3-Complexity - Advanced Engineering Project Management

COMPLEXITY & Project

Management

Advanced Engineering Project

Management

Techniques for Avoiding Project

Failure

1 MDCSystems 2011 All Rights Reserved

The Approach

Forensic Project Management

Systems Thinking

Complexity

Leadership Traits for Project Success

Examples of Failure and the Root Causes

MDCSystems 2011 All Rights Reserved

The Sequence of the Beginning Traditional Project Management

Scope, Schedule & Budget

Common Characteristics of Troubled Projects


Systems Thinking Concepts

Case Histories/StudiesSimple Case - Ras Tanura - Refinery Rebuild

Complicated Case - Industrial Coke Manufacturing Facility

Complexity Case - Highway Traffic Control System (Big Dig)

Joint Stars Aircraft Procurement and Modification

Saudi Arabian Air Defense System


Traditional Project Managers Trained in Analysis

Trained to Utilize The Scientific Method of Inquiry Observation

Model or Analysis of the Problem

Prediction of Behavior Based on the Model

Trained to Utilize Models (Primavera Schedules, 3D-CADD)

Encouraged to Sub-Optimize (Parts of the Process)

Failure Modes and Effects Analysis

Project Models Fail Because Project Processes Are Non-Linear Self Organizing Processes and Reconfigure Their Interactions Based Upon Uncontrolled Feedback From the Last Set of Interactions

Not Aware of Systems Thinking Concepts

Provides Reactive Management Based Upon Recorded/Developing Data Analysis


New Paradigms

Simple Project Context - Domain of Best Practices -PMBOK1 Known Knowns; Agreement on right solution to problems

Complicated Project Context Domain of Experts Known Unknowns; At least one right answer to problem

Complex Project Context Domain of Emergent Theories Unknown Unknowns

Chaotic Context - Unknowables1 Project Management Body of Knowledge

A Leaders Framework for Decision Makingby David J. Snowden & Mary E. Boone

Harvard Business Review - 11/2007


The Modern Project Management Challenge

Contract Management

Scope Management

Schedule Management

Procurement Management

Cost Management

Integrate New Tools and Technology

Time is of the Essence

Project Close-out Negotiation


Traditionally Why Many Projects Fail!

Flawed Assumptions

Project Environment Changes (External Factors)

Top Down Planning

Project Planning vs. Business Planning

Ambiguous Communications

Ambiguous Goals

Static Project vs. Dynamic Project Environments

Inability to Adapt to Changes

Uncoordinated Incentives for the Participants

Failure = either + or , 10% Cost and or Schedule



Project participants often relate the:

Symptoms

Analysis

Synthesis

Systems Thinking

The goal of the above investigation is to

determine the disease


Forensic Project Management Tools

Analysis Planned vs. As-Built Comparisons

Schedule

Cost

Change Order Analysis

Documentation Review (Timelines)

Time Impact Analysis (TIA)

Damage Calculations

Systems Thinking Approach to Understanding Synthesis (Holistic)

Advanced Modeling Concepts


Spectacular Project Failures

Advanced Automation System Air Traffic Control

Big Dig Boston Central Artery Tunnel Project


Obit on AAS

Related Story


The Power to Manage a Project

Derives from the Contract

Key Contract Clauses Scope Definition

Schedule

Price for the Work

Performance Requirements

Changes Clauses

Notice Provisions

Force Majeure

Disputes and Resolution


Assumptions for the Work(Bidding and Planning)

Assumptions (Explicit or Implicit) More Important Than ForecastsManpower Availability

Materials availability

Environmental Influences

Commodity Pricing

Team Continuity

No Intervening Circumstances

Lack of Common Agendas (Incentives)

PM - Early Recognition of Flawed Assumptions


Trouble at the Project Interaction Points(Friction at work Scope Boundaries)

Contractor Coordination

Engineering Deliverables

Long Lead Equipment

Mobilization (Getting Resources in Place)

Interfaces (Between Parts of the Project Team)

Interfaces (Between Defined Work Scopes)

Start-Up Testing/Commissioning

Initial Operation and Operator Training


How do I load this new project management software into my crystal ball?

Are the new PM tools good enough?


