This paper discusses the application of recovery planning as a feasible solution for the phenomena of troubled projects. The information and studies discussed in this paper will be generated from a major PMO project implemented at a government ministry in the Middle East. The total value of this ministry’s projects was 720 million dollars distributed between 123 projects in 13 regions. The recovery planning in the PMO project focused on 55 troubled projects with a value ranging between 1 and 100 million dollars.
The researcher of this paper, who was assigned a program manager by the owner on those troubled projects, along with the PMO team started to draw a proper recovery plan for each one of those projects. The recovery planning was preceded by a full Ishikawa scan to discover the major causes that resulted in the tripping of those projects. Pareto diagramming was then used to categorise the most and least important causes (80/20 Rule). A site survey was then conducted using a detailed questionnaire to evaluate the current status of each of the projects. Finally, a road map was designed to determine the main elements of recovery implementation including a fast track schedule and a critical path. The overall recovery plan for those troubled projects included the initial delivery of at least 4 projects every month in a period of 12 months.
The implementation of the 12 months plan succeeded to deliver 41 of the planned 48 projects. The average schedule performance index (SPI) of the 41 delivered projects equaled 0.85. The plan was 85% successful. The success of that plan was a result of the full collaboration between the key project stakeholders including the owner representatives, the contractors, and the consultants.
LPC Warehouse Management System For Clients In The Business Sector
Recovery Planning for Troubled Projects
1. The Applied Recovery
Planning for Troubled
Projects
Emergency Application to an Emergent Phenomenon
Co-Authors: Dr. Akram K. Hassan & Ahed I. Zarzar
2. Table of Content
Paper Summary:......................................................................................................................................3
Introduction:...........................................................................................................................................4
The General Outcomes of Troubled Projects: ........................................................................................4
The General Causes of Troubled Projects:..............................................................................................4
The Current Study:..................................................................................................................................5
Recovery Planning:..................................................................................................................................8
Solution Implementation:.....................................................................................................................10
Category A Projects (Deliver):...........................................................................................................10
Category B Projects (Push):...............................................................................................................11
Category C Projects (Direct):.............................................................................................................11
Solution Results: ...................................................................................................................................11
Paper Conclusion: .................................................................................................................................12
Recommendations:...............................................................................................................................12
Table of Figures:
Figure 1: Ishikawa Analysis of Troubled Projects....................................................................................5
Figure 2: Cause frequency by category...................................................................................................7
Figure 3: Cause percentage by category.................................................................................................7
Figure 4: The Structure of the Support Teams......................................................................................10
Figure 5: Project Status before and after the implemented recovery planning...................................11
3. The Applied Recovery Planning for Troubled Projects
Paper Summary
This paper discusses the application of recovery planning as a feasible solution for the phenomena of
troubled projects. The information and studies discussed in this paper will be generated from a
major PMO project implemented at a government ministry in the Middle East. The total value of this
ministry’s projects was 720 million dollars distributed between 123 projects in 13 regions. The
recovery planning in the PMO project focused on 55 troubled projects with a value ranging between
1 and 100 million dollars.
The researcher of this paper, who was assigned a program manager by the owner on those troubled
projects, along with the PMO team started to draw a proper recovery plan for each one of those
projects. The recovery planning was preceded by a full Ishikawa scan to discover the major causes
that resulted in the tripping of those projects. Pareto diagramming was then used to categorise the
most and least important causes (80/20 Rule). A site survey was then conducted using a detailed
questionnaire to evaluate the current status of each of the projects. Finally, a road map was
designed to determine the main elements of recovery implementation including a fast track
schedule and a critical path. The overall recovery plan for those troubled projects included the initial
delivery of at least 4 projects every month in a period of 12 months.
The implementation of the 12 months plan succeeded to deliver 41 of the planned 48 projects. The
average schedule performance index (SPI) of the 41 delivered projects equalled 0.85. The plan was
85% successful. The success of that plan was a result of the full collaboration between the key
project stakeholders including the owner representatives, the contractors, and the consultants.
Key Words:
Troubled Projects, Project and Program Management, Recovery Plans, Government Sector,
Construction.
4. Introduction
The Kingdom of Saudi Arabia is considered amongst the largest markets for construction projects in
the Middle East and North Africa (MENA) region. The total value of construction contracts to be
signed in 2013 was estimated at 80 Billion Dollars. This figure is approximately 36% higher compared
to its equivalence in 2011 and 10% higher compared to 2012. The majority of this value was
directed to transportation infrastructure projects such as airports, rail ways, and roads; social
infrastructure projects such as education and health care; and utility infrastructure projects such as
power, water, renewable energy, and disposal.
