Successfully Managing High Risk, Critical Path Projects

1. Successfully Managing High Risk, Critical Path Projects Lawrence Oliva Director, Infrastructure Project Management CSC PRIME Alliance

2. Introduction 16% Of All Projects Started Complete Successfully (Schedule, Budget, Deliverables) 1 • Top Five Reasons For Failure: 1) Incomplete Requirements 2) Lack Of User Involvement 3) Lack Of Resources 4) Unrealistic Expectations 5) Lack Of Executive Support • Typical Cost Overrun Of 189% • Typical Schedule Overrun Of 222% 1) Standish Group, 1995, study of 365 companies and 8380 IT applications

3. Introduction 5% Of All High Risk, Critical Path Projects Started Complete Successfully 1 • Top Five Reasons For Failure: 1) Unrealistic Expectations (Schedule, Cost, Functionality) 2) Insufficient Funding 3) Poorly Defined Objectives 4) Incomplete Requirements 5) Lack Of User / Customer Collaboration • Typical Cost Overrun > 250% (For Completed Projects) • Typical Schedule Overrun > 280% (For Completed Projects) 1) L. Oliva Independent research, 2001-2002, on profiles of 100 HRCP projects

4. HRCP Projects Are Increasing • Companies Are Reducing Technology Budgets, Leading To Fewer, But Mission Critical Projects… • At The Same Time, Technology Continues To Increase In Complexity, Making Projects More Difficult... • Simultaneously, A 95% Project Failure Rate Has Decreased The Number Of Experienced PM’s Available To Lead HRCP Projects… • It’s An Interesting Paradigm!

5. Working Definitions • High Risk: Activities Have A High Risk Of Failure Due To Factors Such As Scale, Scope, Technology, Schedule Or Final Deliverable • Critical Path: Every Sequential Task Planned With A Minimum Duration, Without Planned Schedule Slack

6. Profile of HRCP Projects • Project Contains Many Unknowns (Technology, Political Objectives, Resource Availability, Scope, etc.) • Project Failure May Lead To Significant Financial Impact Or User Injury – Often Within Public View • Time Frame Is Immoveable (Y2K or Budget Year) • Deliverables Are Large ($$$) and Desirable • May Involve Public Or Worker Safety • May Be Mandated By Law, Society or Nature

7. Recent Examples ofHRCP Projects • Pentagon Reconstruction (In One Year After 9/11) • World Trade Center Cleanup (9 m vs 24 m Estimate) • TSA Baggage Inspection Program (435 Airports By 12/31/02) • Power Restoration Efforts after 8/03 Northeast Blackout • California Governor Recall Elections • Brentwood (DC) Post Office Anthrax Decontamination • Hunt For Snipers In Washington DC Area (Oct 2002) • Search And Recovery of Shuttle Columbia Vehicle & Crew

8. Why High Risk Projects Go Critical Path • Initial Planning Was Inaccurate • Unplanned/Undocumented Scope Changes & C.O.’s • Unplanned Events Happening Outside the Project • Key Personnel Changes • Technology Failures • Unexpected Financial Conditions/Changes • Lack / Loss Of A Dependable Executive Owner • Critical Supplier Failure Or Contractual Default • Failure Due To “Cascade Effect”

9. Five Common Aspects of HRCP Projects • Underestimation of Problem Complexity • Unclear Requirements And/Or Deliverables • Lack of Proper Change Controls • Underestimated Resource Levels • Cumulative Small Failure Cascade Effect

10. Five Common Aspects of HRCP Projects • Underestimation of Problem Complexity • Non-technical Experts Established Unrealistic Initial Goals/Timeframe • Lack Of Knowledge About Large Scale Project Management Methodologies • Lack of Technical/Operational Knowledge About The Problem(s) Or Solution(s) • Exuberant Optimism For The Schedule • Management Not Aware Of Their Responsibilities • Political Agendas Driving Actions

11. Five Common Aspects of HRCP Projects Examples Of Underestimation of Problem Complexity • FBI Trilogy Project Is Running $100 Million Over Budget And 1 Year Behind Schedule Due To “Technical Complexity” • Denver Int’l Airport Baggage System Ran So Far Over Schedule It Caused A Delay In The Airport’s Opening; Completion Took $200M More Than Budgeted • Production of HDTV Receivers Delayed For Three Years Due To Content Owners Fear Of IP Theft By Viewers Using PC’s • Hershey Foods Deployed New SAP, Manugistics and Siebel App Suites At The Same Time in 1999; Inaccurate Inventory And Sales Mistakes Caused Losses Of $150M +

12. Five Common Aspects of HRCP Projects 2. Unclear Requirements And/Or Deliverables • Requirements Are Unknown To Project Team • Requirements Appear To Be Obsolete Or Inaccurate • Deliverables Appear To Be Constantly Changing • Lack Of Documentation About Deliverables • Requirements Developed Without User, Customer, or Stakeholder Involvement • Contracts Not In Place To Pay For Deliverables

