Project Management Institute

Special report

Asia Pacific

A SUPPLEMENT TO PM NETWORK

A SUPPLEMENT TO PM NETWORK

SPECIAL REPORT

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BY ROSS FOTI

INFRASTRUCTURE DEVELOPMENT PROJECTS in Asia Pacific are moving at such an amazing pace that if you blink, you may be surprised by the new telecommunications corridors, roadways and buildings that crop up. With about 2.6 billion people, nearly 60 percent of the world GDP and about 47 percent of world trade, according to Xinxua news service, the region has seen skyrocketing infrastructure, technology and services demands.

The burgeoning economy points to a need for strong project skills, and recognizing the need, China has joined a regional trend to invest in training its workforce. Just two years ago, Chinese universities offered less than 10 project management courses, but that number has jumped to more than 700. There are an estimated 1.7 million project managers in China, and the United Nations Industrial Development Organization Investment Promotion Office reports that at least 600,000 will seek project management certification.

Regional government, business and private enterprises are demanding formalized, proven project management best practices, and training alone will not fill the void for project skills. In this way, the infrastructure boom has translated into a pull on IT, consultant, construction, training and financial project experts. Outsourcing and off-shoring both remain major components of the local value chain, but in some instances, the roles have been reversed. Although the region often has garnered business from Western companies looking to outsource critical services, many within Asia Pacific are contracting foreign talent themselves.

Find outside expertise or train your own project managers—this trend is evident in projects throughout the area, and illustrated through successes at PT Excelcomindo, ORIX Australia, Manmar Technologies and Korea Western Power Co. Ltd.

NEXT-GENERATION WIRELESS

The Indonesian telecommunications market is fiercely competitive, so wireless providers constantly need an edge to attract new customers. “There are seven major telecommunications operators vying to grab around 80 million potential subscribers among the 220 million residents of Indonesia,” says Adi Prasetyo, head of the program management office (PMO) for PT Excelcomindo. “The number of telecommunications industry projects is considered very aggressive, very high cost- and resource-consuming.” With more than 7.2 million subscribers, PT Excelcomindo is the third-largest telecommunications operator for GSM Cellular in Indonesia.

To keep pace with that growing demand, PT Excelcomindo has been working to develop third-generation (3G) wireless, or technologies that will make multimedia transmission possible. First-generation cellular systems introduced analog systems to wireless customers, while second-generation (2G) systems pioneered digital technology. More spectrally efficient technologies such as 3G will increase wireless voice capacity and bandwidth, Mr. Prasetyo says.

In the beginning of the 3G project, PT Excelcomindo established a systematic communication plan among project stakeholders, including the executives and sponsor. As the intermediary between executives and the project team, the sponsor provided financial and non-financial advice and illuminated technological and legal issues. Because most of the team members came from the vendor side, the project team had to work closely with vendors to ensure performance.

To determine the feasibility and application of 3G networks, the PT Excelcomindo team undertook six concurrent phases for project initiation and testing:

Technology assessment—Ensuring that PT Excelcomindo would achieve the best value system at an acceptable risk level.

Market analysis—Ensuring the project would be valuable from a business perspective.

Product roadmap—Determining future product life cycle and development strategies.

Product prototyping—A small product modeling to simulate all features, functions and interoperability to be developed for the real project.

Project: Third-generation wireless network development

Company: PT Excelcomindo, Jakarta, Indonesia

Primary stakeholders: Operators, vendors, customers, government

Resources: 150 people (most from the vendors’ side)

Budget: US$5 million (Phase 1 initiation and testing only; Coverage, network expansion and billing systems are not included)

Timeline: Six months

Integration—Integrating the new 3G systems with the old 2G systems, including the network, billing and the operation systems.

Government regulation—Assessing the government's existing and future policy toward spectrums and frequency of telecommunication sectors. “Government regulation was not yet ready to cope with this new technology advancement,” Mr. Prasetyo says. To overcome uncertain government regulation, the PT Excelcomindo project team worked with a telecommunication association body to lobby for spectrums and frequencies.

