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Progress in Improving Project at the Department of Ene an Cement 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 OF THE NATIONAL ACADEMIES THE NATIONAL ACADEMIES PRESS WASHINGTON, D.C. www.nap.edu

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THE NATIONAL ACADEMIES PRESS 500 Ffflh Street, N.W. Washington, DC 20001 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 supported by Contract Number DEAM01-99PO8006 between the U.S. Department of Energy and the National Academy of Sciences. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the authorts) and do not necessarily reflect the views of the organizations or agencies that provided support for the project. International Standard Book Number 0-309-08909-3 (book) International Standard Book Number 0-309-50608-5 (PDF) Additional copies of this report are available from the National Academies Press, 500 Fifth Street, N.W., Lockbox 285, Washington, DC 20055; (800) 624-6242 or (202) 334-3313 (in the Washington metropolitan area); Internet, http://www.nap.edu Copyright 2003 by the National Academy of Sciences. All rights reserved. Printed in the United States of America

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THE NATIONAL ACADEMIES Advisers to the Nation on Science, Engineering, and Medicine 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. Harvey V. Fineberg 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 chair and vice chair, respectively, of the National Research Council. www. nationa l-academies.org

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Prepublication Copy Subject to Further Editorial Correction COMMITTEE FOR OVERSIGHT AND ASSESSMENT OF U.S. DEPARTMENT OF ENERGY PROJECT MANAGEMENT KENNETH F. REINSCHMIDT, Chair, Texas A&M University, College Station, Texas DON JEFFREY BOSTOCK, Lockheed Martin Energy Systems (retired), Oak Ridge' Tennessee DONALD A. BRAND, Pacific Gas arid Electric Company (retired), Novato, California ALLAN V. BURMAN, Jefferson Solutions, Washington, D.C. LLOYD A. DUSCHA, U.S. Anny Corps of Engineers (retired), Reston, Virginia G. BRIAN ESTES, Consulting Engineer, Williamsburg, Virginia DAVID N. FORD, Texas A&M University, College Station, Texas G. EDWARD GINS ON, University of Texas, Austin, Texas THEODORE C. KENNEDY, BE&K, Inc., Birmingham, Alabama MICHAEL A. PRICE, Project Management Institute, Newtown Square, Pennsylvania Stab RICHARD G. LITTLE, Director, Board on Infrastructure and the Constructed Environment MICHAEL D. COHN, Project Officer DANA GAINES, Financial Associate PAT WIGWAMS, Senior Project Assistant . 1V

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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 THEODORE C. KENNEDY, BE&K, Inc., Birmingham, Alabama MICHAEL A. PRICE, Project Management Institute, Newtown Square, Pennsylvania Stay RICHARD G. LITTLE, Director, Board on Infrastructure and the Constructed Environment MICHAEL D. COHN, Program Officer DANA GAINES, Financial Associate PAT WILLIAMS, Senior Project Assistant v

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BOARD ON INFRASTRUCTURE AND THE CONSTRUCTED ENVIRONMENT PAUL GILBERT, Chair, Parsons Brinckerhoff Quade & Douglas, Seattle Washington MASSOUD AMIN, University of Minnesota, Minneapolis RACHEL DAVIDSON, Cornell University, Ithaca, New York REGINALD DesROCHE, Georgia Institute of Technology, Atlanta DENNIS DUNNE, California Department of General Services, Sacramento PAUL FISSETTE, University of Massachusetts, Amherst YACOV HAIMES, University of Virginia, Charlottesville HENRY HATCH, U.S. Army Corps of Engineers (retired), Oakton, Virginia AMY HELLING, Georgia State University, Atlanta SUE McNEIL, University of Illinois, Chicago DEREK PARKER, Anshen+Allen, San Francisco, California DOUGLAS SARNO, The Perspectives Group, Inc., Alexandria, Virginia WILL SECRE, Masterbuilders, Inc., Cleveland, Ohio DAVID SKIVEN, General Motors Corporation, Detroit, Michigan MICHAEL STEGMAN, University of North Carolina, Chapel Hill DEAN STEPHAN, Charles Pankow Builders (retired), Laguna Beach, California ZOFIA ZAGER, County of Fairfax, Fairfax, Virginia CRAIG ZIMRING, Georgia Institute of Technology, Atlanta Stay RICHARD G. LITTLE, Director, Board on Infrastructure and the Constructed Environment LYNDA L. STANLEY, Executive Director, Federal Facilities Council MICHAEL COHN, Program Officer DANA GAINES, Financial Associate JASON DREISBACH, Research Associate PAT WILLIAMS, Senior Project Assistant vim

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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 National Research Council's (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, evi- dence, 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 Corp of Engineers (retired), Bradley C. Moore, Ohio State University, Burton Richter, Stanford Linear Accelerator Center, and Richard N. Zare, Stanford University. Although the reviewers listed have provided many constructive comments and suggestions, they were not asked to endorse the conclusions or recommenda- tions, nor did they see the final draft of the report before its release. The review of this report was overseen by Lawrence T. Papay, Science Applications Inter- national Corporation. Appointed by the National Research Council, he was responsible for making certain that an independent examination of this report was . . via

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vit! ACKNOWLEDGMENT OF REVIEWERS carried out in accordance with institutional procedures and that all review com- ments were carefully considered. Responsibility for the final content of this report rests entirely with the authoring committee and the institution.

