Project Performance Management

Present and Future

Russ Novak

Director of Consulting

ARC Advisory Group

rnovak@arcweb.com

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Agenda

Why Rethink Project Performance Management

Owner’s Perspective of Project Performance Issues

Evolution of Project Performance Management

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Rethinking Project Performance Management

Plan Design Procure Build Operate MaintainRetire & Recycle

Project Performance Management (PPM)

Asset Performance Management (APM)

Project PerformanceManagement

(PPM)

Asset PerformanceManagement

(APM)

Asset & Project

PortfolioManagement

(APPM)

Handover

ModificationRequests

FundedProjects

New Facility

Requests

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Why Rethink Asset Lifecycle Management?

Riskier Business Opportunities

More Mandatory Investments

Limited Capital, Tough Capital Markets

Bigger, More Complex Projects

Global Projects, Global Project Teams

Escalating Labor and Material Costs

Poor Asset Utilization, High O&M Costs

Aging Workforce, Lack of Skilled Workers

Legacy IT Systems Constrain Improvement

Easy IT solutions can help

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Research Results: Owner Perceptions on Project Performance Management Issues

How do you accomplish Handover?

What about JVs and governance?

How does IT play a role in Governance?

Do you use GRC software?

Document management?

How do you approach governance and process assurance?

How well do you integrate Project and Engineering Systems?

Do you use Portals for project status reporting?

What about asset-centric information management?

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Governance and Process Assurance

Need well defined & governed CapEx delivery processes

Adoption by Top Tier Performers

Internal or External Controls & Metrics

Corporate/Enterprise versus Project/Engineering Workflow Perspectives

• Enterprise Issues Trump the Engineering Workflow Analysis & Lead to Corporate IT Involvement

• Continual Improvement

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Project Performance Management: O/O Activities Require Effective IT Strategy

PortfolioApproval

OperatingFacility

Process Design

Handover

Commission

Budgeting

Estimating

Construct

Project Mgmt

Finance

StartUp

Scheduling

Mgmt Reporting

Procure

Evaluate

InspectionEngineering

FEED

Permits

Training

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Project Performance Management: Reality, Constraints & Obstacles

Different Worlds: O/Os don’t fully understand the information requirements of E&D, EPCs, or Project Mgmt. … and vice-versa

IT Gaps: Asset-centric Approach vs. “Silos”

Interdependency issue is underestimated

“Workarounds” distort reliability of information

Increase in Size/Complexity/Costs: =>Unacceptable Risks with IT legacy systems

Failure to follow Best Practices/Governance omissions

Lean/Aging workforce (information transfer & retention)

Engineering Tools originally designed for E&D, not O/O

Evolution in format of information: Drawings --> Databases

Initial development of IT systems not focused on project execution

Not fully integrated with Portfolio Performance

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Project Performance Interdependency with Portfolio Assumptions

SPECIFIED Benefits, Risk,

Resources

Project Approval is based upon specific assumed levels of Benefits,

Risk, and Resources.

Project Performance Management for all projects must be

synchronized, standardized, and update the Portfolio Performance

Management base cases.

Portfolio Projects

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Evolution of Project Performance Management

Evolution of Project Performance Management is being driven in part by …

Adoption of Portfolio Performance Management

• Synchronizing corporate business objectives with selected projects

• Prioritization/ranking/selection of competing projects

• Competition for investment, people, resources,

• Alignment with strategic initiatives (sustainability, etc)

• Lifecycle of “project” becomes lifecycle of asset

• Increased emphasis of Risk Analysis

• Trend of executive access via dashboards, etc.

• Stakeholder community expanded (marketing, financial, sustainability, compliance, L-R planning)

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Project Performance Management: The Future - Optimal Case

O/Os fully understand the asset information needs of E&D, EPCs, and Project Management …and vice versa

Lean/Aging workforce issues resolved/compensated by emergence of knowledge worker and IT implementations

Engineering Tools evolve with inherent IT capabilities for both Project and Operations domains

Technology enables automation of IT strategy for PPM

IT and enterprise systems are totally in sync with the entire project space and portfolio management processes

All phases of project performance management is understood, accepted, and incorporated into normal business workflows

Seamless transfer of Project information to Operate and Maintain phases

Central governance and process assurance programs mature, but continue to improve

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Takeaways

ARC continues to expand its ALM research efforts in the Project Performance Management space.

Project Performance Management is evolving and will exhibit tighter integration with Portfolio Performance Management.

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Thank You.For more information, contact the author at

rnovak@arcweb.com or visit our web pages atwww.arcweb.com