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Dissertation_Governing Process Infrastructure Governmental Programmes_Oxford_vsecure

  1. 1. MSc in Major Programme Management Empirical framework for the Governing Process of Infrastructure Governmental Programmes Submission Date: 01/09/2014 Word Count: 9989 Candidate Number: 287402 Declaration: This dissertation is submitted in partial fulfilment of the requirements for the degree of Master of Science in Major Programme Management. I hereby certify that the following piece of work is my own and complies with the Own Work Declaration form and with the University’s Rules and Regulations relating to plagiarism and collusion.
  2. 2. ii ABSTRACT Empirical framework for the Governing Process of Infrastructure Governmental Programmes This dissertation explores the fact that many infrastructure major projects are procured without the necessary technical detailed studies resulting in rework, cost overruns and schedule delays. It then introduces a framework for the governing process of infrastructure major projects within a governmental programme. It hypothesis that the framework might reduce uncertainties and problems that are related to the execution of these projects by adopting an agile approach that encourages early stakeholder involvement, accountability and transparency to the planning and execution control phase. It includes a literature review on major projects’ overruns and on Projects’ Governance that encourages early stakeholders’ involvement, progressively shaping of the projects during its life cycle, incremental deliverable of benefits by the physical outputs from the projects within a programme, management in small batches and other methods that could be related to an Agile approach Therefore, based on this literature, an analysis of data on four major projects within the Brazilian 2014 World Cup Programme and based on the results gathered by a questionnaire applied to the Brazilian Government’s PMO Analysts, this dissertation examines how the framework can contribute towards mitigating the risks and uncertainties faced by these type of problems.
  3. 3. iii Although the data analysed were on Brazilian Major Projects conducted by the Brazilian government, this research project assumes the fact that since these type of problems are presented worldwide, this framework could also be applied to programmes that face these type of problems. Abstract word Count: 237
  4. 4. iv ACKNOWLEDGEMENT Firstly, I would like to thank God for providing me the will, opportunity and capability to complete this course successfully. Secondly, I would like to thank to my family. Without their encouragement, patience and support I could hardly complete this MSc. Thirdly, I would like to thank all my new friends and colleagues for their experience, comments and discussions, which brought much glamour and knowledge to the classroom. Thanks also to the Pernambuco State Government and Recife City Hall for providing the data, the interviewees for answering the questions, the Saïd Business School for accepting me and the MMPM staff who were very helpful. Finally, thanks to my business colleagues for our constant discussion on Megaproject and Governance, and for my supervisor Dr. Chantal Cantarelli who guided me through this dissertation process.
  5. 5. v TABLE OF CONTENTS LIST OF FIGURES ....................................................................... VII LIST OF TABLES.......................................................................... IX LIST OF ABBREVIATIONS................................................................ IX 1. INTRODUCTION...................................................................... 1 1.1. Research Question ............................................................ 3 1.2. Background..................................................................... 3 1.3. Structure of the dissertation ................................................ 7 2. LITERATURE REVIEW ............................................................... 8 3. RESEARCH METHOD............................................................... 18 3.1. Approach ..................................................................... 18 3.2. Sample Population .......................................................... 19 3.3. Questionnaire Design ....................................................... 22 3.4. Data on five major projects within the world cup programme on the host city of Recife .................................................................. 24 4. RESEARCH DATA .................................................................. 26 4.1. Questionnaire data ......................................................... 26 4.1.1 Section 1 – Interviewee Identification.............................. 26 4.2.1 Section 2 - Project(s) Characteristic(s)............................. 27 4.3.1 Section 3 - Governing Process ....................................... 30 4.2. Data on four major projects within the world cup programme ...... 39 4.3. Data Analysis................................................................. 43 5. FRAMEWORK....................................................................... 45 6. DISCUSSION ........................................................................ 54
  6. 6. vi 6.1. Limitations ................................................................... 54 6.2. Theoretical and Practical allegations .................................... 54 7. CONCLUSION ...................................................................... 56 APPENDICES............................................................................. 57 APPENDIX A. Questionnaire ....................................................... 57 APPENDIX B. Data on four major projects within the 2014 World Cup Programme .......................................................................... 63 REFERENCES ............................................................................ 64
  7. 7. vii LIST OF FIGURES Figure 1. Organization Structure of Pernambuco State Government (Governo de Pernambuco, 2014) ...................................................................... 4 Figure 2. . Organization Structure of the city hall of Recife (Prefeitura da Cidade do Recife, 2014) ......................................................................... 5 Figure 3. % distribution of respondent per Government ......................... 22 Figure 4. Example of open question related to a previous answer. ............ 23 Figure 5. Typical question for the section three of the questionnaire, governing process. ................................................................................. 24 Figure 6. Average number of projects monitored per function of the interviewee ........................................................................................... 26 Figure 7. Interviewees Experience in Project Management ..................... 27 Figure 8. Percentage of their main projects that are sub-projects of others projects ................................................................................. 28 Figure 9. Budget category distribution in million Brazilian Reais............... 28 Figure 10. Average duration of the Projects per budget category ............. 28 Figure 11. Stakeholder identification............................................... 29 Figure 12. Main Stakeholders ........................................................ 29 Figure 13. Stakeholders’ power and influence identification ................... 29 Figure 14. Stakeholders’ conflicting interest identification..................... 29 Figure 15. Project Management method used ..................................... 30 Figure 16. Definition of Project success for the interviewees .................. 31 Figure 17. Existence of Prioritization Criteria..................................... 32 Figure 18. Type of prioritization criteria........................................... 32
  8. 8. viii Figure 19. Prior study on cross-project interference. Figure 20. Reasons for not conducting prior study on cross-project interference............................ 33 Figure 21. Reliable delivery schedule.............................................. 33 Figure 22. Percentage of respondents that knew that Project Amending is a common practice. ..................................................................... 35 Figure 23. Reasons for project amending. ......................................... 36 Figure 24. Amount of project procurement with the necessary construction detailed design......................................................................... 36 Figure 25. Reasons for bidding without the necessary detailed design. ....... 37 Figure 26. Reliability of the KPIs .................................................... 38 Figure 27. Adoption of any agile approach for the execution control. ........ 38 Figure 28. Monitoring of Project’s vision and purpose ........................... 39 Figure 29. BRT corridors (Governo do Brasil, 2013)............................... 40 Figure 30. Project amending type................................................... 43 Figure 31. Governance Perspectives ................................................ 46 Figure 32. Prioritization criteria graph ............................................. 51 Figure 33. Construction Sprints...................................................... 52 Figure 34. Governing Framework.................................................... 53
  9. 9. ix LIST OF TABLES Table 1. Average cost overrun in 258 transportation infrastructure projects, in constant prices (Flyvbjerg, 2007) ................................................... 12 Table 2. Interviewees and their role in the government structure............. 21 Table 3. Main Transportation Project for the host city of Recife. ............. 40 Table 4. Overruns for the four majors projects within the programme ....... 41 Table 5. Analysis over contracted projects ........................................ 42 Table 6. Analysis over decision to build ............................................ 42 Table 7. Interference Matrix ......................................................... 49 Table 8. Power and Interest Matrix ................................................. 50 Table 9. Data on the four major projects within the 2014 world cup Programme ........................................................................................... 63 LIST OF ABBREVIATIONS DBB – Design Bid Build CS – Construction Sprints GDP - Gross domestic product KPI – Key Performance Indicator MMPM – Master in Major Programme Management PMO – Project Management Office
  10. 10. 1 1. Introduction This research project proposal aims to create an empirical framework for the governing process of infrastructure governmental programmes. The framework intends to ameliorate the problems by adopting an agile approach to the planning and execution control phase by breaking down the duration of the major project into smaller cycles. Additionally, it aims to involve the main stakeholders from the beginning of the construction phase in order to get the required buy-in. During the smaller cycle, the goal is to introduce a process for continuous planning aimed at reducing the exposure to risks as yet identified. This process also identifies the deliverables that are less likely to change due to misconception of the preliminary construction design. The framework will be created based on the data of obtained from a questionnaire applied in the government of the state of Pernambuco in Brazil and it will also analyse data on four major projects within the Pernambuco state governmental programme related to the World Cup in the host city of Recife. Brazil is one of the largest countries in the world, both by population and by geographic area, and has the seventh highest GDP in the world (World Brank Group, 2014). Recently Brazil has hosted the 2014 Football World Cup and it is preparing for the 2016 Olympic Games in Rio de Janeiro. In order to be able to deliver such mega-events, the Brazilian Government has had to rely on its public procurement process, regulated by the Federal Law 8666/93 (Congresso Nacional Brasil, 1993). The Brazilian Federal Law establishes rules for bidding and procurement of Public Administration. One of
  11. 11. 2 the regulations establishes that the contract type should be fixed price and fixed time with an annual economic adjustment based on a federal economic index. This law follows the DBB (Design-Bid-Build) model for construction bids once it demands a previous design in order to launch the Bidding Process. However, this bidding model could exacerbate any problems if it permits the bidding process to happen without the necessary detailed studies and thus unrealistic estimations. Although the Federal law 8666/93 demands a previous construction design, it does not demand a detailed design. So, it is common practice to bid only with the preliminary design. The lack of a detailed design can cause, for example, problems during the execution phase such as design omissions, inconsistency between designs and underground situation, defects, lack of several studies, bad estimation, poor planning interface among the projects, wrong project prioritization and poor execution and control (Hsieh, et al., 2004; Flyvbjerg, 2005). Therefore, the particularity that in Brazil the bidding process can happen with a preliminary design, the availability of data and the fact that Brazil has been investing billions of dollars in preparation for these mega-events makes Brazil an interesting case for analysis.
