3-Complexity - Advanced Engineering Project Management

COMPLEXITY & Project
Management
Advanced Engineering Project

Management
Techniques for Avoiding Project
Failure
MDCSystems 2011 All Rights Reserved
The Approach
Forensic Project Management

Systems Thinking
Complexity
Leadership Traits for Project Success
Examples of Failure and the Root Causes
The Sequence of the Beginning

Traditional Project Management
Scope, Schedule & Budget
Common Characteristics of Troubled Projects

Systems Thinking Concepts
Case Histories/Studies
Simple Case - Ras Tanura - Refinery Rebuild
Complicated Case - Industrial Coke Manufacturing Facility
Complexity Case - Highway Traffic Control System (Big Dig)
Joint Stars Aircraft Procurement and Modification
Saudi Arabian Air Defense System
Traditional Project Managers

Trained in Analysis
Trained to Utilize The Scientific Method of Inquiry
Observation
Model or Analysis of the Problem
Prediction of Behavior Based on the Model
Trained to Utilize Models (Primavera Schedules, 3D-CADD)

Encouraged to Sub-Optimize (Parts of the Process)
Failure Modes and Effects Analysis
Project Models Fail Because Project Processes Are NonLinear Self Organizing Processes and Reconfigure Their
Interactions Based Upon Uncontrolled Feedback From the
Last Set of Interactions
Not Aware of Systems Thinking Concepts
Provides Reactive Management Based Upon
Recorded/Developing Data Analysis
4
New Paradigms
Simple Project Context - Domain of Best Practices PMBOK1
Known Knowns; Agreement on right solution to problems
Complicated Project Context Domain of Experts

Known Unknowns; At least one right answer to problem
Complex Project Context Domain of Emergent

Theories
Unknown Unknowns
Chaotic Context - Unknowables

1
Project Management Body of Knowledge
A Leaders Framework for Decision Making

by David J. Snowden & Mary E. Boone
Harvard Business Review - 11/2007
The Modern Project Management Challenge
Contract Management
Scope Management
Schedule Management
Procurement Management
Cost Management
Integrate New Tools and Technology
Time is of the Essence
Project Close-out Negotiation
Traditionally Why Many Projects Fail!

Flawed Assumptions
Project Environment Changes (External Factors)
Top Down Planning
Project Planning vs. Business Planning
Ambiguous Communications
Ambiguous Goals
Static Project vs. Dynamic Project Environments
Inability to Adapt to Changes
Uncoordinated Incentives for the Participants
Failure = either + or , 10% Cost and or Schedule
7

Project participants often relate the:
Symptoms
Analysis
Synthesis
Systems Thinking
The goal of the above investigation is to

determine the disease
Forensic Project Management Tools

Analysis
Planned vs. As-Built Comparisons
Schedule
Cost
Change Order Analysis
Documentation Review (Timelines)
Time Impact Analysis (TIA)
Damage Calculations
Systems Thinking Approach to Understanding

Synthesis (Holistic)
Advanced Modeling Concepts
Spectacular Project Failures

Advanced Automation System
Air Traffic Control
Big Dig Boston Central Artery Tunnel Project
10
Obit on AAS
Related Story
11
The Power to Manage a Project

Derives from the Contract
Key Contract Clauses
Scope Definition
Schedule
Price for the Work
Performance Requirements
Changes Clauses
Notice Provisions
Force Majeure
Disputes and Resolution
12
Assumptions for the Work

(Bidding and Planning)
Assumptions (Explicit or Implicit) More Important
Than Forecasts
Manpower Availability
Materials availability
Environmental Influences
Commodity Pricing
Team Continuity
No Intervening Circumstances
Lack of Common Agendas (Incentives)
PM - Early Recognition of Flawed Assumptions

13
Trouble at the Project Interaction Points

(Friction at work Scope Boundaries)
Contractor Coordination
Engineering Deliverables
Long Lead Equipment
Mobilization (Getting Resources in Place)
Interfaces (Between Parts of the Project Team)
Interfaces (Between Defined Work Scopes)
Start-Up Testing/Commissioning
Initial Operation and Operator Training
Are the new PM tools good enough?

