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Leading Complex Projects
Strategies for Success
Module 1: Introduction and Motivation
Outline Motivation to Understand Complex Projects
Ground Rules
Organization of Seminar
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Industrial • Projects that make a product for sale, e.g., oil, natural gas, iron ore,
What Is a nickel, gold ingot, diamonds, chemicals, etc.
Complex • Intend to make an economic profit
Industrial • Excludes military developments, purely public works and
Project? transportation projects, monuments, works of art, etc.
Complex • Complexity occurs in several dimensions:
Project − Sheer size
− Stakeholders and “politics”
− Multiple scope areas
− Technology
− Organizational complexity
• Complex projects are inherently difficult
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Elements of High Profiles
Require Huge Physical &
Financial Resources
Difficulty for
Complex Projects
Hostile Climates Higher Frequency of Turnover
Include Multiple Major
Inadequate Basic Infrastructure
Contractors
Complicated Communication
Several Functional Areas
Matrices
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Elements of • Multiple partners, stakeholders and other
“interested” parties
• Serious political unrest in country
Complexity • Basic data are often expensive and
• Project deals with a difficult or very
complex regulatory climate (permitting)
difficult to obtain
• Inadequate local labor supply to support
The More You Check • Multiple distinct scope elements project
Off, the Harder It’s • Large number of interfaces • Difficult for owner to adequately staff the
Going to Be project
• Difficult project location (harsh climate,
remote region, environmentally sensitive) • Project team members are geographically
dispersed
• Sometimes extensive infrastructure
development required • Lots of contractors involved with many
interfaces to define and manage
• Often have to cope with local content
requirements (formal or informal) • Difficult contracting environment with
contractors very busy or highly risk-
• Substantially new technology used or
averse
major process modifications made
• Internal opportunists to cope with
• Weak institutional framework
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Program Complex Project
Distinguishing • A series of related projects often • Parts only make sense only when
executed over a substantial period all are completed
Between of time
• Pieces are tightly coupled such
Complex Projects • Each project, or phase, is that they only make business
and Programs economically justified sense together
independent of the projects yet to
• Both forward and backward
be done
dependency
• More valuable as a set than the
sum of projects
• Not a stretched out project
• Forward dependent, not backward
dependent
Complex projects that are carved into pieces for whatever reason
tend to have miserable results because the interfaces created are
not managed
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• The seminar is given from the point of view of generating
successful assets for sponsoring companies
Seminar Point of
• Primary audience:
View
− Business considering/involved in complex projects
− Project directors, sub-project managers, and members of the project team
• Secondary Audiences
− Those who finance major projects – a key concern is large project risk
− NGOs – frequently take issue with these large projects
− Contractors – helpful to learn what success looks like from owners’
perspective
− Anyone with responsibility on the business or project side for smaller
complex projects – remote/frontier regions, implementing new technology,
difficult political environments
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• Complex project frequency has increased, and will continue
to increase for decades to come
Why Study These
Projects? • These projects are important, especially to:
− The societies in which they are executed
− The health of the global economy
− The sponsors and others providing large amounts of money
• Complex projects are highly problematic and are failing at
an alarming and unsustainable rate
• The problems these projects face can be controlled and the
chances of success improved greatly
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• Climate change requirements have made most industrial
projects more complicated that they were 10 years ago
Why Are Projects • Changes in information technology have created new
Larger and More stakeholders and the ability to mobilize opposition to the
Complex? projects is easier
• In the global marketplace, full exploitation of economies of
scale is necessary to being competitive in many
commodities
• Resource development projects are in progressively
inaccessible
• Extensive infrastructure development requires projects to
be large enough to spread the infrastructure costs over a
wide base of beneficial production to be economic
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• Far too many industry complex projects executed over the
past decade have suffered disappointing outcomes
Motivation of
This Seminar • Both the successes and failures tell us that lead sponsors
largely control the results
• Failure is actually quite predictable
• The large number of failures suggests the owners don’t
always understand that or what is needed to succeed
• This seminar discusses the basic changes sponsors must
make in their approach to exercise that control and to
significantly improve the outcomes of these projects
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• This entire seminar is focused on risk identification, risk
reduction, and risk management
If Risk
Management is • Getting the fundamentals right is what mitigates risk:
your Focus…. − Good Shaping
− Complete Basic Data
− Good Teams
− Good front-end work
• The “risk register” is but a small part of the risk
management process
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Outline Motivation to Understand Complex Projects
Ground Rules
Organization of Seminar
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Introductions • Name and position
• Functional responsibility and experience
• Complex project experience
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United States Brazil
Independent Project Analysis, Inc. Independent Project Analysis Latin America
44426 Atwater Drive Rua Deputado Heitor Alencar Furtado, 3415
IPA Offices Ashburn, VA 20147 Edificio Montelig – 4o andar
USA Campo Comprido
+1 703 729 8300 Curitiba – Paraná 81200-528
Brazil
+55 41 3028 9028
Australia Singapore
Independent Project Analysis, Inc. Independent Project Analysis, Pte Ltd.