  12. 12. 3 1.1. Research Question The dissertation hypotheses that introducing a framework for the governing process of infrastructure major projects within a governmental programme might reduce uncertainties and problems that are related to the execution of these projects. It works with the assumption that most of the problems are caused by technical issues, i.e., the lack of necessary studies and thus unrealistic data. This is permitted by a breach of the Brazilian 8666/93 Federal law as mentioned above. Through a review of the literature, an analysis of the data of four major projects within the 2014 World Cup Programme and based on the results gathered by the questionnaire applied, the following research questions were examined. (a) Is it possible to ameliorate risk and uncertainties of major infrastructure projects that were procured without the construction detailed design? (b) How could a governing framework be applied in order to minimize such risks and uncertainties? 1.2. Background The United Nations – Department of Economic and Social Affairs awarded the Government of Pernambuco for its effort in modernizing its decision making process (United Nations, 2012 and 2013). Pernambuco is one of the fastest-growing states in Brazil and managed to attract huge investments concentrated in the industrial Port Complex of
  13. 13. 4 Suape (The Economist, 2012). In 2010 Suape was one of the largest centres of investment in the country attracting several megaprojects, such as the Atlântico Sul Shipyard, the Petrobras’ Abreu e Lima oil refinery and the construction of the R$ 7.5 billion Brazilian Reais Transnordestina railroad (The New Economy, 2012). The organization structure of the Pernambuco state government is shown by the figure 1 below: Figure 1. Organization Structure of Pernambuco State Government (Governo de Pernambuco, 2014) The state PMO was created and structured in 2009 with the goal of acting as facilitator for planning, monitoring and controlling the priority projects selected by the governor. The number of projects monitored by the PMO varies, but it normally runs from 50 to more than 110. At the present date, July 2014, according to a PMO analyst, the total number of Projects monitored is 100. Their approximate budget is R$4 billion Brazilian Reais. Governor State Secretariat of Planning and Management Executive Secretariat of Strategic Management State PMO State Secretariat of Economic Development State Secretariat of the Cities Special Secretariat for 2014 World Cup Others Secretariats Governor Cabinet
  14. 14. 5 The State PMO is composed of 10 analysts and a Manager, totalling 11 members. The 100 projects are split among the analysts. However, among the analysts are those specialized in infrastructure projects and programmes. The Pernambuco PMO methodology was inspired by the ones developed in Minas Gerais (Governo de Minas Gerais, 2014) and in Rio de Janeiro (Governo do Rio de Janeiro, 2014). The capital of Pernambuco state is Recife, one of the largest cities in Brazil. Recife also has the highest GDP per capita among the capitals of the northeast region (Instituto Brasileiro de Geografia e Estatística, 2014). The organizational structure of the City Hall is shown by figure 2 below. The Cabinet for Special Projects was created to be responsible for the construction of several commitments made by the Mayor (Prefeitura da Cidade do Recife, 2014). It has in its portfolio approximately 181 projects. There are Mayor Municipal Secretariat of Planning and Management City Hall PMO Municipal Secretariat of Development and Urban Planning Municipal Secretariat of Sports and World cup Others Secretariats Mayor's Cabinet Cabinet for Special Projects Figure 2. . Organization Structure of the city hall of Recife (Prefeitura da Cidade do Recife, 2014)
  15. 15. 6 approximately 20 people working for the Cabinet, including six engineers responsible for overseeing construction projects. Around the year 2013 the city hall implemented its PMO following the same principles developed by the state PMO. At present, the City Hall PMO is composed of six people and monitors 26 priority projects. The estimated budget is approximately R$777 million Brazilian Reais. The Brazilian 2014 World Cup programme started being structured in January 2010 with the signature of the Responsibility Matrix (Governo do Brasil, 2014b). The Responsibility Matrix is a document that defines the roles of the Federal, State and City Hall governments in the release of funds and execution of actions. Recife was chosen as one of the tournament´s host cities. So, the Matrix defined the budget for the Programme for the Host City Recife, which was approximately R$1,5 billion Brazilian Reais. The actual cost of the Programme, according to the World Cup 2014 Transparency Portal to date was approximately R$534 million Brazilian Reais (Governo do Brasil, 2014a). Officially, the state secretariat that was created to manage the programme was the Special Secretariat for 2014 World Cup. However, the state major projects within the programme were conducted by the State Secretariat of the City and managed by the state PMO. The programme consisted of the implementation of series of related projects divided into seven priority areas, namely (Governo do Brasil, 2014a):
  16. 16. 7 1. Tourism Development 2. Football stadium 3. Urban Mobility 4. Harbour 5. Public Safety 6. Telecommunication 7. Temporary structures (Confederations Cup) 1.3. Structure of the dissertation The dissertation is divided into seven chapters. Chapter one presents the introduction and gives an overall idea of the purpose of the dissertation, chapter two presents a literature review trying to identify which key points are necessary to a practical framework for governmental infrastructure programmes. Chapter three describes the research method, i.e., the approach used, the sample population where it describes who were the participants and the percentage of respondents and how the questionnaire was designed. The fourth chapter analyses the data from the questionnaire and from five major projects within the World Cup Programme in the host city of Recife and they give the necessary subsides to propose a framework, presented in chapter five. Chapter six addresses the limitations of the research and its implication and chapter seven draws the conclusion.
