Project Management Institute

The big time

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Marek Adamek, Arcadis Poland, Warsaw, Poland

THE FAME AND GLORY OF RUNNING A MEGAPROJECT CAN BE TEMPTING—BUT NOT EVERYONE IS UP TO THE TASK.

BY SARAH FISTER GALE // PHOTOS BY BARTEK DURCZEWSKI

There's no escaping them. From massive infrastructure investments in Asia to sprawling pipelines in Latin America, megaprojects are everywhere. And even in a dismal economy, they usually come with a decent budget. Landing a coveted leadership spot on one can be a career-defining coup, a powerful vehicle for showcasing strategic management, leadership and teambuilding abilities. But that's only if project managers are able to scale up their experiences and build a rapport with the stakeholders who will look to them to lead the way—and blame them if things go wrong.

In this economy, managing a super-size project means bringing it in on time and on budget, no matter what it takes. There's no room for error, and no budget cushion for projects that already have millions of dollars, pesos or yen attached to them.

Not everyone has what it takes, says Bob Prieto, senior vice president at Fluor Corp., an engineering, procurement, construction and maintenance service company in Princeton, New Jersey, USA.

Megaproject managers may not need to know the details of the technical issues, but they should appreciate and have insight into the issues that their teams will face.

—JOHNNY XU, SHIMIZU CORP., SINGAPORE

“A lot of owners only take on megaprojects periodically, some only once in a generation,” he says, noting that many companies don't have the experience in-house to manage projects of such a grand scale.

“More and more owners are recognizing the unique skill set required to oversee a megaproject and acknowledging it is broader than their own experiences,” says Mr. Prieto, who has been tackling megaprojects for 25 years or so.

That creates tremendous opportunities for strong project or program managers who can come in with the guidance, risk management and streamlined processes to take control.

They should also be willing to “engage with the client at a very early stage,” Mr. Prieto says. “This gives them the opportunity to help set the strategy and map it to the business objectives that will drive decision-making.”

If, for example, cost is the primary concern, the project management approach will be different than if time or another component is the focus.

Figuring out the motivation is particularly critical on megaprojects, which are notorious for blown deadlines and bloated budgets. It's not too hard to see why—the slightest increase in the budget or delay in the schedule can have a cascading effect on the whole project.

“The increases aren't incremental, they are exponential,” Mr. Prieto says. And the project managers who recognize this and can keep the project on track are the ones who tend to stand out from the pack.

And that's an awfully nice position to be in—especially in a slumping economy.

“Typically these projects are revenue-generating so every additional day of production has a huge impact,” Mr. Prieto says.

Megaproject management operates under a whole different set of rules.

On smaller or even regular-size initiatives, project managers can focus on the specific technical issues at an operational level. But the megaproject manager must take a broader approach, says Johnny Xu, senior planning engineer at Shimizu Corp., a global general contractor, architecture and engineering firm in Singapore.

“Besides having a keen understanding of the project goals and strategies, megaproject leaders must have macro-level knowledge of the political and cultural issues surrounding the project,” he says. “They must be familiar with local construction practices and customs.”

And yet they're not entirely exempt from keeping up on the action at the micro-level, either.

“They may not need to know the details of the technical issues, but they should appreciate and have insight into the issues that their teams will face,” Mr. Xu says.

Overseeing a megaproject is not simply a matter of taking conventional project management experience and applying it on a larger scale. There are fundamental differences that can make or break a megaproject manager, Mr. Prieto says, particularly when it comes to small flaws in the system.

“Little things happen on typical projects all the time that have no impact on the project outcome,” he says. “But on a megaproject, those same little surprises can kill you.”

While visiting the remote site of a recent construction megaproject, for example, he noticed two team members kept returning to a storage facility for new nuts and bolts as they worked on a hopper. Intrigued, Mr. Prieto investigated and discovered the construction required eight different kinds of nuts and bolts, each of which required a separate tool. When asked why, the engineering group explained the choices were made to optimize the design—smaller bolts and screws cost less. The savings amounted to US$147 per hopper. Yet without realizing it, the team racked up at least US$10,000 in lost efficiencies due to the added time the contractors spent collecting different tools and materials.

“On a small project no one has to worry about eight nuts and bolts, but in a megaproject, that creates major problems and financial inefficiencies,” he says.

WHEN GOOD

PROJECTS GO BAD

No one wants their projects to fail, of course. But with megaprojects, the stakes are even higher for the company's bottom line—and the project manager's career.

When a megaproject fails or even just doesn't quite live up to expectations, it's seen as the project leader's fault even if other factors were to blame.

There's always the risk that unforeseen events will cause problems, says Mansour Almalik, Almalik Holding Co. To reduce the impact, he encourages project managers to document everything that happened on the project, including why failures occurred, the rationale for decisions and the lessons learned.

“Whether it's an issue of funding, lack of resources, hostile circumstances or environmental challenges, the project manager should make clear, through good documentation of events, what happened and why,” he says.

That takes on added importance if the project manager wants to move to a different position or take a job at another company.

