Taking Control of Runaway Project Failure Rates

 

In a previous post, I’ve written about project failure rates in the mining and oil and gas sectors. Ernst and Young issued reports in 2014 and 2015 which reported 50-90% of projects are facing cost overruns, and between 50-85% projects are facing schedule delays, (depending on the geographical region you study, and whether they are metal mining or oil and gas developments.) Average budget overruns on these projects have spanned from 50 to over 100%. 

In their reports, several causes of overruns were noted on both the internal and external fronts. Primarily, most are non-technical issues, including: poor management, conflicts and communications, poor planning leading to optimistic estimates, regulatory delays and changes, and geopolitical issues, including economic downturns, commodity pricing, and disruptions caused by local and NGO stakeholders.

Links & Inter-relations

From experience and past research, it is my opinion that many of these non-technical factors are directly linked and inter-related - for example, disruptions by stakeholders primarily come about when they are dissatisfied with the level of engagement and/or emphasis placed on addressing their wants and needs, leading to conflicts and barriers to continue mandated engagement sessions, to access lands or to obtain work permits.  

This, in turn, not only causes impacts on exploratory work and collection of environmental and other relevant information necessary for project definition, regulatory assessments and applications, but also directly impacts the ability to gain regulatory approvals, and extends the timelines over which this may be completed.  

Much of this disruption originates from poor or incomplete engagement and communications, and mismanaged conflicts, both externally and internally. 

Lost in Translation

Even with the right external engagement and an initial acceptance of a proposal, if the wants and needs of our stakeholders are not well defined and pulled appropriately into the scope of the project, (read, specified as criteria or requirements), then the planning for that project becomes flawed and incomplete, causing the creation of budgets and schedules that are lacking in robustness. 

I have dealt with technical knowledge gaps in my own experience, and have interviewed several other environmental assessment practitioners, who have validated my concerns.

Often recommendations made by environment and social engagement practitioners are ignored. Perhaps the design team may have misunderstood how to produce the results requested, or it may simply have been that the criticality of the recommendations was under-appreciated. 

Under these circumstances, the resulting design becomes insufficient, and the details necessary to gain approvals (without a fight), or to ensure positive environmental outcomes, are left out. 

The typical reasoning provided?  The proposed option is the most “cost effective.” 

Risks Run Amok

Many risks to the project, or arising from the project, unfortunately get left unaddressed, and eventually end up having to be accommodated in later project phases as change requests and/or scope creep in order to gain that approval.  And the later changes are introduced to a project, the more time and money it takes to address them, hence forming the basis for poor performance rates of projects at a broader scale.

So, in reality, with all these issues being cited as causes of project failure rates, this is simply not true.

We have it in our power to change it.

Along with significantly altering failure statistics.

Had we done our jobs right, and not only engaged all of our stakeholders appropriately, but also at the right time (meaning before we commence planning and design of our proposed infrastructure), a large proportion of project impacts would diminish.  

We will have done a better job defining all of the requirements to include within the scope of our projects.  There would have been a broader, more refined scope, the risks associated would have been more clear, and the opportunities to find optimized, innovative solutions to address all of the requirements and risks, available to our design teams.  

Taking Control

This level of stakeholder engagement does take effort, and it needs to be carried internally with the teams working on the developments as well.  

Collaboration, a holistic view, and an understanding of all the interdependencies of our project components are critical, and communications between typically siloed teams need much improvement.  

Steps can to be taken to introduce broader thinking, and intersecting design philosophies, to form better designs and increase synergies. 

The creation of an open environment, where expression of new ideas and the introduction of new technologies or methodologies are welcomed.  Where concerns about decisions being made by other teams, and providing constructive feedback to each other, for the improvement of the project as a whole, can be voiced freely.

Am I suggesting that all of our problems will go away if we carry out these steps? No.

Geopolitical issues will not disappear, and regulatory changes should be expected over time, particularly in the extractive sectors where the lifecycles of operations can span many decades. Should we let this stop us from making change? No.

Instead, let’s improve what we have control over, and anticipate the other issues - engage, keep a fair and positive relationship with all parties involved, include stakeholders in critical decisions, and design for best practice / performance to avoid future problems.

Every team member and stakeholder involved with the project has a role to play, and each have the ability to make a positive impact.

Only this will help to optimize and streamline project performance, right from stakeholder engagement, planning and design, through environmental approval processes, development and operations of a site, and finally, to closure.

Gaining Support

A team representing various areas of expertise will be located in the exhibition hall in the “Ask the Expert” booth at the PMI Congress in San Diego – starting this weekend already! 

I’ll be there to help answer any questions you might have about sustainability, integration of these issues into project planning, and stakeholder engagement. Come find me!

Can’t make it and still have questions? Post them here, or connect with me on LinkedIn, or Twitter and send me a message that way. I’d love to hear from you!