This document discusses three proven tracks for motivating employees and project teams: value creation, leadership opportunity, and gain share. Value creation involves recognizing and rewarding team members for ideas that create cost savings or other benefits. Leadership opportunity provides growth opportunities by assigning higher responsibilities or volunteering roles to recognize top performers. Gain share rewards the entire project team if project profitability targets are exceeded. These tracks are grounded in motivation theories like Maslow's hierarchy of needs and Herzberg's two-factor theory. Value creation can come from value engineering during planning or ongoing value improvement plans during execution. Leadership opportunities may involve specific project roles or volunteering. Gain share compensates for measurable performance gains. Together these tracks aim to fulfill higher-level needs

1. 1 Page

2. Motivating for Results – three proven
tracks
V T Chandra Sekhar Rao– Project Management Director, Foster Wheeler India
Pvt Limited

3. Contents
1. Abstract ........................................................................................................................................... 4
2. Introduction...................................................................................................................................... 4
3. Theoretical basis behind the three tracks ....................................................................................... 5
3.1 Maslow’s hierarchy of needs ..................................................................................................... 5
3.2 Herzberg's two-factor theory ..................................................................................................... 7
4. Three proven tracks ........................................................................................................................ 7
4.1 Value creation ........................................................................................................................... 7
4.1.1 Value Engineering (VE) ......................................................................................................... 8
4.1.2 Value Improvement Plan......................................................................................................... 9
4.2 Leadership Opportunity ........................................................................................................... 10
4.2.1 Leadership Opportunity in a specific project assignment .....................................................10
4.2.2 Leadership Opportunity in Volunteering assignments ..........................................................11
4.3 Gain Share .............................................................................................................................. 11
5. Preparatory work for value creation and Gain share .................................................................... 12
6. Leadership qualities and Motivating for Results ........................................................................... 13
7. Other Aspects of Motivating for Results ........................................................................................ 13
8. Conclusions ................................................................................................................................... 14
9. References .................................................................................................................................... 14
10. Author’s Profile ............................................................................................................................ 15
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4. 1. Abstract
Projects provide opportunities where the team members can deliver outstanding results and
recognising and rewarding such contributions is key for ensuring excellence in project performance.
Three proven tracks implemented in select large EPC (m) projects are explained. These are Value
Creation, Leadership Opportunity and Gain-share. The basis for designing these plans is explained in
light of established motivation theories. The process of implementation is also explained along with
examples of implementation on large projects. Value creation is a process where individual team
member is encouraged to contribute with innovative solutions or ideas which can provide cost savings
or schedule gains. The core principle here is recognition of implementable idea. Leadership
Opportunity is assigning a higher responsibility to a team member as recognition of his potential and
consistently exceeding high expectations in his current role. The principle here is a reward for good
performance. Gain-share is a process where the team contributions of entire project task force in
exceeding project profitability targets are rewarded at the end (close-out) of the project. While these
schemes or motivation tracks are good, it also requires some key leadership behaviours for effective
implementation. These essential leadership traits are also discussed in the concluding sections of this
paper
2. Introduction
Motivation is a key factor for an individual as well as project team for delivering a successful project.
Project Manager, who has the total accountability on project results, should know how to influence it.
To motivate for results, project manager must have the knowledge and ability to instil confidence and
channelize efforts leading to a successful outcome that is something worth having and has enhanced
visibility in the organisation, Fig 1 shows the process of motivating for results.
Fig 1: Process of Motivating for Results.
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5. The primary objective of the paper is to address the above requirement. There is no doubt that
working on projects is often demanding and deadlines/ delivery expectations of client put the project
teams as well as the project leader under noticeable duress. But this feeling of pressure disappears
when their actions beget a successful project result which is appreciated by the client and when their
individual/ team contribution is recognised and rewarded.
The three proven tracks (elaborated later) are based on actual implementation on major complex
hydrocarbon projects whose total installed cost varied from several hundred million dollars to few
billion dollars. The projects delivered successful results and the team members were rewarded well at
the end of project.
These three proven tracks are
1. Value Creation
2. Leadership Opportunity
3. Gain Share
These are further addressed in detail later.
3. Theoretical basis behind the three tracks
It is important to recognise that motivation ultimately comes from within a person. In this context,
Maslow’s hierarchy of needs is still a valid basis for a project manager to understand what motivates
the individual team member. While it is a fact that individual decides his behaviour, it is often possible
that a positive behaviour is also stimulated by external factors such as work environment,
opportunities for advancement, co-workers’ collaboration etc. Herzberg’s theory address this aspect.
Both these theories are detailed below at summary level.
