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4
Human Capital
INTRODUCTION
Many factors contribute to successful project management, but the essential
component of a successful capital acquisition program is a corps of competent,
experienced project managers with the requisite skills and dedication to execut-
ing their responsibilities in a professional and accountable manner. This resource
had been markedly eroded in DOE (NRC, 1999~; however, serious efforts have
since been made to define a career development plan for DOE project manage-
ment personnel. The roles of the federal project manager and the knowledge,
skills, and abilities needed to be a successful owner's representative were dis-
cussed in previous reports (NRC, 1999, 2001, 2002a, 2002b) and in Chapter 5
and Appendix D in this report. Still, DOE suffers from a lack of professional
training opportunities and, especially, a departmental vision for the future direc-
tion of its program and project management capabilities.
Training of project management staff has been seriously underfunded at
DOE. DOE management should note that a properly conducted training program
is not only a means for enhancing fundamental project management skills but
also a primary means for communicating management approaches and expecta-
tions for how project management will be conducted in DOE.
KNOWLEDGE, SKILLS, AND ABILITIES
Project management is an endeavor that requires judgment, management
skills, technical knowledge, and experience. It also relies heavily on relation-
19
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PROGRESS IN IMPROVING PROJECT MANAGEMENT AT THE DOE
ships between federal managers, contractors, vendors, and other key stakeholders.
Although an organization can (and should) leverage its capabilities by contract-
ing outside resources to plan, design, construct capital facilities, or remediate
hazardous conditions, some functions should not be outsourced. (See Chapter 5
of this report for a discussion of the owner's role in project management.) Gen-
erally, owners are the critical decision makers on projects because they (1) are
ultimately the beneficiaries of the facility, (2) are in a better position than con-
tractors to make risk trade-off decisions, (3) understand their strategic interests
better than any contractor, and (4) have to live with the consequences of these
decisions. When outsourcing project management responsibilities, DOE should
ensure that contractors have the requisite project management capabilities for the
size and complexity of the project.
To be effective as a project manager representing the owner, personnel need
to possess the appropriate technical knowledge and experience to understand the
owner's perspective. For example, technical issues in DOE projects often require
project managers to have educational backgrounds and project experience in civil
engineering, architecture, mechanical engineering, chemical engineering, envi-
ronmental engineering, or other disciplines. Experience working on projects of
similar size, complexity, and risk is also important. As noted in the 1999 report,
a single program office may not provide sufficient opportunities for professional
growth, so that reassignment of project management personnel across program
offices may be desirable to achieve the necessary experience and efficient utiliza-
tion of personnel resources (NRC, 1999~. There is no evidence that DOE intends
to assign project management personnel across program office lines.
The Center for Construction Industry Studies (CCIS) conducted a study in
the late 1990s that examined requirements for owners to develop successful
collaborative relationships with contractors. The study team interacted with
approximately 50 owner and contractor organizations, conducted 7 site visits,
performed more than 70 interviews, and captured more than 100 surveys. It
found that project managers acting as the owner's representative need certain
skills to function in collaborative relationships with outside contractors (Davis-
Blake et al., 1999, 2001~. The relational skills summarized in Table 4.1 are said
to contribute favorably to successful collaborative execution of projects. If an
organization changes its culture to move in the direction of greater collaboration
on projects, many of these skills may be lacking and project managers may have
to be retrained to use them.
A project manager acting as the owner's representative needs the skills
required to work with outside contractors. A DOE owner's representative should
be able to work closely with contractors without losing sight of who the owner is
and who the contractor is. (See Appendix D of this report for characteristics of
owners' representatives.)
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HUMAN CAPITAL
TABLE 4.1 Skills for Functioning in Collaborative Relationships
21
Category of Skill
Examples of Skills
Business Writing and managing contracts
Negotiation
Managing budgets and schedules
Communication Coordination and liaison
Conflict management
Cultivating a broad network of relationships
Influence Mentoring
Motivating
Managing change
Managerial Team building
Delegating
Being politically aware and seeing the big picture
Problem solving Continually analyzing options and innovating
Planning
Considering both sides of issues, managing risk
FEDERAL WORKFORCE TRENDS
Staffing to ensure a strong and continuous stream of good project managers
is a challenge to any organization that constructs capital facilities. This chal-
lenge may become more critical in light of projections that many government
agencies will lose experienced personnel (GAO, 2000, 2001~. However, because
DOE projects (especially environmental remediation projects) tend to have long
durations, DOE has the opportunity to establish a long-term career development
program that will ensure a more than adequate supply of managers specifically
trained to manage DOE projects.
