Project management reform experience in a public sector environment

Abstract

In 2003, Government of Punjab, Pakistan launched an initiative to introduce modern project management practices in public sector projects. The initiative was described in “Project Management in Pakistan Government” published in the 2005 Project Management Institute (PMI®) Global Congress (Khan & Shiek, 2005), with a discussion on the government's intervention strategy and the steps required to achieve its goal. This paper reviews the progress of the project management initiative against those steps and discusses some of the important outcomes that have helped to sustain the reform. It looks at performance in areas like project management training, creation of PMOs, use of Earned Value for performance measurement, and development of new standards. The lessons learned in Punjab Government are particularly relevant in the region for policy makers looking to benefit from the use of formal project management practices to improve project delivery.

Introduction

Punjab is Pakistan's largest province with a population of 74 million. In July 2003, the Government of Punjab, Pakistan initiated a program to induct modern project management practices into the effective management of its development projects. This program was initiated following the directions of Punjab Chief Minister Chaudhary Pervaiz Elahi under the name ‘Chief Minister's Project Management Initiative (CMPMI)’. A special Project Management Unit (PMU) was created and placed under the supervision of Chairman Planning & Development Board, Suleman Ghani to carry out the reform. In the three years since the start of the initiative, the provincial development portfolio has grown in value from US$ 4 billion to US$ 7.5 billion. This large increase in spending makes the success of the initiative more vital than ever since it will define the government's ability to deliver on its commitments to the public, now and in the future.

The idea to redo the entire public development mindset has been a momentous endeavor. In its three years of existence, the CMPMI has matured from a proof-of-concept to a mainstream government function, following the recent decision to incorporate project management as a core function of the central Planning & Development Department in the form of the Directorate of Monitoring & Evaluation. The CMPMI forms a very useful change management experience in the public sector in this region – one that has resulted in the accumulation of a significant body of lessons learned in public sector intervention, as well as valuable insight on the process of initiating and sustaining change.

This paper will attempt to consolidate the learning attained in the three years since the initiative, including an analysis of the Punjab government's strategy in context of existing literature on managing change, the achievements of the reform, and the problems that are prevalent in public-sector project environments. The paper tries to provide a reasonable assessment of the effort required to replace traditional project management with modern practices, and identify some new areas that can be explored to build upon the existing momentum. However, it is important to first understand the objective of the reform and its origins.

Background

At the time the paper “Project Management in Pakistan Government” (Khan & Shiek, 2005) was published in the 2005 PMI Global Congress, the CMPMI had been recently formulated and was only beginning to gain momentum. The initiative had originated from a top-level review of prevalent project management practices to identify bottlenecks in the development process. Unlike former similar efforts, this initiative saw the full support of senior decision-makers and included within it a comprehensive institutional setup to take the reform forward. A Provincial Steering Committee for Project Management (PSCPM) was created under the chairmanship of the Chief Secretary (senior-most bureaucrat in the province). It included amongst its members key decision makers, such as Chairman Planning & Development, Secretary Finance, Secretary Communication & Works, Secretary Irrigation & Power,

Secretary Implementation & Coordination, Secretary Information Technology and Head of PMU. The main objective of this committee was to maintain strong ownership of the reform during its early phase and ease the transition across government department in the following years. The actual job of identifying and implementing project management practices was given to the Project Management Unit (PMU). The PMU was attached with the Planning & Development Department – the central department responsible for development projects – in order to grant it more flexibility and authority in its functioning.

Some of the specific items on the reform agenda, as highlighted in the previous paper were: (a) improving scope definition, (b) automating workflow, (c) speeding up the consultant selection process, (d) delineating policy for major capital projects, (e) creating dedicated project teams, (f) introducing a better estimation system, (g) implementing Earned Value measurement, (h) enhancing project management skills, (i) creating reference projects, and (j) enabling better access to information (Khan & Shiek,, 2005, p 6-7).

Strategy

An important issue that was identified in the earlier paper was that the success of the reform would depend on maintaining the perceptions of stakeholders in line with the intentions of the reform body. Due to the nature of intervention, the level of resistance against change has generally remained high throughout the effort. Even though the initiative has had active political support, it required a well thought-out change management plan to garner the institutional support necessary to accept and implement the changes.

