prof. dr. mladen radujkovic, university of zagreb, … 02, 2017 · megaproject success for moving...

Megaproject Success for Moving Society Forward

Prof. Dr. Mladen Radujkovic,

University of Zagreb, Croatia

Alma Mater Europea University

IPMA, Chair of CoD

Prof. Dr. Mladen Radujkovic (CROATIA)

• Professor of Project Management and Construction Management at the University of Zagreb Faculty of Civil Engineering, Croatia and parttime professor at Alma Mater Europea University ECM

• Former Vice dean and Dean at the University of Zagreb• President of Council of Delegates (IPMA CoD Chair) at International

Project Management Association, IPMA, and also Former IPMA President (2013-14) and Vice President in three terms (2007-2012)

• President of Croatian Association for Project Management.• Consultant for Projects, programs and portfolios in the South-east

Europe (Booz Allen; USAID; Strabag; Importanne; Ilbau; Adris;…)• Published about 200 papers and presenter at more then 50

international events, participation in around 20 research projects, around 35 keynotes at international events, …

• Around 35 years of experience working like site manager, supervisor, project manager, consultant for different projects including research, water, transport, education, tourism, …

346 years of tradition

1669. Leopold I Habsburg issued a decree granting the status and privileges of a university to the Jesuit Academy of the Royal Free City of Zagreb

29 Faculties

3 Art Academies

University Center for Croatian Studies

65.000 students

7,000 teaching and administrative

staff

University of Zagreb, Croatia

about 4,000 bachelor students/year

about 7,500 masters students/year

about 400 doctors of science/year

1669. Leopold I Habsburg issued a decree granting the status and privileges of a university to the Jesuit Academy of the Royal Free City of Zagreb

Alma Mater Europaea - ECMUnder the patronage of the European Academy of Sciences and Arts Salzburg (EASA)

(over 1.900 scientiests and 33 Nobel Prize winners)

19 accredited programs

All threeBologna cycles

Lecturers fromacademia & industry

International cooperation

96% employability

Summary : Megaproject Success for Moving Society Forward

The presentation deals with mega projects, where project management is challenged to achieve business success in parallel with respect to natural environment and delivering benefits for the community. Mega projects are usually undertaken for major change which influence life of many people within the specific community. Usually they absorb enormous quantities of resources, so failure can seriously damage the future development of the community. Due to the extremely complexity and long life cycle, such projects involve significant uncertainty and frequently are faced with many challenges. The success of mega projects is composed by many factors, and final assessment could be challenged over the time . The presentation focus all those aspects and provide insights in past practices gathered from several relevant research communities. The lessons learned are used for analyses and defining proposition for mega project management framework.

Prof. dr. Mladen Radujković

The World of Projects becomes the World ofMegaprojects

The World of Projects

Employees

???


GDP share

Spendings

……..

Income

Why projects ?

• In a dynamic human environment project is a tool for converting anopportunity to a benefit.


Complexity increasing worldwide – up to mega dimension

Mega projects for mega societies

Projects on a global mega scale in multicultural contexts

Real (manufacturing/construction) vs virtual work

Critical need of behavioural skills at the megaworld

Growing number of mega-multinational projects

Multi-cultural influence on project deliverables

Projects increasingly done for the good of society/ environment –

multi-criteria approach

Project and project management are just following the global human

trends

Challenges ……

More and more : Mega and

Multy


About the Topics : Internet Review• Project – 2.540.000.000 results

• Program – 2.470.000.000 results

• Portfolio – 558.000.000 results

• Project management – 224.000.000 results

• Program management – 56.400.000 results

• Portfolio management – 18.400.000 results

• Project management success – 49.700.000

• Program management success –23.500.000

• Portfolio management success –6.760.000

• Mega project – 5.000.000 results

• Mega project management – 630.000 results

• Mega project management success –744.000 results


Trend ???

Why Megaprojects ?

• Megaprojects are temporary endeavors (i.e. projects) characterized by: large investment commitment, vast complexity (especially in organizational terms), and long-lasting impact on the economy, the environment, and society (EU COST Action 1007) at the cost more than 500 mil EUR,… or (industrial) - project with the final capital cost of more than 1 billion USD (cost of materials, construction, labour) (Merrow, 2011) (OMEGA, 2012)

• Without Mega projects society we know would not exist, …..There are more and more sectors realizing megaprojects:• Aerospace• Disaster clean-up• Energy projects• Science projects• Spaceflight , space industries,..• Sports and culture• Global infrastructures (Transport, Water, Oceans, …) • Planned city and urban renewal (Megacities,..)• Extreme changes within a society (large data, major reorganizations of sectors, …)• ……. https://en.wikipedia.org/wiki/List_of_megaprojects

But it is not story only about money, it is much, much

more,…., it is about movingsociety forward …


https://en.wikipedia.org/wiki/List_of_megaprojects

The Benefits from Megaprojects (and Drivers)• Technological Inspiration. Most megaprojects are technically inspiring. Engineers and

technologists develop great enthusiasm for working on large and innovative projects, pushing the boundaries for what technology can do.

