Going over budget is one of the key reasons big projects fail. In this course you’ll understand typical investor and project financing approaches in major projects so that you are in a better position to successfully manage them. By taking this course, you’ll learn to interpret some key contractual instruments that are relevant for the financing of major engineering projects such as concessions and Special Purpose Vehicles (SPVs) so that you are in a position to ensure the financially secure delivery of your project. You’ ll learn about the concept of “time value of money” and be able to compute key indicators such as “Pay-back time”, “Net Present value” and “Internal Rate of Return”. Through identifying common stakeholder and management approaches, you will be in a better position to implement key messaging, taking accurate requirements and manage expectations. Through real-life case studies you’ll identify appropriate best practice related to governance, execution strategies, requirements management, procurement, asset and risk management and organisational design and development for the successful delivery of large engineering projects. This is the third course in the Managing Major Engineering Projects Specialization. The specialization is the first step towards earning degree credit from the University of Leeds. Learners who successfully complete the specialization will be able to apply to the enhanced, for-credit Capstone project which will run as a private course on Coursera. Credit earned by successfully completing the Capstone project can be used directly towards our online MSc in Engineering Management and as evidence of accredited postgraduate study.
Overview of major project initiation: A UK public sector perspective
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Del curso dictado por University of Leeds
Financing and Initiating Major Engineering Projects
3 calificaciones
University of Leeds
3 calificaciones
Curso 3 de 3 en SpecializationManaging Major Engineering Projects
De la lección
Project initiation and delivery models
Conoce a los instructores
Dr Giorgio LocatelliLecturer of Infrastructure Procurement and Management
School of Civil Engineering
In the UK, and around the world,
major projects continue to face challenges caused
by decisions made in the early stages of their life cycle.
The poor initiation of major projects is in
part due to the highly publicised nature of their development.
But also, due to a lack of appreciation of how to manage these complex systems.
Understanding what is involved in the initiation of major projects,
and what this means for project managers in helping the project move into
delivery is important in order to set up major projects with the best chance of success.
Project initiation is generally
considered to be the first stage of the project life cycle.
This stage involves defining the project's objectives and outputs.
Sometimes referred to as the concept stage,
project initiation generally refers to
the activities prior to final approval for delivery,
but this is dependent on the project's context.
The project context influences the scope and scale
of the decisions to be made during project initiation.
If the project is part of an ongoing strategy,
it is likely that delivery approval has already been granted.
If the project forms part of a company's 'business as usual',
then the financial investment for the project may already be in place.
A lot depends on the differing processes and practices of the organisation.
For instance, how they assess and assure the business need,
the benefit of a project,
and how it should be delivered.
Major project initiation is different.
As you have learned, major projects are defined not only by their scale,
but also by their level of complexity.
What's more, major projects also have
high expectations of the benefits arising from their delivery.
This can include expected outcomes such as the upskilling of a workforce,
or the shaping of a market,
but also includes longer-term benefits.
For example, an infrastructure project might involve constructing a bridge over a river.
However, it might be expected that
the project does not only deliver a way to cross that river,
but also produces changes in the commuter behaviour,
and future population redistribution.
Because of this, and the fact that major projects are led by,
or have public sector involvement,
the traditional idea of project initiation
often forms part of a lengthy project development phase.
This is because those who are involved in managing the project,
need to carefully consider the project's affordability,
its investment value, and the benefits it should deliver.
This information is then used to inform decisions about the project's scope,
and the delivery strategy.
If this initial assessment is not thorough and robust,
then it is highly likely that we see cost overruns,
delay, and uncertain realisation of benefit.
Often, this occurs on a disastrous scale,
and unsurprisingly, the media is often keen to highlight this!
Surprisingly, the number of
failed major projects still vastly outweighs the number of successful ones.
Part of this is because major projects don't fail on a small scale.
Because the projects are complex systems,
they are either highly successful as everything perfectly comes together,
or complete failures across the board.
This does not happen by accident.
How a major project is initiated is predictive of its future performance.
So how do we, as project professionals,
set a major project up to increase the likelihood of successful delivery?
For good project initiation,
it is important to ensure that the decisions we make
or recommend in this phase consider both the strategic intent of the project,
and how various elements of practice, such as governance
and commercial arrangements, interact.
Aligning the business need with the delivery approach is critical.
We often see cases where
major project underperformance is blamed on the form of contract.
However, it is often the case that the projects themselves were formed as bad projects.
That is, the project was set up to have barriers
to effective delivery: like slow decision-making
or the inappropriate transfer of risk.
For successful project initiation,
major projects must have five key things.
One: clarity of purpose,
and the overall priorities, and desired outcomes.
Have stakeholders been engaged and expectations managed?
Two: a realistic understanding of what delivery will cost.
Is sufficient funding or finance available?
Three: evidenced feasibility.
Is it reasonable that this can be delivered under the conditions set out,
and have alternatives been considered?
Four: a clear business need linked to detailed delivery and procurement strategies.
And five: a robust risk and change management framework.
Change will happen over the life of these projects.
Therefore, who is responsible and accountable?
To achieve success there are a number of things that
a project team needs to consider during initiation.
For example, governance, risk management, stakeholder management,
the delivery organisations, and
the various strategies that make up the business case for a project.
It is within project initiation that the project team
collects the information needed to finalise the project's business case.
In the UK public sector,
the business case development process is used to ensure
public value is fully considered in spending decisions.
It is important to note that this is
a lengthy process rather than a simple tick-box exercise.
And business cases are developed over time.
For major spending proposals,
the UK Treasury employs a thinking framework called the Five Case Model.
This framework has five dimensions.
The strategic case, the economic case,
the commercial case, the financial case,
and the management case.
These cases progress throughout project initiation in three key stages.
Firstly, the strategic outline case.
Secondly, the outline business case,
and lastly, the final business case.
A project manager needs to understand how to take the strategy laid out in
the business case, and translate it into
the various plans for delivery and performance measurement.
A lack of a clear link between strategic priorities
and project objectives has been listed as
the number one factor in the UK government's list of why projects fail.
So, it is clear why linking the business need to a plan for action is important.
Key to making this link is being able to clearly demonstrate the logic,
or 'line of sight', all the way from project requirements through to project evaluation.
For example, you can imagine the difficulties you might encounter as a project manager.
If the project requirements are to provide a fast train,
but the project's success is measured on customer satisfaction.
As a project manager,
you need to be able to trace how
project requirements are translated into project objectives,
and then into project outputs and project outcomes.
By doing this, you'll be certain that the case for the project is strong - that planning,
scoping and delivery activities are aligned,
and that there is an appropriate way to measure project success.
All of this helps to make sure that there is
a realistic picture of what a project can deliver,
so that you can manage expectations and optimism bias.
One way of understanding this is through a logic map.
A logic map helps make a clear link between the outputs, outcomes and benefits.
It checks that all the outcomes are expected to lead to benefits,
and provides a basis for negative impacts to be considered.
This also provides a means to challenge the project's requirements,
if the logic is unclear.
Particularly, it helps to make sure that
the business case dictates the project requirements,
and not the other way around.
This is something that can easily happen on
high profile, politically charged major projects.
Finally, for a project to be set up successfully,
it is crucial to make sure that a project does not proceed until it is ready.
Front end loading, pre-project planning,
or allowing sufficient time for
conceptual development is crucial to major project performance.
Also, allowing for project and program management
and operations to support during project initiation
helps to ensure a smooth transition to delivery,
and ultimately operation or handover.
And remember, the value of major projects is determined during project initiation.
What you do as a project manager is work to preserve it.
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