Tag Archives: Benefits Realization

The reference case for management reserves

Risk management and Earned Value practitioners, and a range of standards, advocate the inclusion of contingencies in the project baseline to compensate for defined risk events. The contingency may (should) include an appropriate allowance for variability in the estimates modelled using Monte Carlo or similar; these are the ‘known unknowns’.  They also advocate creating a management reserve that should be held outside of the project baseline, but within the overall budget to protect the performing organisation from the effects of ‘unknown unknowns’.  Following these guidelines, the components of a typical project budget are shown below.

PMBOK® Guide Figure 7-8

The calculations of contingency reserves should be incorporated into an effective estimating process to determine an appropriate cost estimate for the project[1]. The application of appropriate tools and techniques supported by skilled judgement can arrive at a predictable cost estimate which in turn becomes the cost baseline once the project is approved. The included contingencies are held within the project and are accessed by the project management team through normal risk management processes. In summary, good cost estimating[2] is a well understood (if not always well executed) practice, that combines art and science, and includes the calculation of appropriate contingencies. Setting an appropriate management reserve is an altogether different problem.

 

Setting a realistic management reserve

Management reserves are an amount of money held outside of the project baseline to ‘protect the performing organisation’ against unexpected cost overruns. The reserves should be designed to compensate for two primary factors.  The first are genuine ‘black swans’ the other is estimating errors (including underestimating the levels of contingency needed).

The definition of a ‘black swan’ event is a significant unpredicted and unpredictable event[3].  In his book of the same name, N.N. Taleb defines ‘Black Swans’ as having three distinct characteristics: they are unexpected and unpredictable outliers, they have extreme impacts, and they appear obvious after they have happened. The primary defence against ‘black swans’ is organisational resilience rather than budget allowances but there is nothing wrong with including an allowance for these impacts.

Estimating errors leading to a low-cost baseline, on the other hand, are both normal and predictable; there are several different drivers for this phenomenon most innate to the human condition. The factors leading to the routine underestimating of costs and delivery times, and the over estimating of benefits to be realised, can be explained in terms of optimism bias and strategic misrepresentation.  The resulting inaccurate estimates of project costs, benefits, and other impacts are major source of uncertainty in project management – the occurrence is predictable and normal, the degree of error is the unknown variable leading to risk.

The way to manage this component of the management reserves is through the application of reference class forecasting which enhances the accuracy of the budget estimates by basing forecasts on actual performance in a reference class of comparable projects. This approach bypasses both optimism bias and strategic misrepresentation.

Reference class forecasting is based on theories of decision-making in situations of uncertainty and promises more accuracy in forecasts by taking an ‘outside view’ of the projects being estimated. Conventional estimating takes an ‘inside view’ based on the elements of the project being estimated – the project team assesses the elements that make up the project and determine a cost. This ‘inside’ process is essential, but on its own insufficient to achieve a realistic budget. The ‘outside’ view adds to the base estimate based on knowledge about the actual performance of a reference class of comparable projects and resolves to a percentage markup to be added to the estimated price to arrive at a realistic budget.  This addition should be used to assess the value of the project (with a corresponding discounting of benefits) during the selection/investment decision making processes[4], and logically should be held in management reserves.

Overcoming bias by simply hoping for an improvement in the estimating practice is not an effective strategy!  Prof. Bent Flyvbjerg’s 2006 paper ‘From Nobel Prize to Project Management: Getting Risks Right[5]’ looked at 70 years of data.  He found: Forecasts of cost, demand, and other impacts of planned projects have remained constantly and remarkably inaccurate for decades. No improvement in forecasting accuracy seems to have taken place, despite all claims of improved forecasting models, better data, etc.  For transportation infrastructure projects, inaccuracy in cost forecasts in constant prices is on average 44.7% for rail, 33.8% for bridges and tunnels, and 20.4% for roads.

