Rev: 1 Date: 7/10/2010 By: JC

Session 2 Projects in context and the Project Process

1. Introduction

We will begin this session by examining how a project might fit into the context of an overall
business strategy. Having done this we will consider (in overview at least) a typical project
process, in preparation for subsequent sessions which will provide the opportunity to
explore a number of areas in more detail. We conclude by revisting briefly the discussion of
projects and project success in preparation for the next session.

2. Projects in context

Project Management, as we will see provides a methodology for ensuring that individual
projects are managed effectively. However, before discussing this it is essential to first
consider how a project might fit into the overall business environment.

The Problem.

Less than 10% of strategies effectively formulated are effectively executed

Fortune Magazine

60% of organisations do not link their programmes and projects to the strategy

Forbes Magazine

The Pressures.

Tightening budgets

Need for greater returns

Pressure to achieve competitive advantage faster

 Program Management provides a methodology for ensuring that projects which share a
common overall objective are managed effectively together. However, too many projects and
(programmes of projects) are not aligned with strategic objectives and therefore do not
deliver the expected contribution to the bottom line. The effective alignment and
management of all projects and programs across an organization is necessary to ensure that
all work is helping the organization meet its business goals.

Ok, having introduced some new term(s), Programme and Programme Management it is
worthwhile pausing to understand what these mean and how they relate to Projects and
Project Management.

2.1 Programmes vs. Projects?

Before examining what a programme is and how it relates to a project it is worth considering
some examples. Probably one of the best examples of a programme which you will no doubt
be familiar with is the NASA space programme.

If you are able to do so you should start by listening to the, now famous, speech given by
JFK's at Rice University on September 12th, 1962 in which he set out the goals of the space
race during the 1960's. The speech is available, amongst other places, on YouTube at the
following URL.

http://www.youtube.com/watch?v=g25G1M4EXrQ&feature=related

In this speech the US president sets out the goal of what will become the NAS A Apollo
space programme, whos insignia is shown below;

Activity

In session 1 we spent some time considering what a project is and discussed some examples of
projects

Before turning the page, take 5 or 10 minutes to consider how the Apollo programme compares with
the projects we discussed in Session 1. What are the similarities and what are the differences?
Probably the most notable difference between the two is that a programme delivers specific
outcome(s) whilst a project delivers specific output(s).

An output is something specific, often but not always tangible, that is produced. In the case
of a project the output might be a new building, a new IT system or a new drilling platform

An outcome is the result of change, normally affecting real world behaviour and/or
circumstances. Outcomes are desired when change is conceived and achieved through
activities undertaken to effect the change

Another way to look at this is that a programme is an endeavour which is made up of

projects which share a common overall objective. In JFK;s speech to congress he himself
outlined some of these projects which would ultimately contribute to the overall programme
goal of putting a man on the moon. A transcript of part of his speak is as follows

We propose to accelerate the development of the appropriate lunar space craft. We propose
to develop alternate liquid and solid fuel boosters, much larger than any now being
developed, until certain which is superior. We propose additional funds for other engine
development and for unmanned explorations--explorations which are particularly important
for one purpose which this nation will never overlook: the survival of the man who first makes
this daring flight.

Of course there were many more projects and sub projects that made up the Apollo space
programme. Dont worry too much if you are struggling to differentiate the concept of
outcome and output as to some extent it is an issue of scale as much as definition. The key
point is that a programme is made up of a number of related projects which together are
required to achieve a specific goal. Other differences are summarised in figure 1 below

Programmes
Projects
Strategic vision of the desired end goal
Definite start and end date
About managing change
High degree of certainty
Uncertainty is acknowledged
Predetermined output
Changes to culture of work practices
Clear path start to end
Co-ordinate a set of projects to realise
Changes to operations and services
benefits
Benefits accrue after the end
Benefits can accrue before the end

Fig 1: Projects vs. Projects

In addition to the Apollo Space Programme other notable examples include

The United Nations Development programme

The United Nations World food programme
The Low Carbon buildings Programme
The UK Climate Change programme

Activity

Try to think or other examples in your home country or near where you live. What are the
constituent projects?

