How to Stabilise a Project in Distress

How to Stabilise a Project in Distress

After establishing new leadership and creating a recovery strategy, teams may take months to stabilise a large project in distress.

Consider the case of a turnaround at a large refinery. The project leader had a detailed recovery plan that required extensive groundwork. One major goal involved restructuring the engineering, procurement, and construction-management teams, as well as the owner’s team, to increase the focus on the critical path for priority facilities.

As a first step, the project leader negotiated for approximately 60 new staff, assigned them responsibilities, and set them to work. These activities, which included the identification and mobilisation of new resources, required two months. 

The recovery plan also called for improved governance, since leaders wanted to reduce bureaucracy and encourage more rapid and effective decision making. The project leader spent the first three months adjusting the new agenda and shifting the composition of key meetings before they were satisfactory.

To improve interactions with stakeholders—another major goal—he worked with the team to evaluate and implement new performance-management tools. These solutions, in combination with the improved governance system, increased transparency and facilitated decision making. 

As in most projects, the recovery plan included some activities designed to score quick wins and mitigate short-term risks, including those related to the supply chain, fabrication, and contractor management. Almost immediately, the project leader created a list of 20 critical solutions and implemented them within the first 30 days of the stabilisation process. For example, he rebalanced the scope of work to eliminate bottlenecks for contractors and arranged to airfreight some critical materials. 

Finally, the recovery strategy called for creating a new schedule sequence that would help compensate for lost time on critical tasks. The project leader brought in a new construction manager to lead a team review of the three most critical facilities. The team’s main goal was to determine the optimal construction methods. It evaluated different cranes and lifting techniques to increase the number of work fronts.

The team also identified more efficient methods for erecting steel and piping. In many cases, it also pointed out skill and process gaps that subcontractors had to address if they wanted to increase field productivity. By identifying these opportunities, the team created more than 12 weeks of new schedule float. 

The stabilisation phase is of utmost importance in turnarounds. If new leaders demonstrate that they are willing to make big changes, tackle problems, and work with contractors within their first few weeks, they will help the project gain momentum. But if they can’t report any major accomplishments or progress after 30 days, companies will know that they have a new—and larger—problem to fix. 

Strong project leaders can manage the unexpected problems that usually pop up each week. These problems may involve trouble-shooting the late delivery of equipment or materials, resolving an engineering problem, or resolving a quality problem. But the best project leaders will also dedicate significant time and resources to capture float or buffers—elements that will make the project more robust and protect against unforeseen events. 

Most project leaders recognise the importance of being strategic, rather than just tactical, since they know that new opportunities to cut costs and reduce timelines always arise as the project transitions from early construction to bulk construction and again from late-stage construction into pre-commissioning and commissioning.

But leaders often become so focused on their day-to-day work that strategy takes a back seat. They can overcome this bias by establishing an operating model with a dual focus. In addition to optimising day-to-day performance management and capturing short-term value, they must engage in medium- to long-term strategy development. 

For this operating model to work, project leaders should establish a full-time team of highly skilled staff who can recognise and capture strategic opportunities. Team members should have the right mix of operations, construction, engineering, and planning skills. For best results, they should report to the project leader, who can provide rapid access to the information and resources required to implement their recommended strategies. 

In one case, the project leader dedicated a team of four highly experienced staff to identify opportunities to reduce costs and timelines. The team analysed activities that needed to occur about 6 to 12 months out, as well as those that were in no man’s land because they didn’t fall under a line manager’s responsibilities. The leader spent about one or two hours with the team each day on discussing their findings.

For example, the project plans for construction and commissioning were originally separate, since they were contracted to different parties. The team realised that it might be able to reduce the project timeline dramatically if it created an integrated plan.

By considering construction and commissioning together, the team significantly reduced the schedule. The team also recognised that it could capture long-term savings and reduce rework if it set up a boot camp to help contractors improve welding productivity. 

This article was first published on Mckinsey & Company 

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