Sandy Vasser, ExxonMobil’s Facilities Group I&E manager, and Don Allen, from ABB, presented a tutorial on how to do project management flaw-lessly. By that they mean, with fewer flaws…
Vasser is perhaps one of the world’s few experts on the management of megaprojects. His projects run to over $2 Billion (yes, that’s “billion with a b”) each, and ExxonMobil is doing about 50 of these projects in the next five years.
It’s nice to have lots of money to spend, finally, in the oil patch. I worked for Baker-Hughes when Texas Nuclear was the only part of the company that had any positive cash flow, so I’ve seen the other side of things.
Vasser said that effective project management requires ExxonMobil to train their managers in:
–working on quality project management teams
–change management discipline
“We also expect this of our suppliers,” Vasser said, sternly.
“Megaprojects increase the emphasis,” he said, “on selection and execution,” as engineered equipment and bulk costs are well above trend, and increasing. “Shop loading is sharply up, and labor costs are increasing rapidly, worldwide,” he continued.
“Total Erection Costs have increased 50% since 2002,” he went on, “and there is a greater expectation that we will increase the local content.”
“We want to lower execution times,” he said, and went on to define his target at 4 years per project. This, he hoped, would lower costs. “We are in a ‘perfect storm’ for difficult project execution,” he said.
ExxonMobil’s strategy is to:
…be flaw…less. Mistakes will happen, and we need to respond and correct them quickly
…complete projects on time on budget
…develop systems and procedures to force compliance with time and budget
…apply those systems rigorously
“If it feels bad, it probably is,” Vasser said, “so you need to jump on it early.”
…use time-outs to regroup and rethink when projects are going bad
…qualify new technology in a formal way
…steward the interfaces between contractors
…steward resolution of critical issues
…develop trade critical KPIs
…leverage significant corporate resources
…develop Project Leaders
Then Vasser took the audience through a discussion of key elements of successfully managing a Megaproject, or any other project for that matter.
Plan for the unexpected, Vasser said, and understand all the risks as best you can. Utilize the effective project planning process you’ve set up for risk management, and remember the influence curve. The earlier that you intervene in a process, the greater influence you have, and the lower the cost of changes. He encouraged project managers to spend time on strategic thinking, and doing “what if…” scenarios, so that you can always have backup and contingency plans.
Make sure your decision making is fact-based. Decisions based on facts are always better. But “good timely decisions are better than perfect decisions rendered untimely,” he said.
“Manage risk by assigning tasks to those actually best able to execute them, and let the assigned resources do what they do best,” Vasser said. That means, give projects to the best qualified to do them, and then leave them the hell alone.
From the owners’ perspective, Vasser encourages the development of strong business relationships with key suppliers. He recommends the formal adoption of Executive Sponsors for both suppliers and owners, and a formal methodology for working toward good relationships and successful projects.
“We are trying to harmonize our specifications,” he said, “with supplier standard offerings to minimize exceptions and deviations, and we are asking our suppliers to harmonize their offerings with our specifications, too.”
And from the supplier, ExxonMobil expects that they will manage the order, keep their commitments, fully disclose problems timely, respond and mitigate them quickly, and maintain consistent quality worldwide.
Finally, Sandy provided some thoughts on Lessons Learned. “Capture the Lessons Learned,” he said. “The definition of insanity is doing the same thing over and over expecting different results.” Learn from both your successes and failures, he urged.
As a result of this methodology, he said, ExxonMobil is well into a strategy of “design once, build many” and that’s what is allowing these fast track megaprojects to succeed.
ABB’s Don Allen was next up, but he was so totally upstaged by Vasser that he could have just as easily stood up, pointed at Sandy, said, “What he said.” and sat down.