ARC's Russ Novak Project Performance Management Presentation @ ARC Industry Forum 2010 in Orlando, FL. Project Performance Management Present and Future Why Rethink Project Performance Management Owner’s Perspective of Project Performance Issues Evolution of Project Performance Management Why Rethink Asset Lifecycle Management? Riskier Business Opportunities More Mandatory Investments Limited Capital, Tough Capital Markets Bigger, More Complex Projects Global Projects, Global Project Teams Escalating Labor and Material Costs Poor Asset Utilization, High O&M Costs Aging Workforce, Lack of Skilled Workers Legacy IT Systems Constrain Improvement Easy IT solutions can help

1. Project Performance Management
Present and Future
Russ Novak
Director of Consulting
ARC Advisory Group
rnovak@arcweb.com

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Agenda
 Why Rethink Project Performance Management
 Owner’s Perspective of Project Performance Issues
 Evolution of Project Performance Management

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Rethinking Project Performance Management
Plan Design Procure Build Operate Maintain
Retire &
Recycle
Project Performance
Management (PPM)
Asset Performance
Management (APM)
Project
Performance
Management
(PPM)
Asset
Performance
Management
(APM)
Asset & Project
Portfolio
Management
(APPM)
Handover
Modification
RequestsFunded
Projects
New
Facility
Requests

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Why Rethink Asset Lifecycle Management?
 Riskier Business Opportunities
 More Mandatory Investments
 Limited Capital, Tough Capital Markets
 Bigger, More Complex Projects
 Global Projects, Global Project Teams
 Escalating Labor and Material Costs
 Poor Asset Utilization, High O&M Costs
 Aging Workforce, Lack of Skilled Workers
 Legacy IT Systems Constrain Improvement
 Easy IT solutions can help

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Research Results: Owner Perceptions on
Project Performance Management Issues
How do you
accomplish
Handover?
What about JVs
and governance?
How does IT play a role in Governance?
Do you use GRC software?
Document management?
How do you approach governance and process assurance?
How well do you integrate Project and
Engineering Systems?
Do you use Portals for project status reporting?
What about asset-centric information management?

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Governance and Process Assurance
 Need well defined & governed CapEx delivery
processes
 Adoption by Top Tier Performers
 Internal or External Controls & Metrics
 Corporate/Enterprise versus Project/Engineering
Workflow Perspectives
• Enterprise Issues Trump the Engineering Workflow
Analysis & Lead to Corporate IT Involvement
• Continual Improvement

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Project Performance Management:
O/O Activities Require Effective IT Strategy
Portfolio
Approval
Operating
Facility
Process
Design
Handover
Commission
Budgeting
Estimating
Construct
Project
Mgmt
Finance
Start
Up
Scheduling
Mgmt
Reporting
Procure
Evaluate
InspectionEngineering
FEED
Permits
Training

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Project Performance Management:
Reality, Constraints & Obstacles
 Different Worlds: O/Os don’t fully understand the information
requirements of E&D, EPCs, or Project Mgmt. … and vice-versa
 IT Gaps: Asset-centric Approach vs. “Silos”
 Interdependency issue is underestimated
 “Workarounds” distort reliability of information
 Increase in Size/Complexity/Costs: =>Unacceptable Risks with
IT legacy systems
 Failure to follow Best Practices/Governance omissions
 Lean/Aging workforce (information transfer & retention)
 Engineering Tools originally designed for E&D, not O/O
 Evolution in format of information: Drawings --> Databases
 Initial development of IT systems not focused on project
execution
 Not fully integrated with Portfolio Performance

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Project Performance Interdependency
with Portfolio Assumptions
SPECIFIED
Benefits, Risk,
Resources
Project Approval is based upon
specific assumed levels of Benefits,
Risk, and Resources.
Project Performance Management
for all projects must be
synchronized, standardized, and
update the Portfolio Performance
Management base cases.
Portfolio Projects

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Evolution of Project Performance
Management
 Evolution of Project Performance Management is
being driven in part by …
 Adoption of Portfolio Performance Management
• Synchronizing corporate business objectives with selected
projects
• Prioritization/ranking/selection of competing projects
• Competition for investment, people, resources,
• Alignment with strategic initiatives (sustainability, etc)
• Lifecycle of “project” becomes lifecycle of asset
• Increased emphasis of Risk Analysis
• Trend of executive access via dashboards, etc.
• Stakeholder community expanded (marketing, financial,
sustainability, compliance, L-R planning)

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Project Performance Management:
The Future - Optimal Case
 O/Os fully understand the asset information needs of E&D,
EPCs, and Project Management …and vice versa
 Lean/Aging workforce issues resolved/compensated by
emergence of knowledge worker and IT implementations
 Engineering Tools evolve with inherent IT capabilities for both
Project and Operations domains
 Technology enables automation of IT strategy for PPM
 IT and enterprise systems are totally in sync with the entire
project space and portfolio management processes
 All phases of project performance management is understood,
accepted, and incorporated into normal business workflows
 Seamless transfer of Project information to Operate and
Maintain phases
 Central governance and process assurance programs mature,
but continue to improve

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Takeaways
 ARC continues to expand its ALM research efforts
in the Project Performance Management space.
 Project Performance Management is evolving and
will exhibit tighter integration with Portfolio
Performance Management.

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Thank You.
For more information, contact the author at
rnovak@arcweb.com or visit our web pages at
www.arcweb.com