In 1987, Beckhard and Harris published a formula to manage wide-ranging change in complex environments. They found out that the only way to overcome the natural resistance to change is to make sure that: (a) everyone fully understands that the present situation is not satisfactory, (b) there is a realistic positive vision of what the system can and should look like in the future, and, (c) the change process used to roll out the reform includes some achievable early wins (OECD, 2005, p 31).

The intervention of the CMPMI has largely been based on these guidelines. The most formidable challenge in the early stages of the reform effort was to create sufficient awareness about the present situation of public-sector projects. It was also important to highlight the increase in the severity of the problems if spending continued to grow at this pace without a suitable project management system. To achieve this, the PMU focused on establishing a rigorous monitoring and evaluation regime to study key projects. The results of this study were then used to show the Chief Minister a cluster of projects that showed considerable increase in project cost and scope (Exhibit A), and still continued to consume money and resources despite having passed their finish dates. With commitment from the top-level decision maker firmly in place, similar analyses were shown to stakeholders at multiple levels to ensure that everyone understood that a problem existed and effort needed to be made to bring change.

Exhibit A

Exhibit A

Once sufficient awareness about existing conditions was created, the initiative was taken to the next stage of bringing change – providing a vision for the solution. Using existing literature on the accomplishments of project management across the world, examples of successful international projects that used tried methods and by holding workshops for senior bureaucrats to explain how the new practices could potentially resolve current issues, the PMU was able to create an understanding across the government that the problems being faced locally were not unique, but well-documented issues with tried solutions.

Finally, with optimistic expectations in place, the PMU was given access to two large irrigation projects, the Rehabilitation of Taunsa Barrage (US$ 500 million) and the Lahore Chenab Canal East (US$ 250 million). Even though the PMU was not involved in the client role, it intervened in client functions by creating client-side schedules, establishing PMOs, refining contract conditions and providing project management expertise. Only one year into the exercise, the three-year Taunsa Barrage project was able to reach 63% completion – an unprecedented achievement in the history of the province.

Achievements

CMPMI, from the very onset, has been guided by the PMI's A Guide to the Project Management Body of Knowledge (PMBOK® Guide) due to its adoption as the project management standard for the Government of Punjab. This by itself clearly indicates that the reform effort has been successful in getting public-sector project management recognized as a specialized area of expertise that requires the presence of a well-developed framework to build upon. With this realization in place, the next step was to create awareness that large capital projects (which form nearly 70% of all development spending) required separate policies to ensure success as compared to regular public development activities (Government of the Punjab, 2006a).

The unique nature of public sector capital projects was formally recognized in the ‘Strategy for Procurement Reform in the Punjab Government’ in 2006 due to the efforts of the PMU. A dedicated section was included in the reform strategy calling for effective project management, creating a permanent place for it in the future procurement strategy of the province. The policy states:

“A major part of public procurement is of a capital nature (building, roads, canals, etc)…public development projects are frequently challenged in terms of time, scope and cost targets. Given the significance and contribution of capital projects and their share in the overall procurement budget it is important to update existing standards, rules, and guidelines to ensure their effective and timely execution. Revision of existing systems on the basis of modern Project Management and procurement practices can make the process more effective in delivering capital projects on time and budget.” (Government of Punjab, 2006b, p 5-6)

In addition to this, several other aspects of public sector project management have been completely overhauled in the three years of the reform. Many of these have already been widely accepted as having a positive impact on the delivery of projects in the province. Some key achievements in this regards are mentioned below.

PMO Engagement Model

The overall management approach to public sector projects has taken a turn towards Project Management Offices (PMO) over the years, with the number of dedicated PMOs rising from just 2 in 2004 to over 10 at the end of 2006. This shift stems from the recognition of the advantages of functional teams versus general management setups based on hierarchical and regional bands. The idea of the PMO calls for the use of functional specialists who can work as a team to manage the complete lifecycle of the project (i.e. pre-planning to post-execution) (Hill, 2004, p 253). Following the launch of the CMPMI, PMOs were implemented for three large major provincial projects Rehabilitation of Taunsa Barrage, Rehabilitation of Lahore Chenab Canal East and the Computerization of Land Revenue Records (US$ 0.6 billion). Since then, multiple government departments have opted to place dedicated project teams to plan and execute projects which are composed of individuals with specific specialized skill sets generally needed for large and/or complex projects. Some of the other large projects that are now being executed under the PMO model are: Lahore Ring Road (US$ 1.8 billion), Lahore-Sialkot Motorway (US$ 500 million), Software Technology Park (US$ 170 million) and Jinnah Burn Centre (US$ 15 million).