13. Five Common Aspects of HRCP Projects Examples Of Unclear Requirements Or Deliverables • TSA Screener Hiring Program Cost Increased 722% Due To Lack Of Clear Requirements ($100M to $722M) • Lack of Clarity About Which Standard Measurement System To Use Causes Crash Of Mars Climate Orbiter ($125M) • Ariane 5 Rocket Exploded In 1996 Because Software Flaws That Caught A 64-bit Floating Point To 16-bit Integer Conversion Decided To Shut Down The Guidance System Rather Than Ignore The Erroneous Data ($500M Payload Lost)

14. Five Common Aspects of HRCP Projects 3. Lack of Proper Change Controls • No Documentation For Changes Requested Or Performed…By Either Customer Or Project Team • No Methodology To Determine Schedule Or Cost Impact Of Changes To Project Baselines • No Client/Management Approval Process For Changes • If It Exists, Change Control Process Takes Months, Outliving Project Work Performed

15. Five Common Aspects of HRCP Projects Examples Of Lack of Proper Change Controls • Building Maintenance Company Learns PM Accepted $10 Million In Change Orders Without Incremental Funding Or Documentation; Files for Bankruptcy Three Months Later (2002) • Military Weapons Contractor Provides Invoices For $252M Based On “Verbal Understanding On Changes” With Contract Officer. Government Pays. (2001) • $250M Lockheed Satellite Crashes To Floor During Test; Key Safety Bolts Removed By Team Building Other Satellite Without Proper Notification (8/03)

16. Five Common Aspects of HRCP Projects 4. Underestimated Resource Levels • Scope Did Not Indicate Correct Resource Levels • Severe Budget Underruns With Schedule Slips • Excess Overtime Hours By Entire Team • Staff Trying To Perform Work That Should Be Done By Missing Staff • Long Delays In Locating Rare Skillsets • Inability to Perform Additional Billable Work Due To Absorbed Programming Team

17. Five Common Aspects of HRCP Projects Examples Of Underestimated Resource Levels • Springfield VA Intersection Construction Project Is About 300% And Five Years Behind Schedule Due To Scope Creep And State Funding Constraints • Due To Budget Reasons, Verizon Communications Laid Off 2300 Technicians In NYC Last December – People Who Rebuilt The Destroyed WTC Switching Center In 12 Months • Oxford Health Plans Migrated To A New Set Of Applications in 1996 Without Training Doctors, Nurses Or Accounting Staff; Losses Totaled Over $80M

18. Five Common Aspects of HRCP Projects Small 5.Cumulative Cascade Effect Of Small Failures • Small Problems Trigger Massive, Uncontrollable Failures • Small Schedule Overruns Expand Into Indefinite Times • Small Budget Overruns Become Infinite Estimates • Key Technology Elements Operate In Unimagined And Uncontrolled Ways Big

19. Five Common Aspects of HRCP Projects Examples ofCumulative Cascade Effect • French Concorde SST Runs Over $25 Metal Strip During Takeoff, Causing Tire Explosion and Aircraft Crash • $10 Chunk Of Foam Falls Onto Shuttle Columbia Causing Loss Of Craft And Crew • Lighting Strike At One Ohio Power Station Triggers Northeast Blackout Impacting 50 M People In August ’03 • Effects Of Blaster Worm (Estimated At $1B In Aug) Could Have Been Prevented By Downloading Free Patch in July

20. Political Aspects of HRCP Projects • Review By Elected Officials And Unelected Bureaucracy • Working With A Culture Of Service, Not Profit • Political Posturing With Media Access • Linking Of Political Agendas To Project Success • Alignment With Supporters To Drive Public Focus • Balancing Public Disclosure With Legal Constraints • Bridging Elective Terms-In-Office

21. HRCP Challenges • NIH (Not Invented Here) Mindset • Patents And Regulations May Dictate Processes – Changes Are Difficult • Changing Management Priorities May Impact Project Priority And Budget • Unexpected Litigation May Impact Project Deliverables • Political Pressures May Terminate Project Despite Potential Benefits

22. HRCP Directional Indicators • Unreliable Or Inaccurate Metrics • “Stovepipe” One Perspective Measurements • Management Malpractice (Enron, Worldcom, etc.) • “Silver Bullet” Syndrome (Expecting A Miracle Fix) • Unexpected User Requirements Scope Creep • Litigation / Visits From “Public Interest” Parties • Unexpected, Low Productivity From Team Members

23. Media Aspects of HRCP Projects Two Problems of HRCP Projects: 1) Complex projects usually have complex explanations 2) Media coverage usually focuses on problems, not benefits Solution: • Need To Create A Set Of Project Statistics And Benefits • PM May Need To Educate Media Personnel • Prepare “Sound Bites” For Interviews • Media Coverage Can Be Vital To Financial And Political Support When Over Budget / Over Schedule

24. Media Aspects of HRCP Projects Examples Of Media Briefing Statement: “Still Under Review By The FDA, This Product Could Reduce The Risk Of Post-Operative Infection by 47% For 12 Million Hospital Patients.” “We Intend To Reduce The Commute Time Of 17 Million Drivers In California By Synchronizing The Traffic Lights Across 300 Square Miles Of Roads For Just 10¢ Per Day Per Driver.” “Starting Monday, This New Internet Web Portal Will Reduce Sales Tax Collection Times By 18% With 21% Fewer Support Staff.”

