PRIMAVERA

Delivering Success in Public Infrastructure Projects

A discussion paper from Oracle The world is watching

Every government today faces the same problems achievement. They’re charged with keeping projects when it comes to making critical improvements to its on track, on budget and in line with the needs of country’s infrastructure: where to start, and how to pay the country’s constituents. Only the most rigorous, for it? From the many pressing calls upon resources comprehensive, integrated and easily understood and finance – from transport to water and utilities to the management information, monitoring and control extraction of natural resources to the provision of basic systems can help project teams deliver on the services for the underprivileged and far-flung – which expectations of their stakeholders and the needs and projects take priority? expectations of the future.

In Chile, for example, 35 per cent of infrastructure When embarking upon public infrastructure projects projects are rejected upon scrutiny by the National of any size and purpose, public and state-sponsor Public Investment System1. Get it right and the result accountability and public scrutiny create constant, can not only improve citizens’ lives but can often make a and justified, pressure. Robust and diligent governance significant financial contribution to the national coffers is mandatory in areas such as budget control, – Stockholm’s congestion-charging scheme has an transparency (tales of corruption can sometimes haunt overall net present value of $1.2 billion1. The upside can the world of public construction) accountability to be huge. The downside can be catastrophic. constituents, and demonstrable best efforts to drive productivity efficiencies and improvements. When infrastructure needs are inadequately or inefficiently met the problem doesn’t simply get Problems in infrastructure improvements absorbed in an uncomfortable reporting meeting or create nationwide discontent result in the demotion or firing of those responsible. The problem magnifies and knocks on through the Research from the Project Management Institute economy, through the culture and into the quality of (PMI)3 suggests that performance in meeting project life of constituents. In some countries the government goals, timelines and budgets creates a financial gets voted out; in others, the people riot. Decisions impact of staggering proportions. Organisations with are critical. MGI analysis suggests that an increase in high performance in these three measures risk only infrastructure investment equivalent to 1 percent of GDP US$20 million per US$1 billion spent, while their less could create 3.4 million direct and indirect jobs in India, successful peers jeopardise US$280 million for the 1.5 million in the US, 1.3 million in Brazil, and 700,000 same US$1 billion spent. The opportunity costs of in Indonesia.2 inefficient management can send shockwaves through a government – one less hospital that can be built The mandatory performance level for example, or one less township served with fresh water; one less problem solved. Problems give birth The skill of those who identify, design and implement to nationwide discontent, and weaken government transformative projects is in meeting extremely positions… solutions do the opposite. demanding and high level goals of performance and

Steps taken at the commencement of the project to employ collaborative practices enabled by organisation-wide access to information will be critical to success.

1 & 2 The McKinsey Global Institute (MGI): “Infrastructure productivity: How to save $1 trillion a year”. 2013 study. 3 “PMI’s Pulse of the Profession™ – The High Cost of Low Performance” 2013. A report which features feedback and insights from nearly 800 project management leaders and practitioners across North America, Asia Pacific, 2 | Oracle Discussion Paper Europe, the Middle East, Africa (EMEA) and Latin America and Caribbean regions. Oracle Discussion Paper | 3 The technology solutions put in place to ensure visibility Progress will be monitored and critiqued in areas such into operations and enable well-informed business as strategic and fiduciary responsibilities to government Eskom brings hundreds of thousands of tasks and activities decisions can ensure smarter cross-organisation departments, regulatory bodies, and the wide range of financial discipline and risk mitigation, operational stakeholder interest groups who will be following the into one tool. excellence, and smart use of innovation. development of the project. Eskom is a 100% state-owned principles, methodologies and enabling organisation responsible for the technology represented by EPPM, Complete Project Portfolio Management generation, distribution, and transmission Eskom’s PMO is charged with the central of electricity in South Africa. Eskom planning and execution of projects that Programmes and projects carefully Investments easily accessed for review generates 95% of electricity used in South fulfil the following criteria: prioritised and approval Africa and approximately 45% on the • High interdependency in the execution Accountability tracked Delays avoided continent of Africa. of the project between divisions or Waste averted through risk management The organisation contributes significantly between business units requiring to South Africa’s social economic central coordination development and transformation. Its • Projects covering multiple sites Predicting success Project Management Office (PMO) or regions where central planning employs 1200 people; a single set of and execution optimises resource integrated project tools is critical to its allocation The effective management and monitoring of public Enterprise Project Portfolio Management (EPPM) ability to handle data and make sense of • Are strategic or high risk infrastructure projects is challenging on a vast scale. solutions drive better portfolio management decisions by it for ensuring rigorous financial control Even the most rigorous of plans, where it seems that providing end-to-end, real-time visibility into all relevant Through organisation-wide use of EPPM and risk mitigation, driving operational every detailed aspect has been explored, every risk has information. EPPM solutions also help organisations dashboards to provide clear and simple excellence and optimising opportunities been assessed, and every reasonable expectation of evaluate the risks and rewards associated with projects any-time, any-location visibility of live change has been taken into account – with safeguards and programmes by providing project management, for innovation across its country-wide project data, Eskom brings process and instigated to minimise its likelihood of occurring or its collaboration, and control capabilities necessary to operations. ability to disrupt or delay the project – can be affected by manage change and successfully deliver projects on project capabilities into one place and unforeseen factors. time, within budget. Eskom has created a world-class centre handles hundreds of thousands of tasks of excellence for managing capital and activities in one tool. Whilst nobody prepares for failure, the most successful Improve collaboration, management, and control of projects are those where the possibility of failure is nationwide or even global networks of engineering and projects which are transforming South always recognised and guides best practice to mitigate construction suppliers and partners to: Africa’s electricity network and improving Source – http://www.eskom.co.za and http://medianetwork.oracle.com/video/player/3504495411001 – the possibility. The world’s media pays little heed to robust the lives of millions. Deploying the How Eskom Leads the Largest Infrastructure Program in Africa video contingency plans that are never needed. When projects • Clarify responsibilities for multiple activities and go off-track, however, they hit the headlines. improved project management control and governance for the large, costly, and complex project by sharing No-one can guarantee success in a project environment data in the same format with partners and suppliers. either, but organisations can increase the predictability • Create project schedules faster, reducing costs and of achieving it, by making sure that they have full visibility delivering improved results. into every part of every project. Holistic visibility makes • Reduce total cost of ownership and maintenance costs control easier and supports the strong management with zero customisation to help keep project costs to a discipline of leaving nothing to chance. minimum.