Delineation of Roles & Responsibilities

Public sector projects generally involve multiple stakeholders, both on the client side, such as the sponsoring department, executing department, supporting department, etc, and the consultants and contractors side (often other public bodies). In a project environment this setup adversely affects execution speed due to the fact that decision-making power does not lie with any one authority in charge of the project. Often delays are unpredictable and difficult to control even if a single department raises an objection (due to the inbuilt multi-layer approval structure).

The creation and use of PMOs for individual projects has allowed a new solution to this problem. Since projects are now under the control of dedicated project teams, the head of the project, generally the Project Director, has been granted Category-1 powers (similar to those granted to Secretaries of the Government) allowing him/her complete financial control over his/her project, the authority to induct new staff and take project-level decisions without seeking approval from the parent department. For higher level decisions, for instance those that affect scope, cost or time, the concept of Steering Committees has been introduced. Steering Committees are now formed for each project to oversee the PMO. These consist of senior bureaucrats from stakeholder departments (including Planning & Development and Finance) as well as the Project Director, who serves as the Secretary of this committee. All key matters are referred to a project's Steering Committee, where the decision is taken immediately without referring to multiple departments. This has vastly expedited decision-making as a whole on projects.

Consultant Selection Guidelines

The selection of consultants, identified as one of the initiative's key interventions, has been a bottleneck that has caused concern to departments due to its lengthy process. Typically, engaging consultants required anywhere between three month to six months of processing time, with the risk of this time increasing two-fold in case the lack of suitable candidates necessitated re-advertisement. Even the engagement of individual consultants, often necessary for small yet critical segments such as bid evaluation and preparation, required lengthy paperwork and processing times.

Based on the early identification of this problem, the CMPMI created a streamlined selection guideline that offers users greater flexibility in engaging consultants (both, individuals and firms), faster turnaround times and inclusion of internationally-accepted evaluation techniques such as Quality Based Selection (QBS) and Design Competition. In addition to this, project directors now have complete control over project-related consultancies (as head of the Consultant Selection Committee), with the power to approve TORs for small consultancies, appoint individuals as consultants and evaluate and appoint any consultancy (instead of seeking approval from the central Planning & Development Department) (Government of the Punjab, 2006c).

Capacity Building

CMPMI has focused heavily on building up project management capacity in all stakeholders of public projects, i.e. government departments, consultants and contractors. Due to the close integration of PMI standards with public policy, the government has placed great stress on PMP certification. The strategy to build project management expertise has been two-fold: pull-based (demand) and push-based (supply).

On the demand side, the government has taken four steps to encourage conversion: (i) recommending the use of one Project Management Professional (PMP®) for every PKR billion (US$ 180 million) of public development spending, (ii) giving preference to PMPs as project directors, (iii) giving preference to PMPs in project management-related posts in PMOs (hired at competitive salaries), and (iv) granting PKR 5,000 monthly allowance to government officers who clear the PMP certification. On the supply side, the government through the Punjab Information Technology Board (PITB) has created an extensive training system to produce the large number of PMPs required to meet upcoming need. Training courses are offered free to government employees and at 80% subsidy to private sector employees. Regular seminars and workshops for senior-level government officers are also being held to create top-down push towards building PM capacity. This strong show of commitment by the government has resulted in an increase in certified PMP professionals, up from 2 in 2002 to over 50 at the time of this publication. The monthly training courses have been completely booked for several months in advance due to unprecedented increase in demand.

Public-Private Partnership Model

The CMPMI has been closely linked with the PMI Lahore Chapter ever since its promulgation. In the past three years this relationship has matured to a level where it can serve as a reference standard for Public-Private partnership. The PMI chapter has heavily supported the reform since the start, and played a critical role in connecting industry professionals to the government, lending project management support in reference projects and helping in placement of experts in PMOs. The chapter has been a primary signatory in creating the PMP training courses and continues to manage the organization and execution of the program each month. Since the start of CMPMI, the PMI Lahore Chapter has seen growth in interest in Project Management with membership rising from 25 to over 200.

