Ensuring Oilsands Project Success – Whitepaper

by | Jan 30, 2011 | Project Management

Authors: Brant Sangster, IMC (former Sr. VP Oilsands Petro Canada),Dr. Paul Clark, IMC (former CEO Nova Chemicals Technology, Board Member NRC, CCEMC),Dr. George Jergeas, Dept of Civil Engineering, University of Calgary, Nick Anderson, Senior Partner, PDS Group, Editor: Rolf Wenzel, IMC, Director Business Planning

Overview

Mobilizing armies of skilled labour from diverse locations and cultures, moving large equipment into remote locations in harsh climatic conditions and managing to budgets while costs are escalating make oilsands projects among the most challenging ever undertaken. Perhaps the most critical success factor  in managing such complex projects is establishing and developing productive relationships. This key factor is very difficult to measure yet is cited repeatedly as the number one reason for project failure. Consistently,  project  managers’  expectations  of,  colleagues,  teams,  subcontractors,  workers  and project  partners  are  substantially  different  from  what  they  actually  think  is  expected  of  them.    Such misalignments result in expected tasks not being completed in the way required for project success, tasks  being  completed  in  a  sub-optimal  sequence  or  excessive  time  invested  on  “low  return”  tasks. These  misalignments  cascade  into  scheduling  conflicts,  delays,  cost  overruns,  personnel  turnover, increased stress, safety and legal issues.
The take-away: New methods have been developed for the gathering and analysing of expectations from both the expectation originator’s and expectation receiver’s point of view. This enables the diagnosis of misalignments critical to project success, and facilitates the timely conversations required to align expectations and to keep projects on track before they become critical variables. Resource and competency gaps are exposed  and addressed. High achieving managers can be identified. A culture of communication, alignment and accountability can be measured and developed.

Listen to an introduction by Nick Anderson

CONTENTS

1.0 Oilsands Projects – What Makes Them Unique
2.0 Why do Projects “Fail”?
3.0 Expectation Alignment for More Effective Project Planning and Execution
4.0  Case Study – Large Construction Project
5.0 Project Teams as a Neural Network – The Foundation for a Culture of Alignment and Accountability
6.0 The ROI for Oilsands Projects

1.0 Oilsands Projects – What Makes Them Unique

The Opportunity

With over 170 billion barrels of recoverable reserves, the Alberta oilsands represent a unique opportunity for North America to achieve a greater degree of energy independence in a low risk operating  regime.    Total  oil  supply  from  Western  Canada  is  expected  to  grow  from 2.4 million barrels  per day  in 2005  to  over  3.6  million barrels  per day  (bbl/day)  in 2015,  an increase of 50%.  This requires an investment of between $94 and $125 billion.1 While  some  bitumen  reserves  are  accessible  using surface mining  techniques,  most of the recoverable reserves  are  deeper  and  accessed  using  Steam Assisted  Gravity  Drainage  (SAGD)  technology  that requires far less surface land disturbance. While not without  reservoir  risks,  SAGD  enables  operators  to expand  production  more  gradually  than  mining operations because the minimum economic size of a SAGD  project  can  be  scaled  down,  perhaps  even below 10,000 bbl/day.

 

Suncor Oilsands Plant

The Challenges
Size – These large projects are large, with capital budgets currently ranging from $250 million to $7  billion,  or  US$25,000  to  US$70,000  per  flowing  barrel.    Projects facilities range  in  size from10,000  bbl/day  to  over  100,000  bbl/day.      Every day  of  schedule  slippage  could  cost between $1 million and $10 million in lost revenue. Complexity  –  These  projects  are  characterized by  a  large diversity  of functional  areas  each with  separate  project  managers, budgets  and  schedules.    There  are  many  project  elements, requiring  a  long  build  schedule  with  the  possibility  of  multiple  EPCs  and  many  and  diverse suppliers and contractors.
For example: Designing and constructing a $3-billion oilsands project can involve the following:
(Why Cost and Schedule Overruns on Mega Oil Sands Projects?, George F. Jergeas, Ph.D., P.E.1; and Janaka
Ruwanpura, Ph.D., PQS2; Practice Periodical on Structural Design and Construction, ASCE / February 2010)

Engineering effort:

  • 3.5 million work hours at a cost of $100/h.
  • 40–50,000 design drawings.
  • 10–20,000 vendor and shop drawings.