How do I load this new
project management
software into my
crystal ball?
15
The Miracle
16
Influence of Decision Making on

Cost over Time
Ability to Influence Project Costs Over Time
Relative
Influence
Cumulative
Cost
Influence
Cost
Time
Data Source: Construction Industry Institute
17
Case Studies
18
Refinery Renovation and Expansion
19
20

EPC contractor bids on a LSTK renovation and
expansion project in Saudi Arabia
$113 million contract
Basic engineering by owner (flow diagrams and P & IDs)

Detailed engineering by EPC contractor
As-built data for existing underground by owner
Operational site
EPC retains a construction sub-contractor that has experience with both
owner and EPC contractor
Sub-contractor mobilizes to refinery site and begins site

excavation
EPC completes design for pipe rack system and begins
steel procurement
21

Sub-contractor reports obstructions at each of the first
100 excavation locations
Kobe earthquake strikes Japan
Owner directs EPC contractor to design around the
obstructions
World supply of steel disappears overnight as Japanese
production is halted and Japan becomes and importer of
steel
22

EPC contractor discovers errors in Heat and Material
balances provided as part of the basic engineering by
owner (Flow Diagrams and P & IDs must be redesigned)
Owner promises action on proposed change orders
EPC redesigns the pipe rack system to utilize the
available steel which can be procured (mixture of English
and Metric sizes)
EPC designs new foundation locations due to
unavoidable underground conditions
23

Sub-contractor submits a $ 18 million claim for delay
Owner demands a recovery schedule to overcome the
delays caused by the EPC contractor
Recovery schedule accepted by the owner eliminates the
predecessor/successor relationship between engineering
and construction
Owner rejects the design of the tank farm instrumentation
and piping system and institutes an on-line blending/mixing
system for diesel, gasoline etc.
24

18 months of chaos elapse on-site
EPC engineers are blaming their own construction staff
for the problems and vice versa.
Sub-contractor submits a $ 60 million claim for additional
work
EPC contractor submits a $ 110 million claim for all costs
incurred to complete the work
EPC achieves substantial completion
Industrial Coke Manufacturing Facility

Proprietary Process for Coke Ovens, in operation in
Virginia
EPC Contractor selected to build a larger facility in
Indiana
Site is adjacent to Lake Michigan and old disposal
site for blast furnace slag and steel making slag
Project is completed six months late and $ 30 million
over budget
EPC Contractor files claim to recover additional cost
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27
28
29

EPC Contractor alleges unknown site conditions
caused cost and schedule delay
Owner counterclaims for defective design
Draft from the furnace
Ground Swelling and settlement
Lost Profit
Site Dewatering Issues

Draft deficiency
Ground swelling and settlement
31
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Pic 2-5.jpg
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Central Artery Tunnel

Automation and Monitoring System (Contract C22A2)
Contract Value - $ 100 Million

Two Years Late
$ 90 Million over budget
39

40
Incomplete work on C22A1

System Architecture
Delayed highway construction
Obsolescence
Construction Schedule Confusion
Recoverable costs @ about $ 25
Million

IPCS Architecture
Central Processing
Fibre Optic Loop
Custom Software interfaces
Off the Shelf Software
Interactions control system operability
Barrier to upgrading systems software
Hardware changes restricted by custom software
8 bit technology in central processing computer
41

HTSI properly bid the work

CA/T knowingly or unknowingly provided
defective data and information
42
43

Technological change
44
Rapid changes 1992 to 2003

Memory, Bandwidth, Storage
Exhibit 6
Requirement to upgrade to current
Requirement to be expandable
Piecemeal upgrades required by CA/T
Sequential upgrades from 8 to 16 to 32 bit
technology
45
User Expectations
I saw a really neat GUI
Graphic displays of computer games
Gaming technology driving industrial
applications
46
Traffic Control System Project Failure
Due to:
Poor computer System Design Architecture
Cascade of Changes
Flawed Assumptions
Incomplete Testing of Phase One
Bad Scope Definition
Technology Creep
Obsolescence
47
Conclusions
1. The HTSI C22A2 bid was consistent with the understanding
of all the parties at bid time, based upon the information
contained in the bid documents and other information
supplied by the CA/T at the time of bidding.
2. The contract documents issued by the CA/T did not
accurately depict either the true state of the work of the
C22A1 contractor or the CA/Ts intended scope of work for
the C22A2 contract.
3. The basic system design concept architecture was fatally
flawed in that it was neither easily expandable nor
upgradeable without major modification as contrasted to how
it was described in the contract bid documents.
48
Conclusions
4. The installation schedule for the IPCS issued by the CA/T
was not achievable nor did it accurately reflect the state of
completion of the general civil construction portions of the
project when the C22A2 contract was bid.
5. During the course of the project since the C22A2 contract
was awarded, the CA/T was advised of the existence of
conditions 2, 3, and 4 above but either ignored them or
directed HTSI to ignore them. This failure of CA/T to ensure
that the necessary predecessor work was completed and
properly documented was a major initial contributing factor to
HTSIs schedule and cost overruns.
49
Conclusions
6. Changes in technology since the C22A2 project was originally
designed (1992-93), updated (1997-98), and bid (1999) have
made the implementation of the project as it was bid no
longer either practical or possible.
7. Given that (a) there was no material error in HTSIs part in
initially bidding the C22A2 project (No. 1 above), that (b) HTSI
was fundamentally misled (knowingly or unknowingly) during
the course of its attempts to execute the work of the contract
(No. 2, 3, and 4 above), and that (c) changes in technology
over time have rendered the original design commercially
impracticable or technically infeasible (No. 6 above), MDC
has concluded that the C22A2 contract should be converted
from a fixed price to cost reimbursable type of contract.
50
Conclusions
8. The CA/T Master Project Schedules do not contain the
necessary information to adequately status and manage the
C22A1 and C22A2 contracts or to coordinate these contracts
with the work of other contractors upon which they are
dependent.
9. The CA/T Master Project Schedules are not useful to either
understanding or managing the CA/T project as a whole or
providing a basis for analysis and quantification of HTSIs
damages.
10. Systems testing was disrupted, delayed and became
iterative in nature due to the same system interaction issues
driving the software and field installation work.
51
Joint Stars
Aircraft Procurement and Modification
52
Joint Stars
New application of Side Looking Airborne Radar
Grumman develops the Radar and software
Boeing Military Aircraft procures and militarizes two used
707 aircraft
Aircraft are delayed in initial procurement and
modification
Oil price declines to $ 9.00 per barrel
Aircraft procured are in poor condition
Actual quantity of repair and new parts for the aircraft are
10 times the bid estimate by Boeing
53
Joint Stars
Boeing submits claim for cost impact $ 100 million
Boeing asserts cost increases due to requirements
changing for Radar power and mounting
Boeing utilizes parametric estimating methods to justify
its claim
Aircraft flight delays impact Radar testing
Grumman rejects Boeing claims after technical and
schedule analysis
54
Joint Stars
Why did Boeing need so many parts?
Why did Boeing procure/manufacture new parts and
then rework all the parts for both aircraft?
55
Future Implications for Projects & Project Managers