Lessons Learned

CMPMI's intervention in the past years has not only yielded actual project successes/achievements, but has also resulted in the accumulation of a useful repository of lessons regarding the public-sector project environment. The PMU's supervision of various projects across government departments allowed it to identify several issues that were recurrent and had the same negatives effects across projects. The main issues of concern that most likely affect the outcomes of public project are explained below.

Project Management Offices

One of the most visible impacts the CMPMI had was in the widespread introduction of the PMO model. Before this setup, the regular practice was to break large projects into multiple regional segments (called Packages) so that they would be more manageable for existing managers. The idea behind this methodology has been that execution would be faster due to smaller size of the Packages. While this approach works for routine projects such as rural roads, school systems and canal works, larger, more complex projects suffer greatly. The reason for this is that even though Packages are small, they are essentially vertical slices of the same project. Each segment involves the full range of specialist horizontal functions like bidding and evaluation procedures, consultant evaluation, monitoring, project management, contract management, etc. Instead of relieving pressure, this places undue burden on regional managers, who are required to interact at all levels and take decisions based on general management skills. Also, this approach results in one individual being made responsible for multiple projects within his/her area, creating a decision-making bottleneck that will often affect project schedules. At the departmental level, the complex management of multiple contractors makes it very difficult to synchronize project progress and ensure timely delivery.

Not all PMOs, however, had a positive impact on projects during the CMPMI experience. Some aspects that were initially overlooked due to the lack of experience, turned out to be major issues in a public-sector environment. Some of the lessons learned were: (a) the project team should be dedicated to only one project and not be shared with parent department, (b) project director has to be fully empowered regarding project decisions, (c) the project team has to be accountable for project success, and (d) the PMO has to have sufficient resources/staff. This particular orientation of the project management office has been stressed in a number of case studies on the organizational structure, all of which conclude that the complete empowerment of the project office and the dedication of its team are a perquisite to project success (Kendall, 2003).

The negative affects of (a) were particularly visible in both the LCCE project where the entire project team was shared and the Jinnah Burn Center (JBC) where the PMO's Finance Director, a shared resource, held this position both in the Jinnah Hospital (parent department) and in the PMO. As a result of this, he did not perceive himself to be accountable to the project director, thereby seriously limiting the effectiveness of the PMO. The JBC PMO also provides a valuable lesson on the need for a suitably empowered director, as stressed by Kerzner, since it is only with sufficient authority that the project director can hope to ‘measure, evaluate, and correct’ decisions taken by the project office (Kerzner, 2000, p 197-198). The director has to be able to maintain a supervisory role in his team, and take all relevant decisions in regards to the project by reporting only to the project steering committee.

Other experiences that resulted from the creation of multiple PMOs showed that it is relatively easier for a PMO to assume command and function properly if it is created before the project execution stage. In cases, such as the Lahore Ring Road, where the project was already underway, transition from an existing departmental setup to a PMO met with considerable resistance from the department. This was particularly so because the department essentially viewed the move as hostile, infringement of territory and an indication of failure. On the execution side, contractors have been very receptive to the change due to the efficiency brought by dealing with a dedicated project team.

Client-Side Project Plan

One of PMU's primary forms of intervention was the creation of client-side plans for key projects in its portfolio. The understanding at that time was that once such a plan was in place, departments would be able to exert better control on project execution and be able to prevent major delays. However, the results were not quite so literal. Of the two initial projects for which client side plans were made initially, the Taunsa Barrage is one year ahead of schedule, while the Lahore Chenab Canal East (LCCE) is still incomplete, more than a year after its projected end date.

A study of the reasons why the client-side plan failed to affect the outcome of the latter project revealed three causes (a) failure to incorporate schedule enforcement in the contract, (b) lack of dedicated project team to maintain the plan, and (c) lack of capacity on the contractor and consultant side.

The failure to use a contract with a schedule enforcement mechanism means that even though the client, contractor, and consultant may reach a consensus before execution, there is no way of ensuring the contractor's compliance with the decided schedule. In fact, in the LCCE project, the government was unable to levy any penalty on contractors when project delays arose because of independent reasons.

A comparison of the Taunsa Barrage and the LCCE project shows that contractor and consultant capacity also plays a key role in the enforcement of a client-side plan. Even though both plans were sufficiently detailed, only the contractor on one project (Descon in Taunsa Barrage) had the capacity to use this plan to its benefit. In LCCE, the absence of modern project management tools at the contractor and consultant's side placed the complete burden of the effort on the client, contributing to its eventual failure. The reasons for the difference in contractor/consultant capacities is discussed further on in this section.