Before turning the page, take 5 or 10 minutes to consider how the Apollo programme
compares with the projects we discussed in Session 1. What are the similarities and what are
the differences?

2.2 Programme Management

It is essential that all projects within the programme are aligned with strategic objectives of
the programme. This point is critical and in essence means that for an organisation whose
sole aim is delivery of a single programme that organisation should not be contemplating
projects which do not support the or further the delivery of that programme.

Of course potential projects will occur from time to time which deliver huge benefits for very
little investments. In the case of an organisation whose sole aim is to deliver a particular
programme and who does not need to generate additional funds to do so this apparently
attractive project should almost certainly be avoided as a distraction from the aim of the
organisation, a red herring if you will. However, in the case of a real business whos
mission maybe to create shareholder value it may be necessary to consider such projects.
However, care must be taken with these projects to ensure that they do not sap
unacceptable scarce resources such and money and people to the extent that they
adversely impact delivery of the companys existing strategic objectives and improvement
programmes. In doing so the company maybe inadvertently exchanging longer term growth
and success for a short term payoff.
Assuming we the programme contains the right projects it is then clearly important to
effective management of all projects to ensure effective and efficient delivery of the
programme goals.

Programme management differs fundamentally from the management of projects as it is

concerned with doing the right projects not just doing projects right.

Activity

A programme is essentially a set of projects which together deliver the programmes objectives.

Step One is to select an appropriate set of projects and , importantly, reject those projects which do
not align with the programmes objectives.

Step two is to effectively manage this grouping of projects to ensure effective and efficient delivery of
the programme objectives.

Effective Do the right things ensures a happy customer

Efficient Do things right ensures happy business and or shareholders

Before reading on take 5 10 minutes to consider the issues that might arise from the programme
management perspective and how these might be resolved. If you like use the Apollo example to
assist your thinking or alternatively use another example with which you are familiar.

Programme management, by definition, is essential when executing complex or large scale

change. It allows the co-ordination of activities across many specialisms, business units and
organisations not to mention potentially distant geographical areas. It allows for more
efficient use of company resources by providing mechanism for project prioritisation. Areas
which may benefit from such an approach include

Design interfaces between projects

This is essential in order to harmonise the design and preserve integrity. The
importance of this is probably best explained in an article published in The New
Scientist relating to the loss of a NASA space probe in 1999.
 NASA lost a $125 million Mars orbiter because a Lockheed Martin engineering team
used English units of measurement while the agency's team used the more
conventional metric system for a key spacecraft operation, according to a review
finding released Thursday.

The units mismatch prevented navigation information from transferring between the
Mars Climate Orbiter spacecraft team in at Lockheed Martin in Denver and the flight
team at NASA's Jet Propulsion Laboratory in Pasadena, California.

The New Scientist

Scarce resources

Resources such and money but also people, space and time are often in short supply
and as a general rule there isnt enough to go around. In such cases it is important
that these scarce resources are channelled to the projects where they will have the
biggest beneficial effect. If nothing is done individual project managers will fight over
the resources which may ultimately go to the project manager who shouts the loudest
rather than the neediest. It is often said that the baby that cries loudest gets most
milk.

This is an interesting area to consider for potential project managers. As project

manager you will be responsible for delivering your project but you will also most
likely work within a larger organisation whose broader aims may at times be
inconsistent with the current needs of your project. What issues might arise, How
would handle you this?......... Hopefully, you will have a proactive Programme
manager who can ensure everyone is pulling in the same direction but what if you
didnt?.

Setting priorities and resolving conflicts

The consequence of this interacts heavily with the issues already discussed under
scarce resources.

Focusing on those projects that deliver strategic objectives

This is in essence the selection of projects which most closely align with the strategic
objectives
 Identifying and exploiting opportunities for sharing

It may be possible to complete tasks more quickly, cheaply or to a higher quality by

working more closely with other related projects or even areas of the business which
are non-project related.

