Moving Project Management to the Next Level of Performance

Dutch Holland, Chairman, and Mike Campbell, Managing Director, Holland & Davis LLC

What an extraordinary opportunity to see how conventional management thinking actually plays out in the real world. In 2005, a professional development event “packed the house” with 300 highly experienced senior project managers in the global oil and gas industry. No rookies with outlandish expectations or unrealistic goals while learning their craft occupied these seats. Just the opposite. These were skilled professionals at the hub of projects sometimes costing as much as the gross domestic product of a small developing nation.

If this sounds like a gathering of corporate happy campers engaged in rounds of back-patting, hold that thought. Lean back and digest what they said in a questionnaire about their profession’s status within their energy company. Were they in tune with conventional management thinking or not?

Biggest Project-Management Challenges

On its face, the formal-sounding project management (PM) name would seem no more controversial than a business leader saying, “Business is a good thing.” However, PM’s history has been bumpier than a back country road, especially in the oil industry, which, ironically, thrives on policies, procedures, and protocol.

Consider questionnaire results about the greatest challenge faced by project managers in their oil industry organizations, in order of most frequent response:

Getting PM recognized as a core work process. That includes differentiating PM from daily line management. That includes the reality that at most companies, supply chain, accounting, and procurement are typically viewed as formalized work processes that demand strict compliance. Why isn’t project management viewed this way, too?
Companywide adoption of standardized templates/approaches for conducting PM. More typically, different regions of the same company use different PM approaches, making global projects difficult to manage. These big projects are hard enough without having to squabble over whose template is best.
Invest in PM. Commit to PM, then put teeth into the commitment. Hire experienced project managers, hire enough of them, provide comprehensive training and development, provide cross-training for managers outside PM, and encourage certification/support of the PM organization. Significantly, PM tools (such as software) were not an expressed concern.
Acute time pressure to make PM work. And these were only the top complaints, with many other noteworthy ones including too many projects but too little time; little or no upper management acceptance; lack of consistency or templates; focus on company earnings forcing shortsightedness in project planning; being expected to perform magic with few or no resources, poor executive understanding, or undercommitment; and the overwhelming need to get the word out that PM is important.

Fig. 1—The state of PM today.

Why don’t these concerns resonate with management? Although PM has been present in the oil and gas industry for decades, it has had a shaky coming of age. As projects become increasingly larger and more complex, PM is becoming more important, getting more overdue recognition in the industry, and is finally coming into its own.

Don’t applaud yet. Most management exposure to the PM discipline is still limited, and many still do not know the ropes. Couple that problem with the need to educate employees in the differences between PM and daily management, and there is a real disconnect (Fig. 1).

Each Well Unique?

A key reason that PM may not have advanced to a higher maturity level in the oil industry involves the widely accepted concept that “no two projects are the same” (like “no two wells are the same”), so there can be no “process of PM (or drilling)” because each is unique.

That contention is definitely not lost on experienced project managers, especially as a challenge in the construction end of the oil and gas industry. As expressed in the questionnaires, they overwhelmingly want management to see PM not as an art form, but as a disciplined work process that can be measured and optimized. Project managers are frustrated that upper management does not see PM as a process with a certain capacity and certain steps that must be taken with which the company’s people must comply. PM is not communicated as a disciplined work process requiring companywide compliance.

The next highest frustration of senior project managers surveyed—lack of templates and uniform procedures for use companywide—causes numerous problems globally. Instead of one template, there are separate templates for oil-producing regions ranging from the North Sea to the Permian Basin. Not surprisingly, when people are transferred to the other regions, disagreements about managing the project occur because each individual approaches it differently.

Management knows it needs to invest in PM when:

Its big business expenditures are not separately labeled as projects, given separate budgets, or assigned professional project managers.
The company spends millions to get a new IT system ready for the organization with no project chartered to get the organization ready for full utilization of the new system.
Senior management is unwilling to publicize timing of revenue projections that are to come from big capital projects.

Three Use Areas

Therefore, it makes sense to see how to take PM to the next level of performance. How? It depends on where PM is used each time, with primary areas being:

Big, complex projects such as platform construction.
Implementation of large information technology (IT) projects.
Around major organizational initiatives such as big re-engineering on the business side of a merger.

Working backward from the least mature PM area, look first at the application to major organizational initiatives. The first stage seems too simple to say out loud, yet it is one of the biggest stumbling blocks to valid PM acceptance: Identify a piece of work (a merger or a consolidation) as a project by naming it as such and giving it its own budget. Then, it becomes a more natural segue to assign a skilled project manager who will manage the “merger project” as is done in the most mature PM environment, construction.

Fig. 2—Stages of PM.

Implementing IT projects is the second use area for PM in oil and gas companies. But this use area is slightly more complicated than the one discussed above, with management needing to see IT assets as technical projects that must be readied for the organization’s use while projects are formed to ready the organization to use the IT assets. Too frequently, the technical IT projects are managed well, while the projects on the business readiness side are given less attention.

The result? Those in charge of the technical project are deluged with complaints that the business users are not ready. And too often the retort is that users should just log on to the new system and it will be “intuitively obvious” what to do. Could there be a more illogical way to manage a business?

In the third use area, construction management, PM is most at home as a disciplined core work process that matured long ago. These management people define a platform as a technical project and get crews ready on the business side. Each time they strive to get more efficient and effective in reducing cycle time during construction, resulting in less waste and lower cost (Fig. 2).

In other words, by taking a cue from construction management, oil and gas company management can optimize PM through visualizing it as a business process, just as with other business processes such as a supply chain that can be improved and optimized over time.

Invest, Invest, Invest

Ultimately, challenges are different in where and how PM is used by oil and gas companies. But the common denominator action to meet the challenges is the same: invest, invest, invest. A point of confusion frequently rears its head around investment. Namely, running billions of dollars of offshore projects is not an investment in PM, any more so than the landing of billions of dollars of airplanes at an airport is an investment in airport infrastructure, lights, or runways.

While money is invested in optimizing the supply chain, for example, money is not being invested at nearly the same level to optimize the performance of PM; not invested in getting users ready for IT projects in advance of “go live”; and not invested in helping executives see change projects as projects. Seeing PM as a core work process is necessary because that is what makes a company consistently move ahead. Yet senior project managers participating in the survey discussed earlier said that what they hear with alarming regularity is that management does not even think about investing in PM because they do not see it as a systematic, disciplined process.

How should companies invest?

Document and systematically improve the PM work process.
Create and publish formal PM templates.
Train and certify people in PM.
Implement PM tools needed to do sophisticated planning and tracking of projects.
And, above all, professionally manage the investment in PM as a project to improve project performance—on target, on time, and on budget.

With that investment must come companywide compliance that is mandated, not voluntary, by stating that just like procurement or accounting, rules exist and they must be followed. Only when the PM approach becomes recognized as a core business process and not an option will companies see PM’s real business value.

Dutch Holland is Chairman and founder of Holland & Davis LLC. He has worked as a management consultant since the 1960s, developing a wide range of tools and concepts for managing change. He focuses on strategy, organizational design, management of technology, team building, management of quality, and executive coaching. He has been an adviser on industrial innovation to the U.S. President and Secretary of Commerce. Holland has taught in executive programs at Rice U., U. of Houston, U. of Texas at Austin, and the Wharton School Securities Industry Inst. Mike Campbell is Managing Director with Holland & Davis LLC and has more than 20 years of experience working with senior management teams to improve organizational communication and prepare management teams for organizational change. He is a nationally recognized expert on performance consulting and shared services.