Mega projects - raw diamonds or raw eggs?

Mega Projects –
Raw diamonds
or raw eggs?
Siemens – Corporate Development Consulting

© Siemens AG 2017
June 2017Page 2 Siemens – Corporate Development Consulting
© Siemens AG 2017
Technology Readiness Level model is more than 20 years old
and well established within Siemens
 NASA developed
Technology Readiness
Level System in the 1980's
 US Department of
Defense took over and
enlarged the system
in the 1990's
 Since 2000 used as a
standard method
to identify and evaluate
technology maturity
of big programs
System test,
launch and
operations
System/
subsystem development
Technology
demonstration
Technology development
Research to prove
feasibility
Basic technology
research
TRL 9
TRL 8
TRL 7
TRL 6
TRL 4
TRL 3
TRL 2
TRL 1
TRL 5
1
© Siemens AG 2017
What are “classic” root causes for late surprises?
• Underestimation
of technology
• Underestimation of
up-scaling
• First-of-its-kind
• Lack of requirement
management
Technical
requirements
underestimated
• Personnel gap
• Competence gap
• Inefficient planning
Inadequate resource
and competence
management
• Deficiencies in
supplier/partner
evaluation/selection
• Unknown customer
Insufficient supplier/
partner selection and
performance
Root causes
Examples
Source: PM@Siemens
© Siemens AG 2017
How giga projects will develop – What others say, …
Thomas Frey
Senior Futurist at the DaVinci Institute, Futurist Speaker
“Gone are the days where people are
impressed by projects costing $10-$50 million
or even $100 million. We are witnessing an
explosion in the number of $1 billion+ projects
with many now exceeding $100 billion. Mega
[or giga] projects are set to triple over the
coming decade, reaching a staggering 24%
of global GDP by 2030.
„
Mega projects – raw diamonds or raw eggs
What is a
mega project?
What we can do
to have raw diamonds?
Why we think
they are raw eggs?
The amount of worldwide mega
projects will increase continuously over
the next decades …
..., in addition during execution and
handling of mega projects higher risks
(risk portfolios) jeopardize success ...
… to address these mega opportunities
comprehensive tackling of risks on all
levels is needed.

© Siemens AG 2017
Mega project:
What’s this?

© Siemens AG 2017
Rhein-Ruhr-Xpress
Major order within new delivery concept
(Trains, service and operability) incl. full
service (incl. depot) for 32 years of
operation 4-car-trains
Egypt
program
Siemens is supplying power plants and
wind turbines to Egypt - the world's
three biggest combined cycle power
plants
East Anglia ONE
Major order for offshore wind power plant:
East Anglia ONE in Great Britain
is the largest order to date for the 7 MW
wind turbine.
Some different examples for mega projects
Source: Siemens – Corporate Communications

© Siemens AG 2017
Selected examples for upcoming mega initiatives,
e.g. US and China
• Nanshuibeidiao: World‘s largest water canal system [4.350 km; Suez Canal 193 km; N.Y. to L.A.: 3.944 km] 60‘‘ US$
• Jiuquan Wind Power Base: World‘s largest wind farm [20 GW power capacity; more than 7.000 turbines] 20‘‘ US$
• Dalian-Yantai Tunnel: World‘s longest undersea tunnel [123 km; Channel tunnel: 50 km] 42‘‘ US$
• China Railway High Speed: World‘s largest high speed rail network [peak speed 431 km/h] 300‘‘ US$
• Project Clean Lake: 25-year renewal plan for Lake Erie 3‘‘ US$
• Texas Central High Speed Rail: From Houston to Dallas in 1,5 hrs [240 miles of track mostly on viaducts] 16‘‘ US$
• Hudson River Rail Tunnel: Upgrade the 100 year old tunnel 20‘‘ US$
• California‘s High Speed Rail: From L.A. to S.F. in 3 hrs [500 miles of track; America‘s biggest infrastructure project] 64‘‘ US$
Source: CD C, own research
not comprehensive

