August 1st, 2022
There’s no denying projects are unpredictable. In a featured New York Times Article titled “Years of Delays, Billions in Overruns: The Dismal History of Big Infrastructure,” author Ralph Vartabedian discussed the growing prevalence of monetary and scheduling uncertainties plaguing today’s projects in the United States. Today’s project cost overruns don’t just cost thousands, but rather millions. Project schedule delays, likewise, have grown from months to years.
Throughout the article, Vartabedian alludes to multiple projects experiencing these issues. In particular, he references the Honolulu rail transit line. The objective of this project was to create a railroad that would transport passengers 20 miles from the suburbs outside of Pearl Harbor into the heart of the capital city. The project was expected to cost $4 billion and was slated to open in 2019. However, due to environmental, humanitarian, and material concerns, the project was delayed… and delayed… and delayed again. The project is currently expected to finish in 2031 and it’s current cost sits at an amazing $11.4 billion.
Could this have been avoided? According to Joseph Schofer, a Northwestern University civil engineer, “The setbacks that resulted in delays… are the kind of challenges that plague nearly all major infrastructure projects; the common mistake is in not planning and budgeting for them.”
The article goes on to pose a valid concern: “As the nation sets out on a national spending spree fueled by a $1.2 trillion infrastructure bill (from the federal government),” how can cost overruns and delays be minimized to ensure the lump sum is spent on what is needed – improved infrastructure.
It seems to ensure the $1.2 billion is better leveraged, the project-industry must better prepare for the unknown. But how? Especially when projects like these are wrought with complexity.
The solution: establish an effective risk and change management system.
Ok, so maybe it’s easier said than done… but effective risk and change management is vital for a project to stay on track. And here’s why:
What is Risk Management?
A risk is any event that might occur during the project that differs from the original assumptions associated with the project. Risks can be either positive or negative. Risk management allows you to anticipate project risks, plan for contingencies, and adapt project plans when issues and opportunities arise. If a risk becomes a reality, it can have a major impact on cost, schedule, and resources. That’s why it’s so important to identify risks early and have contingency plans in place to counteract them when they arise.
What is Change Management?
When a risk becomes a reality, the contingency plans you have created are then enacted within your change management process. Change management is the effective use of resources, processes, and strategies to meet project goals despite a change. The goal of change management is to minimize the negative impacts of changes and maximize any positive effects.
Once you establish effective risk and change management processes, one problem remains: you can’t see into the future. There is no way of knowing for certain what circumstances will arise during project execution. So, how can you identify risks and prepare for change if you don’t know what’s to come? Below are some practical steps to ensure you’re as prepared as possible.
Foster Open Communication:
Communication is the key to mitigating risk. Be sure to consult with relevant stakeholders and leverage their unique expertise and experiences.
Use Data from Past Projects to Inform the Path Forward:
Odds are you’ve probably completed a project similar to this one before. While not all projects are the same, it’s worth consulting the analytics gleaned from past projects to identify common risks. You can then analyze the way issues have been addressed and the subsequent outcomes to decide if you should improve your change management processes.
Consult Realtime Data from Current Projects:
There’s no doubt that the projects you’re working on now have their own challenges. So, it’s easy to assume some of those challenges might also affect any new projects you take on. For example, if your current projects are suffering from cost inflation, the budgets for future projects should take these rising costs into account.
A Complete View of Project Data
Unfortunately, many project-driven organizations struggle to obtain a complete view of project data. Since accessing trends through project data is essential to identifying risks, a lack of visibility can be detrimental if not crippling. To combat this issue, industry leaders are ditching their fractured web of project management tools and turning toward a single, automated Enterprise Project Performance (EPP) solution.
By doing so, they achieve never-before realized transparency across their entire project portfolio. An EPP mindset allows users to gain full control of the entire project lifecycle – from making better decisions on what projects to pursue to enhancing their ability to identify risks and mitigate change. In turn, they experience greater project success and maximize financial returns.