Progress in Improving Project Management at the Department of Energy

2003 Assessment

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
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Progress in Improving Project Management at the Department of Energy: 2003 Assessment Progress in Improving Project Management at the Department of Energy 2003 Assessment 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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Progress in Improving Project Management at the Department of Energy: 2003 Assessment THE NATIONAL ACADEMIES PRESS 500 Fifth 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 authors and do not necessarily reflect the views of the organizations or agencies that provided support for the project. International Standard Book Number 0-309-09180-2 (book) International Standard Book Number 0-309-53122-5 (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 2004 by the National Academy of Sciences. All rights reserved. Printed in the United States of America

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Progress in Improving Project Management at the Department of Energy: 2003 Assessment 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.national-academies.org

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Progress in Improving Project Management at the Department of Energy: 2003 Assessment 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, JR., University of Texas, Austin THEODORE C. KENNEDY, BE&K, Inc., Birmingham, Alabama MICHAEL A. PRICE, Project Management Institute, Newtown Square, Pennsylvania Staff RICHARD G. LITTLE, Director, Board on Infrastructure and the Constructed Environment MICHAEL D. COHN, Program Officer DANA CAINES, Financial Associate PAT WILLIAMS, Senior Project Assistant

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Progress in Improving Project Management at the Department of Energy: 2003 Assessment 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 DesROCHES, Georgia Institute of Technology, Atlanta DENNIS DUNNE, California Department of General Services, Sacramento PAUL FISSETTE, University of Massachusetts, Amherst WILLIAM HANSMIRE, Parsons Brinckerhoff Quade & Douglas, San Francisco, California 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 HENRY SCHWARTZ, JR., Washington University, St. Louis, Missouri DAVID SKIVEN, General Motors Corporation, Detroit, Michigan MICHAEL STEGMAN, University of North Carolina, Chapel Hill WILLIAM WALLACE, Rensselear Polytechnic Institute, Troy, New York ZOFIA ZAGER, County of Fairfax, Fairfax, Virginia CRAIG ZIMRING, Georgia Institute of Technology, Atlanta Staff RICHARD G. LITTLE, Director, Board on Infrastructure and the Constructed Environment LYNDA L. STANLEY, Executive Director, Federal Facilities Council MICHAEL D. COHN, Program Officer DANA CAINES, Financial Associate PAT WILLIAMS, Senior Project Assistant

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Progress in Improving Project Management at the Department of Energy: 2003 Assessment Preface The National Research Council’s Committee for Oversight and Assessment of U.S. Department of Energy Project Management has completed its assigned tasks. It was chartered in 2000 in response to continuing concern in the U.S. Congress over the Department of Energy’s (DOE’s) processes and procedures for managing projects. The chair expresses his appreciation to the committee members for their time, hard work, persistence, and commitment to the interests of DOE and the nation. In its 3 years of operation, this committee has crisscrossed the country to gain input from DOE and contractor personnel at DOE offices and laboratories, as well as headquarters. The committee has had the cooperation of a wide range of DOE personnel, from the secretary through project directors and support staff in the field. It has also had input from a number of DOE contractors and from the DOE Energy Facilities Contractors’ Group. The committee appreciates the time and effort of these people in providing their perspectives and insights on the issues facing DOE project management and on ways to improve DOE project performance. The findings and recommendations of the committee in its three annual reports and two interim reports are derived in large part from the candid comments of more than 200 personnel from DOE and its contractors. The committee appreciates particularly the input from the many people in DOE who are committed to improvements in the organization’s project management. The work of this committee is a continuation of the efforts of the Committee to Assess the Policies and Practices of the Department of Energy to Design, Manage, and Procure Environmental Restoration, Waste Management, and Other

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Progress in Improving Project Management at the Department of Energy: 2003 Assessment Construction Projects (Phase II committee), and it has used its predecessor’s findings and recommendations as benchmarks for measuring progress. The findings and recommendations in the Phase II report, Improving Project Management in the Department of Energy,1 and the previous annual reports and interim letter reports of this committee continue to be valid. Those previous reports should be read in conjunction with this report to obtain a compete view of the status of DOE’s project management, DOE’s accomplishments, and the problems that still need to be resolved. This report assesses progress in improving project management at DOE during the past 3 years, which is enough time to effect significant changes in project management. Corporations have done it in less. However, as discussed in this report, DOE has not fully committed to the steps that private corporations have had to take in order to achieve project management excellence. This report recognizes DOE’s accomplishments in promulgating policies and procedures and the problems that remain to be resolved if these policies and procedures are to be implemented. In particular, some senior DOE executives have pointed out that they do not have the time to spend on project management. That may be, and the committee appreciates the competing demands on these executives’ time. But if senior management does not have the time to devote to projects and does not delegate the authority to people who do, then projects are not the core priority at DOE. This assessment is based on the belief that, for project management improvements to be effective over the long run, project management and project management improvement need a champion reporting directly to the deputy secretary of DOE. Findings and recommendations on this issue go back to the 1999 Phase II report cited above. The prognosis for progress hinges on the premise that unless or until the role of project management champion is identified at a level that demonstrates the will of DOE management to effect significant cultural change, the likelihood that project management improvements will be effective or permanent is slight. In this report, the committee recognizes the efforts made by DOE project directors and others at various sites to solve project management problems and to handle changes created by resource deficiencies through training, internships, procedure development, and other steps at the field level. Unfortunately, although such actions have positive impacts locally on specific projects, they are too few and too isolated to stimulate widespread change within the DOE culture. Thus, the report notes that even though some process improvements have been accomplished, there is much more to be done to improve project management practices. 1   National Research Council. 1999. Improving Project Management in the Department of Energy. Washington, D.C.: National Academy Press.