3.1 Maslow’s hierarchy of needs
Abraham Maslow developed the Hierarchy of Needs model in 1940/50s and the Hierarchy of Needs
theory remains valid today for understanding human motivation, management training, and personal
development. Maslow's ideas surrounding the Hierarchy of Needs concerning the responsibility of
leader/ manager to provide a workplace environment that encourages and enables employees to fulfil
their own unique potential (self-actualization) are today more relevant than ever..
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6. Fig 2: Maslow’s original Five stage model of Hierarchy of needs.
While all the managers including project manager have the responsibility to understand the aspects of
human motivation, it is also equally important that there needs to be a frame-work and process where
the theory could be put in practice where an individual member
Clearly sees and feels proud that his/ her contribution has a tangible result which is
recognised by the peers, management and in some cases, the client
Is aware that management does recognise the individual potential and provides opportunity
for career enhancement
Gets excited to show/ share with the family and friends, a reward which is a direct result of
his/ her contribution and commitment.
The basic needs of Maslow’s model are fulfilled by the employer by providing a reasonably stable job
with right compensation and providing a good working environment. In general the background or
profile of team members working in IT/ ITES companies or Large EPC organisation, indicates that
they had transcended the basic two levels when they joined such a company. The reference to basic
needs is probably appropriate for companies that deal with direct field labour. The second level –
Safety needs may sometimes be relevant while managing the teams while the organisation has a
challenging business situation and this aspect is beyond the intent of coverage of this paper.
The social needs are taken care because of peer level interaction and being a team member in large
project. The good companies become great companies and projects become great projects by
ensuring/ establishing a frame work that addresses the top two levels of human needs.
Esteem needs and Self Actualisation needs are the key for performance on large EPC or IT/ ITES
project. Esteem needs come out of individual’s urge to attain a degree of importance emerges.
Esteem needs can be categorized as external motivators and internal motivators. Internally
motivating esteem needs are those such as self-esteem, accomplishment, and self respect. External
esteem needs are those such as reputation and recognition.
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7. (Maslow later improved his model to add a layer in between self-actualization and esteem needs: the
need for aesthetics and knowledge. These are the factors that are embedded in the value creation
theme mentioned later)
The three proven tracks mentioned earlier operate on the fact that an employee or project team
member operates at esteem need level in a large IT/ ITES or EPC company.
3.2 Herzberg's two-factor theory
Frederick Herzberg's two-factor theory, a.k.a. intrinsic/extrinsic motivation, concludes that presence of
certain factors in the workplace result in job satisfaction and some factors if absent lead to
dissatisfaction. The factors that motivate people can change over their lifetime, but "respect for me as
a person" is one of the top motivating factors at any stage of life. The theory is sometimes called the
"Motivator-Hygiene Theory" and/or "The Dual Structure Theory."
Herzberg distinguished between:
Motivators; (e.g. challenging work, recognition, responsibility) which give positive
satisfaction, and
Hygiene factors; (e.g. status, job security, salary and fringe benefits) that do not motivate if
present, but, if absent, result in de-motivation.
The name Hygiene factors is used because, like hygiene, the presence will not make you healthier,
but absence can cause health deterioration. Generally in reputed companies, Hygiene factors are
taken care by the employment and working theory.
Value Creation and Leadership Opportunity offer the merits of Motivator in terms of challenging work
and responsibility, while the Gain Share offers the recognition and reward frame-work in a project
environment.
4. Three proven tracks
4.1 Value creation
Core principle for Value Creation is recognition and rewarding of implementable idea. While Value
Creation should be the principle aim of any business entity, projects provide a platform for seeing
immediate results.
Creating value for customers helps sell products and services, while creating value for shareholders.
In a project, the value-creation effort during execution will win customer confidence and more often
can result in repeat business. In a project context, author would like to define Value Creation as
“Innovation in execution that has direct positive impact on cost, schedule or quality of the
product or service.”
However promoting Value Creation in projects is possible when
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8. In rate reimbursable projects, there is client buy-in in recognising and rewarding the value
creation efforts by the project team
Company’s senior management support Value Creation initiatives that are implemented by
project manager and appreciation of the long-term positive impact of such initiatives in the
company.
People are the key for Value Creation. The initiative in the company should be inspiring
enough for employee to be excited to contribute ideas and solutions and rewards should be
treated as means to thank the employee for the contribution than making it as a part of the
age-old misused ―Carrot-Stick‖ approach.