  17. 17. 8 2. Literature Review Governmental programmes are normally conceived to implement changes that deliver benefits to a specific region and its inhabitants. A programme is composed of a group of projects with a common objective. These related projects are the main driver of the desired change. They aim to deliver incremental benefits during the life cycle of the programme. However, many of the programme’s benefits are only achieved long after it is finished because they are hard to measure, especially if they are related to infrastructure programmes. Some programme indicators can be measured during the life cycle of the programme, such as the World Bank Indicator Improved sanitation facilities (% of population with access) that measures the percentage of the population using improved sanitation facilities (The World Bank Group, 2014). But other indicators, such as the United Nations Development Programme HDI (Human Development Index) (United Nations Development Programme, 2014) only reflect the change that programme intends to make after some time. This lag time makes it difficult to evaluate the programmes well because they are finished and normally it would demand an established governance framework to monitor and to associate any improvement of these indicators to the specific project or programme in the time given. In addition, a poor governance can also worsen the overruns and schedule delays in most of the major projects within a governmental programme. This normally happens because it does not offer the necessary tools and processes to assess the
  18. 18. 9 projects and programme well. Besides, it does not offer a clear punishment to promoters once it is proved that the programme was launched without the necessary studies and caused losses to the public treasure (Flyvbjerg, et al., 2003). Project governance has been studied by several authors such as Flyvbjerg et al. (2003), Hobbs & Miller (2002 and 2005), Samset, et al. (2006), Klakegg, et al. (2009) and Müller (2009 and 2011). It can be defined as a framework containing a set of processes, procedures and tools for ethical decision-making based on transparency, accountability and responsiveness that should be used in order to deliver projects successfully. It aims to ensure that the projects are implemented in accordance to the objectives of the organization. The governance processes and tools should outline the relationship of the stakeholders, describe the flow of information, the roles, the policy, ensure appropriate review of issues and monitoring to ensure that the value brought by the projects are being obtained. Flyvbjerg et al. (2003) in his work has focused on the necessity of creating institutional arrangements and regulatory regimes to minimize the effect of over-optimistic forecasts of project viability. Miller & Lessard (2000) also emphasizes that institutional arrangements are the most important factor of project performance. That is because there is a lack of accountability and transparency. For this reason, it is common to see underestimated costs in order to get projects approved and almost no punishment to the politicians who have
  19. 19. 10 promoted those projects. In addition, it is hard to penalize the contractors that have won the bidding process. Still, according Flyvbjerg et al. (2003), the desired governance should establishes the necessary institutional appraisal to minimize the risks of having wrong projects implemented. Those arrangements should focus on measuring how objectives are being met, penalize, and reward the bad and good performance. They also suggest the maximization of overall accountability and performance by introducing transparency and checks and balances on performance. Moreover, they emphasize that the specification, i.e., construction requirement should be formulated consistently to permit any monitoring and auditing during the execution phase. Klakegg, et al. (2009) identifies several principles that a governance framework should possess. Among many of them, it is worth pointing out the identification and engagement of stakeholders in planning and decision making, simple methods and practices, learning capacity, risk sharing and rule of conduct. In accordance with Flyvberg et al. (2003), Samset, et al. (2006) and Klakegg, et al. (2009) mention the lack of accountability as being related to problems in both public and private context. Besides, they expand accountability in answerability, responsibility and liability. According to Miller & Hobbs (2005) project governance should be a dynamic body adapting itself to the complexity, singularity and changes as projects development unfolds. In addition, they suggest a creation of a progressive
  20. 20. 11 shaping of a project through the project development life cycle. Moreover, according to them, the issues cannot be settle by a predetermined process. That is because there is a lot of uncertainty as the project development process unfolds. Therefore, the issues should be identified and resolved through a flexible process during the development of the project. Also in accordance to Flyvbjerg et al. (2003), Miller and Hobbs (2005) also highlight the need for accountability and transparency. They showed that strong political will is essential for examination and process improvement during the project life cycle. Müller (2009), on the other hand, gives a special attention to the process and methodology to be used in a programme governance framework, where he defines as being the achievement of a major purpose or benefit. Since this objective is directly related to the incremental delivery of benefits achieved by, normally, the physical outputs delivered by the projects, it should include how the projects are measured and related to each other avoiding superposition of similar activities among them. This sum of energy, synergy and output should deliver the programme objective, which is not easy to measure in the early stages. Therefore, still according to Müller (2009), the main areas of concern of a programme should be the management of stakeholders and benefits, as well as the projects’ governance within the programme. Although much has been written regarding project governance, there are still a lot of data on project overruns. Overrun in construction projects is a common
  21. 21. 12 phenomenon that happens all over the world. Many papers have been written on the causes of cost overrun (Flyvbjerg et al., 2003; Sinnette, 2004; Flyvbjerg, 2005, 2007, 2008, 2011; Flyvbjerg et al., 2009; Cantarelli, et al., 2010; Son & Rojas, 2011). An article by Flyvbjerg (2007) shows that for the last 70 years nine out of 10 infrastructure transportation projects have presented cost overruns, so accuracy of project cost estimates has become a larger concern. Table 1 below shows the average of cost overruns in 258 infrastructure projects compiled by Flyvbjerg (2007). Type of project Number of projects Average cost overrun Standard deviation Rail 58 44,7% 38,4 Bridges and tunnels 33 33,8% 62,4 Road 167 20,4% 29,9 Table 1. Average cost overrun in 258 transportation infrastructure projects, in constant prices (Flyvbjerg, 2007) According to Son & Rojas (2011) an important cause of cost and schedule overrun can be found in unrealistic baseline plans because planners usually do not take into account the complexity of managing major programmes. For Flyvbjerg (2007) unrealistic estimations could be subject to three main reasons: technical, psychological, and political-economic. The technical explanation given by Flyvbjerg is mainly related to honest mistakes, lack of experience, imperfect techniques and inadequate data. The psychological one can be explained by what is called the Planning Fallacy and Optimism bias, these concepts were first developed by Kahneman and Tversky (1979).
  22. 22. 13 In the planning fallacy, planners are normally so immersed in the actual scenario that they make decisions based on the inside view of the problem and do not consider past experience. Optimism bias, however, is a human condition that is inherent in most humans where we tend to have an optimistic approach, trying to minimize the likelihood of negative results when we are faced with uncertainties. So, we involuntarily create scenarios of success and we overestimate the likelihood of potential risks and issues and thus underestimate cost and time (Flyvbjerg, 2011; Sharot, 2011). The political-economic one is when politicians, planners and promoters deliberately and strategically overestimate benefits and underestimate costs. According to Flyvbjerg (2008), those intentional overestimations of benefits and underestimations of costs by politicians and promoters can also be called Strategic Misrepresentation, and it is one of the root causes of project underperformance, and can be traced to political pressure especially if there are scarce funds, which have to be competed for. Nevertheless, politicians, according to their political objectives, normally select Governmental programmes because they have a mandate to follow, where they intend to implement the changes that they believe are the best for their voters or people. The established government does not necessarily follow any prioritization criteria, besides, mainly, the political ones, as we will see later. However, since the politicians’ political mandate has a fixed term, decisions can be made based on political pressure or commitments made by the
  23. 23. 14 politicians. Cantarelli et al. (2010, 2012) has shown that when these decisions are made based on political pressure or commitment most of the overruns happen for those reasons, even before the real construction starts. These decisions are known as the ‘real decision to build’. According to Wood & Antonsson (1990) when a construction project receives its “permission” to go during one of the earliest phases of the project the more inaccurate would be the engineering design, cost and time estimates. This happens because during the preliminary phases of the projects there are still a lot of uncertainty and imprecision and only the first estimates or feasibility studies should be done. Nevertheless, promoters and planners are normally more optimistic about project outcomes in these phases when there are not enough information about the possible problems that the project will face. Therefore, it would be common to find errors in design, omissions, construction mistakes and other factors that are underestimated by planners leading to overruns (Son & Rojas, 2011; Cantarelli, et al., 2012). It is known, though, that the more detailed your engineering design, the more accurate is your cost and schedule. Flyvbjerg (2005) in his article for the Harvard Design Magazine shows us what happens when you start a construction project subject to political pressure and when it starts the right way. Flyvbjerg throws some comparison between two “classical” examples of projects, one very successful in terms of cost and time overruns and the other not so much.
