How to successfully
manage your
mega-project
Part III – Continuously improve
your chances for project success
kpmg.com
2 | Building, Construction & Real Estate
Mega-project keys to success
Early planning and organizing
Stakeholder communication and project
controls integration
Continuously improving
your chances of project success
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firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name,
logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. NDPPS 206280
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How to successfully manage your mega-project
Part III – Continuously improve your chances for project success
“Mega-projects” in the construction space live up to that categorization
in many ways, including mega-size, mega-cost, mega-complexity,
and mega-risk. When things go awry, mega-cost and schedule
overruns can also occur. In Part I of this three-part series, we cited
a Tennessee Valley Authority (TVA) nuclear generation expansion
project that has experienced $1.5–2 billion and three years in
overruns due to “deficiencies in project set-up” and “ineffective
management oversight.”1
The bigger the project, the more difficult it is to manage. The lesson
from the TVA is that project management on mega-projects must be
equal to the task.
There are three keys to effective management of mega-construction
projects: early planning and organizing, stakeholder communication and
project controls integration, and continuous improvement. In this third
installment of a three-part series, KPMG’s Engineering & Construction
practice offers six leading practices for continually improving your
chances of project success.
1
Office of the Inspector General, Tennessee Valley Authority. Inspection Report: Watts Bar
Nuclear Plant Unit 2 Project Set-Up and Management Issues Affected Cost and Schedule.
Inspection 2010-13088 (May 18, 2012).
© 2013 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name,
logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. NDPPS 206280
4 | Building, Construction & Real Estate
Project management processes and practices are continuously improving as the scope
and cost of mega-projects increases. For example, a hand-drawn 200–300 activity
construction project management (CPM) schedule that was satisfactory 20 years ago
can’t compare to the 100,000+ activity schedules typical of today. Similarly, it was not
until the mid-1990s that earned value management (EVM) was widely recognized as a
useful performance measurement tool for private engineering and construction projects.
There are a number of papers and trade articles describing techniques for driving
continuous improvement.2 A common theme is for the project team to make small
process improvements as the need arises and not wait for a major overhaul of the entire
project management system. This can be done, for example, by making small changes
and revisions to on-screen templates, logs, project reports, and other documents used
on the mega-project. All such changes that simplify and facilitate communication are
potential candidates for improvement.
Additionally, continuous improvement is about the attitude and culture of your project
team. If internal communication and interaction are overly formal, it will be difficult even to
perform within the envelope of project-specific policies and procedures. A collaborative
culture—where information is exchanged informally and through multiple channels—is
preferable for inspiring continuous improvement. The project team must also practice
tolerance for human error, but rigorously evaluate processes in order to eliminate wasted
steps. Process efficiency should be directed towards improving quality, lowering the cost
of performance, and eliminating delays.
2
See, for example: Keh, Bernie. Establishing a Continuous Improvement Culture to Improve
Project Results. BOT International Management Brief, BOT International (undated), which
can be found at: http://www.botinternational.com/continuous_improvement.htm.
© 2013 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name,
logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. NDPPS 206280
Building, Construction & Real Estate | 5
1 – Perform self-assessments
One way to encourage continuous improvement is for the project
team to schedule a series of project control self-assessments.
Typically, one or two self-assessment activities are completed
each quarter. The project self-assessments should focus on
validating compliance with existing corporate-level and projectlevel policies and procedures. Where there are negative findings,
the review team provides recommendations for improving
compliance and assigns a responsible individual to plan and
improve results. All actionable findings have milestones and/or
deadlines attached.
• Contractor/vendor cost audit
Some types of project controls self-assessments include:
• Project closeout audit.
• Project readiness assessment
• The goal is to reduce negative findings to zero on subsequent
assessments dealing with the same subject matter. Project
controls self-assessments should continue throughout the
mega-project life cycle until handover and project closeout.