Why do Systems Fail?
Large Complex Systems are Beyond Human Capacity
to Evaluate
In general, we can say that the larger the system
becomes, the more the parts interact, the more difficult
it is to understand environmental constraints, the more
obscure becomes the problem of what resources
should be made available, and deepest of all, the more
difficult becomes the problem of the legitimate values of
the system
Source: C. W. Churchman
56

Emergence
Complex dynamic feedback gives rise to an emergent
entity that is qualitatively different from that of its
elements. Sand dunes are far different from grains of
sand, both in scale and in behavior.
A marketplace based upon money rather than barter is
qualitatively different because easily communicable
prices emerge that create relationships between all
goods and services. More specialized goods and
services can participate on an equal footing with
everyday commodities.
57

And, the emergent behavior called the Web is
dramatically different from communities that swap files
by FTP even though the technical differences between
FTP and HTTP are relatively minor.
How big does a system have to be before feedback
loops become nearly inevitable? It turns out that it
depends upon how complex their interactions are the
simpler the elements and their interactions, the more of
them are needed to give a high probability of
emergence.
58
Saudi Air Defense System

US Air Force Management
Hardware, Software and Ground Facilities
Five Year Software Development Project
59

At year five, Boeing predicts five more years for development
Boeing was required by CDRL to utilize software planning
tool COCOMO
Boeing monthly reports from year two onward predict software
slip due to code growth
New Threat Assessments
New response criteria
More sophisticated software routines
Boeing Contract is terminated
60

Northrop hired to complete the project
Northrop completes at year ten
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Complexity
62
New Approaches for Dealing with Complexity
Expanded Capacity
1. Systems Thinking
2. PMBOK
3. Action Learning
4. Advanced Project
Management Capability
63
Complexity as a Condition
What is interactive complexity
and why should you care?
How to Think About Complexity
A large number of elements

Many interactions
Attributes are not predetermined
Interaction is loosely organized and probabilistic in
behavior
The system evolves over time
Sub-systems are purposeful and generate their
own goals
The system is largely open to the environment
65
Complexity
It is the number of parts and the ways in
which they interact that define the
complexity of a given system
Two different kinds of complexity
Structural complexity
Interactive complexity
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Structural Complexity
Based on the number of parts in a system
A system can have many parts, but no interactive
complexity
Machines function this way
Such systems demonstrate:
linearity
proportionality
replication
additive
demonstrable cause and effect
67
Interactive Complexity
Determined by the behavior of the parts
and the resulting interactions
Attributes of Interactive Complexity
unpredictable
non-linear
non-additive
the link between cause and effect is ambiguous
unstable, irregular, and inconsistent
68
The New Worldview of Complexity

No certainty
A lack of predictability
A dynamic condition that is to a large
degree unknowable
A change in worldview or mindset is
fundamental to engaging with interactive
complexity
69
What does this mean to Project Managers?

A very different set of competencies is
required
Complexity cannot be successfully
decomposed
Detailed long-term planning is impossible
Rigid structures and elaborate control rules
are counterproductive
Traditional PMBOK will drive the complex
project towards failure faster
70
The Project Managers Challenge!

