The project ran significantly over budget finished very late and was technically less than perfect; $millions are currently being spent rectifying many of the technical deficiencies in the building. But can anyone say Sydney Opera House is not one of the most recognised and therefore successful buildings in the world?[1]

Success is an ephemeral concept! Different people will have different perspectives and judge the success or failure project differently. Neither a project nor a program manager can control many of the factors that have made the Sydney Opera House worldwide icon but they can address the concept of success with their stakeholders and then work to deliver a successful outcome based on these discussions.

So what is success? There are probably three key elements, but these frequently create a paradox that requires a balanced approach to success. The three fundamental elements are:

• The Iron Triangle (Scope + Cost + Time)
• Benefits realised (or maximised)
• Satisfied stakeholders (but, when??)

One of the key paradox is a myopic focus on the Iron Triangle particularly time and cost can frequently destroy benefits and leave the stakeholders unhappy, but focusing on keeping stakeholders happy can frequently have detrimental effects on the Iron Triangle. There are no easy solutions to this problem[2].

In my view, the successful delivery of a project or program requires:

• Achieving the overall goal for the project;
• Delivering its objectives; and
• Meeting its success criteria.

But, to achieve success you need to define and agree the project goal, the project objectives, and the project success criteria with your key stakeholders with a view to achieving a combination of stakeholder satisfaction and value created. The goal and objectives frame the project’s work and direction. The success criteria frame how the objectives are achieved.

The Project Goal

Goals are high-level statements that provide the overall context defining what the project is trying to achieve. One project should have one goal (if there are multiple goals you are most likely looking at a program of work[3])!  For example:  Within 180 days, reduce the pollution in the rainwater runoff from a council tip by 98%.

The goal is a key statement in the Project Charter[4] and if the project is to be successful, all key stakeholders need to agree the goal.  The goal needs to be specific and should define the project in a way that focuses attention on the key outcomes required for overall success from a technical and strategic business perspective[5].

Project Objectives

The objectives are lower level statements that describe the specific, tangible products and deliverables that the project will create; each objective (and the overall goal) should be SMART[6]. For the runoff project the objectives may include:

• Develop wetlands to trap 99.8% of sediment
• Install channels to collect and direct the runoff
• Install screens remove floating debris
• Etc….. There will be a number of objectives……

Each objective requires defining and specifying with clear performance criteria so you know when it has been achieved. This may be done by the client or by the project team during the scope definition process. The performance criteria may be defined by a set of precise specifications that are specific and measurable or may be defined as a performance requirement with either:

• The external contractor to provide the specific details of how the objective will be achieved, or
• The internal project team to develop the details in consultation with the client

The defined objectives are the building blocks that facilitate the achievement of the goal and the creation of the benefits the organisation is expecting from the project[7]. The benefits need to be realised to create value.

Success criteria

Success criteria are different they measure what’s important to your stakeholders. Consequently, they are the standards by which the project will be judged at the end to decide whether or not it has been successful in the eyes of its stakeholders. As far as possible the stakeholders need to be satisfied; this includes having their expectations fulfilled and in general terms being pleased with both the journey and the outcome (in this respect scope, cost and/or time may be important).

Success criteria can be expressed in many different ways some examples include:

• Zero accidents / no environmental issues;
• No ‘bad press’ / good publicity received;
• Finalist in the project achievement awards;
• Plus the goal and all of the objectives achieved (yes – you still need to do the work).

For any project, the success criteria should be split between project management success criteria which of related to the professional aspects of running the project; plus project deliverable success criteria which are related to the performance and function of the deliverable.

Documenting the success criteria is important, it means you can get project stakeholders to sign up to them, and having them clearly recorded removes ambiguity about what you are setting out to do. The four basic steps to create useful success criteria are

1. Document and agree the criteria; each criteria should include:
   1. The name of success criteria,
   2. How it is going to be measured,
   3. How often it is going to be measured, and
   4. Who is responsible for the measurement.
2. Use continuous measurements where possible. For example, rather than ‘finish the project on time’ measure progress continually ‘no activity completes more than 5 days after its late finish date’.
3. Baseline today’s performance.
4. Track and report on your progress.