The consistency of the error and the bias towards significant underestimating of costs (and a corresponding overestimate of benefits) suggest the root causes of the inaccuracies are psychological and political rather than technical – technical errors should average towards ‘zero’ (plusses balancing out minuses) and should improve over time as industry becomes more capable, whereas there is no imperative for psychological or political factors to change:

  • Psychological explanations can account for inaccuracy in terms of optimism bias; that is, a cognitive predisposition found with most people to judge future events in a more positive light than is warranted by actual experience[6].
  • Political factors can explain inaccuracy in terms of strategic misrepresentation. When forecasting the outcomes of projects, managers deliberately and strategically overestimate benefits and underestimate costs in order to increase the likelihood that their project will gain approval and funding either ahead of competitors in a portfolio assessment process or by avoiding being perceived as ‘too expensive’ in a public forum – this tendency particularly affects mega-projects such as bids for hosting Olympic Games.

 

Optimism Bias

Reference class forecasting was originally developed to compensate for the type of cognitive bias that Kahneman and Tversky found in their work on decision-making under uncertainty, which won Kahneman the 2002 Nobel Prize in economics[7]. They demonstrated that:

  • Errors of judgment are often systematic and predictable rather than random.
  • Many errors of judgment are shared by experts and laypeople alike.
  • The errors remain compelling even when one is fully aware of their nature.

Because awareness of a perceptual or cognitive bias does not by itself produce a more accurate perception of reality, any corrective process needs to allow for this.

 

Strategic Misrepresentation

When strategic misrepresentation is the main cause of inaccuracy, differences between estimated and actual costs and benefits are created by political and organisational pressures, typically to have a business case approved or a project accepted. Reference class forecasting will still improve accuracy, but the managers and estimators may not be interested in this outcome because the inaccuracy is deliberate. Biased forecasts serve their strategic purpose and overrides their commitment to accuracy and truth; the application of reference class forecasting needs strong support from the organisation’s overall governance functions.

 

Applying Reference Class Forecasting

Reference class forecasting does not try to forecast specific uncertain events that will affect a particular project, but instead places the project in a statistical distribution of outcomes from the class of reference projects.  For any particular project it requires the following three steps:

  1. Identification of a relevant reference class of past, similar projects. The reference class must be broad enough to be statistically meaningful, but narrow enough to be truly comparable with the specific project – good data is essential.
  2. Establishing a probability distribution for the selected reference class. This requires access to credible, empirical data for a sufficient number of projects within the reference class to make statistically meaningful conclusions.
  3. Comparing the specific project with the reference class distribution, in order to establish the most likely outcome for the specific project.

The UK government (Dept. of Treasury) were early users of reference class forecasting and continue its practice.  A study in 2002 by Mott MacDonald for Treasury found over the previous 20 years on government projects the average works duration was underestimated by 17%, CAPEX was underestimated by 47%, and OPEX was underestimated by 41%.  There was also a small shortfall in benefits realised.

 

This study fed into the updating of the Treasury’s ‘Green Book’ in 2003, which is still the standard reference in this area. The Treasury’s Supplementary Green Book Guidance: Optimism Bias[8] provides the recommended range of markups with a requirement for the ‘upper bound’ to be used in the first instance by project or program assessors.

These are very large markups to shift from an estimate to a likely cost and are related to the UK government’s estimating (ie, the client’s view), not the final contractors’ estimates – errors of this size would bankrupt most contractors.  However, Gartner and most other authorities routinely state project and programs overrun costs and time estimates (particularly internal projects and programs) and the reported ‘failure rates’ and overruns have remained relatively stable over extended periods.

 

Conclusion

Organisations can choose to treat each of their project failures as a ‘unique one-off’ occurrence (another manifestation of optimism bias) or learn from the past and develop their own framework for reference class forecasting. The markups don’t need to be included in the cost baseline (the project’s estimates are their estimates and they should attempt to deliver as promised); but they should be included in assessment process for approving projects and the management reserves held outside of the baseline to protect the organisation from the effects of both optimism bias and strategic misrepresentation.  As systems, and particularly business cases, improve the reference class adjustments should reduce but they are never likely to reduce to zero, optimism is an innate characteristic of most people and political pressures are a normal part of business.

If this post has sparked your interest, I recommend exploring the UK information to develop a process that works in your organisation: http://www.gov.uk/government/publications/the-green-book-appraisal-and-evaluation-in-central-governent

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[1] For more on risk assessment see: http://www.mosaicprojects.com.au/WhitePapers/WP1015_Risk_Assessment.pdf

[2] For more on cost estimating see: http://www.mosaicprojects.com.au/WhitePapers/WP1051_Cost_Estimating.pdf

[3] For more on ‘black swans’ see: https://mosaicprojects.wordpress.com/2011/02/11/black-swan-risks/

[4] For more on portfolio management see: http://www.mosaicprojects.com.au/WhitePapers/WP1017_Portfolios.pdf

[5] Project Management Journal, August 2006.