Managing capital and mitigating risk are the top two drivers in managing a project successfully through Enterprise Project Portfolio Management unanticipated changes; the biggest threat to project EPPM is the methodology increasingly adopted by success. When these two areas are given the highest some of the world’s largest organisations to support the level of strategic focus and become the guiding principles successful transformation of public infrastructure and, of every project action, they improve operational in the case of Eskom, to transform entire countries. excellence. They improve the likelihood of success. 4 | Oracle Discussion Paper Oracle Discussion Paper | 5 • Integrated solution spanning all agency • Coordinated, improved investment approval The benefits of Enterprise Project business activity procedures that enable an organisation to make • Improve strategic investment decisions around the right decisions at the right time and prioritise its Portfolio Management budgets, personnel allocations and maintenance capital expenditure • Enable Agency Mission and Operational Success • Standardised processes, procedures and systems that boost efficiencies • Quickly prioritise and rationalise programmes, EPPM solutions help organisations propose, prioritise, • Complete PPM lifecycle for planning, programme projects, applications and overall portfolios • Synchronisation between departments, functions and select investments and plan, manage, and control alignment, budgeting and execution and external third parties that drives faster and the most complex projects and portfolios. These • Analytics-driven process delivers better decision- EPPM at-a-glance smoother execution solutions give complete visibility into the progress of making for all stakeholders • More efficient use of scarce and valuable resources projects and programmes, to support delivery on time, EPPM solutions help public sector agencies • ROI on priority projects • New opportunities to develop talent within budget, and in compliance. quickly identify underperforming and redundant • Visibility into resource capacity vs. inbound programmes, and strategically align assets, budgets, • Learning from sharing information and experience project demand and other investments through portfolio management across projects and businesses rationalisation and prioritisation.

University of Minnesota Saves Millions with Fewer Construction Change Orders and Claims, Improves Collaboration with Project Management Solution

The University of Minnesota is one of the • Ensure prompt payment to contractors most comprehensive public universities and suppliers to meet contractual in the United States. The university’s requirements and promote capital planning and project management good relations. department oversees approximately 300 capital projects annually, valued The university has improved collaboration at US$250 million. Typically, 10 to 15 of by enabling contractors, architects, and those projects have budgets exceeding other internal stakeholders, to enter and US$2 million. view change orders, drawings, and more, and access critical documents from a Standardising and automating processes standard browser. and closely tracking the cost of capital projects have helped the university to: The Result:

• Ensure on-time, on-budget completion Reduction in number of change orders by 15% – saving US$3.7 million in one • Improve its ability to locate and manage year alone – thanks to more detailed project documentation to increase cost and scope information, audit trails, transparency and collaboration and and transparency. reduce the number and size of claims

