Driven by a need to arrest the decline in Return On Assets (ROI), businesses must now attempt more brownfield installations where previously they would have supported greenfield projects.
Businesses must also consider the use of low cost materials where previously they would not have accepted the potential risks to their operating platform.
Projects with these challenges are more complex. Therefore it is getting harder for senior managers to cut through the detail and monitor the health of projects in complex supply chains of today.
So how do you assess the health of a complex project and ensure that it’s not about to become a disaster?
First, you need to decide if you project is really that important.
“Why do I need to do that?” I hear you ask, “I just want to know if my project is healthy!” There are two reasons;
- If the project risk is low than is there really any benefit in doing a review? – Is it better to let the managers get on with it and deal with whatever happens at start-up knowing that, in the worst case, the potential risk to the business won’t be profound.
- A low cost project can ALSO have a devastating impact on a business. – If someone is assessing the health of a project then they should be searching for a level of due diligence that is commensurate with the project risk, not the cost.
If you want to know more about assessing project risk then please go to “The 5 steps to assessing project risk & complexity?“. But for our purposes here, we will concentrate on how to assess the health of a high risk, complex project.
Projects must be driven toward a business outcome and there must be someone aware of, and responsible for, the business outcome (which is distinct from the hardware outcome). There must be a project governance process in place that monitors and manipulates the risk profile of the project.
Here is a basic governance framework for a complex project in an FMCG environment:
If there is a robust governance process in place then has this been supported throughout the project? Has there been a constant management of the risk profile of the project through all four phases of the project governance process. See “The 4 key phases of good project governance” for more information on governance.
2. Hardware Team
The team tasked with contracting and coordinating the hardware, be that assets or material inputs, should be selected and managed in a particular way according to the type of project. There are 5 factors that determine the way a hardware team is structured;
- Type of product made on the installed process – Is the business, or business unit in which the project is being executed, involved in the production of a commodity which rarely changes or is it involved in the production of many different products which change constantly, such as Fast Moving Consumer Goods (FMCG)?
- Type of installation site – Is the project stand-alone on a greenfield site or is it being implemented within an existing facility with an operations platform and HR culture already in place?
- Level of business integration required – Does the project require a lot of integration into existing operations or can it be segregated and implemented without much reference to existing infrastructure or industrial relations agreements?
- Anticipated stakeholder buy-in and consent – Have project stakeholders got a high commitment to the project, do they have significant “skin in the game” as witnessed by their behaviour towards the project or is there a lot of friction & uncertainty regarding whether or not the design is fit for purpose?
- How closely is capability & profitability matched with the investment? – How closely does the capability of the assets and material being introduced as part of the project meet the business expectations expressed in the approved project? Is there still a lot of work to be done to validate that original asset or material supply assumptions made in the original project can actually deliver the project business brief?
For more on this see How do I prepare contracts and resources for a complex project?
3. Integration Team
If the project is high risk then there should be evidence of an integration team. That is a group of people from the receiving business that have a sound understanding of how the business operates and how those business operations relate to the incoming project.
Refer to our white paper Agile Project Management in High-Change Businesses for more information on Project Integration.
4. Industrial Engineering
- Is there someone who is responsible for analysing the project scope and the impact it will have on the total supply network?
- Can the operational performance of the assets being installed (or the new materials being introduced) be clearly articulated using a bottom-up analysis as well as a top down analysis, ensuring that it will actually deliver the business benefits expected?
- Does the bottom-up operational analysis include clear operational limits and targets for variables such as efficiency, quality, capacities, etc for the new assets or material inputs?
- Has the modified, or new, operational platform been sufficiently modeled to relate it’s performance to the demand expectations in the project?
5. Project Finance
To what extent is there clarity around how much has been spent, what is planned to be spent and how that relates to the project budget?
6. Project Portfolio Management
A large, high-impact project will rely on the delivery of many sub-projects within the broader business. These subprojects will be charaterised by:
- design uncertainty
- supplier capability uncertainty
- material input design and delivery uncertainty
- asset delivery uncertainty
- business dynamics uncertainty
- lots of uncertainty
These sub-projects include, but aren’t limited to;
- Hardware supply and installation
- Material inputs (commercial) sourcing
- Logistics and warehousing (finished products and material inputs)
- New Products and S&OP
- R&D Process & Quality
- Human Resources
- External Relations
Coordinating all of these projects is complex and time consuming, so someone must be accountable for their oversight. This oversight requires a familiarity with the business as well as a strong understanding of total supply network dynamics.
This oversight also includes managing the time uncertainty involved in all the sub-projects. This is very complex and exceeds the capability of most commercially available project scheduling packages such as Microsoft Project™.
That is why we continue to develop our understanding of Critical Chain Project Management as we think it is the only project management tool capable of managing the levels of uncertainty experienced in the complex projects encountered in the process industry, particularly FMCG.
A Final Word!
The rating system and form of assessment used against each of the six areas above is not important. More important is the fact that these different elements within a project can survive scrutiny.
A word of warning, if it doesn’t feel right then it probably isn’t! If you think your project is in crisis then please go to this white paper – Fixing a project that is in crisis.