Construction effort:

  • Typically runs at 5,000 work hours for each million dollars invested, i.e., 10–15 million man-hours at $85–$100 per hour for a $3 billion project..
  • Supported by 500–800 staff personnel.
  • Labor force of 10,000 workers with a turnover of 30,000 people. (Even using the lowest North American average estimates of replacement costs for $8.00/hr employees of $3,500, this equals a cost of $105 million!)
  • Organize order, store, and retrieve 80,000,000 material items.
Procurement and transport logistics challenges to a remote location can be  exacerbated by long lead  times  on  key  equipment,  increasing  the  risk  of  scheduling  conflicts  and  slippage. Personnel training, scheduling and logistics are complex and include continuous flights bringing workers in from Eastern Canada and elsewhere.   There are complicated communications lines among the functional areas, contractors, locals business and governments.  The  involvement  of  multiple  equity  partners  with  substantial  financial  interests  adds  another level of accountability and can be a bottleneck in decision making.  Partner communications can add significant project overhead and makes it more difficult to respond to change, or innovations arising mid-project that could benefit the project.
Climate – Harsh climatic conditions affect productivity, health and safety, and project costs, especially for workers unused to working in these conditions. Health & Safety – In addition to working in a harsh climatic environment, cultural and language barriers with foreign workers can affect safety.  High turnover and inexperienced workers pose dditional safety risks.
Labour – Availability and Productivity – As projects begin to ramp up again, the risk of shortages of experienced project managers and skilled labour may again increase.  Personnel retention was a major issue during the construction boom up to 2008.  The cost effective integration of aboriginal  contractors  requires  special  attention.    The  balance  between  union  and  non-union labour must be planned and managed.   Housing and the cost of living are expensive in the Ft. McMurray area. Workforce scheduling and logistics are a major challenge and there has been  lack of  cooperation among operators  in this area,  largely based on concerns around  losing personnel to other projects.
Environmental – Oilsands projects have become the centre of media attention in the past few years.  Thus, even the design and construction phases of these projects must demonstrate a proactive stance, rather than just compliance.
“In summary, future oil sands projects are going to be more complex due to both a set of external and internal factors interacting dynamically with each  other.  This  means  that  the  industry’s  ability  to  manage  socio-political, economic and technological fluctuations over a project’s life will be  critical.  This  is  not  an  advocacy  for  throwing  out  the  tried  and  true project management disciplines but learning how to use them in far more fluid circumstances”
(Richard Westney, Westney Consulting Group)

2.0 Why do Projects “Fail”?

“Insanity: doing the same thing over and over again and expecting different results”
Albert Einstein

The State of Oilsands Projects

During the 2005 to 2008 period, oilsands  projects were notoriously over budget and behind  schedule.   With  the  current  ramp  up  of  projects,  can  we  face  similar  cost escalations and labour shortages  in the coming years?
Randy Ollenberger, (BMO Nesbitt Burns Inc.), points to the expansion of  the Athabasca Oil Sands Project as it was the biggest project to continue construction throughout the entire market crash. But  rather  than  costs falling, they  continued to  rise.  “If  there were great  savings to be had, they should have captured them. And clearly they haven’t,” he said.
Steve Laut, President, Canadian Natural Resources (05/21/10) fears that cost escalations may be an unavoidable outcome of the rush to get back into oil sands.
“There will probably come a point in time that people feel confident oil prices aren’t  going  to  fall  to  $30  [U.S.]  again  and  everyone  will  have  their engineering done more or less at the same time. So there’s potential that you could get some overlap in projects. Canadian Natural is already struggling with the lingering effects of the last boom, when triple-digit oil prices propelled a mad building scramble. That has resulted in operational problems at the first phase of its Horizon oil sands project, which Mr. Laut admitted has been “bumpy.”
A recent Booz Allen Hamilton report, “Capital Project Execution in the Oil & Gas Industry”, indicated that the majority of energy industry executives:
  • Are dissatisfied with project performance (40% of capital projects overrun) his level of dissatisfaction is the highest ever.
  • Agree  that  poor  project  performance  is  not  acceptable  when  the  market  expects predictability and strong returns.
  • Accept that they cannot afford to miscalculate project risks, yet they do not have a good grasp as to how to manage them.
According to Richard Westney, Westney Consulting Group,
“Everyone in the industry is aware of the major cost overruns and schedule  delays  associated  with  major  projects  today.  An  often overlooked  fact  is  that  these  overruns  are  often  announced  when projects  are  well  into  construction—long  past  sanction  and  at  a  time when traditional project risks have (or should have) been mitigated. How is this possible when conventional wisdom suggests that all project risks should  have  been  understood  and  under  control  by  this  time? Conventional project risk management is based on two assumptions:
• Good “front-end loading” ensures a high level of confidence in the estimate of time and cost at sanction.
• Project risks decrease with time and progress.”
Since it is not uncommon for projects with good front-end loading to experience major  overruns  well  after  sanction,  we  must  ask,  “What  is  missing  from  the conventional approach?”

