A fresh start for USDOE’s approach to program and project management for the acquisition of capital assets
David M. Treacy, Systems Analyst, USDOE Office of Engineering and Construction Management
One of DOE's challenges over the past decade has been to pull together new ways of accomplishing projects in a way that effectively and safely meet its unique and complex needs. It must do this while supporting an aging industrial complex, and at the same time, operating numerous business elements that do not directly relate to one another. An example of this diverse scope would be its defense responsibilities, versus its energy and environmental cleanup responsibilities. This diversity, coupled with an extremely complex, serious, and often hazardous mission has made it a challenge to reach an appropriate balance between requirements and prescription in its policies and directives for accomplishing project work. This challenge has only increased with criticism of some department projects in the media over the cost and schedule performance of some of its projects. All of this has resulted in a commitment by DOE to overhaul all facets of its project delivery system for acquiring large-scale systems, facilities and performing remediation.
Decades ago, DOE adopted an entirely prescriptive standard for handling projects. This initial effort by the Department and its supporting contractors produced a very detailed, highly prescriptive system for project management. Today, this initial project management system continues to be referred to by its original DOE Directive number, “4700.” It was developed just as the DOD went through an intense period of criticism during the cold war build up. It reflected much of what the critics were demanding in those days as necessary tools for improvement. Lots of detailed prescription, coverage on every topic, strong verification, audit enforcement, “a land of milk and honey” for the consultants, and over 2,000 pages of policy, requirements, and guidance under a host of directives and implementation guides. All across the DOE Complex one could hear a groan under the weight of project management control, system descriptions, implementing procedures, and the need for more and more budget to get it all done. As the need for implementation budgets grew and tangible results were scarce, support began to collapse for “4700.”
The final blow occurred at the Savannah River Site (SRS). The Under Secretary and Assistant Secretary at the time ended their support requiring validated Cost-Schedule-Control Systems (CSCS) as a contractor requirement. Gossip had the price at over $100 million to get a fully validated system on-line at the large sites. Whether this was true or not, is not the point. This fatal blow stopped all CSCS activities and drove the formation of an “organizational” team to chart a new path forward. This team was comprised of DOE Headquarters staff and representatives from a few large sites (principally SRS, Hanford, and Idaho National Engineering Laboratory), and included both federal and contractor employees. These sites represented the complexity and uniqueness of DOE. They were large, multifaceted/multimission sites. This team issued a report, which swung the pendulum the other way by essentially recommending that all of the prescription and control be replaced with “good sense,” more empowerment in the field, and more focus on the actual business of doing projects rather than controlling them. The focus and talk centered on competent people making competent decisions involving limited central control, with few documents and custom approaches built for each project and location. This effort, together with a large federal government push to bring more “life-cycle” estimating into use, along with expectations of improved government performance resulted in a completely new approach which emphasized mostly, if not only, principles. Thus, DOE Order 430.1A was born, which cancelled and replaced the old “4700” system.
Under this new approach, all direction, not just program/project direction, was summed up in three sentences:
The Department of Energy (DOE), in partnership with its contractors, shall plan, acquire, operate, maintain, and dispose of physical assets as valuable national resources. Stewardship of these physical assets shall be accomplished in a cost-effective manner to meet the DOE mission. This shall incorporate industry standards, a graded approach, and performance objective. (Page 1 of 430.1)
A quick comparison of their tables of contents and page count confirms this shift (see Exhibit 1):
As each DOE field location and their associated contractors set off on their own, various critics and oversight organizations expressed concern. This quickly generated concern over losing the former systems, processes, and methods that had been developed and utilized over the past several decades. The end result was the development of (never finished) over 12 inches of paper that was affectionately known as the Good Practice Guides (GPG). These Guides were optional, allowing the individual federal contracting officer the freedom to determine the precise interpretation and applicability of the Guides to their project. This overall approach seemed to make sense to many, and was received with glee by those who disliked the excessive prescription and cost that had resulted from the early system.
Parallel to this was what could be called an evolving environmental compliance mission of DOE. Overnight, DOE was shifting its focus to compliance due to numerous pressures brought on by the aging weapons complex, collapse of the cold wars, secrecy, and the specialized work that had been accomplished within an environment of self-regulation that often fell outside normal industrial codes and standards. As the size and complexity of the wartime weapons effort was recognized, substantial criticism of its environmental performance surfaced. In addition, as DOE took on the commitment to bring the Complex into compliance with these highly volatile and newly developing State and Federal environmental regulations, costs began to soar.
