Bernie Grover

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Program Management Our Allies Ourselves DND /
PMI Project Management Seminar 16 September 2003

• Bernie Grover

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Points to Ponder

• There are always opportunities to learn from
  others successes and disasters.
• There are always opportunities to improve on the
  margin.
• If you can successfully manage a DND project,
  chances are you can successfully manage any
  project.
• But, does DND really need project managers at
  all?

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Project Work Breakdown / OrganizationDND vs Other
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Project Work Breakdown / OrganizationDND vs Other
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Project Management Performance

• The really bad government projects
• The too-good-to-be-true private sector projects
• The in-between defence projects
• How does DND score overall

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Government Project Approval Formula

• Project approval
• Overvalued economic development effects
• Overestimated revenues
• Underestimated costs
• Undervalued environmental impacts

Credit Bent Flyvbjerg, Nils Bruzelius, Werner
Rothengatter in Megaprojects and Risk
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Millennium Dome

• Projected cost 449 million pounds
• Actual cost 728 million pounds ( 62)
• Attendance was 50 of forecast
• Exhibition was a financial flop.
• There were neither occupants nor buyers for the
  finished complex
• Government added acres of development land and
  sold the package for one pound.

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Londons Millennium (Or Wobbly) Pedestrian Bridge

• Cost 18.2 million pounds
• Closed after 2 days
• Too wobbly (Synchronous Lateral Excitation)
• Cost additional 5 million pounds and two years to
  stabilize

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A great building for Scotland. Sir Sean
Connery 29 Aug 2003
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Project Holyrood New Scottish Parliament
Buildings

• Planned
• Cost 1997 estimate 10-40 million pounds
• Occupancy Jul 2001

• Actual
• Cost 374 million, on the way to 400
• Schedule Sep 2004

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Project Holyrood What Went Wrong?

• Cost plus contract, with few or no performance
  incentives
• Work began before design was complete
• Top level (Parliamentary) oversight
  organization changed. Everyone was in charge no
  one was in charge.
• Lead architect died
• Very poor cost control (Consulting engineers
  cost 56 million pounds, on a 40 million pound
  project)
• Very poor project management from engineering
  perspective, e.g. conflicting task scheduling
• Questionable PM selection and PM expertize and
  experience

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Credit The Telegraph, 11 Jun 2003.
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The New Project Manager Not A PMP By A Long
Shot

• Job advertisement for the position a proven
  track record for delivering major projects is
  essential.
• The new PM (Jun 2001) 30 year old civil servant
  clerk with post grad diploma in Art History, was
  clerk to two Parliamentary committees, and never
  worked on a construction project in a managerial
  capacity.

Opposition Reaction She was taken on because
she was unlikely to be a whistle blower.
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Bostons Big Dig

• Big Dig Construction Cost Estimates
• Original 2.6 billion
• Current 14.6 billion
• Increase 462 and climbing

Charles River Bridge connecting the Big Dig to
North Boston (Photo Andy Ryan, Bechtel)
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Government Projects Cost Performance

• Project Cost Performance
• Confederation Bridge On budget
• Brooklyn Bridge 200
• Sydney Opera House 1,500
• Suez Canal 2,000
• Concorde 2,100
• Canadian Gun Registry 49,900

Source Bernie Grover, Bent Flyvbjerg, Nils
Bruzelius, Werner Rothengatter
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Some Private Sector Projects
June 5, 2001 April 11, 2003
September 4, 2003 (Ottawa) The Ottawa
Macdonald-Cartier International Airport Authority
(OMCIAA) will open its new terminal to travellers
on October 12, 2003, six months early, on budget
and without the help of government subsidies.
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Queen Mary 2 is going from SS(ID) to in-service,
revenue generating operations in less time than
DNDs ALSC will take to go from SS(ID) to
SS(EPA). (Schedule for QM 2 at SS(ID) was 66
months, actual is 68 months.)
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• SNC Lavalin Ankara Metro System
• SNC Lavalin
• Provided total project management and
  procurement, leadership of the consortium through
  the financing, design, construction, testing and
  commissioning phases.
• Planned, financed and negotiated a fixed-price,
  turnkey package for the 900-million Ankara
  Metro.
• In 2002 more than 50 of SNC Lavalins 3.4
  billion in revenues came from firm fixed price
  project packages. (Gross margin was 8.0 in
  2002, 12.1 in 2001, but revenues doubled from 01
  to 02.)

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So, What About Defence Projects?
If private sector projects are the good, And
non-defence government projects are the bad, Then
what are defence projects ?? .and can they
change ??
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What is Todays Driver
The highest score does not win!
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Acquisition Cycle Time

• US DoD Reduce by 25 per cent. DoD reported to
  the President and to Congress that it met its
  goal. Then the DoD Inspector General reported
  that DoD had used inaccurate numbers, and nobody
  really knew what has happened to ACT.
• UK MoD First decided to reduce ACT from 14 years
  to 9. Then decided to aim for no more than one
  day slippage per year from Main Gate Approval to
  In Service Date.

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Acquisition Cycle Time Canada

• Reduce by 30, from 15.8 years to 11 years,
  measured from SS(ID) to Project Close-out.
• DNDs ACT Reduction Plan can make the acquisition
  / project process more efficient, but cannot
  reduce ACT unless many projects are formally
  cancelled, or capital budget is increased.