• Project controls compliance
• Regulatory compliance assessment
• Internal cost audits
• Risk management assessment
• Cost performance and EVM assessment
• Schedule performance assessment
• Quality control and inspection audit
• Change orders and claims assessment
2 – Conduct performance appraisals
Individual performance appraisals of project team members
will sharpen skills, identify areas for additional training, and
encourage continuous improvement. The key to effective
performance appraisals is to link actual performance to expected
performance based on specific job descriptions (see comments
in Part I on project team roles and responsibilities). The use of
scorecards published in advance and a five-point grading scale
is recommended. Scorecards should be tailored to individual
job descriptions.
Functional managers should review the performance of
their direct reports, and senior managers should review the
performance of their functional managers. The project director
will review the performance of his or her senior managers.
Don’t forget 360-degree performance appraisals where
managers and staff anonymously report on a set series of
questions about their peers and managers. The feedback can be
surprising (and humbling), but must be received and incorporated
in the spirit of continuous improvement.
© 2013 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name,
logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. NDPPS 206280
6 | Building, Construction & Real Estate
3 – Implement new processes
From time to time, there will be a need to implement new
processes for managing your mega-project. Some processes
will be dictated by regulatory requirements, some by the
home office, and some to improve or enhance existing project
controls. To effectively implement new processes, the project
leadership must get on board and oversee the transition from
the top down. The benefits to the project and the construction
owner should be clearly communicated along with the
business rationale for implementing the change.
The project team should be provided with appropriate advance
training and a period of time to transition into new processes.
Specific “cut-over” dates and expectations for using the new
processes should be communicated to the project team by the
project director.
As new processes are implemented, leadership should
encourage comments and user feedback. Negative feedback
may require additional training of personnel or modification of
the new processes to correct errors.
4 –Integrate operational readiness
personnel into the project team
One of the most basic failures of mega-projects is not having
an operational team trained and in place to take over the project
upon completion. Too often, facilities are commissioned
and ready for occupancy or production, but operational
governance, roles and responsibilities, key management
personnel, and shift workers have not been selected.
One way to avoid this pitfall is to integrate your operational
readiness personnel into the project team. Shortly after the
investment committee’s approval of the project, a core group
of operational readiness managers should be contacted
and invited to join the project team. Operational readiness
managers will obtain a firm understanding of the scope
and size of the project, systems and facilities, equipment
types, maintenance cycles, and staffing and supervision
requirements. As the project’s engineering design progresses,
operational readiness managers will be instrumental in
reviewing the engineering, procurement, and construction
(EPC) contractors’ drawings and specifications and in helping
the project team to source and select equipment vendors.
Working alongside the EPC contractor and project team, your
operational readiness personnel will review and provide input
into the development of the commissioning and start-up plan
for the project. This is a key activity, as the commissioning and
start-up plan needs to be integrated into the overall project
baseline schedule at a high level of detail. A mega-project
cannot afford to wait until construction is 50 percent complete
to add hundreds of commissioning and start-up activities into
the CPM, because the schedule may be too compressed to
accommodate commissioning and start-up activities without
accelerating the work and incurring significant cost growth.
If systems and equipment training is included in the EPC
contractor’s scope of work, the operational readiness
personnel will serve as the construction owner’s primary
point of contact for training content, formats, and schedules.
This relieves the project team from the need to coordinate
between the EPC and the operational readiness team
and places responsibility for developing the necessary
training programs with the proper owner organization. If the
construction owner is primarily responsible for training, then
the operational readiness team will need to initiate contacts
within the project team to identify resources that will assist in
developing operational training programs.
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firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name,
logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. NDPPS 206280
Building, Construction & Real Estate | 7
5 – Get operational resources familiar
with project technology
Depending on the length of the training program, operational
supervisors and staff will be hired typically within four to eight
months of facility start-up and will need to become familiar with
project technology, facility layouts, operational procedures,
maintenance schedules, etc. This requires that operational
readiness teams have access to detailed design information,
process descriptions, piping diagrams, and mechanical and
electrical specifications, drawings, and Computer-Aided Design
(CAD) models. Operational readiness managers will develop shift
schedules, identify staffing requirement, prepare and validate
operating cost models, and receive materials for first fills and
operational spares.
