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5 Policy Implications Even if you are on the right track, you'll get run over if you just sit there. Will Rogers Properly initiating a facility project is a complex task that involves significant effort in the areas of acquisition strategy, stakeholder identification, and preproject planning. An effort to improve the development of project scopes of work for federal facilities and the overall preproject planning process is challenging and requires consideration of diverse elements such as organizational behavior, architecture, engineering, project management, and law. This report is intended to be generic enough to be applicable to a diverse range of organizations and missions. However, it is important to point out issues that can provide a basis for improvement. During the course of this investigation, it became clear that "pockets of excellence" exist for the planning of federal facility projects. Despite downsizing, loss of expertise due to retirements, and perceived administrative and legal hurdles, the interviewees were achieving good results in planning on at least some of the projects in their diverse portfolios. It was also enlightening to see the unique approaches of the different agencies, driven in large part by their distinctive mission requirements and histories. The following discussion focuses on two areas process and resources. Based on research and the authors' experience, agencies that address the findings pertaining to each of these areas can realize significant opportunities to positively impact the performance of their facilities programs and portfolios. CONCLUSION AND FINDINGS After reviewing the literature on this subject and conducting interviews, the authors concluded that the key practice for developing an effective scope of work for design is to conduct a structured, consistent, and thorough preproject planning process andfully develop a project scope of work. The preproject planning process incorpor- ates a series of approval gates and involves organizing for the effort; selecting project alternatives; developing a project definition package; and making a decision on whether to proceed with the project. It is during this crucial stage that risks are analyzed, preliminary designs are formulated, critical decisions are made, and the specific project execution approach is defined. Organizations that understand the importance of this process, that develop detailed process guidelines, 41

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42 STARTING SMART: KEY PRACTICES FOR DEVELOPING SCOPES OF WORK FOR FACILITY PROJECTS that measure the results (both level of effort and effectiveness) of the process, and that continuously improve over time will reap positive dividends. Consistency in applying these practices can improve an organization's entire project portfolio. The following findings relate to process. Finding 1: "Pockets of excellence" for the planning of federal facilities projects exist within the agencies interviewed. However, few mechanisms are in place to widely and systematically share preproject planning lessons learned and successful processes within and between agencies. ~ _ _J Eleven of the 13 agencies interviewed have an established process for preproject planning. Nine of the agencies have clearly defined approval gates prior to the authorization of detailed designs; these agencies see the approval gates as a vital part of the process to improve the definition of project scopes of work and the accuracy of their cost estimates. More importantly, they base the scope of work for design on a detailed project scope definition package that has been developed with key stakeholder involvement. However, the study authors found that sharing of lessons learned and successful practices is not taking place on a consistent or widespread basis within or across agencies. Finding 2: Different levels of effort and participant skill sets are required for different types of projects. Preproject planning efforts need to be tailored to the specific project type and its complexity. Recognizing the appropriate level of effort and the skills needed to preplan for different types of facility projects is difficult yet critical for project success. Building projects differ from industrial projects in various ways, including the approach to the planning, design, and construction of facilities; the owner's perspective; the architec- tural focus; and the building's functions. It is often beneficial to structure a core team of five to seven individuals and to bring in representatives from additional key areas as needed. Clearly stated priorities among project cost, schedule, and quality features will assist all team members in making decisions regarding the project. Finding 3: The first key element of an effective preproject planning process is to ensure that the agency is pursuing the "right" project. Preproject planning should begin with good leadership, effective and appropriate involvement of key stakeholders, and a detailed determination of project requirements. Ideally, proposed facility projects will support the strategic intent and mission of an organization. The leadership should be technically proficient and knowledgeable of the preproject planning process, have defined responsibilities, be accountable for results, and remain focused. Team leadership should develop a culture of trust and honesty through kick-off meetings, establishing the importance of trust in the team's performance, developing long-term working relationships over a number of projects, and providing accurate information. Research has shown that stakeholder identification and team alignment are critical to project success. A typical preproject planning team is comprised of representatives from a wide variety of functional groups with diverse priorities, requirements, and expectations. At a minimum, the team needs to include representatives from the business management group, operations group, construction, project management, and design personnel. If success is to be achieved, their objectives must be aligned through the development of a uniform set of project objectives that meets the organization's needs. Ten of the 13 agencies interviewed have established processes for identifying stakeholders, and all of the agencies appear to establish their project teams with good representation from the user/client, facilities/project personnel, operations and maintenance groups, technical support functions, local representatives, and regulatory agencies. Finding 4: To adequately develop a project scope of work, significant design effort by architects, engineers, and consultants is needed to translate project requirements into a basis for detailed design. In effect, a project' s scope of work provides a bridge between the operational and business needs that the facility will meet and the technical aspects of project execution.