Adequacy of Resources
In past reports, the committee expressed concern for the apparent shortage of
personnel functioning as line managers and support staff for programs and
projects (NRC, 2001, 2002a). In a self-evaluation inventory conducted by OECM
in 2001, only 115 DOE employees classified themselves as functioning project
managers. Based on the committee's experience, this figure is surprisingly low
given the magnitude of the capital acquisition and environmental remediation
programs at DOE, even taking into account the possibility of inconsistent language
in position descriptions and misunderstanding on the part of the individuals who
do not classify themselves as project managers. Many DOE personnel have not
seen themselves as project managers, nor have they been seen as such by past
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PROGRESS IN IMPROVING PROJECT MANAGEMENT AT THE DOE
DOE executives, because they perceive that contractors (particularly manage-
ment and operations (M&O) and management and integration (M&I) contractors)
are hired to function as project managers. If there is underreporting of project
managers in DOE, it may reflect a self-image problem. The open question is, If
DOE personnel do not see themselves as project managers, are they truly func-
tioning as effective DOE owner representatives? Establishing the appropriate
size of the project management workforce for a particular project or combination
of projects is an important and difficult task. Many variables come into play,
such as complexity, scope, schedule, organizational capability (contractor and
government), contractual arrangement, and the technology incorporated in the
projects. Staffing requirements are dependent on the amount of work to be
processed over a particular time, as well as the specialties that may be required.
The committee made several attempts to analyze the adequacy of project
management personnel on the contractor and DOE staff but found it very difficult
to gain a clear picture of the number of personnel engaged in project management
compared with the dollar value of work under way. This situation emanates
largely from the absence of resource-loaded contractor schedules and from the
fact that DOE personnel are charged to a central account rather than being project
funded. NNSA developed the most comprehensive accounting of DOE project
management loading, which indicated that on average each project manager was
responsible for the oversight of roughly $20 million of work. A simplified
accounting by the Office of Science yielded roughly $25 million of work per
project manager.
Assuming a $200,000 loaded cost per individual, the project management
oversight cost would amount to between 0.8 and 1.0 percent of the value of the
work. The Spallation Neutron Source (SNS) project at Oak Ridge National
Laboratory (ORNL), a $1.4 billion project with a FY 2002 funding profile of
about $280 million, is managed by approximately 55 ORNL contractor personnel
and 5 federal personnel. This suggests that one DOE project manager oversees
$56 million in annual expenditures, with a total expenditure for project manage-
ment of less than 5 percent and a ratio of 1 DOE person to 11 contractor personnel
in management, which may be low for that type of project
The committee does not have sufficient data to evaluate what these DOE
project managers are doing or not doing, or what the appropriate number of
federal project managers should be on a project, but it is concerned about the
apparent high value of the work being overseen by each project manager.
The committee also perceives that the number of DOE personnel (115)
assigned to project management is low for the scope and complexity of work
DOE is charged with executing. The committee is concerned that there appears
to be neither staffing policy nor standards, nor is there a consistent approach to
staffing for either the contractor or the federal project managers. This can lead to
inappropriate coverage (either over- or understaffing) for assuring a contractor's
effective execution and for DOE properly discharging its ownership role.
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23
Given this perceived shortage of project management personnel in DOE for
the volume of project work being done, it would appear that the M&O and M&I
contractors may be performing some of the functions that otherwise would be the
responsibility of the federal project manager as the owner's representative. If by
design or by default the M&O and M&I contractors are performing some of the
functions of the owner that should not be outsourced, this could create a conflict
of interest for the contractors. (See Chapter 5 for a description of these functions.)
The committee believes strongly that this issue should be assessed by DOE
to ensure that DOE projects are adequately, as well as competently, staffed with
appropriate project management personnel. DOE should also analyze the project
management staffing of its contractors.
Sustainability of the Workforce
General Accounting Office (GAO) testimony before Congress indicated what
was already common knowledge that the federal government faces challenges
in retention of personnel (GAO, 2001~. Successful public and private organiza-
tions recognize the need to sustain management capabilities through succession
planning and professional development. GAO also noted that stove-piped orga-
nizations will need to be better integrated organizationally if they are to make the
most of the knowledge, skills, and abilities of their staff as well as establish
performance-oriented management and a focus on continuous improvement. As
noted above, deficiencies in human capital in the DOE may be affecting the
department' s ability to manage large projects. This problem is made more acute
insofar as experienced project managers are underutilized that is, they are
assigned to a single program office rather than being assigned wherever they are
needed by the agency as a whole.