  24. 24. 15 He compares the “famous” Sidney Opera House, which had one of the highest cost overruns in history, with the Guggenheim Museum Bilbao. There is of course plenty of difference between them, but one point that should be noted is that the Sidney Opera House clearly suffered political pressure to start as soon as possible without the necessary detailed designs. Therefore, a very low estimated cost was approved. Whereas for the Guggenheim Museum Bilbao they only started with the detailed engineering design and with the cost and time estimations done based on the detailed designed and approved by the main stakeholders. To start a construction with the detailed engineering design and the cost and time estimates based on this design should be the rule. For Wood & Antonsson (1990) the engineering design should follow its normal phases, which are many, but it normally goes from a highly imprecise phase to a very detailed and precise stage where the final refinements, design, specification, cost and time estimation happens. Nevertheless, it is a common practice to overlap design and construction activities. This overlapping introduces risks that the design might change after the construction starts causing rework, overruns and delays. Hossain & Chua (2014) suggest the implementation of a framework to help overlapping design and construction activities by using concepts of upstream evaluation and downstream sensitivity. Sensitivity activities are construction activities that are strongly influenced by a change on the final design differing from the preliminary one. This difference would cause a high degree of rework and thus
  25. 25. 16 overrun and delays to a high sensitive activity, whereas this would not happen to low sensitivity activities. Blacud et al. (2009) also adopted strategies that insert flexibility to the process to deal with the uncertainty of the overlapped execution. In a similar approach, Elvin (2003) found that is more effective to gather downstream information in small batches as needed than to have it all at once. In addition, the small batch process results in a mutual adjustment of design minimizing the possibility of rework and overruns since there are the involvement of designers, constructors and client. Some authors such as Owen et al. (2006), Demir et al. (2012), Senthilkumar et al. (2012), Lavikka et al. (2013) have studied the adoption of agile to construction projects. This approach brings special benefits to the design phase of the construction and control due to its flexibility under uncertainty, interactivity, process for requirement definition, and stakeholder early engagement. The agile methodology improves the understanding of the requirement once it breaks down the project into smaller cycle permitting the team to focus on each problem at once. These smaller cycles, also known as sprints, increases the common understanding between stakeholders. Besides, an early stakeholder involvement tends to create a more united team improving the trust and commitment. According to Owen et al. (2006) the so called agile manufacturing is an answer to the modifications brought by a constant change, and it is based on
  26. 26. 17 an incremental development with a continuous learning. Also Owen et al. (2006) refers to the importance of bringing together in any design phase the contractor and the client in order to have a joint decision-making process, because most of the construction costs that do or do not result from overruns or reworks or regular works are determined during a design phase.
  27. 27. 18 3. Research Method 3.1. Approach The approach taken by the researcher was to gather primary data from the people that are indirectly1 and directly dealing with the monitoring of the execution phase2, as well as being directly involved in the construction phase of major projects within a governmental programme. The data was gathered through a personal interview where the researcher conducted a structured questionnaire to allow quantitative statistical analysis. Although the questionnaire did not have any open questions where the interviewee could openly state anything they wanted, the interviewer took note of any relevant statements made by the interviewees to help the interpretation of the data gathered by the questionnaire. The process taken by the researcher consisted of the following activities: 1. Explanation of the research. The researcher emphasized that any statements or information provided would be used only on a non- attributable, confidential basis and the data collected during the study would be used for the purpose of the researcher dissertation. 2. Consent permission. The researcher handed the consent permission to the interviewees who gave their consent by signing the document. 1 Stakeholders that are only informed on the progress of the projects and have no direct power over the project. 2 Execution phase considered here is the phase after the tendering process when the contracts are awarded.
  28. 28. 19 3. The interviewer applied the questionnaire, took notes on statements that would help in interpreting the data and sent the answered questionnaire in PDF format to the interviewees. 3.2. Sample Population The participants in the research, the interviewees, work for the state and City Hall government as secretary executive, functional managers, PMO managers, PMO analysts and civil engineers. The selected interviewees work either monitoring the execution phase as Manager or Project Analyst, or PMO Analyst or as a team member of the infrastructure construction projects3. They oversee most of the infrastructure projects within both governments and they would be the logical choice. The reason for both governments was to have a more representative number of respondents once the methodology used by the City Hall to monitor programmes came from the State Government. Before selecting the interviewees, the researcher, in accordance with the secretary executive and PMO manager for both governments, studied the function of each interviewee and selected only the ones that were involved with infrastructure projects. This was important to have more consistent data only on infrastructure projects related or not to a Programme because it was noted that some PMO analysts and managers supervise projects that are within or without a programme. Table 2 below summarizes the interviewees, the amount chosen and their roles in the government structure. 3 From now on, the term “Project” will be used to relate to any project, major project and programme.
  29. 29. 20 Government Function Role TotalAmount ofpossible interviewees Amount Selected Amount Interviewed %ofinterviews done City Hall Executive Secretary of Secretariat of Planning and Management Responsible for overseeing more than 700 projects 1 1 1 100% City Hall Manager of the Cabinet for Special Projects Responsible for overseeing more than 170 projects 1 1 1 100% City Hall General Manager of Secretariat of Planning and Management Responsible for overseeing more than 700 projects 1 1 1 100% City Hall PMO Manager Responsible for overseeing more than 20 projects 1 1 1 100% City Hall PMO Analysts Responsible for overseeing more than 20 projects 5 3 3 100% City Hall Project Analyst Responsible for overseeing more than 700 projects 11 5 2 40% City Hall Engineers Responsible for overseeing directly 40 construction projects 5 5 4 80% State Executive Secretary of the Secretariat of the Cities Responsible for overseeing more than 35 projects, including the projects related to the World Cup 2014 1 1 1 100% State Engineers Responsible for overseeing directly 40 construction projects 2 1 1 50% State Project Analyst Responsible for overseeing more than 700 projects 10 4 1 25%
  30. 30. 21 State PMO Manager Responsible for overseeing more than 100 projects 1 1 1 100% State PMO Analysts Responsible for overseeing more than 100 projects 11 7 5 71% Table 2. Interviewees and their role in the government structure The total percentage of respondents was 71% of the total population chosen, see figure 3 below. The distribution showed by the table above demonstrates that PMO Analysts were the major respondents, making up 36% of the total respondents. This is important because they are the ones analysing, communicating, integrating the projects within or without a programme and experiencing the problems encountered with the projects. However, it is also important to mention that Civil Engineers were the second largest group with 23% of the total respondents that correspond to approximately 83% of the respondents of the group Engineers. The Engineers are the ones who are directly supervising the construction on the construction sites. Their feedback on the risks, issues and main problems is vital to the analysis of the data and creation of the framework.
