Delivering Success in Public Infrastructure Projects

Transcription

1 PRIMAVERA Delivering Success in Public Infrastructure Projects A discussion paper from Oracle

2 The world is watching Every government today faces the same problems when it comes to making critical improvements to its country s infrastructure: where to start, and how to pay for it? From the many pressing calls upon resources and finance from transport to water and utilities to the extraction of natural resources to the provision of basic services for the underprivileged and far-flung which projects take priority? In Chile, for example, 35 per cent of infrastructure projects are rejected upon scrutiny by the National Public Investment System 1. Get it right and the result can not only improve citizens lives but can often make a significant financial contribution to the national coffers Stockholm s congestion-charging scheme has an overall net present value of $1.2 billion 1. The upside can be huge. The downside can be catastrophic. When infrastructure needs are inadequately or inefficiently met the problem doesn t simply get absorbed in an uncomfortable reporting meeting or result in the demotion or firing of those responsible. The problem magnifies and knocks on through the economy, through the culture and into the quality of life of constituents. In some countries the government gets voted out; in others, the people riot. Decisions are critical. MGI analysis suggests that an increase in infrastructure investment equivalent to 1 percent of GDP could create 3.4 million direct and indirect jobs in India, 1.5 million in the US, 1.3 million in Brazil, and 700,000 in Indonesia. 2 The mandatory performance level The skill of those who identify, design and implement transformative projects is in meeting extremely demanding and high level goals of performance and achievement. They re charged with keeping projects on track, on budget and in line with the needs of the country s constituents. Only the most rigorous, comprehensive, integrated and easily understood management information, monitoring and control systems can help project teams deliver on the expectations of their stakeholders and the needs and expectations of the future. When embarking upon public infrastructure projects of any size and purpose, public and state-sponsor accountability and public scrutiny create constant, and justified, pressure. Robust and diligent governance is mandatory in areas such as budget control, transparency (tales of corruption can sometimes haunt the world of public construction) accountability to constituents, and demonstrable best efforts to drive productivity efficiencies and improvements. Problems in infrastructure improvements create nationwide discontent Research from the Project Management Institute (PMI) 3 suggests that performance in meeting project goals, timelines and budgets creates a financial impact of staggering proportions. Organisations with high performance in these three measures risk only US$20 million per US$1 billion spent, while their less successful peers jeopardise US$280 million for the same US$1 billion spent. The opportunity costs of inefficient management can send shockwaves through a government one less hospital that can be built for example, or one less township served with fresh water; one less problem solved. Problems give birth to nationwide discontent, and weaken government positions solutions do the opposite. Steps taken at the commencement of the project to employ collaborative practices enabled by organisation-wide access to information will be critical to success. 1 & 2 The McKinsey Global Institute (MGI): Infrastructure productivity: How to save $1 trillion a year study. 3 PMI s Pulse of the Profession The High Cost of Low Performance A report which features feedback 2 Oracle Discussion Paper and insights from nearly 800 project management leaders and practitioners across North America, Asia Pacific, Europe, the Middle East, Africa (EMEA) and Latin America and Caribbean regions. Oracle Discussion Paper 3

