Improving Project Management in the Department of Energy (1999) / Chapter Skim
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2 Project Management
2 Project Management
Pages 23-49
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From page 23... ...
GAO noted that management problems and ineffective oversight had led to cost overruns, schedule slippages, and project terminations. The DNFSB also raised concerns about ineffective project management in its analysis of schedule slippage in DOE's spent nuclear fuel project at Hanford, Washington, citing the lack of sound project management as the principal reason (DNFSB, 1997~.
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From page 24... ...
RECORD OF PROJECT PERFORMANCE Do DOE projects exceed their schedules and budgets more often and by larger amounts than projects of similar size and complexity with similar risks executed by other government agencies or private industry? The committee sought an objective answer to this question in a variety of independent analyses by the GAO and by DOE' s independent contractor, Independent Project Analysis (IPA)
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From page 25... ...
· cost performance, or the absolute cost of DOE projects compared to the absolute costs of industry and other government agencies, normalized for comparability · cost overruns, or the relative increase in DOE project costs compared to the original budgets schedule performance, or the absolute duration of DOE projects compared to the duration of projects by industry and other government agencies, normalized for comparability · schedule slippage, or the relative pared to the original schedules Project Costs and Cost Overruns increase in DOE project durations com The combined results of two IPA studies (1993, 1995) showed that DOE waste management projects cost 48 percent more on the average than comparable projects by industry and other government agencies; and DOE environmental remediation projects cost about 33 percent more.
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From page 26... ...
The 1996 update of project performance showed that DOE waste management projects cost 33 to 43 percent more than similar projects carried out by the private sector, and cost overruns were between 22 and 36 percent. DOE improved somewhat on the cost of environmental remediation projects during the period, lowering the average cost to 25 percent more than the private sector.
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From page 27... ...
IPA also found that in waste management projects, definition is usually done after only 6 percent of the design is complete, while the industry average is 15 percent (IPA,1995~. Project definition is closely correlated with cost growth (see Project Planning section below for details)
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From page 28... ...
DOE projects are developed and funded under the direction of the program offices and managed by the field organization responsible for oversight of the contractor's implementation of the project. For major engineering or construction projects, a DOE project manager is assigned and, if necessary, a technical support organization is provided.
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Project Management Guidance Documents Project management at DOE is governed by four documents, in hierarchical order. At the highest and most general level is DOE Order 430.1, LCAM (Life Cycle Asset Management)
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The LCAM Order focuses on performance or outcomes over process and allows the Operations/Field Offices the flexibility to develop their own systems once a site-specific performance agreement has been implemented. The LCAM Order specifies the minimum project management system requirements that all projects must comply with (DOE, l995b)
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From page 31... ...
The JPODPM provides joint program direction to their respective field project management organizations. EM, ER, DP, and RW have consolidated their basic project requirements in the areas of planning, reporting, approval and change control thresholds.
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The ESAAB Notice addresses the Headquarters' decision-making process for project critical decisions and baseline change control (DOE, 1997b)
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For example, DOE projects do not consistently use project management plans (PMPs) to define the organization of projects and the roles and responsibilities of the parties involved, although such plans are standard in industry and the JPODPM calls for them (see examples in Chapter 3~.
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Finding. Many DOE projects do not have comprehensive project management plans to define project organization, lines of authority, and responsibilities of all parties.
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However, DOE often disregards the intent of the ESAAB oversight process. The acquisition executive may classify systems that meet the total project cost threshold of strategic systems as major systems, which are subject to lower level approvals (e.g., the High Level Waste Removal from Filled Waste Tanks Project at the Savannah River Site)
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at completion. Field Information needed Report requirements as specified by the Element to meet statutory, headquarters program element, including those legislative, and may need on project-specific risk evaluations (frequency regulatory for risk mitigation.
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Significant accomplishments relating to project execution, as well as project related issues that require headquarters office(s) Participants shall report any issues that departmental attention.
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The DNFSB has repeatedly reported that the lack of expertise among project managers has been a problem and was the major contributor to schedule overruns on the Hanford Spent Nuclear Fuel Project (DNFSB, 1997~. In 1993, the DFNSB recommended that DOE increase the qualifications for personnel at nuclear sites, particularly personnel involved with project management (DNFSB,1993~.
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, and the Business Roundtable (BRT, 1997) have found that better-than-average project systems have some form of central organization that is responsible for controlling project definition, maintaining discipline, and integrating management activities.
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From page 40... ...
PROJECT PLANNING DOE's project planning has not been effective, although there are exceptions, such as the successful Advanced Photon Source Project at Argonne National Laboratory and the B-Factory at the Stanford Linear Accelerator Center. Recurrent problems with project management have raised questions about the credibility of DOE's conceptual designs and cost estimates (NRC, 1998~.
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From page 41... ...
DOE should require that strategic plans, integrated project plans, integrated regulatory plans, and detailed project execution plans be completed prior to the establishment of project baselines. To ensure facility user and program involvement in the preconstruction planning process, DOE should require written commitments to project requirements from the ultimate users.
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From page 42... ...
DOE often sets project baselines too early, usually at the 2- to 3-percent design stage, sometimes even lower. (An agreement between Congress and DOE's chief financial officer to establish baselines at the 20- to 30-percent design stage is scheduled to be implemented beginning with fiscal year 2001.)
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From page 43... ...
Costs can be reduced, however, by faster project completion, reductions in project scope, better project definitions, redesigns, value engineering, rigorous change control, better quality control, more effective management, and more efficient design and construction through stronger incentives, shared lessons learned, and more effective competition. Considerable pressure has been generated from within DOE and from OMB to reduce project budgets to fit the funds expected to be available (OMB, 1997~.
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From page 44... ...
Because DOE has no standard method for assessing project risk comparing projects, methods, and contracts is difficult. DOE often bases contingency allowances on a fixed percentage of the total estimated cost rather than on an assessment of the risks of success and failure, and contingency allowances on DOE projects are routinely low (see Appendix B)
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Considering the size and technology of DOE projects, it is very surprising that DOE conducts so few formal project risk assessments. Finding.
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From page 46... ...
Change control requires that a current working cost estimate be kept up to date with all approved changes and that all impacts of all proposed changes be fully evaluated and priced out prior to approval. The LCAM Order (DOE Order 430.1)
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From page 47... ...
Department of Energy project management. Presentation by John Conway, Chair of the Defense Nuclear Facilities Safety Board, to the Committee to Assess the Polices and Practices of the Department of Energy to Design, Manage, and Procure Environmental Restoration, Waste Management, and Other Construction Projects, June 23, 1998, National Research Council, Washington, D.C.
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From page 48... ...
U.S. Department of Energy, Office of Environmental Restoration and Waste Management, Project Performance Study, Waste Management Addendum.
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From page 49... ...
Presentation by A Tavares, director, Project and Fixed Asset Management, Office of Field Management, to the Committee to Assess the Polices and Practices of the Department of Energy to Design, Manage, and Procure Environmental Restoration, Waste Management, and Other Construction Projects, June 22, 1998, National Research Council, Washington, D.C.
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