  31. 31. 22 3.3. Questionnaire Design The main objective of the questionnaire, see Appendix A for the entire questionnaire, was to evaluate whether the interviewees were aware of the existence of a formal process that was accountable and transparent. The questionnaire was divided into three sections with a total amount of 57 multiple-choice type of questions. There were 17 open questions that were mainly related to a multiple-choice question answered before, totally 74 total questions. The researcher conducted the questionnaire asking each question to the interviewee, making sure that they would answer all questions. There were some questions that were related to a previous answer, such as, “if no, why?”. Figure 4 below shows an example of an open question (question #30) related to a previous answer (question #29). 17 14 31 13 9 22 76% 64% 71% 58% 60% 62% 64% 66% 68% 70% 72% 74% 76% 78% 0 5 10 15 20 25 30 35 City Hall State Total PercentageofRespondent NumberofPeople % of Respondent per Government Amount Selected Amount Interviewed % of Respondent Figure 3. % distribution of respondent per Government
  32. 32. 23 Figure 4. Example of open question related to a previous answer. The first section of the questionnaire, named Interviewee Identification, aimed to identify the interviewees’ experience (months of work involved in Projects), where they work (for which government), their function, and what type of project they normally supervise and how many projects they have supervised. The objective of the second section, named Project(s) Characteristic(s), was to understand the context of the Projects being managed or monitored by the interviewees. The questions were related to characteristics of the project, such as the average duration of the project, the budget, if their main project was a sub-project related to a programme or megaproject, if the stakeholders are formally identified and if the objectives of their main project are known by most of the stakeholders. Section three of the questionnaire was designed to try to understand whether there was a formally established governing framework. The name of the section was Governing Process and it was divided into three sub-sections. The first one was concerned with the strategy used to prioritize, to manage the projects and to check the level of involvement of the stakeholders. Figure 5 below show an example of question presented in this section.
  33. 33. 24 Figure 5. Typical question for the section three of the questionnaire, governing process. The second sub-section was designed to try to understand the processes used to assess mainly risk and scope, since any changes made with these processes can affect other management processes. The third sub-section was designed to evaluate the methodology used to assess the performance of the projects. 3.4. Data on five major projects within the world cup programme on the host city of Recife All the data was provided by the state Secretariat of the Cities responsible for the bidding process for most of the projects within the 2014 World Cup Programme for Recife. Some information was gathered from the World Cup 2014 Transparency Portal (Governo do Brasil, 2014a). In addition to having the data provided by the state secretariat and from the Transparency Portal, the researcher identified who among the possible interviewees would have more information on the data. After the identification, a questionnaire, section 3.3 above, was conducted with the interviewee and the researcher asked the interviewee to
  34. 34. 25 relate each possible answer to the four major projects within the 2014 World Cup Programme. The purpose of this analysis was to complement the results obtained by the questionnaires matching the answers to real examples that happened in a major governmental programme, corroborating the results obtained by the questionnaire.
  35. 35. 26 4. Research Data 4.1. Questionnaire data 4.1.1 Section 1 – Interviewee Identification The first section of the questionnaire had the objective of identifying the interviewees, the type of projects they normally supervise and their experience in time and amount of project supervised. Figure 6. Average number of projects monitored per function of the interviewee Data for the figure 6 above excludes the secretary executive and a manager that only supervise the status of the project, i.e., they are not directly involved in the monitoring of the projects and they are related to the projects only through a higher functional hierarchy. The managers that were kept in the figure above, although functional managers, act as a sponsor. This is despite the fact that there was no clear evidence that they have a direct sponsor for their projects. Engineer Manager PMO Analyst Project Analyst Average Number of Projects 4 84 10 96 Standard Deviation 2 77 8 52 0 20 40 60 80 100 120 140 160 180 TítulodoEixo Average Number of Projects (+/- Standard Deviation)
  36. 36. 27 From what we can see shown in Figure 7 below, most of the interviewees have less than five years of work experience in the field of Project Management. However, the Engineers that work directly on the construction site have more than 10 years of experience. It is interesting to observe that although most of the interviewees have little experience in Project Management, they are monitoring a high number of the Projects. Perhaps that is due to the characteristics of their function where they are constantly involved in meeting with the several different stakeholders of the projects, while the Engineers are normally in the field. Figure 7. Interviewees Experience in Project Management 4.2.1 Section 2 - Project(s) Characteristic(s) In the second section of the questionnaire the research tries to understand the characteristics of the projects that are being monitored by the interviewees. Most of the Projects, 55%, are sub-projects of a greater project, as we can see in figure 8. PMO Analyst Manager Engineer Project Analyst Executive Secretary Average Months 33 51 149 32 96 Standard Deviation 10 27 101 18 34 0 50 100 150 200 250 300 MONTHS Experience in Average months (+/- Standard Deviation)
  37. 37. 28 That means that they are involved in the execution and control of programmes and major projects. This is corroborated by figure 9 and 10 that shows the size of budget and duration respectively of their main project. The data also shows that the main stakeholders are identified in the projects; see figure 11. However, there is not any method for mapping their 100-500 million 50-100 million 10-50 million Up to 10 million Average 33 21 21 15 Standard Deviation 6 8 14 3 0 5 10 15 20 25 30 35 40 45 MONTHS Duration per size of the Main Projects being supervised (+/- Standard Deviation) Figure 10. Average duration of the Projects per budget category major project 4% None 32% Not sure 4% Program 55% Project 5% % of projects supervised that belongs to: 100-500 million 18% 10-50 million 23% 50-100 million 32% Up to 10 million 27% Size of the Main Projects being supervised Figure 8. Percentage of their main projects that are sub-projects of others projects Figure 9. Budget category distribution in million Brazilian Reais
  38. 38. 29 characteristics. It seems that they are only acknowledged because they are the parties directly involved, see figure 12. In addition, there is almost no stakeholder management method where, for instance, their power and their conflicting interests are assessed, see figures 13 and 14 respectively. No 73% Yes 27% Does your organisation normally identify stakeholders' conflicting interests? No 77% Yes 23% Does your organisation normally identify stakeholders' power and influence? Figure 14. Stakeholders’ conflicting interest identification Figure 13. Stakeholders’ power and influence identification No 18% Yes 82% Does your organization normally identify the stakeholders of the Projects? Demanding Secretariats 30% Regulatory Bodies 15% Community 15% Constructo r 27% Management Subcontractor 13% Who are your main Stakeholders? Figure 12. Main StakeholdersFigure 11. Stakeholder identification
  39. 39. 30 Figure 15 below shows that the main method used to control the projects is time. Although there is not a specific question completing the figure 15 asking why, the researcher hypothesises that Time Management was the most answered due to political obligations taken by the politicians. That does not mean that they do not use other method such as scope and cost management, because by law they are required to control scope, cost and time when they make amendments to the projects. Figure 15. Project Management method used 4.3.1 Section 3 - Governing Process Section three of the questionnaire is mainly related to the strategy used for prioritizing the projects, the issues regarding the technical problems and the process for monitoring. 20,5% 2,6% 2,6% 20,5% 7,7% 46,1% 0,0% 5,0% 10,0% 15,0% 20,0% 25,0% 30,0% 35,0% 40,0% 45,0% 50,0% Cost Management Quality Management Risk Management Scope Management Stakeholder Management Time Management Project Management Method
  40. 40. 31 An important observation that needs to be pointed out is the fact that most of the interviewees think that a project’s successes is defined as “Products delivered within the quality, budget and time contracted”, see figure 16 below. That means that they are mainly worried about the Project Management Processes and not really with the other dimensions of Project Success, such as the ones related to the benefits brought by the Project’s objectives or to the stakeholders’ satisfaction (Cooke-Davies, 2002). Figure 16. Definition of Project success for the interviewees Figures 17 and 18 below show a strong political influence in prioritizing criteria. Figure 17 shows that 95% of the respondents affirmed that there are some prioritization criteria in order to select the programmes or projects. Although the Political criteria corresponds to 59%, some of the interviewees do believe that the government is ensuing its Governmental Promise by structuring and following its strategic objectives. One important thing to consider is that the interviewees are very sure about the difference between Strategic 27% 55% 18% 0% 10% 20% 30% 40% 50% 60% Benefits or value brought by products delivered Products delivered within the quality, budget and time contracted. Stakeholder's satisfaction In your opinion, which option best defines success in a project?