© Siemens AG 2017
How mega projects will develop – Gone are the days where
people are impressed by projects costing $50 million
Thomas Frey
„

© Siemens AG 2017
2017 Atlanta runs the biggest airport in the world, while Dubai,
Mexico, Beijing & Istanbul are building even bigger airports …
Frankfurt
Al
Maktoum,
Dubai
Atlanta
Beijing
Daxing
Istanbul
Mexico
City
Runways
in 2016
Passengers
in 2016
(in millions)
10161 150 130 130 130
6 5 6 7 - 964
… generating collateral business additionally and
therefore setting a lot of opportunities and risks
Source: CD C, own research
Passengers
in ~2026
(in millions)
Runways
in ~2026
today future
Selected
examples
known
projects

© Siemens AG 2017
© Siemens AG 2017
 NASA developed
enlarged the system
in the 1990's
standard method
technology maturity
of big programs
System test,
launch and
operations
System/
Technology
demonstration
Research to prove
feasibility
Basic technology
research
TRL 9
TRL 8
TRL 7
TRL 6
TRL 4
TRL 3
TRL 2
TRL 1
TRL 5
1
© Siemens AG 2017
• Underestimation
of technology
up-scaling
management
Technical
requirements
underestimated
• Personnel gap
• Competence gap
Inadequate resource
and competence
management
• Deficiencies in
supplier/partner
performance
Root causes
Examples
Source: PM@Siemens
© Siemens AG 2017
Thomas Frey
„
What is a
mega project?
What we can do
Why we think
they are raw eggs?
levels is needed.

© Siemens AG 2017
Project Business is a very strong piece of Siemens’ DNA
and of our portfolio .
1870 2015 2020 …
~48%
Project
Business
~35%
Service
Business
~17%
Product
Business
Order backlog
Industrial Business
Source: PM@Siemens

© Siemens AG 2017
What are “classic” root causes for surprises?
• Underestimation
of technology
• Underestimation
of up-scaling
management
Technical
requirements
underestimated
• Personnel gap
• Competence gap
Inadequate resource
and competence
management
• Deficiencies in
supplier/partner
performance
Root causes
Examples
Source: PM@Siemens

© Siemens AG 2017
© Siemens AG 2017
 NASA developed
enlarged the system
in the 1990's
standard method
technology maturity
of big programs
System test,
launch and
operations
System/
Technology
demonstration
Research to prove
feasibility
Basic technology
research
TRL 9
TRL 8
TRL 7
TRL 6
TRL 4
TRL 3
TRL 2
TRL 1
TRL 5
1
© Siemens AG 2017
• Underestimation
of technology
up-scaling
management
Technical
requirements
underestimated
• Personnel gap
• Competence gap
Inadequate resource
and competence
management
• Deficiencies in
supplier/partner
performance
Root causes
Examples
Source: PM@Siemens
© Siemens AG 2017
Thomas Frey
„
What is a
mega project?
What we can do
Why we think
they are raw eggs?
levels is needed.

