Large Projects challenges - Beyond applications
In my earlier blogs, I had briefly touched upon how a project centric approach will facilitate utilities achieving process efficiencies by integrating its various business functions. We had also seen how Oracle out of the box capabilities can be leveraged. Whilst the oracle based project centric solution enables utilities, there are some industry wide challenges that cannot be addressed through any system or solution. Based on our experience the following are the few industry challenges that need to be considered while implementing any transformational solution to such project organisations.
Long front end planning phase for capital projects
Capital projects typically run for many years. In one of the organisations we observed that the average lifecycle of capital projects were around 3.5 years. This lifecycle is preceded by a front end engineering design (FEED) phase, which was about 7-15 months on average. While structured project management and budget management processes can be put in place from the point when the projects start, the front end exercise typically goes unnoticed and is an overhead to the organisation. The challenge is to track them and close them. In addition to this, there are many uncertainties in this phase about the project itself. Hence this needs to be planned by taking many factors into consideration. E.g., Regulatory climate plays a very vital role in the planning process for utilities in their capital projects. The regulatory implications need to be known upfront and they need to be taken into consideration during planning. Explicit front-end planning for regulatory risks and opportunities can drive important tasks, such as a proactive communication program specific to the regulators, building in the right controls to actively manage project cost, scope, time and quality. This in conjunction with innovative rate solutions should be conceptualized to minimise rate shock and reduce risk
Establishing a framework to manage capital investments
Capital investments in any organisation are likely to have a larger spread of stakeholders; like engineering, environment health and safety planning, customer and public relations, operations, taxation, regulation, procurement, logistics, inventory and finance. In such projects there will be a need to have a framework that will address the needs to review and report status to respective stake holders. Since the information comes from disparate sources and needs to be disseminated to disparate recipients, the effort required to do this is large and is key to the management of capital projects. A lot of pains could be saved by institutionalising the project management, review and reporting processes. While the governance is established for the project, this should be considered.
Need for Scenario based planning
Capital project lifecycles are long and likely to have embedded uncertainties and risks; the planning process has to be robust, with capabilities to handle those scenarios that could come up. There have been many technology advances in engineering design, construction, and facility operations; however, project planning has remained a very intuitive process with little automation. Project planning is carried out by project engineers who may or may not have the experience needed to understand all of the project variables and their complex inter-relationships. Many a times, project requirements must be extracted from business teams by project team members who may not have the right questions to ask and are unable to analyse and identify project alternatives to meet the requirements. This enforces the need to have automated scenario modelling and simulation capability available to the project managers and sponsors, should the project be on schedule and within budget. Many projects follow a tight timeline forcing inexperienced team members to make spur of the moment decisions with insufficient data. Many senior project professionals have experience-based professional judgement that is not institutionalised. Some of the variables addressed in the decision-making process are unique to specific projects, may need to be weighted differently, and may have over-riding or dominating factors.
Performance management
Getting real time information from various systems towards cost, quality, resource and schedule is always a typical challenge in large projects as data tends to reside in multiple systems and in multiple worksheets. However, this data is very important, should the project is planning to have any scientific performance management tools – e.g., Earned Value Management. EVM allows project managers to parallely track cost, schedule, resources and quality as a project progresses. This means managers gain early and detailed understanding of when and why projects are not performing according to the original plan. In turn, organizations can quickly target problem areas and make informed decisions about early cancellation or how and where to intervene.
Conclusion
The establishment of an integrated project centric model for the utility brings in the relevant business functions that are critical to project management under a single application. This improves the efficiency of business operations and enables accurate data to be available to the key decision makers who can make critical decision for the project. Most of the functions can to be implemented out of the box with minimal customisation and / or integration. This typically gives the organisation to be flexible and scalable, with minimal disruption to business. The project centric approach ensures that near-to-real-time data is available to the decision makers which are critical for large projects. Once these operational issues are addressed, that puts the organisation in a better position to focus on other issues that are key to managing such large capital projects.