If DOE is understaffed in the project management area, then it has both a
challenge and an opportunity to rectify this situation by hiring qualified engineers
at entry and midlevel positions and by training them to perform DOE-specific
project management and to serve as owner's representatives. The development
of mentoring programs and career paths should provide a continuous stream of
project managers experienced in the way DOE performs (or intends to perform)
projects. Project managers should be recognized as a DOE-wide asset. This
would facilitate their movement between projects and would allow NNSA, EM,
and SC to share resources in the best interests of DOE at large (NRC, 1999~.
TRAINING AND CAREER DEVELOPMENT
Project managers need ongoing training and professional development to
perform proficiently and to become capable of discharging increasing responsi-
bilities. In addition to training for the presently designated project managers,
there should be training for aspiring individuals who demonstrate potential to
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PROGRESS IN IMPROVING PROJECT MANAGEMENT AT THE DOE
become project managers as well as for other support personnel on the project
team. DOE has an opportunity to go beyond traditional project management
education, which aims at training individuals, to the training of project manage-
ment teams. However, to do this, DOE would have to take control of its own
. .
training program.
In January 2001, DOE began to formulate a program to address the training
and development of project managers. This effort, known as the Project Manage-
ment Career Development Program (PMCDP), met its original completion date
of December 2002. Once PMCDP is implemented, it is essential that supervisors
provide the opportunity for individuals to attend appropriate training courses.
Training, however, is not enough supervisors should provide developmental
assignments to ensure that individuals have the opportunities to maintain and
enhance their skills.
The committee is deeply interested in this effort and has followed it very
closely. The 2001 assessment report addressed the topic in detail (NRC, 2001~.
Although the committee would have preferred that the program be implemented
in far less than 2 years, the committee recognizes the effort devoted to the project.
Upon reviewing the draft PMCDP, the committee believes that the depth and
extent of the program are appropriate for the intended purpose. Placing the
PMCDP module as a subset of the Acquisition Career Development Program
covered by DOE Order O 361.1 is also considered appropriate. The proposed
draft attachment to O 361.1 covering project management policies, procedures,
and qualification and training requirements is quite clear and complete and should
serve well as the base for the program (DOE, 1999~.
The committee was particularly impressed with the draft qualification stan-
dards for each project manager level. It is centered around 10 basic management
competencies: project management in general, leadership and team building,
scope, communication, quality and safety, cost, time, risk, contracts, and integra-
tion. The committee endorses the selected competencies.
In addition to qualification standards, a functional requirements document
has been drafted that covers the training and development requirements for eligi-
bility to each of the four project manager levels contemplated and that tracks
individual compliance with the requirements. This document will serve to advise
existing and aspiring managers of their training and development needs as well as
to produce an inventory of project manager competencies at DOE. Such a data-
base would have made it simpler to develop the PMCDP.
To aid in implementing the training, the task force for the PMCDP devel-
oped 10 courses to be taught by in-house personnel with appropriate experience
and 18 courses by outside contractors. These courses cover the full gamut of
project management as well as some support activities. An anticipated annual
schedule of courses to be offered and the weeks of training needed has also been
developed. The committee previously expressed concern about the efficacy of
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25
the extant contract for training development. This contract has not proven to be
a satisfactory vehicle for accelerating project management training. The com-
mittee believes that OECM should explore obtaining needed training by other
means and that educational contracts should be awarded based on the knowledge,
competence, and practical experience of the proposed instructors.
The estimated annual cost of tuition for the training program to satisfy imme-
diate needs is approximately $1.5 million (covering about 200 people for several
courses each). DOE reported to the committee that its records support an esti-
mated cost of $2,500 per course per student. The committee has also heard of
difficulties in securing adequate funds for training from within the various
organizational appropriations. It would appear that an alternative approach a
centralized budget for training might be preferable for attaining the prescribed
goals.
The PMCDP appears to effectively address the program manager aspect of
the human capital equation but may not adequately address the needs of the
concomitant support staff.
FINDINGS AND RECOMMENDATIONS
Finding: There is reason to believe, based on the reported numbers of DOE
project management personnel and the volume of DOE projects, that DOE is
understaffed in the area of project managers and essential project management
support staff. The committee concludes that there may not be enough DOE
project management personnel to discharge their responsibilities as the owner's
representatives. This apparent deficiency may lead to a situation in which M&O
and M&I contractors, by design or default, are performing the roles and functions
that should be the prerogative of owners' representatives. This inappropriate
devolution of some of the department's project management responsibilities to
contractors may be creating a conflict of interest.