Client's Role

In public-sector project environments, client departments tend to exert complete control of the project, often as the result of a common distrust of external parties. Prior to the CMPMI, clients were independently responsible for vetting technical designs, inspections, cost analysis and even quality management. Government departments also hesitate in using realistic estimates during contracting, since the common perception is that contractors will always exceed deadlines and raise costs. As a result of this distrust, client's often demand unreasonably short completion dates, discouraging good contractors in favor of those that accede to impractical demands. This behavior has given rise to a ‘bargaining’ environment and a tendency to commit to false timelines and costs, which are then adjusted over time (through delays and escalation).

Future Plans

The CMPMI has been successful in addressing many of the issues it originally set out to solve. At the same time, new learning from last year has revealed several other areas that require attention if the reform effort is to sustain its momentum. As a first step, regular departmental training has to be introduced to create greater project management expertise. Departments need to create systems to retain trained project managers and make them available for future projects. An approach to this is to establish a central PMO within each department that will create departmental standards, templates, knowledgebase and provide services across projects. The results of this approach will soon be visible in the Irrigation Department, where the formation of central PMO has recently been authorized by the government.

With sufficient effort invested in creating departmental capacity, it is also important to provide the essential tools that are required for the implementation of modern project management techniques. A project has been initiated by the Planning & Development Department to customize open-source applications to local needs. This set of tools will be rolled into a single suite that will be standardized across all government departments, giving them the ability to seamlessly share project management templates and data. An interesting aspect of this development is the strengthening of the Public-private partnership in the form of a research collaboration between the PMI Lahore Chapter, Punjab Information Technology Board, and the PMU.

On the policy-side, one major bottleneck that still exists is the state of contract conditions. An immediate objective of the PMU is to address this issue. For this, the PMU, in consultation with the Planning & Development Department, has already initiated the process of reviewing these conditions with reference to international best practices. It is expected, that improvements in the contracting framework will be beneficial to both, clients and contractors, and will improve the outcome of projects significantly.

Conclusion

The positive outcome of the CMPMI can largely be attributed to its emphasis on change management from the very start. Winning stakeholder support, in our experience, has been, by far, the most critical factor in the implementation of this public-sector reform. Two of the most important contributors to this effect have been: (a) the selection of the right early win – Taunsa Barrage, and (b) the active involvement of an internationally recognized professional body – the PMI through its Lahore Chapter. These two factors worked together to create an environment that was receptive to change. The successful outcome of the Taunsa Barrage helped to dispel earlier resistance, while the active support of a professional body boosted the confidence of recipients. To us, this experience has been a valuable lesson: a reform's success lies not only on its ability to do so, but on its ability to convince stakeholders that it can do so.

References

Government of the Punjab (2006a). Medium Term Development Framework 2006-2009 Development Programme 2006-2007. Lahore, Punjab: Government of the Punjab.

Government of the Punjab (2006b). Strategy for Procurement Reform in Punjab Government. Retrieved on November 1st, 2006 from http://www.pmupunjab.gov.pk/PunjabProcurementStrategy.pdf

Government of the Punjab (2006c). Consultant Selection Guidelines 2006. Lahore, Punjab: Government of the Punjab

Hill, G.M. (2004) The Complete Project Management Office Handbook. Boca Raton, FL: Auerbach Publications

Kendall, G.I., Rollins, S.C. (2003) Advanced Project Portfolio Management and the PMO. Boca Raton, FL: J. Ross Publishing, Inc.

Kerzner, H. (2000). Applied Project Management: Best Practices on Implementation. Berea, Ohio: John Wiley and Sons.

Khan, K.A. & Sheikh, R.A (2005, January). Project Management in Pakistan Government. PMI Global Congress 2005, Singapore, Singapore.

OECD (20 January 2005). Working Party on Aid Effectiveness and Donor Practices Good Practice Papers on Strengthening Procurement Capacities in Developing Countries Retrieved on November 1st, 2006 from http://www.oecd.org/dataoecd/43/7/35045887.pdf

© 2006, Khalid Ahmad Khan, PE, PMP
Originally published as a part of 2007 PMI Global Congress Proceedings – Hong Kong

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