6 | Oracle Discussion Paper Oracle Discussion Paper | 7 Experience the benefits of Primavera • Monitor programme and project health. Define. Achieve. Deliver. Enterprise Project Portfolio Graphically depict a portfolio’s health and highlight Management solutions opportunities to improve project performance or reallocate resources • Select the right programmes and projects. Prioritise EPPM helps you define the future, how you will deliver, and how • Quickly assess programme performance. Easily enterprise investments based on your organisation’s view the metrics that are important to you. mission, risk tolerance, and resource constraints you will make decisions to best serve the needs of effective Create customised status windows to suit your • Monitor programme status. Avoid wasting time programme needs project management at every step of the way. analysing mountains of data. Quickly assess your • Gain greater programme control. See across all project’s overall status in real time, and focus your project teams and summarise information with easily risk mitigation with customisable dashboards configurable scorecards that allow greater visibility into projects, costs, and risks Achieve financial discipline and mitigate risk… Investment in public infrastructure projects commits millions of dollars in government funds to long-term projects, often without adequate financial visibility into project performance. Solutions to high-risk problems offer the potential to save billions of dollars, improve service to the public, and strengthen the performance and accountability of state-sponsoring bodies Adopting Enterprise Project Portfolio and governments. …by capturing real-time and actionable financial project and portfolio management insight Management: the six-step roadmap and removing vulnerabilities to waste, mismanagement and fraud Public infrastructure investments often attract multiple funding sources ranging from donations, direct foreign investment, Public-Private Partnerships, or development funds The following six steps propose a sequence through a deviation or out-of-tolerance development. These from supra-national finance institutions. The ability to maintain the traceability of funding which EPPM can be adopted. Reference to ‘projects’ relationships may be logical, resource related and/or allocations provides investors with confidence in how money is allocated and utilised. pertains not just to an overall infrastructure project but benefit related. can relate to each of its many constituent parts, which Successful programme management and project management requires insight into all the are interdependent and often sequential and where Benefits: visibility of conflicts and interactions between risks that may affect service delivery or system performance. Good project management is change in one area affects progress in all others. projects and project phases gives you the ability to about managing the schedule, budget, quality and safety on a project, and the risks that each understand how certain project phases depend on each of these areas entail. 1. Visibility Across the Current Range other, how certain benefits depend on the successful of Project delivery of multiple projects and how some projects Achieve operational excellence… demand the same resources. Selecting the right infrastructure investments in the right places – creating the greatest Implement a process for collating status reports on economic gains – be they transportation systems or core services such as energy, water and all current projects or parts of. This may initially be a 3. Resource Management sanitation is crucial to achieving developmental and service delivery objectives set out by a simple project register, but often this is expanded to In the public sector, all organisations have limited government. include all project details such as timelines, budget, resources and many of the resources will have multiple current status and a traffic-light representation of its …by effectively managing the infrastructure project portfolio roles. Unpredicted overloads are contrary to efficiency status. Collectively, the right infrastructure projects are those that make the greatest contribution and it is exceptionally challenging to balance availability to your government’s strategic objectives. Infrastructure project and portfolio management Benefits: providing an overview of the current workload and demand. helps managers to ensure that the right programmes and projects are started and the wrong enables you to better understand each project’s Benefits: a clear understanding of the resource ones are stopped or not initiated. alignment with strategy. It is not uncommon to end this demands of the total project workload over time allows stage with the cancellation and redefinition of the less this to be matched with resource availability. Harness innovation… valuable projects.

Using the best available tools to drive collaboration and monitor progress is essential if public Predictions often enable the team to pre-empt and sector organisations are to meet their nation’s requirements for sustained economic growth 2. Interactions Between Projects therefore avoid over-demands that would have led to and improved quality of life. Understanding the often complex relationships between project failure and take advantage of under-demands …by removing any barriers to progress and making very action positive, timely, projects enables you to properly assess impacts of that allow faster deliveries. and transparent One team with one goal and one view.

8 | Oracle Discussion Paper Oracle Discussion Paper | 9 4. Best Practice Techniques and Tools interaction and interchange between project teams and clearly demonstrate adherence to government best A portfolio of project subsets and phases will benefit practice guidelines. from a consistent set of best practice tools and techniques. This will also ease the efficient collation of 6. Selecting the Most Beneficial status data across the portfolio. Programmes to Change Benefits: the use of consistent tools and techniques The use of best practice governance techniques in the across a workload allows interaction and interchange identification, selection, authorisation, prioritisation and between teams at a level previously impossible. With delivery of strategically important programme drivers: modern tools such as Oracle Primavera, geographical distances need present no barriers. • An understanding of the government’s strategy and any changes to it 5. Governance • A clear view across the landscape of the project, The use of repeatable, consistent and appropriate including status governance processes will help to deliver and • An understanding of the interactions between demonstrate professionalism in the management of elements of the project the infrastructure project. Appropriate governance will • The ability to plan work within the capacity also ease the efficient collation of status data across of the organisation to deliver change through the portfolio. resource predictions • The confidence that the project will be managed Benefits: the organisation can easily demonstrate with best practice tools that projects are following a set of appropriate procedures and become aware of those where these • The knowledge that governance processes will procedures are not being followed. This will allow be followed

Making rational decisions The process for initiating authorised programmes is not complex but relies on good judgment. Historically, decision makers have found it hard to support their decisions with hard data which describe the current state of the existing workloads and valuable models of potential new initiatives. Programme dashboards using EPPM can view current workloads as well as projects contending to join a workload. On the basis of this information, governments and government departments can make rational decisions to authorise, amend, delay or cancel individual projects and programmes.

10 | Oracle Discussion Paper Oracle Discussion Paper | 11 About Oracle’s Primavera

Oracle is the leading worldwide provider of project portfolio management solutions for project-intensive industries. Our Primavera enterprise project portfolio management applications help public sector organisations propose, prioritise, and select project investments and plan, manage, and control the most-complex projects and project portfolios.

Oracle solutions are in use globally by governments and public sector agencies, bringing about faster transformation through better project management performance and control.

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