[6] For more on the effects of bias see: http://www.mosaicprojects.com.au/WhitePapers/WP1069_Bias.pdf

[7] Kahneman, D. (1994). New challenges to the rationality assumption. Journal of Institutional and Theoretical
Economics, 150, 18–36.

[8] Green Book documents can be downloaded from: http://www.gov.uk/government/publications/the-green-book-appraisal-and-evaluation-in-central-governent

The maturing or ‘agile’

kitten-yogaA deliberately provocative article on Linked-In asks the question is ‘Agile Dead?’; a discussion on how various aspects ‘agile’ invented by different individuals and groups are fading from prominence follows.  Agile is not my area of expertise but the article seems designed to generate attention without really saying anything new.

What the article did prompt in my thinking was the question ‘What is agile?’. Concepts vary from:

  • The Agile Manifesto (which is basically 101 common sense) created to overcome the failures of rigid IT development that required a 100% complete fully detailed plan before people really knew what the problem was (often referred to as ‘waterfall’ development but nothing like the original ideas in the waterfall concept).
  • Through to the agile anarchist community who’s mantra seems to be ‘trust us all of our teams are above average’ and we will make you really nice software without any discipline (a concept that ignores the mathematical fact that 50% of any group have to be below average….).
  • Then there are all of the various ‘agile’ methods from ‘Scrum’ to ‘XP’.

Ergo ‘Agile’ or ‘agile’ can mean virtually anything to anyone.  In contrast to all of these specific variants, I would suggest at its root ‘agile’ is a concept or philosophy rather than a methodology or process; useful philosophies rarely ‘die’.

What is emerging I believe is a gradual understanding that the false concepts of ‘command and control[1] and ‘certainty, based on a fully detailed plan[2] are slowly disappearing from management thinking (although there are still plenty of recalcitrant ‘fossils’ embedded in far too many management structures) – detailed planning months or years in advance of the work, done at a time where the work is imprecisely understood cannot control an uncertain future regardless of contract conditions and the exhortation of management. These ideas are slowly being replaced by an adaptive approach to projects that engages stakeholders and focuses on actually achieving the stakeholder’s objectives and realising benefits, ie, an ‘agile’ approach.

Every project and every project management system can benefit from some elements of ‘agile’ (which overlaps with many other concepts such as ‘light’, ‘lean’, and ‘last planner’. The key tenets seem to be:

  • involve your stakeholders,
  • trust your team,
  • don’t waste time planning in detail things you don’t have detailed knowledge of[3],
  • adapt to changing circumstances, and
  • wherever possible avoid a ‘big bang’ approach – iterative and incremental developments mitigate the risk of catastrophic failure.

The agile manifesto certainly highlighted these important concepts but it did not invent them. These elements of fundamental common sense are ignored in far too many situations. What the agile manifesto and the subsequent changes in attitude have done is refocus on the importance of people and relationships in any project.

On the ‘Agile front’, many of the ridiculous excesses promoted by consultants and experts are certainly fading into obscurity. Executives are learning that ‘agile’ is not a cure all ‘silver bullet’ it needs pragmatic management and proper planning the same as everything else, it just the way planning and managing is done that differs; for more on this see: http://www.mosaicprojects.com.au/PDF_Papers/P109_Thoughts_on_Agile.pdf

Certainly there has been a realisation that the agile anarchist’s concept of ‘trust us’ (and their abandonment of any pretence of strategic planning and documentation) really does not work. An appropriate degree of planning, coordination and documentation are essential to achieve success, particularly on larger projects and in the longer term when the inevitable updates and maintenance cut in.

In summary, if ‘agile’ is a philosophy that prioritises people over rigid process, and it will change and adapt over time; it’s not ‘dead’ but it is evolving into a pragmatic management process. Certainly some of the narrowly defined concepts and methodologies branded as ‘agile’ are failing and being abandoned as ‘passing fads’ and new adaptations are emerging, but that’s normal. The core underpinnings of the original Agile Manifesto are still alive and well.

