1
Introduction

BACKGROUND

In response to a directive from the Committee of the Conference on Energy and Water Development of the 105th Congress (U.S. Congress, 1999), DOE requested that the National Research Council (NRC) appoint a committee to review and assess the progress made by the department in improving its project management practices. The NRC appointed the Committee for Oversight and Assessment of U.S. Department of Energy Project Management, under the auspices of the Board on Infrastructure and the Constructed Environment (BICE), to undertake the oversight and assessment of DOE project management. The committee completed its planned 3-year review with publication of Progress in Improving Project Management at the Department of Energy: 2003 Assessment (NRC, 2004a). (See Appendix A for a complete list of NRC reports on DOE project management.) In its final assessment the committee made the following observations:

DOE does not have a uniform set of objective measures for assessing the quality of project management. The lack of objective measures or even reliable historic project data makes it difficult to assess progress in improving project management. It also makes it difficult to build confidence within GAO, Congress, OMB, and the public in the department’s ability to manage the money it spends on its projects. Evidence continues to be anecdotal rather than objective, quantitative, and verifiable. The absence of objective performance measures prevents the identification of best practices and impedes widespread improvement in project management throughout the agency. (NRC, 2004, pp. 31-32)

In addition, it observed that

benchmarking performance and management processes throughout a project’s life cycle and from different perspectives can provide a basis for a measure of improvement of project management procedures. Both internal and external benchmarking perspectives are useful and should be a regular part of DOE benchmarking procedures. (NRC, 2004, p. 33)

The Department of Energy responded to the NRC report by forming an internal task group, led by the Office of Engineering and Construction Management (OECM), to develop performance measures and benchmarking procedures and asked the NRC to provide additional assistance to guide this effort. For this purpose, the NRC’s Board on Infrastructure and the Constructed Environment reconvened the Committee for Oversight and Assessment of U.S. Department of Energy Project Management. Six members of the earlier committee were involved in this study, together with two new members. The committee has experience in academic, government, and industrial settings and extensive knowledge of project management, process improvement, performance measurement, and benchmarking. (See Appendix B for the committee’s statement of task and Appendix C for biographies of the committee members.)



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Measuring Performance and Benchmarking Project Management at the Department of Energy 1 Introduction BACKGROUND In response to a directive from the Committee of the Conference on Energy and Water Development of the 105th Congress (U.S. Congress, 1999), DOE requested that the National Research Council (NRC) appoint a committee to review and assess the progress made by the department in improving its project management practices. The NRC appointed the Committee for Oversight and Assessment of U.S. Department of Energy Project Management, under the auspices of the Board on Infrastructure and the Constructed Environment (BICE), to undertake the oversight and assessment of DOE project management. The committee completed its planned 3-year review with publication of Progress in Improving Project Management at the Department of Energy: 2003 Assessment (NRC, 2004a). (See Appendix A for a complete list of NRC reports on DOE project management.) In its final assessment the committee made the following observations: DOE does not have a uniform set of objective measures for assessing the quality of project management. The lack of objective measures or even reliable historic project data makes it difficult to assess progress in improving project management. It also makes it difficult to build confidence within GAO, Congress, OMB, and the public in the department’s ability to manage the money it spends on its projects. Evidence continues to be anecdotal rather than objective, quantitative, and verifiable. The absence of objective performance measures prevents the identification of best practices and impedes widespread improvement in project management throughout the agency. (NRC, 2004, pp. 31-32) In addition, it observed that benchmarking performance and management processes throughout a project’s life cycle and from different perspectives can provide a basis for a measure of improvement of project management procedures. Both internal and external benchmarking perspectives are useful and should be a regular part of DOE benchmarking procedures. (NRC, 2004, p. 33) The Department of Energy responded to the NRC report by forming an internal task group, led by the Office of Engineering and Construction Management (OECM), to develop performance measures and benchmarking procedures and asked the NRC to provide additional assistance to guide this effort. For this purpose, the NRC’s Board on Infrastructure and the Constructed Environment reconvened the Committee for Oversight and Assessment of U.S. Department of Energy Project Management. Six members of the earlier committee were involved in this study, together with two new members. The committee has experience in academic, government, and industrial settings and extensive knowledge of project management, process improvement, performance measurement, and benchmarking. (See Appendix B for the committee’s statement of task and Appendix C for biographies of the committee members.)

