Avoiding Megaproject Blowouts

John F. Gravel

Rio Tinto’s Oyu Tolgoi underground copper mine project in Mongolia is estimated to be completed two and a half years late and with a $1.9 billion overrun.

Meanwhile, more than seven years after its expected opening, Germany continues to wait to “pop the champagne” at its much anticipated Berlin Brandenburg airport. With costs having risen from $3 billion to $8 billion, and with completion now scheduled for October of 2020, in the end, there might not be much champagne popping.

Project management, let alone Megaproject management is a tough gig, and blowouts are about much more than a missed party, or an embarrassing moment splashed all over headlines. I have personally seen reputations stained, and careers “ruined” when projects go off the rails.

The Right Tools for the Job

In an industry where no two projects are the same, and new challenges are faced daily, if not by the hour, there is not just one solution that will fix every issue. The art of project management and avoiding blowouts is knowing when to intervene and which tool to wield.

All project managers have developed methods based on experience. However, according to a comprehensive McKinsey article, six proven methods can be used to help turn blowouts around.

1. Build a turnaround team

Dropshipping experts into a project midway through to save the project rarely works. What is needed is an improved process for an overall change in direction.

Project owners should organize internal and external teams with complementary skillsets and turnaround experience. These teams should work cohesively, integrating their varied knowledge bases and analytical skills to find solutions to specific issues. Roles must clearly be defined, and the team must be equipped with project control tools that allow for costs and progress tracking.

2. Create an information framework

With all the technology available today, it’s hard to imagine any project, large or small, running disparate systems to manage project data. Creating a project dashboard that aggregates data and holds one singular version of the truth, easily accessible to all parties, will improve timely decision making. A harmonized system will also mitigate costly errors.

3. Productivity control

Controlling costs and ensuring the project remains on target requires tight controls on productivity. Efficiency is found through a thorough examination of processes, with the objective of removing waste such as supply chain delays,  or labor productivity.

Whether the team implements lean six-sigma or a less formal procedure, the goal is to see smooth handoffs between trades, collaborative workflow plans, and finely tuned resource management.

4. Diagnostic infrastructure

When a project becomes distressed, project owners typically earmark one or two areas of concern to drive improvements. However, problems often require a more in-depth analysis to get to the root cause and understand how issues are interconnected before project managers can set a change plan that will have any meaningful impact.

To ensure a thorough analysis, the diagnostic process must be methodical. Creating a visual of the diagnostic infrastructure of critical activities, as well as the supportive functions and how they interface affords a beneficial viewpoint for identifying issues and determining solutions.

5. Redefining targets

Revising project plans and targets midstream requires a strong change-management program run by people skilled in resetting baselines and driving cultural shifts. New objectives must be driven from the top-down, ensuring clear communication to fight inertia and gain alignment. The project team, contractors, and sub-trades must be onboard, empowered, and held accountable for reaching targets.

6. Transition planning

We have seen many instances where construction and operations often work in different silos, using a waterfall approach when it comes to information sharing. This can cause significant loss in production time, as operations struggle through commissioning as well as the learning curve required to run an efficient operation. Establishing an operational readiness organization from the onset and building transition planning into the workflow allows operations to gain valuable insights on design decisions and learn what it is they need to learn before it begins costing them valuable production time.

New times require new mindsets, and significant challenges need big ideas. Avoiding blowouts is no small task.  While we know what works and what doesn’t in the traditional small project world, we should remain open to new ideas and imagine better ways forward.