The Miracle


CostInfluence

Ability to Influence Project Costs Over Time

Time

Cumulative

Cost

Relative

Influence

Data Source: Construction Industry Institute

Influence of Decision Making on

Cost over Time


Case Studies


Refinery Renovation and Expansion

19



20



EPC contractor bids on a LSTK renovation and expansion project in Saudi Arabia

$113 million contract Basic engineering by owner (flow diagrams and P & IDs)

Detailed engineering by EPC contractor

As-built data for existing underground by owner

Operational site

EPC retains a construction sub-contractor that has experience with both owner and EPC contractor

Sub-contractor mobilizes to refinery site and begins site excavation

EPC completes design for pipe rack system and begins steel procurement



Sub-contractor reports obstructions at each of the first 100 excavation locations

Kobe earthquake strikes Japan

Owner directs EPC contractor to design around the obstructions

World supply of steel disappears overnight as Japanese production is halted and Japan becomes and importer of

steel



EPC contractor discovers errors in Heat and Material balances provided as part of the basic engineering by

owner (Flow Diagrams and P & IDs must be redesigned)

Owner promises action on proposed change orders

EPC redesigns the pipe rack system to utilize the available steel which can be procured (mixture of English

and Metric sizes)

EPC designs new foundation locations due to unavoidable underground conditions



Sub-contractor submits a $ 18 million claim for delay

Owner demands a recovery schedule to overcome the delays caused by the EPC contractor

Recovery schedule accepted by the owner eliminates the predecessor/successor relationship between engineering

and construction

Owner rejects the design of the tank farm instrumentation and piping system and institutes an on-line blending/mixing

system for diesel, gasoline etc.



18 months of chaos elapse on-site

EPC engineers are blaming their own construction staff for the problems and vice versa.

Sub-contractor submits a $ 60 million claim for additional work

EPC contractor submits a $ 110 million claim for all costs incurred to complete the work

EPC achieves substantial completion


Industrial Coke Manufacturing Facility

Proprietary Process for Coke Ovens, in operation in Virginia

EPC Contractor selected to build a larger facility in Indiana

Site is adjacent to Lake Michigan and old disposal site for blast furnace slag and steel making slag

Project is completed six months late and $ 30 million over budget

EPC Contractor files claim to recover additional cost



27


EPC Contractor alleges unknown site conditions caused cost and schedule delay

Owner counterclaims for defective design Draft from the furnace

Ground Swelling and settlement

Lost Profit

Site Dewatering Issues

Draft deficiency

Ground swelling and settlement



Pic 2-5.jpg



Central Artery TunnelAutomation and Monitoring System (Contract C22A2)


Contract Value - $ 100 Million

Two Years Late

$ 90 Million over budget

Incomplete work on C22A1

System Architecture

Delayed highway construction

Obsolescence

Construction Schedule Confusion

Recoverable costs @ about $ 25 Million




Central Processing

Fibre Optic Loop

Custom Software interfaces

Off the Shelf Software Interactions control system operability

Barrier to upgrading systems software

Hardware changes restricted by custom software

8 bit technology in central processing computer

IPCS Architecture



HTSI properly bid the work

CA/T knowingly or unknowingly provided defective data and information


43



Rapid changes 1992 to 2003

Memory, Bandwidth, Storage

Exhibit 6

Requirement to upgrade to current

Requirement to be expandable

Piecemeal upgrades required by CA/T

Sequential upgrades from 8 to 16 to 32 bit technology

Technological change


45


User Expectations

I saw a really neat GUI

Graphic displays of computer games

Gaming technology driving industrial applications


Traffic Control System Project Failure

Due to:

Poor computer System Design Architecture

Cascade of Changes

Flawed Assumptions

Incomplete Testing of Phase One

Bad Scope Definition

Technology Creep

Obsolescence


Conclusions

1. The HTSI C22A2 bid was consistent with the understanding

of all the parties at bid time, based upon the information

contained in the bid documents and other information

supplied by the CA/T at the time of bidding.

2. The contract documents issued by the CA/T did not

accurately depict either the true state of the work of the

C22A1 contractor or the CA/Ts intended scope of work for the C22A2 contract.

3. The basic system design concept architecture was fatally

flawed in that it was neither easily expandable nor

upgradeable without major modification as contrasted to how

it was described in the contract bid documents.


Conclusions

4. The installation schedule for the IPCS issued by the CA/T

was not achievable nor did it accurately reflect the state of

completion of the general civil construction portions of the

project when the C22A2 contract was bid.

5. During the course of the project since the C22A2 contract

was awarded, the CA/T was advised of the existence of

conditions 2, 3, and 4 above but either ignored them or

directed HTSI to ignore them. This failure of CA/T to ensure

that the necessary predecessor work was completed and

properly documented was a major initial contributing factor to

HTSIs schedule and cost overruns.