• Job creators. With so many jobs being automated out of existence, megaprojects serve as a catalyst for both the unemployed and the under employed.

• Political Accomplishment. Politicians need something they can point to with a sense of pride and accomplishment.

• Economic Benefits. Business people, trade unions, and workers alike will all reap the rewards from megaprojects. Impact on a economy.

• Community Pride. Everyone loves to tell stories about the big things their community accomplished. Symbol of pride and progress within a community.

• Aesthetic Beauty. Most people appreciate good design when it comes to building, using, and looking at something very large that is also ironically beautiful. Megacities with mega demands Pareto 20/80 becomes 80/20 in favour of mega cities.

• See more at: http://www.futuristspeaker.com/job-opportunities/megaprojects-set-to-explode-to-24-of-global-gdp-within-a-decade/#sthash.gH99pzCs.dpuf


http://www.futuristspeaker.com/job-opportunities/megaprojects-set-to-explode-to-24-of-global-gdp-within-a-decade/#sthash.gH99pzCs.dpuf

The Future of Megaprojects World : Infrastructures and People

• All of the world’s defense budgets and military spending taken together total just under $2 trillion per year, but our global infrastructure spending is projected to rise from $3 trillion to $9 trillion per year over the coming decade. - See more at: (Global Strategist, Parag Khanna)

• “We have been living off an infrastructure stock meant for a world population of three billion, as our population grows towards nine billion,” says Khanna. “As a rule of thumb, we should spend about $1 trillion dollars on basic infrastructure for every 1 billion people on the planet.” If we do increase our infrastructure spending to $9 trillion per year, as ParagKhanna suggests, megaprojects will rise in importance from roughly 8% of global GDP to close to 24% factoring in all the spinoff economies. –

• http://www.futuristspeaker.com/job-opportunities/megaprojects-set-to-explode-to-24-of-global-gdp-within-a-decade/


http://www.futuristspeaker.com/job-opportunities/megaprojects-set-to-explode-to-24-of-global-gdp-within-a-decade/

http://www.futuristspeaker.com/job-opportunities/megaprojects-set-to-explode-to-24-of-global-gdp-within-a-decade/

The Future of Megaprojects World : Example –Infrastructures : Time perspective Top 10 Emerging Markets –by growth in infrastructure spending needs

• Not only developed countries are faced with more and more large scale or mega projects

• The need for large infrastructures in developing countries is even higher


Too Many Mega project Failure Reports, …… ???

Megaprojects : Global Top Cost Overruns


Large infrastructure Projects – Overruns

https://www.linkedin.com/pulse/budget-busters-infrastructure-projects-reasons-frequent-michael-kuzio


https://www.linkedin.com/pulse/budget-busters-infrastructure-projects-reasons-frequent-michael-kuzio

The Reports on Megaproject Performance

Research EY (2014):• 365 mega projects in oil and gas industry• Mega projects: proposed investment > US$1b• 64% of the projects are facing cost overruns• 73% of the projects are reporting schedule delays

• Research -EU COST Action, (2013) 35% of the mega-projects: made on time, and only 2% in the budget

• Research Merrow, (2011) - 65% of the mega-projects not achieving its objectives. Oil and gas costs approx. grew by 46% more than was estimated at the project start

• Research KPMG & PMI, (2013) 45.6% of projects with time overrun and 31.5% cost overrun on average

• Research …… All similar findings


The Reports on project Performance

• PriceWaterHouse Report - 86% of projects fail to deliver against their budget, schedule, scope, quality and benefits baseline (PWC, December, 2012)

• Standish Group Report - 1/3 of projects have serious problems with budget and specifications, and 2/3 projects have project overrun (Standish group)

19

Standish Group „Chaos Manifesto 2013 – Think Big, Act Small“


Key Issue : The Success / Failure of a Megaproject ?????

• In a mega project world – everything is mega, including success or failure, so mega projects are marked like „creator or destroyer of capital” (E. Merrow)

• When mega project fail, it is nor just business failure, it is community failure, due to opportunities lost, so as time lost, so as resources missused, ….., so we can say that megaprojects are „creator or destroyer of a community opportunities ……… - benefits”…..


It is much more then an individualfailure, or a team failure, or a comapny

failure …

?

Who ? When ? How ? Why?………

Reports

Why it is so challenging and complex …. ?

• Mega projects are not justsimpleanswer on businessneeds, but rather anwersto communitytrends andneeds

MEGA & MULTY

• PARTICIPATIONS• INTERESTS• CHANGES• RISKS• PARTICIPATIONS• FUNDING• TIME SCALE• INNOVATIONS• IMPACT TO ENVIRNMENT• EXPECTATIONS• PERCEPTIONS• …….