Symptoms and Causes

The symptoms of “project failures” or significant negative variance from plan are obviously manifested  in  easily  measurable  parameters  such  as  budget  overruns,  lateness  and  safety issues. However, problems can start long before these measurements of tactical activity are possible. Jergeas  et  al5  point  out  that  the  trend  towards  project fast  tracking  can  result  in  appropriate planning time being traded for overly ambitious construction schedules which can result in more overtime  and  higher  materials  and  equipment  expenses.  In  addition,  inadequate  time  spent planning  in  areas  of  risk  management,  project  control,  communications,  organization, contracting, design, procurement, site layouts, utilities, commissioning and external stakeholder  management, among others, can result in a fundamentally misaligned project strategy. Conversation  with  oilsands  operators  and  a  review  of  the  2004  multi-sector  study  by PricewaterhouseCoopers  (PWC),  “Boosting  Business  Performance  through  Programme  and Why Cost and Schedule Overruns on Mega Oil Sands Projects?, George F. Jergeas, Ph.D., P.E.1; and Janaka Ruwanpura, Ph.D., PQS2; Practice Periodical on Structural Design and Construction, ASCE / February 2010
Project Management”,  among  the  top  reasons  cited  for  “project  failures”  were  issues  and misalignments in the following areas:
  • Late scope changes

    Nearly but Not Quite

  • Change in environment
  • Insufficient resources / Poor support
  • Poor communications
  • Poor project processes and controls
  • Poorly developed teams
  • Poor partnering strategies
  • Poor contracting strategies
  • Team turnover
  • Inadequate definition of stakeholders
Late Scope Changes – To what extent are scope changes the result of inadequate communication of  expectations  between  owner  and  EPC,  or  EPC  and  contractors?    At  the earliest stages of the project, inadequate specifications can be a root cause.  The owner may expect the EPC to have conducted a thorough review of specifications prior to start of drafting. Was this expectation communicated and detailed evidence of completion requested?   The later in the project these sorts of changes occur, the more expensive they become. Attempts to appease, accommodate or just to get things done means change orders or scope changes  are  too  readily  accepted  without  sufficient  impact  analysis.  This  situation  is  often compounded by having no firm and set date beyond which no further changes are accepted.   It is  reminiscent  of  Mr.  Creosote,  a  fictional  character  in  Monty  Python’s  the  Meaning  of  Life. Creosote  is  an  impossibly  obese  man  who  is  served  an  enormous  amount  of  food  in  a restaurant. After being persuaded to eat one more mint, he explodes in a very graphic way. The key error is the consequent layering of changes creates an almost blinkered approach of approvals or rejections while losing sight of bigger, end repercussions.
Changes in Environment – It may be beneficial to ask the question, “How can we improve our  ability  to respond to  environmental  and other  changes”?   To  what  extent  could  improved communication of expectations mitigate these issues?  Have the owner and EPC clearly relayed their expectations of rapid communications from contractors and suppliers when circumstances change?    Does  the  project  have  a  change  management  plan  with  specific  communication protocols for managing crises?
Insufficient Resources  /  Poor  Support –  Supply  chain  logistics  are  both  critical  yet vulnerable aspect of oilsands project execution. It relies heavily on proper communication and tracking agreed and unmet expectations.    Shift scheduling and logistics optimization offer large opportunities for efficiency gains.  To what extent are the expectations of efficient and proactive communications  relayed  to  all  levels  of  the  project  structure?    What  mechanisms  exist  to facilitate this and ensure monitoring of logistics operations? Especially  lacking  are  those  inter-professional  expectations  which  don’t  really  specify  what  is being  agreed  to.  The  act  of  agreeing on  an  expectation  is  too  easily  accepted.  The problem emerges when the expectation’s Receiver doesn’t deliver what was expected by its Originator. The problems often lies when the Originator doesn’t ask the Receiver to state what evidence they think meets the given expectation. This  situation  is  often  compounded  under  stressful  and  changing  conditions  where  the ramifications of meeting the new expectation are not fully considered on existing commitments.
Poor Communications – The number of possible lines of communication in a project can be expressed as n2 – n, where “n” is the number of people assigned to the project.  Thus a 100 person project would have 9,900 possible communication links.   Regardless of matrix, project or siloed command structures, there are still many cross functional and contractor expectations that are not surfaced or managed and that impact project execution. These lateral links are so numerous and not so obvious that important connections for timely and  accurate  communications  are  missed.  Many  would  say  with  all  the  technology  now available, all those involved have access to what everyone else is doing or challenged by. The reality, as one Project Manager expected of a design engineer: “If you find out you can’t make your deadline, don’t email me – pick up the @#$% phone…” Communications technology has become a two- edged sword – efficient yet overwhelming. While  many  respondents  cited  poor  communication  a  significant  problem,  to  what  extent  are poor communications or processes a root cause of the other cited project failures?  Following are quotations gathered from participants in various projects:
1. “We could be better at identifying problems and their solutions before they actually occur.  We are too reactive and this slows us down”
2. “The way we allocate resources and feedback on their (subcontractors’) performance compounds problems in managing projects”
3. “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”
4. “We are reactive and respond too quickly to changes to understand the implications and impacts on other elements and groups”
5. “We don’t reuse what has been done before – “Reinventing the Wheel” is costly and takes time”
6. “Measuring the impact of what we do is too subjective and lessens our ability to stay within  budget”
7. ‘Cost overruns and missed milestones are too common and compounded by finger pointing”.
Some of which are directly attributable to expectation gaps:

Project Team Dysfunctions

Dysfunction #1: Absence of Trust
This occurs when team members are unsure what others really expect of them as opposed to what their company has committed to legally.
Dysfunction #2: Fear of Conflict
Teams that lacking trust are incapable of engaging in unfiltered, passionate debate about  key  issues.  This  causes  situations  where  team  conflict  can  easily  turn  into personal, veiled discussions and a retreat to pure self interest.
Dysfunction #3: Lack of Commitment
Without conflict, it is difficult for team members to commit to decisions, creating an environment  where  ambiguity  is  comfortable.  Lack  of  direction  and  commitment  can make project partners and teams disgruntled, fall into formal communication and lack of responsiveness.
Dysfunction #4: Avoidance of Accountability
When teams don’t commit to a clear plan of action, even the most focused and driven individuals  hesitate  to  call  their  peers  on  actions  and  behaviors  that  may  seem counterproductive early enough to correct a situation for the overall good of the project.
Dysfunction #5: Inattention to Results
Project team members naturally tend to put their own needs (ego, career development, recognition, etc.) ahead of the collective goals of the team when individuals aren’t held accountable. If a team has lost sight of the need for achievement, the project ultimately suffers.
The above dysfunctions are rooted in problems with aligning expectations.
(Adapted from Patrick Lencioni “Five Dysfunctions of a Team”)
“Expectation Gaps are like pot holes, the more you leave them the deeper they get. The impact of misalignment leads to projects overruns.” (Nick Anderson, PDS Group LTD)
Poor Project Process and Controls Execution – It is the daily execution using project process  controls  that  makes  the  difference.  Senior  management  can  be forgiven  for  thinking that if processes and controls are in place that they are being used diligently.   However, the early  clear  communication  of  specific  expectations  around  development  and  use  of  these systems is foundational to success. Increased complexity and changing dynamics in running oilsands projects means the industry has to pay more attention to the costs of misalignment.
Poorly Developed Teams – While projects of this size and complexity usually command the best available personnel, Alberta companies often have large experience gaps between senior managers and junior managers.   Bridging these competency gaps requires clear expectations communication  of  responsibility  not  just  tasks.    Then,  crucially,  conversations  must  align expectation originators with the expectation receivers, including deliverables. Only then can the originator effectively rate the receiver’s competence and performance.
Poor Partnering Strategies – Staffing for inter-partner communications, that add millions of dollars to the cost of a project, buffer the project teams from regular and ad hoc reporting and information requests.  The less work that is done up front in explicitly defining expectations in geographically remote and culturally different partners, the more cost in communications.  Far more  important  however  are  the  potential  for  delays  in  the  project  where  unexpected circumstances  need decisions  requiring  consent  from  partners.        These  may be  changes  in project  circumstances  or  opportunities  for  applying  improvements  or  innovation  with  potential positive economic impact on the project.
Poor Contracting Strategies – Failure to document performance guarantees and risk sharing  obviously  undermines  contractual  relationships.  However,  on  site,  it  is  really  about avoiding ever to having to use them.   As many say, “if you have to get the contract out then we really are in trouble!”. Partnering starts to fail when specific expectations aren’t communicated, agreed,  discarded  or  are  unresolved  to  avoid  using  these  contractual  devices.      Successful partnering is founded on: ”Getting personal to  prevent ever getting contractual”.
Team Turnover – Poor communication and alignment of expectations often causes of turnover.    When  expectations  like  budgetary  discretion,  scheduling  flexibility  and  safety protocols are not only agreed but managed to, employees may not wish to stay and face the consequences. This will be a major factor again if the industry goes back to its practices of the last boom in Alberta. Apart from cost and experience and project knowledge “walking out the door” from the project managers risk losing well  established relationships  both  within  and  outside the  team.  They  then  hobble their replacements with no clear commented expectations to help new team members get up to peed with the right people.
Inadequate Stakeholder Engagement – Oilsands project stakeholders are diverse, typically  including  owners,  EPCs,  contractors,  suppliers,  logistics  providers,  regulators,  local communities, local businesses, aboriginal communities, environmental groups and others. It’s  natural for those  planning projects  to focus on  project execution.  Yet  how  often  has  their apparent disregard of some stakeholders led to delays, scope creep and cost overruns?  Here the illusion of efficiency fails to take into account those that need to be onside for the project’s success.    This  then  creates  a  corrosive  element  to  relationships  when  stakeholders  feel disregarded.  By  the  time  Project  Staff  realize  the  need  to  align  they  have  an  uphill  battle  to convince these parties of there inadvertent lack of alignment. The key concern is: How many of these stakeholders and project staff will then be involved on subsequent projects. Mutual suspicion built up from one project bleeds over to the next project.
Summary
In summary, planning, whether “fast track” or not, still requires a clear concise and communication  of  expectations  by  stakeholders  along  key  aspects  of  the  project strategy.   While  this  paves  the way  for  successful  project execution,  simply  allocating the resulting tasks does not ensure success. Without project   manager’s expectations being  understood  and  “bought  in  to”  by  the  engineering  or  construction  domains, improved performance will not occur.   Fast Tracking methods of strategic planning and construction  risks  getting  ahead  of  stakeholder’s  ability  to  measure,  manage  and facilitate communication. New methods of more effective communication and alignment of  critical  expectations  are  needed  to  cope  with  this  decade’s  accelerating  project dynamics.