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Contents EXECUTIVE SUMMARY INTRODUCTION Review Activities, 6 Organization of the Report, 6 References, 8 CORE COMPETENCIES Introduction, 9 Areas of Progress, 9 Areas of Concern, 11 References, 14 5 9 3 DOE ORDER O 413.3 AND THE PROGRAM AND PROJECT 15 MANAGEMENT MANUAL Introduction, 15 Analysis of Current Status and Direction, 15 Findings and Recommendations, 17 References, 18 HUMAN CAPITAL Introduction, 19 Knowledge, Skills, and Abilities, 19 Federal Workforce Trends, 21 fix 19

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x Training and Career Development, 23 Findings and Recommendations, 25 References, 27 5 DOE'S ROLE AS OWNER Introduction, 28 Government/Industry Forum on the Owner's Role, 28 Federal Project Managers' Functions, 30 Findings and Recommendations, 31 References, 32 6 DOE PROJECT MANAGEMENT CULTURE Introduction, 33 Leadership, 34 Acceptance of Change Within the DOE Culture, 36 Overcoming Resistance to Cultural Change, 38 Findings and Recommendations, 39 References, 39 CONTENTS 28 33 7 READINESS TO PROCEED FOR FIRST-OF-A-KIND PROJECTS 40 Introduction, 40 Characteristics of First-of-a-Kind Projects, 41 Challenges That Arise in First-of-a-Kind Projects, 42 Critical Decisions, 44 Management Planning and Control, 47 Findings and Recommendations, 48 8 PROJECT CYCLE TIME REDUCTION Introduction, 49 Prerequisites for Reducing Cycle Time, 49 Effect of DOE Order O 413.3 on Project Cycle Time, 50 Eliminating Delays from Critical Decisions, 52 Complexity Increases the Risk of Delays, 53 Reducing Project Time and Supportive Management Culture, 54 Staffing for Reduced Project Cycle Time, 54 Findings and Recommendations, 55 References, 56 9 ACQUISITION AND CONTRACTING Introduction, 57 Developing an Acquisition Strategy, 58 Performance-Based Contracting, 60 49 57

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CONTENTS Xt Incentives, 63 Findings and Recommendations, 64 References, 66 10 RECOGNIZING PROJECT MANAGEMENT SUCCESSES 67 Introduction, 67 2002 Project Awards, 67 Other Notable Projects, 70 Common Factors, 71 Findings and Recommendations, 71 References, 72 APPENDIXES A Statement of Task, 75 B Biographies of Committee Members, 76 C Committee Fact Finding and Briefing Activities and Documents Reviewed from October 2001 Through October 2002, 82 D Characteristics of Effective Owners' Representatives, 92 E Key Questions for Readiness to Proceed, 96 F Building Flexibility into Projects to Manage Uncertainty, 108

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Acronyms and Abbreviations BICE CCB CCIS CD-0 CD-1 CD-2 CD-3 CD-4 Board on Infrastructure and the Constructed Environment Change Control Board Center for Construction Industry Studies critical decision 0, approval of mission need critical decision 1, approval of system requirements and alternatives critical decision 2, approval of project baseline critical decision 3, authorization to complete implementation critical decision 4, approval of project completion and transition to operations CFO chief financial officer CPI cost performance index DOE U.S. Department of Energy EM Office of Environmental Management EPC estimated project cost ESAAB Energy Systems Acquisition Advisory Board ES&H environment, safety, and health EVMS earned value management system FAR Federal Acquisition Regulations GAO General Accounting Office . . . x~

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xiv ACRONYMS AND ABBREVIATIONS ICPP integrated construction project plan INEEL Idaho National Engineering and Environmental Laboratory IPT Integrated Project Team LANL Los Alamos National Laboratory M&I management and integration M&O management and operations NASA National Aeronautics and Space Administration NIF National Ignition Facility NNSA National Nuclear Security Administration OECM Office of Engineering and Construction Management OMB Office of Management and Budget OMBE Office of Management and Budget Evaluation ORNL Oak Ridge National Laboratory ORO Oak Ridge Operations Office ORP Office of River Protection PA&E Office of Program Analysis and Evaluation PARS Project Analysis and Reporting System PBC performance-based contracting PEP Project Execution Plan PMCDP Project Manager Career Development Plan PMP Project Management Practices PMSO project management support office PPM Program and Project Management manual PSO Program Secretarial Office RL Richland Operations Office SC Office of Science SNL Sandia National Laboratories SNS Spallation Neutron Source SPI schedule performance index SRS Savannah River Site UC University of California WBS work breakdown structure