For my second professional example of benchmarking in projects I am drawing on the context of major oil and gas pipelines. Specifically pipelines from Azerbaijan to Europe. I was involved in facilitating a series of front end planning workshops; advising on project best practices and investment analysis in support of the Finance Memorandum being presented for the Financial Investment Decision (FID).
My personal story of facilitating the front end planning workshops was a great example of how the benchmarking process can make a huge difference to the project outcomes. I led the workshops in the main project team offices in London. The key representatives of the team (Project Manager, Project Services Manager, Lead Engineers, Operations Representative, Environmental and Safety Leads) were all present in a meeting room overlooking Paddington Station. The atmosphere was tense but positive – we were assessing readiness and looking for gaps. My role was to listen and lead – particularly to listen for the quietest voices – and there were several moments when I probed for more information and we identified some critical items that needed more attention to reduce the risk of delays. I’m happy to say the project moved smoothly into detailed design and is in effective operation today.
This front end planning result became part of a benchmarking supplement; supporting the Financial case used to seek approval for the Investment in the pipeline project. To illustrate this I have examples of three benchmarks that were presented.
Front End Planning – The first benchmark was the Project Definition Rating Index (PDRI) and the results of the front end planning workshops. The benchmark showed the PDRI for the portfolio of oil and gas pipelines from Azerbaijan through Georgia to Turkey and the progression through the planning phase to Final Investment Decision to an acceptable level of definition. The comment included in the finance submission stated: “The completed FEL Self Assessment using CII Project Definition Rating Index (PDRI) tool. The overall score of 240/1000 (Lower score is better) indicates the project is well positioned for entering Execute Stage. This score is within the range for projects approaching final sanction”
Schedule – The second benchmark for the pipelines (metres/spread day) had the project seeking sanction compared to company references. These comparative benchmarks are based of reference projects, assessed for their comparability by the project team and validated by the PMO/Central team. The comment included in the finance submission stated: “The pipeline has a low Metres/Day lay rate due to the terrain, brownfield working and numerous work locations. The line to be replaced is not continuous, requiring the move around of the total spread numerous times.“ This explained why the project had a slower projected rate than the comparative benchmarks
Cost – The third benchmark was cost per inch-km; an industry standard metric for benchmarking of pipelines. The project seeking sanction was benchmarked against company references. The comment included in the finance submission stated: “The pipeline cost is higher than the benchmarks; due to more complex work scope, brownfield working, interrupted work sequence and terrain challenges.“This explained why the project has a more expensive projected rate than the comparative benchmarks.
These three benchmarks were core to the benchmarking supplement in support of the Investment case and I believe, represent an example of best practice in using benchmarking.
I am sure you will have your own professional examples of project benchmarks, please share any that you think would be of interest to this community. For my next blog on the subject of benchmarking I will share my third professional example of benchmarking at work – in the context of major infrastructure projects.
To continue my series of blogs on benchmarking, for my first of three professional examples I will focus on benchmarking of project practices. I have three complementary benchmarks of project best practices to share – they are front end planning, team alignment and project complexity.