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Progress in Improving Project Management at the Department of Energy: 2003 Assessment In December 2003, after the committee’s work on this report was substantively complete, the deputy secretary confirmed the department’s commitment to improving project management by creating the position of associate deputy secretary, reporting directly to the deputy secretary, with responsibilities for capital acquisition and project management. This action is a substantial step toward addressing the committee’s recommendations in this report and in previous reports that DOE should have a department-wide champion for project management reporting to the deputy secretary. The committee trusts that this initiative by the deputy secretary will help achieve the permanent institutionalization of the improvements in project management made during the period of the committee’s existence and will help ensure additional needed, ongoing improvements. Kenneth F. Reinschmidt, Chair Committee for Oversight and Assessment of U.S. Department of Energy Project Management

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Progress in Improving Project Management at the Department of Energy: 2003 Assessment 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 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, evidence, 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), Angelo Giambusso, Stone & Webster (retired), Fletcher H. (Bud) Griffis, Polytechnic University, Henry J. Hatch, U.S. Army Corp of Engineers (retired), Martha Krebs, U.S. Department of Energy (retired), Alan Schriesheim, Argonne National Laboratory (retired), 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 recommendations, nor did they see the final draft of the report before its release. The review of this report was overseen by Charles B. Duke (NAE), Xerox Research and Technology. Appointed by the National Research Council, he was responsible for

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Progress in Improving Project Management at the Department of Energy: 2003 Assessment making certain that an independent examination of this report was carried out in accordance with institutional procedures and that all review comments were carefully considered. Responsibility for the final content of this report rests entirely with the authoring committee and the institution.

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Progress in Improving Project Management at the Department of Energy: 2003 Assessment Contents     EXECUTIVE SUMMARY   1 1   INTRODUCTION   7      Background,   7      Review Activities,   8      Organization of the Report,   9      References,   10 2   PROGRESS AND OPPORTUNITIES   11      Introduction,   11      Organization,   13      Policies and Procedures,   16      Human Capital and Professional Development,   22      Recognized Value of Change,   25      Program and Project Planning,   27      Risk Management,   29      Project Controls,   30      Performance Measures,   31      Project Reviews,   34      Acquisition and Contracting,   36      Recommendations,   37      References,   39

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Progress in Improving Project Management at the Department of Energy: 2003 Assessment 3   PROGNOSIS FOR PROGRESS   41      Introduction,   41      The Prospect for Continued Improvement,   42      Project Performance,   44      Momentum for Improvement,   46      Findings and Recommendations,   48      References,   50     APPENDIXES         A   Statement of Task,   53     B   Biographies of Committee Members,   54     C   Committee Fact-Finding and Briefing Activities and Documents Reviewed, February 2003 Through June 2003,   60     D   Compilation of Findings and Recommendations,   70     E   Delegation of Authority as Acquisition Executive,   97     F   Summary of External Independent Reviews for National Nuclear Security Administration, Office of Environmental Management, and Office of Science Projects, FY 2001 Through FY 2003, Covering Only Baseline Validation Prior to Critical Decision 2,   99     G   Correspondence Between Dr. Orbach and Dr. Alberts Regarding the Committee’s 2002 Assessment Report,   109

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Progress in Improving Project Management at the Department of Energy: 2003 Assessment Acronyms and Abbreviations AEP acquisition execution plan ANL Argonne National Laboratory BCWS budgeted cost of work scheduled CD-0 critical decision 0, approval of mission need CD-1 critical decision 1, approval of system requirements and alternatives CD-2 critical decision 2, approval of project baseline CDF Collider Detector at Fermi Laboratory CERCLA Comprehensive Environmental Response, Compensation, and Liability Act CII Construction Industry Institute COO chief operating officer COR contracting officer’s representative CPI cost performance index DoD U.S. Department of Defense DOE U.S. Department of Energy DUS dynamic underground stripping EIR external independent review EM Office of Environmental Management ESAAB Energy Systems Acquisition Advisory Board

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Progress in Improving Project Management at the Department of Energy: 2003 Assessment ES&H environmental safety and health EVMS earned value management system FFRDC Federally Funded Research and Development Center FNAL Fermi National Accelerator Laboratory FYNSP Future Years’ Nuclear Security Plan GAO General Accounting Office GFS&I government-furnished services and items ICE independent cost estimate ICPP Integrated Construction Program Plan ICR independent cost review INEEL Idaho National Engineering and Environmental Laboratory INTEC Idaho Nuclear Technology and Engineering Center IPR internal project review IPT Integrated Project Team LANL Los Alamos National Laboratory LBNL Lawrence Berkeley National Laboratory LLNL Lawrence Livermore National Laboratory M&O management and operations NA-54 NNSA Office of Project Management and Systems Support NASA National Aeronautics and Space Administration NIF National Ignition Facility NNSA National Nuclear Security Administration OECM Office of Engineering and Construction Management OH Ohio Field Office OMB Office of Management and Budget OMBE Office of Management and Budget Evaluation OPC other project costs ORNL Oak Ridge National Laboratory PA&E Office of Program Analysis and Evaluation PARS Project Assessment and Reporting System PBC performance-based contracting PDRI Project Definition Rating Index PEP Project Execution Plan PMCDP Project Management Career Development Program

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Progress in Improving Project Management at the Department of Energy: 2003 Assessment PMP Project Management Practices PMSO project management support office PNNL Pacific Northwest National Laboratory PSO Program Secretarial Office SC Office of Science SLAC Stanford Linear Accelerator Center SNL Sandia National Laboratories SPI schedule performance index SRO Savannah River Operations SRS Savannah River Site TEC total estimated cost TPC total project cost TYCSP Ten Year Comprehensive Site Plan UT University of Tennessee VE value engineering

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