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[1] In the 1950’s Peter Drucker identified the need for a new way of managing ‘knowledge work’, see: http://www.mosaicprojects.com.au/PDF_Papers/P070_A_Simple_View_of_Complexity.pdf

[2] “All models are wrong, but some are useful” (Prof. George E.P. Box), and every estimate used in the plan is wrong to a greater or lesser degree, see: http://www.mosaicprojects.com.au/WhitePapers/WP1051_Cost_Estimating.pdf

[3] For more on ‘rolling wave’ planning see: http://www.mosaicprojects.com.au/WhitePapers/WP1060_Rolling_Wave.pdf

The Shergold Report calls for better governance and better project controls!

Shergold2The recently released report by Professor Peter Shergold, ‘Learning from Failure: Why large government policy initiatives have gone so badly wrong in the past and how the chances of success in the future can be improved’ (the Shergold Report), sets out a framework designed to improve the delivery of major Australian Government programs.  But the framework is not limited to government; the concepts can be usefully applied by any organisation seeking to initiate a major program of works.

The report focuses on making practical recommendations to enhance the capacity of the Australian Government to:

  1. Design and implement large public programmes and projects;
  2. Develop robust and effective governance and accountability arrangements for such programmes and projects;
  3. Understand the broader environment in which programmes and policies are designed and implemented;
  4. Identify, understand and manage risks; and
  5. Provide accurate, timely, clear and robust advice to ministers and within the APS.

Substitute ‘organisation’ for ‘Australian Government’ and ‘senior stakeholders and governors’ for ‘ministers and within the APS’ and the value of the document to the wider community becomes apparent.

The Shergold Report does not make specific recommendations to the government; rather it reaches a series of immutable conclusions based on the narrative in each section and is intended to spark public comment and discussion from a wide spectrum of people both within and outside of the Australian Public Service.

The Shergold Report contains 28 proposals for improvement; the key conclusions are reproduced below are reformatted as recommended good practices for any organisation planning to undertake a major program of works:

Ensuring Robust Advice: Good governance is founded on good policy, and good policy depends on good advice. To this end, executives and managers should be held accountable for the quality of advice they provide. Significant advice should be provided in writing and records maintained.

Decision Making: The importance of decision-making, and the circumstances under which it occurs, underscore the need to have well-functioning support systems in place.

Creating a Positive Risk Culture: Moving the organisation from reactive, defensive risk management; to proactive, performance-focused risk engagement. The major challenge is to embed the new approaches within a strong risk culture. This requires: understanding appetites for risk on individual programs and across the portfolio, appointing a Chief Risk Officer, at a senior executive level, proposals should be supported by an endorsed Risk Management Plan, and preparing a bi-annual whole-of-organisation Risk Assessment for the governing body, analysing the system-wide impact of operational, financial, strategic, legislative and procurement risks faced by the organisation.

Enhancing Program Management: Program and project management are too often seen as control activities; they are actually creative processes!  They require discipline and professional expertise to maintaining single point accountability while being open and flexible to the opportunities of networked governance structures. To achieve this requires:

  • Defined standards of proficiency for project and program managers, with active support through career development opportunities, continued education and participation in professional communities of practice such as the upcoming Project Governance and Controls Symposium.
  • For each project or programs[1], a clear understanding of who accepts end-to-end responsibility for managing implementation (typically the Sponsor[2]), wields delegated authority and where accountability resides.

Opening up to diversity: A diversity of perspectives in the workplace and the boardroom improves performance. Diversity increases critical analysis of information, results in better decision-making and challenges ‘groupthink’. Program advisory groups should be established that include representation drawn from outside the organisation in order to capture a broader diversity of perspectives and knowledge.

Embracing adaptive governance: Organisations that thrive are flexible. They seize opportunities, learn rapidly and recognise that partners will be needed to deliver long-term goals. When they enter uncharted territory they respond fast, start small, test new approaches, watch market responses, learn from doing, scale-up their activity or, if necessary, try again.

Most importantly, they are honest about failure. They recognise that mistakes happen, interrogate why they occurred and set in place remedial measures to ensure that they perform better next time. Failure and its lessons are an inevitable part of entrepreneurial life but are also central to maintaining organisational competitiveness. This means (where possible) new proposals should include a trial or demonstration stage, allowing new approaches to be developed fast and evaluated early. Large projects should incorporate staged decision-making[3].