Indicators in the Middle East started to show increasing numbers of projects entering the “troubled”
zone (refer to appendix 1) where its values and rates have exceeded the acceptable limits and
became an area of great attention for project management studies. The current percent of troubled
projects in the government sector during the past three to four years reached 20%, which alarms of
new social and economic negative results and a drawback in the development strategies and plans.
A troubled project, by the definition of the 2012 Engineering Troubled Projects Forum in Makkah, is
the project that begins its execution with a proper schedule then stops for causes that are either
outside the control of the contractor on site, contractor capacity shortage, or other macro elements.
The General Outcomes of Troubled Projects
Statistics indicate that 90% of troubled projects are caused by the lack of good performance of the
key project stakeholders, mainly the Contractor, the Supervision Consultant, and the Owner
(Reference 2). The entrance of a project into the “troubled” zone increases the cost of the project,
especially when the owner is pressured to generate emergency short term solutions.
One of the critical results of a troubled project is weakening the government ability to commit to the
development strategy and benefit from the project’s operations. Resolving a troubled project, on
the other side, does not only involve the instant reaction to get the project on track but adapting a
new strategy that prevents projects from getting in the same troubles again.
The General Causes of Troubled Projects
The general causes of troubled projects vary as per several studies made in government owned
projects. Among those causes are the following six:
1- The lack of flexible and updated laws and legislations compared to the huge government
spending and rapid development in the Arabian Gulf region. The lack of escalation
procedures against faulty contractors and subcontractors in government projects.
2- Awarding contracts to the cheap bidder disregarding the technical feasibility and overall
capacity of the contractor. A large portion of the contract is then usually sold to
subcontractors.
3- Low performance on the supervision consultant side in regards to monitoring and control.
4- Low financial and technical capacity at the contractor and supervision consultant levels
5- Disregarding the professional integrity when performing a certain task and the continual
delay in the cashing of billed invoices.
5. 6- The administrative corruption at some of the companies executing the projects in addition
to the lack of a governance committee that oversees all projects and helps resolving
emergent issues.
Even though tens of conferences and meetings were held to discuss the causes of troubled projects
in collaboration of government agencies, practical solutions that motivate the use of recovery
planning and provide increased transparency were not allocated or enforced.
The Current Study
Study Background
The researcher of this paper studied 123 projects related to one centralised development
program with a total value of 720 million dollars distributed between 123 projects ranging
between 1 and 100 million dollars per project in 13 different regions. The locations of the
projects were dispersed from the central administration sometimes by 1000 Kilometres. Each
region was assigned its separate project management team.
The implementation of the recovery planning focused on 55 chosen projects out of the 123. The
overall duration of the chosen projects was 4 years while the durations of each of the chosen
projects ranged between 12 to 48 months.
The project management team of this development program consisted of 13 central
administration members and 125 regional members (average of 9 members per region). The
technical specialty of the team members covered all the needed engineering and project
management expertise.
Problem Identification & Analysis
The main causes of the troubled projects were identified using Ishikawa diagram (Figure 1,
Reference 5). The study shows that 45% of the 123 projects have already been identified as
troubled projects.
Figure 1: Ishikawa Analysis of Troubled Projects
Project Prioritization Processes Governance
Bidding Docs. Prequalification Project Delivery
6. 1- Project Prioritization: Is the suggestions of executing new projects
Lack of a certain standard to choosing and prioritizing to execute new projects as per
the organizational strategic objectives
Lack of identified process to choosing new projects when the yearly budget is
released
Lack of enough preparatory studies to identify the feasibility of the suggested
projects
2- Bidding Documents:
Lack of detailed identification of project scope which results in endless number of
change orders.
Improper project costing
Improper project scheduling. Usually, projects have certain durations regardless of
its nature or specified scope.
3- Contractor prequalification:
Provide contractor qualification without taking into consideration its projects history
and technical and administrative teams experiences.
Reward contractors without taking into consideration their financial and technical
capacity
Lack of enforcement on the contractor to provide employee training and healthy
working environment.
4- Processes:
High bureaucracy in cashing out billed invoices and certifying change orders.
High dependence on paper instead of electronic systems.
Overlap and conflict of processes, especially with the existence of several
supervision and monitoring sources.
5- Governance: Is the policies and decisions that the government agency takes to assure
project compliance to an agreed scope.
Lack of policy updates in accordance to market and project circumstances.
Lack of control and transparency between the key stakeholders which blocks
escalation to the right decision parties to resolve the issues and avoid future risks
Lack of fine and punishment application against weak contractors.
6- Project Delivery:
Delay in the delivery of utilities even after the project is done.