Level 2, Suite 2 No. 1 International Business Park
192 High Street #10-02 The Synergy
Northcote, VIC 3070 Singapore 609917
Australia Singapore
+61 3 9458 7300 +65 6567 2201
United Kingdom The Netherlands
Independent Project Analysis, Ltd. Independent Project Analysis, Inc.
Wellington House – First Floor WTC The Hague Business Center, Room 03.25
Worton Drive Prinses Margrietplantsoen 33
Reading RG2 0TG 2595 AM The Hague
United Kingdom The Netherlands
All email inquiries to: +44 118 920 7800 +31 70 335 0707
ipainstitute@[Link]
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1 This is a safe zone 7 One speaker at a time
Ground Rules
2 No rank in the room 8 Be an active listener
3 Everyone participates 9 Help us stay on track
Agree or disagree only if it makes
4 10 Keep an open mind
sense to do so
5 Give freely of your own experience 11 Silence mobile phones and tablets
Respect time for breaks to keep us
6 12 Have fun!
on track
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Outline Motivation to Understand Complex Projects
Ground Rules and Code of Conduct
Organization of Seminar
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Standard Project
Development
Process
Appraise Select Complete Define
Startup &
FEL 0 Opportunity Scope Scope Project Execute
Operate
FEL 1 FEL 2A FEL 2B FEL 3
Business Case Scope Authorization
Developed Closure
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Basic Data Process
Basic Data Development Science-Driven
Complex Project
Development Interaction at Decision Points to
Either Move Forward or Kill the
Process: Project
Braiding three work Select Complete Define
Core Team Startup &
streams into a is Formed Scope Scope Project Execute
Operate
FEL 2A FEL 2B FEL 3
strong project
Scope Closure Authorization
Project Process
Project-Driven
Interaction at Decision Points to
Either Move Forward or Kill the
Project
Project Potential Comparative Stakeholder Project
Context Value Advantage Alignment Governance Shaping Process
Business-Driven
Country Advance Team is Formed for new territory entry
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To explore the factors that promote successful production assets
The Goal To instill an appreciation that a broad encompassing approach is
The Seminar essential to understanding complex project performance
Organization Is
Centered Around
the Asset
Creation Process To understand that the execution of the capital project is
The Vision actually the culmination of years of work and cross-functional
cooperation (or dysfunction)
To recognize that the interplay of work streams, functions, and
The Challenge
scope elements is what makes these projects difficult…
…and fascinating!
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Facilities Facilities
This Is How IPA Appraisal Facilities
FEL
FEL
Facilities
Outcomes
Outcomes
Views an
E&P Asset Reservoir
Reservoir
Teams
Teams Target Asset
Asset
FEL
FEL Setting Outcomes
Outcomes
Reservoir Wells Wells
Wells
Scope and Wells FEL
Complexity Technology FEL Outcomes
Outcomes
(facilities/
wells complexity)
Project Execution
Discipline
Appraise Opportunity Select Define
Execute Operate
FEL 1 FEL 2 FEL 3
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Appraisal
Methodology Facilities* Facilities
This Is How IPA Facilities
FEL
FEL
Facilities
Outcomes
Outcomes
Views a
Mining Asset Orebody
Reservoir
Teams
Teams Target Asset
Asset
FEL
Definition Setting Outcomes
Outcomes
Orebody Wells Wells
Mine
Scope and Mine FEL
Complexity Technology FEL Outcomes
Outcomes
(facilities/
mining system complexity)
Project Execution
Discipline
Appraise/Conceptual Select/Scoping/Prefeasibility Define/Feasibility
Execute Operate
FEL 1 FEL 2 FEL 3
21 | CONFIDENTIAL * Includes process facilities and infrastructures, measured separately
Technology Enables Business Safety
Strategy Strategy
Pathway to
Establishes
Success Sustainability
Clear Objectives
Trade-offs Understood
Right Scope Business Value
Meets Business Need
Guides Development
Prerequisite to IRR/NPV
Develop
Execute with
Strong Team Minimal Change
Firm Quantities Baseline
Low Cost
Creates Basis
Follows Continuity
Project Process Minimal Disruption
From Turnover
Fast
Front-End Loading Schedule
Leading Excellent
Risk Interaction Operability
Technology
Leading Indicators Performance Indicators
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• Each section of this seminar has a few critical lessons and insights
into why this projects succeed or fail and by implication what to
Learning do about it
Objectives • Most of you are seasoned project professionals who already
know all the basics
• Focus your attention on the aspects of complex projects that
distinguish them from easier projects
• Focus on the concepts that are less familiar to you and slot those
into your framework for thinking about how to do projects well
• By Friday afternoon you should have a list of things to ponder in
more depth in the weeks and months ahead, especially if you find
yourself engaged in one of these projects
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