Project Practice – Front End Planning – the first example is the Project Definition Rating Index (PDRI) – a tool developed by the North American Construction Industry Institute (CII) to benchmark the quality and completeness of front end planning. This was an area of research I was deeply involved in as a company representative and co-leader of the industry working group. The PDRI measures shows the progression of development of front end plans through the early project stages. The level of progression is measured by a finely tuned checklist of over 70 elements weighted by importance covering three sections – Basis of Project Decision, Project Design and Execution Approach. A lower score is better and the there is a range of acceptable score against outcomes determined by research based on a large sample size of completed projects. The research has shown that proper front end planning and measured by the PDRI leads to more predictable cost and schedule outcomes. For more on the PDRI
Project Practice – Team Alignment – the second example of is the team alignment. The tool is called the Team Alignment Thermometer also developed by the CII. There are several dimensions to project team functionality that have been proven to be important to project success. There are four main dimensions that are measured by a team member questionnaire – with the collated results discussed in a team workshop. The four dimensions are Culture – leadership communication and behaviours; Project execution processes; Information on clear project priorities and objectives and fourthly Team working processes and behaviours. The exercise of measuring alignment in a workshop greatly aids team development by identifying gaps and fostering an environment of openness and collaboration. For more on the Alignment Thermometer
Project Practice – House of Complexity – the third example is a measure of complexity developed with Massachusetts Institute of Technology (MIT) in Boston, USA and tested on a portfolio of International and oil and gas industry projects – The House of complexity has three main dimensions – technical, (the technological challenge for the project) institutional (the political, geographical and organisational context for the project); and architectural (how the project is set up) – which can add significant complexity when there are distributed project teams and complicated governance arrangements. For those of you interested to read further, here is an academic paper from Engineering Project Organization Journal
Front End Planning, Team Alignment and Complexity have been proven by the CII and others to significantly impact project performance in terms of cost, schedule and outcomes.
Project Practice – Evidence of Schedule Slip v Team Alignment and Complexity There was an important insight from the analysis I undertook on around 20 oil and gas industry projects. I found that there is a the linkage between schedule outcomes and the combination of project complexity and team alignment. Charting the data shows on the y axis schedule slippage from low to high and the x axis the function of combining project team alignment with project complexity; the clear result is that greater the project complexity combined with lesser team alignment – the more likely is schedule slippage. The analysis indicated a strong trend – with a statistical R2 correlation of 0.74 of the data-points and the calculated trend.
Put another way the schedule slippage is lower for less complex projects and most importantly is reduced by greater project team alignment and functionality.
That completes my tour of project best practices and the complementary benchmarks for front end planning, team alignment and complexity.
I am sure you will have your own professional examples of Benchmarking where data helps you in achieving business goals, please share any that you think would be of interest to this community. Over the next month I will share my second and third professional examples of benchmarking at work, particularly in the context of projects and project management.
In the first in my blog series on Benchmarking I will opens with an introduction to the subject. The material is based on a presentation I gave this year for a PMI UK webinar and an evening seminar for the PMI UK South
What is benchmarking?
Looking back at history, a benchmark was surveyor’s mark cut in a wall, pillar, or building and used as a reference point in measuring altitudes and levels. In today’s context, I like to describe benchmarking as the considered use of data as a way achieving three things. Firstly, driving continuous improvement; secondly to support target setting and thirdly to foster sharing and learning across an organisation and with outside peers;
Put simply – Benchmarking is achieving important goals by comparing performance with colleagues and peers, using data. To illustrate this, I have one personal and three professional examples which I will cover in a series of future blogs including this one.
To start with my personal example earlier this year with my daughter, I completed the London Winter 10km charity run. We ran the course together, beat our target of going under one hour and raised over £1000 for Cancer Research.
A big part of achieving this goal was based on using the fantastic Park Run – who has heard of that – who has run? Park Run is a weekly 5km group run, held at 100’s of locations mainly in the UK but increasingly also around the world. It starts at 9.00 am every Saturday morning, has changed many people lives and for me provides the motivation to participate and improve my performance, supported by easily accessible data. The data comes from the clever use of technology and is a simple matter of registering on the Park Run web site, With registration comes a bar code and when you finish the Park Run the timers scan your code and give you a recorded time – with all the others – over 170,000 people in the UK each weekend. For me a big incentive is also running with family and friends. You get a record of your performance each time you run and a comparison to your previous performance; a personal best recorded for each different course you run; a comparison to others and very usefully, an age related % performance. This all supports of an overall goal of keeping fit, and healthy, having opportunities to spend time with friends and family and as a bonus raising money for charity.
I am sure you will have your own examples of Benchmarking where data helps you in achieving personal goals. Following this blog I will share three professional examples of benchmarking at work, particularly in the context of projects and project management.