By Simon Bimpson, Business Development & Operations Director for MWH Global
Many organizations are already seeing the benefits of adjoined-up approach to capital investment by implementing program management. But the techniques used may have more to offer to reduce risk and optimise resources.
Learning from clients in nuclear and other sectors, MWH has found that applying a program management approach – with communication, people, a desire for learning and continual improvement at its heart – right round the asset cycle can bring significant gains compared to a just-in-time, project-by-project approach to delivery. It can build a credible, predictable and optimized rolling program, underpinned by the buy-in and commitment of managers across the business and within the supply chain and will deliver enhanced value for the organization and its customers.
Predicting consequences
When program management processes are deployed upstream in the business plan – during strategic planning – they can bring significant long-term gains. The gains arise from upfront detailed assessment and categorization of projects as speculative, probable, defined or emergent, followed by constant review as the timeline progresses based on developments and on-the-ground learning. Program management modelling systems can then be used to predict consequences. Where such modelling reveals these consequences pose unacceptable risk, the program can be adjusted to avoid it at the outset rather than during the delivery stage.
Achieving optimum value in resource planning is down to timing,not necessarily speed. Work flow must line up with the availability of key resources – finance, labor and materials. While asset management generates the priorities, these do not always naturally line up with the availability of resources. The need can hit the market in a less-than-optimal fashion because it does not fit with the resource trajectory with a consequent increase in costs. By using predictive modelling upstream, the asset owner has early visibility of upcoming needs. This can be shared with the supply chain enabling it to optimize its resources and thus reduce costs.
The nuclear sector is a case in point. The steep slope of delivery as the sector moves into huge capital programs is likely to create risk in the supply chain as the needs for skills and materials coincide. Only by taking a holistic modelling approach early on can the risk be managed and reduced. If the first sight of a resource need is downstream in delivery, options to react are limited.
And nowhere is risk under more scrutiny than with nuclear. Among the challenges of achieving investor confidence is the appreciation of their dynamic nature and the shifting nature of the related benefits. Dynamic risks typically are financial, legislative, technical, delivery based and reputational. Accounting for these in the upstream strategic stages will build resilience into a program.
Enhancing collaboration
However it is through people that these processes are truly optimized and business benefits derived. Day to day, a business faces many communications challenges including cultural differences between it and its suppliers, or even between its own business units. Different personalities play a significant factor, so an organization needs to ensure collaboration and communication between all stakeholders. Unless they all understand what is required of them before delivery commences, the program manager can spend much of his time trying to integrate them in real time adding to costs. Thus a change management strategy to win hearts and minds and initiate unified processes needs to be developed from the outset.
Failing to account for people and ways of working at the start of a program can lead to a costly disconnection between the business decision-makers, who set the strategic vision, and the service delivery bodies on the ground. Why? Reasons include differences in personal behaviors and styles of reporting internally and externally in the supply chain; a lack of understanding of what needs to be shared with whom and by when; the quality of the data selected and the manner in which it is presented; and distrust between parties. Such a disconnection can delay the flow and inadvertently hide critical information. Not only can this cause issues during the program but, upon completion, there is a risk that delivery organizations can take useful trending data with them if nobody within the organization seems to recognize its value.
Keeping an eye on the end game
If a disconnection is allowed to arise between those setting the strategic vision and the service delivery bodies, poor intelligence will ensue leading to poor decisions. So even if all of the projects come in on time, on budget and with the intended quality, the asset may not deliver the outputs from the strategic intent. This can arise when an organization’s governance is based on approval of single projects rather than overall outcomes of the asset. Everyone below the board will worry about getting the right level of risk and input and, with best intent, may defer risk losing program benefit. The answer is a program manager who holds overall inputs and outputs in alignment and can provide the business with intelligence that its outputs are secure. Crucially, program management is all about communication, people skills and change management. Application of program management processes across the asset life cycle enables better delivery. But the full benefits will only emerge by using them to transform people and working habits for the long term.
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Case study
Energy: National Grid
MWH is working with National Grid in the UK to help manage its investment in electricity and gas transmission networks over the next five years and beyond. This investment is driven by the need to connect new sources of electricity generation and gas and to replace transmission assets that are reaching the end of their planned lives. The two organizations are creating and embedding an integrated program management environment with the U.K. Construction Division, growing its in-house program management capabilities and enhancing National Grid’s program delivery. The integrated solution will better align the flow of projects to asset management needs as capital expenditure grows. National Grid’s Construction Head of Business Planning, Neil Pullen, says: “It was essential to introduce new techniques and practices to ensure we meet our goals and optimize the value from our future construction program. ”MWH has designed the architecture for the new systems, established a new scheduling environment, and built schedules for over 500 future overhead line and substation projects –accounting for over £5 billion of work. Program visibility through standardized data is now being rolled out to National Grid’s delivery partners. The ability to see its entire program is allowing National Grid to prioritize and develop plans to alleviate constraints in its future resource, procurement and outage plans. Outcomes include:
- A program planning and management approach that integrates National Grid’s program of projects released from asset management to deliver
- A single system used by National Grid and partners to plan and deliver projects
- A strategic program management capability to optimize delivery