A particularly common example of this concerns the erection and use of scaffolding.
Whilst one might not realise it the cost of scaffolding, its erection and removal is often
quite significant to a project, as is the scheduling of this activity. However, it is often
the case that the maintenance team may need to erect scaffolding to do some
inspections in the same area where some project work is planned. Is there an
opportunity for both teams to use the same scaffolding? Can one team apply some
flexibility in scheduling to accommodate this?

Where there is probability of change during the programme

We will see later in this course that the activities which make up a project are often
closely related with such that some activities cannot start until others are completed
or can only take place during other events. A very common example of the latter is
work which can only be completed during a planned overhaul. If the shutdown is
moved back, or forwards it could have a devastating effect on the project if no
corrective action is taken. Of course it is often possible to adjust the project
programme or alter it in some way to minimise or eliminate any adverse impact on
the project but this takes a proactive project manager who is constantly vigilant and
aware of the possibility of such changes.

In the same way projects within an overall programme can interact. In considering
whether to accept change one will need to look at the impact on the overall
programme and its outcomes. What might appear to be trivial to the project manager
considering a change might have severe or devastating consequences to the
programme or business. Even where a programme manager does not exist it is an
important aspect of project management to consider the wider implications on the
business.
 Activity

This latter point on the previous page is worthy further thought.

If as a business you employ external engineering service providers to implement your projects
how do ensure that the impact of changes inside or outside the organisation or inside or
outside the project are properly assessed and addressed to the benefit of the business?

In general the project manager employed by the service provider will not have a significant
stake in the success of your business and will be entirely accountable for delivery of the
project on time and to budget.

Activity- Some Thoughts

I am sure you must have heard of the old adage that you can delegate responsibility but not
accountability, well it is also true that you can delegate the responsibility for managing risk
but not the risk. These concepts clearly have relevance to this activity.

However professional the organisation you have employed to deliver your project you are still
ultimately responsible for the project in its entirety and as a client this responsibility will often
extend well beyond the scope of the project or even the customary deliverables of quality, cost
and time. From the businesss perspective the project must add value not just within the
narrow confines of the project itself but to the organisation as a whole. It is therefore essential
that you (or whoever is charged with the job) are fully able to act as what I would term a client
side project manager. The responsibility of a client side project manager begins well before
the engagement of a contract project manager and ends (if it ever does) well after. It
encompasses cost, quality and time but also full lifecycle benefits, operability maintenance
and ultimately decommissioning
Continuing the previous list.

Promoting common values and shared responsibilities / Fostering

collaboration

We previously discussed the identification of opportunities for sharing and in

particular talked about scaffolding. This is related but much broader in scope and
depth. When people really have shared values and a wish to collaborate problems
are resolved, people at all levels in all organisations and parts of the organisation
work together for the common good recognising that it is the overall mission that is
important.

Where there is potential to deliver a series of outcomes

Clearly a programme, or series of projects, has the potential to deliver not only
several outcomes but to phase these outcomes to deliver added value at an early
stage. This can often be an important factor in the success or failure of particularly
lengthy programmes. Since programmes which soak up effort without delivering any
beneficial outcomes are more likely to be cut by senior management and are more
likely to suffer from lack of commitment or focus from team members who may say
whats the point. Of course, programmes also have the potential to deliver additional
resources such as cash or people which maybe very important to the overall
business or even to the success or failure of other projects to be implemented later in
the programme.

Managing , monitoring and reducing risks with the smallest impact on

programme outcome

If projects are viewed in isolation then an individual project manager will assess and
manage project risks in order to minimise the impact of risks on their particular
project. This may be fine but it could equally be simply a case of moving risk from
one project to another or to the wider business. In the worst case it is clearly possible
for an individual project manager acting in good faith to reduce his project risk to
inadvertently increase overall programme or business risks or equally to fail to take
steps to mitigate against risks that may arise in other projects or from ongoing
business activities. It is for this reason that it is essential that the risks are accessed,
mitigated, monitored and managed from the programme as a whole. Whilst this is of
course the primary responsibility of the programme manager this cannot be achieved
without good communication to and between projects. Ideally, senior project
 managers from all projects should be involved in periodic review of programme risks
and in particular should consider the impact on the programme when considering
whether to accept or reject changes which impact things like the scope, quality,
design or timing of deliverables.

