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This month I continue to look at different industries that have difficulty in implementing successful change. Last month we looked at the problems cutting red tape in local  government, this month we look at large Oilsands construction projects
Ugh?? Why? Bear with me readers….here’s some facts

• Fact: Canada has the largest reservoir of crude bitumen in the world. Making Canada’s total oil reserves the second largest in the world, after Saudi Arabia’s.
• Fact: Crude oil prices will go through the $100 pbl this year. Making Canada’s oilsands economically viable once again, especially with advances in production technology.
• Fact: Forecasts say Canada will 5.0+ million barrels per day by 2035
• Fact: In the last boom (2005-08) these projects ran notoriously over budget and behind schedule.

So, what’s going to happen in the next boom AND why should anyone care about what happens in the barren lands of Alberta?

Basically, the more delay in these projects, the greater the cost and guess who’s going to end up paying at the gas pump.  Here’s some disturbing evidence. In a recent survey of Oil & Gas Industry executives, most said they were:

• Dissatisfied with project performance (40% of capital projects overrun); Highest ever level of dissatisfaction
• Agreed that poor project performance is not acceptable when the market expects predictable strong returns.
• Agreed that they can’t afford to miscalculate project risks, yet they don’t have a good grasp of how manage them.

(Booz Allen Hamilton “Capital Project Execution in the Oil & Gas Industry”)
You would think these executives would have their act together by now. What sorts of things did the survey identify were going wrong?

Good question. Another survey identified several things, including:

1.  Late scope changes

2.  Insufficient resources

3.  Poor support

4.  Poor contracting strategies

5.  Poor communications

6.  Poor project processes and controls

7. Poorly developed teams

8.  High Team turnover

9. Lack of stakeholder identification and engagement

(PriceWaterhouseCoopers 2004)

It strikes me that lot of these come down to people not being on the same page. For example, to what extent are late scope changes the result of inadequate communication between different groups?

Quite often. We find people in construction projects aren’t aligned early enough. For example, the owner may expect the Contractor (EPC) to have conducted a thorough review of specifications prior to start of drafting only to find out later the review was inadequate.  And the longer specification mistakes remain uncovered the more expensive they become to fix.
The key problem is layered change. It builds pressure to “to get on with it”. Under stressful conditions, the ramifications of meeting the latest change order are not fully considered. So, more change orders are approved without sufficient time or budget for professionals to consider their impact and cost. This sets up “wicked problem solving” – you “solve” one problem but create five more – and so on.( C. West Churchman, 1967)
We have seen this happen when three projects were running in parallel on the same site where increasing Change Orders led to increased Requests for Information (RFIs)
It reminds me of a Monty Python sketch – Mr. Creosote .  Creosote is an impossibly obese man who is served an enormous amount of food  After being persuaded to eat “just one more mint wafer”, he explodes in a very graphic way.
Another good example are Poor Partnering Strategies – Normally performance guarantees and risk sharing are agreed to contractually between, say, Contractor and Sub-contractor. But, invariably no one then takes preventative action align specific expectations to avoid their use. As many say, “if you have to get the contract out then we really are in deep do-do!”

What have you found to explain this a lack of specific expectations and how it contributes to these problems?

At the start of a project, construction people are under enormous pressure to “get on with it!’. So, they agree too readily to others’ expectations of them and accept others’ agreement of their expectations. This ready acceptance of expectations is especially true between professional disciplines and companies. The problem is people don’t really specify what is being agreed to. This only emerges when the expectation’s Receiver doesn’t deliver what was expected by the Originator and then the remedy is usually expensive. At its core is a lack of understanding of what alignment is really about. Alignment requires a Responsibility Shift between an expectation’s Originator and Receiver. Let me explain.

The Alignment Responsibility Shifts

When the Originator has an expectation, they are responsible to initiate discussion with the Receiver(s) (70% of the time this doesn’t happen – LOL)
Shift 1. If the Receiver agrees to the expectation, then the responsibility shifts to the Receiver. To tell the Originator what they will and will not deliver to meet the agreed expectation.
Shift 2. Now, the Responsibility shifts back to the Originator to assess the Receiver’s need for help to meet their expectation. (Contrary to what common sense would indicate):
Shift 3. and most importantly the Originator still has the responsibility to provide that help. For example, like briefing, coaching, advice, support etc.
Now, Originator and Receiver stand a chance of being aligned. The key is that success is more likely, replicable, faster and at reduced cost.

Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime. (Chinese Proverb)
Why don’t project management processes cope with this sort of problem very well?

Two factors. As someone once said:

“If everything is going according to plan, something somewhere is going massively wrong’

First. There is an over-reliance on such processes like accountability matrices (A grid of who does what, who they should consult and inform etc.). They fail to reflect the dynamics of a complex construction project. Back to Mr Creosote….it’s not so much about adding more! (Reporting, processes, communication etc.) but having clear expectations on how we handle problems and opportunities as they arise. Such rational planning processes needs strong emotional glue to be really effective. Let me explain.
Emotionally intelligent glue consists of compounds like trust, constructive criticism and holding each other accountable. And like glue needs “curing”. It needs controlled heat, and a blend of team members to initiate and harden commitments, just like using high-performance adhesives when you need  strong bonding.
The second factor compounds the problems of over-reliance on traditional project management processes. It’s the number of lines communications and deciding which are needed under pressured dynamics. Just take a 100 person project, potentially you could have 9,900 possible communication links.   Regardless of matrix, project or siloed command structures, you still need a way of managing the myriad number of cross functional, organizational and contractor expectations. And if not surfaced and managed will negatively impact project execution.

How do you respond to those that say, “ This is why we have all this technology available so that all those involved have access to what everyone else is doing?

But, somebody has to feed the technology. More reporting what’s been done comes at a price – Time and declining utility. Unfortunately technology has become a two-edged sword….efficient yet overwhelming. It produces so much data that it dilutes information and makes sense making difficult.  This then hobbles a team’s ability to cope with problems, delays and change and what they need to do.
Teams are most productive when they are bonded by the following curing process:

1.  Sustainable Trust leads to
2.  Healthy Conflict which leads to
3.  Solid Commitment which builds
4.  Owning Accountability which enables
5. Keeping Focused under the pressure of delays and problems

If these are not present cracks appear and quickly team adhesion fails. These cracks occur because expectation gaps and misalignments are not addressed early enough.
Let me explain how team adhesion is lost:
Lack  #1: Trust
When team members get unsure what others really expected of them; as opposed to what their company has committed them to legally. This uncertainty is then  compounded by cynicism from previous project experience. A typical cause of which is when:

“People get so absorbed in what they are doing that Key Stakeholders are not actively involved. This has led to tension between them and the project team”

Lack of trust stifles teams engaging in unfiltered, passionate debate about key issues. This can develop into resistance to following through with expectations. Negative attitudes and unstated resistance occur evidenced by politicking,  and regressing into pure self interest.  Effective teams need to have:

“Iron sharpening iron, so one person sharpens the wits of another. (after Proverbs 27:17)

Lack #3: Commitment
Without conflict, it is difficult for team members to commit to decisions and ambiguity becomes the default. The resulting lack of direction and commitment can make project partners and teams disgruntled, falling back on required formal communication and lead to slower response times.

“We are reactive and respond too quickly to changes to understand the implications and impacts on other elements and groups”

Lack#4: Accountability
When teams don’t commit to a clear plan of action, even the most focused and driven individuals hesitate. They hold back from calling their peers on actions and behaviors that are counterproductive. This procrastination means correcting a situation becomes very difficult without direct confrontation of the issue for the overall good of the project.

“We could be better at identifying problems and their solutions before they actually occur.  We are too reactive and this slows us down”

Lack #5: Focus
Now the lines are drawn. Project team members circle their wagons. They fall back into the distraction of putting their own needs first. If a team has lost sight of the need for collective achievement, the project will ultimately suffer.

“We don’t reuse what has been done before – “Reinventing the Wheel” is costly and takes time”
“Measuring the impact of what we do is too subjective and lessens our ability to stay within budget”

These five cracks are rooted in problems of not aligning and managing expectations.

“Expectation Gaps are like pot holes, the more you leave them the deeper they get. The impact of misalignment leads to cost and time overruns and then bleeds over into subsequent projects” (Nick Anderson, PDS Group LTD)

Successful projects are founded on:”Get Personal before you get contractual!”

In summary, no matter how well a project is planned, it is executing the plan that ultimately determines success. Project success demands authentic communication to align expectations and then track them methodically.  Tools  needed to measure, manage and facilitate easier communication and alignment of critical expectations among project participants

So, you’re saying that those managing complex projects, like oilsands, need to stand back and consider what they do differently…..if past delays and overruns are to be avoided?