As with any performance indicators, the art is to select a few key measures that represent the wider picture if there are too many success criteria defined the impact will be severely reduced. For example, the effectiveness of meetings, communication and stakeholder attitude could be measured scientifically using the ‘Index Value’ in the Stakeholder Circle[8] or pragmatically by measuring the number of open issues against a target (eg, no more than 5 high priority open issues).

Summary

Goals and objectives are the building blocks required to allow the realisation value from the project’s outputs; they are essential ingredients in a successful project but are insufficient on their own.  The role of success criteria is to direct the way work at the project is accomplished so as to meet stakeholder expectations, and to craft a perception of success in the stakeholder’s minds.

Project success is an amalgam of value created for the organisation and your stakeholders being satisfied with the journey and the outcome.  This concept of success may seem subjective, but it does not have to be. Successful organisations work to take the guesswork out of this process by defining what success looks like and agreeing these definitions with the key stakeholders, so they all know when the project has achieved it.

This means the key to stakeholders perceiving your project as successful lays in understanding the criteria they will measure success by, incorporating those measures into your project success criteria, and then working to achieve the criteria. But even this is not enough, to engage your stakeholders you need to communicate the criteria, communicate your progress and communicate your success at the end. For more on effective communication see: http://www.mosaicprojects.com.au/PM-Knowledge_Index.html#PPM07

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[1] For more on the success or failure of the Sydney Opera House see Avoiding the Successful Failure!:  http://www.mosaicprojects.com.au/Resources_Papers_046.html

[2] For more on paradox see: https://www.projectmanagement.com/blog-post/30669/The-Problem-With-Paradox

[3] For more on differentiating projects and programs see: http://www.mosaicprojects.com.au/WhitePapers/WP1002_Programs.pdf

[4] For more on the project charter see: http://www.mosaicprojects.com.au/WhitePapers/WP1019_Charter.pdf

[5] For more on project success see: http://www.mosaicprojects.com.au/Mag_Articles/N001_Achieving_Real_Project_Success.pdf

[6] SMART = Specific, Measurable, Attainable, Relevant and Time-framed.

[7] For more on linking objectives and benefits see: http://www.mosaicprojects.com.au/WhitePapers/WP1042_Outputs_Outcomes_Benefits.pdf

[8] The Stakeholder Circle® index value see: http://202.146.213.160/help-files/stakeholder-engagement-profile/#engagement-index

This ‘Scope for Improvement’ report identified productivity and skills shortages as a key problem for the sector but failed to offer any real options for improvement.  The report also acknowledged productivity in Australia is significantly worse than many other developed economies, and whilst skills shortages are less of an issue now that the demand in the resources sector has returned to more normal levels, many participants expect it will again become a major issue in the near future. Some of the more significant observations from the report (with my thoughts in italics) are:

• Major inhibitors are the heavily regulated labour market and restrictive work practices. This is a management failing, enterprise bargaining has been part of the Australian industrial system for nearly a decade.
• Inadequate or insufficient training, and lack of experience, particularly in project and risk management of large projects, have been evident. . This is another management failing, skills don’t magically develop in ‘the market’ organisations need to invest in training.
• There is a generational shift in talent and experience at project director level. Developing ‘young talent’ needs career planning – largely ignored in the construction sector.
• There is not enough talent in the market to adequately cover the step shift in project scale (typically up from $800 million to $2billion) that occurred in the mid-2000s. Long term skills development has been largely ignored in this sector.

More depressing, was the complete absence of any meaningful discussion on BIM – Building Information Modelling.  BIM is now mainstream in the UK construction industry and gathering pace in the USA, China, Europe and many other countries (many of which have contracting footholds in the Australian market).

