An Essay on Changing Risk Manager Perceptions

on Large Complex Projects

COMMENTARY

By Bob Prieto

Jupiter, Florida, USA

In this essay I will attempt to change some of the perceptions about large complex projects and the risks they face and some of their sources. It is organized into three main themes and is intended to provoke thought and reaction.

The first theme is that Gantt and Fayol, in some sense the fathers of Project Management were right, but not at scale. The very scale where we find large complex projects.

Second, that large complex project success is improbable. Note that I said improbable but not impossible. But also remember that 2 out of 3 large complex projects fail.

Third, that large complex projects are not closed systems, not really what Gantt and Fayol had in mind.

Gantt and Fayol were right…but not at scale

So, let’s get right into it and look at where the ideas of Gantt and Fayol fall short and why.

First, it should not come as a surprise that large complex systems behave differently. We see this in nature where catastrophic natural events, hurricanes, earthquakes, tornadoes, occur more frequently than a normal distribution would suggest.

But this catastrophic behavior is not limited to nature. We see it in manmade systems such as financial markets where extreme behaviors occur at much higher frequency than a normal distribution would suggest. Nassim Taleb’s book, Black Swan, describes this behavior and the rare birds which we conveniently ascribe many project failures to.

But what do these two systems have in common? They have a plethora of actors coupled in both known and unknown ways. This is exactly what we have in large complex projects with 100,000 or more activities, numerous suppliers and stakeholders, and an ever-changing set of connections.

The result – large complex projects behave catastrophically.

Let’s look at the theory of project management, the theory of Gantt and Fayol, through the lens of an analogy. In the world of physics, Newtonian physics did well in describing the behavior of the world we experience every day. Just like classical PM theory did for Gantt.

But along comes Einstein and he wants to study the Universe, now we are talking about scale! He starts with Newtonian physics but soon finds that it breaks down at scale. The same has happened to classical PM theory. It breaks down at scale.

So where does classical PM theory fall short?

I will suggest that we see shortcomings in three areas. First, the foundations of the project, and there are a number of contributors here. Second, an overly strong focus on those 100,000 activities while not paying enough attention to the more than 100,000 arrows connecting all those activities. And finally, deluding ourselves into believing we can manage stakeholders.

Let’s begin by looking at some of the contributors to the weak foundations we see in large complex projects. I will discuss five in this essay, but others exist. We will take a closer look at these shortly.

Our second major area where classical PM theory falls short was by focusing on tasks but not putting enough attention on flows. We will also come back to this, but a couple key points at this stage.

First those connecting arrows are not dimensionless.

Second, large complex projects are subject to at least three types of flows. The first, transformational flows, are what we would expect if you will from those 100,000 arrows. The second and third types of flows arise because large complex projects are not as well bounded as Gantt and Fayol would have us believe. But more on this later.

The third major area is our self-delusion that we can manage stakeholders.

I have three children. I can’t manage any of them. The best I can do is engage with them and the same is true with stakeholders on a project.

Think about the real sources of problems and the risks that materialize on large projects. Are they the result of technical failures? Rarely.

More often they arise from stakeholder actions. Stakeholders include the client, suppliers, subcontractors, regulators, NGOs and in a sense the world at large.

Today, our project control efforts are largely inward looking and maybe even more rearview mirror looking. That perspective was fine when projects were well bounded. But large projects are not.

Our project control efforts must include a balanced look at what is happening outside the boundaries of the project, recognizing that these boundaries are semi-permeable with influencing flows traversing them. We need to do better at seeing what is coming at us.

Weak Foundations

Let’s return now to the first of the three areas where classical PM theory falls short, weak foundations. And let’s look at some of these contributors to project failure, more closely, starting with governance.

More…

To read entire paper, click here

How to cite this paper: Prieto, R. (2021). An Essay on Changing Risk Manager Perceptions on Large Complex Projects, commentary, PM World Journal, Vol. X, Issue VI, June. Available online at https://pmworldlibrary.net/wp-content/uploads/2021/06/pmwj106-Jun2021-Prieto-Essay-on-Changing-Risk-Manager-Perceptions2.pdf

About the Author

Bob Prieto

Chairman & CEO
Strategic Program Management LLC
Jupiter, Florida, USA

 Bob Prieto is a senior executive effective in shaping and executing business strategy and a recognized leader within the infrastructure, engineering and construction industries. Currently Bob heads his own management consulting practice, Strategic Program Management LLC. He previously served as a senior vice president of Fluor, one of the largest engineering and construction companies in the world. He focuses on the development and delivery of large, complex projects worldwide and consults with owners across all market sectors in the development of programmatic delivery strategies. He is author of nine books including “Strategic Program Management”, “The Giga Factor: Program Management in the Engineering and Construction Industry”, “Application of Life Cycle Analysis in the Capital Assets Industry”, “Capital Efficiency: Pull All the Levers” and, most recently, “Theory of Management of Large Complex Projects” published by the Construction Management Association of America (CMAA) as well as over 750 other papers and presentations.

Bob is an Independent Member of the Shareholder Committee of Mott MacDonald. He is a member of the ASCE Industry Leaders Council, National Academy of Construction, a Fellow of the Construction Management Association of America, Millennium Challenge Corporation Advisory Board and member of several university departmental and campus advisory boards. Bob served until 2006 as a U.S. presidential appointee to the Asia Pacific Economic Cooperation (APEC) Business Advisory Council (ABAC), working with U.S. and Asia-Pacific business leaders to shape the framework for trade and economic growth. He had previously served as both as Chairman of the Engineering and Construction Governors of the World Economic Forum and co-chair of the infrastructure task force formed after September 11th by the New York City Chamber of Commerce. Previously, he served as Chairman at Parsons Brinckerhoff (PB) and a non-executive director of Cardno (ASX)

Bob serves as an honorary global advisor for the PM World Journal and Library and can be contacted at rpstrategic@comcast.net.

To view other works by Bob Prieto, visit his author showcase in the PM World Library at https://pmworldlibrary.net/authors/bob-prieto/