3 The technology solutions put in place to ensure visibility into operations and enable well-informed business decisions can ensure smarter cross-organisation financial discipline and risk mitigation, operational excellence, and smart use of innovation. Complete Project Portfolio Management Programmes and projects carefully prioritised Accountability tracked Waste averted through risk management Predicting success The effective management and monitoring of public infrastructure projects is challenging on a vast scale. Even the most rigorous of plans, where it seems that every detailed aspect has been explored, every risk has been assessed, and every reasonable expectation of change has been taken into account with safeguards instigated to minimise its likelihood of occurring or its ability to disrupt or delay the project can be affected by unforeseen factors. Whilst nobody prepares for failure, the most successful projects are those where the possibility of failure is always recognised and guides best practice to mitigate the possibility. The world s media pays little heed to robust contingency plans that are never needed. When projects go off-track, however, they hit the headlines. No-one can guarantee success in a project environment either, but organisations can increase the predictability of achieving it, by making sure that they have full visibility into every part of every project. Holistic visibility makes control easier and supports the strong management discipline of leaving nothing to chance. Managing capital and mitigating risk are the top two drivers in managing a project successfully through unanticipated changes; the biggest threat to project success. When these two areas are given the highest level of strategic focus and become the guiding principles of every project action, they improve operational excellence. They improve the likelihood of success. Progress will be monitored and critiqued in areas such as strategic and fiduciary responsibilities to government departments, regulatory bodies, and the wide range of stakeholder interest groups who will be following the development of the project. Investments easily accessed for review and approval Delays avoided Enterprise Project Portfolio Management (EPPM) solutions drive better portfolio management decisions by providing end-to-end, real-time visibility into all relevant information. EPPM solutions also help organisations evaluate the risks and rewards associated with projects and programmes by providing project management, collaboration, and control capabilities necessary to manage change and successfully deliver projects on time, within budget. Improve collaboration, management, and control of nationwide or even global networks of engineering and construction suppliers and partners to: Clarify responsibilities for multiple activities and improved project management control and governance for the large, costly, and complex project by sharing data in the same format with partners and suppliers. Create project schedules faster, reducing costs and delivering improved results. Reduce total cost of ownership and maintenance costs with zero customisation to help keep project costs to a minimum. Enterprise Project Portfolio Management EPPM is the methodology increasingly adopted by some of the world s largest organisations to support the successful transformation of public infrastructure and, in the case of Eskom, to transform entire countries. Eskom brings hundreds of thousands of tasks and activities into one tool. Eskom is a 100% state-owned organisation responsible for the generation, distribution, and transmission of electricity in South Africa. Eskom generates 95% of electricity used in South Africa and approximately 45% on the continent of Africa. The organisation contributes significantly to South Africa s social economic development and transformation. Its Project Management Office (PMO) employs 1200 people; a single set of integrated project tools is critical to its ability to handle data and make sense of it for ensuring rigorous financial control and risk mitigation, driving operational excellence and optimising opportunities for innovation across its country-wide operations. Eskom has created a world-class centre of excellence for managing capital projects which are transforming South Africa s electricity network and improving the lives of millions. Deploying the principles, methodologies and enabling technology represented by EPPM, Eskom s PMO is charged with the central planning and execution of projects that fulfil the following criteria: High interdependency in the execution of the project between divisions or between business units requiring central coordination Projects covering multiple sites or regions where central planning and execution optimises resource allocation Are strategic or high risk Through organisation-wide use of EPPM dashboards to provide clear and simple any-time, any-location visibility of live project data, Eskom brings process and project capabilities into one place and handles hundreds of thousands of tasks and activities in one tool. Source and How Eskom Leads the Largest Infrastructure Program in Africa video 4 Oracle Discussion Paper Oracle Discussion Paper 5

4 The benefits of Enterprise Project Portfolio Management EPPM solutions help organisations propose, prioritise, and select investments and plan, manage, and control the most complex projects and portfolios. These solutions give complete visibility into the progress of projects and programmes, to support delivery on time, within budget, and in compliance. Complete PPM lifecycle for planning, programme alignment, budgeting and execution Analytics-driven process delivers better decisionmaking for all stakeholders ROI on priority projects Visibility into resource capacity vs. inbound project demand Integrated solution spanning all agency business activity Improve strategic investment decisions around budgets, personnel allocations and maintenance Enable Agency Mission and Operational Success Quickly prioritise and rationalise programmes, projects, applications and overall portfolios EPPM at-a-glance EPPM solutions help public sector agencies quickly identify underperforming and redundant programmes, and strategically align assets, budgets, and other investments through portfolio management rationalisation and prioritisation. Coordinated, improved investment approval procedures that enable an organisation to make the right decisions at the right time and prioritise its capital expenditure Standardised processes, procedures and systems that boost efficiencies Synchronisation between departments, functions and external third parties that drives faster and smoother execution More efficient use of scarce and valuable resources New opportunities to develop talent Learning from sharing information and experience across projects and businesses University of Minnesota Saves Millions with Fewer Construction Change Orders and Claims, Improves Collaboration with Project Management Solution The University of Minnesota is one of the most comprehensive public universities in the United States. The university s capital planning and project management department oversees approximately 300 capital projects annually, valued at US$250 million. Typically, 10 to 15 of those projects have budgets exceeding US$2 million. Standardising and automating processes and closely tracking the cost of capital projects have helped the university to: Ensure on-time, on-budget completion Improve its ability to locate and manage project documentation to increase transparency and collaboration and reduce the number and size of claims Ensure prompt payment to contractors and suppliers to meet contractual requirements and promote good relations. The university has improved collaboration by enabling contractors, architects, and other internal stakeholders, to enter and view change orders, drawings, and more, and access critical documents from a standard browser. The Result: Reduction in number of change orders by 15% saving US$3.7 million in one year alone thanks to more detailed cost and scope information, audit trails, and transparency. 6 Oracle Discussion Paper Oracle Discussion Paper 7

