1. In your opinion, what are the main attributes and skills needed to reach capital project success?
Capital projects are essentially a microcosm of an entire organization. In fact, many large capital projects have budgets that far exceed the revenues of many small companies. Yet, staffing decisions at the leadership levels of a capital project seem to be made based primarily on technical skills and experience rather than the managerial and organizational capabilities needed to lead such an enterprise. Of these crucial non-technical prerequisites of success, what is particularly important are the skills and a culture for problem-solving and defining solutions. We should look to leadership to create such an environment, one that brings out the best in the project team, and which provides them the support and direction to succeed not just collectively but also individually. In fact, I would say that these organizational capabilities can be even more important for project success than technical knowledge or experience.
2. Do you think companies tend to underestimate soft skills as an important factor for project success?
There is no doubt about it. I have seen that throughout my career and client work. Though, it’s important to acknowledge that the realization that organizational health drives performance, and just how closely the two are related is a relatively recent concept. The best performing companies have been able to leverage their organizational health as a competitive advantage not just to attract and retain the best talent, but to create the highly successful environments necessary to outperform their competition. By the way, achieving robust organizational health, however, is much more than just building 'soft skills.' You need the three elements of the full project "operating system" -- what we describe as the management system, technical system, and mindsets and behaviors -- working in harmony to reinforce a high-performance culture
3. Where do you begin with establishing an effective leadership strategy to meet project goals and deadlines?
I can tell you where we begin! We have adapted our well-established Organizational Health Index (OHI) to capital-project organizations. The process involves an organization-wide survey, followed by workshops with employees. The result is not a just quantification of hard to measure elements such as project leadership, career progression, performance management, and bottom-up innovation, but an identification of health areas where the organization is strong and where it needs improvement. This baseline is our starting point. From there, we identify a recipe for success suited to that organization’s aspirations, prioritize the actions that work, and define the leadership strategy to get there. Every organization is different, but this overall approach works very well. What’s best is that you can measure and track progress. OHI is especially powerful because it has been used for 1200+ organizations over the last 10 years in every industry -- therefore, the results are analyzed against an unrivalled, unique benchmark database.
4. What is the biggest pitfall capital projects typically fall into?
There are several big ones, but one that particularly concerns me is the number of large projects that get approved and funded with an inadequate understanding or underestimation of the risks involved. It is important that project owners fully understand potential risks, prioritize investment in projects for which they can best minimize that risk and ensure the project fulfills its intended need, and then establish a project team with the skills required to best mitigate the identified risks and overcome obstacles when they arise.
McKinsey research shows that more than 90 percent of mega projects experience cost overruns or schedule delays. If a full and comprehensive quantification of risks had been completed prior to developing and funding these projects, you would inevitably see a decline in the number of projects failing.
That said, some risks on any project are irreducible -- they will always exist, especially as projects become more complex -- but then you can't just rely on contract structures to protect you from the risk. You need to anticipate issues through much deeper and earlier performance transparency, supported by insight-driven analysis of data, and you need much closer joint problem-solving across owners, EPCs, and other contractors.
To read more about McKinsey’s work on project organizations, please visit http://www.mckinsey.com/industries/capital-projects-and-infrastructure/how-we-help-clients/organization