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Thought Thursdays

 Project management in the boardroom (or rather the lack thereof)

2012-11-15 00:00
Willem Louw (Director of the Centre for the Business Management of Projects at USB-ED)
At the Presidential Infrastructure Investment Conference held in Sandton on Friday, 19 October 2012, President Jacob Zuma said that South Africa would spend as much as R4 trillion on infrastructure development projects over the next 15 years. At the same conference Deputy President Kgalema Mothlanthe reflected that the implementation of projects would be the most challenging aspect, while President Zuma stated that South Africa should use what it learned about project management prior to hosting the 2010 FIFA World Cup to implement the National Infrastructure Development Plan successfully.

It can therefore be argued that it is not in implementation that we should excel, but much rather in developing and planning the front-end of the projects. 

The jury is still out on how much the 2010 World Cup stadiums really cost and to what extent these monoliths will be utilised gainfully in the future. The overrun in costs (and there are more than superficial facts available to substantiate this) and the future utilisation are not execution issues, but significantly dependent on how substantially the front-end plans were interrogated by the ultimate decision-makers, i.e. boards, organising committees, etc. Similarly, we could question how thorough or complete the involvement was by decision-makers asking the right questions early enough regarding the following collection of projects:
  
  • The new multi-purpose pipeline built by Transnet from Durban to Heidelberg (Gauteng )
  • Eskom’s Medupi and Kusile power stations and its ability to deliver as promised. 
  • The Gautrain’s end cost, and its schedule to Pretoria and Park Stations. 
  • The current saga of the e-tolling fiasco in Gauteng. 
If we should rate our performance at board level for the mentioned smorgasbord of projects it will be very surprising if we score more than 4 or 5 out of a possible 10 points on a rating scale reflecting the ability of the boards overseeing these projects to ask the right questions early enough in the process to have deterred bad decisions.  

In order to address the issue at hand the conversation should be all about the interface between business management (read ‘board’ or other equal-stature decision-making authorities) and project management (both within the owner fraternity) early enough in the development of a capital project. It is NOT about project management during the execution phase of the project. 

To deal with this ‘anomaly’ and to ensure that appropriate attention is focused on the right questions at the right time by the board or business management during the front-end loading (FEL) or front-end planning (FEP) process of a capital project the following high-level recommendations are to be applied:

  • An executive sponsor should be appointed for a project or programme at the highest level as a member of the executive team tasked with the responsibility for the project or programme on behalf of the organisation. This sponsor’s primary job is governance: to see that the project or programme meets the organisation’s goals and complies with its policies. Successful executive sponsors must be (company) politically connected throughout the organisation and be willing to engage in regular dialogue with project team members and stakeholders. The executive sponsor must be a superlative strategist who monitors project scope to ensure that the end result will deliver strategic benefits. This is a severely underestimated role in the broader scheme of roles and responsibilities on a project, and, although of significant importance, preparation and guidance of an executive sponsor is often largely neglected.
  • It is more important than ever before for owners, boards and decision-making authorities to establish a rigorous governance framework that guides effective decision-making very early in the development of the project, thereby laying the groundwork for achieving project success. This framework should, inter alia, cover the following: project definition and project planning, a transparent control environment, internal accountability, contract terms and communication and reporting.
  • The performance of front-end loading and front-end planning on the project must be measured, as it is the world’s best capital investment. Unclear business or delivery objectives that fail to articulate what the board or business management need for success, the failure to secure cooperation from other non-project functions (such as operations), and the lack of enough knowledgeable staff are failures of the primary tasks of the board or business management early enough in the project. The FEL or FEP is a matter of discipline and needs to be driven by the board. A stage gated FEL or FEP work process is a core business process. The board or business management needs to insist on it. Corporate main boards and governmental decision-making authorities must insist on equally good preparation of all major projects.  

 

If we do not address the glaring vacuum in project management skills at board level in all these focus areas and particularly at board level for those projects being overseen in the Infrastructure Development Plan, then we will not live up to the expectations created by the Plan, but will continue our slide towards mediocrity as far as service delivery is concerned. 

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Project Management