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Specifics of Managing Large, Complex Projects

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This presentation shows in a compelling way why it is not possible just to scale up from managing simple projects to leading large, complex projects. …

This presentation shows in a compelling way why it is not possible just to scale up from managing simple projects to leading large, complex projects.
A must see for organizations that want to tackle large, complex projects!

Published in: Business, Technology

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  • 1. Project Value Delivery Specifics of Managing Large, Complex Projects in particular in the Offshore Construction Business Project Value Delivery January 2012© Project Value Delivery, 2012www.ProjectValueDelivery.com
  • 2. Specifics of Large, Complex Projects • Most of us are used to day- trekking • How much do you prepare? • Like most people you decide the day before + minimal preparation© Project Value Delivery, 2012www.ProjectValueDelivery.com 2
  • 3. Specifics of Large, Complex Projects • Day-trekking = 500 to 1,000m height difference in a day • No big deal… • What’s then the deal to do 3 or 4 times the same? • Is it just a matter of doing more of the same?© Project Value Delivery, 2012www.ProjectValueDelivery.com 3
  • 4. Specifics of Large, Complex Projects• Everest base camp: 5,150m• Everest 8,848 m• Only 3,700m…• “Bye bye honey, I’ll just climb the Everest tomorrow…” ???© Project Value Delivery, 2012www.ProjectValueDelivery.com 4
  • 5. Specifics of Large, Complex Projects• What is the difference between day-trekking and climbing Mt Everest?ORGANIZATION / SYSTEMS / PROCESS TEAM EQUIPMENT© Project Value Delivery, 2012www.ProjectValueDelivery.com 5
  • 6. Specifics of Large, Complex Projects Running a Successful Large, Complex Projects Company is fundamentally different from running a Successful Simple Projects Company© Project Value Delivery, 2012www.ProjectValueDelivery.com 6
  • 7. Specifics of Large, Complex Projects • What is a Large, Complex Project? • Convergence processContents • Survival • Organization • Systems • Conclusion© Project Value Delivery, 2012www.ProjectValueDelivery.com
  • 8. Specifics of Large, Complex Projects What is a Large, Complex Section Project? 1 About size and complexity, and the offshore industry© Project Value Delivery, 2012www.ProjectValueDelivery.com
  • 9. What is a Large, Complex Project?• What is complexity? Unpredictability…© Project Value Delivery, 2012www.ProjectValueDelivery.com 9
  • 10. What is a Large, Complex Project?• Complex System = System with many independent components and strong interactions© Project Value Delivery, 2012www.ProjectValueDelivery.com 10
  • 11. What is a Large, Complex Project? In the Offshore Construction Industry• In the Offshore Construction Industry – Complex ~ EPIC project • Sizeable Complex Procurement & Fabrication & related engineering (30, 40%+ of revenue) – Large ~ 300 MUSD+• Risk ownership varies – lump-sum projects = risk & opportunity with Contractor = higher potential margins© Project Value Delivery, 2012www.ProjectValueDelivery.com 11
  • 12. What is a Large, Complex Project? In the Offshore Construction IndustrySimple Project Complex ProjectProject Management Project ManagementEngineeringSimple Procurement Engineering Simple ProcurementComplex ProcurementFabrication Complex ProcurementLogistics FabricationOffshore Logistics Offshore operations operations© Project Value Delivery, 2012www.ProjectValueDelivery.com 12
  • 13. What is a Large, Complex Projects In the Offshore Construction Industry• Business Benefits of Large, Complex Projects – Leverage revenue / asset base – Lump sum – higher potential margins – Multi-year predictable activity / revenue / cash – Market premium & market leverage – Increased organization capabilities allows to tackle new developments© Project Value Delivery, 2012www.ProjectValueDelivery.com 13
  • 14. What is a Large, Complex Projects In the Offshore Construction Industry• MINDSET ISSUE• How do you recognize easily a company which mindset is one of Simple Projects?© Project Value Delivery, 2012www.ProjectValueDelivery.com 14
  • 15. What is a Large, Complex Projects In the Offshore Construction Industry• Answer: speak of Vessels and Assets • A company where people only • A company where people only speak of Vessels and Assets….© Project Value Delivery, 2012www.ProjectValueDelivery.com 15
  • 16. Specifics of Large, Complex Projects Convergence process Section 2 The Key To Successful Large, Complex Projects© Project Value Delivery, 2012www.ProjectValueDelivery.com
  • 17. Convergence processSimple Project Complex Project© Project Value Delivery, 2012www.ProjectValueDelivery.com 17
  • 18. Convergence process Project Performance Driver (or, what kills a project) Simple project Large project Efficiency Convergence +20% ±10% Potential upside/ downside - 30, -50, -100%© Project Value Delivery, 2012www.ProjectValueDelivery.com 18
  • 19. Convergence process• For Complex Projects, the focus of project management needs to be on convergence – Main driver: avoid standby of project & major assets – Project management is geared on timely delivery of all required deliverables – This might require investment = additional cost upfront• Very different project management focus & process than Simple Projects• Read our White Paper on the Fallacies of conventional scheduling & the way to implement the convergence process© Project Value Delivery, 2012www.ProjectValueDelivery.com 19