The reason the rest of the world is focusing on BIM is productivity and profit.  BIM reduces risk, increases efficiency and substantially reduces cost. BIM has a similar enabling capacity to EFPOST in the retail industry. The development of fully integrated data, driving efficiencies right through the supply chain – with EFTPOS, the suppliers know how many stock items have been sold today to arrange restocking overnight; JIT with a vengeance. BIM offers similar opportunities to radically reform and update the construction industry and drag it from its medieval craft roots into the modern era.

Implementing BIM will be a cultural revolution in the Australian context, making the optimum use of BIM will require skilled staff working as permanent members of the construction business’ supply chain. Successfully implementing BIM will require investment, training, staff development and a major shift in workforce management and supply chain management. The challenge facing Australian companies in all parts of the industry is to either catch up with their global competitors or face extinction.

The problem is a unlike the UK, there is no government leadership and we do not have the market size that allows innovative investments in Europe, China and North America. Solving this conundrum is where the real ‘scope for improvement’ lies.

To understand more about BIM and access a wide range fo free resources (mainly from the UK) see: http://www.mosaicprojects.com.au/WhitePapers/WP1082_BIM_Levels.pdf

The Scope for Improvement reports can be downloaded from: http://www.ashurst.com/publication-item.aspx?id_Content=10561&langId=1

Henry V has a number of memorable speeches focused around battling insurmountable odds to overcome adversity…… ‘Once more dear friends unto the breach let us block the gap with [engineering] dead’,  ‘We few, we happy few, we band of brothers. For he to-day that sheds his blood with me shall be my brother …..’.  Stirring stuff given the character assassination most of the Plantagenet Kings suffer at the hands of the Bard. Which brings me back to the lunch.

Ashurst were launching the fourth report in the ‘Scope for Improvement’ series looking at the management and delivery of mega projects in Australia.  And unfortunately it really was a case of ‘once more dear friends……’  The title of the original 2006 report was derived from its major finding that scope was routinely omitted from tender documentation for mega projects.  The second report 2008 identified the consequences from scoping inadequacies. Survey participants attributed cost overruns (61%), delayed completion (58%) and disputes (30%) to scoping inadequacies. Further, scoping inadequacies had resulted in 26% of the $1 billion+ projects surveyed being more than $200 million over budget.  In 2006 and 2008 there was definitely ‘scope for improvement’; in 2014 the situation remains fundamentally unaltered.

The research for the 2014 report used a qualitative approach starting with discussions over lunch with some 130 executives (primarily from the organisations involved in the Australian Contractors Association), the discussions were documented and the emerging hypotheses tested in focused one-on-one interviews. This methodology has undoubtedly generated some interesting and important insights to the challenges faced by the major projects industry; but unfortunately the methodology prevents a precise trend analysis on this major area of concern. All we know for sure is it remains a major area of concern.

Probably the most telling insight in explaining the reason for the continuing omission of scope is the imposition of unreasonable time pressures to complete the work.  This pressure comes in part from the lack of any overall strategy on the part of the clients that defines the need for the project, meaning there is no ‘master plan’ to provide a framework for developing the project’s scope in a sensible timeframe.  This is a fundamental governance failure – very few mega-projects need to undertaken in ‘panic mode’.

The second insight is the effect of perceived ‘political imperatives’ that push governments and/or organisational executives to simply demand the work be accomplished in an unreasonably short timeframe. For some reason a completely unnecessary need for speed seems to have come to dominate executive decision making.  This demand for excessive speed will always drive up cost, increase risk and reduce quality.  This is equally true of a small $50,000 IT project as it is of a $multi-billion infrastructure project such as the National Broadband Network.

The only option to achieve excessive speed without compromising quality too much is to employ highly skilled people with direct experience of the work.  But as another section of the ‘Scope for Improvement’ report highlights, skills are in very short supply and only half the people in any group can be ‘above average’ – you simply cannot achieve ‘above average performance’ all of the time.