3.0 Expectation  Alignment  for  More  Effective  Project Planning and Execution

You Can Only Manage What You Can Measure

Effective interpersonal communications is  a  recognized  cornerstone  of successful  project  management.    Why then  is  it  so  metric  and  data  starved? How  can  we  manage  what  we  cannot measure?
Many people who run projects will tell you:
“Building the thing is not difficult compared  to  managing  all  the  people involved”
So,
  • How do we develop measurable ways of working more effectively?
  • How do we assess people’s expectations  of  others  with  those  others have of them
  • How can we help people be more aligned and focused
  • How can we drive performance discussions  between  groups  and individuals  on  their  expectations  and assumptions that result in:
o Specifying clearer performance criteria against which individuals/groups will be measured
o Removing expectations that are non-value added and not strategically aligned
o Identifying significant issues to address for project advancement
o Creating an accountability framework

The AlEx™ Expectation Alignment Methodology

The AlEx™  Expectation  Alignment  methodology  is  a  key  driver  of  change  which  accelerates alignment  and  tracks  the  development  of  working  relationships.  Such  tracking  includes:
  • Distractions that impact work loads
  • Misaligned expectations which reduce flexibility, risk rework and cost overruns

    Human glue

  • Factors that reduce cross functional competitiveness
  • Misalignment with organizational principles and strategies
  • Productivity issues between managers and their staff
  • Quality of interpersonal communication
  • Integration of new team member
  • Performance tracking & management
  • Recruitment & talent management
The impact of this approach is:
  • Insurance against projects delays
  • Faster project execution
  • Better productivity
  • Improved employee retention
  • Attracting people who are naturally better aligned
Essentially these 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