How do you recognize and deal effectively
with emergent conditions of interactive
complexity?
Success depends more on ones philosophy
or "world view" than on ones mastery of
science and technology
71
The Difficulty of Shifting

Ones World View
72
The Worldview Shift..

From a mechanistic worldview..
.to a systemic worldview
The mistake of science is to pretend everything is a
clock when the world is more like a cloud.
- Jonah Lehrer
Traditional Project Management

Project Management Body of Knowledge (PMBOK)
Fundamentals
Trained in Analysis
Trained to Utilize The Scientific Method of Inquiry
Observation
Model or analysis of the problem
Prediction of behavior based on the Model
Trained to Utilize Models (Primavera Schedules) (CADD

Models)
Encouraged to Sub-Optimize (parts of the process)
Failure Modes and Effects Analysis (Cause and Effect)
Not Aware of Systems Thinking Concepts
74
It really is a question of Leadership.

.Complexity requires a more holistic
leadership perspective
Concerning Toyota:
This is not a crisis of faulty brakes and accelerators, but a
leadership crisis. William George, Harvard Business School
In fact, the recent criticism of Toyotademonstrates how
leadership holds the keys to success, and failure, to
organizational transformation.
Alan Pang, Director, Aon Consulting Global Research Center.
How to Deal with Complexity

From
To
Management
Leadership
Predict and Forecast
Anticipate
Analyze Data
Recognize Patterns
Simplify KISS
See and Deal With The Whole
Pay Attention To Details
Pay Attention To Relationships
Rational Thinking
Intuitive Thinking
Learn a Skill Training
Nurture Cognitive abilities
Think Algorithmically
Think Heuristically
Analytical Thinking (scientific,

based on induction and deduction
thinking)
Design Thinking (based on

abduction thinking)
Leadership Attributes
Self-control
Cognitive fitness
Ability to distribute attention over many
factors
Ability to perceive dynamic relationships
A contemplative turn of mind
A high level of intellectual development
Ability to think concretely
Leadership Attributes
A powerful memory for the project vision
Powers of synthetic thinking and
imagination
Pattern recognition
A disciplined will
Potentiating
A highly active intellect
Disciplined emotions
Self-confidence
When PMBOX Fails

A Model for Understanding
Complexity
How do you recognize complexity and
why does PMBOK fail?
The Cynefin Framework
80
Why Many Projects Fail!

Flawed Assumptions
Project Environment Changes (External Factors)
Top Down Planning & Project Planning vs. Business
Planning
Ambiguous Communications
Ambiguous Goals
Static Project vs. Dynamic Project Environments
Inability to Adapt to Changes
Uncoordinated Incentives for the Participants
Failure = Greater than either +10% Cost and/or
Schedule overrun
81
Trouble at the Project Interaction Points
Parts vs. Whole

Contractor Coordination
Engineering Deliverables
Long Lead Equipment
Mobilization (Getting resources in place)
Interfaces (Between parts of the project
team)
Interfaces (between defined work scopes)
Start-Up Testing/ Commissioning
Initial Operation and Operator Training
82
Snowdens Decision Making Context

Simple: The Domain of Best Practice
Complicated: The Domain of Experts
Complex: The Domain of Emergence
Chaotic: The Domain of Rapid Response

Source: David J. Snowden, Mary E. Boone, A Leader's
Framework for Decision Making, Harvard Business
Review Article, Nov 1, 2007
83
Simple Context
What are simple cases, how do you recognize
them, and how are they handled?
Characteristics
Danger Signals
Clear cause-andeffect
relationships
The right answer
exists; fact-based
Complacency
and comfort
Entrained
thinking
No challenge of
wisdom
Overreliance on
best practice
84
Example: Gas Gathering Project
Contract Provisions
PMBOK Skills
Project Monitoring
Claim Situation Recognition
Early Recognition of Metric Deterioration
Complicated Context
Characteristics
Danger Signals
Expert diagnosis
required
Causal
relationships are
discoverable
More than one
right answer
exists; fact-based
Overconfident
experts in their
own solutions
Analysis
paralysis
Viewpoints of
non-experts
excluded
86
Example: Coke Manufacturing Plant

Multiple Symptoms of Trouble
No One Determinant, Cause and
Effect Relationship
Multiple Parties Share Responsibility
Successive Analysis Yield Different
Results
No Coherent Relationship between
Scope, Schedule and Cost Outcomes
Complex Context
Characteristics
Danger Signals
Flux and
unpredictability
No right
answers;
unknown
unknowns
Many competing
ideas
Emergent
patterns provide
instruction
Temptations to
regress to
habitual
command-andcontrol
management
Temptation to
look for facts
Desire for
accelerated
problem
resolution
88
Example: Highway Automation

