Agile Project Management on construction projects: From delivering on Cost to delivering Maximum Value and Benefits
This conference to the Montreal Chapter of the AACEI aimed at explaining that delivering maximum value and benefits is the real mesure of project success, while delivering on time and on cost are just constraints to take into account
delivering on Cost to delivering Maximum Value and Benefits Conference to the AACEI Montreal Section Tuesday February 19 2013, SNC-Lavalin Claude Émond, BEng, MEng, MBA, rmc, CD, PMP Les Entreprises Quali•Scope Inc.
like a Beauceron • Chemical engineer, BEng RMC, MEng McGill • MBA Queen’s/Ottawa...and PMP • Full time on project-oriented ventures since 1980 • Co-founder of , trainer and project management coach since 1995 • Creator of «2-String Project Management» • Creator and developer of «Changeboxing» • Co-writer of the 1st international standard for portfolio management, «The Standard for Portfolio Management», PMI, 2006 • Renowned international expert on organisational agility and «Agile» project management (Canada, USA, Europe, North Africa) Claude Émond, BEng, MEng, MBA, rmc, CD, PMP
Benefits Realisation started its journey towards becoming the main focus of enterprise strategic management processes (upper management), replacing «LEAN – operational cost reduction» for the sake of it Today: «Agile» project management confirms its superiority in providing the right mindset and tools to enable and maximise the benefits and value of project deliverables through day-to-day project management activities (project teams), replacing schedule and cost control for the sake of it
conclusions of the KPMG/TOP-BCG studies 2. Value, benefits and project success 3. The Agile management mindset 4. “Traditional” engineering-construction project management vs «Agile» project management (Why, Who, What, When, Where) 5. From delivering on cost to delivering maximum value and benefits
40% of projects fail to deliver any net improvement 2. Of the remaining 60%: • More than half (55%) fail to deliver the available business value in full….often missing the target by more than 50% Results and conclusions of the KPMG/TOP-BCG studies
such as Benefit Realisation Management, most organisations probably achieve between 10% and 25% of potential benefits» Other studies SOURCE: Gerald Bradley, «Benefits Realisation Management», 2nd edition, Gower, 2010
conclusions of the KPMG/TOP-BCG studies 2. Value, benefits and project success 3. The Agile management mindset 4. “Traditional” engineering-construction project management vs «Agile» project management (Why, Who, What, When, Where) 5. From delivering on cost to delivering maximum value and benefits
Value START FINISH PROJECT ZONE Project success, value and benefits as per PMI? PMI’s definition of project SUCCESS ? PMI’s definition of project QUALITY ? The journey The destination Value, benefits and project success
WHOM and WHEN? • For WHOM: • ALL stakeholders… this INCLUDES the project team • WHEN: • AFTER project completion… sometimes over many years, for the users of the deliverables • DURING project realisation both for the users of the deliverables and those delivering them Value, benefits and project success
conclusions of the KPMG/TOP-BCG studies 2. Value, benefits and project success 3. The Agile management mindset 4. “Traditional” engineering-construction project management vs «Agile» project management (Why, Who, What, When, Where) 5. From delivering on cost to delivering maximum value and benefits
conclusions of the KPMG/TOP-BCG studies 2. Value, benefits and project success 3. The Agile management mindset 4. “Traditional” engineering-construction project management vs «Agile» project management (Why, Who, What, When, Where) 5. From delivering on cost to delivering maximum value and benefits
persons WHO (A RESTRICTED AND NON-ALIGNED WHO) realise in a highly conflictual manner, more often trhough confrontation than through collaboration, (output/input ratio subsequently sub-optimal) (A HOW, WHEN AND HOW MUCH that are conflictual and chaotic) things (deliverables and activities) for a «DIFFERENT WHO» that MUST respect given (initial) delays and costs that are not always realistic (and/or not necessarily producing the RIGHT OUTPUT/OUTCOMES) (A WHAT DELIVERED including as part of the WHAT a «FROZEN» WHEN and HOW MUCH, for a RESTRICTED FOR WHOM, often without knowing WHY) A RESTRICTED AND NON-ALIGNED WHO= EXECUTING PARTY = Consulting firms, suppliers and contractors who «materialise» given specifications, many not having congruent and converging individual and corporate objectives . - Constant disagreements and contractual litigations between stakeholders - «silo» deliveries, deliverables' integration ultimately occurring only on site with last-minute corrective actions impacting negatively both project schedules and project costs - The major stakeholders (The executing party-WHO differs from the receiving party-WHO) see one another more as an adversary than a partner and use a «winner-loser» approach to conflict resolution rather than a «win-win» mindset The DELIVERED WHAT= - A solution delivered as per specifications not necessarily aligned with the needs (the WHY and FOR WHAT the deliverables are expected to be used) (any distortion between the WHAT and the WHY