Managing business budgets

Projects and programmes are generally delivered by businesses which themselves

often have budgetary and financial constraints either planned or arising during the
year. It is clearly essential that a business can afford the projects and programmes
it is embarking on.

Most projects span many years and often have a very uneven spend profiles. The
impact of a project slipping or even being ahead of plan may have devastating
consequences for the business finances which tend to run on an annual basis.
Understanding and managing these issues is clearly a key concept within programme
management

In a similar way the business environment often changes and the availability of
money may reduce. The business has to decide which projects it will stop, which it
will slow, which it will adjust the scope of. It is clearly essential that these decisions
are taken at programme level by someone accountable to the business. Equally,
important from the project managers perspective is that the impact of any change
requests are quickly but fully understood and communicated back to the programme
manager to allow the right business decisions to be taken. However, having been told
to slow the project up it is clearly important that the project manager documents the
request and the expected impact as this will certainly result in failure to deliver
against original plan and almost certainly impact the budget as many project costs
are time related.

2.3 Portfolio Management

I have included this so as a potential project manager you are fully aware of the big picture.

We have talked so far about projects and how these fit within programmes. In the same way
portfolios are simply the next level up in that a business may have a number of programmes
which may be related or unrelated which have been put together in order to deliver the
business or organisations overall aims. A good example of this would be the various
programmes operated by the United Nations which form a portfolio of activities aimed at
delivering on its goal of a better world, examples include;

United Nations World Food Programme

United Nations Environment Programme
United Nations Development Programme

A Portfolio is a suite of business projects (all business projects not just those managed in the
conventional projects environment) which are managed to optimize their overall value to the
organization (or enterprise). The relationship between Portfolio, programme and projects is
shown in figure 2 below.

Figure 2: Portfolio, Programme and Project.

Whilst it is unlikely that, as a potential project manager you will be directly involved in
portfolio management in the short term, it is important for you to understand how these
concepts fit together. This is shown quite neatly in figure 3 (overleaf) with the arrows
indicating that strategy translation is a top down process whilst delivery is therefore a bottom
up process. Some would argue against this but this is beyond the scope of the current
course.
 Figure 3: Strategy as a Top Down process / Bottom Up process

To feed the Portfolio managemen process different organizational levels need to make
different contributions.

Enterprise Level - At Enterprise Level executives are required to undertake Destination

Definition and Strategy Development.

Portfolio Level - At Portfolio Level executives are suite of business initiatives are designed
and managed to optimize enterprise value and support the strategy.

Programme Level - At Programme Level programs of work are designed and managed
which clearly identify business value or defined benefits to the initiative.

Project Level - At Project Level Project Managers are concerned with delivering a defined
capability based on an agreed budget and schedule.

In order to further illustrate how the concepts of portfolio, programme and project
management are related I have include figure 4 (overleaf)
 Figure 4 : Overall Structure - Example

NewCall
New CallCentre
Centre
Planning Phase Delivery Phase Acceptance
Go/No go Go/No go Go/No go
Private Public Committed
Private Public Committed

ITITProgram
Program(Technology
(TechnologyAcquisition
Acquisition&&Implementation)
Implementation)

Software selection & implementation

Software selection & implementation

Hardware Selection & Installation

Hardware Selection & Installation

Telecoms Selection & Installation

Project Management Telecoms Selection & Installation
Methodologies,
e.g. APM/PMI/PRINCE Facilities Program (Building a Call Centre Facility)
Facilities Program (Building a Call Centre Facility)
Site Acquisition Build Facility
Site Acquisition Build Facility

Initiative Marketing Program (Promoting the Call Centre)

Marketing Program (Promoting the Call Centre)
Marketing & Promotion
Program Marketing & Promotion

Project PersonnelProgram
Program(Acquiring
(Acquiring&&Training
TrainingCall
CallCentre
CentreStaff)
Staff)
Personnel
Staff Training
Initiative status Staff Training

[P.T.O]
3. The Project Management Process

3.1 Introduction

This section of the course is intended to provide you with an overview of the project
management process. It is very much an overview as we will explore some of the more
important concepts in more detail over the coming weeks.