Conclusions

Good governance is focused on creating good outcomes, not developing a straightjacket of impenetrable and restrictive procedures – the person or organisation that has never made a mistake has never made anything! The art of effectively using project and programs to create a new and desirable future is effective governance, backed by prudent risk management and effective, adaptive delivery and change management processes. The Shergold Report concludes that:

  1. Policy is only as good as the manner in which it is implemented
  2. Policy advice can only be frank and fearless if it is supported by written argument.
  3. Deliberations, oral and in writing, need to be protected.
  4. Deliberative documents need to be preserved, whether written on paper or delivered by digital means.
  5. It is up to ministers (the governing body), not officials (management), to make policy decisions.
  6. The effective management of risk is just as important in the public sector as in the private – perhaps more so.
  7. As the public service fully commits itself to measuring results by outcomes, program management needs to be accorded far greater professional status.
  8. Good governance increasingly depends on collaboration across sectors.
  9. The APS needs to be further opened up. Diversity and external inputs to the organisation.
  10. An adaptive government (organisation) can respond rapidly to changing circumstances without taking unnecessary (and unforeseen) risks.

The one area missing from the Shergold Report is recognition of the importance and difficulty of implementing organisational change (and the disciplines of change management and benefits realisation). The concepts are implicit in many aspects of the report but would have benefitted from direct discussion.

These limitations aside, the Shergold Report is a very deep and well considered document, well worth the effort of reading by both private and public sector mangers and governors. It highlights failures and the learning that can be taken from the experiences to improve future outcomes. To quote Confucius “By three methods we may learn wisdom: First, by reflection, which is noblest; Second, by imitation, which is easiest; and third by experience, which is the bitterest”. Learning from other’s experience may not be the ‘noblest’ option but is far preferable to repeating avoidable mistakes.

We will be commenting further on this report in future posts and I’m sure it will feature prominently in discussions at the upcoming Project Governance and Controls Symposium that is being held in Canberra in May.

Shergold1

The full report can be downloaded from: http://www.apsc.gov.au/publications-and-media/current-publications/learning-from-failure

From a completely different source, the Australian Infrastructure Plan Priorities and reforms for our nation’s future (Feb. 2016), recommendations under Chapter 9 – Governance calls for very similar processes to the Shergold Report.  These reports, and many previous, have consistently promulgated the same message.  We know what needs to be done, understanding why its not being done is the real challenge.


 

[1] To understand the difference between a project and a program see: http://www.mosaicprojects.com.au/WhitePapers/WP1002_Programs.pdf

[2] For more on the role of the Sponsor see: http://www.mosaicprojects.com.au/WhitePapers/WP1031_Project_Sponsorship.pdf

[3] For more on ‘gateway reviews see: http://www.mosaicprojects.com.au/WhitePapers/WP1092_Gateways-Scorecards.pdf

Some ideas for making project management effective and efficient in 2016

SuccessIt’s a New Year and by now most of us will have failed to keep our first set of New Year resolutions! But it’s not too late to re-focus on doing our projects better (particularly in my part of the world where summer holidays are coming to an end and business life is starting to pick up). Nothing in the list below is new or revolutionary; they are just good practices that help make projects successful.

Most projects that fail are set up to fail by the organization and senior management (see:  Project or Management Failures?).  80% of projects that fail don’t have a committed and trained project sponsor. An effective project sponsor will:

  1. Give clear project objectives.
  2. Help craft a well‐defined project scope.
  3. Remove obstacles that affect project success.
  4. Mediate disagreements with other senior stakeholders.
  5. Support the project manager.

The role of the project or program sponsor is outlined in: WP1031 Project & Program Sponsorship.

Customers or end‐users are critically important to the success of ‘their project’. Unfortunately there is an extreme shortage of ‘intelligent customers’.  A ‘good customer’ will:

  1. Help refine the project scope – no one gets it 100% correct first time.
  2. Convey requirements fully and clearly
    (see: WP 1071 Defining Requirements).
  3. Avoid changing their minds frequently.
  4. Adhere to the change management process.