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G-Modell des USMC mit Seilwinde in Afghanistan
Canada Speeding up The Process The LUVW Case
It took the USMC 7 months to buy this
vehicle. The LUVW Project is taking 101 months (8
years, 5 months) to buy the same vehicle.
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G-Modell des USMC mit Seilwinde in Afghanistan
CFB VALCARTIER, Que. (CP), 28 Aug 2003 The army
revealed it has bought 20 new seven-seat Nissan
Torano sport utility vehicles to replace some of
its older Iltis light vehicles in the field. The
17-year-old Iltis trucks built by Bombardier have
been plagued by mechanical difficulties in
Afghanistan.
The G-Class is a proven pedigree with over 50,000
vehicles in NATO service.
It took the USMC 7 months to buy this
vehicle. The LUVW Project is taking 101 months (8
years, 5 months to buy the same vehicle.
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Responding To Change DoD -- DNDUS Army Crusader
Project

• Spent US 2 Billion on RD
• Role changed
• Requirement went away
• Program was cancelled by SecDef May 2002

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Responding To ChangeCF ADATS Project Protecting
Our Airfields in Germany

• Contract awarded April 1986
• Entered service at Air
• Defence School Chatham 1989
• Role changed 1990. Requirement
• disappeared. Project continued
• First new systems delivered in
• 1992 to NB, not Germany
• Currently deployed at 4
• Air Defence Regiment (Moncton,
• Gagetown)
• CF maintained an unused capability
• Project was never closed
• Continues to spend money
• Planning mid-life upgrade, 13 years after
  original requirement disappeared.

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USAF Lease Capability vs Buy Capability Lease
100 767 Tankers
USAF Position Leasing is the preferred
approach because of the advantage it affords for
quickly delivering needed tankers to our
warfighters without requiring significant
up-front funding. Leasing will cost 1 million,
or less than 1 more, per aircraft.
Boeings Position Saves KC 135 maintenance,
upgrades cost Boeing assumes RD cost and
production risk Is the quickest way to acquire
capability Tanker will be best in world 90
reduction in depot maintenance time
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Lease 100 767 Tankers
Other Considerations CBO Costs of leasing are
23 more than buying (161 million vs 131
million per aircraft) CBO The transaction would
essentially be a purchase of the tankers by the
federal government but at a cost greater than
would be incurred under the normal appropriation
and procurement process. (R. Sunshine testimony
before SASC, 4 Sep 03) A 2001 Air Force study
found that the (KC 135E) fleet could last until
2040.
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Cost performanceUS Defense Contracts

• Jacques Gansler reported that the average cost
  overrun of defence contracts is 40. (Affording
  Defense)

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UK MoD Project Cost, Schedule , Performance

• Prior to Smart Acquisition. Aim for 50 chance of
  meeting cost schedule targets
• Smart Acquisition. Aim for 90 confidence of
  achievability
• Latest NAO reports suggests 98 of all projects
  will meet performance requirements, and cost and
  schedule performance is improving (14 of 20
  projects are still showing cost increases or
  schedule slippage)

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DND Cost Schedule Performance

• DND projects can NEVER have a cost over run,
  because the budgeted costs are ALWAYS changed to
  agree with actual costs, as part of the project
  close-out process.
• Historically, schedule performance has not been a
  priority.
• DND is aiming for a 30 reduction in acquisition
  cycle time, from 15.8 years to 11.0 years.

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APMP National ConferenceUnited States Air
ForceAcquisition Initiatives
(How Do DND Initiatives Stack Up?)
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USAF Acquisition Improvement Efforts

• 2001 Lightning Bolt Initiatives (RFP Support
  office, Spiral acquisition, Knowledge pipeline,
  Roadblock busters)
• Acquisition Center of Excellence (ACE)
• Changes to the Acquisition Process
• Industry as a Team Member

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DND and Acquisition / PM Reform

• In every area of acquisition / project management
  reform, DNDs performance is equal to or better
  than that of its major allies US, UK, Australia
• Areas where Canada is ahead Formal adoption of
  PMBOK as departmental standard speeding up
  project close-out fully integrated acquisition
  in service support organizations early and
  continuous dialog with industry on par with US,
  but ahead of others with MAS Desktop.
• Within Canadian Government, DND is the leader in
  acquisition reform. PWGSC has played reactive
  role, responding to DND initiatives.

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Project Expenditure Approval Levels

• UK MoD IPT Leader, up to 20 million pounds, DPA
  (ADM(Mat)) to 400 million pounds
• US Services All formal capital projects must be
  approved by Congress, but then contracts may be
  let without additional authority
• DND Political approval for capital equipment, 2
  million and above
• Departmental services contracting authority is
  400,000 for competitive contracts, then to
  PWGSC. Above 20 million to TB.

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Food for Thought 1.

• Could DND improve its project management if its
  internal project approval levels were
  significantly increased, say to 30 million at
  ADM(Mat) level
• Or
• If we had Parliament approve our capital plan as
  part of the defence budget, thereby eliminating
  the requirement to go back to TB?

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Food for Thought 2.

• Make Canada the same as all its allies. Bring
  contracting for DND projects into DND,
  eliminating PWGSCs role in defence contracting.
• Could / would this improve overall
  contracting performance, support, and
  responsiveness to project managers and project
  sponsors?

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Food for Thought 3.

• Put Canada ahead of all its allies.
• Make all equipment projects turnkey, fixed
  price, with the prime contractor responsible for
  project management, and consulting engineering
  contractors responsible for certifying
  performance.
• Otherwise, you have to convince senior
  management that you can do better than industry?

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Knowing when to stop is important