Agile in EPC projects – Why I am super delighted?

Can we use agile principles outside I.T?. This is one question I had to answer many times during my project management workshops, and consistently my answer was/ is ‘Yes’. I have mentored a team of lawyers who analyse outsourced cases and submit case analysis reports back, to follow ‘scrum’, one of the agile methods.

Another question from an architect of Turner construction was about the applicability of agile / lean principles in EPC projects. This was around seven years back. My answer was ‘Partially possible’. Agile gives best results in projects where the requirements are evolving and the technology is also new to the team. The early phases of EPC projects (contracting, requirements collection, scope definition, architecture, engineering phases) satisfies ‘evolving requirements’, ‘technology ambiguity’ criteria very well, which justifies my answer ‘partially yes’. The rolling wave or moving window planning which is part of PMBOK for the last one decade, in it’s fully expanded form is nothing but iterative and adaptive in nature. I was always optimistic about application of agile and lean practices in EPC projects, except during construction phase.

Last week, I received a McKinsey report on the emerging trends in EPC from Mr. Varghese Daniel, CEO, Wrench solutions with whom I am professionally associated to analyze the global project management best practices and their application to EPC projects to improve on time and within budget delivery. My further googling got me another KPMG study on the emerging trends. Both points to Integrated Project Delivery (IPD) as one of the key trends globally, which revolves around better collaboration of motivated teams achieved through;

  • Choosing the right contract types (tri-party contracts between the owner, contractor and the architect)
  • Greater collaboration during planning phase (last planner – which is similar to iteration planning)
  • Greater collaboration during execution (construction) (burn down charts, information radiators, daily stand up meetings)

At last my hunches are coming true. All these years I was the lone crusader who used to say that adaptive(agile) and predictive (PMBOK, TCM, PRINCE2) are complimentary which raised many eyebrows, and as an acknowledgement of my views, the industry is moving towards it. I am super delighted.

About the blogger

Abrachan Pudussery is a highly experienced project management domain expert with three decades of project experience in project management, consulting, coaching and research. He has in depth knowledge about various project management frameworks (PMBOK, PRINCE2, TCM, Agile. He is the founder director of the Project Management Research Institute He is also associated with Wrench Solutions as their project management domain expert.

Great opportunity to contribute to the project management professional community

Here are two standards open for review for the members of the Project Management Institute, USA.

  1. Practice standard for project estimating, second edition. The review period ends on 6th May 2019
  2. The standard for Earned Value Management (EVM). The review period ends on 30th April 2019

Click here to access the draft documents for review

The impact of Engineering, Procurement and Construction (EPC) Phases on Project Performance: A Case of Large-scale Residential Construction Project

The Construction Industry is a complex and fragmented industry worldwide with regards to its supply chain, products, and processes, and is faced with a similar dilemma as faced by manufacturers during its time in past decades. Scope, time, and cost are the triple constraints of project management and leading factors in defining the project performance. Productivity and efficiency of each construction project is measured through its triple constraints, therefore the factors that affect project success are significantly important. Despite the importance of understanding project performance indicators, few empirical studies have been conducted over the last decade in terms of analyzing the factors that determine the performance of high-rise buildings in Engineering, Procurement, and Construction (EPC) projects. Hence, the aim of this paper is to analyze and rank EPC critical activities across large-scale residential construction projects in Iran, by using the TOPSIS method as a multi-attribute group decision-making technique. Results indicate that engineering design, project planning and controls are significant factors contributing to the project performance. In addition, engineering has a pivotal role in project performance and this significance is followed by the construction phase. On the contrary, all believe procurement is more important than Construction phase.

Download the research paper

Multifaceted demands on a project manager

Projects are strategic in nature, so are the demands on a project manager. Organizational success, achievement of business goals is directly linked to the successful completion of projects on time, within budget and with quality. The project manager has to cater to the needs of the project, the organization (organizations), industry, professional discipline and across disciplines. Performing integration is the key role of the project manager. Performing integration comprises of the ‘Plan, Do, Check and Act’ of integrating the efforts and work of all to achieve the project goals.