Organisation need for Value Creation in Projects: In a world where nearly everyone faces
abundant choices, the challenge for all businesses is to develop and sustain a uniquely attractive
proposition for both customers and employees. But the hardest challenge is to do this in a way that
also creates value. In a project, holding the functional leads/ managers to this standard means
continually asking, "What exactly do we do that's different from the competition, and how will this
enable us to create value?" By instilling this discipline, any project organisation can make their project
people better managers and create an environment that attracts only people who adhere to the
highest standards for business performance and personal achievement. When a team member
delivers a value added service or product to the client, it reinforces his/ her confidence in tested
professional skills and instills a sense of professional achievement. Implementation of Value Creation
initiatives in a company thus addresses the esteem needs of the employee/ project team members.
Value Creation advantage: It is observed in large capital projects that the cost optimization is
achieved through
Value Engineering (VE) during early stages of the project such as Front End Engineering
Design (FEED) where upto10 % reduction in TIC is achievable. VE however needs specialist
skills.
Value Improvement Plans (VIPs) at EPC phase, where cost effective measures and designs
are implemented in project to further extract 3-5% saving in TIC.
In a Lumpsum services contract, a tool or a program that saves both time and effort required to
produce a deliverable is Value Creation. In a EPCm reimbursable contract, an equipment engineer
agrees with client to remove some redundant or dated requirements, thus resulting in cost and
schedule, is Value Creation. Fig 3 shows how relative capitals costs vary with implementation of
Value Creation efforts. Both VE and VIPs are elaborated below.
4.1.1 Value Engineering (VE)
Value engineering (VE) is a specialist systematic method to improve the "value" of goods or products
and services by using an examination of function. In EPC/ EPCm project context, VE is a disciplined
method used during Front End design, often involving the use of an internal or external VE consultant,
aimed at eliminating or modifying items that do not contribute to meeting business needs. VE is a
creative and organized method for optimizing the cost and performance of a facility. It is a function-
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9. oriented, systematic approach to eliminate and prevent unnecessary costs. The purpose of a VE
study is to improve decision making and obtain lowest life-cycle cost without reducing quality.
4.1.2 Value Improvement Plan
This is structured process to promote, recognise and reward small savings during the detailed
engineering/ EPC phase of project. The project team members are encouraged to think creatively to
optimise the design solutions to deliver a positive cost advantage to the client.
The fundamental requirements to implement Value Improvement Plan are:
Cost awareness among team members on the equipment/ product or tools they specify on
projects
No Silo approach: The net positive impact considering the influence of value improvement
suggestion on other functions. For example a less costly rotating equipment actually needs
higher electrical load requirement, thus nullifying the cost advantage, is NOT a value
improvement suggestion
Recognition and reward for suggestions and persons/ teams that go extra-mile on suggesting
Value Improvement solutions in the project.
Fig 3. Relative Capital Costs with Value Creation Efforts
As mentioned earlier Value Engineering is a specialist activity performed in front end engineering
stage of the project, but Value Implementation is practicable in any EPC or EPCm project. Author has
seen motivational levels of the team members at high when the VIP suggestions and solutions are
recognised, rewarded and implement in large capital projects, especially when such recognition or
appreciation is directly from the client or senior management.
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10. 4.2 Leadership Opportunity
Key principle in providing leadership opportunity is recognising the talent and rewarding the high
performance. The Leadership Opportunity concept is an extension to The Job Characteristics Model
(JCM), as designed by Hackman and Oldham which attempts to use job design to improve employee
motivation. They have identified that any job can be described in terms of five key job characteristics:
Skill Variety: the degree to which a job requires different skills and talents to complete a
number of different activities.
Task Identity: this dimension refers to the completion of a whole and identifiable piece of
work versus a partial task as part of a larger piece of work
Task Significance: is the impact of the task upon the lives or work of others
Autonomy - is the degree of independence or freedom allowed to complete a job
Task Feedback - individually obtaining direct and clear feedback about the effectiveness of
the individual carrying out the work activities
Jobs or assignments that are high in motivating potential must be high on at least one of the first three
factors that lead to experienced meaningfulness, and also must be high on both Autonomy and
Feedback.
1. Leadership Opportunity with specific project roles
2. Leadership Opportunity with volunteering assignments.
4.2.1 Leadership Opportunity in a specific project assignment
Many companies have leadership development programs which focus on providing necessary
knowledge and skills for future leaders. What is further needed is a follow through, by providing
specific leadership assignments. Though it is recognized that training in itself is not sufficient to
develop leaders, this follow through effort is often missing in some companies.
Author has mentored few employees in the companies he worked for. The potential leaders were
recognized and provided visibility in the senior management circle. This helped in getting support in
providing specific project assignment opportunities. For example, a young engineer with 3 to 4 years
experience was given a responsibility as lead engineer though senior persons could be chosen for it.