Certainly there will always be a limited number of projects where speed is an imperative, for most a combination of better strategic planning so the work is started at the right time and/or simply allowing adequate time will produce far better quality outcomes at a significantly reduces cost. Getting this balance right, and requiring management to have the right systems in place to avoid unnecessary ‘time pressures’ is a key governance imperative.

Simply having an immovable deadline is not an excuse. The London Olympics infrastructure was started ‘early’, properly resourced from the beginning, used appropriate procurement systems and finished a year ahead of the opening ceremony with no fatalities. Contrast the success of this project to similar ones in New Delhi and Rio de Janeiro where strategic decisions were not made at the right times, pressures to ‘increase speed’ developed and cost, quality and safety all suffered (or in the case of Brazil, are suffering).

The current ‘Scope for Improvement’ report identifies a range of solutions to this problem:

• Clearly identify the project objectives.
• Education on the importance of scoping.
• Allow sufficient time allowed to prepare the scope
• Employ sufficient personnel of the right quality to prepare the scope. Including providing adequate training for the personnel involved in preparing the scope.
• Choose the right delivery model and the right method of describing the scope (performance based where appropriate).
• Get the right people involved, with a collaborative process to obtain input from key stakeholders (including the end users).

Another area of the report that will be discussed in a later post is the interlinked topics of productivity, innovation and training. In the meantime, the Scope for Improvement reports can be downloaded from: http://www.ashurst.com/publication-item.aspx?id_Content=10561&langId=1

In 2006 the Kingsway Hall Hotel paid £49,999 plus an annual licence fee of £7,528 for software vendor Red Sky’s Entirety package, which covered bookings, check-in and sales. Kingsway selected the system based on Red Sky’s recommendation.

Problems arose almost immediately. Issues included incorrect room availability and no-show reports, unallocated mini-bar charges and a main server crash. Entirety could not cope with group bookings and the servers frequently froze.

Kingsway’s solicitors wrote to Red Sky saying that Entirety was unfit for its purpose and Kingsway was entitled to reject it and seek damages. Kingsway claimed for loss of profit on lost room sales of between £222,000 and £311,000, plus £13,500 for an additional reservations manager, £36,333 for three additional shift leaders and £13,500 for wasted staff costs.

Red Sky claimed Kingsway had bought an off-the-shelf package after having ample opportunity to investigate it.

The judge held that Red Sky had been aware of Kingsway’s requirements and under section 14 of the UK Sale of Goods Act 1979 it could be implied that the Entirety software system would be fit for the purpose of increasing revenue and occupancy levels and allowing quicker check-in and check-out. Entirety did not meet that purpose, nor the standard a reasonable man would consider acceptable.

The court awarded Kingsway £50,000 in lost profits £24,000 in wasted expenditure and £38,000 for extra staff costs.

To avoid similar problems, effective requirements analysis is becoming mandatory backed up by delivering on the contracted promises to meet the identified stakeholder requiremets.

References:

Kingsway Hall Hotel Ltd v Red Sky IT (Hounslow) Ltd [2010] EWHC 965 (TCC) – UK Technology and Construction Court May 2010

BSkyb Ltd & Anor v HP Enterprise Services UK Ltd & Anor (Rev 1) [2010] EWHC 86 (TCC)

As a start, the only point of undertaking a project or program is to realize some form of value. Benefit realization! To realize value, three elements need to be brought together:

1. There needs to be a new product or process created (an artifact);
2. People within the organization need to make effective use of the artifact to deliver a service;
3. The service as delivered needs to be accepted and used in the ‘market’.

The role of Strategic management and Portfolio management is to determine what services are likely to be accepted or needed by the market; a new shopping centre, an improved insurance package or simply a more efficient process to deliver information. These decisions will depend on the objectives of the organization, and is not the province of this blog.