System
Every Known Symptom of Project Failure

Input to Output Models no Longer Work
Cost Spiral without Control
Progress is Impeded Across all Elements
of the Project
Lots of opinions and finger pointing
Demoralization of Management and Staff
Chaotic Context
Characteristics
Leaders Job
Danger Signals
Next Steps
High turbulence
No clear causal
relationships
Unknowables
High tension
Many decisions
to make with no
time to think
Act Sense
Respond
Watch for what
works, instead of
right answers
Provide clear,
direct
communication
Missed
opportunities to
innovate
Applying
command-andcontrol approach
longer than
needed
Set up parallel
teams to take
advantage of
opportunities
Encourage
advisers to
challenge
leaders point of
view
Work to shift the
context to
complex
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The Cynefin Framework

This is NOT a recipe it is a
contextual sense making
guide.
All contexts can exist at the

same time. You just dont
know it.
SENSE and RESPOND are
common. WHAT is sensed
and when?
Simple
Sense - Categorize -
Respond
We know what we know.

Heuristic:
We only need to know what we need to know
when we know it.
- David Snowden
CONTEXT0
THE LEADERS JOB

Sense, categorize, respond Ensure
that proper processes are in place
Delegate Use best practices
Communicate in clear, direct ways
SIMPLE
DANGER SIGNALS
Complacency and comfort
Desire to make complex problems
simple
RESPONSE TO
DANGER SIGNALS
Create communication channels
to challenge orthodoxy
Stay connected without
micromanaging
Entrained thinking
Understand that extensive
interactive communication may
not be necessary
Dont assume things are simple

No challenge of received wisdom
Overreliance on best practice if
context shifts
Recognize both the value and the

limitations of best practice
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Complicated
Sense Analyze - Respond

We know what we dont know.
Heuristic:
We can't solve problems by using the same
kind of thinking we used when we created
them.
- Albert Einstein
CONTEXT
THE LEADERS JOB

Sense, analyze, respond
COMPLICATED
DANGER SIGNALS
Create panels of experts
Experts overconfident in their

own solutions or in the efficacy of
past solutions
Listen to conflicting advice
Analysis paralysis
Expert panels
RESPONSE TO
DANGER SIGNALS
Encourage external and internal
stakeholders to challenge expert
opinions to combat entrained
thinking
Use experiments and games to
force people to think outside the
familiar
Viewpoints of non-experts
excluded
93
Complex
Probe - Sense - Respond

We dont know what we dont know.
Heuristic:
entropy eventually is nothing more nor less
than loss of information.- Gilbert Newton Lewis
CONTEXT
THE LEADERS JOB

Probe, sense, respond
Create environments and
experiments that allow
patterns to emerge
COMPLEX
Increase levels of interaction

and communication
Use methods that can help
generate ideas
RESPONSE TO
DANGER SIGNALS
Temptation to fall back into habitual, Be patient and allow time for
command-and-control mode
reection
DANGER SIGNALS
Temptation to look for facts rather

than allowing patterns to emerge
Desire for accelerated resolution of
problems or exploitation of
opportunities
Use approaches that encourage

interaction so patterns can emerge
Open up discussion (as through
large group methods); set barriers;
stimulate attractors; encourage
dissent and diversity; and manage
starting conditions and monitor for
emergence
94
Chaotic
Act - Sense - Respond

We dont know.
Heuristic:
The absence of evidence is not evidence of
absence, or vice versa. - Donald Rumsfeld
CONTEXT
THE LEADERS JOB

Act, sense, respond
Look for what works instead of
seeking right answers
CHAOTIC
Take immediate action to

reestablish order (command
and control)
DANGER SIGNALS
Applying a command-and-control
approach longer than needed
Cult of the leader
Missed opportunity for innovation
Chaos unabated
RESPONSE TO
DANGER SIGNALS
Set up mechanisms (such as
parallel teams) to take advantage
of opportunities afforded by a
chaotic environment
Encourage advisers to challenge
your point of view once the crisis
has abated
Work to shift the context from
chaotic to complex
Provide clear, direct

communication
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Situation Awareness
What is Situation Awareness and
Why is it Important in
Conditions of Complexity?
The Cognitive Continuum
What are you really sensing?

Perception vs. Reality
Need to make sense
Ordered = analysis
Categorization is a kind of analysis
Fact-based relationships/cause-effect
Unordered = action
Probe is a kind of action
Pattern-based relationships/interactions
Disorder = no clear context
Total loss of information high entropy
Asymmetric collapse
Sense = Sense making

Sense making is the ability or attempt to make sense of an
ambiguous situation. More exactly, sense making is the
process of creating situational awareness and understanding
in situations of high complexity or uncertainty in order to
make decisions.
It is "a motivated, continuous effort to understand
connections (which can be among people, places, and
events) in order to anticipate their trajectories and act
effectively.
- Gary Klein
The Situational Awareness/Situational

Understanding (SA/SU) Model
Dealing with Interactive Complexity requires

understanding that failures occur when
uncertainties and interactions are not properly
accounted for.
So what does the Leader need to do? Same basic
issues faced by:
Pilots, Warfighters, Police, Doctors, Etc.
Leaders need to adopt

the Situational Awareness/Understanding mindset
The first step..

