Project Management Improvement Plan

The sharing of experiences and continuous search for improvements is the key to the avoidance of the earlier pitfalls and sets the path for continuous learning in value creation.

Walter van de Vijver

Continuous improvement needs a commitment to learning.

David Garvin

The Improvement Process is aimed at maximizing the value of an opportunity by identifying the Value Creation areas within the opportunity and examining the ways in which increased value can be obtained from those areas. To obtain the greatest benefit from the process it should be linked to the Vision of the team. The process can be used for any aspect of the business (not just projects) and during any Opportunity Realization Phase. It is at its most powerful, however, during the earlier phases of the project when the opportunities for adding value are at their greatest and it gains significantly by involving external experience.
The process has seven key steps:

• Identification of Value Creation Areas and Value Drivers
• Identification of Performance Indicators for the Value Creation Areas and Value Drivers
• Setting the Improvement Goals (Stretch Targets)
• Analysis of the Critical Success Factors (CSFs), the successful management of which
• enables the Improvement Goals to be achieved
• Developing Improvement Plans for those CSFs
• Implementing and closing-out the Improvement Plans
• Measuring and Banking the Gains

Depending on the nature of the business opportunity, many of the tools in the ORP Toolbox (Chapter 6) can be applied in the Improvement Process.

Value Creation Areas and Value Drivers

The first task is to identify the primary, high level areas of the opportunity or project
in which value can be created for shareholders. In a typical hydrocarbon development,
for example, the primary Value Creation Areas might be:

• Markets
• Lifecycle Cost
• Schedule
• Developed Resources

Once the primary Valuation Creation Areas have been identified then any subsidiary Value
Creation Areas should be separated out. For example, Lifecycle Cost separates into Capital
Cost and Operating Cost; Developed Resources separates into Reserves and Production.
Stretch Targets (see next section) are then developed against each of these.

Having established the Value Creation Areas the next step is to identify the Value Drivers
in each area. The Value Drivers are those key elements of an opportunity or project that
‘drive’ the end result in the Value Creation Areas.

Value Drivers change in importance as the opportunity develops.

Separating the Value Creation Area, “Lifecycle Cost” into Capital Cost and Operating Cost as examples, then the key Value Drivers for these areas could be as shown in Figure 3.9.3.

Having identified the Value Drivers for each Value Creation Area then there are two ways forward:

1. the team can determine the critical Value Drivers for its opportunity or project, leave aside the others and focus only on these in the next phase;
2. the team may decide that it doesn’t yet know which Value Drivers are critical in achieving its vision or decide that they are all critical and need further examination. In either case, all Value Drivers would be taken forward to the next stage.

The Value Drivers can be analysed to provide subsets at a level where performance can
be measured and action taken. Examples of such sub-sets are shown in Figure 3.9.4,
Performance Indicators.

Performance Indicators

Performance Indicators can be used to set targets for performance achievement in the
various areas of the business. They are important in identifying both what one wants to
achieve (the target) and what one is achieving versus the target and they should be
developed when sensible and useful for the identified Value Drivers. They can be high
level or low level indicators.

In examining the first two Capital Cost Value Drivers in Figure 3.9.3 then potential
Performance Indicators may be as shown in Figure 3.9.4
Performance Indicators and Stretch Targets can now be developed for each of the selected
Value Drivers that support the Value Creation Area Stretch Target.

Stretch Targets

Stretch Targets are invaluable in providing a focus for the team in pursuing the
achievement of its vision.
A Stretch Target can be seen as an extremely ambitious goal that gets people to perform
in ways they never imagined possible:

• a goal that requires the use of unproven technology/methods.
• a goal that we don’t know how to achieve.
• an artificial stimulant for finding new ways to work smarter.
• a legitimate endorsement to think out of the box.

Stretch targets are often set at three levels in the Improvement Process hierarchy:

1. at the overall opportunity or project level (then normally measured as NPV gain).
2. at the level of the Value Creation Areas – generating Stretch Targets in each area that will add up to the overall stretch e.g. cost reduction target.
3. at the level of the Value Drivers – generating Stretch Targets against the Value Drivers associated with each Value Creation Area that will build up to the individual Value Creation Area Stretch targets.

Stretch Targets, at whatever level, need to be set against historical performance,
benchmarks from others and the team’s own aspirations. As is the case for the whole of
the Improvement Process, the greatest gains can be made by setting appropriate Stretch
Targets for the early phases of the project (Select and Define). (This does not nullify or
lessen the need for Stretch Targets during the Execution Phase!). However and whenever
derived, they should measure up to the definitions of a Stretch Target discussed above.