Delay in the delivery of long term procurements
Contractor escape of project delivery to avoid delay fine
According to the frequency analysis of the previously listed causes, the design phase and contracting
phase causes turned to be the most frequent. During those two pre-construction phases the scope
of the project, the duration of execution, the project budget, and the contractor prequalification are
all determined (Figure 2 Pareto Chart).
7. Also, the Pareto chart shows that the causes of the troubling projects in the preconstruction phases
reaches 76% while the remaining 24% is caused by the lack of monitoring and control and process
non compliance.
Figure 2: Cause frequency by category
Figure 3: Cause percentage by category
55
41
34
19
13
10
0
10
20
30
40
50
60
Frequency
of
Causes
Cause Category
32%
24%
20%
0%
20%
40%
60%
80%
100%
Triping
Percentage
Cause Category
8. Recovery Planning
After identifying the main reasons behind troubled projects (55 Projects) and categorizing those
reasons and prioritizing their criticality and frequency in accordance to the international standards
(Reference 7 & 8), the PMO team decided to do the following:
1- Draw preventive plans for the projects that have not reached 20% of progress (68 Projects)
2- Draw recovery plans for the troubled projects (55 Projects)
The recovery plan includes:
1- Identify the project progress status regardless of the percent of duration passed (Table 1).
2- Categorise the projects into three categories as following:
Category A “Deliver”: Projects with over 80% progress
Category B “Push”: Projects with 20% - 80% progress
Category C “Direct”: Projects with less than 20% progress, including the projects that
have not started yet.
# Category
Duration in
Days
%Complete %Remaining
1
A “Deliver”
720 99.00% 1.00%
2 280 95.00% 5.00%
3 900 94.05% 5.95%
4 720 90.00% 10.00%
5 720 84.60% 15.40%
6 720 83.80% 16.20%
7 270 83.12% 16.88%
8 720 82.75% 17.25%
9
B “Push”
90 70.63% 29.37%
10 550 69.00% 31.00%
11 120 68.00% 32.00%
12 550 67.35% 32.65%
13 720 66.00% 34.00%
14 720 62.81% 37.19%
15 550 62.01% 37.99%
16 720 61.30% 38.70%
17 120 59.76% 40.24%
18 720 54.06% 45.94%
19 720 53.16% 46.84%
20 1080 48.98% 51.02%
21 720 46.64% 53.36%
22 720 46.51% 53.49%
23 720 43.00% 57.00%
24 720 41.35% 58.65%
25 720 40.56% 59.44%
26 720 40.54% 59.46%
9. 27 550 40.51% 59.49%
28 720 40.00% 60.00%
29 360 36.65% 63.35%
30 720 36.25% 63.75%
31 720 36.25% 63.75%
32 1080 34.56% 65.44%
33 720 33.85% 66.15%
34 550 33.20% 66.80%
35 720 30.75% 69.25%
36 720 30.63% 69.37%
37 720 30.15% 69.85%
38 720 28.68% 71.32%
39 720 28.00% 72.00%
40 720 27.95% 72.05%
41 720 27.50% 72.50%
42 720 27.31% 72.69%
43 550 26.78% 73.22%
44 550 25.78% 74.22%
45 720 23.39% 76.61%
46 720 23.16% 76.84%
47 720 21.70% 78.30%
48
C “Direct”
720 18.27% 81.73%
49 720 14.85% 85.15%
50 900 7.12% 92.88%
51 1080 5.86% 94.14%
52 540 4.02% 95.98%
53 720 3.21% 96.79%
54 180 3.12% 96.88%
55 1080 0.00% 100.00%
Table 1: % Complete and Troubled Projects Categorization
3- Identify the barriers that is blocking the delivery of the Type A category in accordance to the
program manager permissions:
In need of coordination and support from the government (Administrative &
Financial support)
In need of immediate decisions (Technical & Contractual support)
4- Establish support teams on the level of the regions to coordinate the financial,
administrative, technical, and contractual issues and fast track the delivery of the Type A
projects to reach a pace of delivering 4 projects per month. The structure of the support
teams is as following:
10. Figure 4: The Structure of the Support Teams
5- Agree with the owner of the projects to recommend the priority 4 projects of each month
from the Type A.
Solution Implementation
Category A Projects (Deliver)
1- A recovery plan template was developed to be filled by the support teams of each region
including the following:
Status update: % complete in accordance to the billed invoices, actual % complete
per site, % of duration passed.
Tripping reasons: administrative, financial, technical, and contractual reasons.
Analysis and evaluation
Corrective actions
Recommendations
2- The Regions Support Teams started to provide monthly reports of the 4 fast-track projects
and recommend the next 4 projects for the next month.