Every project team needs expertise – this is frequently provided by external experts. Subject‐matter experts should:

  1. Highlight common pitfalls.
  2. Help rather than hinder decision making.

The work of the project is done by ‘the team’. A committed and motivated project team will:

  1. Buy into the project’s objectives.
  2. Identify all of the required tasks and ensure the schedule is complete and accurate.
  3. Provide accurate estimates.
  4. Report progress and issues truthfully.
  5. Deliver their commitments.
  6. Focus on achieving the intended benefits
    (see: WP 1023 Benefits and Value).

Finally, the project manager

  1. Recognises that there is no “I” in project and works with the team and stakeholder community to create a successful outcome
  2. Resolves issues and risks that may arise from the 18 items above quickly, efficiently and effectively.

Making Projects WorkAlmost all of the items listed require action by people other than the project manager – this highlights the fact that projects are done by people for people and the key skill required by every project manager is the ability to influence, motivate and lead stakeholders both in the project team and in the wider stakeholder community.

For more on Making Projects Work see: http://www.mosaicprojects.com.au/Book_Sales.html#MPW

Is your steering committee costing $5000 per hour?

The loaded cost of running a committee of senior managers can easily exceed $5000 per hour once the opportunity costs are included.  Productive committees offset this by creating value, hopefully significantly greater than their running costs.  Project and program steering committees should be no different!

Steering_Committee

However, if the steering committee is simply focused on ‘governance’ it is highly unlikely to be generating any significant value.  At the management level where most steering committees operate there is very little governance decision making needed and conformance and assurance usually needs specialists.

The first four functions of governance defined in The Functions of Governance are:

  • Determining the objectives of the organisation: this is done by the organisation’s governing body and implemented through the strategic plan. The project should have been selected because it contributes to achieving the strategic plan, a function of portfolio management, but once the project has started it is rather too late.
  • Determining the ethics of the organisation: this is done by the organisation’s governing body; it is a duty of every manager to support the organisation’s ethical standards and ensure the people they are managing conform. But you do not need a committee to ensure this occurs, just the project manager’s line manager (usually the Sponsor).
  • Creating the culture of the organisation: again this is done by the organisation’s governing body; it is a duty of every manager to support the organisation’s cultural standards and ensure the people they are managing conform. But you do not need a committee to ensure this occurs, just the project manager’s line manager (usually the Sponsor).
  • Designing and implementing the governance framework for the organisation: this should be done before the project is started and include delegations of authority for expenditure and decision making and escalation paths. If it has not been done, one half hour meeting of the sponsor and a few key managers can set the delegations.

In summary, the aspects of governance that determine the way the organisation operates and how the project or program will fit into the overall governance framework does not need a monthly meeting of any type.  There are management responsibilities but these are vested in the responsible line manager, typically the Sponsor (see more on the role of a Sponsor).

The final two functions of governance are ensuring accountability by management and conformance by the organisation.  A steering committee can certainly focus on these aspects of governance but if they do, they are largely wasting their time and most of the $5000 per hour.  There are two fundamental reasons for this:

  1. It is extremely poor governance for a managing entity to seek to provide assurance that the people it is managing are conforming. Assurance oversight should be provided by an independent body.
  2. Most aspects of project surveillance and assurance require high levels of technical skill. It is highly unlikely any of the managers on a steering committee posses these skills (see more on project surveillance).

The organisational entity best suited for the work of surveillance and assurance is a PMO with appropriate support from management. If there is an effective PMO structure in place with the ability to identify shortcomings, backed up by responsible line management there is no need for another committee to second guess the process a few weeks later (see more on PMOs).

Dilbert-committee

Some of the completely unproductive ‘governance’ functions undertaken by ‘steering committees’ include:

  • Validating correct procedures have been followed (properly resourced PMOs are a better and cheaper option).
  • Discussing negative variances and allocating blame (management action is needed not committee discussions).
  • Second guessing management decisions after the event and interfering in the day-to-day running of the project (project professionals are not helped by interference from amateurs – even if they are senior managers).
  • Listening to lengthy reports on what has happened during the last month (effective reporting is all that is needed).

Being involved in this type of activity may make the steering committee members feel important but contributes little or nothing of value in a well governed and structured organisation; if the organisation is not well governed and structured the committee members would be far better off focusing on fixing the real problems.