All these changes brought on real and substantial project delivery problems, which continue today. Numerous reviews were spawned as a result, which continue to highlight the lack of a common “agreed to” set of project delivery processes. The very prescriptive shift to a more “laissez faire” approach left DOE with little consistency on this topic and made project terminology, approaches, and methodology difficult to improve without a clean slate. This problem reached its climax two years ago when the Secretary of Energy was embarrassed by a highly publicized project success story, which two months later appeared in the press as in deep trouble. Various corrective action plans had been developed over the years, but none had really addressed the growing issue. With congressional hearings ongoing, the most senior DOE Headquarters management committed to a revised program and project acquisition improvement plan that included the creation of a completely new project delivery system, which spanned all elements: policy, procedures, training, and development. In addition, a new office was created, called the Office of Engineering and Construction Management (OECM) to oversee all of the change.
Quickly, OECM decided that DOE Order 430.1 was inadequate in covering program and project acquisitions, and needed replacement. A plan evolved that included putting in place a completely new acquisition process that would eventually lead to a new policy, order, manual, and practice. OECM, in a desire to move quickly, decided to pursue development of all elements in parallel. They put together a team to assess and benchmark various acquisition systems from numerous Federal agencies and contractors. Meanwhile, other teams possessing experience with most facets of DOE work were put together to utilize past federal and contractor experience in an effort to quickly arrive at a usable product. Team members who had experience with success as well as failure were utilized. Comprehensive and immediate usability of the product was key, with a commitment to continuously improve the product in the future. Two complex-wide review sessions were then held, including broad DOE and contractor representation. In addition, some elements of DOE organized their own teams to follow and comment on this complex-wide development effort.
In approximately six months, the teams drafted, reviewed, and revised all elements, using previous and existing material from DOE, DOD, NASA, FAA, and some selected contractors. In October 2000, the new Order titled, “Program and Project Management for the Acquisition of Capital Assets” was issued, along with two separate volumes—the Manual that contained requirements, and Practices for more detailed guidance and description. These combined documents were aimed at finding a balance between the old, overly prescriptive system, and a newer, more generalized, hands-off approach.
In a federal government department as large as DOE, it could have taken years to make any change. The approach was to quickly provide a visible, usable, and improved system that put back into place needed controls, reviews, and sensitivities without excessive prescription. This has brought about a unique blend of policy, requirements, motherhood, and detailed guidance. Supporting this was an early, strong commitment by senior management to issue the documents while committing to solicit continued improvements that would only result from use and feedback. This approach cleared the way for public distribution at an October Project Management Conference while insuring the needed additional time to work on bringing the three documents to a higher level of integration with the right level of requirements, controls, and guidance. The three resultant table of contents are (see Exhibit 2):
These initial products, the Order, Manual, and Practices, were produced in approximately six months. The objective to assure consistent application of sound management principles in a disciplined, systematic, and coordinated approach has begun. The Order and Manual were loosely written around the acquisition phases and processes. Coverage has been provided from the initial determination of mission need, to execution, closure, and turnover to mission activity.
MUCH of what has been published was adapted from existing project delivery systems from all across the federal government as well as organizations like the Project Management Institute and the Construction Industry Institute. However, this benchmarking and comparison to other systems has identified a few areas where the products generated brought together old issues and many years of experience that resulted in potentially best-in-class (or only-in-class) processes. Specifically, the Technology Management and closely related Risk Management Practices, both the Manual and Practice on Integrating Safety and Quality in Projects, and the Practice on Communications and Stakeholder Participation have brought together new insight and concentration on these topics that was not evident before. One of the best examples of this is summarized in the Technology Practice. These figures summarize the approach and need for care when a new project system must grapple with new or unproven technology. For brevity, only Figure 5-1 from the Practices is replicated here reflecting the need for a careful, thoughtful, and, yes, generally a more expensive approach that is needed, as a project entertains technology issues.
