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