In addition, operational supervisors and staff should serve
as observers during the mega-project’s final inspection,
commissioning, and start-up procedures to facilitate the handover
of the project from the project team to operations. By shadowing
and observing commissioning procedures, operational
supervisors and staff will boost their confidence and get a more
thorough understanding about how to operate the facilities
after turnover.
Your project management procedures should have a formal
process for facility turnover by the project team and acceptance
by operations as evidenced on a turnover document signed by
both the project director and the facility manager.
© 2013 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name,
logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. NDPPS 206280
8 | Building, Construction & Real Estate
© 2013 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name,
logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. NDPPS 206280
Building, Construction & Real Estate | 9
6 – Share lessons learned
One of the benefits of cultivating a collaborative project
management environment is the wealth of knowledge and
experience that can be shared across all disciplines and
experience levels. This is all the more beneficial for companies
that manage similar types of projects year over year. For this
reason, project teams should capture and communicate lessons
learned on every project.
Lessons learned should be captured by the project team in
monthly or quarterly increments and stored in a database
accessible to all team members. On a regular basis (two or more
times per year), the project director or his designee should review
the lessons-learned data and decide if there are any helpful ideas
from a corporate planning and project execution perspective.
These particular lessons learned should be submitted to and
captured by the corporate level project management office
(PMO) for use in planning future projects. An incentive program
for submitting useful observations about project management
practices and controls can encourage project team members to
contribute data.
Where project learning on one particular project is considered
significant for implementation on other current or future projects,
the learning should be incorporated into project management
policies and procedures. Even various checklists and forms
developed by a particular project team that demonstrate an
efficient and effective way of controlling a project are useful and
should be passed along to other project teams. Institutionalization
of good ideas through updates to the policies and procedures
captures that knowledge for the use of others.
At the conclusion of the project during the closeout phase, project
team members should reserve at least a half day to meet and
discuss project performance and team learning. The discussions
should not focus on individual successes or failures, but on the
team as a whole and on processes that went right or wrong.
A team member should be assigned to prepare meeting minutes
of the discussions and the note should be preserved in the
archived records for the project. Copies of the meeting minutes
should also be forwarded to the PMO for retrieval and use by
other project teams.
Project learning should be identified by major project
management category and control (see the discussion in
the project organization section in Part I). This allows for the
accumulation of project learning by topic area and is more useful
to those on the planning and project management teams whose
roles are limited to a particular area or process control.
© 2013 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name,
logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. NDPPS 206280
10 | Building, Construction & Real Estate
Conclusion
You can’t manage a mega-project simply by drawing on industry experience, being familiar with project
management principles, and applying technology. A successful mega-project is the result, in part, of
continuously improving the ability of the project to meet business goals. That’s the third key to success,
and it encompasses self-assessments, performance appraisals, new processes, operational readiness
and technology resources, and lessons learned.
As we discussed in Part I, the first key to success is early planning and organizing, which encompasses
team assignment, delivery strategy, estimating, risk management, buy-in from leadership, policies
and procedures, role assignment, and conducting meetings. In Part II, we discussed the second key to
success—effective stakeholder communication and project controls integration—which encompasses
communication planning, systems and controls, work structure, scheduling, scope changes, risk,
reporting, and sticking to the plan.
Managing mega-projects may seem difficult and elusive. However, by following these three
mega-project keys to success, it’s more than possible.
© 2013 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name,
logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. NDPPS 206280
Building, Construction & Real Estate | 11
© 2013 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name,
logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. NDPPS 206280
For more information, please contact:
Brian Relle
T: 703.286.8133
E: [email protected]
Clay Gilge
T: 206.913.4670
E: [email protected]
kpmg.com
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© 2013 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name,
logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. NDPPS 206280