Achieving Situational Awareness
Helps to
Define
Information
(Answers to?)
Who
What
When
Where
(Why)
Situation
(Avoid boiling the ocean)
Narrows the
process
Dont boil the ocean Avoid information overload

..next, Situational Understanding

Situational
Awareness
Who
What
When
Where
(Why)
..Time to..
Situational
Understanding
Sensemaking
How
(Decision Risk)
(Decision)
Decisions are based on reducing Decision

Risk!
Example: Boyds OODA Loop SA/SU Model

Note the combination of
Analyses and Synthesis as
part of Orientation
Recognition-Primed
Decision Model
generates
Situation
To affect the
Clues
Mental
Simulation
using your
that let you

recognize
which you
assess by
Mental
Models
Action
Scripts
that
activate
Patterns
Gary Klein 2003
MDCSystems 2011 All Rights 104

Reserved
Application of SA/SU
Situational Awareness and Program Time

Second law of thermodynamics
Entropy (a measure of disorder)
Same principle applies to a program

Over time, a program will become more
disordered if left alone and will move
through each context
Systemic Events can cause a program to
move across contexts
As events move into complexity, the first
law of thermodynamics comes into play:
Heat is transferred to the PM!!
Program Time
Heuristics: SA/SU Approach

Cognitive Focal Aids
Form follows function: Louis Sullivan (Architect)
Examples:
If each part of a system, considered separately, is made to
operate as efficiently as possible, the system as a whole will
not operate as effectively as possible
The performance of a system depends more on how its parts
interact than on how they act independently of each other
Heuristics help to focus quality thinking
Applying Heuristics
The challenge:
To determine when and how to forego intuition for
the application of rigorous objective techniques for
decision-making
Example: Over-reliance on risk models instead of using
good judgment (Wall Street)
Heuristic: If its too good to be true, then it probably
isnt true. (Example: Madoff, Enron, etc)
SA/SU Project Components: People and Technology

80+% of digitized information resides in individual hard
drives and in personal files and is unstructured, not
secure nor backed up.
Employees get 50%-75% of their relevant information
directly from other people via technology not face-toface
Wasted Time is a key to ROI
Intellectual Property
Individual knowledge leaves with employees
Leverage past experience to organizational learning
SA/SU Project Components: People and DATA
No agreed upon definitions (shared context)

Different tools and processes = different data
Manual transformations and analysis
Manual Audit Trails
Poor Data Quality
Poor Connectivity from applications to resources
One Way Data Traffic (errors not corrected at the
source
Same data stored in multiple locations
What does a Program/Project Leader do?

Red Flag: Dont worry everything is (or will be) Fine
How does one achieve SA/SU?
Make use of dashboards and scorecards
What are you measuring and why?
Ask questions: Who, What, When, Where, Why and How?
Use heuristics to develop key questions
Start a blog: Example CPL Cartwright
Take time to walk around and listen
Communicate, Communicate and Communicate
some more talk to the whole system
Applying Systems Thinking

How do you apply systems
thinking to project management
to mitigate complexity?
The Difficulty of Shifting

Ones World View
113
The Mechanistic View of the World

In the Renaissance, when the science
as we know it today was born, a
scientific inquiry method called Analysis
was developed.
Analysis comes naturally. Just watch
children taking apart new things, and
curious about the parts.
114
Analytic Thinking
Take it a part - down to its indivisible
parts, elements
Explain the behavior or properties of
each part taken separately
Aggregate the explanations of the parts
into an explanation of the whole
115
A Systems Approach to the Capital

Project
View a capital project as a social system
Social systems are purposeful systems that contain
purposeful parts and are contained in a larger
purposeful system
A set of constantly changing processes, relationships,
and components
The way in which the elements of the system come
together can lead to outcomes that are materially
different from those planned

116
Definition of Systems Thinking

Systems thinking is a holistic approach to
understanding that focuses on the way that a
system's constituent parts interrelate and how
systems work over time and within the context of
larger systems
To understand systems thinking, we must first
understand systems
Systems Thinking: What is a System?