The generally accepted role of project management is to create a unique product, service or result (an output) and the role of program management is to manage a group of related projects to achieve an outcome more efficiently than if the projects had been managed in isolation. Neither of these processes achieves real value in themselves. The realization of sustained value is achieved by the organization using the program’s outcome effectively over many months or years.

The Scope of Change Management

Projects and, to a greater extent, programs can realize some benefits, partially in the design and delivery of their respective outputs. Early benefits realization is frequently linked to ‘soft’ elements in the range of deliverables such as developing effective training, managing the transition to operations and ensuring a proper support framework is developed. Achieving these elements require the project/program team to really understand the requirements of their stakeholders. However, as demonstrated by the cost/benefit graph, benefits realization should continue for years after the program is finished and closed.

The extended timeline for value realization has important ramifications for organizational change management. Each project is an intense burst of change and the program absorbs these changes and has additional change effects of its own. These ‘activity related changes’ will include beneficial and negative impacts on a range of associated stakeholders. Some changes are disruptive caused by the execution of the work, learning curves, etc. Some changes positive caused by the improvements the projects and programs were initiated to deliver. Achieving a successful project/program outcome requires the effective management of these stakeholder communities, but the stakeolder management activity is essentially tactical.

The critical requirement to deliver sustained value is the organizational culture change needed to actively embrace the program’s outcomes and make valuable use of them. Embedding a culture change into an organization is a 2 to 3 year process as the change migrates from ‘new and threatening’, to ‘accepted (but the old way are still fondly remembered)’ to the ‘established old way’ things are done around here. This type of long term organizational change can only be accomplished by the organization’s line management supported by senior management. This is the realm of the program sponsor and executive management!

These ideas also have important ramifications for effective stakeholder management:

• Project level stakeholder management is relatively short term and focused on minimizing opposition to the work whilst ensuring necessary organizational support is in place to deliver the project’s outputs effectively. This is essentially tactical in nature.
• Program level stakeholder management has a wider view that needs to engage with the organizations strategic vision to ensure the program’s outcome is optimized to the changing circumstances within and around the organization. The key issue here is identifying and responding to changing stakeholder requirements, needs and expectations/perceptions over time; so as to optimize the value of the ‘outcome’ the project was established to deliver.
• Organizational level stakeholder management needs an even broader and longer term view focused on the strategic needs of the organization and its long term relationship with both internal and external stakeholders. Sustained value creation requires both the organizations internal staff and its external customers to jointly perceive the programs ‘output’ as valuable to them and also to perceive the organization favorably so they together maximize its use:
  • For a new shopping center with a 20 year lifespan this translates to retail tenants being willing to rent space and the ‘public’ seeing the shopping center as a ‘good place to shop’.
  • For a new call centre management system this translates into the call centre staff seeing the system as efficient and easy to use and clients of the business perceiving the system and staff as friendly, efficient and effective so they are happy to make repeated use of the system.

Conclusions

Change management and stakeholder management are closely aligned. Effective stakeholder management is essential for successful change management.

Change management and stakeholder management must start as soon as the project or program are initiated but should continue well after the project/program are completed.

The on-going organizational component of change management supported by strategic stakeholder management is critical if the real value of the outputs/outcomes created by the projects and program are to be realized.

Benefits realization is a line management responsibility starting with the project sponsor. All project and program managers can do is ensure their deliverables are crafted to facilitate and encourage benefits realization.

PMI and the new ISO21500 have the view a project starts when it is officially started and it finishes when it has delivered all of the required deliverables. This raises a number of sensible considerations.

