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Industrial Megaprojects
Concepts, Strategies and Practices for Success
Ed Merrow
President & CEO Independent Project Analysis, Inc. (IPA)
Outline
The Data The results of large industrial projects The proximate and root causes of failures Implications for project management
Industries Represented
Chemicals 10%
Africa 9% Australia 9%
CONFIDENTIAL
Outline
The Data
10
Megaprojects
60% 50%
Yes
40% 30%
Projects <$500 MM
About two-thirds of large projects failed by these criteriatwice the rate of small projects
20% 10% 0%
11
1.2
COST GROWTH
40% 30% 20% 10% 0%
1.1
PRODUCTION
1.0 100% 0% 80% 60%
1.0
10%
1.1
20%
1.2
30%
1.3
12
13
14
Outline
The Data The results of large industrial projects
15
16
Clear Objectives
17
Only a Slight Difference in Clarity of Business Objectives Between Megas and Non-Megas
70
Percent of Projects
Under $500MM
60 50 40 30 20 10 0
Very Fairly
Megaprojects
Somewhat
Unclear
70 60 50 40 30 20 10 0
Very
Under $500MM
Megaprojects
Fairly
Somewhat
Unclear
CONFIDENTIAL
19
Megas
Percent of Projects
CONFIDENTIAL
20
Percent of Projects
FEL Index
CONFIDENTIAL 21 INDEPENDENT PROJECT ANALYSIS
Project Size
Leadership Turnover
CONFIDENTIAL 22 INDEPENDENT PROJECT ANALYSIS
Larger Projects Experience More Frequent Project Manager Turnovers Even After Controlling for Schedule
50%
40%
35%
30%
25% 10 50 100 150 200 250 300 350 400 450 500
Turnover No Turnover
COST GROWTH
1.10 40% 30% 20% 10% 0% 0.90 1.00 1.10 20% 1.20 1.30 30% 40% 0.90 10% 0% 10% 20% 30% 1.00 40% 50%
SCHEDULE INDEX
CONFIDENTIAL
1.40
SCHEDULE SLIP
INDEPENDENT PROJECT ANALYSIS
24
25
26
Front-End Loading
27
30%
250 - 500
20%
100 - 250 <100MM
10%
0%
Good GOOD
Fair FAIR
Poor POOR
Screening MISERABLE
FEL Index
CONFIDENTIAL
28
Percentage of Projects
BEST
GOOD
FAIR
POOR
MISERABLE
FEL Index
CONFIDENTIAL
29
Percentage of Projects
FEL Index
CONFIDENTIAL
30
FEL Index
Best
Good
Fair
Poor
Very Clear
Fairly Clear
Somewhat Clear
32
33
Root Causes
Difficulty contributes to poor practices, but is a secondary cause The primary cause is the drive for unachievable speed
34
Large projects cannot recover from cut-corners There are too many business cowboys with weak accountability for results driving the projects too fast
35
36
Outline
The Data The results of large industrial projects The proximate and root causes of failures
37
38
39
40
41
42