To ensure PT Excelcomindo was not blindsided with unforeseen problems with the as-of-yet untested technology, the team identified a number of possible issues and mitigation plans.

Because vendors’ performance was vital for technology development and service delivery, lack of coordination was seen as a major risk. In addition to a robust communication and multi-vendor management plan, Mr. Prasetyo says PT Excelcomindo chose vendors with proven project management concepts and approach.

In addition, with rapidly evolving technology such as 3G, there's always the possibility that a new standard will supersede a project currently in development. To mitigate that risk, the project team frequently conducted technology assessments and design reviews. Again, vendors with a robust project management approach were thought to be better able to handle extreme change management, Mr. Prasetyo says.

In the end, the project was on time, on budget and met the scope of work. “Non-technical issues, such as coordination and change management, required an intensive approach of project management methodology,” Mr. Prasetyo says. If he had the project to do again, he would work to improve upon:

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  • Incomplete requirements
  • Changing requirements and specifications
  • Gaps in communication
  • Lack of coordination of multiple vendors and resources
  • People management issues.

“I would ensure all project stakeholders understand project management concepts and methodology,” Mr. Prasetyo says.

CUSTOMER-SERVICE ORIENTATION

Even the most revolutionary customer relationship management (CRM) solutions can end up unused and forgotten without employee buy-in. In the late 1990s, ORIX Australia, a non-bank lender, introduced a CRM application across its lending network. Yet, by 2000, only between two to five people out of ORIX's entire staff of 400 actually used the application, according to Neil Stewart, managing director of SRD Group. The Auckland, New Zealand-based CRM consulting company was called in to make a few changes.

Company: ORIX Australia, Macquarie Park, Australia

Project: Improved customer relationship management (CRM)

Primary stakeholders: Executive management team (authorized by the ORIX CEO and general manager of operations)

Resources: 400 staff with a CRM team of seven

Budget: CRM consulting costs were AU$225,000 in 2001–02, $200,000 in 2002–03, and $100,000 in 2004. Technology costs already had been incurred.

Timeline: Three years

“Australians and New Zealanders have an attitude of, ‘She'll be all right,’ or ‘We can do it,’ and are less inclined to outsource change management and project management,” Mr. Stewart says. “Often they are willing to live with the lower returns from their project rather than admitting mistakes or getting professionals in to right the wrongs.”

ORIX wanted to ensure that everyone had a 360-degree view of the customer. To improve communication between its various departments and the customer, the SRD Group had to:

  • Provide ORIX employees with a system that would allow them to maintain and build stronger, more profitable relationships
  • Grow customer service levels across all of ORIX to greater than 90 percent satisfaction
  • Integrate legacy operational systems with the CRM system
  • Develop a marketing department, merged with sales, to ignite the ORIX front office.

Planning revolved around identifying ORIX's strategic CRM objectives, Mr. Stewart says. The company wanted to understand where it stood, including the experiences customers were having and the processes employed. Employees needed to understand ON Contact, the CRM application they were expected to use.

Prior to SRD's involvement, the CRM project was seen as a technology-only project that needed little training, Mr. Stewart says. “Dealing with IT was frustrating as they saw us as taking control of their project,” he says. “They had looked at the technology from the perspective of ‘it works,’ rather than was it providing any benefit to the business. They abdicated this responsibility to others and yet they still wanted to own it. IT needs to deliver on business objectives, not technical delivery alone.”

The team started with a gap analysis and then began working out the process, people, culture and technology changes that would bridge the gap. Milestones included:

  • Mapping CRM potential to overall strategy. The team needed to determine how CRM could help ORIX reach its objectives and what the measures would be. This step included prioritization of what should happen when, what expertise was required from which departments and divisions, and what costs would be incurred. Once this had been done, the high-level project plan was approved by the CEO, Mr. Stewart says.
  • Breaking the high-level plan into subprojects. The team then developed detailed project plans for each subproject. “We followed a clear methodology for each,” Mr. Stewart says. “Strategic objectives were broken down to elements and objectives that could be related to by roles, tasks and processes. It's taking the theory of the strategy and putting practicality behind it.”
  • Managing risks. A major risk on the CRM relaunch was lack of senior management buy-in and support. “It required a lot more than signing the checks,” Mr. Stewart says. “Executives had to walk the talk and show their commitment through action. Albeit engineered, their support was very clear for everyone in the company to see. It was not a matter of, ‘Follow me, I am right behind you,” but, ‘Stick with me, and you need to keep up!’”