will result in a LOST of BENEFITS and inferior project value) - Deliverables realised «on time and on cost», the WHEN and the HOW MUCH being perceived as TRUE additional deliverables, instead of being treated as CONSTRAINTS . A WHY= based on rigid specifications rather than on needs (requirements) that can evolve through time . A RESTRICTED FOR WHOM = The PAYING PARTY, NOT NECESSARILY THE END-USERS AND CERTAINLY NOT THE EXECUTING PARTIES = Excluding both excuting stakeholders and other stakeholders impacted by the project and its deliverables, the former perceived as adversaries, the latter just being ignored. SUB-OPTIMAL EFFICIENCY (E1) AN EFFECTIVENESS WHICH IS IMPOSSIBLE TO MEASURE (E2) ???? «TRADITIONAL» Project Management is: In response to the global and turbulent business environment that characterises the 2010s, the only one that exists, (very complex, highly competitive, uncertain, permanently changing, requiring great velocity as well as a high level of creativity to constantly innovate and adapt) (WHERE) PRODUCTIVITY = E1 X E2?? = NON MEASURABLE PROJECT PERFORMANCE/SUCCESS RESULTS/OUTCOMES: ?? «Traditional» engineering-construction project management vs «Agile» project management
A COLLECTIVELY COMMITTED WHO (An ALIGNED WHO) realise successfully, meeting everyone's day-to-day expectations, SHOWING PROACTIVITY, CREATIVITY, GREAT REACTIVITY, FLEXIBILITY AND ADAPTABILITY (CONTINUOUS AGILITY OF THE HOW, WHEN, HOW MUCH) THE right things, meaning DELIVERABLES OPTIMISING VALUE FOR ALL (MAXIMUM BENEFITS «WHAT/WHY», FOR ALL) ALIGNED WHO= An integrated project team (P7) = All Stakeholders, who, thanks to: - shared values (V1,V2,V3,V4) - a shared vision of the project objectives (its WHY, its «raison d'être») - converging interests (V4) - Shared success criteria (P10) - required knowledge and sufficient resources (P2) - collaborative behaviour (V2) are committed to succeed together (P3) . realise successfully, using AGILE approaches and tools (HOW, WHEN, HOW MUCH), in particular: - openness and capacity to adapt to change (V3,P2) + a structure, an organisation, tools, technologies that are flexible and adaptable (P5, P6,O1,O2,O3,O4) and sufficient resources (P2) + responsible and autonomous human resources (P1, P2), reactive, flexible and adaptable + continuous change communication and management (P8,P9) + continuous learning and capitalisation of lessons learned (P10) - monitoring and innovation practices (P4) for optimal value (benefits) creation (V4, P10) - practices valuing HR and encouraging collaboration (V1,V2) THE right things, meaning THE DELIVERABLES ALLOWING MATERIALISATION OF THE PROJECT WHY (V4): - NEGOTIATED DELIVERABLES (WHAT) (P3) - ACCELERATING (P10) MATERIALISATION AND MAXIMISING PROJECT EXPECTED BENEFITS (O4) (WHY) - FOR ALL STAKEHOLDERS (V4) (FOR WHOM) . . . . . OPTIMAL STAKEHOLERS' ALIGNMENT (A1) OPTIMAL AGILITY IN PROJECT EXECUTION (A2) ACCELERATED BENEFITS (AB) AND OPTIMAL VALUE (V) RESULTS/OUTCOMES: «AGILE» Project Management is: In response to the global and turbulent business environment that characterises the 2010s, the only one that exists, (very complex, highly competitive, uncertain, permanently changing, requiring great velocity as well as a high level of creativity to constantly innovate and adapt) (WHERE) PRODUCTIVITY = A1 + A2 = AB + V = OPTIMAL MEASURABLE PROJECT PERFORMANCE/SUCCESS «Traditional» engineering-construction project management vs «Agile» project management
conclusions of the KPMG/TOP-BCG studies 2. Value, benefits and project success 3. The Agile management mindset 4. “Traditional” engineering-construction project management vs «Agile» project management (Why, Who, What, When, Where) 5. From delivering on cost to delivering maximum value and benefits
«REAL value and benefits» ? This 20 M$ bridge is 70% complete. What is its «earned value» ? What is its «REAL value» if we never complete it ? «REAL value and benefits» come from USING the project deliverables at least as anticipated From delivering on cost to delivering maximum value and benefits
«REAL value and benefits» ? Sydney Opera House (Utzon) 1957 cost estimate: 7 M (Au)$ Due date 1963 ?? 1973 completed for 102 M$ Au (10 years late) Among the busiest performing arts centres in the world, hosting over 1,500 performances each year attended by some 1.2 million people. 2012: «DIRECT» revenues of 177 M$ (Au) and net profits(surplus) 37M$ (Au) Payback period = achieved a long time ago Montreal Olympic Stadium (Talibert) 1970 cost estimate: 134 M$ 1976 partially finished: 264 M$ 2006 final cost (including repairs, renovations, construction, interest, and inflation): 1 610 M$ Avg revenue since 1977: 20 M$/yr 2011: «DIRECT» revenues of 39 M$ (50% from subsidies) and a deficit of 1,1 M$ Payback period = «infinite» ?? From delivering on cost to delivering maximum value and benefits 15 X more 12 X more
to delivering maximum value and benefits COSTS BENEFITS Agile project management “A Project is a temporary structure created to deliver a set of agreed desired business outcomes, benefits and value….. It’s your choice whether you deliver ‘projects, programs and portfolios’ – the orthodox view – or choose to deliver ‘strategy, business outcomes and value’ ” Jed Simms (AND INDIVIDUAL)* *my addition
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