To start with imagine you are a project manager working within one of the oil and gas majors
such as BP or Shell. You are busy playing Tetris and chatting with your mates one day when
you boss walks in and says he has a new project for you to manage.

Great you say, tell me about it.

Your boss explains that he wants a new oil and gas facility in West Africa. He explains how
big it needs to be and when it is required to be on stream by.

You say great, Just give me 2 billion dollars and I will have it up for you in a jiffy!.

Next day you are reassigned to your new role stacking shelves in the local supermarket.

This of course is a ridiculous example but it does contain some important messages

Activity

Before turning the page please try this activity

Whilst stacking shelves in your new job you have time to think. What did I do wrong?

Spend 5 to 10 minutes and list down what problems the approach you suggested might
present you as project manager and/or the organisation which used to employ you.
 Activity- Discussion

The first and most obvious point is you have no idea if delivery to this cost and time frame is
even possible, or if it is what compromises or risks are involved.

The old adage It is better to have tried and failed than not to have tried at all does not really
apply to project managers!. Companies employ you to Deliver on your promise, remember
this and you will not go far wrong.

However, whilst, what I have said above is true the problems with the suggested approach are
far broader and far deeper than can be captured by a discussion of certainty over cost and
programme. Issues include but are not limited to

How do we measure success? More importantly how do the stakeholders measure it?

What are the givens or things which cannot be changed?

What are the assumptions maybe these can be challenged?

What are the options? And which is preferred? Why?

What are the risks? How will these be managed?

Preparing a detailed estimate is costly. How does the business know its even worth
the time and effort?

What is the financial case and how does it fit with other investment opportunities?

What organisation do I need? Do I have the resources?

What technology options?

What Environmental, health and safety issues?

What about government permits etc

Who will construct? Who will manage?

What is the contract strategy?

Any critical intermediate or final milestones that must be achieved?

Who will operate the facility

What about logistics

Do we even have customers? What specifications/requirements do they have?

In truth the list is both varied and almost endless. You probably have other points down which
I am sure are equally valid. The key point here is that there is a myriad of issues and people to
consider and it is for this reason that we have a project process.
3.2 Project Process - What is a Stage Gate?

As the concept of a stage gate is fundamental to the project process it is worth taking a little
time consider its meaning.

I guess most of you will understand what a gate is, and for those that dont figure 5 may act
as a reminder!

Fig 5: A Gate

Figure 5 represents an actual gate but the concept of a gate is something that allows you to
pass through only if you satisfy certain requirements such as holding the key. The concept
has been used extensively in Christianity to explain the concept that only the worthy, or in
other words those meeting the Gods requirements, shall pass into heaven.

The stage gate concept is a key element of any project process and can but further
illustrated using the following example:

Example

Imagine you are purchasing a new car

Stage 1: You list down your requirements and selection criteria. Hopefully, ensuring
you have considered other key stakeholders such as your partner.

Stage 2: You identify potential alternatives and select the one you prefer
 Stage 3: You estimate the detailed costs associated with your preferred car and
decide when you want to purchase it

Stage 4: You purchase it

Stage 5: You drive and hopefully enjoy!

Stage 1 Stage 2 Stage 3 Stage 4 Stage 5

Consider the previous example. In order to progress to the next stage you need to have
fulfilled a set of requirements. If you have done this properly there should be no need to
recycle back to an earlier stage. Imagine the gate between stages is essentially one way, a
type of non-return valve if you will.