How AlEx™ Works

Using the AlEx  Easy Entry™ web application, individuals  identify  their  expectations  of  others and what they think is expected of them. AlEx™  is  then  used  to  analyze  content,  quantity,  and quality of the Expectations generated. AlEx™ Cross-Hairs Alignment Tool™ provides targeted data pictures of groups and one-on-one relationships as shown on the right.
For  example,  the  relationship  between  Tom and Cliff  looks  aligned  if  you  only  look  at  Tom’s expectations of Cliff (13) and what Cliff thinks Tom expects him (12). But, Cliff’s expectations (22) & What Tom thinks Cliff expects of him (4) tells a different story. Users are then shown how to use their AlEx™ Cross-Hairs Alignment Tool™ to “rifle-in” on data  to  prioritize  which  alignment  meetings  are  really  needed.  Then  users  meet  and  decide which of their expectations are:
  • Discards
  • Unresolved
  • Agreed
This ability to “rifle-in” on key issues before they cause entrenched discord is much like “clash identification” in BIM (Building Information Modeling).
” AlEx™ is the “human cousin to BIM”
Dick Ortega, President, Alternative Mechanical
Building Information Modeling (BIM) is the process of generating and managing building data during its life cycle[1]. Typically it uses three-dimensional, real-time, dynamic building modeling software to increase productivity in building design and construction.[2] The process produces the Building Information Model (also abbreviated BIM), which encompasses building geometry, spatial relationships, geographic information, and quantities and properties of building components.

AlEx™ Outputs

1. Distraction Index
The Distraction Index identifies which individuals  or groups are aligned or distracted from achieving strategic goals:

Closing the Distraction Gap

  • Aligned,  and  Doing  Things  that  are  Expected —  expectations  and  assumptions  of  these expectations are in balance.
  • Distracted,  and  Doing  Things  that  are  Not  Expected —  individuals  are  making  incorrect
  • assumptions about what others expect of them
  • Distracted and Expecting Things that are Not Done — expectations exceed assumptions of those expectations.
 

Designers & Owners Tension Ratings


2. Tension Ratings
Expectation originators rate each of their expectations on a scale from High (project critical) to
Low Tension if an expectation is not met. Tension rating filtering enables users to see how well they are aligned
in terms of stress and the importance others place on different areas of the construction process.
3. Cross-Hairs Communication Channel Analysis
Un-Channeled
In a construction project, groups are often expected to change who they communicate with and about  what.  If  for  example,  the  General  Contractor’s  Project  Executive  is  expected  to  work closely  with  the  Chief  Superintendent  to  adopt  Lean  Construction  practices  to  meet  Owner expectations and they d 

Misaligned Core Group


o not have any expectations of each other! Conversely, if the Design Engineers  now report directly  to  the newly appointed Owner’s  Engineer and  not  the  Owner’s Facilities Manager then you would not want to see people still having expectations of the GM.
4. Cross-Channeled
Medium levels of expectations are often needed between different professions and trades as the main construction phase begins. This is especially true in Design-Build Projects
Highly-Channeled
High levels of expectations are needed where people work in the same function or project, e.g. Owners and EPCs.
5. Dealing with Change
Changing project circumstances require timely responses. AlEx™ is a real time system that enables adaption of existing or creation of new expectations to handle change.  E-mail updates of  such  changes  can be automatically  broadcasted.   AlEx™  has  adjustable granularity,  i.e.  it can  deal  with  high  level  expectation  alignment  through  to  execution  level  task  alignment, depending on the changed circumstance.
6. How Does AlEx™ Integrate with MS Project™ and Other Project Management Systems?
AlEx™ acts as a project management “front end” to keep existing project reporting systems updated with not only task completion status, but also with changed expectations required by changing internal or external circumstances.   Thus expectation alignment can be maintained without having to change pre-existing reporting systems. The interface between AlEx™ and existing systems is done via scheduled batch file updates. Thus  even  if  the  project  “playing  field”  changes,  the  benefits  of  aligning  team  members  are realized  continuously  throughout  the  life  of  a  longer  project  using  existing  reporting  systems. Adding  AlEx™  can  make  existing  project  management  systems  more  than  just  dashboards, they can become navigation systems, to keep the project on course as circumstances change.

