Project management reform experience in a public sector environment

Abstract

In 2003, the Government of Punjab, Pakistan launched an initiative to introduce modern project management practices in public sector development. The initiative was described in “Project Management in Pakistan Government” published in the PMI Global Congress Asia Pacific 2005 (Singapore), with a discussion on the government’s intervention strategy and the steps required to achieve its goals. 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 Project Management Offices, 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 modern project management practices to improve project delivery.

Introduction

Punjab is Pakistan’s largest province with a population of 74 million. In July 2003, Government of Punjab, Pakistan launched a program to promote the use of modern project management practices for effective management of its development projects. This program was initiated following the directions of Punjab Chief Minister Chaudhary Pervaiz Elahi as the ‘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 $ 4 billion (US) to $ 7.5 billion (US). This large increase in spending has made the success of the initiative more vital than ever in helping to enhance the government’s ability to deliver on its commitments to the public, now and in the future.

The plan to reform the public sector development framework has been a challenging endeavor. In its three years of existence, the CMPMI has matured from a proof-of-concept to a mainstream government function. In this regard a decision was made in December 2006 to create a permanent body for promoting the use of project management in Punjab Government. This entity, Directorate General for Monitoring & Evaluation (DGME), has been created as an attached department of the Planning & Development Department. The CMPMI forms a very useful change management experience in the public sector in this region—one that has resulted in the accumulation of valuable lessons in public sector intervention, as well as insight in the process of initiating and sustaining change.

This paper will attempt to describe the learning attained in the first three years of the initiative, including an analysis of Punjab government’s strategy in context of managing change, the achievements of the reform, and the challenges that are encountered in public-sector project environments. This paper provides a reasonable assessment of the effort required to replace traditional management with modern project management practices, and identify some new areas that can be explored to build upon the existing momentum. However, in order to do this, it is important to first understand the objective and origins of this reform.

Background

When the paper “Project Management in Pakistan Government” was published in the PMI Global Congress Asia Pacific 2005 (Singapore), the CMPMI was recently formed 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 similar earlier 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 among its members key decision-makers, such as the Chairman of the Planning & Development Board; Secretary of Finance; Secretary of Communication & Works; Secretary of Irrigation & Power; Secretary of Implementation & Coordination; Secretary of Information Technology; and Head of Project Management Unit (PMU). The objective of this committee was to maintain a strong ownership of the reforms and to steer the implementation efforts across government departments. The actual job of identifying and implementing project management practices was given to the PMU. The PMU was associated with the Planning & Development Department which is responsible for managing public sector development.

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, 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 this intervention, the level of resistance against change has generally remained high throughout the effort. Even though the initiative had active political support from the start, 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 likelihood of increase in the severity of problems in the event that project spending continued to grow at an increasing pace without suitable project management systems. To achieve this, the PMU collected data on a number of mega projects across departments to analyze their performance. The results of this study were then used to show the Chief Minister a general trend in mega projects of large cost and time overruns (see Exhibit 1). Based on a clear realization that the present situation was unacceptable the top decisions makers committed to the reform proposals of the PMU. The same report was shared with stakeholders at departmental levels to ensure that everyone understood that a problem existed and efforts needed to be made to bring change.

Exhibit 1

Once sufficient awareness about existing conditions was created, the initiative was taken to the next stage of bringing change by providing a vision for the solution. Using existing literature on the accomplishments of project management across the world and local examples and experiences a series of workshops were designed and held for senior bureaucrats. These workshops were able to create an understanding across the government that the problems being faced locally in development projects could be addressed through the use of project management.

Finally, with optimistic expectations in place, the PMU was given access to two mega projects, the Rehabilitation of Taunsa Barrage (Taunsa—$ 500 million (US)) and the Lower Chenab Canal East (LCCE—$ 250 million (US)). PMU guided the implementation of project management in these projects by supporting the client, the Irrigation & Power Department, in creating client side project schedules, establishing PMOs, drafting contract conditions, and providing project management expertise. Two years into the exercise, the three-year Taunsa project was able to reach completion a year ahead of schedule—an unprecedented achievement in the development history of the province.

Achievements

The first achievement of CMPMI was the recognition by government of project management as a specialized discipline and the importance of its proper usage in improving the outcome of projects. CMPMI, from the very onset, has been guided by A Guide to the Project Management Body of Knowledge (PMBOK^® Guide – Third Edition/ The use of PMBOK^® Guide, supplemented by the Government Extension to the PMBOK^® Guide helped in providing a well-developed project management framework for the government. With this 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 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 and creating a permanent place for it in the future procurement strategy of the province. The policy states:

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 (PMOs), driven by a policy that now requires the creation of these units for all mega projects. 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., preplanning to post-execution) (Hill, 2004, p. 253). Following the launch of the CMPMI, PMOs were implemented for three large major provincial projects: Taunsa, LCCE and the Computerization of Land Revenue Records projects. Since then, multiple government departments have opted to engage dedicated project teams drawn from individuals with skills in design, planning, engineering, and finance to plan and execute large and/or complex projects. Some of the other large projects that are now being executed under the PMO model are: Lahore Ring Road ($ 1.8 billion (US)), Lahore-Sialkot Motorway ($ 500 million (US)), Software Technology Park ($ 170 million (US)) and Jinnah Burn Centre ($ 15 million (US)).

Delineation of Roles and Responsibilities

Public sector projects generally involve multiple stakeholders on the client side, such as the sponsoring department, executing department, supporting department, etc. Hierarchical decision-making structures, multiple layers of approvals, and shared responsibilities across departments prevent the development of ownership and authority required by the project teams to deliver results. Project progress can be impeded by poor coordination between key stakeholders.