Safety net was provided through continuous guidance. This engineer later got a project management
assignment in US and has established himself as a dependable project manager. In another case
leadership potential was seen in a Lead engineer and he was given a Engineering Manager
responsibility in a project which he did superbly well.
Author himself was trained in risk management by a Vice President in the company he worked for,
before being given a concurrent responsibility as risk manager.
The key aspects in providing a Leadership opportunity in a project are
Identify the right talent
Provide the necessary training and support
Provide safety net in terms mentoring, coaching and feedback
And let the results speak themselves.
Never force -fit
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11. 4.2.2 Leadership Opportunity in Volunteering assignments
As many of us know, PMI also recognized volunteering as a leadership opportunity. Volunteering
opportunities do exist in most of the EPC(m) projects. Author sees the Volunteering Opportunities in a
project context should be based on the following principles:
1. Employees/ Project Team members as a group would decide which non-profit activities to
support.
2. Employees would manage the effort.
3. Project provides support in terms of funding logistic and other support
For many of our employees, managing a volunteer event gives them first level leadership experience
without risking company revenue or profits. It’s a wonderful opportunity for these employees to learn
important management skills, gain experience talking to a group and grow in confidence.
A post-event feedback loop, in which we discuss what we learned from the event and what we could
have done better, helps the event manager further hone leadership skills. Author is generally inspired
to see how many natural leaders the company has and the number of employees interested in
learning how to manage.
A recent example is the volunteering activity taken up in a mega project in Orissa, where the few
members of the project construction team extended a helping hand to flood victims in Paradip area.
This effort was well recognized by client as well as senior management in the company.
4.3 Gain Share
Gain Share is an employee motivational technique where compensation is given for measurable
performance gains in such areas as sales, customer satisfaction, and cost reductions. The
compensation is often given to employee teams for achieving specified goals. Applying this concept
to a project should be based on the following fundamentals:
There is buy-in from senior management.
Because of the project team’s contribution, the project has potential to perform commercially
and professionally well. That is, the actual profit in the project can be higher than the as-sold
basis, without compromising the good-will of image of the company which is necessary for
repeat business
The individual has contributed positively, without leaving the project or the company at crucial
time. (reward basis)
Author actually implemented successfully Profit-Share on couple of projects, one was one rate
reimbursable contract and other on Lumpsum Engineering-Procurement services contract with an
EPC Contractor. Profit-share amount was disbursed at the end of the contract. The amounts were
significant with the team members in the project. The key was of course, that top management in the
company had seen the merit of the Gain-share (Profit-share) scheme and approved the proposals.
Based on the positive experience on the projects, author would like to recommend the following
process for Project-Profit-Share scheme, hence forth referred as GS Scheme
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12. A committee is formed early in the project with a team consisting of the senior members of
project team Generally Project Manager, Project Procurement Manager, Project Business
manager and Project engineering manager and at least one person from the operation
management such as Director – projects or his delegate.
Common unit (generally man-hours) is used for measurement of individual efforts
Effectiveness of Individuals contribution is formally assessed by his supervisor and the
functional group leaders’ performance is formally assessed by the project manager and
project manager’s performance by the sponsor. This factor will be the pay-out to the
employee.
As company takes care of several employee related costs such as space, computers,
facilities, an agreed percentage (normally 50%) is accounted into profit at completion.
Employee is not penalized for any profit under-realized in a project, i,e negative profit-share is
not encouraged, as an employee will see it unfair treatment because of several factors
beyond his/her control
So if P(b) is the profit baseline or as-sold profit and P(a) is actual profit realized at the end of the
project. Then an amount P(a) – P(b) is the amount qualified for Gain Share between the employee
and the company. GS amount can be any amount between 30-50% of this qualified amount.
Some part of the GS money can be allocated towards celebrating the extra-ordinary project success,
giving mementos to the project team members and contribution to recognizing special extra-ordinary
efforts. It is also important to recognize and reward other stake holders who contributed to the project
indirectly though their efforts are not directly billed to the project or client. Some Persons or functions
or departments contribute more significantly in terms of positive impact on the project and man-hours
spent on the project are not in proportion. Part of the GS amount needs to be kept aside to recognize
specific contributions which otherwise are not rewarded earlier. For example, a procurement
specialist could have negotiated a significant reduction in price of major equipment, but he would
have spent less number of man-hours or it could be a case of HR specialist who supported finding a
quick replacement for critical position in the project.
The remaining amount can be distributed to the employees in proportion of the GS factor, which as an
example can be as follows:
GS factor = (Efforts hours by Team member/ Total effort hours on the project) x Performance rating of
the person <= 1.0).
