SPRING 2021 | PM magazine
Joe Siraj Director Facilities/Real Estate
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CAN THE FEDERAL GOVERNMENT LEARN ABOUT PROJECT MANAGEMENT FROM THE REST OF THE WORLD?
Between 1902 and 1913 the Corps of Engineers built the Panama Canal but the Pearson, Inc. final cost was extremely over budget. Fast forward to 2014, “The Obama administration has spent roughly $840 million on HealthCare.gov, including more than $150 million just in cost overruns for the version that failed so badly when it launched last year ” (Baker, 2014). More recently in 2020, The LA Times reported that the California High Speed Rail, a new bullet train system in California, is likely to be billions of dollars over budget and delivered seven years later than planned (Vartabedian, 2021). These are just a few examples of US government project delivery with high costs. There are so many more cases like this in the past century that maybe we should be asking how foreign government agencies are approaching projects and what can we learn from them? For the purpose of this article the most obvious comparison would be the United Kingdom (UK) because of cultural similarities and maturity, technological advancements, economic conditions, and international political standing. Furthermore, the focus will be on two key issues which are procurement processes as well as detailed cost estimating guidance that commonly have a significant impact on whether a project is delivered successfully or not.
“Usually the root cause of poorly defined scope and requirements definition begins during the delivery phase.” In the US, there are numerous branches and agencies of the government that range from Education to Treasury that engage project managers and the same can be said about the UK. Both jurisdictions must comply with the respective regulatory requirements and organizational processes that are designed to instill the higher level of order needed to successfully deliver trillions of dollars of projects every year, however in both cases it has been common to see reports of projects that are late and hugely over budget. Observers on both sides of the pond would point to that same order as the cause and many have called for change but government organizations all over the world are steeped in traditional practices and historic processes that are difficult to supersede and in this regard in both the US and UK. How do these large organizations overcome the rigidity of order and bureaucracy, and is it feasible while mitigating the obvious risks to time, cost, and quality? The solution may lay in the private sector approach where innovation is encouraged, resources are flexible and agile, effective communication is prioritized, decisions are speedy, and goals and objectives are made clear. Most importantly, the ability to quickly pivot and adapt to changes quickly is something that the majority of government agencies have struggled with. Another important similarity is that both jurisdictions find challenges with cost estimation and budget setting. As reported by The Guardian, In the UK, the 2012 Olympic Stadium was completed millions of euros over budget followed closely by the California High-Speed Train Project in the US that is yet to be completed but already $37B over budget (Vartabedian, 2021). A number of reports by organizations such as Govloop for the US, and Institute of Faculty and Actuaries (IFA) in the UK have identified this as an area for improvement in both countries. That being said, the most common factors that cause these issues are errors in procurement, unit rates, or poorly defined scope. This issue is quite surprising as the US and UK both have very
rigorous procurement processes as well as detailed cost estimating guidance. For example, in the US, the GSA provides a 92 paged document “P-120 Project Estimating Requirements” describing how cost estimates should be derived (GSA, 2017). The UK provides similar guidance, so the question is where are they going wrong? The first significant factor is cost management. Usually the root cause of poorly defined scope and requirements definition begins during the delivery phase. In fact, cost management directly relates to what the Project Management Body of Knowledge (PMBOK) has as a key concept.“Project Cost Management is primarily concerned with the cost of the resources needed to complete project activities. Project Cost Management suggests that PMs consider the effect of project decisions on the subsequent recurring cost of using, maintaining, and supporting the product, service, or result of the project.” (PMI, 2017). As a result, there is a negative impact on the project schedule and budget. The second common factor is changing strategies that can require goals and objectives to be adjusted during the delivery phase, and again this can have a major impact on time, resources, and therefore cost. Some may believe the strategy factor can be mitigated through better planning and a higher degree of consultation and stakeholder engagement, but when you recognize in the US and UK there are general elections every four years that often result in leadership and administration changes then it is easy to understand why even the most positive strategies fall short.
“The ability to quickly pivot and adapt to changes quickly is something that the majority of government agencies have struggled.” Having described these challenges, it would appear a negative picture for project delivery in the US government, but it is apparent that similar circumstances also exist in the UK. Furthermore, my own research indicates that project delivery in other European jurisdictions also suffer the same issues on a regular basis. Is the rest of the world managing their projects better? The answer is actually no, they are not so advanced to warrant the US to consider the grass to be greener on the other side. The
similarities between two close neighbors in the US and UK are even more apparent when you consider the following: the relative scale of operations in each country, available resources, and the complexity of their organizations, it is no surprise that delivery timelines and costs are adversely affected regularly. So, having determined that the federal government approach to projects is quite similar to other countries, where does that leave us with the challenges that still exist and have existed for decades? Perhaps, the answer lies with the private sector. The private sector has one ultimate goal. Profit. Those organizations that are most successful are practicing innovation, lean with highly efficient processes, and effectively utilizing technology to ensure they can be agile and adapt to the needs of their stakeholders and compete in their respective markets. The bottom line is they simply cannot afford to deliver a project late and over budget because the impacts on their business could be terminal or catastrophic. References: Baker, S. (2014, July 30). Obamacare Website Has Cost $840 Million. https://www.theatlantic.com/politics/archive/2014/07/obamacarewebsite-has-cost-840-million/440478/ Government Services Agency. (2016, August 4). Public Buildings Service Cost And Schedule Management Policy. [P-120] GSA https://www.gsa. gov/directives-library/p120-public-buildings-service-cost-and-schedulemanagement-policy-10006-pbs Kelso, P. (2007, October 10). London 2012: Cost Of Olympic Stadium Nearly Double By 2012. https://www.theguardian.com/sport/2007/ oct/11/Olympics2012.politics Project Management Institute. (2017). A Guide to the Project Management Body of Knowledge (PMBOK guide) (6th ed.). Project Management Institute. Vartabedian, R. (2021, February 22). A ‘low-cost’ Plan For California Bullet Train Brings $800 Million In Overruns, Big Delays. https://www.latimes. com/california/story/2021-02-22/california-bullet-train-dragados-designchanges