There are many wheels that spin …

Mega projects

Expectations

Needs

perceptions

Interests

Mega projects

Overoptimisi

m

No adequtecompetencies

Poorlearningfrom the

past

Simplified

approches

Risks

Changes

Constraints


Megaprojects : The Key Findings from the Community of the Practice and Research Groups in

Europe

Success or failure ?

The main topics

• Stakeholder management and support – both, megaproject internal and external stakeholders (EU COST Action, NETLIPSE)

• PM tools adapted for megaprojects management (NETLIPSE)

• Value for a Society – Playing with Complexity (NETLIPSE)

• Open system and Agent of change model (OMEGA Centre UCL)

• Human behaviour, over optimism (Oxford Said)

• Balance of benefits : business / community / environment (IPMA Megaproject)


The Six Perspectives on Megaproject Practice / Research

Megaproject success OMEGA UCL London

Megaprojects inceptionsOxford Said

Megaproject outcomes IPA; USA

Megaprojects performanceEU COST

Success factors, performance and best practices for large IP NETLIPSE

Success andbenefitsIPMA SIG

What constitutes a successful MTP? As is apparent from the preceding lessons, this simple question demands many varied and interrelated responses. In the context of MTP planning, appraisal and delivery, these include taking a view on: understanding how well risk, uncertainty and complexity has been treated; and, acknowledging the importance of context in decision-making and, most importantly, in making judgements about ‘success’.

Megaprojects are recognized by cost underestimates and benefit overestimates which is result of human behaviour.

Cost growth and schedule slippage for projects in the megaprojects database are driven primarily by conflicts between the projects and host governments.Technological innovation also plays a role in project outcomes.

Performance of European megaprojects is analized trough risk management, stakeholders and special purpose entities.

Initial research on the criticalsuccess factors of a project focussed primarily on the control aspects of projects previouslymentioned. It has also become clear that the effectiveness of a project management and organisation does not only depend upon these factors within thedirect control of project managers. Projects have to be realised in a dynamic and multiplecontext. Context factors also have an impact on the realisation of projects whichmay be decisive.

Data about the influence of a megaproject to a community, success factors, benefits for a community, influence of a project management to a project success

Prof. dr. Mladen Radujković & Sandra Mišić ,mag. oec.

complexity

characteristics

stakeholders

overruns

success

risks

performance

Project success and project management success

• From the past records we do know all possible combinations in particular projects:• Successful project with successful project management

• Successful project with unsuccessul project management

• Unsuccessful project with successful project management

• Unsuccessful project with unsuccessful project management

• What does it mean ?

• It means that project management is not the only factor that influence the project success, but rather it contribute in

• The project success is a complex attribute that can be changed over time, and dependable who is providing the evaluation


How do we measure ……. in past?

• Success or failure key measures

Survey vs.

factors

budget scope performa

nce

quality requirem

ents

stated

deliverabl

es

benefits

Standish + + +

Jones + + +

McManus + + +

IBM + + +

Geneca + + +

KPMG + + +

McKinsey + + +

Dalcher Daren, What Can project Success or Failure, Tell Us about Project Management Theory ; Theory Meets

Practice in Projects, GPM; Nurnberg, 2014., page 176-191


Success or Failure ? …. How do we evaluate… and how PM profession contribute

• What is the proper ground for judgment of project success or failure ?

• There are many perspectives on that topic, not always coherent and sometimes dissonant, despite dealing with the same project.

• The key challenges:• Who is authorised to announce success or failure?

• What is the ground for declaring success or failure?

• When we should do evaluation ?

• Should we use the same approach for any mega project evaluation ?

• ...????


And how the project management profession contribute to the project success, ….

Success

Success of a project

Success of a project

management

Theperspective of

profession

The ownerperspective

Criteria , factors ,….

Project manager

The projectOwner


The success of the project management

Success of the project

Focus: Short-term and specific management goals

Focus: Long-term goals and needs of the organization owner of the project

Successful project delivery for the use of the product or service created by project

Successful business case - the benefit for the owners of the project

Internal focus on how the project is managed Focus on the effects of the project on the organization or community that owns the project

Rating by the traditional performance criteria: for example, the time, cost and quality

Through a comprehensive rating criteria and the final outcome of the project - the benefit of the operational phase

The effectiveness of the internal and current dimensions during the phase of preparation and execution of the project

Efficiency and effectiveness, internal and external, long-term and short-term dimension, through all phases, especially phases of use

The three dimensions: time, cost, quality and short-term perspective

Fourth dimension: the benefits of the project and long-term perspective

Mladen Radujković & Mariela Sjekavica : Devloppment of the Model for Project Management Success Improvement by Risk, Changes and ContraintAnalyses, Gradevinar 02/ 2017.