Conclusions

6. Changes in technology since the C22A2 project was originally

designed (1992-93), updated (1997-98), and bid (1999) have

made the implementation of the project as it was bid no

longer either practical or possible.

7. Given that (a) there was no material error in HTSIs part in initially bidding the C22A2 project (No. 1 above), that (b) HTSI

was fundamentally misled (knowingly or unknowingly) during

the course of its attempts to execute the work of the contract

(No. 2, 3, and 4 above), and that (c) changes in technology

over time have rendered the original design commercially

impracticable or technically infeasible (No. 6 above), MDC

has concluded that the C22A2 contract should be converted

from a fixed price to cost reimbursable type of contract.


Conclusions8. The CA/T Master Project Schedules do not contain the

necessary information to adequately status and manage the C22A1 and C22A2 contracts or to coordinate these contracts with the work of other contractors upon which they are dependent.

9. The CA/T Master Project Schedules are not useful to either understanding or managing the CA/T project as a whole or providing a basis for analysis and quantification of HTSIs damages.

10. Systems testing was disrupted, delayed and became iterative in nature due to the same system interaction issues driving the software and field installation work.


Joint StarsAircraft Procurement and Modification


New application of Side Looking Airborne Radar

Grumman develops the Radar and software

Boeing Military Aircraft procures and militarizes two used 707 aircraft

Aircraft are delayed in initial procurement and modification

Oil price declines to $ 9.00 per barrel

Aircraft procured are in poor condition

Actual quantity of repair and new parts for the aircraft are 10 times the bid estimate by Boeing

Joint Stars

Aircraft Procurement and Modification


Boeing submits claim for cost impact $ 100 million

Boeing asserts cost increases due to requirements changing for Radar power and mounting

Boeing utilizes parametric estimating methods to justify its claim

Aircraft flight delays impact Radar testing

Grumman rejects Boeing claims after technical and schedule analysis

Joint Stars

Aircraft Procurement and Modification


Why did Boeing need so many parts?

Why did Boeing procure/manufacture new parts and then rework all the parts for both aircraft?

Joint StarsAircraft Procurement and Modification


Future Implications for Projects & Project Managers

Why do Systems Fail?Large Complex Systems are Beyond Human Capacity

to Evaluate

In general, we can say that the larger the system becomes, the more the parts interact, the more difficult it is to understand environmental constraints, the more obscure becomes the problem of what resources should be made available, and deepest of all, the more difficult becomes the problem of the legitimate values of the system

Source: C. W. Churchman



Emergence

Complex dynamic feedback gives rise to an emergent entity that is qualitatively different from that of its elements. Sand dunes are far different from grains of sand, both in scale and in behavior.

A marketplace based upon money rather than barter is qualitatively different because easily communicable prices emerge that create relationships between all goods and services. More specialized goods and services can participate on an equal footing with everyday commodities.


And, the emergent behavior called the Web is dramatically different from communities that swap files

by FTP even though the technical differences between

FTP and HTTP are relatively minor.

How big does a system have to be before feedback loops become nearly inevitable? It turns out that it

depends upon how complex their interactions are the simpler the elements and their interactions, the more of

them are needed to give a high probability of

emergence.



Saudi Air Defense System

US Air Force Management

Hardware, Software and Ground Facilities

Five Year Software Development Project



At year five, Boeing predicts five more years for development

Boeing was required by CDRL to utilize software planning tool COCOMO

Boeing monthly reports from year two onward predict software slip due to code growth

New Threat Assessments

New response criteria

More sophisticated software routines

Boeing Contract is terminated



Northrop hired to complete the project

Northrop completes at year ten


Complexity


New Approaches for Dealing with Complexity

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Expanded Capacity1.Systems Thinking2. PMBOK

3. Action Learning

4. Advanced Project

Management Capability


Complexity as a Condition

What is interactive complexity

and why should you care?


How to Think About Complexity

A large number of elements

Many interactions

Attributes are not predetermined

Interaction is loosely organized and probabilistic in behavior

The system evolves over time

Sub-systems are purposeful and generate their own goals

The system is largely open to the environment


Complexity

It is the number of parts and the ways in which they interact that define the

complexity of a given system

Two different kinds of complexity Structural complexity

Interactive complexity


Structural Complexity

Based on the number of parts in a system

A system can have many parts, but no interactive complexity

Machines function this way

Such systems demonstrate:

linearity

proportionality

replication

additive

demonstrable cause and effect


Interactive Complexity

Determined by the behavior of the parts and the resulting interactions

Attributes of Interactive Complexity unpredictable

non-linear

non-additive

the link between cause and effect is ambiguous

unstable, irregular, and inconsistent


The New Worldview of Complexity

No certainty

A lack of predictability

A dynamic condition that is to a large degree unknowable

A change in worldview or mindset is fundamental to engaging with interactive complexity


What does this mean to Project Managers?