  • 20. Convergence process• Real life examples – Africa, 2006: Contractor loses 20MUSD direct cost (60MUSD indirect cost) for being late on a 0.5MUSD item in a 800MUSD contract • Delay impacted First Oil: huge organizational disruption • Loses next contract with same Client – Numerous examples of lump sum projects finishing at cost x2 or x3© Project Value Delivery, 2012www.ProjectValueDelivery.com 20
  • 21. Specifics of Large, Complex Projects Survival Section 3© Project Value Delivery, 2012www.ProjectValueDelivery.com
  • 22. Survival • With a Large, Complex Project, the very survival of the Contractor company is at stake. Mt Everest claimed 219 lives… so far© Project Value Delivery, 2012www.ProjectValueDelivery.com 22
  • 23. Specifics of Large, Complex Projects Organization Section 4 Large, Complex Projects Require Specific Organization Patterns© Project Value Delivery, 2012www.ProjectValueDelivery.com
  • 24. Organization• An integrated team – Geographically regrouped – Team effectiveness• Direct report to top management• Functions support project – Resourcing – Processes and tools© Project Value Delivery, 2012www.ProjectValueDelivery.com 24
  • 25. Organization• An experienced Project Manager of Simple Projects is not necessarily suitable to lead a Complex Project – Different skills required • Would you hire this guy to help you to the top of the Everest?© Project Value Delivery, 2012www.ProjectValueDelivery.com ? 25
  • 26. Organization • Different skills required also for Supply Chain Management Engineering© Project Value Delivery, 2012www.ProjectValueDelivery.com 26
  • 27. Organization• PVD recommends that Complex Projects be executed in a different Business Unit than Simple Projects – Complex Projects have different drivers compared to Simple Projects – It is a consistent mistake to try to manage both types of projects in the same organizational structure, with the same processes© Project Value Delivery, 2012www.ProjectValueDelivery.com 27
  • 28. Specifics of Large, Complex Projects Systems Section 5 Large, Complex Projects Require Another Realm Of System Capabilities© Project Value Delivery, 2012www.ProjectValueDelivery.com
  • 29. Systems• Large project = large number of parameters to control© Project Value Delivery, 2012www.ProjectValueDelivery.com 29
  • 30. Systems• Manual systems are overwhelmed, high error rate• Need to: – manage inter-office remote work, remote sites – guarantee data correctness and accurate reporting – have sound forecast over project span© Project Value Delivery, 2012www.ProjectValueDelivery.com 30
  • 31. Systems• What systems? – Document control & Correspondence control – Cost control (different from accounting) – Commitments • SCM • Logistics • Travel, HR • Timesheets – Scheduling & convergence planning Read our White Paper on the setup of right systems and infrastructure© Project Value Delivery, 2012www.ProjectValueDelivery.com 31
  • 32. Systems• What Investment? – NOT JUST ASSETS!! – Systems: 2-5 MUSD – People +© Project Value Delivery, 2012www.ProjectValueDelivery.com 32
  • 33. Specifics of Large, Complex Projects Large Complex Projects Transformation:Conclusion Hard and Rewarding© Project Value Delivery, 2012www.ProjectValueDelivery.com
  • 34. Specifics of Large, Complex Projects On average, people spend more than 1 year to prepare for an Everest climb IT TAKES TIME TO BE READY!!© Project Value Delivery, 2012www.ProjectValueDelivery.com 34
  • 35. Specifics of Large, Complex Projects WITH THE RIGHT PROCESS THE SUCCESS & RELIABILITY RATE INCREASE DRAMATICALLY More than 3,000 people have made it to the Everest today RELIABLE PROJECT DELIVERY CAN BE DONE!© Project Value Delivery, 2012www.ProjectValueDelivery.com 35
  • 36. Specifics of Large, Complex Projects• To tackle Large, Complex Projects – Transform the organization and its mindset / focus • Corporate and governance level • Project leadership level – Invest in the right tools, processes and people• It is possible to do it with the right process, organization and tools• It takes effort and practice• It pays off© Project Value Delivery, 2012www.ProjectValueDelivery.com 36
  • 37. Specifics of Large, Complex Projects• PVD recommendations – It is an investment over several years. Are you ready for it? – Change the organization’s mindset first – Change the organization structure: specific B.U. and career path for Complex Projects – Implement specific Processes for Complex Projects in particular in scheduling & convergence – Implement appropriate Systems that can also be used for other activities© Project Value Delivery, 2012www.ProjectValueDelivery.com 37
  • 38. Specifics of Large, Complex Projects• Welcome to the top!© Project Value Delivery, 2012www.ProjectValueDelivery.com 38
  • 39. Project Value DeliveryTHANK YOU! We Empower Organizations To be Reliably Successful in Executing Large, Complex Projects Discover more on www.ProjectValueDelivery.com
  • 40. Project Value Delivery Intercultural leadership Project Soft Power Team effectiveness Project Coaching Unleashing Value Leadership development from YourProject Control and Reporting Large, Complex Project Recovery Project Startup support Projects Advanced project training Support systems integration Project Health Check Remote sites integration Advanced risk management Organizational maturity Convergence planning We Empower Organizations To be Reliably Successful in Executing Large, Complex Projects Discover more on www.ProjectValueDelivery.com