 

Steering Committees can be highly valuable!

The constitution of most steering committees creates a real opportunity to add value to the overall management of a project or program, but only if the committee focuses on helping craft success. Steering committees typically include members from a range of areas within the organisational affected by the project and its deliverables. Therefore as a group its members are uniquely placed to assist the project manager and sponsor deliver a successful project by helping them steer a path through the organisational politics and stakeholder issues that confront any project or program.

This objective can be achieved by making the members of the steering committee personally responsible for the realisation of value from the organisation’s investment in project, and in particular for dealing with the organisational change and stakeholder issues that are outside of the project manager’s responsibilities. Some of the key responsibilities allocated to the steering committee may include:

  • Responsibility for preparing the organisation for the changes needed to make use of the project’s deliverables and the realisation of value.
  • Managing the interface between the project and the organisational change management work
  • Being available to assist in the management of stakeholder issues escalated from the project and/or identified in areas outside of the direct influence of the project.
  • Ensuring effective benefits management is in place for the life of the initiative (ie, it continues after the project is closed).
  • Dealing with any other aspect of organisational politics that may affect the work of the project or the on-going change initiative.
  • Making value based decisions on complex change proposals, including contributing positively to the resolution of intractable problems, to optimise the value outcome for the organisation.

Obviously the steering committee also needs to take an interest in the project its steering to success. The problem is these are all management activities, not governance activities (for more on this see Does organisational governance exist?).

Effective steering committees work with the project manager and sponsor to identify the external influences causing problems and help the project successfully navigate the organisational stakeholder environment. They also resist the urge to interfere in the actual running of the project or program. There is a world of difference between a collaborative and supportive approach focused on success and the negative approach adopted by so many steering committees that seems to translate ‘governance’ into giving the project manager a ‘hard time’ to ensure compliance with ‘due process’ even if this adds to the existing problems.

Are your organisation’s steering committees worth their hourly running costs?

Directing for Performance. The AICD moves beyond conformance.

The Australian Institute of Company Director’s (AICD) inaugural Australian Governance Summit 2016 focuses on ‘directing for performance’. The summit will explore beyond compliance to frame governance as a fundamental driver of performance outcomes.  A view we strongly support. For more information see: http://www.companydirectors.com.au/ags

The AICD have also identified a range of challenges and ‘disruptors’ that will affect organisations in 2016 presenting opportunities to organisations that can adapt and exploit the situation and threats to those who are slow. The vast majority of the threats and opportunities involve the rapidly changing digital economy which will require a radical change in the way most organisations integrate ICT into their businesses. Rather than being an enabler of business, in a connected world IT will increasingly be the business.

The Gartner IT Hype Cycle. See: http://www.gartner.com/newsroom/id/2819918

The Gartner IT Hype Cycle.
See: http://www.gartner.com/newsroom/id/2819918

One of the major challenges for organisations of all types identified by the AICD is a chronic lack of IT skills among Board members, with many boards populated by Directors who believe the digital economy will not affect their organisation because that are in the (fill in the gap) industry, not the IT industry.  The simple fact of life in the 21st century is that it does not matter if you are in agriculture, mining, manufacturing, personal services or any other business the successful organisations will be driven by the creation and use of information. Successful organisations will be able to find and use the ‘right information’ from the ever increasing torrent of ‘stuff’ being generated minute by minute:

Internet minuteRecognising the challenges and opportunities is one thing, adapting organisations to benefit from the changes is another!  What’s missing from the AICD evaluation this year is a focus on the central role of governing projects and programs to deliver the performance outcomes. Every change needs a project or program to create the ability to change backed up by organisational change capabilities to realise value.

Governing for change is the focus of ISO 21505, a project I’ve been involved with for the last 6 years, due for publication late 2016. It is also the focus of the annual Project Governance and Controls Symposium (PGCS), held in Canberra each May; see: http://www.pgcs.org.au/.

The challenge for organisations of all types and sizes is to adapt their governance and management structures to exploit the rapidly changing world.

Ethics and sustainability

Building ethics and sustainability into a project does not limit its success; in fact the reverse is often true. London’s Crossrail project is turning into an outstandingly successful project despite numerous challenges including finding hundreds of skeletal remains from the Black Death in the excavation for one of its major stations.  One can only hope Melbourne’s Metrorail project to construct a similar heavy rail tunnel under the CBD is as successful.