A very different set of competencies is required

Complexity cannot be successfully decomposed

Detailed long-term planning is impossible

Rigid structures and elaborate control rules are counterproductive

Traditional PMBOK will drive the complex project towards failure faster


The Project Managers Challenge!How do you recognize and deal effectively

with emergent conditions of interactive

complexity?

Success depends more on ones philosophy or "world view" than on ones mastery of science and technology


The Difficulty of Shifting

Ones World View


The Worldview Shift..

From a mechanistic worldview..

.to a systemic worldview

The mistake of science is to pretend everything is a clock when the world is more like a cloud.

- Jonah Lehrer


Traditional Project Management

Project Management Body of Knowledge (PMBOK) Fundamentals

Trained in Analysis

Trained to Utilize The Scientific Method of Inquiry

Observation

Model or analysis of the problem

Prediction of behavior based on the Model

Trained to Utilize Models (Primavera Schedules) (CADD Models)

Encouraged to Sub-Optimize (parts of the process)

Failure Modes and Effects Analysis (Cause and Effect)

Not Aware of Systems Thinking Concepts74


.Complexity requires a more holistic

leadership perspective

Concerning Toyota:This is not a crisis of faulty brakes and accelerators, but a

leadership crisis. William George, Harvard Business School

In fact, the recent criticism of Toyotademonstrates how leadership holds the keys to success, and failure, to organizational transformation.

Alan Pang, Director, Aon Consulting Global Research Center.

It really is a question of Leadership.


How to Deal with Complexity

From To

Management Leadership

Predict and Forecast Anticipate

Analyze Data Recognize Patterns

Simplify KISS See and Deal With The Whole

Pay Attention To Details Pay Attention To Relationships

Rational Thinking Intuitive Thinking

Learn a Skill Training Nurture Cognitive abilities

Think Algorithmically Think Heuristically

Analytical Thinking (scientific,

based on induction and deduction

thinking)

Design Thinking (based on

abduction thinking)


Leadership Attributes

Self-control

Cognitive fitness

Ability to distribute attention over many factors

Ability to perceive dynamic relationships

A contemplative turn of mind

A high level of intellectual development

Ability to think concretely


A powerful memory for the project vision

Powers of synthetic thinking and imagination

Pattern recognition

A disciplined will

Potentiating

A highly active intellect

Disciplined emotions

Self-confidence


Leadership Attributes

When PMBOX Fails

A Model for Understanding

Complexity

How do you recognize complexity and

why does PMBOK fail?


The Cynefin Framework


Why Many Projects Fail!

Flawed Assumptions

Project Environment Changes (External Factors)

Top Down Planning & Project Planning vs. Business Planning

Ambiguous Communications

Ambiguous Goals

Static Project vs. Dynamic Project Environments

Inability to Adapt to Changes

Uncoordinated Incentives for the Participants

Failure = Greater than either +10% Cost and/or Schedule overrun


Trouble at the Project Interaction Points

Parts vs. Whole Contractor Coordination Engineering Deliverables Long Lead Equipment Mobilization (Getting resources in place) Interfaces (Between parts of the project

team)

Interfaces (between defined work scopes) Start-Up Testing/ Commissioning Initial Operation and Operator Training


Snowdens Decision Making Context

Simple: The Domain of Best Practice

Complicated: The Domain of Experts

Complex: The Domain of Emergence

Chaotic: The Domain of Rapid Response

Source: David J. Snowden, Mary E. Boone, A Leader's Framework for Decision Making, Harvard Business Review Article, Nov 1, 2007


84

Characteristics

Clear cause-and-effect relationships

The right answer exists; fact-based

Danger Signals

Complacency and comfort

Entrained thinking

No challenge of wisdom

Overreliance on best practice

Simple Context

What are simple cases, how do you recognize

them, and how are they handled?