Management of Stretch Targets

The question is often asked, “Are stretch targets a stimulating challenge or a demoralising burden?”

To make them the former rather than the latter, the case for improvement/change that drives the need for large improvement needs to be made to and be accepted by the team. It needs to be made clear to the team that there is no failure in not achieving stretch targets, but that failure is in not making every effort – “straining the sinews”.

External management and others must be made to differentiate between the 50/50 target (the team’s contract) and the stretch target. All team members must understand what the stretch targets are and where they themselves fit in the targets achievement.
To ensure the latter, the high level stretch targets need to be broken down so as to be meaningful to the team members at all levels, e.g. higher workplace productivity may need to be illustrated to the trades supervisor in terms of the amount and timing of work job preparation (pre-engineering), metres of cable pulled/day, number of cable terminations per day etc.

Success (that is, the sinews strained to the utmost and substantial improvement made) must be recognised and celebrated.

ReAD Critical Success Factors

Improvement Plans

Having decided the CSFs that need more attention by the team then plans are developed by the team to address those CSFs. Improvement Plans should:

• Address the Critical Success Factors
• Have defined objectives
• Be laid out in a structured fashion
• Be achievable with the resources available (or obtain more resources)
• Have champions for each action
• Be monitored against a plan for completion
• Be closed out and documented
• Be incorporated into cost/schedule forecasts
• Be revisited at regular intervals
• Balance process and people issues

In developing Improvement Plans then the time available should be used to the best possible effect:

• start as soon in the opportunity/project life cycle as possible
• in determining the plan’s schedule then take account of different phases and sub phases of the opportunity or project (e.g. Front-End Engineering, detailed design, procurement, fabrication, hook-up, commissioning, start-up)
• determine the amount of overlap of improvement study or implementation allowable in each sub phase
• include the actual implementation of study outcomes in the plan

Implementation and Close-out

A team member should be made responsible for overall co-ordination and monitoring of plan implementations.

Many teams are very good in performing analysis and developing plans but poor in having the plans executed and closed-out. For the Improvement Process to succeed it is essential that all improvement actions are completed and documented. Regular reporting on progress to the team management should be implemented.

Measuring and Banking the Gains

The Stretch Targets and 50/50 Plan Targets at the various target levels should be clearly set-out and understood by the team. Measurement and illustration of actual performance versus both 50/50 and Stretch Targets should take place regularly and the whole team be fully informed of the progress achieved. Schedule, cost etc. gains must captured in the opportunity or project forecasts.

Should it become clear that some/all Stretch Targets will be met or bettered, then consideration should be given by the team to re-setting the targets so as to provide additional stimulus to the Improvement Process.

As Improvement Plans reach the end of their useful life then a new Improvement Plan should be prepared after re-examination of the Critical Success Factors. In this way, the Improvement Process can be seen as a continuous process.

ORP Tools and the Improvement Process

In executing the Improvement Process there are a number of Tools in the ORP Toolbox (Chapter 6) that can/should be used to obtain maximum value from the process.
For example, taking the previously identified ‘Capital Cost” Value Creation Area (Figure 3.9.4) and the ‘Scope’ Value Driver, there are two Value Driver Subsets identified:

• Technology
• Scope Reduction

The Technology Value Driver can be addressed in the Improvement Plan by using the Tool “Technology Planning and Selection Guide.” The Scope Reduction Value Driver can be addressed by using the following Tools:

• “Value Engineering Guideline”
• “Project Facilities Objectives Guide”
• “Design to Capacity Review Guide”

Having identified the Value Drivers and the Critical Success Factors then the team should examine, as a first resort, which of the ORP Tools can be applied to address the issues. A list of significant value improvement tools is given below but is a sample only and reference should be made to the extended lists and descriptions in Chapter 6.

Major tools for Value Improvement

Additional to the Tools illustrated above, the SIEP Realising the Limit (RtL) Teams as
shown in Figure 3.9.6 have a series of Peer Assist modules that are aimed at improving
value. These are shown in Figure 3.9.7 and are described in 6.4.1, Strategic Process Tools

• Improvement. (A SIEP Peer Assist is created by the combination of local and external
  expertise coming together for a short period of time to focus on assisting an OU to add
  value to an asset).