  41. 41. 32 Objective and Political criteria, because the answers came from an open question and no interviewees mention both of them in the same answer. Figure 19 below shows that there is almost no cross-project interference, and for the interviewees lack of planning, figure 20, was the main reason. However, communication among stakeholders was cited by several respondents in an open question. A statement made by one of the interviewees says: “The contracts are awarded in a decentralised way, so there is not a global vision of the projects among the stakeholders.” In addition, for another respondent politics is the main issue, as it can be seen below, by answering the why question regarding the prioritization criteria. “Political time – they have to execute in that period. Because sometimes they only have the project funding for that period. So they have to start the fastest possible way, even though problems and interference among projects may arise during the execution phase.” No 5% Yes 95% Prioritization Criteria Figure 18. Type of prioritization criteriaFigure 17. Existence of Prioritization Criteria Political 59% Strategic Objectives 27% others 14% Which Criteria?
  42. 42. 33 However, but for most of the respondents, figure 19 and 20, the main reason for not conducting prior studies on cross-project interference was lack of planning. So, by not conducting a prior study on cross-project interference the group of stakeholders involved in the specific project may not know in advance whether this project or parts of it impacts another project or is impacted by. Then no additional cautions are taken which could cause reworks and overruns to the programme. Figure 19. Prior study on cross-project interference. Figure 20. Reasons for not conducting prior study on cross-project interference Figure 21. Reliable delivery schedule No 77% Yes 23% Is there, normally, a prior study on cross-project interference? Lack of Planning 70% Politics 12% Don't know 18% Reaons for not conducting prior study on cros-project interference No 86% Yes 14% At the beginning of a contract, is there, usually, a reliable delivery schedule?
  43. 43. 34 One interesting result shows that 86% of the respondents answered that there was no reliable delivery schedule, see figure 21 above. In some of their spontaneous comments, see below, they mentioned that they could not trust any formal documents because they knew that they would change on day one. “I know it is going to change! It is still missing a lot of scope requirements” One of the interviewees brought up that although a specific contract was awarded to a constructor, they could not start the project until they had to hire another company to redo the entire construction design. Not to mention that they could not include this extra cost as part of the actual cost for the construction. This manoeuvre had to be done because the changes brought by the new technical drawings would considerably change the design resulting in a substantial cost increase. To the researcher’s surprise, the interviewee stated that this case was not a common practice but it happened quite often. In relation to the technical issues, most of the respondents related that to a project requirement as in poor construction design or lack of detail design or insufficient data. This shows why they are so confident that project amending is a common practice, see figure 22.
  44. 44. 35 Figure 22. Percentage of respondents that knew that Project Amending is a common practice. Figures 23 and 24 below show that the main reason for this certainty of project amending is due to insufficient technical data, such as requirement refinement and long history of procurement process without the necessary construction detailed design, although Politics comes close. When the researcher asked the average number of times projects were amended, the average answer was four. Considering that the overall project duration was 22 months that gives approximately one project amendment every six months. No 14% Yes 86% Is it common to know beforehand whether a project will have amendments?
  45. 45. 36 Figure 23. Reasons for project amending. Figure 24. Amount of project procurement with the necessary construction detailed design. When the respondents were asked for the reasons for bidding without the necessary detailed design, lack of planning was the chosen answer with politics 37% 5% 5% 53% 0% 10% 20% 30% 40% 50% 60% It has been made that way in order to be deployed quickly, due to political pressure Yes The cost was poorly estimated Yes The scope was poorly elaborated Yes There isn't any Project detailed design Yes PERCENTAGEOFRESPONDENT Is it common to know beforehand whether a project will have amendments? Why? 45% 32% 23% 0% 0% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 0% 0-25% 25-50% 50-75% 75-100% %OFPROJECTS how many of your projects have been bidden with all the Project detailed designs needed?
  46. 46. 37 coming in second, see figure 25 below. Nevertheless, Lack of Planning could be a possible and logical result for political pressure. This is corroborated by figure 23 that shows that political pressure was an important driver. Figure 25. Reasons for bidding without the necessary detailed design. Regarding the monitoring process, which should be transparent and accountable, most of the respondents do not believe in the existent KPIs. That happens mainly because they just do not trust them. They think they are neither well defined, nor reliable. For that reason, they judge them mainly imprecise. Figure 26 below shows this relation. 5% 59% 5% 9% 23% 0% 10% 20% 30% 40% 50% 60% 70% Bureaucracy Lack of planning Lack of prioritization Other Political pressure Percentageofrespondent Why do you think you projects have been bid without the necessary detailed design?
  47. 47. 38 Figure 26. Reliability of the KPIs The last section of the questionnaire asked whether the interviewees applied any agile approach or if there was any method for that, see figure 27 below. None of the respondents uses any agile approach. However, the researcher had to explain to some of the interviewees what consists an agile approach and its difference to waterfall. Figure 27. Adoption of any agile approach for the execution control. 7% 7% 50% 36% 0% 10% 20% 30% 40% 50% 60% Other No They are hard to be collected No They are imprecise No They don't reflect the actual situation No PERCENTAGEOFRESPONDENT Are the KPIs Reliable? Why not? No 100% Is there any agile approach where the planning and execution control is based on partial delivery, where the project is built over time?
  48. 48. 39 In addition, it is not clear to the researcher whether there is any method for monitoring the Project’s objective for a given time since 50% of the interviewees answered yes. Again, the researcher had to explain what he meant by the question, because the purpose was to establish whether the objectives are measured, not the performance of the projects. See figure 28 below. Figure 28. Monitoring of Project’s vision and purpose 4.2. Data on four major projects within the world cup programme The data on the four selected projects are shown in the Appendix B. These data were obtained by the State Secretariat of Cities and by Governo do Brasil (2014a) where they have a web portal called Transparency Portal. This portal shows the projects conducted by each state and its host city. In this portal, there are some data on each one of the seven priority areas. For the host city of Recife, there were four main transportation infrastructure projects. Three of them were related to the implementation of No 50% Yes 50% Are the project's Vision and purposes monitored and measured?
  49. 49. 40 a Bus-Rapid-Transport (BRT) corridor that would take the visitors from Recife and/or its surrounding to the World Cup Stadium and the last one is related to the construction of a metro terminal near the stadium. Figure 29 shows the routes for the BRT projects. Figure 29. BRT corridors (Governo do Brasil, 2013) The four projects are presented by the table 3 below. On the table 4 is presented the overruns based on the contracted value. Project Name Object of the contract BRT: Corridor "CAXANGÁ" (East/West) Construction works and engineering services to implement the Public Transport East-West Corridor, located in the Metropolitan Region of Recife. BRT: Corridor "World Cup City extension" (East/West) Construction works and engineering services for the implementation of the BRT extension for the World Cup city, located in the Metropolitan Region of Recife. BRT: North/South - section Igarassu/Tacaruna/Recife center Construction works and engineering services to implement the Public Transport North-South Corridor, located in the Metropolitan Region of Recife. Metro: Terminal "Cosme e Damião" Construction works and engineering services for the implementation of the integrated Terminal "Cosme e Damião", located in the Metropolitan Region of Recife. Table 3. Main Transportation Project for the host city of Recife.