Example: Gas Gathering Project

Contract Provisions

PMBOK Skills

Project Monitoring

Claim Situation Recognition

Early Recognition of Metric Deterioration


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Characteristics

Expert diagnosis required

Causal relationships are discoverable

More than one right answer exists; fact-based

Danger Signals

Overconfident experts in their own solutions

Analysis paralysis

Viewpoints of non-experts excluded

Complicated Context


Example: Coke Manufacturing Plant

Multiple Symptoms of Trouble

No One Determinant, Cause and Effect Relationship

Multiple Parties Share Responsibility

Successive Analysis Yield Different Results

No Coherent Relationship between Scope, Schedule and Cost Outcomes


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Characteristics

Flux and unpredictability

No right answers; unknown unknowns

Many competing ideas

Emergent patterns provide instruction

Danger Signals

Temptations to regress to habitual command-and-control management

Temptation to look for facts

Desire for accelerated problem resolution

Complex Context


Example: Highway Automation

System

Every Known Symptom of Project Failure

Input to Output Models no Longer Work

Cost Spiral without Control

Progress is Impeded Across all Elements of the Project

Lots of opinions and finger pointing

Demoralization of Management and Staff


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Characteristics

High turbulence

No clear causal relationships

Unknowables

High tension

Many decisions to make with no time to think

Leaders Job

Act Sense Respond

Watch for what works, instead of right answers

Provide clear, direct communication

Danger Signals Next Steps

Set up parallel teams to take advantage of opportunities

Encourage advisers to challenge leaders point of view

Work to shift the context to complex

Missed opportunities to innovate

Applying command-and-control approach longer than needed

Chaotic Context


The Cynefin Framework

This is NOT a recipe it is a contextual sense making

guide.

All contexts can exist at the

same time. You just dont know it.

SENSE and RESPOND are

common. WHAT is sensed and when?


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Simple Sense - Categorize -Respond We know what we know.

Heuristic:

We only need to know what we need to know when we know it. - David Snowden

CONTEXT0 THE LEADERS JOB DANGER SIGNALSRESPONSE TO

DANGER SIGNALS

SIMPLE

Sense, categorize, respond Ensure

that proper processes are in place

Delegate Use best practices

Communicate in clear, direct ways

Understand that extensive

interactive communication may

not be necessary

Complacency and comfort

Desire to make complex problems

simple

Entrained thinking

No challenge of received wisdom

Overreliance on best practice if

context shifts

Create communication channels

to challenge orthodoxy

Stay connected without

micromanaging

Dont assume things are simple

Recognize both the value and the

limitations of best practice


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Complicated Sense Analyze - RespondWe know what we dont know.

Heuristic:

We can't solve problems by using the same kind of thinking we used when we created

them. - Albert Einstein

CONTEXT THE LEADERS JOB DANGER SIGNALSRESPONSE TO

DANGER SIGNALS

COMPLICATED

Sense, analyze, respond

Create panels of experts

Listen to conflicting advice

Experts overconfident in their

own solutions or in the efficacy of

past solutions

Analysis paralysis

Expert panels

Viewpoints of non-experts

excluded

Encourage external and internal

stakeholders to challenge expert

opinions to combat entrained

thinking

Use experiments and games to

force people to think outside the

familiar


94

Complex Probe - Sense - RespondWe dont know what we dont know.

Heuristic:

entropy eventually is nothing more nor less than loss of information.- Gilbert Newton Lewis


DANGER SIGNALS

COMPLEX

Probe, sense, respond

Create environments and

experiments that allow

patterns to emerge

Increase levels of interaction

and communication

Use methods that can help

generate ideas

Temptation to fall back into habitual,

command-and-control mode

Temptation to look for facts rather

than allowing patterns to emerge

Desire for accelerated resolution of

problems or exploitation of

opportunities

Be patient and allow time for

reection

Use approaches that encourage

interaction so patterns can emerge

Open up discussion (as through

large group methods); set barriers;

stimulate attractors; encourage

dissent and diversity; and manage

starting conditions and monitor for

emergence


95

Chaotic Act - Sense - RespondWe dont know.

Heuristic:

The absence of evidence is not evidence of absence, or vice versa. - Donald Rumsfeld


DANGER SIGNALS

CHAOTIC

Act, sense, respond

Look for what works instead of

seeking right answers

Take immediate action to

reestablish order (command

and control)

Provide clear, direct

communication

Applying a command-and-control

approach longer than needed

Cult of the leader

Missed opportunity for innovation

Chaos unabated

Set up mechanisms (such asparallel teams) to take advantageof opportunities afforded by achaotic environmentEncourage advisers to challengeyour point of view once the crisishas abatedWork to shift the context fromchaotic to complex


Situation Awareness

What is Situation Awareness and

Why is it Important in

Conditions of Complexity?