© Siemens AG 2017
So, what else is
needed to
address these
mega project
risks properly
The way of addressing risks in large-scale projects
was shown during one of the last Corporate Risk Minds
© Siemens AG 2017
sira is an unique method for analyzing and assessing risks in
projects and connects “head” and “gut”, i.e. facts and feelings
sira at a glance
AwarenessMitigationsRisks
Estimation of Damage
Status
Risk-Id
qualitative
risk
analysis
RPN
qual.
Ranking
Com
men
ts
qual
itati
intuitive
Risikoeinsch
ätzung,
normiert,
project
uncertaintie
s
Risk of Today
* Root of Risk
* Description of Risk
* Description of Impact
* Description of Probability
Special
Attention!
Not
considered
Impactin€
minutes
longer
0 -1.00 0.00 €
0 -1.00 0.00 €
0 0.00 0.00 €
0 0.00 0.00 €
0 0.00 0.00 €
0 0.00 0.00 €
0 -1.00 0.00 €
0 -1.00 0.00 €
R-0 2 2
2.00
traffic jam, impact=5 min longer, P=20%
5.00 € 5.00
R-1-1 3 3
3.00
traffic jam, impact=10min, P=30%
10.00 € 10.00
R-1-2 3 3
3.00
heavy traffic jam, impact=30 min longer, P=10%
30.00 € 30.00
R-2 1 1 1.00 traffic jam, impact=5 min longer, P=10% 5.00 € 5.00
R-3 0 0 0.00 no risk 0.00 €
R-4 0 0 0.00 no risk 0.00 €
R-5 0 0 0.00 no risk 0.00 €
0 0.00 0.00 €
0 -1.00 0.00 €
R-6-1 3 3
3.00
searching for a parking place, impact=5 min longer, P=50%
20.07.2007: Risk closed, searching at home for a parking place will not increase risk
for being late at the office
5.00 € 5.00
R-6-2 3 3
3.00
searching for a parking place, impact=10 min longer, P=20%
20.07.2007: Risk closed, Risk closed, searching at home for a parking place will not
increase risk for being late at the office
10.00 € 10.00
R-6-3 3 3
3.00
additional footwalk, impact=5min, P=30%
20.07.2007: Risk closed, Risk closed, searching at home for a parking place will not
increase risk for being late at the office
5.00 € 5.00
R-7 1 1 1.00 additional footwalk, impact=5min, P=50% 5.00 € 5.00
0 0.00 0.00 €
0 0.00 0.00 €
0 -1.00
YES
0.00 €
0 -1.00
YES
0.00 €
R-8 1 1 1.00 no risk 0.00 €
R-9-1 1 1 1.00 missing one subway, impact=waiting 5 minutes, P=50% 5.00 € 5.00
R-9-2 1 1
1.00
one subway is late, impact=max. 5 minutes, P=5 per year
5.00 € 5.00
R-9-3 1 1
1.00 no subway transport, impact=need to go by car --> 1,5h additional, P=1 event during
last 7 years
YES
90.00 € 90.00
R-10 2 2
2.00
miss to devalue ticket, impact= wait for next train --> 5..10 minutes, 4 times per year
7.50 € 7.50
R-11 1 1 1.00 no risk 0.00 € 0.00
0 0.00 0.00 €
0 0.00 0.00 €
0 -1.00
YES
0.00 €
R-12 2 2 2.00 no risk 0.00 €
R-13 2 2
2.00
missing the bus would lead to missing the train, impact= wait 20min for next train,
P=5%
20.00 € 20.00
R-14-1 3 3
3.00
missing the train, impact=20 min waiting, P=5%
20.00 € 20.00
R-14-2 3 3
3.00
train breakage, impact=30 min delay, P=20%
30.00 € 30.00
R-14-2 3 3
3.00 train breakage, impact=30 min delay, P=20%
20.07.2007: re-evaluation of risk, commuter transport is more reliable, P=5%
30.00 € 30.00
R-15 2 2 2.00 miss to devalue ticket, impact= wait for next train --> 20 minutes, 4 times per year 20.00 € 20.00
0 0.00 0.00 €
0 0.00 0.00 €
0 -1.00 0.00 €
Risktable
Uncertain-
ties
Cost
analysis
Delay
analysis
sira.iris
• Neutrally and professionally
moderated risk analysis for outstanding,
challenging or highly innovative projects
• sira connects the right experts around
the table to commonly identify the risks
• All relevant project parties are
involved to enable 360° project view
• Multiple charts and analysis to disclose
risks and increase transparency
• The interpretation of the sira graphics
combined with neutral sira risk
workshops facilitation enables
identification of additional risks
• Consideration of all kind of risks, e.g.
technical, commercial and "soft" risks as
well as uncertainties
• Neutral assessment of results and
professional moderation by a neutral
sira expert leading finally to:
• 360 view on project risks
• Faster project development
• Less surprises during project lifetime
• Common understanding by all
stakeholders
• Reduction of NCC
• Qualitative assessment that includes
psychological factors on the team and
uncertainties
• Precise quantitative assessment of
risks and elaboration of suitable risk
mitigation
Approach BenefitsResults