And what is success ? A four perspecitves ....

1. Management by the book: iron triangle, controllability

2. Product-oriented management: end-result, fit-for-purpose

3. Parent-oriented management: project specific political or social factors

4. Client-oriented management: balancing between the needs of stakeholders

5. ……….

So, which perspective the proper ground for evaluation ?

• Prof.dr.ir. Marcel Hertogh, From Best Practises to Next Practices, 2015 1st IPMA Mega projects, Special Interest Group (SIG)

Meeting


Public and private perspectives ….

• Driven by needs

• Benefis & Perception

Public

• Driven byresults

• Facts & resultsPrivate

Who ? When ? How ? Why?………

Reports


composed by the intersection of empirical facts and perceptions of stakeholders.

Critical drivers of megaprojects success and failure

Mišić and Radujković, _ Critical Drivers of Megaproject Success and Failure ,Proceedia Engineering, 122, (2015) 33

Successfactors

Failurefactors

Missingstartegy

Poorcommunicatio

n

Ineffective riskanalyse

Value vs Context

Clear strategyand objectives

Frontendreview

Politicalleadreship

CharismaticPM

The Contribution from the PM Profession : Megaprojects : Facilitation of Success

Investment in Project Management

• An organization can not buy project management at the market like they do with technical or technologicalcomponents.

• 55% companies are ‘satisfied’ or ‘mostly satisfied’ with their investment in project management

• And what does it mean investment in project management ???

Results

Other???

tools

people

INVESTMENT


Project managementDelivery, results, benefits,….Standards, methods, tools,…People, stakeholders, …..Competence, capacity, ….Context, business, organizations, ….…….

1. Competence : People + ContextThe IPMA Competence Framework

Behavior

Co

ntext

Tech

nics

creative short high

complex normal medium

regular long low

issueTime

reactionuncertainty

Value for people within particular context

MEGAPROJECTS


Value for society

2. Value for society: Playing with Complexity

Infrastructure

Environment

Combining functions

Transport

38

Source :

Prof.dr.ir. Marcel Hertogh, TU DELFT

3. Front-end phase management

1. Milestones and decision gates, 2. Go / no go decisions 3. Ensure adequate basis for decisions, 4.focus on decisions in critical points, not details


Source : EU Cost action Megaprojects , 2015.


4. Stakeholder Management

5. PM /Standards

Success for organization / community

Delivery

Value

Benefits

Project success

Business case

Strategy

……

PM SuccessPeople

competencePM Standard

Coallition for a megaproject

Business/Society/Environment

Forcing vs controlling

Scope / goals / stakeholders

Front-end phase

…….


6. Risk & Change management1.EXTERNAL SOURCES OF RISK IN PROJECTS

1.1. LEGAL 1.2.

POLITICAL

1.3.ECONOM

IC

1.4.SOCIA

L

1.5.NATU

RAL

Local

regulations

Permits,

approvals

Changes in

law

Standards

Change in

politics

Elections

War

Treaties

Economic

politics

Prices, taxes

Financing

conditions

Currency

value

Education,

culture

Seasonal

work

Strikes

Fluctuation

in

population

Climate

Foundation

Fires

Earthquak

es

Floods

2. INTERNAL SOURCES OF RISK IN PROJECTS

2.1.

MANAGEME

NT

2.2.PROJE

CT

DOCUMEN

TS

2.3.PEOPL

E FACTOR

2.4.SUPPLY

AND

LOGISTICS

2.5.

CONTRAC

TS

Unrealistic

goals

Poor control

Technology

Organization

Superficialit

y

Inaccuracy

Incomplete

ness

Updated

documents

Productivity

Illness

Motivation

Errors

Shortages

Availability

Reliability of

equip.

Insufficient

workers

Type of

contract

Short time

frames

Unrealistic

prices

Party

relations

0

50

100

150

200

250

300

0 50 100 150 200 250 300

Ov

err

un

(%

)

Construction projects

Time

Budget

Risk identification

Risk assesment

CU

RR

EN

T P

RO

JEC

T R

ISK

RE

GIS

TE

R

CE

NT

RA

L R

ISK

RE

GIS

TE

R

Risk analysis

Risk response

Monitoring of

results

Communication

Conclusions

• Without megaprojects we would not have world we know ….

• The main goal for any megaproject is to create benefits for the society where the project is implemented, in parallel with business success and respect to the environment

• It is not possible to develop, manage and evaluate megaproject by using standard approach for standard project

• Decomposition of megaproject success or failure is not as simple as standard projects.

• The main focus of project management must be to contribute in the project success. PM profession still do not have adequate replay for such big challenge,

• ………

prof. dr. mladen radujkovic, university of zagreb, … 02, 2017 · megaproject success for moving...

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