(97d) Aligning Organizations to Manage Large Capital Projects

Planning and executing large, high risk, capital projects means that chemical processing industry firms have had to retool their project delivery systems. While many firms have started the development of more robust project management processes to support these high capital expenditure (CAPEX) projects, implementation of this new way of doing business is meeting limited success.

IPA, Inc. reports that 50% of all energy mega-projects overrun CAPEX by greater than 30%. Business leaders feel that they must effect change because of their mixed experience in delivering major projects.

By some estimates 50% - 80% of enterprise level initiatives are deemed failures by organizations. How much stockholder's equity has been liquidated attempting to implement a new way of doing business yet meeting only limited success, if any at all?

Often company staff sees the ?new? way of doing business as just one of another plethora of initiatives. How do you convince employees they need to change as well as remove the barriers within the firm that prevent the initiative from being successful?

The major obstacle to implementing new project management processes is the sheer inertia within the organization. People are accustomed to developing, planning, and exploiting opportunities in a particular way. Individuals often fear change for a variety of reasons. The firm, as well as its entire supporting infrastructure, is organized to sustain the old way of planning and executing projects. Infrastructure includes all systems associated with human resources, management information, business processes, support staff, etc. Never underestimate the resistance to change within the firm.

In this article we will apply a contemporary organizational change(1) and behavioral model(2) to a time proven 9 step methodology to facilitate success. The model addresses mobilizing the staff, removing barriers to change within the firm and finally institutionalizing the new way of planning and executing projects to meet the challenges of the current capital environment.

Bibliography 1. Leading Change, John P. Kotter, Harvard Business School Press, 1996

2. The Five Dysfunctions of a Team: A Leadership Fable, Patrick M. Lencioni, Wiley Company, 2002

3. The Balanced Scorecard, Robert S. Kaplan & David P. Norton, Harvard Business School Press, 1996