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IPA Webinar: Coping with Resource

Limitations on Capital Projects


Lucas Milrod
Research Team Leader, Organizations and Teams

Outline
Introduction to the Problem
How to Cope with Resource
Limitations
How to Improve Long-Term
Outlook

INDEPENDENT PROJECT ANALYSIS

The Problem Not Enough of the Right


People
Everyone agrees that they do not have all of the
people resources they need
True of capital project teams - 75% do not have
adequate resources
Missing critical owner functions

Inexperienced leaders
Understaffed

Demographics suggest the problem is here to stay

INDEPENDENT PROJECT ANALYSIS

World Population is Nearing Retirement Age at


Increasing Rate

% of World Population 60 Years


Old or Older

30
25
20
15
10
5

0
1980

1990

2000

2010

2020

2030

2040

2050

2060

World population aging 2013. 2013. United Nations, Department of Economic and Social Affairs, Population
Division.
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INDEPENDENT PROJECT ANALYSIS

What Is a Project?

Something you build on a budget and schedule?

Budget

Schedule
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INDEPENDENT PROJECT ANALYSIS

A Project Is the Flow of Information


About two-thirds of the project cycle is spent
producing, using, and moving information from
one information producer/consumer to another

FEL 2 and FEL 3


Authorization

Detailed
Engineering

Construction

Startup

Just one-third of the life cycle is


typically spent building anything
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INDEPENDENT PROJECT ANALYSIS

Building Something Physical Is the Result of


a Complex Information Production Process
Information is at the core of
capital projects:
Accurate and timely production
Smooth flow
Correct use

People are information


consumers/producers
Teams are units of people
working in concert

INDEPENDENT PROJECT ANALYSIS

Without Adequate Staff Capital Project Teams


Struggle (1)

25% WORSE COST COMPETITIVENESS


22% WORSE COST GROWTH
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INDEPENDENT PROJECT ANALYSIS

Without Adequate Staff Capital Project Teams


Struggle (2)

5% MORE SCHEDULE SLIP


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INDEPENDENT PROJECT ANALYSIS

Outline
Introduction to the Problem

How to Cope with Resource


Limitations
How to Improve Long-Term
Outlook

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INDEPENDENT PROJECT ANALYSIS

Basic Approaches to Coping with


Resource Limitations
Get the right skills and abilities on the team
Form the team early
Organize the team to cope with limitations
Retain institutional knowledge

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INDEPENDENT PROJECT ANALYSIS

Get The Right People In Critical Functions


When faced with resource limitations
The team members that are there must be the right fit
Key positions on the team must be filled

Business must be involved to ensure the right people


are on the team
When business sponsors are involved in a project, the team
is twice as likely to have owner personnel in critical functions

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INDEPENDENT PROJECT ANALYSIS

Types of Project System Organization

Full
Functional
Control

Weak Matrix

Strong Matrix

Pure Project
Control
(Function-Centered Matrix) (Project-Centered Matrix)

Most project systems tend to fall in the middle

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INDEPENDENT PROJECT ANALYSIS

Project Team Organization In ResourceLimited Environments


Project team organization often reflects the
organization of the project system
Teams that cope with resource limitations best reflect
a project-centered matrix
Function-centered systems are more complex and
team integration is difficult
Project-centered systems simplify the flow of
information

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INDEPENDENT PROJECT ANALYSIS

Resource Limited Teams That Are Formed


Early Achieve Success in Definition
Forming the team during FEL 2 offsets some negative
consequences of resource limitations
Team that experience resource challenges, but are formed
early, achieve significantly better definition

Teams that are formed early have a head start in the


planning process

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INDEPENDENT PROJECT ANALYSIS

Leveraging Knowledge Allows Teams to Get


the Most Out of What They Have
Use retirees to fill short-term gaps in the project team
Set-up to mentor others

Establish and maintain long-term relationships with


contractors
Promote the retention of organizational knowledge (i.e.,
standards, processes, etc.)

Develop and support inexperienced personnel


through mentorship and communities of practice

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INDEPENDENT PROJECT ANALYSIS

Outline
Introduction to the Problem
How to Cope with Resource
Limitations

How to Improve Long-Term


Outlook

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INDEPENDENT PROJECT ANALYSIS

Identify
Long-Term
Needs

Step 7

ShortTerm
Action
Plan

Step 6

Identify
Immediate
Gaps

Step 5

Assess
Immediate
Needs

Step 4

Assess
Current
State

Step 3

Define
Core
Functions

Step 2

Step 1

Step 1: Define and Understand Core Capital


Project Functions
Long-Term
Action
Plan

Thoroughly define each function or functional group


involved in capital project execution
Responsibilities, duties, knowledge, skills, abilities, scope of
management
How does the role change across project types, sizes,
locations, etc.?

What does success in the function look like?