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POLICY IMPLICATIONS 43 Staff in many organizations seem to think that project scope is adequately developed once the general requirements are defined and a preferred approach is chosen. However, significant design effort is needed to translate project requirements into a basis for detailed design. A well-developed project scope of work corresponds rou~hlv to a 15- to 25-percent complete design effort. Major tasks include developing the technical requirements: lo, ~ ~ ~ I, ~ ~ I, ~ . . . . .. ... . . . .. . . . . . .. . . .. . .. . performing risk management activities; developing the project control baseline including cost estimates; and documenting this information. The technical requirements should focus on site evaluation, flow design, design parameters, and equipment requirements. finding 5: Project scope verification with key stakeholders is critical. Some agencies use innovative methods to verify the project scope of work, such as planning charrettes, detailed planning checklists, and consensus scope reviews when the project design is 30- to 35-percent complete. Proper use of tools and other techniques by the project team fosters open communication and acceptance of the project scope, schedule, estimates and work processes. Examples of such tools include work process diagrams, scope definition checklists, scheduling techniques, and risk analysis techniques. Periodic communication with stakeholders outside the preproject planning team can be accomplished through team meetings, newsletters, e- mail, video conferencing, town hall meetings, and computerized information management systems. finding 6: ()ne element of an ellective preproject planning process is the structured identification and manage- ment of risk. This effort is most effective when performed prior to "locking in" facility budgets and committing funds for detailed design and construction. Finding 7: Only five of the agencies interviewed use a risk quantification tool prior to requesting detailed design funds. It appears that in many cases project scopes and budgets are locked in prior to significant efforts to define project scope. The first key element of an ellective preproject planning process is to ensure that the organization is perform- ing the right project. One reason for investing in preproject planning is to determine whether a project should proceed. The proper time to do this is prior to congressional authorization. When the budget is locked in prior to detailed development of the project's scope, it is essentially viewed with more accuracy than it deserves. Funding a project based on such an estimate will almost certainly lead to project cost overruns or significant project scope changes during design and construction. Processes and tools can be used to help the preproject planning team assess and measure scope definition risk elements and then develop mitigation plans. The Project Definition Rating Index developed by the Construction Industry Institute is one risk management tool that is being used by some private-sector organizations and some federal agencies. Finding 8: Six agencies measure their performance on selected individual projects with respect to preproject planning practice usage, and nine measure project performance. However, none of the agencies interviewed indicated that they measure preproject planning, including project scope definition and team alignment practices, across their project management programs. Measurement of preproject planning has been the subject of much study. Building and industrial projects with thorough preproject planning have consistently outperformed other projects in terms of cost, schedule, and number of change orders. Six of the 13 agencies interviewed measure the degree or quality of their project scope definition, primarily through the use of checklists. Specific measures used to determine successful project scone definition for an O ~ ~ ~' ~ Individual project and from a program perspective were change orders, customer satisfaction, budget (cost) performance, schedule performance, time to execution, and whether the project was actually built or not. Some agencies use project-reporting systems to collect performance data and conduct periodic performance review

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44 STARTING SMART: KEY PRACTICES FOR DEVELOPING SCOPES OF WORK FOR FACILITY PROJECTS meetings. Those agencies that do not use metrics evaluated the level of scope definition through subjective review processes that rely primarily on the experience of the reviewers. Finding 9: Although preproject planning appears to be done thoroughly on some federal projects, the overall planning effort is inconsistent. Most of the agencies interviewed limit their preproject planning efforts, especially relatively costly activities, to major projects. Consistency in preproject planning efforts leads to better cost and schedule predictability as well as real cost savings. Experience in the private sector has shown that facility project portfolios with inconsistently applied preproject planning efforts tend to result in mediocre project performance and little improvement over time. It has also shown that smaller projects may be properly managed using abbreviated versions of the preproject planning processes and tools. Eight of the 13 agencies interviewed implement their preproject planning processes on all major projects. In order for a preproject planning process to be effective, adequate resources (people, time, and money) must be applied. The availability of resources was a recurring theme throughout almost every interview, and the following findings relate to resources. inding 1~): Private industry experience indicates that approximately 2 to 5 percent of a project' s total cost will fund a cost-effective preproject planning effort (i.e., one that results in a facility project that is on time and within budget). Only three agencies reported this level of investment. A comprehensive preproject planning process includes a team charter that outlines team members' roles and responsibilities, budget, schedule, and objectives. Lack of funding is many times cited as one of