This paper looks at the difficulties of managing modern capital
projects and endeavors to reduce the complexities to simpler and
more understandable terms. It examines the project environment,
defines project management and discusses points of difference from
traditional management. A major technique for handling any project,
the Work Breakdown Structure, is discussed and rules and guidelines
are suggested. The paper concludes with some essentials for success.
Significant advances in technology, especially in communications
have raised the expectations of most people of the world. I understand
that India has a current five year plan (1985 to 1990) which is
aimed at providing basic food, health and education for all of her
population which will reach one billion persons in the year 2000.
This current plan fore-casts government spending to reach over $140
billion US. Approximately $18 billion US of this is to be spent
on transportation, $22 billion on social services, $30 billion US
on agriculture and over $40 billion US on energy projects. This
is an ambitious plan indeed, and represents a massive program of
However, severe economic strains have developed in international
trade over the last decade, resulting in difficulties in capital
markets and with levels of external debt. This has necessitated
a serious reappraisal of how projects, especially capital projects
are brought to successful completion. This is just as true in the
West as it is in the East, the North or the South.
The high cost of money puts a special premium on the time it takes
to complete a project and how well it is managed. Delays and poor
management may substantially reduce the effective benefits and quality
of a project. Not only this, but in forcing a poor project to completion,
money and other resources will be drawn away from other vital and
needed project opportunities.
Even with good project management, a host of problems usually beset
the average capital project. This is especially true in a developing
nation, where political, economic, social and physical difficulties
impede progress causing serious delays in completion or even failure.
In Appendix A to this paper I have listed some of the most common
problem areas and situations encountered in overseas project management.
The major headings include:
- During Concept Development
- Environmental Conditions
- Market Conditions
- During Planning
- Organizational Difficulties
- During Execution
- Control Difficulties
- Start-up and Operating Difficulties
So after all that bad news, I have some good news. Project management
is really very simple. The rest of the bad news is that it is people
that make project management difficult!
As projects become larger and more complex, the effective management
of them becomes relatively more significant to a successful outcome.
How well the project is managed will generally far outweigh how
well any of the specific technical roles are performed. Thus, putting
in place competent Project Management capability long before putting
in place appropriate design, engineering or construction capability
The difficulty is that on almost all capital projects, there will
be a number of people involved who do not really or fully understand
the process of bringing a capital project on stream. Without embarrassment,
I include owners, sponsors, financiers, bankers, operators, politicians,
lawyers, accountants and, I regret to say, even engineers. This
is because Project Management is a particular but logical concept
of management applied to project-type work.
So let me begin with some definitions, and compare project management
to traditional management.