One factor in the Crossrail success has been the focus of the UK government on developing the skills needed to manage major infrastructure projects focused on the Major Projects Authority. This multi-year investment links proactive oversight and reporting, with research, support and training designed to create an organic capability to make major projects work (more on this later). Another is being prepared to ‘think outside of the square’ to solve major challenges – the focus of this post.

The challenge faced by Crossrail (and to a lesser extent Metrorail) is what to do with millions of tonnes of excavated materials when your project is situated under a major city??  The Crossrail solution has been innovative and coincidentally focused on restoring the environment of my youth.

Wallasea Island unloading wharf

Wallasea Island unloading wharf

Tidal marshlands may not be the scenery of choice for many but the marshes do have a fascination for those of us who grew up playing in and around them. My home and Charles Dickens 150 years earlier were the North Kent marshes.

Pip at the start of Great Expectations: “Ours was the marsh country, down by the river, within, as the river wound, twenty miles of the sea…”  and elsewhere “The dark flat wilderness, intersected with dykes and mounds and gates, with scattered cattle feeding on it… the low leaden line of the river… and the distant savage lair from which the wind was rushing, the sea…”

The landscape is not quite as bleak as it was (but still comes close in winter). The marshes have been drained and there are hops and orchards where there would once have been a windswept wilderness. But the Kent that Dickens knew can still be glimpsed if you know where to look, including the graves where Pip was first confronted by Magwitch in St. James’ churchyard at Cooling.

Seals at Wallasea Island

Seals at Wallasea

However, what may be seen as less than desirable real-estate to people not born on or near the marshes is essential habitat for a vast range of migratory birds and native wildlife.  Unfortunately, in the 150 years since Dickens, the draining, farming and urbanisation of the lands around the Thames and Medway estuaries has destroyed much of this valuable habitat. But the tide is turning.

The Royal Society for the Protection of Birds (RSPB) has been on the campaign trail for the last 30 years to re-establish the marshlands in North Kent and Essex.  One of their earlier successes was to convert the industrial landscape of the Cliffe marshes (my home village) into Cliffe Pools.

Cliffe Pools before the RSPB project

Cliffe Pools before the RSPB project

The chalk hills and clay marshes were home to whiting works from the early 1700s and Portland cement works from 1866. Several years after the last of the factories finally closed, the flooded quarries used to dredge clay and some of the former industrial sites were brought by the RSPB and are now a steadily improving wildlife reserve.

Cliffe Pools after the RSPB project

Cliffe Pools after the RSPB project

On the other side of the Thames, the RSPB and Crossrail have combined in to create a new marshland on a massively larger scale.  Wallasea Island in Essex is an on-going project that has used 3 million tonnes of clay from the Crossrail excavations to start the transformation of drained farmland into coastal wetlands and marshes.  Another 10 million tonnes will be required to complete future stages of the project.  The drained farmland was several meters below the high tide level, protected by sea walls (and under increasing threat from rising sea levels); coastal marshes need to be a bit above sea level. Massive amounts of fill were required for the ‘wild coast project’.

Crossrail solved their problem of ‘what to do with millions of tonnes of excavated spoil’ by shipping the materials to Wallasea Island and working with the RSPB to transform the area. A win-win outcome Crossrail were able to use costal shipping to remove the clay from London minimising road haulage and carbon emissions, and they avoided tipping costs from commercial landfill sites. 80% of the materials were transported by water or rail on a tonne per kilometer basis. The RSPB got a head start on a major project to reinstate a major area of coastal marshland and 1000s of birds are getting a new home.

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When completed in 2025, the project will have created 148 hectares of mudflats, 192 hectares of saltmarsh, and 76 acres of shallow saline lagoons.

Wallasea Island is a work in progress, but with at least two major tunnelling projects in London still to come, the Thames Tideway sewage scheme and Crossrail2, and the infrastructure in place to take the excavated spoil completion of this project seems likely.

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What is of importance form the perspective of this post is the Crossrail project is 65% complete and on time and on budget – being environmentally friendly and effective are not incompatible!  It will be interesting to see what the Metrorail project does with its excavated spoil.