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OCR for page 28
DOE's Role As Owner
INTRODUCTION
As noted in the committee's 2001 assessment report, DOE needs to become
more involved and focused on project management activities associated with its
role as owner (NRC, 2001~. Because DOE relies extensively on contractors to
carry out project management activities, the distinction between the roles of
owners and contractors have become blurred. DOE has assumed some of its
contractor' s management responsibilities by directing how activities are executed,
while shifting some of its ownership responsibilities to contractors by allowing
them to define mission needs and projects.
GOVERNMENT/INDUSTRY FORUM ON THE OWNER'S ROLE
On November 13, 2001, the committee convened a government/industry
forum on the owner's role in project management and preproject planning. The
forum included presentations in case study form of successful project manage-
ment organizations in industry and the importance of project management and
preproject planning from DOE's perspective. The forum proceedings were pub-
lished by the NRC (NRC, 2002~. Through this forum, the committee sought to
reinforce some of the general points made in its earlier reports:
.
Successful project management requires the institution of a project man-
agement discipline that encompasses all projects. It is not sufficient to do some
projects well; what is needed is consistency. All the firms represented in the
28
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DOE'S ROLE AS OWNER
29
forum have well-defined, disciplined project processes, with buy-in and active
participation by senior management.
· There is an absolute requirement for emphasis on project justification and
identification of business (or, in the case of DOE, mission) need early in every
project, even before a project is formalized. Senior corporate (agency) manage-
ment must be closely involved in this process, as it is their responsibility to
identify and interpret business or mission needs.
· Decision points with options for project approval, go-ahead, change,
rework, or termination must be clearly identified. These decisions must be made
by appropriate senior managers. The view that the need for senior management
decisions slows down good projects is explicitly rejected. A good decision
process actually expedites projects in that it assures that they have the necessary
resources, support, and direction to proceed to successful completion and opera-
tion not merely to the next phase.
· Accountability and responsibility for project performance must be clear
and well defined across the enterprise. For the enterprise to succeed, all elements
must succeed.
· A corporate organizational structure for project management must be
established and maintained.
· There must be continual, formal project reviews by responsible management.
· Expectations, products, and metrics must be clearly defined for the entire
process.
· There is no substitute for thorough front-end planning. This is true even
(better, especially) for first-of-a-kind and one-of-a-kind projects.
· A successful project-management improvement process requires a cultural
change, and cultural change is driven from the top.
Characteristics of Successful Owners
The fact that the companies with consistently successful projects were not
always successful in the past was noted to illustrate their common commitment to
process improvement. They achieve this improvement by focusing on the project
management process as a part of the core values of the company and assuring that
the process is consistent throughout the organization. They develop a corporate
language to define and control the project management process as well as perfor-
mance measures that guide process improvement.
The case studies emphasized the importance of the owner's role in front-end
planning and senior management involvement in assuring that projects are aligned
with corporate missions. The planning process emphasizes identifying possible
risks and being prepared to address them and manage the changes that may be
required during the project. It was noted that the greater the technical complexity
of the project the greater the involvement of the owner in its planning and
execution.
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30
PROGRESS IN IMPROVING PROJECT MANAGEMENT AT THE DOE
The clear message presented at the forum is imbedded in O 413.3 as well as
the draft PPM. Of particular note is the similarity of DOE and industry project
review and approval processes and that in both kinds of organizations senior
managers and directors are intimately involved. At ChevronTexaco, which has a
$5 billion annual capital budget, the corporation's executive committee reviews
and approves projects at the $25 million level. Senior management involvement
in the process is crucial.
FEDERAL PROJECT MANAGERS' FUNCTIONS
An NRC report, Outsourcing Management Functions for the Acquisition of
Federal Facilities, states that "ownership and management functions in the facil-
ity acquisition process differ. An owner's role is to establish objectives and make
decisions." The report indicates that a smart owner should be capable of per-
forming four interdependent functions: (1) establishing a clear project definition,
(2) establishing performance metrics, (3) monitoring overall project performance,
and (4) providing commitment and stability to the project definition and its
achievement (NRC, 2000~.
The committee discusses the project management functions of the owner in
this report and in its 2001 assessment report (NRC, 2001~. The functions are
basic and fairly well understood by DOE and DOE contractor project managers.
The problem is that while they are inherently the owner's responsibility, DOE
relies on M&I and M&O contractors for many of these functions. The committee
believes that DOE needs to consider whether outsourcing certain management
functions is restricting its ability to manage projects. These functions primarily
relate to strategy determining the mission, scope, priority, and budget of
projects. The following questions should be answered when determining whether
a function should be outsourced and the level of involvement of the federal
project manager and the level of control that should be retained by the DOE:
Are decisions related to the function critical to the success of the project?
Is the management function one that requires significant responsibility
and that can have an impact on the progress of the project if it is not carried out
properly?
· Does the management function bind the agency to either a monetary
commitment or a contract?
.
Does the management function have effects beyond the scope of the
project (e.g., environmental, public safety, or national security effects)?
· Does the management function infringe on mandates by government or
requirements by law?
· Does the management function place unjustified and uncontrollable author-
ity in the hands of a private provider?
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DOE'S ROLE AS OWNER
31
· Does the management function encourage the contractor organization to
make the service delivery sufficiently proprietary to the point that the agency
would be committed solely to that organization for future services (NRC, 2000~?
The committee has observed a lack of understanding of the project manager's
roles and responsibilities. The draft PPM lists the functions in section 2.8.1 with
little elaboration. A detailed definition of the roles and responsibilities of federal
project managers and contractor project managers who perform the functions of
an owner' s representative should be prepared by each program secretarial office
(PSO). The department should then assure that the managers who are assigned
these roles and responsibilities have the appropriate training, expertise, and expe-
rience. (The committee outlines the characteristics of effective owner's represen-
tatives in Appendix D.)
FINDINGS AND RECOMMENDATIONS
Findings: The forum held in November 2001 provided examples of the points
made in the committee's previous reports about how industry fulfills its role as
owner in planning and managing projects. In subsequent meetings with DOE and
DOE contractor personnel the committee saw evidence of increased emphasis on
front-end planning and a clearer understanding of DOE's role as owner. Recent
policy memoranda that emphasize acquisition planning are encouraging.
Recommendation: The committee believes that in order for DOE to be an
effective owner of capital acquisition projects it should:
· Consider capital projects critical to organizational success.
· Require senior management involvement in project decision making,
usually at the $5 million dollar and higher level.
strategic plan.
· Have a detailed and well-recognized internal front-end planning process.
Capture metrics on planning effort and project performance.
Require owner involvement and leadership in front-end planning.
Ensure that projects support DOE's mission and are consistent with DOE's
Recommendation: DOE should periodically benchmark its performance in
project planning and control processes and compare it with the performance of
industry leaders to ensure that it is consistently utilizing the best practices.
Recommendation: Senior managers in each program secretarial organization
(PSO) in DOE should develop a complete definition of the roles and responsibili-
ties of project managers.
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PROGRESS IN IMPROVING PROJECT MANAGEMENT AT THE DOE
Recommendation: Senior managers should continue to emphasize the impor-
tance of improving the project management processes and procedures to assure
long-term improvement throughout the organization.
REFERENCES
NRC (National Research Council). 2000. Outsourcing Management Functions for the Acquisition of
Federal Facilities. 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. 2002. 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 functions
