Project Management Core Problems
Khalid Ahmad Khan, PE, PMPPresident – PMI Lahore Chapter
22 December 2009
About PMIIntroduction
Founded in 1969 by working project managers ◦ 420,000 members and credential
holders◦ 250 chapters in over 70 countries◦ 450 members in Lahore
Goal: Organizations everywhere will embrace, value and utilize project management and then attribute their successes to it.
Project Management Institute
A Guide to the Project Management Body of Knowledge
The purpose of the Guide is “to identify and describe that subset of the PMBOK® which is generally recognized as good practice”
PMBOK Guide®
Standards ensure a basic project management framework is applied consistently worldwide
Project Management Institute
Public Sector Performance
Analysis / Lessons
SolutionsBenefits
PM Core Problems
Public Sector PerformanceChallenges
Public Sector Project Performance 2003
Unsatisfactory outcomes• Cost over runs• Long delays• Poor quality• Unsatisfied users
Planning Commission
Public Sector Project Performance – Nov 2007
World Bank – Pakistan Infrastructure Implementation Capacity Assessment Nov 07
Public Sector Project Performance – Nov 2007
Programming Wrongly selected Planning Poorly executed
World Bank – Pakistan Infrastructure Implementation Capacity Assessment Nov 07
• Wrong Project Design, Location or Basis
• Typical examples• Schools at wrong locations• Infrastructure inconsistent with
needs• Gross over or under design
• Untested development hypothesis
Selection of projects
Programming failure
Example – Addressing urban traffic congestion
C&W Increase capacity
Road widening
Transport Reduce load
Improve Public transport
Other possibilities
Shift trafficRestrict access
(Congestion Charge)
Programming Challenge
Example – Gastro problem in city
WASA Reduce leaks
Revamp sewage lines
Health Enhance capacity
Additional emergency
beds
Environment Improve
water supply
Install Filtration
plants
Other possibilities
Hygiene Education
Water treatment
Programming Challenge
Programming Failure◦ Wrong Project Design, Location, Basis 0-100%
loss Project Delay - Loss of benefits
◦ Electricity production from Ghazi Brotha Rs. 145 million/day – Rs 52 billon/year Total delay in project – 4+ Years
Project Delay - Inflation◦ Impact of inflation on RBOD
Rs. 6.1 million/day – Rs. 2.3 billion/year Total delay in project – Uncertain (current 5+
Years)
Cost of failure
RBOD Project – Nov 05
Project Approved May 2001 Original Budget Rs. 13.95 billion Target Completion June 2005 (48
months) Progress Rs. 2.7 billion (20%)
Apr-01 Apr-09
Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09
Jan-03Construction
Aug-04Consultant M&E
Feb-06PC-1 Revision
Jul-01 - Jul-05Project Span
May-01PC-1 Approval
Jul-05 - Dec-08Extension
Jan-02Consultants
RBOD Revision 2005
Original PC-1May 2001
Revised PC-1Dec 2005
Revised PC-1May 2001 Value
Discounting to May 2001
Rs. 13.95 billion Rs. 30.74 billion
Rs. 21.74 billion
InflationRs. 9 billion
53.6 %
ScopeRs. 7.8 billion
46.4%
OverallRs. 16.8 billion
Progress Rs. 2.7 billion (8.7%)
Analysis/LessonsReasons for failure
PM and Programming
Input Transform Outcome Model
Input Build Output UtilizeOutcom
esIdentify Select
Project Management Processes
Major Causes for Project FailureSecretaries workshop - 2003
Rank P&D and Finance1 Original assumptions & estimates invalid2 Change in government priorities3 Unclear Objectives4 Lack of senior management support5 Ineffective team
Rank Others1 Ineffective team2 Lack of senior management support3 Inadequate funding4 Change in government priorities5 Original assumptions & estimates invalid
Major Gaps in Delivery of Projects – Nov 2007
World Bank – Pakistan Infrastructure Implementation Capacity Assessment Nov 22-07
Public Sector DevelopmentEstimation at PC-1 Stage
Payments[10%]
Project Identified
PC-2Feasibility
PC-1Project Approval
Technical Sanction[4%]
Tendering[Premium]
Award
Execution Measurement of Work
Estimate Type Design Complete AccuracyOrder of Magnitude 0-5% +50% to -30%Budget 10-15% +30% to -15%Definitive 45-100% +15% to -5%
Estimation Standards – American Association of Cost Engineers © 2002
Bias in Project Roles
ClientEngineer
Contractor
Role of Client1. Sponsor
