Progress in Improving Project Management at the Department of Energy

2001 Assessment

Committee for Oversight and Assessment of U.S. Department of Energy Project Management

Board on Infrastructure and the Constructed Environment

Division on Engineering and Physical Sciences

National Research Council

NATIONAL ACADEMY PRESS
Washington, D.C.



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Progress in Improving Project Management at the Department of Energy: 2001 Assessment Progress in Improving Project Management at the Department of Energy 2001 Assessment Committee for Oversight and Assessment of U.S. Department of Energy Project Management Board on Infrastructure and the Constructed Environment Division on Engineering and Physical Sciences National Research Council NATIONAL ACADEMY PRESS Washington, D.C.

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Progress in Improving Project Management at the Department of Energy: 2001 Assessment NATIONAL ACADEMY PRESS 2101 Constitution Avenue, N.W. Washington, DC 20418 NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance. This study was funded by the U.S. Department of Energy, Contract Number DE-AM01–99PO8006. All opinions, findings, conclusions, and recommendations expressed herein are those of the authors and do not necessarily reflect the views of the Department of Energy. International Standard Book Number 0-309-08280-3 Additional copies of this report are available for sale from National Academy Press, 2101 Constitution Avenue, N.W., Lockbox 285, Washington, DC 20055; (800) 624–6242 or (202) 334–3313 (in the Washington metropolitan area); also available online at <http://www.nap.edu>. Copyright 2001 by the National Academy of Sciences. All rights reserved. Printed in the United States of America

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Progress in Improving Project Management at the Department of Energy: 2001 Assessment THE NATIONAL ACADEMIES National Academy of Sciences National Academy of Engineering Institute of Medicine National Research Council The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Bruce M.Alberts is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Wm.A.Wulf is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Kenneth I.Shine is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Bruce M.Alberts and Dr. Wm.A.Wulf are chairman and vice chairman, respectively, of the National Research Council.

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Progress in Improving Project Management at the Department of Energy: 2001 Assessment COMMITTEE FOR OVERSIGHT AND ASSESSMENT OF U.S. DEPARTMENT OF ENERGY PROJECT MANAGEMENT KENNETH F. REINSCHMIDT, Chair, Texas A&M University, College Station DON JEFFREY BOSTOCK, Lockheed Martin Energy Systems (retired), Oak Ridge, Tennessee DONALD A. BRAND, Pacific Gas and Electric company (retired), Novato, California ALLAN V. BURMAN, Jefferson Solutions, Washington, D.C. LLOYD A. DUSCHA, U.S. Army Corps of Engineers (retired), Reston, Virginia G. BRIAN ESTES, consulting engineer, Williamsburg, Virginia DAVID N. FORD, Texas A&M University, College Station G. EDWARD GIBSON, University of Texas, Austin PAUL H. GILBERT, Parsons, Brinckerhoff, Quade, and Douglas, Seattle, Washington THEODORE C. KENNEDY, BE&K, Inc., Birmingham, Alabama MICHAEL A. PRICE, Project Management Institute, Newtown Square, Pennsylvania Staff RICHARD G. LITTLE, Director, Board on Infrastructure and the Constructed Environment MICHAEL D. COHN, Project Officer KIMBERLY GOLDBERG, Financial Associate NICOLE E. LONGSHORE, Project Assistant

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Progress in Improving Project Management at the Department of Energy: 2001 Assessment BOARD ON INFRASTRUCTURE AND THE CONSTRUCTED ENVIRONMENT RICHARD WRIGHT, Chair, National Institute of Standards and Technology (retired), Gaithersburg, Maryland MASOUD AMIN, Electric Power Research Institute, Palo Alto, California GREGORY BAECHER, University of Maryland, College Park JONATHAN BARNETT, urban planner, Washington, D.C. MAX BOND, Davis, Brody, Bond, LLP, New York, New York MARY COMERIO, University of California, Berkeley PAUL H. GILBERT, Parsons, Brinckerhoff, Quade, and Douglas, Seattle, Washington YACOV HAIMES, University of Virginia, Charlottesville HENRY HATCH, U.S. Army Corps of Engineers (retired), Oakton, Virginia JEREMY ISENBERG, Weidlinger Associates, New York, New York SUE McNEIL, University of Illinois, Chicago DOUGLAS SARNO, The Perspectives Group, Inc., Alexandria, Virginia WILL SECRE, Masterbuilders, Inc., Cleveland, Ohio DAVID SKIVEN, General Motors Corporation, Detroit, Michigan DEAN STEPHAN, Charles Pankow Builders (retired), Laguna Beach, California ERIC TEICHOLZ, Graphic Systems, Inc., Cambridge, Massachusetts ZOFIA ZAGER, County of Fairfax, Fairfax, Virginia CRAIG ZIMRING, Georgia Institute of Technology, Atlanta Staff RICHARD G. LITTLE, Director, Board on Infrastructure and the Constructed Environment LYNDA STANLEY, Executive Director, Federal Facilities Council MICHAEL D. COHN, Project Officer KIMBERLY GOLDBERG, Administrative Associate NICOLE E. LONGSHORE, Project Assistant JASON DREISBACH, Research Assistant