“You can only explain why a project failed through clear documentation,” Mr. Almalik says. “At least you will be able to say ‘The failure was due to these three events that were beyond my control.’”

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“On megaprojects it's all about standardization,” Mr. Prieto says. “The decisions project managers have to make to be successful are so much more strategic in nature.”

That sometimes means looking at things from a different perspective. “The question is not ‘What size bolts should we use?'” he explains. “It's about making choices that will scale up, then choosing designs, materials and schedules that will support those decisions.”

ON THE CLOCK

Those same rules of scale apply to schedules. On a megaproject, meeting—or missing—deadlines can have a greater impact downstream, says Mansour Almalik, president of Almalik Holding Co., an investment and business development company in Riyadh, Saudi Arabia. Even making a small adjustment on a calendar can mean a monumental shift on a large project.

So if a megaproject manager can manage to keep all the elements on schedule, it's quite a feat.

“Time is money. If you can complete a megaproject on time, that's a big success. The most successful megaproject managers are those who can manage the different vendors, contractors and tasks simultaneously,” Mr. Almalik says. “This is skilled management.”

TIP Choose wisely.

“The level of complexity on these projects is huge. The project manager is responsible for delivering the project, so that person should have the right to choose the best people for the job,” says Marek Adamek, Arcadis Poland, Warsaw, Poland. “There should never be too little time to build the team.”

And the better the relationship between the project manager, the project owner and vendors, the more likely it is that things will run smoothly.

“For a megaproject, the management and communication skills carry more weight than those smaller-sized projects where technical and operational knowledge are more important,” Mr. Xu says. “The project manager must be able to understand the different needs of the stakeholders and talk to them with frequency, and to share those needs with his or her own boss and the subcontractors.”

Massive teams are obviously part and parcel of megaprojects, and that often translates to teams scattered around the globe. Yet even though virtual teams have become de rigeur, meeting in person still ranks as one of the best ways to build the necessary rapport.

“Even with current high-tech communications, nothing is like face-to-face management coordination,” Mr. Almalik says.

And when problems arise—as they inevitably will—close communication and influence with the project owner allow megaproject managers to take fast, corrective action.

“If you can't avoid problems, you must solve them as soon as they occur,” warns Mr. Almalik. “This is how success is defined.”

That requires constant risk analysis so you can predict and plan for issues before they arise.

“On large projects, you have to have a living risk analysis,” Mr. Prieto says, adding that he runs Monte Carlo simulations on a continuous basis.

“We see it as an ‘opportunity analysis,’ where we look at what action we can take that could result in improvements to the schedule. When you know the value and chance of the actions, you can think through the potential benefits and risks,” he says.

TIP Attention up-and-comers, here's your chance to nab some of the spotlight.

“There are definitely opportunities on megaprojects for young project managers to get amazing experience,” says Mansour Almalik, Almalik Holding Co., Riyadh, Saudi Arabia. “Working on a megaproject—even if you are managing a sub-project within a mega project—can be a big boost to your career.”

He urges younger project managers to seek out an experienced mentor at the level of their boss, or boss’ boss, and to ask for their advice throughout the project.

“If you can save a day in the closeout of a project by changing a sequence, that can add huge value,” Mr. Prieto explains.

And if the plan fails, at least you can show the process you used for making that decision.

RUNNING THE RAILS

The Warsaw, Poland arm of global engineering and management giant Arcadis is currently managing several massive road and rail projects in the country. Marek Adamek, CEO, relies on a small group of project managers with a proven track record on supersize projects.

“On megaprojects, successful project managers must have the right mix of management skills and leadership abilities,” he says. And they must be able to establish themselves as authority figures to drive the direction of the project. “They have to be able to influence everyone on the team, including the owners.”

As an example, he cites a multiyear rail project that's now nearing completion. Early on, it became clear that the materials supplier would not be able to deliver tons of material to the building site on time due to cash-flow and logistic constraints. That sort of problem is normally considered the vendor's responsibility, says Mr. Adamek, but Jerzy Zalewski, the Arcadis project manager leading the effort, took a different approach.

“When we manage a project, we see everyone's problems as our problems and we strive to help solve them,” Mr. Adamek says.

Mr. Zalewski was able to convince the project owner to help the vendor by advancing payment on the materials and providing the transport infrastructure. That, in turn, enabled the team to get the materials to the site on time and meet the project deadline.

“He was able to show the owner that, without helping the contractor, the project would be impossible to realize,” he says. “Fortunately, Mr. Zalewski is very experienced and very well-known in the rail industry. He had such high authority among all the parties involved in the project [that] the stakeholders trusted his decisions.”

Clearly there's a mega-payoff for defining clear expectations for communication among team members, vendors and staff. “Those are the people who will make or break your project,” Mr. Almalik says. “They can solve problems or they can create delays.” PM

EXPLORE MORE ON MEGAPROJECT MANAGEMENT IN A CLOSER LOOK»

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

PM NETWORK FEBRUARY 2009 WWW.PMI.ORG

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