The Cognitive Continuum


Perception vs. Reality

Need to make sense

Ordered = analysis

Categorization is a kind of analysis

Fact-based relationships/cause-effect

Unordered = action

Probe is a kind of action

Pattern-based relationships/interactions

Disorder = no clear context

Total loss of information high entropy

Asymmetric collapse

What are you really sensing?


Sense making is the ability or attempt to make sense of anambiguous situation. More exactly, sense making is the

process of creating situational awareness and understanding

in situations of high complexity or uncertainty in order to

make decisions.

It is "a motivated, continuous effort to understand

connections (which can be among people, places, and

events) in order to anticipate their trajectories and act

effectively.- Gary Klein

Sense = Sense making


The Situational Awareness/Situational

Understanding (SA/SU) Model

Dealing with Interactive Complexity requires understanding that failures occur when

uncertainties and interactions are not properly

accounted for.

So what does the Leader need to do? Same basic issues faced by:

Pilots, Warfighters, Police, Doctors, Etc.

Leaders need to adopt

the Situational Awareness/Understanding mindset


Who

What

When

Where

(Why)

Achieving Situational Awareness

Dont boil the ocean Avoid information overload

Information(Answers to?)

The first step..

Situation(Avoid boiling the ocean)

Helps to

Define

Narrows the

process


..next, Situational Understanding

Decisions are based on reducing Decision

Risk!

Who

What

When

Where

(Why)

How(Decision)

Situational

Awareness

Situational

Understanding..Time to..

Sensemaking(Decision Risk)


Example: Boyds OODA Loop SA/SU Model

Note the combination of Analyses and Synthesis as

part of Orientation


Action Scripts

Patterns

Clues

Situation

Mental Simulation

Mental Models

To affect the

generates

that let you recognize

thatactivate

which youassess by

using your

Recognition-Primed Decision Model

Gary Klein 2003


Application of SA/SU


Second law of thermodynamics

Entropy (a measure of disorder)

Same principle applies to a program

Over time, a program will become more disordered if left alone and will move

through each context

Systemic Events can cause a program to move across contexts

As events move into complexity, the first law of thermodynamics comes into play:

Heat is transferred to the PM!!

Situational Awareness and Program Time

Program Time


Heuristics: SA/SU Approach

Cognitive Focal Aids

Form follows function: Louis Sullivan (Architect)

Examples:

If each part of a system, considered separately, is made to operate as efficiently as possible, the system as a whole will

not operate as effectively as possible

The performance of a system depends more on how its parts interact than on how they act independently of each other

Heuristics help to focus quality thinking


Applying Heuristics

The challenge:

To determine when and how to forego intuition for the application of rigorous objective techniques for

decision-making

Example: Over-reliance on risk models instead of using

good judgment (Wall Street)

Heuristic: If its too good to be true, then it probably isnt true. (Example: Madoff, Enron, etc)


SA/SU Project Components: People and Technology

80+% of digitized information resides in individual hard drives and in personal files and is unstructured, not

secure nor backed up.

Employees get 50%-75% of their relevant information directly from other people via technology not face-to-face

Wasted Time is a key to ROI

Intellectual Property

Individual knowledge leaves with employees

Leverage past experience to organizational learning


No agreed upon definitions (shared context)

Different tools and processes = different data

Manual transformations and analysis

Manual Audit Trails

Poor Data Quality

Poor Connectivity from applications to resources

One Way Data Traffic (errors not corrected at the source

Same data stored in multiple locations

SA/SU Project Components: People and DATA


Red Flag: Dont worry everything is (or will be) Fine

How does one achieve SA/SU?

Make use of dashboards and scorecards

What are you measuring and why?

Ask questions: Who, What, When, Where, Why and How?

Use heuristics to develop key questions

Start a blog: Example CPL Cartwright

Take time to walk around and listen

Communicate, Communicate and Communicate some more talk to the whole system

What does a Program/Project Leader do?


Applying Systems Thinking

How do you apply systems

thinking to project management

to mitigate complexity?


The Difficulty of Shifting

Ones World View


The Mechanistic View of the World

In the Renaissance, when the science as we know it today was born, a

scientific inquiry method called Analysis

was developed.

Analysis comes naturally. Just watch children taking apart new things, and

curious about the parts.