Now imagine that before progressing to the next stage that you not only need to have
completed certain tasks and assembled certain documentation but you also need the key
stakeholders to approve progression to the next stage. This can be represented as below
with the diamonds representing decision points or gates.

Stage 1 Stage 2 Stage 3 Stage 4 Stage 5

This is a rather simplistic example but I hope one which helps rather than hinders
understanding of the project process which will be described in the coming sections

3.3 The Project Stage Gate Process

There are a myriad of different versions of the stage gate process which have been tailored
to the needs of particular industries and business sectors in fact most major businesses
and organisations have their own.
To avoid introducing unnecessary complexity we will focus here on the concept rather than
getting bogged down in the strengths and weaknesses of different types of process. That
said, it will clearly be important for you as individuals to know, understand and apply the
project process appropriate to the organisation within which you operate.

Figure 6: Typical Stage Gate Process

Approvals

1 2 3 4 5

Frame the Review Fully Define Execute Operate &

opportunity alternatives Scope look-back
& select
preferred
option

Each stage has a number of tools, processes, resources and deliverables associated with it,
and it is the understanding of each of these phases that will concern the rest of this course
so that each student can develop or enhance their own project management process.

Similarly each stage, except the last one, has an approval phase which allows the key
stakeholders to review work to date, consider how the project fits in with the programme and
decide whether to continue, hold, stop or on occasion recycle.

The first three stages, are usually the most critical, since although these stages typically
make-up only a small fraction of the final project costs it is during these stages that the
project team can have the biggest impact on any and all of capital cost, benefits,
programme, technology selection, quality and EHS pretty much anything that impacts the
real and perceived success or failure of the project. Figure 7 (overleaf) shows the typical
relationship between the cost of change and the impact on outturn cost and/or benefits.
 Figure 7: Cost & Impact of Change vs. time for typical project

Cost

Impact

Time

If you think about it is pretty easy (and cheap) to delete or modify a piece of equipment on an
engineering drawing during the early stages of a project. However, as design progresses
through to detailed design our ability to modify the equipment becomes limited and the cost
of such modifications even at this stage can start to increase as due to rework of the item
changed and any associated knock-on effects. Once the equipment has been ordered our
ability to change things is drastically reduced and the cost of such changes increases
dramatically and this pattern continues through to operation when the scope to make
changes is relatively small without incurring enormous capital costs and consequential costs
associated with lost production.

In a sense the stage gate process is all about doing the only the work needed to support the
next decision. It is about ensuring that a companys precious resources are not tied up in
undertaking detailed design (or god forbid execution) on a project that does not fit with the
companys strategic direction and does not represent the best use of the companies
precious resources.

The key to the design of these processes is usually to improve decision making and
execution of projects by fostering better planning, collaboration and communication. They
assist team efforts in selecting the right opportunities through improved decision making, and
improve overall project outcomes by helping project teams excel in the execution of
business-driven decisions.
Also, the focus of such processes is to improve both the decision making and execution of
projects. If we perform only one of these dimensions well, either decision making or
execution, the project is less likely to provide a successful business outcome.

The principles behind the examples illustrated above are:

Focus on key value drivers for the opportunity.

Use integrated, multifunctional teams.
Achieve effective input, communication and alignment among teams, decision makers
and stakeholders.
Do the work needed to support the next decision; be focused on decisions, not activities.

3.4 What value does this process add?

It is believed through benchmarking results that this type of process results in significant
project cost savings in the range of 20% and execution time on the project schedules was
reduced by 10%.

However, concrete evidence is hard to find. In a massive deployment of just such a stage
gate process for management of a shutdown involving 3 million man-hours of work the
project still came in over budget and over ran. However it was an extremely complex and
difficult work programme and the consensus was the process greatly improved the result
and they are committed to continuing its use.

3.5 The Project Process A closer look

The generic project process shown previously in this section has 5 main phases . In practice
each stage generally has a detailed series of activities which are often listed below each
phase. They are the elements required to enable the decision board to take the decision
required at the end of each phase. As mentioned previously we will review each stage in
more detail but I have included some thoughts on each phase in order to give more insight
and aid your understanding.