4.0 Case Study – Building Construction Project (See Case Study)

Symptoms
This large construction firm manages and constructs large projects around the world. Some of their most complex work is on hospital projects. In  this  case,  the  number  of  change
orders, RFI’s (Requests for Information) and building decisions awaiting government  regulatory  agency  approval had  pushed  a  $500  million  hospital project into crisis.
The owners and prime contractors were faced with escalating change orders brought on by a number of factors including drawing quality, owner groups changing their specifications and a series of contractual changes. Consequently, the overall contingency fund for a three hospital project was being depleted at an accelerated rate.
Relations between owners, engineering firms, architectural design professionals, subcontractors and the general contractor had become strained.
The leadership group representing the major players became increasingly concerned about the ineffectiveness of OAC meetings (Owner/Architect/Contractor), and the cost of having so many rofessionals/consultants on hand, all charging professional level hourly rates.
Diagnosis and Therapy
The AlEx™ Expectation Alignment methodology was employed with the following approach:
  • Facilitation of meetings with each of the main group’s leaders to elicit their perspective on the key issues and what they wanted to be better aligned on with other groups/individuals.
  • Development of consensus of six key issues or “components” on which all 7 groups (a total of 35 people from 17 companies) agreed would require alignment
  • Coaching of all these players in generating expectations for each of these components (within and between groups)
  • Providing analysis and feedback to the leadership team, isolating several key initiatives.
For example:
  • Aligning OAC representatives to focus on key initiatives in each of the three projects
  • Setting up structured coaching within owner, general contractor and architectural firms
  • Aligning the change order process across the three projects
  • Accelerating the decision to replace the incumbent architects and help integrate their replacement
  • Aligning three architectural firms on fostering better co-ordination and common design policies
Outcome
The leadership group recognized the following tangible benefits from applying the AlEx™  system:
  • Cost hemorrhaging was stopped.
  • The project was completed on schedule.
  • There was no post project litigation among the 17 organizations involved in project planning and execution.
Other intangible benefits noted by the client:
  • Created a more productive environment for all of our building Partners Reduced or eliminated conflicts of all kinds by improving the way we communicate with each other
  • Reduced schedule blocks and re-work, thereby maintaining the approved construction  schedule
  • L ed the way for our partners (Client, Design Team, Inspection Agencies, and Subcontractors) in conducting business in a fair, open, and trusting way as the means to eliminate profit erosion, conflicts, and claims
  • Utilized “Partnering” as the means to accomplish our initiatives In a “design-build” environment which included a government owner, we were able to resolve several major conflicts using AlEx™ to expose hidden and unspoken expectations in “real time.
  • Ongoing communications became much more interactive and without conflict.
  • Tools from our partnering sessions are long lasting were used by all parties almost daily to insure the success of each stake holder. A reduction in lost time and resources resolving “festered” conflicts, because most were resolved before they reached such a state.”

5.0 Project Teams as a Neural Network – The Foundation for a Culture of Alignment and Accountability The Project “Brain”

Consider each team member a neuron in a “Project Brain” and the lines of expectations with other team members as synaptic connections. A one  way  expectation  will  be  a  weak  synaptic connection

Project Synapses are essential to neuronal function: neurons are cells that are specialized to pass signals to individual target cells, and synapses are the means by which they do so.


until it is acknowledged and accepted by another neuron.The AlEx™ expectation alignment process facilitates  and  measures  the  creation  of aligned expectations  so  the  Project  Brain  grows  and learns to better able to handle change. Thus,  like  brain  plasticity  now  being  discovered  in  humans,  the  Project  Brain  will  adapt  to changing circumstances by discarding synaptic connections (fulfilled or dropped expectations) or making new connections (new or altered expectations).The Project Brain is effectively self-diagnosing, exposing the squandering of energy (on unnecessary tasks) or resource deficiencies (lack of materials, knowledge or support).  It can also regulate the release of hormones to stimulate action (tension ratings).
Tools Facilitating a New Project Execution Culture

We have seen how one of the most important aspects of project management, expectation alignment, can now be measured and managed.  However, a toolkit and system to enable this does  more  than  measure  and  manage,  it  promotes  a  culture  of  communication  and accountability. Aculture of accountability is fostered  by AlEx™ because it ensures team members gain a feeling of control over what is expected of them but also that their expectations of others are understood  and  evidence  of  task  completion  documented.      As  the  entire  AlEx™  process requires more effective communications, team members must incorporate it in their regular work activity.
Competency Development

Like any habit, coaching and repetition are key factors in adoption. Initially, facilitated expectation  alignment  sessions  are  combined  with  training  on  the  web  input  of  expectation parameters.    Periodic  monitoring  of  alignment  progress  then  helps  ensure  the  most  efficient adoption  of  this  methodology.      Corporate  internalization  of  the  system  is  accomplished  with relatively  simple  “train  the  trainer”  sessions  that  enable  provision  of  in-house  facilitation  and monitoring services. AlEx™ identifies  communications  weaknesses  among  managers,  where  coaching  may  be needed, thus strengthening the project team going forward.
Optimized Resource Allocation – Top Down and Bottom Up
For an improved accountability culture to take root, it must be not only top down and bottom up but  omni-directional.    It  takes  root  because  expectation  originators  are  accountable  to  the expectation  receivers  to  ensure  they  have  the  required  competencies  and  tools.  This  is  the neural connection that builds the Project Brain’s capacity because people explicitly know:
  • What leaders expect of them (typically 70% of leaders’ expectations are either not known or understood by those executing the project)8
  • What team members expect of their project leadership.