3- The region support teams worked on solving the technical and contractual issues while the
region projects coordinator communicated directly with the central program management
office and with the owner to reach an accommodation in the administrative and financial
issues.
4- A hot line was established to the government agency (owner) to urgently intervene in the
matters of critical issues and immediate decisions on sites.
5- The delivery of the first 4 projects was on the second month of the plan, especially for the
projects that were over 90% in progress and were hanging at that level for a while.
6- “Deliver your Project” was the slogan that was put for the recovery year plan. Delivery
celebration was conducted to motivate the employees and support teams at the end of each
month.
Regional Projects Coordinator
Contract Specialist
Electro-Mechnical
Engineer
Civil Engineer
Quality
Engineer
Architechtrual
Engineer
11. Category B Projects (Push)
1- Continual review and updates of recovery plans
2- Continual review and updates of schedules
3- Issue management on site to push the projects to reach the delivery status
4- Avoid the main causes of project tripping like the process beurucracy and lack of project
governance through the use of an electronic system and periodic visit to sites.
Category C Projects (Direct)
Three main steps were taken into consideration to maintain the progress of those types of projects:
1- Continual review of project documentation (drawings, BOQs, specifications, site surveys,
etc.)
2- Sub Contractor training and evaluation to assure quality of work and a steady progress pace
3- Periodic scheduling updates and issue management to direct the projects to reach the push
status.
Solution Results
After 12 months of continues effort and collaboration, the following outcomes were reached:
1- 41 delivered projects that constitute to 85% of the planned 48 projects
2- 33 pushed projects from Category A to Category B
3- 6 directed projects from Category C to Category B
Below is a graphical description of the status of the projects before and after the implementation of
the recovery planning:
Figure 5: Project Status before and after the implemented recovery planning
Category
A -
Deliver
14%
Category
B - Push
71%
Category
C - Direct
15%
Before Recovery
Planning
Category
A -
Deliver
74%
Category
B - Push
22%
Category
C - Direct
4%
After Recovery
Planning
12. Paper Conclusion
The researcher of this paper studied and analysed 55 troubled projects with a value ranging between
1-100 million dollars. The main causes of troubled projects were identified, analysed, and counted
for its frequency of repetition. Recovery plans were developed including updated schedules and a
target of delivering 4 projects per months was set. The plan was carried through with a n 85%
success rate after delivering 41 projects in collaboration with all key stakeholders including the
owner, the contractor, and the supervision consultant. The following lessons were learned:
1- Troubled projects could be delivered and turned around with the condition of full
collaboration between the key project stakeholders
2- One of the most crucial causes of project failure is the government delay in the preparation
of the RFP and reliability of its related drawings. This cause also relates to using
unreferenced technical specifications and conditions, which immediately result in changes
and claims.
3- 80% of the causes of troubled projects are in the preconstruction phase as following:
Project Prioritization (Choosing the right projects)
Bidding Documentation
Contractor prequalification
4- Recovery planning should be aligned with a definitive agreed upon methodology that starts
with identifying and categorising the causes, quantifying the frequency of repetition,
developing the solution, and assigning the team (Reference 9)
5- Dedicating a separate regional support teams to perform the direct coordination with the
stakeholders is key to the success of recovery planning.
6- Dedicating a Hot Line to directly communicate urgent issues with the client (Owner) is key to
issue management
7- Managing troubled projects is reachable if the teams were wisely directed through the use
of motivation techniques and rewards.
8- Process automation and project governance are keys to the success of pushing projects
through their execution phases (Reference 10).
9- Using and learning from project management best practices is always beneficial instead of
thinking hard to reinvent the solutions that many others have figured out in the past
(Reference 11).
Recommendations
The researcher, through the implementation of the recovery planning for the government program,
realised the importance of the following points:
1- To implement data transparency between the project key stakeholders and the supervision
parties that would help in the timely collection of weaknesses and issues.
2- To activate the term “replacement contract”: this term is only activated when a project is
officially been identified as troubled. This term would eliminate 50% of the effects of
troubled projects by removing some of the scope from the main contractor and giving them
to the replacement contractor.
3- To continually support the key stakeholders when the project is troubled to quicly identify
the caused and collaborate to bring the project back on track.
13. 4- To allow the recruitment of large international contracting companies and to modify and
update the governmental procurement systems and enhance the process of project
monitoring and control.
5- To establish governance boards at the level of the programs to allow periodic ad hoc support
and issue control from upper management
6- To learn from the success stories that was built by other governmental agencies such as the
Royal Commission for Industrial Jubail and Yanboa.
7- To activate portfolio management techniques to allow for project prioritization in
accordance to the alignment of the project deliverables and program benefits to the overall
organizational strategic objectives.
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