Analytic Thinking

Take it a part - down to its indivisible parts, elements

Explain the behavior or properties of each part taken separately

Aggregate the explanations of the parts into an explanation of the whole


A Systems Approach to the Capital

Project

View a capital project as a social system Social systems are purposeful systems that contain

purposeful parts and are contained in a larger purposeful system

A set of constantly changing processes, relationships, and components

The way in which the elements of the system come together can lead to outcomes that are materially different from those planned


Definition of Systems Thinking

Systems thinking is a holistic approach to understanding that focuses on the way that a

system's constituent parts interrelate and how

systems work over time and within the context of

larger systems

To understand systems thinking, we must first understand systems


Systems Thinking: What is a System?

Definition: SystemWhole which consists of a set

of two or more parts

Three requirements:

Each part must affect behavior

All parts must be interconnected

All subsets must effect behavior, none can

act independently


Steps to a Systemic Approach

Synthesis vs. AnalysisSynthesis = putting things together

Analysis = taking things apart

3 Steps to Synthesis1. Identify the containing whole (system)

2. Explain the behavior or properties of the containing

whole

3. Then explain the behavior or properties of the subsystem

and its function within the containing whole


Analytical and Synthetic Thinking

Analytical ThinkingThe object is considered a whole to be taken apart

Example: Calculus

Synthetic ThinkingThe object is considered as an integral part of a larger

whole

Leads to systems thinking


The Importance of Systems Thinking

Helps to design smart, lasting solutions to problems

A more precise image of reality in its simplest sense

Encourages long-term thinking

Founded on fundamental principles that integrate all aspects of life


From Mechanistic

Thinking

To Social Systems

Thinking

Analysis (An explanation of the whole derived from explanation

of its parts.)

Synthesis(An explanation of the whole derived from explanation

explaining the role of the system in the larger system of

which it is a part.)

Reductionism(The belief that everything can be reduced.)

Expansionism(The system is always a sub-system of some lager system.)

Cause and Effect(Environmental free theory of explanation, a cause

needs to both necessary and sufficient in order to have

the corresponding effect.)

ProducerProduct(Environmental full theory of explanation as opposed to

cause and effect where the importance of the environment is

stressed.)

Determinism(Fatalism.).prior condition )

Indeterminism(Probabilistic, observe and discover.)

Research(The embodiment of the above to arrive at instructions

based on theory.)

Design(The embodiment of the above to facilitate learning.

Designing the whole systems means creating a system

configuration that is optimum.)


Design The Core Concept in Systems Thinking

Design a method of problem solving

Design is to the systems thinking as "continuous improvement" is to scientific thinking

Design - a process which requires the ability to question prior or existing assumptions regarding the ultimate state to be achieved.

Source: Van Gigh and Warfield


All People are Designers Design is basic to all human activity Design is the conscious effort to impose meaningful

order

The planning and patterning of any act towards a desired, foreseeable end constitutes the design process

All that we do, almost all the time, is design Any attempt to separate design, to make it a thing-

by-itself, works counter to the inherent value of design as the primary underlying matrix of life


Design Thinking

The designers who can solve the most wicked problems do it through collaborative integrative thinking, using abductive logic, which means the logic of what might or could be.

Conversely, deductive and inductive logic are the logic of what is.


Prospective Hindsight or

A Pre-Mortem

Prospective hindsight, called a pre-mortem, is a method which helps project teams identify risks at the outset Research conducted in 1989, found that Prospective Hindsight

(imagining that an event has already occurred)increases the ability to correctly identify reasons for future outcomes by 30%.

The System Was Destroyed Last Night!


Capital Projects As Social Systems

Include all primary stakeholders - owner, designer, and constructor as well as other stakeholders such as subcontractors, material and equipment vendors, and the end-user(s) of the product or service.

The adoption of a social systemic approach to capital project management has several implications. Three of these implications are: alignment of purpose

management of interactions, and

learning and adaptation


Stakeholder Theory

A Stakeholder is any group or individual who can affect or whom is affected by the

achievement of the projects objectives

Stakeholder Theory describes the principle of whom or what really counts

and to whom or what managers give their

attention.


Stakeholder Theory

EconomicForces Ecological

Forces

Socio-culturalForces

TechnologicalForces

PoliticalForces

Project Environment

StructureCulture

Competencies Resources

Transactional Environment

Trade AssociationGeneral

managers

Union/employees

Varied Instituions

Local, State and Gov

Work packagemanagers Suppliers

Contractorssubcontractors

Customers(users)

Corporate senior managers and

directors

Functional managers

Contextual Environment

Creditors

Employees


Alignment of Purposes - Changing Mindsets

Requires a high level of commitment from all stakeholders

Purpose of the project must be aligned with the purpose of the larger, parent organization

The purpose of each of the parts must be aligned with the projects purpose


Team Alignment - Convergence of Mindsets

Concerted Project Team Action

Concerted Project Team Action

Individual Mindsets


Alignment of Purposes

Includes the purposes of the individual project team members as well as their own individual parent organizations.