The creation and use of dedicated 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 to 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 interdepartmental coordination, scope, budget, or time, the concept of Steering Committees has been introduced. Steering Committees are now formed for each project to oversee the PMOs. These consist of representatives of all key stakeholders with the Project Director serving as the Secretary of the steering committee. All key matters are referred to a project’s Steering Committee, where the decision is made 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, had been a bottleneck that has caused concern to departments due to its lengthy process. Typically, engaging consultants required between three to six months of processing time. Even the engagement of individual consultants, often necessary for small yet critical segments such as design review, expert opinion, bid evaluation etc, required lengthy paperwork, and processing times.

Based on the early identification of this problem, the PMU worked with the Planning & Development Department to create new procurement guidelines for the Selection of Consultants. These guidelines, notified in September 2006, offer users greater flexibility in engaging consultants (both consulting individuals and firms), faster turnaround times and a switch from least cost selection to quality- and cost-based selection. In addition to this, the guidelines provide project directors with complete control over project-related consultancies (as head of the Consultant Selection Committee), with the power to approve TORs, and appoint consultants without seeking approval from the Planning & Development Department (Government of the Punjab, 2006c).

Capacity Building

CMPMI has placed special focus on building up project management capacity of 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 emphasis on PMI’s Project Management Professional (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 PMP for every PKR billion ($ 180 million (US)) 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 (Pakistani Rupees) 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 the 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 pull 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 110 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 inception. In the past three years, this relationship has matured to a level where it can now serve as a reference for Public-Private partnership. The PMI chapter has supported the reform by playing a critical role in connecting industry professionals and project management practitioners with the government, helping in developing training programs and assisting in the search for project management professionals required by PMOs. The chapter has been a key contributor in organizing the monthly PMP preparation courses for government and private sector managers. Since the start of CMPMI, the PMI Lahore Chapter has seen growth in interest in Project Management with membership rising from 25 to over 295 in three years.

Lessons Learned

CMPMI’s intervention in the past years has not only yielded actual project successes and achievements, but has also resulted in accumulation of useful lessons in implementation of project management in the public-sector environment. 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. Some of the issues of concern that affect the outcomes of public project are explained below.

Project Management Offices

One of the most visible impacts that the CMPMI had was in the widespread introduction of the PMO model. Before this change, the regular practice was to use shared departmental resources to manage mixed portfolio of projects ranging in value from a few hundred thousand dollars to several million dollars. Larger projects would be frequently broken down into to several sub-projects and distributed across teams. So for example, an irrigation canal that stretched for 100 kilometers would be broken into 8-10 kilometer segments and assigned to the manager in whose region a particular segment fell; each sub-project would let out and managed independently. As a result of this practice, mega projects would frequently miss their deadlines because of poor performance by contractors or managers in individual segments. In terms of management, each manager of a segment would be expected to have the project management, contract administration, engineering, finance, and general management skills to independently manage his or her segment.

The PMO model developed by the PMU was based on creation of dedicated project teams with specialists in general management, project management, engineering, contract administration and having them run mega projects in an integrated fashion. The size and composition of the PMO is defined by the PMU in consultation with the sponsoring department and approved by the Planning & Development department.

Not all PMOs, however, had a positive impact on projects during the CMPMI experience. Some aspects that were initially not brought into consideration, turned out to be major issues in a public sector environment. Four important lessons learned were: (a) the project team should be dedicated to only one project and not be shared with the 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 prerequisite to project success (Kendall, 2003).

The negative affects of (a) were particularly visible in both the LCCE project where the project team was shared with the parent department, and the Jinnah Burn Center (JBC) where the Finance Director, was shared between Jinnah Hospital (parent department) and in the PMO. In the later case difficulty in managing finances seriously limited 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 a hostile infringement of territory and an indication of failure. In contrast, 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 intention 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 is one year ahead of schedule, while the LCCE project 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 project management know-how on part of contractors and consultants.

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 mechanism for ensuring the contractor’s compliance during execution. In fact, in the LCCE project, the government was unable to levy any penalty on contractors when project delays arose because of the way the contracts were drafted.

A comparison of the Taunsa 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) had the capacity to use this plan to manage execution. In the case of LCCE, neither the consultant nor the contractors had the necessary project management capacity to use project plans.

Client’s Role

In public-sector project environments, client departments tend to exert complete control on projects, often as the result of a 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, clients 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 for the reform effort 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 a 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 encouraging aspect of this development is the strengthening of the Public-Private Partnership in the form of research collaboration between the PMI Lahore Chapter, Punjab Information Technology Board, and the PMU.

In a far-reaching decision, the Planning & Development department has initiated a policy requiring departments to include Work Breakdown Structure (WBS) for defining project scope and development of project schedules to define phasing and cash flows in all project proposals presented for approval after September 2007. Simultaneously the PMU has initiated a research project to evaluate the implementation of portfolio management tools/practices for managing the portfolio of provincial development projects.

On the policy side, the PMU, in consultation with the Planning & Development Department, has initiated the process of reviewing contracting conditions with reference to international best practices. It is hoped, 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. Three of the most important contributors to this effect have been: (a) continued top level support, (b) the positive perception of project management created through the efforts to ensure an early win— Taunsa, and (c) the successful training program launched through public-private partnership. These three factors worked together to create conditions that helped to overcome the natural resistance to change. To us, this experience has been a valuable lesson: a reform’s success lies not only on its ability to bring change, but also on its ability to demonstrate the benefits of the change in ways that help to sustain the momentum.