Recommendation: DOE project management should be staffed to the level
needed to ensure that the government's interests are protected. DOE should
assess whether it has enough project management personnel to properly dis-
charge its ownership role or whether DOE understaffing in project management
is permitting contractors to take on responsibilities and functions that should be
reserved for the government's representatives. To do this, DOE will have to
define the roles and responsibilities of federal project managers and then assess
the number of project managers needed to carry out these responsibilities. The
roles and responsibilities of the contractors' project managers vis-a-vis the fed-
eral project managers should also be clarified.
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PROGRESS IN IMPROVING PROJECT MANAGEMENT AT THE DOE
Recommendation: DOE should develop a vision for what project management
in the department should become, and then hire, train, and promote personnel
specifically to staff and fulfill this vision.
Recommendation: Concurrent with the DOE staffing assessment, DOE should
also assess the project management staffing of its (M&O and M&I) contractors in
terms of both quantity and quality (knowledge, background, and experience). It
would be desirable to know if contractors, perhaps because of the declining
competition for DOE projects, are not assigning their best managers to DOE
projects.
Recommendation: DOE should estimate its future requirements for project
management and other project support personnel and develop a plan to address
recruitment, turnover, and retention in the future. Hiring personnel with experi-
ence in preproject planning, cost estimating, risk management, EVMS, team
facilitation, and other critical skills can be a means of meeting some of those
needs in the near term.
Finding: The committee perceives a need for improved utilization of existing
and incoming project management personnel. This need can be fulfilled through
training and career development and by facilitating the movement of personnel
across organizational lines. Executing the PMCDP as a DOE-wide program will
go a long way toward overcoming present training deficiencies. However, a
long-term commitment to funding implementation of the PMCDP is critical.
Recommendation: The projected annual tuition expenditure for training and
development of $1.5 million is considered adequate for the immediate concen-
trated need. Every effort should be made to allocate this amount centrally based
on a DOE-wide decision, especially in the first few years, to assure implementa-
tion of the PMCDP throughout the organization. In the interim, the DOE field
and project offices should continue to meet immediate needs with their own
training programs.
Recommendation. In a previous report, an NRC committee recommended that
DOE should "develop and maintain a cadre of professional certified project
managers who would be assigned to manage DOE projects for all program
offices" (NRC, 1999, p. 77~. Since it is clear that DOE does not intend to
implement this recommendation, the committee recommends that DOE treat
qualified project management personnel as a shared resource and facilitate their
movement to assignments across the organization as the needs arise. OECM, in
conjunction with the operation of the PMCDP, should maintain an inventory of
all project managers throughout the DOE complex, along with their experience
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27
and capabilities, and make this inventory available to all DOE programs as they
staff their projects.
REFERENCES
Davis-Blake, A., K.E. Dickson, J.P. Broschak, G.E. Gibson, F.J. Rodriguez, and T.A. Graham.
1999. Owner/Contractor Organizational Changes Phase II Report, Report #2. Sloan Program
for the Construction Industry, University of Texas at Austin, 49 pp., April.
Davis-Blake, A., K.E. Dickson, G.E. Gibson, and B. Mentel. 2001. Workforce Demographics Among
Engineering Professionals, A Crisis Ahead, Report #21. Center for Construction Industry
Studies, University of Texas at Austin, October.
DOE (Department of Energy). 1999. Acquisition Career Development Program (O 361.1). Washing-
ton, D.C.: Department of Energy.
GAO (General Accounting Office). 2000. Human Capital: Key Principles from Nine Private Sector
Organizations, Report GAO/GGD-00-28. Washington, D.C.: General Accounting Office.
GAO. 2001. Human Capital: Meeting the Government-wide High-Risk Challenge, Report GAO-01-
357T. Washington, D.C.: General Accounting Office.
NRC (National Research Council). 1999. Improving Project Management in the Department of
Energy. Washington, D.C.: National Academy Press.
NRC. 2001. Progress in Improving Project Management at the Department of Energy, 2001 Assess-
ment. Washington, D.C.: National Academy Press.
NRC. 2002a. Progress in Improving Project Management at the Department of Energy, 2002 Interim
Assessment. Letter report, May. Washington, D.C.: National Academy Press.
NRC.2002b. Proceedings of the Government/Industry Forum: The Owner's Role in Project Manage-
ment and Preproject Planning. Washington, D.C.: National Academy Press.
Representative terms from entire chapter:
management personnel