The key stakeholders of the project management role

The project

  • Business analysts
  • Design
  • Engineering
  • Procurement
  • Quality management
  • Risk management
  • Resource management
  • Procurement management
  • Consultants
  • Customer
  • Contractors

The Organization

  • Sponsors
  • Senior management
  • Functional managers
  • Peers (other project managers)

The Industry

  • Industry trends / technological advances
  • Standards organizations
  • Products and prices
  • Competitors
  • Industry benchmarks

Professional discipline

  • Professional bodies like PMI, AACE, Agile alliance, Scrum alliance, PMRI
  • Engineers associations
  • Association of project cost accountants
  • Environmentalists
  • Ethics committees
  • Universities
  • Project management blogging communities
  • Linked in groups
  • Networking with industry experts

Across disciplines

  • Collaborative innovation across disciplines

As we can see, project manager’s is a very strategic role and calls for diverse skills and qualities to cater to the demands of the stakeholders, both internal and external.

PMI’s talent triangle

Skills of a leader

  • Commitment
  • Being a visionary (without total commitment, one will not be able to articulate the vision)
  • Optimistic and inspiring positive attitude
  • Collaborative outlook
  • Relationship building
  • Conflict management
  • Effective communication (Project managers spend about 90% of their time in communication). This include listening skills as well.
  • Demonstrating professional ethics of project managers in all transactions (Responsibility, Respect, Fairness, Honesty)
  • Sharing credit with others
  • Lifelong learner
  • Result oriented
  • Ability to prioritize and focus on important things
  • Ability to manage politics and power and get things done

Performing integration

Projects comprises of multiple sub-teams and even contractors, sub-contractors. Each one of them will have individual plans (engineering plan, design plan,construction plan, procurement plan, quality plan, risk plan, safety plan, scope management plan, schedule management plan etc). All these have to be integrated into a cohesive integrated project plan during the planning phase, and must be continually integrated throughout the project life cycle. During execution, the work packages from these entities have to be integrated. Performing integration at the plan level and at the work package level is a key responsibility of the project manager and she has to have the necessary knowledge, skills and drive to perform this role during the entire project duration

Reference : The project management body of knowledge PMBOK by PMI, USA.

The project environment

Enterprise environmental factors – EEF

  • Organizational culture
  • Organizational structure (functional, matrix, projectized, composite)
  • Distribution of facilities and resources
  • Resource availability (manpower, machine, material)
  • Labor laws
  • Political climate
  • Environmental laws
  • Salary structures
  • Transportation facilities
  • Information systems
  • National holidays
  • Work culture
  • Climatic conditions (Weather conditions)
  • Waste disposal norms
  • Trade unions etc..

Can be internal or external to the organization.

Organizational process assets – OPA

  • Quality management systems
  • Reusable components
  • Proprietary data
  • Processes, procedures, guidelines, templates
  • Lessons learned
  • Databases
  • Project management information systems (PMIS)
  • Management information systems (MIS)
  • Organizational governance frameworks (structures, systems)
  • Organizational structures (Reference PMBOK V6 Page 47)
    • Organic or simple – PM has very less authority
    • Functional – PM has very less authority
    • Multi divisional – PM has very less authority
    • Matrix (cross functional teams)
      • Strong matrix – PM has moderate to high power
      • Weak matrix – PM has low power
      • Balanced matrix – PM has low to moderate power
    • Project oriented – PM has high to almost total power
    • Virtual (distributed teams) – PM has low to moderate power
    • Hybrid – Mix of other types – PM has mixed power
    • PMO (Project management office) – PM has high to almost total power
      • Supportive
      • Controlling
      • Directive

PMBOK structure and Project Success Measures

Projects

Projects are temporary endeavors (have specific start and end dates), delivering unique products or services.

Project and development life cycles

The series of phases a project passes through from it’s start to it’s completion is termed as ‘Project life cycle’ . The phases can be sequential or iterative. Within the project life cycle, there are some phases which are highly technical and contribute directly to the building up of the product of the project. These are known as the ‘Development life cycle’. Development life cycles can be predictive, iterative, incremental, adaptive (agile, iterative or incremental) or hybrid. The development cycles are decided during the project strategy development phase.