What Have We Learned
• Loss of a common “project culture” across a large and complex organization results in considerable difficulty in just the use and understanding of important terms and concepts. For example, the simple word, contingency, which was precisely used in the Manual, has meant so many things to so many different organizations that it is still being resolved. Some see it as “a fudge,” some an amount of budget, some as out of scope, some as in scope. Others see it in the light of estimates, some in the light of contracting. The same kind of challenges have been seen with words like acquisition, earned value, management reserves, systems engineering, contracting, and procurement. Contributing to this has been a number of inconsistencies uncovered between the Order, Manual, and Practices. These have allowed the critics to say it is too hard to implement. This is also complicated by the fact that some of these words have different meanings and one must know the surrounding details and circumstances in order to pick the right understanding. To seasoned project managers this would seem silly, but we assure you it is not. Considerable discussion, editing, and rewriting are being done to be as absolutely accurate as the English language allows.
Exhibit 3. Technology Development Integration With Project Management
• Introduction and implementation of a new budgeting process is much more challenging due to the federal government budget cycle and associated complexities. It is easy to underestimate the need for detail, and the need to go through some actual iterations based upon field use and experience. This is very difficult, since it cannot be done in a “dry run” sense, as all requests and programming of budgets are real or actual. In our case, it may take two years or more to implement a new system to request Project Engineering and Design budgets, meaning the first full impact of the budget will probably take three to four years.
• Federal to contractor relationships play important roles in project delivery systems and must be dealt with using the utmost care to insure requirements and guidance will be properly interpreted and used. This has been particularly important in DOE, as the department has been redefining its contracting approach and methods during this time, and the Order and Manual requirements must be carried down in order for the overall system to work. Overall, the primary goal was to involve all stakeholders, including contractors, in the development of the new documents.
• Even knowledgeable program/project managers underestimate the complexity and interrelationship that lifecycle, phases, and processes have on developing, writing, and using instructions that are meant to follow a flow (timeline, i.e., start to finish) but yet sometimes are meant to communicate a process. Simple words like planning, in a flow sense, meaning early in a project life, or in a process sense, meaning thinking and planning. Some think execution means construction, some design, some contracting for work. To some, closure implies completion, to others turnover and operations. The concepts and ideas drive all of the structure and inject considerable challenge to the writing of an Acquisition Process that is both flow and process. Our current approach is to provide more discussion on this including more real-to-life-phase diagrams that reflect overlap and are carefully worded and made as consistent as possible across all of the documents. Additionally, we now intend to introduce a topic as soon as it is needed and try to minimize grouping them as topics until you get to the Practices, which must be structured, on topics.
• Review processes, including comments, must be focused and controlled in a large complex organization or they become unmanageable and unconstructive. Commenting organizations must be committed to providing focused comments with or without consensus or they will be contradictory and yield no material gain or input.
Where Are We Going?
The Order, Manual, and Practices are being revised to address the first year of use and the lessons that came along with that use. Alignment between the Order and Manual have been improved, additional detail on what is expected for compliance is being added; overlap and duplication has been minimized and numerous areas have received improved handling or have been added to the Practices. Specific additions include separate Practices on Work Breakdown Structures, Value Engineering, Estimating and Independent Reviews and Cost Estimates. Areas strengthened and clarified include Acquisition Strategy and Plan, Programming, Planning and Budgeting System, Processes and Phases, Definitions of Programs and Projects, Project Engineering and Design Budget Requesting, Project Execution Plan, Baseline Setting, Critical Decision Point Package Requirements, Earned Value and Contracting.
Exhibit 4. Sample of Electronic Life-Cycle Integrator
As we have evaluated the needed size of the Practices volume, particularly as more practices, samples, and examples have been added, we have become convinced that it must be usable without paper publishing. This need to fully convert it to a more user-friendly electronic document has now been drafted and allows a project manager to access all of the elements of DOE's project delivery system though a simple process flow. This process flow has been built for each of the major project life cycles, specifically, the traditional system or facility, disposition (D&D), and environmental remediation. A sample of how this has been done follows:
Overall, our primary objective of quickly putting into place a centralized set of management principles and requirements was accomplished. The Order, Manual, and Practices have put back into the DOE's work environment a sufficient level of new requirements and thresholds such that change is beginning to occur and the project culture is feeling the need to apply proven tools. The cultural shift is underway. It is only a path, which will be demanding and require continued care, but everywhere, there are questions, challenges and yes, even progress. A Complex as large and diverse as DOE may never accept one central way of doing business, but it has begun to rebuild a common, more strengthened acquisition program and project culture.
Proceedings of the Project Management Institute Annual Seminars & Symposium
November 1–10, 2001 • Nashville, Tenn., USA