  50. 50. 41 Project Name Contracted Value Actual value % cost overrun BRT: Corridor "CAXANGÁ" (East/West) R$ 145.380.016,61 R$ 162.565.217,01 11,82% BRT: Corridor "World Cup City extension" (East/West) R$ 131.014.036,10 R$ 169.232.319,27 29,17% BRT: North/South - section Igarassu/Tacaruna/Reci fe center R$ 151.113.293,56 R$ 216.344.448,18 43,17% Metro: Terminal "Cosme e Damião" R$ 27.707.308,15 R$ 26.271.832,70 -5,18% Table 4. Overruns for the four majors projects within the programme It is important to observe that although the metro officially had a negative overrun, the truth is quite the opposite. The original contract value for the Metro Project was approximately R$18.2 million Brazilian Reais. However, the state government due to poor performance of the builder terminated the first contract. They had to launch a new bidding process and a new contract was awarded to another company to finish the first contract. The cost of the new contract was approximately R$9.5 million. So, if we consider the original value of the contract, i.e., R$18.2 million and the actual cost of R$26.3 million Brazilian Reais we would have a cost overrun of approximately 145%. The next table shows a comparison of cost overrun between the average of actual cost and contracted cost, and the average of actual cost and estimated cost on decision to build.
  51. 51. 42 Analysis over Contracted projects Cost Time Amendments Number of Projects Total Contracted Value Total Actual value Average Cost Overrun Standard Deviation Average delay (in months) Standard Deviation Average Standard Deviation 4 R$ 455.214.654,42 R$ 574.413.817,16 19,75% 20,99% 22 3 10 2 Table 5. Analysis over contracted projects Analysis over Decision to Build (2010) Cost Time Number of Projects Total Estimated Cost Total Actual value Average Cost Overrun Standard Deviation Average delay (in months) Standard Deviation 4 R$ 317.000.000,00 R$ 574.413.817,16 54,11% 15,57% 16 6 Table 6. Analysis over decision to build Although the researcher showed both tables, 5 and 6, for this dissertation the researcher will consider table 5 for the analysis. That is because the researcher has assumed for this dissertation that most of the technical problems are due to the lack of technical data on the time of the contract. As we can see in table 5 the average number of contract amending was 10. That is a quite a large number considering the average results obtained by the questionnaire, i.e., 4 amendments. According to the data, the main amendment type was regarding scope, i.e., changes made in the scope or in the requirements once the construction detailed designed was ready. That is because the contracts were mostly contracted with only the preliminary design. Figure 30 below shows the distribution of amendments per type.
  52. 52. 43 Figure 30. Project amending type 4.3. Data Analysis The questionnaire data has shown that politics is a strong driver that can directly influence the technical issues. Nevertheless, the data from the analysis of the four major projects within the World Cup Programme and especially figures 23, 24 and 25 from the questionnaire data show that most of the problems regarding cost and schedule overruns are directly related to technical issues. For the researcher this could happen because the politicians have a political term and during their time as political leaders, they tend to launch programmes even without the ideal conditions of budgeting, planning and control. This assumption was made based on the results showed by the data and by the spontaneous statements made by the respondents, such as the one below made by one interviewee when he/she answered the question presented by figure 17 and 18. Others 5% Time 24% Scope change 71% Project amending type
  53. 53. 44 “There is a clear lacking of structured planning for the projects... We launched everything at once, although not the best choice obviously… There was a political need for that.” For the researcher, this is very similar to what Flyvbjerg, et al. (2009) calls “delusion” when managers spin scenarios of success and ignore the possibility of making mistakes and miscalculations. Another spontaneous declaration made by one of the interviewees, below, states that those mistakes happen at the expense of the people (treasure funds) because some politicians tend to do as much as possible during the term to deliver some benefits to the population. This happens because there is still a lot to be done to ameliorate the peoples’ lack of adequate infrastructure. “The population lacks many things, especially basic needs … there is still a lot to do here to provide some dignity… they need to do as much as they can, although it is not the best way.” The data has shown that most of the problems encountered after the contract is awarded are due to the lack of a detailed scope requirement, i.e., detailed construction design. However, one cannot ignore that behind the technical problems there could be a political delusion as the most primary driver.
  54. 54. 45 5. Framework The framework presented by this section consists of a set of processes that aims to mitigate the risks and uncertainties faced by the projects after the bidding process. It assumes that by adopting an agile approach to the planning and execution control phase it will reduce the issues associated with the technical data due to the lack of a detailed design. The governing framework created in this section represents the core processes used by the programmes’ major projects. These processes were idealized based on the data analysis gathered from the questionnaire and by the four major projects within the 2014 World Cup programme that showed that the flaws were mainly caused by a lack of detailed construction design and political prioritization. For this reason, the empirical framework was idealized to diminish these problems once they were procured without the necessary technical detailed design. It does then use some agile approaches to handle the uncertainties. Thus, it separates the projects within the programme, it identifies, categorizes and involves the main stakeholders, it prioritizes the projects, it conducts cross- project interference and it introduces the concept of “Construction Sprints”. This governing framework is a part of a programme governance, which in turn is part of public government governance. Figure 31 below illustrates a framework containing several perspectives of governance, as well as their relationship. It goes from a Public Governance where all the political promises
  55. 55. 46 are put in place and broken down into Strategic Objectives, which are mostly turned into projects or programmes. The Public governance is not covered by this dissertation, but it is the macro perspective that provides the formal arrangements in order to permit the public government to state its decisions and carry out its actions. It also establishes the constitutional values that should be granted and protected (Klakegg, et al., 2009). The Post-mortem Governance, which is also not covered by this dissertation, should be concerned with the measurement of the value and benefits brought by the programme implementation that cannot be assess during the duration of the programme. These benefits are, normally, those ones that should be the main concern of a governmental programme, for instance, the decline of child mortality by implementation of sanitation. The Programme governance is defined as the achievement of a major purpose or benefit. It is obtained by the incremental benefits that are delivered Postmortem Benefit measurement CS 1 CS 2 CS ”n” “Pn” CS 1 CS 2 CS ”n” “P1” Front-endPreliminaryPlanning andProgrammePrioritization Figure 31. Governance Perspectives
  56. 56. 47 by the sum of the projects’ output. For that reason, the Programme Governance should be concerned with the governing process of its projects (Müller, 2009). The governing framework introduces to the infrastructure programme the concept of Construction Sprints (CS) that are smaller project cycles of up to 45 days. This agile approach has as its main objective the introduction of a process for continuous planning by adopting transparency, openness and accountability aiming to reduce the exposure to risks not yet identified and to deliver the physical outputs with the least possible amount of rework and delays minimizing the overruns. These cycles encourage an early stakeholders’ involvement where the government stakeholders from the specific major project would constantly meet with the contractors, PMO and others identified stakeholders over the supervision of the Programme Steering Committee. The stakeholders would then discuss project progress over the performance specifications4, issues, risks and cross-project interference. Then the results would be reported to the identified group of stakeholders, thus creating an environment for cooperation, trust and transparency. By adopting an early discussion of the issues commented on above, they would introduce a planning and control method through the life cycle of the project where they would have, for instance, a more reliable deliverable schedule for each major project and thus for the governmental programme. 4 Technical specifications as well as projects objectives.
  57. 57. 48 This process would also identify the construction activities that are less likely to change due to misconception of the preliminary construction design. It would also enable the approval of overlapping activities between construction activities and design, it would control the major project performance, it would do and/or approve the necessary detailed design for the next CS and it would get the necessary buy-in from the main stakeholders. So, in accordance with the framework the first main process is the programme prioritization that is composed of three main criteria: (1) Cross-Project interference. Which in turn is divided into other criteria that are weighted5 as shown by table 7 below. After an analysis of each type of interference, the corresponding letter is applied to each intersection in the Matrix and then they are weighted resulting on the Prioritization value. The type of interferences are: D – Direct, which has a direct impact over the scope. The project or some part of the project has a clear and unequivocal direct relation to the other project that will interfere on its execution, i.e., it needs some part of the other project to be ready in order to proceed with the project execution. I – Indirect, which has an indirect impact over the scope. The project may or may not be direct related to the other projects, i.e., it is unsure their interference on each other. 5 All the weighted values presented by this dissertation are figurative numbers.