Today, approximately 340 people use the application each day, and financial performance has turned around. Profits went from $1 million in 2000–01 to $16.4 million in 2003–04. Further, customer service level key performance indicators now can be measured through the CRM system, enabling ORIX to report service levels to customers and use this information to continuously improve, Mr. Stewart says. “Customers are responding with positive evidence of service improvement.”

ASIA PACIFIC EXTRA

Outsourcers Pack Their Bags for Malaysia

Malaysia will continue to be a popular destination for offshoring in the Asia Pacific region, most prominently in the energy, logistics and financial services sectors, according to consultancy Frost & Sullivan.

Malaysia emerged as one of the top shared services and outsourcing centers of excellence across these three verticals, offering compelling value proposition in facilitating vertical integration across the business value chain, said Manoj Menon, Frost & Sullivan's partner and Southeast Asia managing director.

Malaysia is preferred for off-shoring operations due to its ability to cultivate a skilled, multilingual workforce and its first-world infrastructure, according to Bernama.com. The Web site reports that the Malaysian workforce is adept at high-value project management implementations because the multiracial community has conditioned the workforce to manage diverse personnel and multicultural teams.

WHAT IS THE MOST NEEDED IMPROVEMENT IN CURRENT IT SECURITY CERTIFICATIONS?

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Source: CMPnetAsia survey of 307 IT security practitioners from the Asia Pacific region.

SINGAPORE FAST FACTS

Singapore is:

  • The second-fastest-growing hub for outsourcing among U.S. businesses, according to the U.S. Department of Commerce. Singapore's Business Continuity and Disaster Recovery standard—the world's first—strengthens the nation's reputation for high-end outsourcing, including project management.
  • The lowest-risk country in Asia Pacific, according to the Business Economic Risk Intelligence and the Institute for Management Development.
  • The country with the strongest intellectual property protection in Asia, according to The World Economic Forum.
  • The world's most successful economy in exploiting infocommunication developments, as ranked by The World Economic Forum, Global IT Report.
SHANGHAI TOP HIRING SECTORS

(JANUARY TO JULY 2005)

FINANCE AND INSURANCE 22
HEALTH 19.5
RETAIL 17.4
LOGISTICS 16.5

Percentage Increase From the Same Period in 2004

Source: Asia Pulse.

India's Infrastructure Efforts Require More Project Experts

India's infrastructure development is feeding a spate of mega-projects, but there aren't enough qualified project managers in the country to lead the efforts. In fact, Indian Finance Minister P. Chidambaram thinks India should be more like China when it comes to project management, according to Asia Pulse.

With high-profile infrastructure success stories, such as the Yangtze Dam and the upcoming Beijing Olympics, China has become the region's power player in project management. In fact, China is planning to train 600,000 project managers to cater to the needs of its infrastructure, Asia Pulse reports. In 2003, China spent more than 10 percent of GDP on core infrastructure, compared to just 3.1 percent in India, according to Engineering News Record (ENR).

Large Indian contractors are reporting annual sales rising more than 30 percent in the country's $75-billion-a-year infrastructure construction industry, ENR reports. In addition, the National Highways Authority of India is investing about $37 billion in roads over the next seven years, and the government is privatizing Mumbai's and Delhi's airports to attract investment, according to the magazine.

Because infrastructure projects are rising at a quickening pace, India is feeling the pinch for qualified project leaders. Mr. Chidambaram suggested that his country's infrastructure sector requires a large number of competent project managers. “We have to take a leaf from China's project management,” he said, according to Asia Pulse. Time and cost overrun has become endemic in India, he said, according to Asia Pulse. “There are about 620 projects each with an investment of over Rs200 million that are suffering from time and cost over-runs.”