6.0 The ROI for Oilsands Projects

Sources of Payback

Adoption of any new process must have a return on investment. While Expectation Alignment has  been successfully  employed midstream  to  “projects  in  crisis”,  it’s  highest  ROI  is  realized when  used  in  real  time  to  diagnose  and  address  communications  weaknesses  and  enable proper project planning and execution. Reviewing our key sources of failure, we can now see where payback can be expected applying Expectation Alignment:
Project Planning – Early alignment of all stakeholder expectations avoids expensive surprises and delays. Alignment facilitates “faster track” planning while reducing the problems of rushing to “Get on with it”, then paying the price later in areas ranging from design, project control and procurement.
Minimized scope changes – The owners’ expectations of the EPC  to have conducted a thorough review of specifications can be conveyed in a very detailed manner using Expectation Alignment.  This can avoid delays due to RFIs and change orders on critical path items.  With delayed revenue costing millions of dollars per day, the investment in expectation alignment can payback in a single avoided change order.Expectation alignment can facilitate  efficient assessment and incorporation of innovation that may  have  a  significant  long  term  benefit  to  the  project  economics.    This  is  accomplished  by enabling faster alignment and decision making among multiple project partners.
Change in environment – Even with a change management plan in place, a methodical and efficient way to incorporate new and discard old project expectations can mitigate costs by:
  • Improving response time,
  • Discarding activities quickly
  • Refocusing project teams to the new realities
Resource and support issues- – 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 planning, financing, permitting, engineering, procurement, construction, commissioning and operation of an oilsands asset,  static  definitional  documents  such  a  project  charters  and  conventional  project management  tools  are  not  designed  to  manage  thousands  of  changing  expectations. successful  project  execution  rests  on  agreeing,  discarding  or  identifying  the  unresolved. Expectation alignment methods identify managers who are especially strong or weak at communicating with their teams.  Coaching or other remedial actions can thus be undertaken and the results monitored. Employing Expectation Alignment in materials supply chain and personnel scheduling / logistics stakeholders can have big paybacks in avoided scheduling problems. Improved  project  processes  and  controls  –  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.
  • Late scope changes
  • Change in environment
  • Insufficient resources / Poor support
  • Poor communications
  • Poor project processes and controls
  • Poorly developed teams
  • Poor partnering strategies
  • Poor contracting strategies
  • Team turnover
  • Inadequate definition of stakeholders
Stronger teams – 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.
Stronger partnering strategies – Early definition of equity partner expectations among all key project themes and issues can be achieved using expectation alignment.   This can reduce inter-company  communications  staffing  requirements,  but  most  importantly  accelerate partner decision making when circumstances change or opportunities arise.
Improved 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. Diagnosing and addressing these issues avoids later conflicts and delays.
Retention of talent – 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.
Better  stakeholder  engagement – while  inclusion  of  all  stakeholders  is  an  obvious apparent  remedy  to  avoiding  later  project  problems,  the  explicit  definition  of  mutual expectations,  especially  of  external  stakeholders,  can  yield  big  paybacks.  For  example, proactively  establishing  a  local  community’s  expectations  before  major  decisions  are  taken builds inclusivity and provides a more objective basis with which to resolve later conflicts and political  changes.    Projects with  international  partners  can  address cultural and other barriers with explicit expectation alignment methodologies.
Summary
In summary, where delays are measured  in millions of dollars a day, improving  the  speed  and  agility  of  construction  has  been  the  “holy  grail”. This pursuit encourages putting in place more controls and systems which often  fail  to  adequately  cope  with  increasing  project  complexity  and dynamics.  Effective  decision  making  needs  the  marriage  of  authority  and accountability  on-site,  not  its  divorce  to  some  remote  decision  maker. Simple, methodical alignment and monitoring of expectations reinforces this marriage to yield very tangible savings in time and money.
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