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 Forensic Project Management Systems Thinking Concepts Case Histories/Studies Simple 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

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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. BooneHarvard Business Review - 11/2007

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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

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

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Forensic Project ManagementProject participants often relate the:

Symptoms Analysis Synthesis Systems Thinking

The goal of the above investigation is to determine the disease

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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

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Obit on AAS

Related Story

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The Power to Manage a ProjectDerives from the Contract

Key Contract Clauses Scope Definition Schedule Price for the Work Performance Requirements Changes Clauses Notice Provisions Force Majeure Disputes and Resolution

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Assumptions for the Work(Bidding and Planning)

Assumptions (Explicit or Implicit) More Important Than Forecasts Manpower Availability Materials availability Environmental Influences Commodity Pricing Team Continuity No Intervening Circumstances Lack of Common Agendas (Incentives)

PM - Early Recognition of Flawed Assumptions

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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?

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The Miracle

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CostInfluence

Ability to Influence Project Costs Over Time

Time

CumulativeCost

RelativeInfluence

Data Source: Construction Industry Institute

Influence of Decision Making onCost over Time

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Case Studies

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Refinery Renovation and Expansion

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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

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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

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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

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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.

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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

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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




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Pic 2-5.jpg


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Central Artery TunnelAutomation and Monitoring System (Contract C22A2)

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Contract Value - $ 100 MillionTwo Years Late$ 90 Million over budget

Incomplete work on C22A1 System Architecture Delayed highway construction Obsolescence Construction Schedule Confusion Recoverable costs @ about $ 25

Million

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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

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HTSI properly bid the work CA/T knowingly or unknowingly provided

defective data and information

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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

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User Expectations I saw a really neat GUI Graphic displays of computer games Gaming technology driving industrial

applications

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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

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Conclusions1. 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.

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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.

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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.

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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.

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Joint StarsAircraft Procurement and Modification

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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


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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


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Why did Boeing need so many parts? Why did Boeing procure/manufacture new parts and

then rework all the parts for both aircraft?


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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

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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.

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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.

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Saudi Air Defense System US Air Force Management Hardware, Software and Ground Facilities Five Year Software Development Project

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Saudi Air Defense System 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

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Saudi Air Defense System Northrop hired to complete the project Northrop completes at year ten

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Complexity

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New Approaches for Dealing with Complexity

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Expanded Capacity1.Systems Thinking2. PMBOK3. Action Learning4. 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

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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

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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

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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

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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

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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

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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

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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 Concepts


.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 LeadershipPredict and Forecast AnticipateAnalyze Data Recognize PatternsSimplify KISS See and Deal With The WholePay Attention To Details Pay Attention To RelationshipsRational Thinking Intuitive ThinkingLearn a Skill Training Nurture Cognitive abilitiesThink Algorithmically Think HeuristicallyAnalytical 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 FailsA Model for Understanding

Complexity

How do you recognize complexity and why does PMBOK fail?


The Cynefin Framework

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

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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

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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

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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 ContextWhat 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 TODANGER 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 TODANGER SIGNALS

COMPLICATED

Sense, analyze, respond

Create panels of experts

Listen to conflicting advice

Experts overconfident in theirown solutions or in the efficacy of past solutions

Analysis paralysis

Expert panels

Viewpoints of non-expertsexcluded

Encourage external and internalstakeholders to challenge expert opinions to combat entrained thinking

Use experiments and games toforce people to think outside thefamiliar


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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


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 reflection

Use approaches that encourage interaction so patterns can emergeOpen up discussion (as through large group methods); set barriers; stimulate attractors; encourage dissent and diversity; and manage starting conditions and monitor for emergence


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Chaotic Act - Sense - RespondWe dont know.

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


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-controlapproach 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

Bellin

ger

Acko

ff

understanding


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 an ambiguous 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


WhoWhatWhenWhere(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!

WhoWhatWhenWhere(Why)

How(Decision)

SituationalAwareness

SituationalUnderstanding..Time to..

Sensemaking(Decision Risk)


Example: Boyds OODA Loop SA/SU ModelNote 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 HeuristicsThe 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

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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.

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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

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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

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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: System

Whole which consists of a set of two or more parts

Three requirements:Each part must affect

behaviorAll parts must be

interconnectedAll subsets must effect

behavior, none can act independently


Steps to a Systemic Approach Synthesis vs. Analysis

Synthesis = putting things togetherAnalysis = taking things apart

3 Steps to Synthesis1. Identify the containing whole (system) 2. Explain the behavior or properties of the containing whole3. Then explain the behavior or properties of the subsystem and

its function within the containing whole


Analytical and Synthetic Thinking Analytical Thinking

The object is considered a whole to be taken apart Example: Calculus

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

wholeLeads 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.)

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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

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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

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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.

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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!

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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

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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.

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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 package managers Suppliers

Contractorssubcontractors

Customers(users)

Corporate senior managers and

directors

Functional managers

Contextual Environment

Creditors

Employees

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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 Approachto 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


REFERENCES1. 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

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WEB SITES

1. Ackoff Collaboratory: http://www.acasa.upenn.edu2. The Systems Thinker Newsletter:

http://www.thesystemsthinker.com3. The In 2 In Thinking Network: http://www.in2in.org4. hbr.org | November 2007 | Harvard Business Review 69

Snowden and Boone

138

http://www.acasa.upenn.edu/http://www.thesystemsthinker.com/http://www.in2in.org/

Questions1. 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?

17. Why are interactions the key to Complexity18. If Complexity is not managed effectively, what results?19. Who must assume leadership?20. What is the OODA Loop?21. What are the elements of situational awareness?22. What are the three key elements to Project

Management?


Questions

Complexity - Advanced Engineering Project Management

Engineering

project processes

project failure1 mdcsystems

planning project planning

reactive management

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disease8 mdcsystems

schedule7 mdcsystems

rights reservedthe sequence