"In all things, success depends upon previous preparation, and without such preparation there is sure to be failure" Confucius (c.550 - c.478 BC)
There are no absolute criteria to define what is 'best practice' in terms of project management and procurement. There are, however, new processes to help with the preparation of projects that have the potential to improve the delivery of projects in terms of costs, time and performance.
An example of such a process is the 'Gateway Review Process' now established by the OGC. This process combines the 'gateway' approach with a clear governance process and is supported by comprehensive guidelines and checklists to steer the review panel.
The key features of a clear governance process include:
• Defining the review process and criteria to be established at each gateway to allow the project to pass through
• Identifying appropriate and clearly defined project objectives
• Using a review team, independent from the project team preparing the business case or other document forming the basis of the review, to act as an auditor
• Basing the review on the entire project life-cycle, giving equal rigour to operational cost and benefits as well as capital costs
• Verifying that the project scope covers all that is necessary to provide the project benefits
• Ensuring that there are criteria established for measuring performance, i.e. can the benefits be measured
• Verifying that there is a suitable competent project management team in place and that key principles of risk and value management will be applied
• Ensuring that there is a clearly defined project sponsor who 'owns' all aspects of the business case.
It is also evident from the research that projects procured through PFI have been successful in achieving their projected works duration timescale with only minimal variation to either capital expenditure (covering initial fees, etc.) or to the forecast unitary payment. The nature of PFI procurement demands an extremely rigorous approach to defining the scope and performance criteria for the project. If properly applied, the review process within the gateway approach should ensure that a similar level of rigour has been applied in the preparation of the business case which, in turn, should begin to drive a far closer correlation between planned and actual cost, time and performance.
Major projects, by their scale, have inherent risks that can be compounded if the project is of a complex, innovative or highly technical nature. At the strategic outline case stage of these projects, it must be accepted that there will be high levels of uncertainty on many issues, though before commitments are made, there must be consideration of alternative options with reduced risks (e.g. by redefining functionality required, business processes or project scale). The OGC Gateway Review Process approves the project in stages, i.e. costs are only committed to achieve the next stage. The review team, therefore, has the authority not to allow a project to proceed unless they are confident that the required allowances for optimism bias are at an acceptable level commensurate with the project risks and stage of the process.
Equipment/development projects tend to involve high risk areas such as technological innovation, bespoke software and systems or complex business processes. In many cases complexity arises through a desire to achieve organisational goals using existing business processes and practices.
"Change should be a friend. It should happen by plan, not by accident." Philip Crosby
The realisation and acceptance of change to business processes can reduce risks, however this needs to be addressed at project definition stage. Resourcing and commitment to implement such change has to be considered equally important as a well managed capital procurement or outsourcing. In addition, these projects also suffer from over-ambitious functional goals and are often better broken down into achieveable projects of less ambition, but with provision for future integration. Also, when new information technology is involved, there must be a change in the way people work. It is more efficient to have standardised methods of working than trying to develop software that deals with the many different ways of working.
No matter how good the systems and processes are, it is the people who are responsible for formulating the business cases and managing projects. Very often, inputs at the early stage of a project, in terms of developing plans, strategies and budgets, can have a critical impact on the success or failure of the outcome. Ensuring the right quality of personnel or organisation in these roles can be categorised as a 'high impact and low value' procurement decision. The emphasis on these decisions must, therefore, relate to quality rather than price and incentives, with flexibility in appointment terms to allow for the inevitable changes in scope and strategy that will occur as the project definition evolves. A project management team that considers, and can effectively put into place, the key management tools highlighted in Appendix H is better placed to deliver a project to time and budget.
When good project plans are prepared in advance by experienced project managers, it is surprising how often the circumstances of projects fit in with the plans. This is no coincidence as this comes as a result of good project management (including risk management).
Projects lasting several years need to have effective induction, training, document control, knowledge transfer and handover processes to ensure that project knowledge is transferred efficiently. In long-term projects it may not be possible to allocate senior management team members for the full length of the project, therefore staggered replacement of senior team members and a minimum allocation (e.g. three years) are recommended to provide project stability.
More emphasis needs to be placed on spending money to increase efficiency, value for money and customer satisfaction rather than just saving money. This is in terms of people and contracts. Good staff should be retained through competitive salaries and incentive schemes. Contracts should be awarded on the basis of value, quality or past performance rather than price. Openness and flexibility will allow projects that are heading for high cost and time overruns to be redirected and control regained. Balancing capital, operating and maintenance costs is crucial.