© Siemens AG 2017
What else is needed to address root causes for surprises
within mega projects?
• Underestimation
of technology
• Underestimation
of up-scaling
management
Technical
requirements
underestimated
• Personnel gap
• Competence gap
• Inefficient
planning
Inadequate resource
and competence
management
• Deficiencies in
supplier/partner
performance
Root causes
Examples
Source: PM@Siemens
1
2
3

© Siemens AG 2017
 NASA developed
enlarged the system
in the 1990's
standard method
technology maturity
of big programs
System test,
launch and
operations
System/
Technology
demonstration
Research to prove
feasibility
Basic technology
research
TRL 9
TRL 8
TRL 7
TRL 6
TRL 4
TRL 3
TRL 2
TRL 1
TRL 5
1

© Siemens AG 2017
Efficient screening of large specifications speeds up the
assignment of right contents to relevant experts
ScreeningInput Results
Specifications,
contracts, …
Business knowledge
and expertise
Advanced
text analysis and
search engine on a
secure server
Classified Requirements
for requirements
management
Summary
with overview and business
specific file assignment
information
Highlighted PDF files
with dictionary-based
business-specific book-
marks and indices
2

© Siemens AG 2017
The highlighted PDF files contain content-related screening
bookmarks for efficient text evaluation
Original PDF specification with highlighted text according to
search criteria
Bookmarked content-related pages including pages without
machine-readable text and business specific indexes at the end
of each document
Text screening can be linguistic tolerant. Types of search
criteria1) can be
• Buzzwords and phrases
• Combination of words within the same sentence
• Text patterns for unknown content (e.g. “values below 1%”)
• Combinations thereof
For high usability of results search criteria can also contain
optional and/or excluded text
2

© Siemens AG 2017
Restricted © Siemens AG 2017
Page 6 01.02.2017 CRM Consulting
MPM Project Business Assessment results – At a glance
From the current status to the way forward
Current status
Management summary Theme overview
•
•
•
•
•
•
•
•
•
•
Maturity level, spider diagram
The way forward
MPM Assessment
• Is the selected
methodology of Siemens
to analyze and to
evaluate the project
business processes and
the behavior of
organizations
• Indicates the fit of
organizational practices
to its business needs
• Provides good practice
to the assessed unit and
to the Siemens project
business via
PM@Siemens
Goals, Benefit
 Transparent and repeatable project planning and tracking procedure in place.
 Perform adequate & consistent resource management, meet successfully schedule & costs.
Action Focus 1: Project Planning and Controlling
Tasks
 Establish a systematic handover procedure incl. a kick-off meeting where all future project
participants shall be involved.
 Define and implement a resource management (i.e.)
Action Focus Areas Transfer of Result workshopAction Prioritization Matrix
ST SIGO PC QPC PM PR PQ DM CO SA EN
5,0
1,0
4,0
3,0
2,0
0%
20%
40%
60%
80%
100%
ST
GO
PC
PM
PR
PQDM
CO
SA
EN
SI
2.00
1,0
2,0
3,0
3,5
4
4,5
5
Total Practice Theory
Maturity Level
3
Adaptable – but well organized – processes, continuously
challenged to derive and share lessons learned, are needed …
… but mega projects also need convinced entrepreneurs behind.

© Siemens AG 2017
Mega projects are raw diamonds -
cut and grinded well they will be extremely valuable
„Be aware …
… mega project opportunities
will increase continuously
over the next decades.
… mega projects will also
generate collateral
business.
… mega projects have
to be addressed
thoroughly.“
„Will need …
… revolving of lessons learned continuously.
… adaptation of processes and methodolgies.
… more comprehensive view on risks on all
levels.
… risk portfolio evaluation and management.
… convinced entrepreneurs behind.“

Mega projects - raw diamonds or raw eggs?

Mega projects - raw diamonds or raw eggs?

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