Fix it or Forget it? Dealing with Troubled Projects Scott Hine Director, Information Technology Services Office U.S. Department of Energy (DOE) Office of Energy Efficiency and Renewable Energy (EERE) 2018 Project Management Symposium

By a show of hands… Fewer than a third of all projects were successfully completed on time and on budget over the past year. (Standish Group) How many of you have had experience with troubled projects or project failure? How many of you have fixed a failing project that was close to being cancelled? How many of you have had to terminate a project? Success in 68% of IT projects is “improbable.” (IAG Consulting) Projects are 2.5 times more successful when proven project management practices are used. (PMI)

Overview of troubled projects 33% of projects fail because of a lack of involvement from senior management. (University of Ottawa) Project “failures” influenced by project factors, external market conditions, and regulations Troubled projects often go unnoticed until it is too late Project teams reluctant to identify underperforming projects Ensure effective communication of the consequences of “failure” and response to risk Response is often to “fix it,” but “forgetting it” is sometimes the more appropriate choice High-performing organizations complete 89% of their projects, while low performers complete 36%. (PMI)

Portfolio overview ~2,800 projects (R&D Portfolio) related to renewable energy and energy efficiency technology and innovation $1.2B in laboratory projects for 17 national labs $4B in financial assistance projects for 12 technology areas Regular monitoring and reporting requirements 3 to 3.5 year project length with annual budget periods Average project size $3M to $4M 1 - 10 11 - 20 21 - 30 31 - 40 41 - 50 >50 Projects by State National Laboratory

Portfolio challenges Unique mission Large, technically and geographically diverse funding recipients Internal and external risks influence project performance High profile projects Unique mission Project goals are advancing technology, not maximizing profit Stewards of taxpayer money to obtain the greatest impact Prioritize proactive communication of risks and working with performers to resolve issues Financial assistance projects cannot be terminated for convenience Technology Areas

How to address troubled Projects? “No surprises” culture Proactive communication of risk (“See something, say something”) Use multiple data streams to establish an early warning system Incorporate enterprise risk management activities into everyday business operations Continuously train project managers on warning signs

Establish a project evaluation process Get buy-in from stakeholders and senior leadership Identify evaluation criteria Develop tools to analyze project performance Monitoring Activities Conduct analysis and reporting These steps can be adapted to all organizations, regardless of your priorities or constraints.

Get buy-in from stakeholders and senior leadership Communicate goals to senior leadership Proactively communicate risk Establish communication pathways Remind them that risk is expected Set expectations Review what project “failure” might look like Prepare for potential consequences Identify how the organization will respond and move forward Get input from staff that will be asked to carry out proposed policies

Identify evaluation criteria of troubled projects Identify risks and develop thresholds for deviation from acceptable limits Use historical performance to identify warning signs Revise as necessary

Evaluation criteria of troubled projects (examples) Layoffs or high turnover Major audit findings Changes in market conditions Leadership changes Failure to comply with corrective actions Chronic failure to meet performance, schedule, or cost goals Policy changes that may have market, financial or technical impacts Significant weather events

Develop tools to analyze project performance Informed by evaluation criteria and data availability Can be as simple or complex as you want, as long as it meets your needs Ensure that your outputs are useful and deliberative Validate criteria, data and tools once there is an “event”

Financial health analysis for select performers Submit report on findings and provide recommendations to project management staff Input data into algorithm Schedule performance Cost performance Project size Number of projects with a specific vendor Invoicing history Reported project health Third party financial metrics Monitor significant events Cash flow and liquidity issues Changes in market conditions Supply chain concerns Leadership change or layoffs Changes in partnerships

Monitoring activities Project management staff provide ongoing monitoring Review of quarterly progress and financial reports Site visits take a closer look at progress, capabilities, and processes Independent reviews evaluate how projects are being executed and if they are meeting milestones Regular communication with performers to help address issues as they arise Significant events are reported immediately

Independent Project Reviews (see handout) An objective evaluation of project performance. Used to enhance oversight of challenging projects, adding a third party perspective when specific concerns are identified. Used to determine whether projects at risk of termination should proceed, and if so, whether additional resources are needed to ensure effective oversight

Conduct analysis and reporting Analyze available data using the tools that you have developed Establish a system and schedule for reporting results to decision makers and senior leadership Ensure decision makers have the results in hand when they need to make decisions, or have access to the information as often as possible

Summary Identifying and monitoring troubled projects is the right thing to do It will take time to gain traction with new policies Work with the project teams to show value – it isn’t just for senior leadership Continuously remind project teams that all projects will not be on track all of the time Communicate to project teams that it is always better to report an issue than to not report it

Questions, Answers, Discussion

Contact information Scott Hine, Director Information Technology Services Office, U.S. Department of Energy Office of Energy Efficiency and Renewable Energy scott.hine@ee.doe.gov 202-586-9744 Executive Sponsor of FedPM COP Get involved at https://go.max.go/fedpmcop