Major Project Management

This month I have enjoyed following the New York press and the excellent morning show on New York 1 TV. There has been much coverage of an apparent reversal in direction for a major subway maintenance project. An important line linking Manhattan to Brooklyn was due to be closed completely for over a year, with all sorts of ramifications. But the MTA clearly did not account for the conquering hero, governor Andrew Cuomo. In December he organised a one-hour visit to the tunnel, and over the New Year he announced that his team had discovered an alternative way to carry out the project and the line could stay open.

This led to some initial good cheer, followed by many questions – New Yorkers never take good news lightly, cynicism always returns quickly. How could the MTA have been so dumb not to have known about this not-so-new technology before? Should we trust a radical fix that Cuomo’s team seems to have come up with so quickly? Why did all the time and money of preparatory work have to be wasted? What about all those people who had already moved house in anticipation of the shutdown, or the landlords who had agreed rent reductions? How was Cuomo able to operate over the heads of the MTA board, when he is usually at pains to point out he does not control it?

This was all good stuff and highly entertaining, but, just like the new Amazon jobs, New Yorkers were being side-tracked onto something they could complain about rather than simply celebrating a positive development.

I enjoyed the story because it recalled my last days in Shell, when somehow I found myself working in its major projects department, responsible for investment projects of billions of dollars, many reminiscent of the MTA L-train tunnel renewal.

That I ended up in major project management, and even found something useful to do there, says many things about me, about Shell and about project management.

About me, I guess it showed that my career had run out of steam and that the lack of a main discipline had finally caught up with me in a company with an engineering culture. I had already signalled my intention to retire early, but it still showed some confidence in me that a position of some consequence was offered, so I guess I had some credibility. Even so, it was quite tough, because the place was absolutely packed with engineers, talking jargon and acronyms that I struggled to understand. I was always one statement away from ignominy.

About Shell, it shows they are a kind employer – I was vulnerable, and they sorted me out. I saw this many times with others, and I found the human decency inspiring, and believe it is rare in corporate life nowadays. It also shows that the company places creativity over discipline – no logical HR process would have supported the move, but it still happened because someone made it happen and leaders trusted people to make things work.

About major project management, it showed what an undervalued discipline it used to be, but also how empty a discipline it is, an apparent contradiction.

Major projects spend billions, kill people, are critical enablers for income streams, and often go badly. Leaders might have the most consequential jobs in their companies. Yet when I joined Shell Global Solutions in 2001, I remember an organisation chart with about 10 VP’s and about 50 direct reports to those VP’s, and the report at the very bottom of the most far right column was the one in charge of major projects. Go figure.

I think part of the reason is that there is so little academic theory of major project management. For most STEM subjects, colleges can devise theory to support bachelors and masters programs and further research. But for major projects, the theory is restricted to a lot of process and protocol, some basic stuff about budget management, and lots of case studies.

In that respect it is very like my home discipline of strategy. In my MBA, I remember the strategy module to consist of a few four box models and many case studies. And strategy is also undervalued, especially in organisations where qualifications count for a lot.

This even affects schools. If there is one thing we all have to learn to do it is to manage projects, from renovating a house to planning a wedding. Those of us who learn to manage projects well have a big advantage in life. But teaching it is wholly absent in school, like so much else that might be useful despite not leading to college research fellowships.

Most of the process in major projects is in preparation. A lot of effort goes into defining extremely clear and detailed goals, and then conducting many reviews to home in on a design and plan that best delivers them, involving the eventual users and owners and all the experts and contactors. It can all take years, before a final execution phase of maybe months.

The key roles are the project manager, who pulls it all together, and someone called the decision executive, representing the owner. A good decision executive understands the business needs and knows how to ask questions. A good project manager is like an orchestra conductor, and the most important attribute is broad shoulders – knowing when to take a personal risk. Most are either risk-averse process managers, or its opposite, cowboys.

In my time in projects, I was supposed to pioneer one new style of review, called target costing, in which cost was modelled as a key constraint rather than an outcome. It could be powerful. On one of the few projects I was able to complete the process, it led to its scrapping, because it became clear that 90% of the benefits could be delivered by 1% of the cost plus a couple of workarounds.

I experienced something very similar at my lovely car workshop yesterday, when I learned I could either fix the occasional floods of rainwater invading my car by investing $500 or by using some duct tape, prayers and towels. My car is barely worth $500, so it was another triumph for target costing and duct tape suppliers.

The practical challenge with all these reviews are the incentives of the key players. The decision executive may not know what questions to ask, and may be motivated by shiny new buildings or avoidance of disaster. The project manager often wants to avoid disaster too, and can shy away from complexity and creativity. Progress towards completion can become paramount too quickly. That is one reason that introducing things like target costing can be tough – it only carries risks for project managers.

All this brings me back to Cuomo and the L-Train. A routine project has just been subject to an extraordinary review from an outsider. It is too late in the process and there has been sunk cost. But essentially Cuomo has challenged the goals, namely the prioritisation of continued service versus cost or other goals. Often these reviews will reveal overlooked opportunities, since the incentives of everyone until now had led to the stifling of creative ideas. It is a good outcome, but not an ideal process. But hey, life sometimes does not follow ideal processes, so well done Andrew, you deserve your uptick in the polls.

I remember the same trade off in Shell when we were rebuilding petrol stations. When the engineers led, the stations had to close during redevelopment, often for ten weeks or more. The upshot was that customers found new habits and it often took years for the new station to become as busy as the old one it replaced. Some smart people intervened, and it became normal practice to keep the place open through the renovation with a couple of pumps. Engineers moaned, but the outcome was better.

Mr Cuomo, while you are at it, could you have a look at the upgrade to the Kew Gardens highway interchange? This complex road junction has been a building site for as long as I’ve lived in New York, six and a half years and counting. I would guess that disruption during the project was not prioritised highly enough among the goals, and a review would reveal ways to finish it more quickly, and to translate that learning into future projects.

A challenge in major project management is to let in such reviews in a timely way, and not so many as to drown projects in bureaucracy. That starts with goals and incentives, and strong decision executives and project managers. These disciplines deserve more consideration, in schools, colleges and companies. I often directed smart and brave young people towards major project management because the opportunities to develop are huge and the limitations few. Procurement and strategy are other fields with those characteristics. If you are looking for an interesting career direction, you could do worse than exploring one of those.