5 Define. Achieve. Deliver. EPPM helps you define the future, how you will deliver, and how you will make decisions to best serve the needs of effective project management at every step of the way. Achieve financial discipline and mitigate risk Investment in public infrastructure projects commits millions of dollars in government funds to long-term projects, often without adequate financial visibility into project performance. Solutions to high-risk problems offer the potential to save billions of dollars, improve service to the public, and strengthen the performance and accountability of state-sponsoring bodies and governments. by capturing real-time and actionable financial project and portfolio management insight and removing vulnerabilities to waste, mismanagement and fraud Public infrastructure investments often attract multiple funding sources ranging from donations, direct foreign investment, Public-Private Partnerships, or development funds from supra-national finance institutions. The ability to maintain the traceability of funding allocations provides investors with confidence in how money is allocated and utilised. Successful programme management and project management requires insight into all the risks that may affect service delivery or system performance. Good project management is about managing the schedule, budget, quality and safety on a project, and the risks that each of these areas entail. Achieve operational excellence Selecting the right infrastructure investments in the right places creating the greatest economic gains be they transportation systems or core services such as energy, water and sanitation is crucial to achieving developmental and service delivery objectives set out by a government. by effectively managing the infrastructure project portfolio Collectively, the right infrastructure projects are those that make the greatest contribution to your government s strategic objectives. Infrastructure project and portfolio management helps managers to ensure that the right programmes and projects are started and the wrong ones are stopped or not initiated. Harness innovation Using the best available tools to drive collaboration and monitor progress is essential if public sector organisations are to meet their nation s requirements for sustained economic growth and improved quality of life. by removing any barriers to progress and making very action positive, timely, and transparent One team with one goal and one view. Experience the benefits of Primavera Enterprise Project Portfolio Management solutions Select the right programmes and projects. Prioritise enterprise investments based on your organisation s mission, risk tolerance, and resource constraints Monitor programme status. Avoid wasting time analysing mountains of data. Quickly assess your project s overall status in real time, and focus your risk mitigation with customisable dashboards Monitor programme and project health. Graphically depict a portfolio s health and highlight opportunities to improve project performance or reallocate resources Quickly assess programme performance. Easily view the metrics that are important to you. Create customised status windows to suit your programme needs Gain greater programme control. See across all project teams and summarise information with easily configurable scorecards that allow greater visibility into projects, costs, and risks Adopting Enterprise Project Portfolio Management: the six-step roadmap The following six steps propose a sequence through which EPPM can be adopted. Reference to projects pertains not just to an overall infrastructure project but can relate to each of its many constituent parts, which are interdependent and often sequential and where change in one area affects progress in all others. 1. Visibility Across the Current Range of Project Implement a process for collating status reports on all current projects or parts of. This may initially be a simple project register, but often this is expanded to include all project details such as timelines, budget, current status and a traffic-light representation of its status. Benefits: providing an overview of the current workload enables you to better understand each project s alignment with strategy. It is not uncommon to end this stage with the cancellation and redefinition of the less valuable projects. 2. Interactions Between Projects Understanding the often complex relationships between projects enables you to properly assess impacts of a deviation or out-of-tolerance development. These relationships may be logical, resource related and/or benefit related. Benefits: visibility of conflicts and interactions between projects and project phases gives you the ability to understand how certain project phases depend on each other, how certain benefits depend on the successful delivery of multiple projects and how some projects demand the same resources. 3. Resource Management In the public sector, all organisations have limited resources and many of the resources will have multiple roles. Unpredicted overloads are contrary to efficiency and it is exceptionally challenging to balance availability and demand. Benefits: a clear understanding of the resource demands of the total project workload over time allows this to be matched with resource availability. Predictions often enable the team to pre-empt and therefore avoid over-demands that would have led to project failure and take advantage of under-demands that allow faster deliveries. 8 Oracle Discussion Paper Oracle Discussion Paper 9