Role of Engineer2. Design3. Control Quality4. Supervise contractor5. Project Planning
Percent based consulting fee
Limitations of Financial Monitoring
Assumes all money spent is used with 100% efficiency◦ Works fine only if the project is on-track◦ Ignores Scope & Time
Physical Progress vs. Financial Progress
80.00
70.00
50.00
70.00
100.00
- 20.00 40.00 60.00 80.00 100.00 120.00
Physical-3
Physical-2
Physical-1
Utilized
Budget
BudgetUtilizedPhysical-1Physical-2Physical-3
Project Splitting/Organization
Project Director
ProjectManageme
nt
Operations
ContractManageme
nt
Technical
Finance
Project Director
Package 1
Package 2
Package 3
Package 4
Package 5
Traditional Functional
SolutionsImproving outputs/outcomes
PMP Prep Primavera PM Soft Skills Leadership Incentives for
government officials 100% subsidy on
training course + exam fees
Bonus of USD 2,000 for passing certification
Skill Enhancement
Programming (Portfolio, Program)• Focus: Selecting the Right Projects
Project Management• Focus: Do the Project Right
Integrated Programming/PM
• Budget• Resources
Inputs
• Methodology• Activities
Process • Deliverables
Outputs
• Proper use of Deliverables
Utilization • Improved indicators
Outcomes
Analysis of Project Context - PPM
Stakeholder Analysis – PM 2.3
Problem/Situation Analysis - PPM
Objectives Analysis – PM 4.1
Plan of Activities – PM 4.2
Resource Planning – PM 6.1
Measurement of Objectives - PPM
Risk Analysis & Mgt – PM 11.1
Analysis of Assumptions -
PPM
Design: LFA and PMI Standards
Project Management Standard – PMI PMBoK 4th Ed
Initiating
Controlling
Executing
Planning
Closing
Earned Value Project Management
• Plan all Work prior to beginning it• Measure performance based on an objective
set of Criteria• Analyze schedule using a Time Phased CPM• Analyze the expenditure of funds in light of the
work Accomplished
Core Concept
Earned Value Analysis
Conclusion: •Accurate picture of project status•cost, schedule, and technical•Early and accurate identification of trends and problems•Basis for course correction•Bring project in on schedule and cost
Project Roles
ClientPM Firm
Engineer Contractor
Role of Client1. Sponsor
Role of PM Consultant2. Manage Schedule
Role of Engineer3. Design4. Control Quality5. Supervise contractor
Fixed/Incentive price consultant fee
BenefitsResults of good project management
Construction Work in Progress on Taunsa Barrage Rehabilitation and Modernization Project
Taunsa Barrage Rehabilitation
Taunsa Barrage
•Duration: 1092 days, 10th May 2005 – 31st May 2008
•Cost: Rs 4,527.6 Million
•Major Works: Strengthening of Existing Barrage, Construction of Subsidiary Weir, Construction of Silt Excluder, Remodeling of DG Khan Canal Head Regulator
Taunsa Barrage
•Duration: 1092 days, 10th May 2005 – 31st May 2008
•Cost: Rs 4,527.6 Million
•Major Works: Strengthening of Existing Barrage, Construction of Subsidiary Weir, Construction of Silt Excluder, Remodeling of DG Khan Canal Head Regulator
Taunsa Project Baseline
May 10, 2005May 10, 2005
May 31, 2008May 31, 2008
15/6/06 - 15/9/06Flood Season
Non-Work
15/6/07 - 15/9/07Flood Season
Non-Work
15/6/05 - 15/9/05Flood Season
Non-Work
May 10, 2005May 10, 2005
May 31, 2008May 31, 2008
15/12/05 - 22/2/06Canal Closure
Work Time
15/12/06 - 22/2/07Canal Closure
Work Time
12/15/2007 - 2/22/2008Canal Closure
Work Time
EARLY
ROI of Project Management
Construction Inflation◦ Long term (4 yr) trend: 9.1% per annum
Based on RBOD-II analysis◦ Short term (1 yr) trend: 13.3% per annum
Based on Market Rates data from Finance
Taunsa Project◦ Budget: Rs. 4.26 billion ◦ 3 Yr Inflation Impact: Rs. 883 million◦ 2 Yr Inflation Impact: Rs. 555 million
Saving: Rs 328 million (8.0% of Budget Cost) PM Cost:
PMO I&P: Rs 50 million (1% of Budget Cost) PMU P&D: Rs. 5 million (0.1% of Budget Cost)
PM Implementations Lessons
LCCE Lahore RR RBOD-II Taunsa
PMO No No No Yes
Client Project Plan Yes Yes No Yes
Contract n x NCB n x NCB n x NCB 2 x ICB
Contractor Project Plan No No No Yes
Performance Delay 2 yrs Delay 2 yrs Delay 4 yrs Ahead 1 yr
Good Programming
• Insures selection of Right Projects
Good Project Management
• Based on: PMI PM Framework
• Insures that projects are executed successfully
• Project Plan• Procurement Plan• Responsibility Matrix
Conclusion
Q&AThank You