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Measuring Performance and Benchmarking Project Management at the Department of Energy The committee reviewed ongoing DOE benchmarking efforts, conducted brainstorming sessions, and convened discussions with OECM and DOE program office representatives. (See Appendix D for a list of participants in the committee briefings and discussions.) The committee appreciates the valuable contributions of the DOE personnel who participated in the committee sessions. The committee urges all program offices and project directors to become actively engaged in DOE’s efforts to develop and implement effective performance measures and benchmarking processes. In past reports, the committee emphasized the need for collecting data to both assess project performance and support project management decisions (NRC, 2001, 2003, 2004a). DOE has implemented the Project Analysis and Reporting System (PARS). However, as noted in the 2003 assessment, current project performance data available in PARS are not sufficient for assessing DOE project management because of problems with inconsistent data and the lack of historical trend data. PARS was created to collect high-level data for senior management review. The committee has found that such systems are more likely to function well if the collected data are also used at the project level. OECM recognizes these problems and opportunities and is currently working to improve the reliability and applicability of PARS; therefore, these issues are not addressed further in this report. When PARS is able to provide accurate and timely data, and when DOE can accurately track these data over time, it will be an important part of performance assessment and, if acted on, will contribute to process improvement. In 2001, the committee conducted a government/industry forum on the owner’s role in project management (NRC, 2002). The case studies presented at the forum told of companies experiencing a marked improvement in project success. Their success was attributed at least in part to a commitment to process improvement through consistent use of company-wide performance measures. They achieved success by focusing on the project management process, making performance measures part of the core values of the company and assuring that the measures were consistent throughout the organization. The companies developed a corporate language for defining and controlling the project management process and developed performance measures to guide process improvement. The performance measures and benchmarking procedures discussed in this report are tools that can help DOE make performance measurement part of its core values and processes. The committee notes that process improvement can be assessed by analysis of performance trends for projects initiated over a period of time (NRC, 2004a). Although it may be years before benchmarking produces observable significant results throughout the DOE, it is essential to long-term performance improvement and should start now. In addition to long-term benefits, an investment in a benchmarking process provides immediate feedback to project directors as they assess their management procedures and the information they use to make decisions. The NRC recently published the report Intelligent Sustainment and Renewal of Department of Energy Facilities and Infrastructure (NRC, 2004b), which discusses DOE’s need for effective performance measures and benchmarking for managing facilities after projects are completed. The report suggests an asset life-cycle approach that addresses the integration of management decisions from project inception through facility disposal. To achieve this integration, metrics and benchmarking for all phases need to be integrated. The facilities and infrastructure report included a detailed set of performance measures and approaches to benchmarking that should be considered when developing a system for project management. The information and advice presented in this report are intended to help DOE to develop and implement effective performance measures and an effective benchmarking program for project management. However, this is only a beginning, and an ongoing and consistent commitment to continuously refine and implement the process will be needed. Such efforts have worked in the private sector and at other federal agencies (NPR, 1997), and they can be made to work for DOE.

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Measuring Performance and Benchmarking Project Management at the Department of Energy ORGANIZATION OF THIS REPORT Following the background information on recent NRC oversight and assessment of DOE project management given in Chapter 1, Chapter 2, “Project Management Performance Measures,” describes performance measures as part of an ongoing system for controlling process improvement and in terms of a paradigm that includes input, process, outcome, and output measures. Chapter 2 also describes the characteristics of effective measures and suggests measures for use at the project, program, and departmental levels. Chapter 3, “The Benchmarking Process,” describes the benchmarking process developed by the Construction Industry Institute to assess and improve construction project management. The chapter includes a roadmap for implementing a benchmarking system and the critical factors affecting the performance of these systems. The characteristics of internal versus external benchmarking and approaches to quality control are also discussed. Chapter 4, “Implementation,” provides a perspective on how the information in this report can be used by DOE to implement an effective performance measurement and benchmarking system. As mentioned above, this report includes four appendixes: a list of NRC reports on DOE project management, the statement of task, biographies of committee members, and a list of DOE personnel who participated in discussions with the committee. REFERENCES NPR (National Partnership for Reinventing Government Reports, formerly the National Performance Review). 1997. Serving the American Public: Best Practices in Performance Measurement. Available online at http://govinfo.library.unt.edu/npr/library/papers/benchmrk/nprbook.html. Accessed March 14, 2005. NRC (National Research Council). 2001. Progress in Improving Project Management at the Department of Energy, 2001 Assessment. Washington, D.C.: National Academy Press. NRC. 2002. Proceedings of Government/Industry Forum: The Owner’s Role in Project Management and Preproject Planning. Washington, D.C.: National Academy Press. NRC. 2003. Progress in Improving Project Management at the Department of Energy, 2002 Assessment. Washington, D.C.: The National Academies Press. NRC. 2004a. Progress in Improving Project Management at the Department of Energy, 2003 Assessment. Washington, D.C.: The National Academies Press. NRC. 2004b. Intelligent Sustainment and Renewal of Department of Energy Facilities and Infrastructure. Washington, D.C.: The National Academies Press. U.S. Congress. 1999. House of Representatives, Energy and Water Appropriations Bill, 2000. HR 106-253. Washington, D.C.: Government Printing Office.

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