CAI COMPUTER A ID , I NC .Project FailuresWhat the BP Disaster Can Teach Us About ManagementDavid GritzSeptember 2011
At a GlanceDisasters mark a spot in time upon which those directlyaffected and the greater society can reflect. The BP oil spill isan event of that magnitude. From the rising action andterminus of the event, there are lessons to be learned aboutmanagementThe BP Deep Horizon StoryThe oil spill in the Gulf created more than $40 billion in directdamages. It was a culmination of a lack of leadership andrepeated failures that can be linked back to organizationalculture.People Cause Failure, Plain and SimpleIt is only logical to link culpability to the people in charge of asituation. Project managers should participate in training andmentorship as they gain experience. Project failure can beaverted by focusing on people first.Leadership is Vital to Project SuccessBeyond people, leadership is essential to ensure success.Integrity, honest communication, focus on strength, andeffective planning are elements of the leadership solution. Bybuilding a leadership culture, disaster can be mitigated oreliminated.
Major disasters and cataclysmic events on Earth have aprofound effect on society.People feel the influence of events occurring thousands of miles away;and the world opens up with compassion. In these brief moments, timeslows down as the world marks and reflects on these events. Almosteveryone can remember where they were and what they were doing onthe day Kennedy was shot or on the morning of 9/11. These historicpauses open a new existential recourse for society to heal its wounds.However, opportunities to evaluate and learn from disaster should not belimited to a finite period around the event. Instead leaders shouldcontinually reflect on situations to learn where they stand and where theyare going. This whitepaper seeks to discover what the BP oil spill canteach us about project management.The BP Deep Horizon StoryFew environmental disasters reach the sheer impact of the BP DeepHorizon oil spill. The catastrophe has amounted to a direct cost of over$40 billion and an indirect cost that amounts to an economic crater inthousands of livelihoods. Out of the ruins, there exists the opportunity tostudy and learn the lessons of people and leadership.Studying the postmortems of senior managers, rig operators, andsurrounding culture, it is clear that there was a lack of integrity. A HarvardBusiness Review analysis found that “CEO Tony Hayward presided overan organisational culture that sanctioned extreme risk-taking, ignoredexpert advice, overlooked warnings about safety issues and hid facts.”Further, a 17-month study released by Bureau of Ocean EnergyManagement found that BP was the sole actor responsible for 21 of 35contributing causes to the well blow-out. This series of fatal decisionscombined with collective human frailty led to the initial explosion, the PRdisaster, and numerous failed attempts at early containment and cleanup.Stepping back from this disaster and back into the shoes of a program orproject manager, it is easy to say “this will not happen to me” or “we havea better culture than that.” However, it is important to dissect the abstractcauses of failure, people, and leadership in order to understand how yourorganization can avert project failure.People Cause Failure, Plain and SimpleWhen it comes to organizational failure, it does not make sense to blamecomputers or the environment. People run organizations, and thereforepeople cause failure. The two major reasons people fail is that they areinexperienced or inadequately trained. The risk of a spill could be greatlyreduced if rig operators, like project managers in your organization, wererequired to go engage in thorough training.. Historic oil spills such as theExxon Valdez and Ixtoc I spills form a body of knowledge from whichoperators can educate themselves.3 Computer Aid, Inc.
This same body of knowledge exists for project managers and is knownas the Project Management Body of Knowledge (PMBOK). Yet, justbecause the captains on the Athos I, which spilled on the Delaware Riverin 2004 , may have learned about the three previous spills in the 30 yearsprior, it is not enough. Experience is essential to project managers’success. Experienced managers should act as mentors to youngermanagers to educate them on the specifics of the organization andcontextual knowledge, such as dealing with organizational politics.Leadership is Vital to Project SuccessLikewise, leadership is an essential element to success. The BP spill wasa breakdown of leadership on a number of levels. The dealings in thedisaster highlight four core areas to stress: personal integrity, honestcommunication, leading from strength, and effective planning.Looking at the fallout of the disaster, it is easy to recognize TonyHayward’s void of integrity. Decomposing an early PR blunder, Hayward’sstatement “There’s no one who wants this thing over more than I do, I’dlike my life back,” shows the need for your organization to be willing tostand by its decisions. As Peter Drucker says, “For the organization toperform to a high standard, its members must believe that what is it doingis, in the last analysis, the one contribution to community and society onwhich all others depend.” It is therefore necessary to ask, ‘Are wemaintaining integrity in our project?’ Building on integrity is the need forhonest communication. It is not a good indicator of future success if youare communicating(e.g. “There aren’t any plumes”) to the press and theopposite to your engineers and lawyers. Team members should be awareof their personal performance and direction of the project. Being aware ofyour strengths and weaknesses is the first step toward improvement.The biggest strength that BP failed to capitalize on was the willingness ofAmerican citizens to alleviate the situation. Fishermen, boaters, andecologists were more than willing to help with the clean-up, yet BP did notcapitalize on that willingness. By focusing on your strengths, you canachieve much more. The strengths of the project team are the talents thatcan be most leveraged to successfully lead and complete a project.Former president Eisenhower said, “You do not lead by hitting peopleover the head – that’s assault, not leadership.”Standing on strength starts with effective planning. The plan must includeunderstanding of requirements, the lifecycle, the methods, the schedule,the risks, and other relevant elements. It is not enough to have a “shut-offvalve” that has never been tested. Further there should be a quick way toadjust for plan deviations to get back on another critical path. The reasonBP had so many failed attempts to seal the well is because they did nothave enough free capacity to quickly address the problem.Computer Aid, Inc. 4
And, they did not Taking these lessons to heart, it is important to draw actionable lessonsknow where from the BP Disaster. Considering the effects of incremental lack ofthere next critical leadership and trained people, it is important the combat those problems.path was. For Many organizations have established project management and leadershipHayward, there training programs to accelerate their employees’ growth. However, otherwas no critical software alternatives exist that have the capability to recognize missingpath to remain elements in project leadership or experience. These software tools allowCEO. organizations to make mid-course corrections and add additional experienced resources if a problem is predicted. Using predictivePrevent your analytics and software, companies can maximize their existingNext Disaster capabilities in the short-term and develop a track from long-term success. 5 Computer Aid, Inc.
About the AuthorDavid Gritz is a research specialist in the Allentown, PA, office of For FurtherComputer Aid, Inc. You may contact him at email@example.com. Contact If you would likeArticle Resources to discuss thisWinters, Frank. "The Top 10 Reasons Projects Fail." Gantthead.com, report, please2004. contact Peter Lechner atCorkindale, Gill. "Five Leadership Lessons from the BP Oil Spill." Harvard peter_lechner@cBusiness Review, 28 June 2010. ompaid.com.Matta, Nadim F. "Why Good Projects Fail Anyways." Harvard BusinessReview. Sept. 2003.“Historys Worst Oil Spills,” The History Channel website, 2011.Staff. "Tony Hayward Quotes: BP CEO Gaffes Or Remarks That WentsWrong." NowPublic.com | The News Is NowPublic. A&E TelevisionNetwork, June 2010.USA. Bureau of Ocean Energy Management. Regulations andEnforcement. Macondo Well Blowout. By Michael Bromwich. Sept. 2011.