Why Are so Many Project Systems Failing to Deliver Predictable Projects?

Originally published on LinkedIn by AP-Networks Managing Director Brett Schroeder. 

In my last post, I highlighted an article from the Financial Times: “Dismal project delivery puts big oil and gas energy projects at risk.”

Every major oil and gas company has invested substantial resources in project governance and assurance processes. These are intended to ensure that the project objectives are in alignment with the business needs, and to drive predictable project outcomes.

The data on project outcomes show that owner companies are not getting a great return on their investments. Having conducted more than a few post-mortems on “train-wreck” projects, I hear senior management complain that although the project diligently followed the company assurance process, the project still failed to deliver. Moreover, these projects were often assessed as having excellent front-end loading, with the risks accurately assessed and quantified at the time of authorization. The internal project dashboards were all showing green lights. They want to know what went wrong. Based on AP-Networks’ experience, I have listed some of the most common pitfalls on the assurance process:

• Checklist-driven approach to reviewing front-end deliverables providing a misleading view on the true state of front-end loading
  The quality and content of project development deliverables were not accurately assessed by qualified assessors.
• Heavy focus on the front-end and relatively minimal emphasis on the post-full-funds authorization activities (Execute)
  Well-defined projects can still go south during detailed engineering and construction. The root cause of most project problems resides in the FEL stages, but we see more and more problems occurring with the quality of detailed engineering and effectively managing the construction work force. There has traditionally been less assurance by owner companies on the Execute stage activities.
• Capability and Experience
  The project organization lacks relevant experience and/or resources, which leads to over-optimism regarding the state of planning and preparation.
• Risk Management
  A risk register is in place, but there is a lack of effective follow-through and mitigation plans.
• Misalignment
  There is a lack of input and alignment from all key stakeholders, leading to late changes and/or poor coordination and management of interfaces.
• Estimate Basis
  The accuracy of the authorization estimate is overstated. The estimate is often driven by approval dates rather than true engineering progress.

Finally, senior management shares in the blame. They need to be steering the project, helping the project team manage risks, and challenging the project team’s assumptions in real-time. In my experience, project steering teams are often too passive, not getting the information they need on the true status of the project in order to make timely and informed decisions.  Compounding the problem, project managers tell senior management what they want to hear rather than risk being the bearer of bad news.

In my next post, I’ll suggest some solutions to the problems identified above.