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Managing Large Projects (Part2)
The Large System Effect
However, before exploring these concepts, we must understand the Large System Effect. In the late 1950's work undertaken in Operations Research during World War II evolved into a broader body of knowledge known as General Systems Theory. Lead by Ross Ashby, Ludwig Von Bertalanfy, Geoffrey Bateson and Stafford Beer and others, General Systems Theory explored the nature of complex systems such as eco-systems, large organizations and the human body. One of the most profound learnings from this research was a simple principle:
The larger the system the harder it is to predict its behavior.
As shown in Figure 1, as systems and/or projects get larger, the number of potential inter-relations and connections between the components (i.e. sub-projects) grows in a non-linear fashion. In projects, the result of this dynamic is that the productivity of the teams drops dramatically as the project size increases. For example, imagine a small project with 2 critical stakeholders. For the project manager to get both those stakeholders into the same room for a meeting may take a couple of phone-calls. Now imagine the same process for a large project with 20 critical stakeholders in a number of different organizational areas. Capers Jones has data drawn from over 3,000 projects that shows order of magnitude differences in the same activity in small and large projects.
Fig. 1 - Large system effect (from Jones, Thomsett, et al)
Project Success
It has long been considered that a project is successful when it: (a) meets agreed requirements; (b) meets agreed deadlines and; (c) meets budget as measured in people, equipment and so on. However, our group has extended the concept of project success as follows:
- satisfies stakeholders and clients;
- meets project objectives;
- meets budgets;
- meets deadlines;
- adds value (R.O.I.) for the organization;
- meets quality requirements; and
- meets/satisfies teams professional requirements.
For large project, the overwhelming evidence is that the concept of success must be re-considered. As detailed in Appendix A, every development profession (engineering, construction, defense, manufacturing) has its own version of large systems. For example, currently in the Australian construction industry, the new Parliament House, the Sydney Olympics, Darling Harbour projects are clear examples of large projects.
In all cases, the publicly available material indicates substantial blowout of costs (10:1 for the Parliament House, 10:1 for the Olympics, and 5:1 for the Darling Harbour) and missing of deadlines and slippage of project time frames. Further, the Darling Harbour costs exclude the Casino which in January 1988 (the original deadline) was not completed until 10 years later. The Sydney Olympics was originally estimated at $600,000,000 and eventually cost over $6,000,000,000,000. While these may appear to be isolated cases, any detailed research into large manufacturing, defence and construction projects reveals the same pattern of project cost-blow-out and deadline slippage. For example, the RAND Corporation examined the cost over-runs of new Processing Plants in 1981. One of their conclusions was:
Severe underestimation of capital costs is the norm for all advanced technologies .
An examination of large computing projects within Australia and America reveals the same pattern. The Australian Public Service's MANDATA, Job-Seeker and Stratplan projects, Bank-America's Masternet (1988), Allstate Insurance (1988), the I.R.S. Migration Project and the Commonwealth Bank's Hogan project all failed to meet the three success criteria. In the case of MANDATA, Masternet and the Hogan project, the projects were abandoned once it became clear that the requirements were facing compromise following budget and deadline blowout. Stratplan, Allstate and Job-Seeker have both faced massive cost and schedule over-runs but are still being developed as the requirements for the projects are still achievable.
The conclusion must be drawn that for large projects, inability to meet all the success criteria is not the exception but the rule.
Simply, whereas normal projects could be expected to meet all success criteria, large projects will meet only one or perhaps two of the success criteria i.e. meet requirements or meet deadline or meet budget.
This revised concept of success for large and super-large projects does not imply that budgets and deadlines are simply sacrificed in order to meet requirements. Indeed, as argued later, the application of budget and schedule control is essential to minimize additional blowouts. However, for large projects, it is inevitable that meeting requirements (original and revised) will not be possible within the initial estimates and budget. When this occurs, the budget and schedule are expanded in a controlled process (see Change-control later).
It is critical that the success expectations for large projects are discussed and negotiated openly before the project is commenced.
For example, in implementing the Goods and Services Tax in Australia, most organizations realized that the success criteria of quality and deadline were mandatory. As a result, there was an ability to negotiate whether all systems had to be compliant by the deadline and the budget, team satisfaction and level of stakeholder satisfaction were compromised. A similar pattern existed in most organizations for the Y2K project..
Project Management Technique
Formal and highly disciplined project management techniques are mandatory for large projects.
The use of RAPP's (Rapid Project Planning) developed by our group are mandatory. These structured planning sessions involving the team, stakeholders and related project managers in planning projects and developing the project Business Case have been proven to improve the quality of and the stakeholder buy-in to projects. They also dramatically reduce the elapsed time for planning.
Because of the need for communication across multiple sub-teams and specialist teams within and many stakeholders outside the project team's organization, the detailed scheduling of tasks and documentation of critical project management information - risks, assumptions, key decisions, agreements and costs is essential to provide a total project view.
Further, the use of organizational standards such as development methodologies, naming conventions, data dictionaries and formal Quality Assurance techniques can minimize the communication complexity. For example, it is typical that large projects will involve multiple project development approaches such as prototyping, quick-wins, fast tracking and so on. These various strategies should be formally documented and common amongst all sub-projects.
The role of senior management is also vital in large projects. Whereas many Steering Committees simply act as review groups, because of the broad organizational impact of large projects, the Steering Committee must act as a problem-solving group particularly in the area of cross-boundary or inter-group disputes. Given the strategic importance of large projects, the senior management Steering Committees must become involved at a more detailed level than is typical for Steering Committees. As discussed later, changes are inevitable in large projects and changes to requirements, costs and schedules must be reviewed by the Steering Committee and specific levels of delegation and authority must be in place to ensure that the typical process of gradual and incremental alteration of the project does not occur without Steering Committee approval.
In addition, it is mandatory that a large project must have a powerful and totally focused Project Sponsor.
The author's research indicates that large projects involve additional project management effort than that required for normal projects. It is generally accepted that 10% of the total development effort should be allocated to the processes of project management for normal projects. For large projects, this allocation could rise to the range of 20-30% of the total development effort. In other words, on a large project of 50 people, 10 would be full-time on running the project management system - communicating with stakeholder, planning and re-planning, selecting tasks, estimating, scheduling, tracking effort and deliverables, reviewing and re-scheduling as required. Since much of the project management process involves clerical tasks such as recording, summarizing and aggregating data and driving the automated project scheduling tools (see later), the 10 people allocated to project management would include a number of specialist and clerical support people (a Project or Programme Office). As covered later in this paper, super-large projects also involve significant additional project management effort in managing the external groups involved with the project.