Keeping Costs Under Control
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1 Keeping Costs Under Control Project Management issues for Research Infrastructures John Womersley Science and Technology Facilities Council United Kingdom
2 Research Infrastructures Large-scale Research Infrastructure projects are essential to maintain scientific competitiveness and to address the major challenges facing society But are often beyond the ability of individual institutions (and increasingly individual countries) to deliver in terms of scope, cost and complexity
3 Big projects potential for big problems Cost escalation (%) Year of decision to build A century of cost overrun in 111 projects (constant prices) Megaprojects and Risks B. Flyvberg et al., 2003
4 EC Expert Group The European Commission established an Expert Group to prepare the EU sinput to the Group of Senior Officials on Global Research Infrastructures This expert group which I chaired -considered the essential cost elements, compared the approaches taken by major projects in Europe and global projects with significant European participation, identified key management issues for cost and schedule control, and drew lessons from present and past experience.
5 Experts from EC Membership CERN, ESO, ESRF, JET and ITER UK, Netherlands, Italy, Germany (DESY) and France USA (Department of Energy), Canada, Australia and South Africa
6 Our report:
7 12 Key recommendations 1. At the start of a research infrastructure (RI) initiative, the political stakeholders must agree on a shared understanding of the scope, schedule and cost, and what to do if deviations occur. Should include awareness of potential cultural differences between the different partners. Should be encapsulated in a comprehensive, formal founding document. Do all the partners have the same understanding of the goals of the project? Do they all agree what happens if there are cost overruns?
8 12 Key recommendations (continued) 2. Where decisions are inspired by political and financial considerations, rather than scientific and technical requirements, the RI management must ensure that the political stakeholders are made explicitly and fully aware of the consequences of these choices. Politically-inspired decisions are not necessarily wrong as long as everyone understands the consequences
9 12 Key recommendations (continued) 3. The governance, management, and supervisory structures must have clearly defined and differentiated authority and responsibilities. They must be able to immediately impact the project and to quickly resolve conflicts. 4. A clear and structured organisation is necessary, with direct, transparent reporting lines and the full use of management and project control tools. Clear and distinct oversight, governance, management responsibilities Clear organisational structure Full use of project management tools
10 12 Key recommendations (continued) 5. Independent scientific and technical evaluation and external professional auditing of financial and management performance must be carried out and acted upon. Independent external evaluation and auditing throughout the project 6. To harmonise expectations and reduce risk, a standardised, stepwise, and phased approach to the preparation and approval of an RI project is necessary. Proceed in phases
11
12 12 Key recommendations (continued) 7. The management must be chosen on the basis of clearly specified competencies, including project management and technical skills. Management at all levels must be given full independence, responsibility and accountability for its budgets. Management must be properly qualified Must be empowered and able to manage
13 12 Key recommendations (continued) 8. Up-to-date, bottom-up planning, control and reporting systems based on work breakdown structuresand financial management tools covering technical, financial and schedule issues, are mandatory. Management at all levels must have full responsibility and be accountable for their specific budget. 9. Best-practice systems for project control and risk management have to be fully embedded in the project management, covering technical, financial and schedule issues, together with mitigating measures in case of deviations. Full use of Project Management tools Mitigating measures in case the project goes off-track (e.g. descope)
14 12 Key recommendations (continued) 10. The procurement process should make best use of the internal and external technical expertise, and of appropriate negotiation procedures according to the technical demands of the procurement. 11. The responsibilities of all suppliers for deliverables must be contractually fixed in a thorough way based on detailed specifications and drawings. The project must have full daily access to all relevant information (technical, financial and schedule related). External suppliers must have clear contracts which fix the costs Must be part of project management information chain
15 12 Key recommendations (continued) 12. Costs must be clearly defined and spending must be realistically planned, including in-kind contributions. Costs should be estimated with appropriate precision according to the project stage, and contingenciesmust be provided. The costs must be controlled by always current bottom-up best-practice systems. Appropriate contingencies are essential
16 Summary Despite some well-publicised problems, there are many good examples of successful completion of research infrastructures onbudget (ALMA, Diamond, GTC telescope ) There is a lot of experience and good consensus on how to avoid problems in cost and schedule management of large research infrastructure projects Clear set of best practices which should be followed at the very least we should make sure that everyone, especially the political actors, is aware of the risks of not doing so!
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