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Project Manager : Project Manager Dec Jan 2014
www.aipm.com.au Project Manager 17 CHANGE OUR SUCCESS RATES With 65 per cent of megaprojects deemed a failure, Independent Project Analysis (IPA) founder Ed Merrow says the industry needs to change the way it thinks about PM to improve rates of success. Such a change could improve success rates across projects of all sizes. Working primarily on projects that fall into the 'megaproject' class, the IPA team collects data, evaluates the success of projects and operates the largest integrated projects research program in the world. Merrow describes the function of this program as crucial to understanding "the relationship between how we prepare, approach and execute capital projects, and how they perform in terms of safety, cost, schedule and production attainment". Merrow says that compared to smaller projects -- those under $500 million in cost -- megaprojects fail twice as often. IPA deem a project to be a failure if there is a growth in costs, a slip in schedule, overspending, or severe operational problems for two years or more after completion. Failure is most commonly a result of poor production attainment and aggressive schedules. "When production attainment is poor there is limited or no cash flow, money is spent with little planning to try to correct problems, and the cost overruns are considerably greater than reported." In a nutshell, megaprojects collapse rather than degrade. The most common cause of project failure is changes that should have been made, but could not be. In smaller projects, changes can quite easily be accommodated, although often at increased cost and with some delay. To accommodate major changes in megaprojects is extremely difficult and highly disruptive. "Changes deform smaller projects," Merrow explains. "Changes destroy megaprojects." While the same management practices often apply across projects of different sizes, the difference is that the gain or loss associated with implementing these practices well or poorly is far greater on megaprojects. On top of this, megaprojects face an additional and unique set of challenges to smaller projects, including basic data development problems -- which underlie approximately 40 per cent of all megaprojects -- organisational problems and logistics, venture shaping and governance challenges. On megaprojects, traditional organisational structures lead to unworkable spans of control for the project director. "Decision making slows and decision quality declines, and the problems are only recognised in the post mortem," says Merrow. While traditional project management skills are still essential at subproject level, the key to successfully delivering a megaproject is systematically preparing people for the challenges of leading it. Merrow identifies a successful megaproject leader as a generalist who understands the big picture, is politically sav vy within the company and is an excellent communicator, able to take complex issues and simplify the decision-making process. Governance is a major driver of project success across all projects, especially very large or complex projects. A business-driven workstream can stabilise a project environment, allowing effective project management. Merrow points out that, along with a thorough understanding of the context of the project, alignment of stakeholders, stable relationships with exterior stakeholders and clear objectives, agreeing with all partners on governance is essential. Overall, leadership is key, and to produce capable leaders, the industry needs to revisit career path development for owners and contractors to allow for a broader range of training and experience. "We need to embrace these efforts to take project management to a new level of excellence," says Merrow. "If we fail, megaprojects will continue to fail." (
Project Manager Oct Nov 2013
Project Manager Feb Mar 2014