Vietnam to Build Economic Corridor

Vietnam has signed a VND450 billion deal with Japanese Kawasaki Heavy Industries - GTECH to supply mechanical and electrical equipment for the East - West Economic Corridor (EWEC) project, according to Asia Pulse. The 1,450 km East - West Corridor, a transportation project scheduled to be completed in 2008, will link Vietnam, Laos, Thailand and Myanmar, the news service reports.

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IMAGING TECHNOLOGY

When commissioning microscopic and diagnostic imaging technology, Manmar Technologies was quite particular about what was needed. It wanted a core application only—the company would develop the user interface, look-and-feel, and marketing and packaging itself. Then, the company would turn the product around for a customer of its own. This is a consistent trend in the region, and one that many technology companies are using to their advantage.

Nspace Tech, Chennai, India, offers 3D visualization and image processing, mainly within the health care industry, but the project was extremely challenging, says Shyam Rajan, Ph.D., Nspace CEO. “3D visualization has really caught up now with the availability of good graphics capabilities on commodity machines and so there is a large window of opportunity out there,” he says. There are a number of players both big and small, but the prospect for niche 3D technology-related work is very good. However, there is a dearth of the requisite skill sets.”

Company: Korea Western Power Co. Ltd. (KOWEPO)

Project: Taean Units 5 and 6 Construction

Primary stakeholders: Contractors, including engineers, suppliers, subcontractors, and the government, central and local residents and environmental organizations.

Budget: KRW962.4 billion

Resources: A daily average of 1,000 workers during the peak construction

Timeline: 52 months

Manmar was very specific about what would constitute success. When developing the core application, Nspace could not use any third-party components—everything had to be built using only C++, Dr. Rajan says. “This meant that all fundamental algorithms had to be developed from scratch.”

Manmar Technologies also demanded that code be completely portable, which meant that no platform-specific tools could be used. “There was also an entry barrier since these skills are not readily available,” Dr. Rajan says.

Because there was a large research and development component in the specification, the project manager's game plan was to build a very sound architectural and design framework around the requirements. “We also wanted these components to be reusable as much as possible, so that it could be deployed in other areas as well.” Dr. Rajan says.

The Nspace team spent a considerable amount of time on design and getting the architecture right. The project manager adopted the extreme programming approach during implementation. Extreme programming is a simplified approach to software development and hinges primarily on communication, teamwork, constant feedback and courage, according to Dr. Rajan.

Every couple of days, team members would check in features—no matter how small—after unit tests. One release was required every month for five months. “This way we would insulate against large changes and the team could see that the product was improving day by day,” Dr. Rajan says. “This is essential in a research-and-development-style project because there can be amounts of time in development when nothing seems to be happening.”

The main milestones included a specification, architectural and design freeze to ensure requirements would not change. To monitor technological risks and avoid integration problems, an automated system test suite was run almost daily. “Each release would seamlessly fit with the other since our architecture was sound,” Dr. Rajan says.

As the team encountered issues, solutions were not always straightforward—sometimes members had to conduct research to come up with the right algorithms. Even then, the team would have to fine-tune solutions as more pieces were added to the puzzle. “In many cases, we would have a couple of guys searching for solutions while the others on the team implemented the researched solutions,” Dr. Rajan says. “Within the project team, there was a clear research and development team and a clear production code team. The R&D guys also needed to be top-quality industry programmers so that they didn't recommend unimplementable solutions.”

In the end, the project was completed on budget, on time and passed the acceptance tests set by the client. “I would do this project exactly the same way the next time,” Dr. Rajan says. “The knowledge from this effort is being managed through documents, an intranet and, of course, within the existing components.”