Certainly, there’s a case to answer and look at a new way of Expectation Alignment for More Effective Project Management. Let’s face it, You Can’t Manage What You Cannot Measure
As many project people will us:

“Building the thing is not difficult compared to managing all the people involved”

So called “soft” skills need hardening. Effective Communication should not only be acknowledged, but recognized as a cornerstone of successful project management.  Why then is it so metric and data starved?  How can we manage what we cannot measure?
So, here are the questions that took us 10 years to answer effectively:

• How do we develop measurable ways of effective Teamworking?
• How do we assess people’s expectations of others with those others have of them?
• How can we drive performance discussions between groups and individuals on their expectations and assumptions that result in:
• Specifying clearer performance criteria against which individuals/groups will be measured
• Removing expectations that are non-value added and not strategically aligned
• Identifying significant issues to address for project advancement
• Creating an accountability framework
• How can we help people be more aligned and focused?

I guess the question in readers minds is: If you make such an investment what do I get in return?

The ROI for Oilsands Projects – Sources of Payback

Expectation Alignment has been successfully employed midstream to “projects in crisis”, but its highest ROI is realized as preventative medicine used in real  time to ensure proper project planning and execution.
We’ve covered Late Scope Changes and Poor Partnering Strategies of the 9 sources of failure. Let’s see how the others can be avoided or protected against by applying Expectation Alignment:

• Optimized  resources / Better support – Early definition of resource expectations all the way down the chain of command can avoid costly delays and expenditures.  Similarly, competency gaps can be identified sooner by engaging in expectation alignment processes.
• Improved communications – With numerous stakeholders involved in an oilsands project, static project charters and the like are not designed to manage the thousands of  changing expectations.  Successful project execution rests on agreeing, discarding or identifying the unresolved…   Expectation alignment methods identify teams and managers who are especially strong or weak at communicating .  Coaching or other remedial actions can thus be undertaken and the results monitored.  
• Accountability Tracking – Expectation Alignment’s regular and measurable process of developing and agreeing project expectations are taken to a level needed for a given project.  Unlike project reporting which can often identify symptoms, Expectation Alignment tools also make accountability for task execution highly visible.   Expectation Tension Ratings may also reveal important tasks that are not necessarily on the critical path but can have huge ramifications to project schedules or budgets.
• Better Team Development– The Expectation Alignment process demands that Expectation Originators ensure that Expectation Receivers have the competency and resources to complete the required tasks.   In situations where senior managers are working with junior personnel, assumptions are often made on their level of process knowledge and industry practices.  Expectation Alignment addresses these issues by facilitating the alignment conversations that reveal experience gaps early enough to develop people and avoid later termination.
• Effective Contracting Strategies – Incorporating subcontractors and key suppliers in the Expectation Alignment process often reveals owner expectations and other stakeholders are not captured in specifications and contracts yet play a significant part in them being effective
• Reduced Team Turnover – Again consider the 5 key” Project Dysfunctions”. (Absence of trust, fear of conflict, lack of commitment, avoidance of accountability and inattention to results). Getting teams participating in facilitated expectation alignment sessions creates an objective assessment of team stressors and progressively builds a more robust and productive project team culture.

Based on this foundation , Expectation Alignment becomes an effective tool to getting new people up to speed and address competency gaps before their credibility is damaged

• Improved Stakeholder Engagement – while inclusion of all stakeholders seems an obvious remedy to avoiding later project problems, the explicit definition of mutual expectations, especially of external stakeholders can yield big paybacks. The process that enables external stakeholders to explicitly state their expectations and have them acknowledged also build good relations both in the current and subsequent projects.

In summary, where project delays are millions of dollars per day, the simple alignment and monitoring of expectations to make the many thousands of required daily decisions more accurate, is strongly beneficial and has been shown to result in very tangible savings.

Tip of the Blog

Here are some questions that are crucial to successful project execution. The above benefits accrue when all people understand:

• What is expected of them
• What they can expect from others
• How well they are strategically aligned
• How their performance is measured and compensated
• What they can stop doing
• What they need to focus on
• What information and resources can be used to achieve their goals
• How they are going to be supported and coached

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For Help in Getting Your People on the Same Page
Nick Anderson, Senior Partner, PDS Group LTD
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© Copyright All Rights Reserved, PDS Group LTD and Walk the Talk – A Blog for Agile Minds, [2010-2011]. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Nick Anderson, PDS Group LTD and Walk the Talk – A Blog for Agile Minds with appropriate and specific direction to the original content.