Definition: System
Whole which consists of a set
of two or more parts
Three requirements:
Each part must affect

behavior
All parts must be
interconnected
All subsets must effect
behavior, none can
act independently
Steps to a Systemic Approach

Synthesis vs. Analysis
Synthesis = putting things together
Analysis = taking things apart
3 Steps to Synthesis
1.
2.
3.
Identify the containing whole (system)

Explain the behavior or properties of the containing
whole
Then explain the behavior or properties of the subsystem
and its function within the containing whole
Analytical and Synthetic Thinking

Analytical Thinking
The object is considered a whole to be taken apart
Example: Calculus
Synthetic Thinking
The object is considered as an integral part of a larger
whole
Leads to systems thinking
The Importance of Systems Thinking

Helps to design smart, lasting solutions to
problems
A more precise image of reality in its simplest
sense
Encourages long-term thinking
Founded on fundamental principles that
integrate all aspects of life
From Mechanistic
Thinking
Analysis
To Social Systems
Thinking
Synthesis
(An explanation of the whole derived from explanation

of its parts.)
(An explanation of the whole derived from explanation

explaining the role of the system in the larger system of
which it is a part.)
Reductionism
Expansionism
(The belief that everything can be reduced.)
(The system is always a sub-system of some lager system.)
Cause and Effect
ProducerProduct
(Environmental free theory of explanation, a cause

needs to both necessary and sufficient in order to have
the corresponding effect.)
(Environmental full theory of explanation as opposed to

cause and effect where the importance of the environment is
stressed.)
Determinism
Indeterminism
(Fatalism.).prior condition )
(Probabilistic, observe and discover.)
Research
Design
(The embodiment of the above to arrive at instructions

based on theory.)
(The embodiment of the above to facilitate learning.

Designing the whole systems means creating a system
configuration that is optimum.)
122
Design The Core Concept in

Systems Thinking
Design a method of problem solving
Design is to the systems thinking as "continuous
improvement" is to scientific thinking
Design - a process which requires the ability to
question prior or existing assumptions regarding
the ultimate state to be achieved.
Source: Van Gigh and Warfield
123
All People are Designers

Design is basic to all human activity
Design is the conscious effort to impose meaningful
order
The planning and patterning of any act towards a
desired, foreseeable end constitutes the design
process
All that we do, almost all the time, is design
Any attempt to separate design, to make it a thingby-itself, works counter to the inherent value of
design as the primary underlying matrix of life
124
Design Thinking
The designers who can solve the most wicked problems
do it through collaborative integrative thinking, using
abductive logic, which means the logic of what might or
could be.
Conversely, deductive and inductive logic are the logic of
what is.
125
Prospective Hindsight or
A Pre-Mortem
Prospective hindsight, called a pre-mortem, is a
method which helps project teams identify risks
at the outset
Research conducted in 1989, found that Prospective Hindsight
(imagining that an event has already occurred)increases the
ability to correctly identify reasons for future outcomes by 30%.
The System Was Destroyed Last Night!
126
Capital Projects As Social Systems

Include all primary stakeholders - owner, designer, and
constructor as well as other stakeholders such as
subcontractors, material and equipment vendors, and
the end-user(s) of the product or service.
The adoption of a social systemic approach to capital
project management has several implications. Three of
these implications are:
alignment of purpose
management of interactions, and
learning and adaptation
127
Stakeholder Theory
A Stakeholder is any group or individual
who can affect or whom is affected by the
achievement of the projects objectives
Stakeholder Theory describes the
principle of whom or what really counts
and to whom or what managers give their
attention.
128
Stakeholder Theory
Contextual Environment
Socio-cultural
Forces
Transactional
Environment
Political
Forces
Economic
Forces
Union/
Corporate senior
employees
managers and
Project
Trade
directors
Association
Environment
General
managers
Creditors
Structure
Functional
managers
Culture
Competencies
Resources
Work package
managers
Customers
(users)
Employees
Varied
Instituions
SuppliersLocal, State
Contractors and Gov
subcontractors
Technological
Forces
Ecological
Forces 129
Alignment of Purposes - Changing Mindsets

Requires a high level of commitment from all
stakeholders
Purpose of the project must be aligned with the
purpose of the larger, parent organization
The purpose of each of the parts must be
aligned with the projects purpose
Team Alignment - Convergence of Mindsets

Concerted Project Team Action
Concerted Project Team Action
Individual Mindsets
Alignment of Purposes
Includes the purposes of the individual project team
members as well as their own individual parent
organizations.
The stakeholder organizations (especially the designer
and constructor) must accept this approach to project
management.
This buy-in is encouraged through the win-win
incentives
Requires a substantial redesign of the contract
documents.
A Systems Approach
to Project Management
Application Examples
Symptoms are Often Mistaken for Causes
Why is this the case?
Organizational structures are inflexible and not aligned for

performance
People skill sets are lagging current needs
Current process improvement efforts are largely
independent and reactive
Insufficient technology resources being applied to
prepare for future (3-5 year out) problems
Policy does not align with advances in technology
Need To Re-Factor The Way We Lead Programs
Abductive Reasoning
ABDUCTIVE REASONING is a means for
design thinking
Purpose - to balance analytical thinking
and intuitive thinking
A mix of reliability + validity
Neither analytical (deductive and inductive
reasoning) nor intuitive reasoning are
sufficient to maximize performance
Abductive thinking is exploitation and
exploration
Combines adjustment and analysis
Encourages innovation and efficiency
Analytical
Thinking
Intuitive
Thinking
Abductive
Thinking
Designers, who live in a world of
abduction, actively look for new data
points, challenge accepted
explanations, and infer possible new
worlds (Martin 64-65)
Abductive Reasoning
Abductive
Thinking
Intuitive
Thinking
Analytical
Thinking
Ackoff: wisdom, deals with the