ELECTRIC ENERGY

Electric energy in Korea, where natural energy resources are scarce, has been vital to national economic growth and competitiveness. Despite continually rising oil prices, electricity rates in Korea have been stable for several years. For example, although consumer prices in Korea have risen 158 percent since 1982, electricity rates have increased only 2.1 percent over the same period, according to Korea Western Power Co. Ltd. (KOWEPO).

In its fifth year of operation, KOWEPO operates six generating sites throughout Korea with a core plant in Taean, Korea. In 2004, sales reached KRW2.057 trillion, and it attributes its growth to project management capabilities. Kim Jong-shin, the company's third CEO, has emphasized improving management that has allowed KOWEPO to succeed in a tight market.

Following Mr. Kim's inauguration in April 2004, he dedicated resources to strengthening project management training and laying a foundation of business innovation based on the methodology. The Korean Institute of Project Management & Technology (PRO-MAT) provided education for KOWEPO employees over five Saturdays for a total of 40 hours. About 300 employees were educated through offline courses and an additional 200 through online courses.

Most employees who completed the course also sought the Project Management Professional (PMP®) credential. While the company had just nine PMPs in April 2004, 500 earned the credential as of 20 November 2005, representing about 30 percent of employees. As a further incentive, KOWEPO has compensated employees who have acquired PMP certification with a special bonus and linked PMP certification with promotions.

Thanks to its reliance on project management best practices, KOWEPO successfully completed construction of Taean Thermal Units 5 and 6 and a desulphurization facility (Thermal Units 1 to 4) at Pyeongtaek. Construction of Taean Thermal Units 5 and 6 was more successful than that of any other similar power plants built in the same period, according to Mr. Kim.

Company: Manmar Technologies, Chennai, India

Project: Microscopic and diagnostic imaging

Primary stakeholders: Executives and the Nspace Tech vendor team

Budget: US$200,000 (Software development)

Resources: 10 people

Timeline: 12 months

At the start, the organization defined the scope for construction and broke tasks down using textbook project management, including procurement, quality management and risk management processes. To ensure strong communication, the KOWEPO project management office (PMO) met with representatives from engineering, the main suppliers and construction companies. In these monthly meetings, the team discussed work status, lags and bottlenecks. The KOWEPO construction office also held weekly meetings with the construction companies, including the engineers and suppliers when necessary. The PMO officially reported monthly construction progress to executives, but if a critical issue occurred, the PMO would let the stakeholders know through special reports.

Despite this structured approach, the project team encountered many obstacles, including a 38-day labor strike and resistance from residents and environmental organizations. “Taean local residents were strongly against adding two more units to the existing four units which had been running since 1997,” Mr. Kim says. “KOWEPO deepened and broadened the range of their understanding through public hearings.”

In addition, through aggressive public relations, the team explained to residents that the construction of power plants contributed greatly to the local society and economy. “The project office invited them to the construction site, explaining to them the status of construction and our design regulations, which are stricter than governmental environmental limit,” Mr. Kim says. “Also KOWEPO made contributions to improve local residents’ income by constructing public facilities and providing equipment for local education.”

The project was a resounding success. Through best practices, the KOWEPO team cut the construction cost per kW by 15 percent to KRW821,000. The construction took four months less than initially planned. From a quality perspective, the average efficiency of units reached 42.49 percent, which is 1.28 percent higher than the preceding Units 1 to 4. In 2003, the Korean Ministry of Science & Technology and PROMATnamed the effort its “Project of the Year.” PM

For more information on project management in Asia Pacific, contact PMI Asia Pacific Regional Service Centre / #03-01 Rex House, 73 Bukit Timah Road, Singapore 229832 / Tel: +65 6330 6733; Fax +65-6336-2263/ E-mail: AsiaPacific-SC@pmi.org · PMI Global Operations Center / Four Campus Boulevard / Newtown Square, PA 19073-3299 USA / Tel: +1-610-356-4600; Fax: +1-610-356-4647 / E-mail: customercare@pmi.org · Publication services provided by Imagination Publishing / www.imaginepub.com

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SPECIAL REPORT: ASIA PACIFIC // JANUARY 2006 // WWW.PMI.ORG

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