8
Question-and-Answer Session

How should DOE deal with flawed projects brought to the agency by congressional supporters?

Dr. Merrow: It would be very unusual if after project professionals said during that critical scoping phase that it was a bad project, that management wouldn’t respond by telling congressional sponsors, “This isn’t something we really ought to do.” If you raise the issue as project professionals, most of the time you can help kill the bad projects. I don’t know any project professional who relishes that role, but in the long run the businesses in the private sector deeply appreciate it, and I would hope that your management would as well.

Mr. Porter: If you see something that you know is not right, then you have got to put that on the table, because if you don’t, then resources are going to be spent and value is going to be wasted, and that is money and time and talent that is not going to be available to do what the right thing was to do. The best way I have found [to address this issue] is either through the use of credible experts viewing an issue and commenting on it in a public way, in our case with some of our technologists, or through the use of people who can help you develop the data that then becomes the basis for the decision, and then people can decide anything they want if they have better data. And it helps put it more on a business footing.

What are companies doing to “evergreen” their organizations so that technical competence is maintained?



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Proceedings of Government/Industry Forum: The Owner’s Role in Project Management and Preproject Planning 8 Question-and-Answer Session How should DOE deal with flawed projects brought to the agency by congressional supporters? Dr. Merrow: It would be very unusual if after project professionals said during that critical scoping phase that it was a bad project, that management wouldn’t respond by telling congressional sponsors, “This isn’t something we really ought to do.” If you raise the issue as project professionals, most of the time you can help kill the bad projects. I don’t know any project professional who relishes that role, but in the long run the businesses in the private sector deeply appreciate it, and I would hope that your management would as well. Mr. Porter: If you see something that you know is not right, then you have got to put that on the table, because if you don’t, then resources are going to be spent and value is going to be wasted, and that is money and time and talent that is not going to be available to do what the right thing was to do. The best way I have found [to address this issue] is either through the use of credible experts viewing an issue and commenting on it in a public way, in our case with some of our technologists, or through the use of people who can help you develop the data that then becomes the basis for the decision, and then people can decide anything they want if they have better data. And it helps put it more on a business footing. What are companies doing to “evergreen” their organizations so that technical competence is maintained?

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Proceedings of Government/Industry Forum: The Owner’s Role in Project Management and Preproject Planning Mr. Porter: Despite the slow economy, DuPont Engineering is continuing to hire young engineers even though other parts of the company are not. We are trying to operate the company today a little differently from an engineering competency point of view than we operated it in the past. We are trying to run it as an integrated operation and to operate it at corporate critical mass as opposed to critical mass within the centralized competency, so that we can reach out and those people who have those competencies within the business units become a part of that project management group. One of the ways we are going to try to accelerate that training process is by running a project inside. Basically we are doing a DuPont lead project and starting to bring some of our better younger people into that project. It is about a $30 million job, and we set it up as a center and do a little training on the job. We have created the DuPont Engineering University, which has brought together the sum and substance of all of what we know about what makes for best practice. We have also created a Project Leaders Academy and a Project Managers Academy, and we are starting to train people in a very focused and aggressive way. How do agencies with dispersed implementing centers maintain consistent performance, planning, or implementation of projects? Dr. Merrow: If top management doesn’t buy into what is required for a good project system, you will ultimately fail. However, I have seen a number of cases where there is a slow, steady, very effective educational effort by the senior management saying: This is good for our business. Let me show you how, give us an opportunity by supporting this and we will show you how it works. Mr. Gregory: ChevronTexaco has a decentralized organization with business units all around the world working projects in their operational area. Each has its own delegation of authority, each is accountable for the business plan, for meeting the business plan, for setting up the business plan, and making sure that plan is in concert and alignment with the organization. To what extent have integrated project teams been used during the front-end loading to assess risks, and the results used in crafting the project acquisition strategy, decision making, and execution management? Mr. Porter: At DuPont, the integrated team is supposed to include all the competencies required to make up a whole project. Once the team has generated enough information to begin to understand the business outcome, DuPont will run a process called decision risk analyst. We refer to that as the DRA, and it is just another one of those discipline tools that you can use to go through and look at the various sensitivities that you have versus price, volume, capital, or what-

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Proceedings of Government/Industry Forum: The Owner’s Role in Project Management and Preproject Planning ever you are looking to assess. Its output is rolled up into a package that goes to the business managers who make the decision whether to pursue the project. Dr. Merrow: It turns out that the critical risks for a project in the private sector are around whether or not anybody wants to buy what it is that we are going to make, and those are so fundamental that it is remarkable that we miss them so often. Like most other activities, there are ways to significantly mitigate the risk by doing the right things very early on. How could private-sector project systems be applied to the federal government, which is not disciplined by market considerations? Mr. Gregory: Project systems such as CPDEP or PACE can be used for any project, whether it is a road construction project, a disposal site, or a marine vessel. Any project, whether it is capital or not, can benefit and will benefit from a process such as the ones you saw today or we discussed today.The CPDEP process was used to implement the merger of Chevron and Texaco. Dr. Merrow: Federal regulations make it difficult for project managers to develop the trust relationship needed to efficiently manage a project. Mr. Porter: Appropriations rules require project managers to come back to Congress for action if their projects overshoot estimates by even a small amount. In this environment, people have a tendency to want to put in contingencies. Now, you have opened the door to other kinds of thought processes about how money gets managed. An owner tends to estimate a project on the basis of what it should cost, not what it will cost, and therein lies a difference in terms of the way you can think about the two types of project system, at least in terms of what I have seen in the past. The key is to come up with some lowest investment strategy, so that you are always only estimating what it really should cost to do that piece of work. If you’ve got a system that allows you to want to know how much it actually will cost, then you’ve probably got something that is awry in there. So appropriations rules can make a big difference.