the most signifi- cant barriers to gaining alignment among team members on a project's objectives and in performing thorough preproject planning. Eleven of the 13 agencies interviewed mentioned resource constraints funding and man- power shortages as having a negative impact on their preproject planning efforts. Finding 11: Some agencies have "fenced" their preproject planning funds, whereas others use operational funds. To ensure that planning efforts do not compete with operational priorities, dedicating funds to projects and/or preproject planning appears to be a better approach than using operational funds. Eight of the 13 agencies interviewed fund preproject planning through their operations budgets, which allows the agencies to shift funds from planning to other operational priorities. Five agencies fund planning efforts with capital funds set aside at the headquarters level; representatives from these agencies thought their planning funds were adequate. Finding 12: The length of the federal budget cycle adversely affects the preproject planning process for facilities. With planning horizons of four to seven years, preproject planning requirements are often not taken seriously enough by participants because the project is not an immediate concern, and many believe that the needs will likely change over time. The long duration of the process for congressionally funded projects is a significant challenge. Changes in mission and personnel between the identification of project requirements and facility construction often cause requests for new requirements and result in late scope changes. Preproject planning documentation can help control project scope changes. Finding 13: Few agencies adequately train their staffs about industry- and organization-specific preproject planning processes. With some exceptions, federal agencies rely on experience as the main source of preproject planning expertise and provide few training programs related to planning processes.

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POLICY IMPLICATIONS 45 Effective training and mentoring are necessary to successfully implement preproject planning processes and to transfer institutional experience to new managers. Six of the 13 agencies interviewed conduct training on their preproject planning processes and tools, but the level of detail varies. Some agencies rely solely on the experience of their project managers and on-thejob training. Finding 14: The loss of preproject planning expertise continues in federal agencies as large numbers of profes- sionals retire or leave for other reasons. Many more retirements are imminent. The situation is especially problematic for agencies that rely almost exclusively on experience, rather than structured processes, to develop project scopes of work. A recent study of the private sector found that the loss of white-collar workers in the project professional ranks over the next few years will be a significant challenge for both owners and contractors. The loss of corporate knowledge as experienced workers leave or retire is a key issue in that experienced personnel have the tacit organizational knowledge and skills to ensure that preproject planning is effectively and consistently performed. In 12 of the 13 agencies interviewed, the preproject planning process is managed through contracts as well as by in-house staff. The persons interviewed for this study had an average of 28 years of work experience. "Lessons learned" programs and organizational processes can aid in institutionalizing tacit knowledge in order to maintain the continuity of federal agencies' capacities to effectively plan and manage facility projects. Finding 15: The project manager is a key stakeholder and should be involved in the project scope development. In some cases, a project manager is assigned to a project after planning is complete. This can create serious problems with alignment of the team and the loss of project-specific knowledge. Continuity of project leadership is an important feature of a good preproject planning process. Six of the 13 agencies interviewed assign project managers prior to detailed project scope development. The others transfer project leadership after the project scope of work is developed. In situations where continuity of leadership and project management will not be maintained, research has shown that a well-defined preproject planning process, documentation of the project scope of work and the decisions made, and a well-structured turnover procedure that includes a turnover meeting and project reviews with new stakeholders can mitigate alignment problems and minimize project scope changes during detailed design and construction. KEY PRACTICES The requirements and processes needed to effectively initiate a facility project are well known in many organizations, both public and private. Examples of the preproject planning process, resources needed, and available tools are discussed in Chapters 2, 3, and 4 of this report. Based on research and the study authors' experience, the following key practices could help federal facilities organizations improve their development of project scopes of work and preproject planning processes: Develop and implement a standardized preproject planning process using experienced, technically profi- cient personnel and provide them with adequate resources (people, time, and money). The owner organization (the federal agency) should lead the planning effort, although some tasks can be outsourced to contractors. Measure the level of effort expended in preproject planning so that the outcomes of the process can be continuously improved over time. Develop an effective acquisition strategy and set realistic and effective project control baselines in the preproject planning process to ensure a smooth transition into the execution phase and overall project success. Without an effective execution approach, the project will likely flounder and require significant management involvement. Institute a standardized project scope of work communication process, including contract requirements and transition meetings, based on the agency's available project management resources, mission, and expertise.

