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Project Manager : Project Manager Dec Jan 2012
www.aipm.com.au Project Manager 21 20 Project Manager When defining the failure rate of these megaprojects, Merrow has discovered the essential criteria. Failure is certain if the schedule slips or the project overspends by more than 25 per cent, the execution time is 50 per cent longer, or there are severe and continuing operational problems into the second year of the project. Interestingly, projects under the $500 billion mark have a failure rate of only 35 per cent by comparison. Merrow said that perhaps the dire problem is “quality, quality, and quality”. “Far too many large projects fail to produce at rates anywhere near what was promised. The production problems come from many sources – poor basic technical data, lack of needed input by key functions during the front-end, and too many changes that result in poor quality plant. Cost overruns get all the press; production failure is where all the profits go.” The human element Merrow is clear on the fact that the effects of poor practices are much more devastating for very large and complex projects because these are inherently fragile. He notes four critical practices that set megaprojects up to succeed or fail: • Setting clear objectives for the team; • Ensuring all key owner functions are involved in development; • Having stability in leadership of the project; and • Ensuring complete definition work (front-end loading) prior to sanction. Coherent project objectives are the foundation on which a strong project team is built. This requires all of the objectives are articulated in a meaningful way – not just some empty nostrum, said Merrow, who insisted that trade-offs among objectives be understood and clear priorities are established. Front-end loading (FEL) is the key practice that drives a megaproject’s results – IPA has developed an index over the past 35 years that is the single most reliable predictor of how projects will turn out with respect to cost, schedule and functionality. Other practices that help to drive results are: clear and full articulated business objectives; full integration of the teams; continuity of team leadership; and excellence in front- end definition and planning. Perhaps one of the most important failure points in megaprojects is the drive for speed which, according to Merrow, results in projects outrunning basic data development, stakeholder alignment, permitting requirements, front-end loading development – and even the business deal itself. FAr Too MAny oF ThEsE lArgE ProjECTs FAil To ProduCE AT rATEs AnywhErE nEAr whAT wAs ProMisEd
Project Manager Oct Nov 2011
Project Manager Feb March 2012