6 4. Best Practice Techniques and Tools A portfolio of project subsets and phases will benefit from a consistent set of best practice tools and techniques. This will also ease the efficient collation of status data across the portfolio. Benefits: the use of consistent tools and techniques across a workload allows interaction and interchange between teams at a level previously impossible. With modern tools such as Oracle Primavera, geographical distances need present no barriers. 5. Governance The use of repeatable, consistent and appropriate governance processes will help to deliver and demonstrate professionalism in the management of the infrastructure project. Appropriate governance will also ease the efficient collation of status data across the portfolio. Benefits: the organisation can easily demonstrate that projects are following a set of appropriate procedures and become aware of those where these procedures are not being followed. This will allow interaction and interchange between project teams and clearly demonstrate adherence to government best practice guidelines. 6. Selecting the Most Beneficial Programmes to Change The use of best practice governance techniques in the identification, selection, authorisation, prioritisation and delivery of strategically important programme drivers: An understanding of the government s strategy and any changes to it A clear view across the landscape of the project, including status An understanding of the interactions between elements of the project The ability to plan work within the capacity of the organisation to deliver change through resource predictions The confidence that the project will be managed with best practice tools The knowledge that governance processes will be followed Making rational decisions The process for initiating authorised programmes is not complex but relies on good judgment. Historically, decision makers have found it hard to support their decisions with hard data which describe the current state of the existing workloads and valuable models of potential new initiatives. Programme dashboards using EPPM can view current workloads as well as projects contending to join a workload. On the basis of this information, governments and government departments can make rational decisions to authorise, amend, delay or cancel individual projects and programmes. 10 Oracle Discussion Paper Oracle Discussion Paper 11

7 About Oracle s Primavera Oracle is the leading worldwide provider of project portfolio management solutions for project-intensive industries. Our Primavera enterprise project portfolio management applications help public sector organisations propose, prioritise, and select project investments and plan, manage, and control the most-complex projects and project portfolios. Oracle solutions are in use globally by governments and public sector agencies, bringing about faster transformation through better project management performance and control. Continue the discussion One hour could change everything In just one hour, we can tell you how we can help you drive better project performance, at lower costs. We can show you how we have helped governments and major organisations with thousands of challenges, mountains of information, tens of thousands of workers and millions of transactions across diverse project portfolios, to gain control over costs, people, partners and, of course, the future. Contact EMEA & LAD: +44 (0) APAC : China: Japan: US: PRIMAVERA Oracle Corporation World Headquarters 500 Oracle Parkway Redwood Shores, CA U.S.A. oracle.com Copyright 2014, Oracle and/or its affiliates. All rights reserved. This document is provided for information purposes only, and the contents hereof are subject to change without notice. This document is not warranted to be error-free, nor subject to any other warranties or conditions, whether expressed orally or implied in law, including implied warranties and conditions of merchantability or fitness for a particular purpose. We specifically disclaim any liability with respect to this document, and no contractual obligations are formed either directly or indirectly by this document. This document may not be reproduced or transmitted in any form or by any means, electronic or mechanical, for any purpose, without our prior written permission. Oracle and Java are registered trademarks of Oracle and/or its affiliates. Other names may be trademarks of their respective owners.