Phase 1 Frame the Opportunity/Frame the problem

Clearly frame the opportunity to be pursued (the project) and ensure alignment with
business objectives.

Perform a Gap analysis. The process is simple, first you define your current state
(where are you now?), then define your desired state (where do you want to be?), and
finally prepare a plan to reach the desired state (how do you get there?).

Understand and agree the Boundary Conditions, Identify the stakeholders and define a
successful outcome. Perform a preliminary assessment of uncertainties, potential return,
and associated risks.

These items make up what is referred to as a Framing Document. The Framing

Document contains at a minimum, an Opportunity Statement, Boundary Conditions,
Stakeholders and Definition of Success. It describes what the project is trying to
accomplish, the limits or boundaries the project is working within, and what the desired
outcome is for the project.
 Creating this Framing Document is the first step for any team using such a process. Its
important to realise that this framing is a team or group effort. For a small project, the
framing session may be two or three people spending an hour to create the document,
while for a larger project it may be a larger team spending an entire day or more. The
effort should reflect the size and complexity of the project.

For small groups, bringing additional peer resource in to assist in the development of the
roadmap is beneficial as it increases the wealth of expertise reflected in the elements
captured in the roadmap.

Once the Framing Document is created, it should be shared with decision makers, key
stakeholders, other team members and others who supply resources to the project. This
document is useful to communicate a consistent message to all the parties associated
with a project. It is also living document, and should be reviewed and updated by the
project team regularly or whenever there is a change to the plan.

This is a critical stage where the project team can have most impact for least effort
and/or cost. Ignore this stage at your and companys peril!

Phase 2 Review alternatives & select preferred option

Generate a wide range of potential alternatives and risks facing the project.

The project manager can uses a wide variety of techniques including expert knowledge

Involve enough people

Cast net wide

Assess these alternatives against the project value measures, and select the preferred
alternative.

Phase 3 Fully define scope

Perform Sensitivity analysis & generate range of outcomes - Fully define the scope of the
preferred alternative, and develop detailed execution plans. Verify the value of the
project meets the business objectives. Refine estimates and economic analysis to meet
funding requirements. Carry out project sensitivities and outcome ranges.
 This phase culminates in the generation of a sanction grade design package with
associated estimate and programme. In also culminates in the production of the project
execution strategy document and of course a business proposal which are both
submitted for funding approval, as appropriate.

This phase is sometimes referred to as a Front End Engineering Design (FEED) stage
although many different terms are used depending on the industry and the company
concerned

Phase 4 Execute

Complete detailed design, implement execution plan, and finalize operating plan. This
phase is often referred to as the Engineer, Procure and Construct (EPC) Phase and it is
all about turning the ideas into reality or realising the dream.

Whilst Phases 1, 2 and to some extent Phase 3 are about change and optimisation this
Phase is about delivery of a frozen or firm design Delivery on ones promise. It is
important therefore carefully manage and changes that maybe deemed or become
necessary as a result of factors outside the projects control.

Phase 5 Operate and Look Back

Begin operation of completed asset, and monitor performance of the asset. This usually
involves some kind of handover of responsibility from project to operating team although
the precise timing (pre-or post commissioning) depend on the size of the job and local
custom and practice. On the larger jobs the project team, acting through a
commissioning manager, are often required to demonstrate that the equipment performs
as promised before final handover to the operating team.

At this stage there is also often an opportunity to benchmark the asset performance
against business objectives and competitors, if appropriate. Share results and lessons
learned. Continue performance assessment, and identify new opportunities.

Activity
Think about how you would use the Stage Gate approach to deal with the purchase of a new
company vehicle. Think of the issues you need to consider for each phase and think
outside the box if you can. What might be the deliverables for each phase? How
accurate/detailed do estimates and programmes need to be?
3.6 Public Sector Example of a Stage Gate Project Management Process

A good example of a similar process with similar roots, but which is common in the public
sector is PRINCE2.