25. HRCP Project Metrics • Earned Value Reporting • Resource Utilization Percentages • Clarity Of Stakeholders Communications • Frequency Of Project And Media Communications • Depth/Quality Of Risk Measurements (Facts vs Estimates) • Six Sigma Measurements (If Applicable) • Potential Benefits To Society Or Business

26. HRCP Project Metrics Examples Of Potential Benefits To Society Or Business • Fewer Medical Mistakes / Patient Deaths • 24x7 Citizen Access To Forms and Payment Systems • First To Market With Information • First To Market With New Product • Accident Analysis To Prevent Future Occurrences • Lower Labor and Operating Costs • Less Traffic Congestion And Air Pollution Levels • Improved Homeland Security

27. Develop And Update Backup Plans • Identify All Critical Activities That Need Backup Plans • Proactively Create Plan B, C and D Scenarios With Cost And Resource Contact Points • Create An Emergency Skillset “Bench” • Create A Communications Plan For Shareholders And Media Tied To Increasing Levels Of Impact Severity • Be Prepared To Change Plans As Events Unfold

28. Develop And Update Backup Plans Examples Of Backup Plans For A Technology Project: • Plan B: Remove 20 Features, Subcontract One Module • Plan C: Remove 40 Features, Add 20 Testers • Plan D: Remove 30 Features, Add $1M & Four Months • Plan E: Sell IP Content To Competitor For 50% Of Cost • Always: Have 25 Qualified Resources On-Call • Always: Write and Practice Media Message About Project Status; Have Telephone/Email List Ready

29. Develop And Update Recovery Plans • Recovery Plans Are Used For Recovering Assets And Information Required For Failure Analysis • Recovery Plans Often Include: • Reducing Customer Expectations • Reducing Project Scope • Reducing Critical Path Points • Breaking Work Into Smaller Work Packages • Outsourcing Critical Deliverables To Partners • Re-Confirming Stakeholder Priorities • Increasing Budget Required To Complete Project

30. Develop And Update Recovery Plans • Examples Of Recovery Plans: • Use An Unconnected Event To Reset Expectations • Restructure Project Into Four Quarterly Releases • Add Schedule Time To Q1 Delivery Date (Move 1/1 to 3/31) • Constrain Software Capability From 120 To 85 Functions • Outsource Work To Two Partners In India and Russia • Schedule A Four Hour Briefing With Stakeholders To Provide Status and Confirm Additional Funding Interest • Conduct An Anonymous Web Poll To Gauge Market Interest

31. Leadership Challenges • Different Agendas: The Project Manager Must Be Able To Manage Multiple Customers Having Different Agendas • Stress: Enormous Personal Stress Exists On All Team Members Due To Potential Project Failure Risk And Critical Path Schedule • Scrutiny: Media Review Adds Communication Steps • Audits: Financial Pressures Often Require More “Fingerprints” • Balance: Requires Leadership Balance Between Vince Lombardi And Mr. Rogers To Motivate, Lead And Cut Losses Early

32. Managing The Challenges • Love The Work: The PM (And All Team Members) Must Like What They Are Doing • Grace Under Pressure: People Often Blame You Simply Because They Have No One Else To Blame • Process Flexibility: Processes Intended For Normal Projects Sometimes Aren’t Appropriate For HRCP Projects • Time Management: Ability ToUtilize And Maximize Every Second Of Every Day Is A Key Skillset • Big Picture: Fitting The Small Pieces Into The Larger Pieces – Every Activity Has A Predecessor And A Successor

33. Summary • HRCP Projects Have Lots Of Different Forces • HRCP Projects Have Common Characteristics • Challenges And Indicators Are Directional Guides • Accurate Metrics Are Critical To Planning • Remember Stakeholder And Media Communications • Backup Plans Are Critical To Retaining Schedule • Recovery Plans Are For Worst Case Scenarios

34. Conclusions Successful HRCP Projects Are Possible And Visible: • Wilson Bridge Replacement Project ($2.5B) • Aircraft Cockpit Door Reinforcement Program • WHO SARS Epidemic Analysis & Containment Program • Summer And Winter Olympics • Anthrax Cleanup • Restoration of Power Grids And Substations After N.E. Blackout and Hurricane Isabel • Best Wishes For Success With Your HRCP Project!