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Progress in Improving Project Management at the Department of Energy: 2001 Assessment Acknowledgment of Reviewers This report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures approved by the NRC’s Report Review Committee. The purpose of this independent review is to provide candid and critical comments that will assist the institution in making its published report as sound as possible and to ensure that the report meets institutional standards for objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the deliberative process. We wish to thank the following individuals for their review of this report: Philip R.Clark, Nuclear Corporation (retired), Fletcher H. (Bud) Griffis, Polytechnic University, Henry J.Hatch, U.S. Army Corps of Engineers (retired), Elvin R.Heiberg III, Heiberg Associates, Inc., Bradley C.Moore, Ohio State University, and Richard N.Zare, Stanford University. Although the reviewers listed above have provided many constructive comments and suggestions, they were not asked to endorse the conclusions or recommendations, nor did they see the final draft of the report before its release. The review of this report was overseen by Charles B.Duke (NAE), Xerox Research and Technology. Appointed by the National Research Council, he was responsible for making certain that an independent examination of this report was carried out in accordance with institutional procedures and that all review comments were carefully considered. Responsibility for the final content of this report rests entirely with the authoring committee and the institution.

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Progress in Improving Project Management at the Department of Energy: 2001 Assessment Contents     EXECUTIVE SUMMARY   1 1   INTRODUCTION   11     Background,   11     Scope of Work,   12     Organization of the Report,   13     References,   14 2   OVERARCHING ISSUES   15     Introduction,   15     Involvement of Senior Management,   16     Strategic Planning,   17     Owner’s Role,   18     Process Improvement,   19     Organizational Structure and Responsibility,   19     References,   21 3   FRONT-END PLANNING   22     Introduction,   22     Assessment of Front-End Planning in DOE,   24     Management Review,   29     Front-End Planning Metrics,   30

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Progress in Improving Project Management at the Department of Energy: 2001 Assessment     Human Resources for Front-End Planning,   30     References,   32 4   RISK MANAGEMENT   33     Introduction,   33     Risk Identification,   34     Risk Analysis and Evaluation,   35     Risk Response,   41     Allocation of Risk and Contracting,   44     Active Risk Management,   45     Ongoing Project Risks,   46     Development of Risk Management Excellence,   47     Program Risks Across Multiple Projects,   48     References,   49 5   PROJECT REPORTING AND OVERSIGHT   50     Introduction,   50     Analysis of Earned Value Management System Data,   51     Project Oversight,   52     Contingency Utilization Index,   53     Benchmarking,   53     Measuring Improvement in Project Management,   54     Other Metrics,   54     Findings and Recommendations,   55     References,   56 6   INDEPENDENT REVIEWS   57     Introduction,   57     Documentation of Review Procedures,   58     Review Team Qualifications,   59     Review Requirements,   59     Review Evaluation,   60     Project Review Management System,   61     Findings and Recommendations,   61     References,   63 7   ACQUISITION AND CONTRACTING   64     Introduction,   64     Performance-Based Contracting,   65     Performance-Based Contracting in Policy and Procedure Documents,   67     Risk, Performance-Based Contracting, and Contract Tailoring,   70

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Progress in Improving Project Management at the Department of Energy: 2001 Assessment     Findings and Recommendations,   72     References,   73 8   DOCUMENTATION OF PROJECT MANAGEMENT POLICIES AND PROCEDURES   74     Introduction,   74     DOE Policy P413.1 and Order O413.3,   75     Draft Program and Project Management Manual and Draft Project Management Practices,   76     Issues in Need of Additional Documentation,   77     ISO 9000 Certification,   78     Findings and Recommendations,   79     References,   80 9   PROJECT MANAGER TRAINING AND DEVELOPMENT   81     Introduction,   81     Project Management Career Development Program,   82     Interim Training Efforts,   83     Alternative Learning Concepts,   83     Other Concerns,   84     Findings and Recommendations,   85     References,   85     APPENDIXES         A Biographies of Committee Members,   89     B Committee Fact Finding and Briefing Activities Through August 2001 and Project Data Request in March 2001,   96     C Phase II Report Findings and Recommendations,   101     D Letter Report of January 2000,   108     E Statistical Process Control with EVMS Data,   120     F Acronyms and Abbreviations,   126

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