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46 STARTING SMART: KEY PRACTICES FOR DEVELOPING SCOPES OF WORK FOR FACILITY PROJECTS Ensure that the agency pursues the right projects for its strategic direction through appropriate stakeholder involvement and team alignment. Project participants' understanding of the driving factors and priorities for a project is essential if the project scope of work is to reflect critical needs. PATH FORWARD It is well understood by experienced practitioners in the construction industry that poor facility project scope definition is one of the major factors leading to poor project performance. As related here, past research gives solid evidence that proper preproject planning provides the foundation for effective communication through a project scope of work document and can significantly enhance the predictability of project performance, improve user satisfaction, and provide real cost and schedule savings. Individual project managers and participants, using the tools and techniques identified in this report, can improve project performance and ensure the effective use of resources. Given that the federal government spends in excess of $20 billion annually on facility projects, cost savings of even single-digit percentages are significant. However, on a programmatic level, none of these steps will be successful without upper-management involve- ment and support. Once preproject planning is complete and a project enters detailed design, the study authors believe that management should defend the project plans developed by the team and not encourage or allow scope changes unless absolutely necessary. Senior-level managers, in the authors' opinions, should adopt the practice of delegating effective authority to project managers and back up project managers' decisions in order to keep projects on schedule and on budget. They should support the idea that every project will be effectively planned, should understand the process, and should ensure that effective preproject planning is being conducted through questioning at project review meetings; providing resources to support process implementation and training; assuring adequate strategic flexibility (including cost and schedule contingency); maintaining discipline in stick- ing to the plan; and benchmarking performance. Preproject planning is a process that works best with experienced and knowledgeable planning personnel. Given the current potential crisis in the federal work force in terms of resource levels and imminent retirements, it is important to protect and foster this expertise in each organization. With an effective preproject planning process in place and the participants trained, management can monitor the process through in-process audits, performance benchmarking, and direct observation/interaction. Project team members can be held accountable for the level of planning completed and for project performance. Identifying projects as being in trouble late in the execution phase is not an effective means of preventing problems or monitoring progress. Implementation of these principles can improve project team formation and cohesiveness, alignment of project goals, and project scope definition. The results will include the ability to accurately transfer requirements to designers and construction contractors through contract documents, the ability to predict cost and schedule performance with greater accuracy, and the realization of savings through fewer change orders and shorter schedules in the execution of construction projects. FUTURE STUDY Although this study looked at 13 federal agencies and a large body of literature, it was limited in its scope. A more detailed and wide-ranging study could include many more interviews and agencies, analysis of completed project data, and comparison of planning and performance metrics among government agencies and with private industry. The objective would be to go into more depth in identifying the issues that are most important, and sometimes unique, about preproject planning for facility construction by government agencies. One topic that was particularly difficult to develop because of the limited nature of this study was that of matching acquisition strategy with project delivery method, including the level of scope definition required for different acquisition strategies. As noted in Chapter 1, the Federal Facilities Council will sponsor a follow-on study to address this particular issue.