Houston, we have a problem!

You’ve just delivered a successful project and are looking forward to wrapping up the loose ends and working with the tendering team to finalise a proposal for your next assignment.  As you start to get your head around the project your manager pulls you aside and tells you that you’re be re-assigned to an ongoing D&C project which is experiencing a “few difficulties” with customer acceptance of deliverables, schedule and budget overruns.

The next day after the round of introductions, team meeting and water cooler chats with key people it’s apparent that the situation is dire with months of delay, massive cost blowout in engineering, and the customer raising a non-conformity.   As you dig down to find the root cause it becomes clear that scope is out of control the prototype has been built and delivered without client approval.

It’s the sales department

Your team members are adamant that the problem started with the tendering team having developed a solution without realising the complexity involved and not understanding the real scope, and they’ve been on the run ever since trying to meet the commercial obligations with an increasingly dissatisfied customer.  But is this real problem or are there other factors to consider?

Inevitably in D&C projects it’s difficult for the tendering team to cover all the bases and some items will slip through to the bottom line either due to incorrect assumptions or poor documentation defining the battery limits.  However, with a competent tendering team these are usually relatively minor and whilst they should be explored to understand impact, they are probably more useful for lessons learned.

The reality is that often it’s not the sales team who missed, but rather the execution team who failed to document what was to be delivered, and/or didn’t control the scope with the customer leading to overruns in design and manufacturing.

Manage scope

If you cast your mind back to PMBOK, the control of scope is comprised of planning and monitoring & control.  In the former this is about understanding what it is to be delivered (collecting requirements and defining deliverables), creating a WBS and baselining the scope.  The latter is about validating what you have produced meets these criteria and managing variance from the baseline.

In this example of project recovery, the PM has quickly grasp what was actually agreed with the customer to establish a baseline.  This means going back and understanding how the offer was constructed, reviewing the contract and deviations schedule, the specifications, the sales handover and project MOM’s, and all the documentation submitted and commented/approved by the customer.  This is both a time consuming and difficult task, particularly in an environment where the project is struggling and people are defensive, but the reality is you have to know what you should deliver to meet your company’s obligations, and be able to clearly communicate this to your team, management and the customer.

Validate customer inputs

Importantly, where the customer is providing equipment or data all inputs must be checked to understand if design freeze status was achieved, or the point where all the input data had finalised.  This milestone is critical to D&C as it is the point where detail design can commence and any change in client data can trigger significant re-work and schedule impacts.

Equally critical is to understand the review and approval cycle for contract documents.  Typically document control procedures will follow a method of revision control and status codification.  Documents which have been submitted and approved should be of a certain revision and stamped with a relevant code to proceed with or without comments.  Your team should manage a register which identified key dates and status which can be compared to contractual obligations to understand if the client is not returning documents on time.

Reality and next steps

Having completed these actions, you should have reached a solid understanding of the real status of the project, what is the actual scope to be met, what has been actually delivered to date and mapped any scope creep in order to reach a conclusion about where the root cause of cost overrun and delay has occurred.

Whilst this might have been a difficult process, the next steps will perhaps be an even greater challenge as you advise your findings to management and recommend a course of action bring the scope under control, implement effective change management, stabilise the budget and address the client non-conformance.  I’ll address these topics in my next post.

Like to know more..?

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