Project phases

A project phase is a collection of logically related activities that produces one or more deliverables of the project. Requirements phase delivers requirements document. Design phase delivers design and the design document.

Phase gate

Phase gate, stage gate or kill points are the senior management review of the project conducted at the end of every major phase. They are also known as the go-nogo meetings, as the decision to fund or do not fund the subsequent phase is decided during these meetings.

Project management process groups

  • Initiation
  • Planning
  • Execution
  • Monitoring and controlling
  • Closing

Project management knowledge areas

  • Project integration management
  • Project scope management
  • Project schedule management
  • Project cost management
  • Project quality management
  • Project resource management
  • Project communications management
  • Project risk management
  • Project procurement management
  • Project stakeholder management

There are 49 processes in PMBOK. Each of these processes have a set of inputs, tools&techniques and outputs. Every process in the PMBOK is associated to a ‘Knowledge area’ and a ‘Process group’. For example the process ‘Develop project charter’ is part of ‘Project integration management’ knowledge area and ‘Initiating’ process group. In page number 25 of PMBOK Version 6, this is depicted in detail as a two dimensional array.

During project initiation, planning, execution, monitoring, controlling and closing, enormous amount of data is generated, which gets processed into information and then to reports.

Should we follow every process of PMBOK in every project?. The answer is ‘No’. Based on the nature of the project (magnitude, complexity, engineering discipline etc), project managers must tailor the project management processes for better value.

Project management business documents

  • Project business case – Documented economic feasibility study of the project , generally owned by the project sponsor
  • Project benefits management plan – Processes for creating, maximizing and sustaining the benefits provided by a project. Project manager provides inputs for maintaining these.

Contents of project business case

  • Why are we doing this project?
  • Key stakeholders affected
  • High level scope of the project
  • Analysis of the situation
  • Recommended solutions / alternatives analysis
  • Milestone list

Project benefit management plan

  • Benefit milestones and dates , Benefit owner
  • Alignment of the benefits to the organizational business strategy
  • Benefit measuring logic, systems
  • Assumptions and risks

Project success measures

Establishing the project success criteria with the involvement of all the key stakeholders upfront in a project increases the probability of success. Must be documented and can include;

  • Definition of success for the project
  • Success measuring parameters
  • Critical success factors
  • Adherence to the project business management plan
  • Meeting the agreed upon financial ratios used while justifying the project selection;
  • Net Present Value (NPV) = (Sum of the present value of all future cash flows – initial investment)
  • Return On Investment (ROI)
  • Internal Rate of Return (IRR)
  • Pay Back Period (PBP) – The year in which we can take recover the initial investment from the project
  • Benefit Cost Ratio (BCR) = (Sum of the present value of all future cash flows) / Initial investment

References : PMBOK Version 6 Pages , TCM Framework

Watch “Want to learn better? Start mind mapping | Hazel Wagner | TEDxNaperville” on YouTube

Applying Earned Value Management successfully

Applying-Earned-Value-Management-successfully – WorkAsOne ­

When is Earned Value Management (EVM) applicable?

We say: in every single construction project.

We are not the only ones who think so.

Association for the Advancement of Cost Engineering (AACE), being more function and detail-oriented, addresses this at length in their Recommended Practices. AACE defines two key concepts in EVM: 1) measurable work progress; and 2) a focus on planning to establish the performance measurement baseline (PMB) against which performance will be tracked and evaluated. AACE’s five guidelines form the foundation for the quality planning process and are identified as one of the two key concepts of EVM, namely:

1. Define Work Breakdown Structure

2. Identify Organizations

3. Integrate Subsystems

4. Identify Overhead Control

5. Integrate WBS and Organization Breakdown Structure

AACE then addresses how to generate and analyse EVM information on a routine basis. The guidelines specify at least monthly reporting although some programs receive reports and perform analysis more frequently.

But to start with, what is EVM? Why is it so useful as a measuring and monitoring tool? Let’s understand the basics.

Click here to read the complete article