Starting a project
Only the managers of an organisation are in a position to determine its strategic direction and then identify and prioritise the ‘needs’ that require meeting to implement the strategy. After a ‘need’ is defined a project can be initiated to deliver the required outputs. This does not mean the business managers need to have a fully defined specification but they must know how much they know about what’s required:

• If the requirements are clearly understood, a project can be initiated with defined time and cost parameters and limited contingencies.
• If the requirements need to be defined or clarified, the project needs to be established with success criteria understood, adequate time and cost contingencies in place and a ‘gateway’ process defined to ascertain the ongoing viability of the project as the requirements are progressively firmed up. If the project continues to offer a valuable contribution to the organisation it should continue. If its value drops below an acceptable level it should be terminated at the appropriate gateway review.

The PMBOK® Guide is relatively silent in these areas but there’s plenty of good information available from OGC and the Association for Project Management in the UK.

Finishing a project
Whilst the project manager needs to be aware of the value proposition for the project, to assist in decision making within the project, the project manager can only be responsible for delivering the required outputs optimised to the needs of the organisation. The rest of the value chain is dependent on the organisation’s line managers making effective use of the outputs to change the way the business actually works and instigate positive changes to realise the benefits that create value to the organisation.

For more on this topic see two earlier blogs:
– Value is in the Eye of the Stakeholder
– The Scope of Change

More in a couple of days on understanding the degree of certainty involved in projects.

On Thursday 20th November 2008, I was privileged to attend the launch of a new report,  ‘Scope for Improvement 2008’, focusing on the issues of scope definition in major Australian construction projects. The total value of projects surveyed was approximately AU$60 billion with an average project value of AU$360 million.

The 2008 survey has shown a slight deterioration from the initial 2006 survey, in the overall performance of the industry in developing adequate project scoping documents. The 2008 findings also show inadequate scope specification is now an endemic problem in Australia with a growing trail of budget blowouts, delays and disputes.

The worry is the construction and engineering industries are generally seen as being far more mature in their project management practices then most other sectors of the project management industry and Australia has one of the more advanced industries world-wide. The key findings from the report, outlined below, are a salient lesson for anyone involved in defining the scope for a project:

Key Findings and Recommendations of the report:

The present situation:

• There is a high prevalence of deficient scoping in Australian construction and infrastructure projects with over 50% of projects being inadequately scoped prior to going to market.
• Scoping inadequacies are being discovered far too late with 64% of deficiencies only being discovered during execution.
• The consequences of poor scoping are significant: 61% of project experienced cost overruns, 58% delays and 30% contractual disputes.

The main factors contributing to poor scoping:

• Lack of experienced and sufficiently competent personnel with 83% of projects reporting adverse effects. This is to an extent explainable by the construction boom of the last few years but compensating factors such as increased time and/or contingencies do not seem to have been allowed.
• Insufficient time to prepare the scope documents.
• Inadequate definition of project objectives by the principal resulting in subsequent changes to the scope and corrections to the scope documents.
• Lack of consultation with end users, insufficient clarity of objectives and a lack of understanding of why the project is required and the benefits the project will produce.
• Insufficient research to understand the environment the project will be executed within.

Practical steps for successful scoping:

• Industry needs to think and act differently.
• Clearly identify project objectives.
• Identify and bring together all relevant stakeholders and end users for the project and maintain their involvement in the scope definition process.
• Set realistic timeframes and budgets for developing the scope requirements (and the overall project).
• Interface the proposed project with related projects and existing infrastructure.
• Identify and establish a core project team early.
• Empower a project leader with appropriate and clear authority and accountability.
• Clearly describe the project objective and requirements once identified.
• Choose the right approach for scope description (performance criteria, detailed specification, etc) and choose the right contract delivery model that aligns with the scope – risk needs to be properly apportioned.
• Check the overall contract package for consistency.
• Involve the tenderers / project management team in getting the scope documents right.
• Capture the value from a successful bid in the final contract.
• Resolve scoping issues and disputes under a contract.

The research was conducted by partners at Blake Dawson with support from the Australian Constructors Association and Infrastructure Partnerships Australia. A full copy of the report can be downloaded from http://www.mosaicprojects.com.au/Resources.html#Construction