Project Management Institute

Office of Energy Efficiency and Renewable Energy, Washington, D.C., USA

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PHOTO BY CADE MARTIN

kara h. Peralta, PMP and scott E. hine, PMP

A federal organization saw its project portfolio budget increase tenfold practically overnight—and had to reassess its project management process.

Not every black swan is a catastrophe. Some of these unexpected game-changing events represent decidedly auspicious opportunities. From the viral success of a toy to the surprise discovery of an oil field, unexpected windfalls can have enormous positive impact on an organization.

However, handling them requires just as much flexibility, leadership and project management skills as disastrous black swans. Otherwise, what could be a great opportunity can turn into a major debacle.

Just look at the American Red Cross. After the 11 September 2001 terrorist attacks, the humanitarian aid organization was faulted for diverting the majority of donations not to victims’ families but to other Red Cross programs.

The Office of Energy Efficiency and Renewable Energy (EERE), which falls under the umbrella of the U.S. Department of Energy (DOE), faced this type of risk when it received an additional US$16.8 billion in funding for projects under the American Recovery and Reinvestment Act of 2009. The agency, which typically manages US$2 billion in projects annually, didn't anticipate a sudden influx of funding that ballooned its budget almost tenfold in a matter of days.

“There's no such thing as having too much money, but this added a lot of complications and complexities to our office,” says Scott E. Mine, PMP, acting deputy assistant secretary for business administration and director of EERE. He's responsible for the execution and oversight of the Recovery Act portfolio, which includes approximately 3,000 projects. “We had to be extremely nimble to be able to manage such a visible and high-volume portfolio of projects.”

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The U.S. National Nuclear Security Administration also dealt with a black swan that caused a huge increase in scope and budget. The agency's work developing G2, a state-of-the-art project management information system to manage the Global Threat Reduction Initiative, earned it the PMI 2010 Distinguished Project Award.

The American Recovery and Reinvestment Act, which included EERE’s provision, was signed into law in February 2009. the legislation outlined how the funds were to be spent and a deadline to allocate all of it by september 2010. that meant that within the next 18 months, the office had to announce its grant programs, solicit and collect applications, perform merit reviews, negotiate and award grants and cooperative agreements, and get the money out to the recipients.

“The biggest risk was managing the magnitude of the work in the time allotted,” says Mr. Hine, who was the acting program manager.

EERE was apportioned US$2.5 billion for discretionary projects, with the rest falling into the agency's 10 base programs: biomass, geothermal technologies, building technologies, federal energy management, industrial technologies, solar energy technologies, vehicle technologies, fuel-cell technologies, and wind and hydropower technologies. As part of the allocation process, the project team had to make sure the funds went to initiatives that met the goals of the Recovery Act—which included creating long-term jobs and bolstering the U.S. economy—and that the recipients had the ability to deliver the promised results.

All of this had to be accomplished under intense public scrutiny in a political environment divided over the Recovery Act, Mr. Hine notes. “it was a key platform for a newly elected president, and there was a lot of political pressure.”

He turned to his own military background to deal with the pressures and risks in those early days. “Things happen all the time on the battlefield that you don't expect. But if you can stay calm and respond rapidly, you can accommodate any necessary course corrections,” he says.

As soon as EERE discovered that it might be awarded a vast sum, executives brought everyone in the office together to create a plan, identify risks, and assemble specialized teams to focus on specific projects and goals, such as reviewing proposals in each category.

“Our leadership thought through what we had to do and how this would impact our portfolio of projects, so that when it happened we could hit the ground running,” says Kara H. Peralta, PMP, performance analyst at EERE.

Creating teams with their own focuses enabled everyone to move forward on their tasks quickly and to make the most of the limited schedule.

“For a while, EERE took best practices from matrixed organizations,” she says. “We pulled people with the right skill sets from across the organization to be part of teams focused on a specific requirement or action. Once the requirement was met, the individuals were either sent back to their regular duties or placed on another team to meet the next set of requirements.”

EERE also worked closely with the DOE Office of Public Affairs and other departmental entities to share its plans and success stories, and to create a level of transparency.

NOT JUST PROJECT MANAGEMENT AS USUAL

Allocating the money was only the first step. The black swan boon led to another sizeable risk: The federal government was holding the agency accountable for delivering the expected project results.

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To ensure its infrastructure could accommodate such a substantial portfolio, the EERE team reviewed existing processes, Ms. Peralta says.

“some of the processes that didn't scale had to do with project reporting up through the chain,” she notes. in the past, when EERE provided management oversight to projects, the teams would report to individual technology development managers within programs, such as the leader of the Federal Energy Management Program or the Vehicle Technologies Program. Those program managers would then share relevant project data with senior stakeholders.

“But that wasn't optimal on a large scale,” Ms. Peralta says. “We found that once the number of projects increased, we needed a more centralized reporting process, so that all the data would be in one place, and in the same format so that it could be easily analyzed and shared.”

In response, her team devised a centralized project-reporting process that included requirements for data-sharing and guidance for measuring performance.

EERE was also aware that many of the financial assistance recipients had never received federal funding before and needed additional guidance early on.

“Some of the additional guidance was issued as formal guidance letters and memorandums, covering topics known to be problematic for recipients,” Ms. Peralta says. Other guidance was provided as direct technical assistance to recipients, which was performed by project officers and subject matter experts. We tried to have those conversations up front so we could head off problems before they occurred.”

STEPPING UP

Black swan events—even those that seem like windfalls—catch project professionals completely unawares. But strong leadership and a focused team can mitigate risk.

“In times like this there's no room for rogue people who go off and do things on their own,” Mr. Hine says. “You have to move forward in unison, make sure everyone understands what you are doing and maximize the ability of your people.”

You also have to acknowledge how hard everyone works to make these opportunities a success, Ms. Peralta adds. “We made a huge effort to make sure the right projects were selected, and our leadership team celebrated that,” she says. “They championed our goals, recognized our achievements and congratulated the entire team for our hard work. When you are working so hard on something, that recognition means a lot.”

—Sarah Fister Gale

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 APRIL 2011 WWW.PMI.ORGK

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