MWH is a leading global provider water, wastewater, energy, natural resource, program management, consulting and construction services to industrial, municipal and government clients, with revenues of $1.3 billion in 2007. The company has developed significant expertise in program management where interrelated projects are managed as a single program, enabling clients to manage costs and risks with better economies of scale. In an exclusive interview, David Nickols, President, MWH Europe, Middle East, Africa & India spoke to Anoop K Menon, Editor, H20 on the scope for program management services in the UAE and MWH's strengths in this area.
Where does one draw the line between program management and project management?
Program management is used in the context of managing a group of inter-related projects as a single program rather than either a single large project or isolated smaller projects. In the latter case, project management would be the appropriate term. Program management as a whole accounts for 30% of our business, which is quite significant considering our global revenues of $1.3 billion in 2007.While the programs we provide vary tremendously, there are commonalities, the foremost being the management of a series of inter-related projects, and the benefits gained for the projects from being managed in an inter-related manner, in terms of confidence in quality, schedule and cost outputs.
Our emphasis is on governance and transparency, and we have systems and tools for enabling the same. You can see at a program level, clear reports on the position of the program, status, quality of its outputs or scheduling for cost, and dashboards that facilitate detailed drill downs. Governance is about trying to get the right information to the people who have to make decisions quickly.
From a systems perspective, what are the key advantages that program management brings to the table? Do you integrate your systems with those of your clients?
An inherent advantage of program management is single set of data. Everybody works with the same set of data, built upwards using scheduling software. A single data set facilitates transparency and consistency. When you have good data at your finger tips, the main question will always be - how best are you going to use it rather than arguing about the correctness of the data or whether or not a project is over-budget. What matters most is the quality of the data and the systems, so that you see what the problems and focus on solving them. We configure the dashboard to suit the client's organisation, from the project personnel level to the top management.
Also, we prefer to work with our own systems because they have been developed by multiple client experiences around the world and are of high quality. Moreover, our people are trained on them. Our systems also integrate with best in class software like Primavera and financial systems. We use Primavera because it is the leading industry -standard scheduling software, and works extremely well as the data source for the project data that we use in our dashboards and data warehouse.
Integrating with the client's IT systems depends on what we are doing and at what level. If we are going into a city to do program management services of their capital program and they have an existing financial system carrying all the cost data, it makes better sense to integrate with their system because there is no point in replicating that data. We simply take out the necessary cost data for our systems and reporting.
Do clients see program management in the manner you have defined it? Are they comfortable using the term?
Some of our clients prefer not to use the term. But if you look at what they want us to do (or what we are doing for them), it falls within the definition of a program. It is more of a perception issue than anything else, and more so in the West, where clients perceive program management as their responsibility. Our approach is to find out what they want from us and provide it. Depending on the scope of the engagement, we may or may not use the term program management.
What's the size of a typical program? Could elaborate on the types of client engagement?
We offer a wide range of programs. There are some where we only supply some tools and systems and the staff to run them. Depending on the scale of the program, the number of people could range from 3-4 to half a dozen to 20. If we are delivering the program, and running the program management office with the responsibility of ensuring that the program stays within budget, the number of people could swell to 600 or more. But such large programs are found in more mature markets like the UK and the US.
We have municipal programs in the US where we function as an extension of the client's team. We also have programs where the clients have practically entrusted everything to us. The engagement model varies as per the clients' needs and to some extent, their maturity. For some clients, engaging us is a means of knowledge transfer to improve their own capability for program management. Others have a specific volume of projects and capital delivery that they want to get done, and come to us to get it done rather than build up their own program management capability.
The duration of the engagement also varies from client to client. We have clients with on-going indefinite programs. They will be building things forever. Cities are a good example. There are clients who want shorter engagements. They prefer we come in for a limited period, give them the systems and tools and withdraw, so that they can do it on their own. We are happy to do both.
Experience and expertise are central to successful execution of program management. In that context, how do you capture, disseminate and re-use experiences accumulated from projects around the world?
Over the years we have built up processes and incorporated many of them into IT-based tools and systems. We prefer to use off-the-shelf software for our programs. We also have our in-house developed custom tools which take the information, produce dashboard reports and make those readily available to everyone involved at different levels of quality of data. A lot of knowledge and experience has been and continues to be embedded into these processes and tools.
