As promised, we are exploring the first five disruptors and discussing how to manage them effectively. These disruptors are key technological and methodological changes that are reshaping the landscape of project management. Understanding and adapting to these changes is essential for staying ahead in the field.
First - Owner capital project delivery downsizing
Over the past several decades, owner organizations have steadily reduced their internal capacity to plan and execute capital projects. This trend is particularly noticeable in large project environments but is also present in smaller in-plant project settings. As a result, owners increasingly rely on contractor support earlier in the project process. While this approach can be effective, it often falls short without clear communication of business and project objectives. Contractors struggle to support owners in a cost-effective and efficient manner without this crucial information.
To address this challenge, owners can implement several solutions:
- Enhanced Communication: Establish clear and consistent communication channels to ensure that contractors fully understand the business and project objectives.
- Integrated Project Teams: Form integrated project teams that include both owner and contractor representatives to foster collaboration and alignment from the outset.
- Detailed Project Status Reports: Provide detailed project status reports and regular updates to contractors to keep them informed and aligned with the project's goals.
- Performance Metrics: Develop and monitor performance metrics to ensure that contractors are meeting the desired cost-effectiveness and efficiency standards.
By adopting these strategies, owners can enhance their collaboration with contractors, ensuring that projects are completed in a cost-effective and efficient manner while meeting business objectives.
Second- Owner ESG business drivers
Owner organizations today are deeply committed to environmental stewardship, community well-being, and regulatory compliance. While these are commendable and ambitious goals, they often do not yield the financial returns necessary to maintain a competitive edge for shareholders. Consequently, owners face more capital project opportunities than they have available capital to invest. This necessitates the careful selection of projects that best align with business objectives. High-return-on-investment projects are now being weighed more heavily against ESG (Environmental, Social, and Governance) initiatives, leading to challenging business decisions.
To address this, organizations can adopt a balanced approach by integrating ESG criteria into their financial evaluation models. This ensures that projects are assessed not only for their immediate financial returns but also for their long-term sustainability and social impact. Additionally, fostering clear communication and collaboration between stakeholders can help align project goals with both business and ESG objectives. By doing so, owners can make informed decisions that support both their financial and ethical commitments, ultimately achieving a harmonious balance between profitability and responsibility.
Third- Misalignment between owner business expectations and project delivery resources.
This is a major trend Pathfinder is seeing across the industry. As owners rely more heavily on third-party support during early project planning, they often fail to provide clear expectations on several project attributes. These include aspects such as design for future expansion, product flexibility, expected life of the asset, operating philosophy, and other related business attributes. When these expectations are left undefined, engineering teams design based on their interpretation of the best engineering solution. This can lead to misalignment with business expectations, resulting in over-design or under-design and miscommunication of cost requirements and execution timelines.
To address this issue, owners can implement the following solutions:
- Clear Communication of Expectations: Establish detailed and clear expectations for all project attributes from the outset. This includes future expansion plans, product flexibility, asset lifespan, and operating philosophy.
- Regular Alignment Meetings: Conduct regular alignment meetings between business and engineering teams to ensure that everyone is on the same page regarding project goals and expectations.
- Reliable, Accurate, Transparent Status Reports: Provide comprehensive status reports that outline all critical business and project attributes. This helps engineering teams design solutions that meet business needs.
- Feedback Loops: Implement feedback loops to continuously assess and adjust project plans based on evolving business requirements and engineering insights.
- Integrated Project Management Tools: Utilize integrated project management tools that facilitate real-time communication and collaboration between all stakeholders.
Fourth- Lack of owner respect for stage gate approach
Over the past 25 to 30 years, the industry has demonstrated that a well-structured and efficient stage-gate approach to project evaluation and delivery not only leads to more efficient utilization of capital and better project delivery but also ensures more effective use of capital by selecting the right projects. Many owner organizations are now aggressively evaluating larger and more complex projects, many of which are schedule-driven. The assumption is that the faster we get to the field, the faster the project will be executed. However, extensive research on the stage-gate approach shows this is not the case.
Recent benchmark results indicate that large, schedule-driven projects typically do not meet their schedule targets and result in substantial cost overruns, sometimes as much as 20%. To address this, the following solutions can be implemented:
- Locking Down Scope: Clearly define and lock down the project scope early in the process to prevent scope creep and ensure all stakeholders are aligned.
- Critical Decision-Making: Make critical project decisions at the appropriate stages to avoid delays and ensure that the project stays on track.
- Detailed Execution Strategies: Develop detailed project execution strategies that outline the steps and resources needed to achieve project goals.
- Stage-Gate Process: Rigorously apply the stage-gate process to evaluate and approve each phase of the project, ensuring that all necessary criteria are met before moving forward.
- Continuous Monitoring and Adjustment: Continuously monitor project progress and make adjustments as needed to stay on schedule and within budget.
By adopting these strategies, owner organizations can improve their chances of meeting overall business and project objectives, resulting in more successful project outcomes.
Number 5- Owners try to optimize scope past FEL3 completion
As outlined above, better alignment between owner business objectives and project goals is essential before engaging the front-end design team. This ensures that engineering efforts are closely aligned with business needs. Additionally, there must be a clear definition of what constitutes the completion of FEL3 (Front-End Loading Phase 3). To address these challenges, consider the following solutions:
- Early Alignment Meetings: Conduct early alignment meetings between business leaders and the design team to ensure that project objectives are clearly understood and agreed upon.
- Clear FEL3 Criteria: Establish and communicate clear criteria for the completion of FEL3, including specific deliverables and milestones.
- Scope Definition: Define the project scope comprehensively before moving into detailed engineering to prevent continuous scope changes.
- Change Management Process: Implement a robust change management process to handle any necessary scope changes efficiently and minimize their impact on cost and schedule.
- Regular Reviews: Schedule regular project reviews to ensure that the project remains aligned with business objectives and to address any emerging issues promptly.
By implementing these strategies, owners can create a more stable project environment, reducing the risk of cost increases, schedule delays, and poor decision-making due to late scope changes.
In conclusion, navigating the evolving landscape of project management requires a proactive approach to addressing key disruptors. By enhancing communication, fostering collaboration, and clearly defining project expectations, owner organizations can better align their business objectives with engineering efforts. Integrating ESG criteria into financial evaluations and rigorously applying the stage-gate process further ensures that projects are both sustainable and efficient. Additionally, implementing robust change management processes and maintaining regular project reviews can mitigate risks associated with cost overruns and schedule delays. By adopting these strategies, owners can achieve a harmonious balance between profitability and responsibility, ultimately leading to more successful project outcomes. Embracing these solutions will be crucial for staying ahead in the field and meeting the challenges of modern project management.
Stay tuned for Disruptors 6 through 10, which we'll be exploring in our upcoming spring edition.
