Most of the time, the business reviews that we do are for single or groups of companies. Occasionally, we are asked to work on something slightly more obscure.
A large project within the aerospace industry had identified risks around its project and programme management capabilities. The irony was that normally, this organization was very good at project management, infact, they were industry leading. In fact, the programme was at risk to a level of £3 million per month in liguidated damages due to non-adherence to project deliverables.
From the beginning it was apparent that the team looking after the military refit side of the programme, the side we were to look at, were very open to help and assistance. Rather than be very defensive about the business review, they embraced it as an opportunity to improve their level of performance. We seized this opportunity to work collaboratively from the outset with both hands and set about design an approach around that. We conducted workshops at which staff mapped out their way of working and were able to engage in blameless self-criticism of their processes. Techniques for self-analysis were also given over to groups to look at the way resources were allocated and controlled and over the planning and reporting processes. The main focus area was the project management mechanism used to plan for and execute on time delivery of milestones.
We found that the methodology for ensuring on time delivery of milestones was not the same as for the other, more successful, programme segment. Why? The profile of staff was very different. The more successful segment was drawn directly from the aerospace industry with a formal project management structure. The less successful segment was drawn from a military background. Whilst this would not necessarily mean that there was no similar adherence to project management procedure, as the programme systems and structures were still in development, those with a more military disposition found in difficult to work in an organization that was in flux itself. There was an unsaid expectation that programme managers would work together to develop their own best practice, and when that didn’t happen, a controlling influence came from the senior team during monthly programme reviews (MPRs) that became excessively long and detailed. Confidence in individual project managers by the senior team plummeted along with morale and, by default, productivity.
The senior team members were also in a dilemma, as their main focus was the end customer, banks and lawyers rather than the detail of the day-to-day programme. As they were drawn more and more into the daily running of the programme, tension and anxiety grew.
The big issue for the programme was that the management operating system (MOS) was not in existence. For the purposes of this business review, the MOS refers to the mechanical processes of running a programme and the staff’s relationship to them. Key performance indicators (KPIs) were only used as a reporting methodology once a month rather than as a way of keeping the programme on track. The result was that once a month, individual project teams spent the four days prior to the MPR meeting gathering data to present. Often, they would be shocked to find that they were off schedule again and had no real understanding as to why.
Suggestions and Solutions:
We suggested that a set of matrices be agreed and rolled out to all of the individual projects forming the programme segment. These matrices would be based upon the industry stand of earned value thus incorporating both design hours used as well of purchasing spend to determine whether the project was on time or not. These would not merely be the culmination of a data grabbing exercise at the end of each month, but be driven upwards on a daily basis. Simple and easy to use daily reporting allowed each manager a daily understanding of progress at a work package level (the smallest practical level of measurement) and thus enabling corrective action to be taken should any variation occur. This approach is known as Short Interval Control (SIC).
As well as SIC, other matrices included a ‘cost to complete’ plan vs actual that could be reviewed monthly. The programme would be at risk of liquidated damages if the planned cost to complete did not match the actual, plus or minus an agreed percentage. This ensured that key purchases had to be made by certain times to ensure delivery on time.
All in all, 10 Key Performance Indicators were devised and installed driven by the daily work of the programme. For the individual Project Managers, it meant that there was no more scrabbling around for data for the MPR. Instead the MPR could take place at any time, as data was always available from the daily management operating system.
The last suggestion was to roll out the MOS to all suppliers in order that performance could be measured in a similar fashion throughout the wider programme organization.
After the business review, it was estimated that implementing MOS methodology would improve programme productivity by 15% significantly reducing the risk of incurring liquidated damages.
Further to that, performance improvements in procurement would give benefits of £2 million through a reduction in the use of supplier ‘change notes’. Currently, with few controls over the design and delivery of key equipment by outside contractors, risks to cost associated with this were high.
About the author:
Andrew Woodward, Executive Director at Faculty Partnership CIC, is a widely respected management consultant having completed more than 30 change projects across Europe, America, Africa and Asia. Once described by colleagues as one of the best productivity consulting brains in Europe, his unique approach combines operational improvements with cultural change.