Reward Amount = GS Factor x GS Amount.
It is important that the entire GS program is a result of well thought-out and deliberated strategy to
ensure that the positive result is the objective, not the reward in itself. Tools like DeepDive can be
implemented to ensure that right amount (of) brainstorming and discussion is done prior to
announcing a GS scheme on any project.
5. Preparatory work for value creation and Gain share
The three tracks mentioned above are definite tools to motivate teams for results. Value Creation and
Gain Share need some ground work or terms of reference, to be created early in the project. The
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13. actual implementation plans for the above strategies can effectively found by using the tools like the
DeepDive. Here is the brief summary of the above tool for the benefit of reader.
The DeepDive™ is a combination of brainstorming, prototyping and feedback loops merged into an
approach that executives can use with teams to help develop solutions for specific business
challenges or in case of projects specific project challenges. The DeepDive™ can be done in as little
as half a day, or to help achieve results over a longer period. The typical project challenges to be
considered for such exercise will be
How to deliver the project well on schedule given the current challenges
How to demonstrate to client that the choice of contractor/ consultant is the best and they are
able to see the value-add such as reduction in Total Installed Cost (TIC) or schedule.
How to enhance the profitability of the project, given the fact the bid was aggressive and
highly competitive.
TM
The DeepDive consists of a professionally produced team toolkit, including facilitators’ guides,
participants’ guides, wall-charts, quick-reference cards, PowerPoint templates and DVDs —
everything required to facilitate the DeepDive™ methodology.
6. Leadership qualities and Motivating for Results
Leadership literature is abundant in the market place. However the following are the minimum
leadership qualities that are needed to implement such strategies on project.
Visionary Leadership: Ability to see the whole picture and articulate the broad perspective to
other stake holders. By doing so, Leader should be able to create a common purpose that
mobilises people and coordinates their efforts to single, coherent and agile project team.
Trust: Vision becomes empty slogan, unless Project leader builds mutual trust through
predictable behaviour, candour, sharing information and power. Trust binds the people
together to build a strong and resilient project organisation.
Creativity: To promote smart solutions that outpace excessive hard work.
Integrity: Leaders working with a moral compass, earn trust and confidence of the team.
7. Other Aspects of Motivating for Results
There are several other means to motivate teams to deliver results such as team building sessions,
Tool Box Meetings, small rewards/ tokens of appreciation. Introducing stress relieving exercises was
also seen to help productivity in projects involving a high degree of CAD design.
Understanding, empathising and if possible counselling of project team members when they have
personal problems, is another positive quality project manager of project leader should possess. Such
attitude commands respect and commitment from team members.
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14. Specific Training which can be immediately implemented in a project is another great source of
motivation. As an example, a project manager or Project controls manager can be given a risk
management training prior to performing a role of risk manager on a project.
8. Conclusions
Project is a best platform for an employee to contribute effectively and see tangible results with in
duration of a project. Also, for management it is easier to measure performance in context of project
delivery. The three proven tracks described in this paper are implementable tracks in any project to
deliver superior project results by the project teams motivated to do so. The three tracks provide
source of motivation at individual level as well as project team level. Major multi-national clients and
hence their contracts recognise the value of these tracks and successfully implement them in
projects. It will be great to see more companies in India, implement such concepts, thus derive benefit
and build excited teams that deliver outstanding results.
9. References
1. Maslow, Abraham (1954). Motivation and Personality. New York: Harper.
2. Herzberg, Frederick (1959), The Motivation to Work, New York: John Wiley and Sons
3. R. Pritchard & E. Ashwood (2008). Managing Motivation. New York: Taylor & Francis Group.
4. J.R. Hackman and G.R. Oldham. Work Redesign. Upper Saddle River, N.J.: Pearson Education,
Inc, 1980; pp 78-80.
5. Rich Horwath. Deep Dive: The Proven Method for Building Strategy, Focusing Your Resources,
and Taking Smart Action. Greenleaf Book Group Press.
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15. 10. Author’s Profile
V T Chandrasekhar Rao is a project management
professional with nearly 30 years of experience in
execution of EPC(m) projects in refineries,
petrochemicals, power plants and steel plants. Mr
Rao has worked on large complex projects in India,
North America and UK and gathered extensive
experience of international best practices in project
management. He is certified PMP and PMI-RMP. In
addition to executing projects, Mr. Rao has
conducted training on project execution and risk
management for project managers and lead
engineers. His project execution experience includes
entire project cycle in Engineering and Construction
Industry starting from Feasibility studies to Front End
Design to detailed engineering and construction
completion.
Email: vtchandrasekhar_rao@fwuk.fwc.com
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