The usual schematic for this process is:

In comparing this with the earlier example, the similarities are striking, but also there are
significant differences. PRINCE2 does not focus on the alternatives, though in the Initiating a
Project phase it does check for an acceptable business case.

The Managing stage boundaries is a different way of expressing the Decision Support
Documentation required by the Decision Board through the project process.

The Controlling phase and managing product delivery is analogous to the single Execution
phase.

Planning is seen as a process continuing throughout the project to the closure phase, and
the project Team is considered as being implicit within the phase boxes.

PRINCE2 is not used extensively by the oil and gas industry or in fact by related industries
and so will not be discussed further within this course.
4. What is Project Management?

I said at the start we would revist this issue. We are doing so not just because this issue is
so important but also to leave you thinking about this subject in preparation for session 3.

Different authors have different views on this (as on most things). For this course we take
the holistic view by first trying to answer a different question:

What is the purpose of Project Management?

Here we can get some agreement between references and we will summarise these as:

The purpose of Project Management is to maximise the success of a Project.

That sounds fair enough. If a Project is disastrous it is not saying that applying Project
management will fix it, but that it will maximise the success that it can in its sphere of
influence (it cant influence commodity price, but can the speed & quality of result). But then
we get to the really sticky bit, what is a Project? You have heard this question before and
had the stock answer which is something along the lines of a defined start and finish, clear
project deliverables and so on. Then examples like launching a new product or building a
house are given. But lets go up from there, a few orders of magnitude. The creation and
eventual destruction of the Universe is that a Project? It has a start and finish with a bunch
of things which are meant to happen in between. So does that mean life is a Project? A
company creation and eventual demise a Project? A product life cycle a Project?

Yes

But but not the type of Project that most authors talk about, because having defined a
Project as something much smaller they then talk about Project Management techniques as
planning, leadership, communication, motivation, and so on all geared to the execution of
a limited number of activities on a Gantt chart. But isnt this a very limited view?

Yes

Lets look at it from your companys point of view. They are launching a new product on the
market, for that they have to build a new factory. Does it really matter if the factory goes over
budget by 1m, or is 3 weeks late if the profit in the first year alone is 10m IF they predicted
the market requirements correctly and get the customer support right? Sure they would be
happier if the factory had been on time and under budget, but they will still say the Project
was a success. So, you can see how much wider Projects actually are than just the bit that
typically involves construction. This is a very important point.

Project success is critical to companies, as their competitive edge may depend on them
such as new product development, the implementation of new business strategies etc. It is
just as critical to the employees involved, their futures may depend on it.

Continued failure of projects, even if not business threatening, will affect motivation of
employees. Employees will avoid being involved in projects and the whole project
programme will become undermined, which must eventually threaten the future of the
business.

If success is so important what do we mean by success? Hard to say as it means different

things depending on your point of view. There is Project success did the project meet its
aims. Did the conservatory you built on the side of your house really add sales value on the
house, was it really as used and useful as you hoped, did it look as good, was it easy to
maintain and was it built at the cost you expected? These would be typical Project aims.
Then there is what we could term Project Management success. This is the success of the
execution of the project. Was the conservatory completed on time, to the right quality and in
budget.

We will examine this in more detail during the next session but it might be useful if you can
give it some thought beforehand

References

University of Aberdeen - MSc in Project Managemen

Recommended reading

None Course notes should be adequate

However, for those students interested in further reading the following books maybe worth
considering

Programme/Portfolio management

APM Introduction to Programme Management. ISBN: 978-1-903494-63-9

Project Portfolio Management: Leading the Corporate Vision. Rajegopal, Shan; Philip
McGuin, and James Waller (2007) Palgrave Macmillan. ISBN 978-0-230-50716-6.

Project Process

APM Body of Knowledge ISBN 1-903494-13-3

PMBOK Guide, A guide to the project management body of knowledge. Published by

the project management institute ISBN 1-880410-23-0