The stakeholder organizations (especially the designer and constructor) must accept this approach to project management.

This buy-in is encouraged through the win-win incentives

Requires a substantial redesign of the contract documents.


A Systems Approach

to Project Management

Application Examples


Symptoms are Often Mistaken for Causes

Why is this the case? Organizational structures are inflexible and not aligned for

performance

People skill sets are lagging current needs

Current process improvement efforts are largely

independent and reactive

Insufficient technology resources being applied to

prepare for future (3-5 year out) problems

Policy does not align with advances in technology

Need To Re-Factor The Way We Lead Programs


Abductive Reasoning

ABDUCTIVE REASONING is a means for design thinking

Purpose - to balance analytical thinking and intuitive thinking

A mix of reliability + validity Neither analytical (deductive and inductive

reasoning) nor intuitive reasoning are sufficient to maximize performance

Abductive thinking is exploitation and exploration

Combines adjustment and analysis Encourages innovation and efficiency Abductive

Thinking

Designers, who live in a world of abduction, actively look for new data points, challenge accepted explanations, and infer possible new worlds (Martin 64-65)

Analytical

Thinking

Intuitive

Thinking


Analytical

Thinking

Intuitive

Thinking

Ackoff: wisdom, deals with the future because it incorporates

vision and design. With wisdom,

people can create the future

rather than just grasp the present

and past.

Abductive

Thinking

Abductive Reasoning


REFERENCES

1. Fooled by Randomness, The Hidden Role of Chance in Life and in the Markets, Nassim Nicholas Taleb, 2004

2. Harnessing Complexity, Organizational Implications of a Scientific Frontier, Robert Axelrod & Michael D. Cohen, 2000

3. The Fifth Discipline, The Art & Practice of the Learning Organization, Peter M. Senge, 1990

4. Thinking in Systems, A Primer, Donella H. Meadows, 2008

5. The Black Swan, The Impact of the Highly Improbably, Nassim Nicholas Taleb, 2007

6. Thinking And Deciding, Fourth Edition, Jonathan Baron, 1988

7. The Fifth Discipline Fieldbook, Peter Senge, Richard Ross, Bryan Smith, Charlotte Roberts, Art Kleiner, 1994

8. Leadership and the New Science, Discovering Order In A Chaotic World, Margaret J. Wheatley, 2006

9. Complexity Leadership, Part I: Conceptual Foundations, Mary Uhl-Bien & Russ Marion, 2008

10. Business Dynamics, Systems Thinking and Modeling for a Complex World, John D. Sterman, 2000

11. Complex Systems Leadership Theory, New Perspectives from Complexity Science on Social and Organizational Effectiveness, James K. Hazy, Jeffrey A. Goldstein, Benyamin B. Lichtenstein, 2007 137


WEB SITES

1. Ackoff Collaboratory: http://www.acasa.upenn.edu

2. The Systems Thinker Newsletter:

http://www.thesystemsthinker.com

3. The In 2 In Thinking Network: http://www.in2in.org

4. hbr.org | November 2007 | Harvard Business Review 69

Snowden and Boone


Questions

1. What is interactive complexity and why should you

care?

2. How do you recognize complexity and why does

the basic PMBOK approach fail?

3. What is situation awareness and why is it

important in conditions of complexity?

4. How do you apply systems thinking to project

management?

5. How can a Systems Thinking approach mitigate

complexity?

6. How do you apply this knowledge to your

projects?


7. Has anyone experienced what you believe

was complexity in a program?

8. If so, can you provide to share with us?

9. Did a solution emerge? If so, how?

10. What is emergence?

11. Do you think that more than one context can exist at a

time?

12. So how does a PM understand the different contexts?

13. What is abductive reasoning?

14. Why are assumptions so important to project success?


Questions

15. How many Black Swan events have you experienced in

PM?, in life?

16. Why are interactions the key to Complexity

17. If Complexity is not managed effectively, what results?

18. Who must assume leadership?

19. What is the OODA Loop?

20. What are the elements of situational awareness?

21. What are the three key elements to Project

Management?


Questions

3-Complexity - Advanced Engineering Project Management

Documents