Independent Project Analysis (IPA) recently did a research study to develop a single metric that plant managers could apply to measure their site project performance. We created different success criteria based on the project business driver.
Cost-Driven Projects Success Criteria:
- No safety incidents
- Has to operate as intended
- Can’t overrun budget by more than 10%
- Has to achieve a cost index of 1.00 or lower
In other words, your cost-driven project can’t injure anyone, has to work, can’t overrun too much, and has to be executed for an industry average cost or better.
Schedule-Driven Projects Success Criteria:
- No safety incidents
- Has to operate as planned
- Can’t overrun budget by more than 10% (those plant managers never like overruns, do they!)
- Has to meet the planned schedule
Since then, I’ve had the opportunity to present this Success Metric to various plant managers, all of whom nod their heads in agreement when I explain the criteria. The criteria are reasonable and capture the key elements of project success.
What is shocking is just how few projects actually meet these criteria! IPA examined over 1,000 small projects in our database and found that just 37% qualified as a success.
If your last project met the above criteria, show this to your plant manager and give yourself a pat on the back! However, if your last project didn’t meet one or more criteria, what problems do you need to address on your next project?
In
IPA’s database, the lack of clear business objectives was one of the most common reasons for failure – some of the failed projects didn’t even know whether they were cost or schedule driven and wound up being both slow and expensive.
A lack of operations input was another driver of failure. And interestingly, sites with a high percentage of schedule-driven projects tend to have lower success rates, possibly because frequent schedule-driven projects (at a commodities site) are often a sign of poor portfolio management. Improvements in these areas can all drive a higher success rate.
About the Author
As IPA’s Manager of Plant-Based Systems, Phyllis Kulkarni oversees all global small project benchmarking, turnaround benchmarking, and licensing of the FEL Toolbox software. Phyllis joined IPA as a Project Analyst in 2002 and has led numerous site benchmarkings, project evaluations, and onshore and offshore megaproject assessments. She is fluent in English, Spanish, and Portuguese. Phyllis can be reached at pkulkarni@ipaglobal.com.