future because it incorporates
vision and design. With wisdom,
people can create the future
rather than just grasp the present
and past.
REFERENCES
1.
Fooled by Randomness, The Hidden Role of Chance in Life and in the Markets, Nassim
2.
Harnessing Complexity, Organizational Implications of a Scientific Frontier, Robert Axelrod

& Michael D. Cohen, 2000
3.
The Fifth Discipline, The Art & Practice of the Learning Organization, Peter M. Senge, 1990
4.
Thinking in Systems, A Primer, Donella H. Meadows, 2008
5.
The Black Swan, The Impact of the Highly Improbably, Nassim Nicholas Taleb, 2007
6.
Thinking And Deciding, Fourth Edition, Jonathan Baron, 1988
7.
The Fifth Discipline Fieldbook, Peter Senge, Richard Ross, Bryan Smith, Charlotte
Roberts, Art Kleiner, 1994
8.
Leadership and the New Science, Discovering Order In A Chaotic World, Margaret J.
Wheatley, 2006
9.
Complexity Leadership, Part I: Conceptual Foundations, Mary Uhl-Bien & Russ Marion,
2008
10.
Business Dynamics, Systems Thinking and Modeling for a Complex World, John D.
Sterman, 2000
11.
Complex Systems Leadership Theory, New Perspectives from Complexity Science on

Social and Organizational Effectiveness, James K. Hazy, Jeffrey A. Goldstein, Benyamin B.
Lichtenstein, 2007
137
Nicholas Taleb, 2004
WEB SITES
1. Ackoff Collaboratory: http://www.acasa.upenn.edu
2. The Systems Thinker Newsletter:
http://www.thesystemsthinker.com
3. The In 2 In Thinking Network: http://www.in2in.org
4. hbr.org | November 2007 | Harvard Business Review 69
Snowden and Boone
138
Questions
1.
2.
3.
4.
5.
6.
What is interactive complexity and why should you

care?
How do you recognize complexity and why does
the basic PMBOK approach fail?
What is situation awareness and why is it
important in conditions of complexity?
How do you apply systems thinking to project
management?
How can a Systems Thinking approach mitigate
complexity?
How do you apply this knowledge to your
projects?
Questions
7.
Has anyone experienced what you believe

was complexity in a program?
8.
If so, can you provide to share with us?
9.
Did a solution emerge? If so, how?
10. What is emergence?

11. Do you think that more than one context can exist at a
time?
12. So how does a PM understand the different contexts?
13. What is abductive reasoning?
14. Why are assumptions so important to project success?
Questions
15. How many Black Swan events have you experienced in
PM?, in life?
16. Why are interactions the key to Complexity
17. If Complexity is not managed effectively, what results?
18. Who must assume leadership?
19. What is the OODA Loop?
20. What are the elements of situational awareness?
21. What are the three key elements to Project
Management?

3-Complexity - Advanced Engineering Project Management

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COMPLEXITY & Project

Advanced Engineering Project

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Forensic Project Management

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The Sequence of the Beginning

Common Characteristics of Troubled Projects

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Traditional Project Managers

Trained to Utilize Models (Primavera Schedules, 3D-CADD)

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Complicated Project Context Domain of Experts

Complex Project Context Domain of Emergent

Chaotic Context - Unknowables

Project Management Body of Knowledge

A Leaders Framework for Decision Making

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The Modern Project Management Challenge

Traditionally Why Many Projects Fail!

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Forensic Project Management

The goal of the above investigation is to

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Forensic Project Management Tools

Systems Thinking Approach to Understanding

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Spectacular Project Failures

Big Dig Boston Central Artery Tunnel Project

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The Power to Manage a Project

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Assumptions for the Work

PM - Early Recognition of Flawed Assumptions

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Trouble at the Project Interaction Points

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Are the new PM tools good enough?

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Influence of Decision Making on

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Refinery Renovation and Expansion

Refinery Renovation and Expansion

Refinery Renovation and Expansion

Basic engineering by owner (flow diagrams and P & IDs)

Sub-contractor mobilizes to refinery site and begins site

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Refinery Renovation and Expansion

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Refinery Renovation and Expansion

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Refinery Renovation and Expansion

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Refinery Renovation and Expansion

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Industrial Coke Manufacturing Facility

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Industrial Coke Manufacturing Facility

Industrial Coke Manufacturing Facility

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Industrial Coke Manufacturing Facility

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