MWH hosts a program management forum three times a year, in different parts of the world, where we bring our program management people together to share experiences. We have launched a program management course in our internal university. With the expansion of business, we felt a more rigorous form of training was needed since the historical practice of on-the-job training through deputation to an existing project was found to be too slow. We also host a knowledge community built around program management in our Intranet, where all our program management staff can log in, post queries and get answers.
I believe our global knowledge sharing network has proved to be a fabulously successful investment. Instead of putting in a tool to merely park data, we encouraged our staff from all over the world to network and then put in a tool that simplified networking. That's been a very powerful approach, not only for program management but for all areas of information and knowledge in the company.
What are the key benefits emerging out of program management?
The key benefits are better surety of quality, cost and schedule for delivery, and transparency and governance. Problems and issues often arise around capital programs, capital delivery, building things. The question in the industry is isn't how to avoid problems - program management can help in that through better processes and systems. Consistency is a big deal in construction, and program management ensures that by doing away with individual errors and replacing individual judgement as the first point of call with processes and systems. It then identifies exceptions that need to be addressed through individual analysis and judgement. Program management gives you quicker and better decisions because you get an early and better warning of the problem. If a project is going off schedule in a program environment, with the right systems and tools in place, you can spot that early on and in a group of projects, you have plenty of choices to do something about it. Without program transparency and governance, such alerts and choices would be non-existent if not weak.
Are these benefits quantifiable?
To give you an example of an on going program, we have taken on the responsibility for a program in the water industry in the UK worth Pounds 700 million. Overall, there are 250 projects in this program. We are delivering the program with 8.2% savings for the client that is beyond their budgeted expectations and their prior experience in standalone projects environment. In this particular project, we also share the efficiency gains. Some clients want to do that and we are happy to do that as along as we understand the risks we are taking on from the client. This project is a short term engagement - it's a 5 year program.
We define key performance indicators for all our projects. While they may vary across clients, we have delved into our knowledge and experiences to arrive at a core set of KPIs that apply to all the programs. These are tweaked at the start so that clients get what they want. The systems and tools we use help create a strong audit trail of how decisions are reached. They also document the business processes that we have created, refined and made consistent over the years. Thus, you get efficiency built in because you aren't repeating things; you have documentation built-in, which also creates great audit trail. A strong audit trail is useful for defending decisions (and clients often have to do it before their owners or shareholders) and for adhering to regulations or things of that nature.
What should clients look for in a program management services provider?
The selection should be based on a proven track record of successful program delivery and demonstration of program tools, and deep understanding of the science of program management technique. I believe that program management is subject matter independent - it is the same whether it is an airport, a commercial development, a water utility program, an airport or a residential development. However, not all clients agree with me because there is a lot of pride around subject matter and exclusivity. The second most important factor is people - does the provider have personnel with program management experience and expertise? Not merely recruited off the street, but people who understand science of program management and understand the systems and processes that go with it.
Globally, fast growing industries are grappling with a skill shortage, and the situation is not different in this part of the world. So how do you get your people? What do you look for in potential recruits?
Actually, it's not a problem everywhere (pauses). It's a big problem everywhere we are working (laughs aloud). If you look at the demographics, thousands of qualified people are being churned out every year in China and India. But in the Middle East, the US, Australia and the UK where much of work is taking place, there is a shortage of people. Our best program managers are people who are highly process driven, and understand the importance of repeatable processes. They are very good communicators and rationalisers because the job involves taking in a lot of complex information, trying to distil it down and understand it. Our pool of program managers is made up of people who are engineers by training and were doing engineering for 5-10 years before moving into program management.
Can issues like material costs inflation be addressed within the framework of program management?
A key element of program management function is being able to identify the mix of uncertainties considering experience and local conditions and working out how to report and manage those risks. There are risks that can be transferred to the supplier or contractor, and risks that have to remain with the owner. There will be a marked preference to transfer risks but that should not be at any price. It also depends upon the stage you get involved with the client. If it is at the beginning of the conceptualisation of a number of projects, you can start implement standardisation and help with the strategy for a procurement contract. Standardisation actually cascades through the whole life of the cost, right from capital stage to the operation.
© H2O 2008