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INDEPENDENT PROJECT ANALYSIS

Identify
Long-Term
Needs

Step 7

ShortTerm
Action
Plan

Step 6

Identify
Immediate
Gaps

Step 5

Assess
Immediate
Needs

Step 4

Assess
Current
State

Step 3

Define
Core
Functions

Step 2

Step 1

Step 2: Assess Current State of Project


Resources
Long-Term
Action
Plan

Leverage job definitions to determine competence of


existing resourceswhere do current employees fit
when compared to definitions?
Development and application of formal tools and/or
assessments of personnel based on identified position criteria
Survey of past work and performance and compare against
responsibilities and scope of management outlined for each
position
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INDEPENDENT PROJECT ANALYSIS

Identify
Long-Term
Needs

Step 7

ShortTerm
Action
Plan

Step 6

Identify
Immediate
Gaps

Step 5

Assess
Immediate
Needs

Step 4

Assess
Current
State

Step 3

Define
Core
Functions

Step 2

Step 1

Step 3: Assess Immediate Project


Management Resource Needs
Long-Term
Action
Plan

Conduct workforce assessment based on corporate strategy and


target portfolio

Identify the type and level of necessary resources based on the


amount of immediate project work and the specific characteristics
of the work
Identify the competencies required to achieve immediate
objectives

Determine the right mix of project personnel necessary to


address the competency requirements
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INDEPENDENT PROJECT ANALYSIS

Identify
Long-Term
Needs

Step 7

ShortTerm
Action
Plan

Step 6

Identify
Immediate
Gaps

Step 5

Assess
Immediate
Needs

Step 4

Assess
Current
State

Step 3

Define
Core
Functions

Step 2

Step 1

Step 4: Identify Gaps in the Current State and


Immediate Needs
Long-Term
Action
Plan

Compare the current state and immediate needs of the


project management resource to identify gaps
Probable gaps include:
Competency gaps in existing resources
Need for additional resources at specific positions and
competence levels

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INDEPENDENT PROJECT ANALYSIS

Identify
Long-Term
Needs

Step 7

ShortTerm
Action
Plan

Step 6

Identify
Immediate
Gaps

Step 5

Assess
Immediate
Needs

Step 4

Assess
Current
State

Step 3

Define
Core
Functions

Step 2

Step 1

Step 5: Develop a Short-Term Action Plan (1)


Long-Term
Action
Plan

Use the report to develop solutions to bridge the


identified short-term gaps
Competency gaps in existing resources: Create individual development
plans to foster the development of competence in targeted areas
Internal/external training, developmental work assignments, certification
attainment, etc.

Need for additional resources: Develop internal and external recruitment


and selection standards, tools based on job definitions

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INDEPENDENT PROJECT ANALYSIS

Identify
Long-Term
Needs

Step 7

ShortTerm
Action
Plan

Step 6

Identify
Immediate
Gaps

Step 5

Assess
Immediate
Needs

Step 4

Assess
Current
State

Step 3

Define
Core
Functions

Step 2

Step 1

Step 6: Assess Long-Term Project


Management Resource Needs
Long-Term
Action
Plan

Conduct workforce planning based on long-term corporate strategy


and target portfolio
Forecast the long-term workforce requirements based on planned
project work and/or capital expenditure

Identify any risks to the development of key functions over time

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INDEPENDENT PROJECT ANALYSIS

Identify
Long-Term
Needs

Step 7

ShortTerm
Action
Plan

Step 6

Identify
Immediate
Gaps

Step 5

Assess
Immediate
Needs

Step 4

Assess
Current
State

Step 3

Define
Core
Functions

Step 2

Step 1

Step 7: Develop a Long-Term Action Plan


Long-Term
Action
Plan

Establish the support necessary to address the identified resourcing


needs and risks, and to set your company up for long-term strategic
management of key project functions

Efforts may include:


Staffing plans and contingencies

More sophisticated recruitment and selection tools


Establishment of functions and career path, linked to development plans
Compensation strategy
Performance Management System
High Potential program
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INDEPENDENT PROJECT ANALYSIS

Goals for Improvement


Identify the amount and type of people required to meet
project/portfolio requirements

Match the competency proficiency of resources with the


competency requirements of projects

Hire internally and externally in a manner that targets specific


needs

Develop people in a way that cultivates the needed competencies


as people retire or leave and projects become more difficult

Measure and manage performance against a solid standard


Engage and retain the best people

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INDEPENDENT PROJECT ANALYSIS

IPAs Organizations and Teams Work

Research that covers:

Assessments / Products:

Project organizations

Organizational Effectiveness
(Site and System)

Organizational design

TeamOp

Project team staffing and


structure

Team and Site Functionality

Functional competency

Lucas Milrod
+1 703.726.5493
lmilrod@ipaglobal.com
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INDEPENDENT PROJECT ANALYSIS