  58. 58. 49 N – None, where there is no relation between the compared projects. After obtaining each value, they are then converted to centesimal where their sum should be 100. Then they can be used as the Prioritization value for this criterion. Group 1 Group 2 Group "n" Project1.1 Project1.2 Project1.n Project2.1 Project2.2 Project2.n Projectn.1 Projectn.2 Projectn.n Sum PrioritizationValue Group 1 Project 1.1 v D D D N N N N N 12 26,1 Project 1.2 N V N D D N N N N 8 17,4 Project 1.n N N v N N I N N N 2 4,3 Group 2 Project 2.1 N I N v D I N N N 8 17,4 Project 2.2 N D I N V I N N N 8 17,4 Project 2.n N N N I I v N N N 4 8,7 Group "n" Project n.1 N N N N N N v N N 0 - Project n.2 N N N N N N N v N 0 - Project n.n N N N N N N N D V 4 8,7 Table 7. Interference Matrix (2) Stakeholder Power and Interest. It is a weighted number for the Power and Interest that each main stakeholder may have on each project within the programme. After the stakeholders’ identification, they are then assessed regarding their power and interest. Then the values are weighted resulting the Prioritization Value. See table 8 below. Programme Grouping Projects
  59. 59. 50 (3) Political Strategic Relevance. It is included because it should reflect the government strategic objective. Although it should be related to the strategic objective, it is an open assessment where decimal values are applied to each project. Group 1 Group 2 Group "n" Project1.1 Project1.2 Project1.n Project2.1 Project2.2 Project2.n Projectn.1 Projectn.2 Projectn.n Stakeholder Stakeholder 1 HH HM HH HH HM HM HH HL HH Stakeholder 2 LH HL LL HM MM HH ML HH LL Stakeholder n LL MM LL HH LH HL LH ML LH Sum 12 20 10 28 15 25 16 21 12 Prioritization Value 7,5 12,6 6,3 17,6 9,4 15,7 10,1 13,2 7,5 Table 8. Power and Interest Matrix Each prioritization criterion value must be weighed generating a weighted number for each project within the programme. Then these weighted values are plotted in a graph that would characterise the Prioritization Criteria for the Programme. The graph represented by picture 32 below shows, for example, that the Project 2.1 has the highest priority according to the weighted criteria. Observe that the further away from the centre, the higher is the project priority. However, the factor 'Natural Order of Execution' should be a key value for decision-making regardless of the result obtained by the weighted values. Because, normally, they are prerequisites for other projects’ execution. When Projects Power Interest Value HH High High 10 HM High Medium 8 HL High Low 7 MH Medium High 6 MM Medium Medium 5 ML Medium Low 4 LH Low High 2 LM Low Medium 1 LL Low Low 0 Legend
  60. 60. 51 there is no impediment for the ‘Natural Order of Execution’, prioritization should be made by weighing the factors. The assigned weights should be agreed and approved by the main stakeholders and make it public through its official communication channels. Figure 32. Prioritization criteria graph The second main process brought by the framework is the Construction Sprints that are schematized by the figure 33 below. As can be seen, it is a continuous process where the lessons learned from a previous CS can be utilized for the next CS. Project 1.1 Project 1.2 Project 1.n Project 2.1 Project 2.2Project 2.n Project n.1 Project n.2 Project n.n Prioritization Criteria
  61. 61. 52 2/6 - 16/6 . 12/5 Monitoramento Semanal Monitoramento Semanal 19/5 m m 26/5 m m 16/6 m m 2/6 m m 9/6 m m Plano de Ataque 5/5 - 16/6 CS1 45 days Up to 15 days before the end of the cycle 14/7 - 28/7 Planejamento Plano de Ataque 02 23/6 Monitoramento Semanal Monitoramento Semanal 30/6 m m 7/7 m m 28/7 m m 14/7 m m 21/7 m m 25/8 - 8/9 . 18/8 m m 11/8 m m 8/9 m m 4/8 Monitoramento Semanal Monitoramento Semanal 1/9 m m 25/8 m m CS2 Planning Section CS “n” Planning Section CS “n+1” Planning Section Periodically Control Meetings Plano de Ataque 28/7 - 8/9 Plano de Ataque 16/6 - 28/7 CS2 CS “n” 45 days 45 days 5/5 - 16/6 . CS 1 Planning Section 28/7 - 8/9 . Periodically Control Meetings Periodically Control Meetings 29/12 . End of Project 16/6 - 28/7 . Up to 15 days before the end of the cycle Up to 15 days before the end of the cycle Figure 33. Construction Sprints For each CS planning section the following arrangements should be considered:  Risk assessment from previous CS, actual CS and next CS  Detailed design activities, i.e., which detailed design activities should be done for actual CS and next CS  Approval of previous detailed design activities  Identification of construction activities that are less likely to change due to modifications done at the detailed design  Identification of a deliverable schedule for the actual CS plus estimation for next CS due to activities dependencies  Assessment of the impact of the possible rework caused by the overlapping activities  Performance assessment based on defined, publicized and approved KPIs
  62. 62. 53 After the specific planning section for the CS, periodically control meetings are held in order to assess the CS. The main objective of the control meeting is to monitor the progress of the actions implemented and to take the corrective actions in case of plan deviation. For that, the control meeting should assess open risks, new known risks, unknown risks and performance. For instance, construction activities completed, deliverables handed in, physical progress, actual costs, scope change, quality issues and so on. It is important to note that each specific CS might not fit another CS from other major projects within a programme. Each CS is unique once it is composed of its own group of stakeholders, of overlapping activities, of risks and issues, of deliverables and methods. That is because there are particularities within each CS, and each one acts like a sub-project within the major project. So the governing framework is the synergy among projects (P1, P2, P3, Pn) plus the sum of benefits provided by each CS, and plus the benefits provided by other projects within the programme as represented by Figure 34 below. Figure 34. Governing Framework CS 1 CS 2 CS ”n” “Pn” Governing “P2” CS 1 CS 2 CS ”n” “P1” CS 1 CS 2 CS ”n” “P3” Front-endPreliminaryPlanningand ProgrammePrioritization Deliverables
  63. 63. 54 6. Discussion 6.1. Limitations The research involved in this dissertation was limited because it involved a small number of respondents and only few major projects within the 2014 World Cup Programme in Brazil. Although the respondents were overseeing more than 700 projects, the actual amount of respondents was low. In addition, the researcher did not have the opportunity to gather more data from the World Cup programme within the other host cities that could have improved the analysis of the overruns and their possible association to the procurement process, thus contributing more to the Governing framework developed in the chapter 5. Another criterion for the limitation was the geographic one. Only data from Pernambuco was gathered, although all Brazilian states have to follow Federal Law 8.666/93 for their procurement process. Finally, it is important to point out that the questionnaire could have been better designed. It was noted that some questions should had been clearer because the researcher had to explain many times what was meant. In addition, it also should have had open questions unrelated to a previous one, where the interviewees could have expressed better their answers. 6.2. Theoretical and Practical allegations The researcher believes that the framework conceived by this dissertation answers the two research questions proposed by this research project. It has
  64. 64. 55 shown that it is possible to ameliorate the problems faced by the lack of construction detailed design. It does that by adopting a set of processes conceived for this end as showed by chapter 5. The researcher also believes that the Agile approach used helps in understanding better the major projects within the programme and mitigates its issues and uncertainties. The literature has shown that Agile is already being applied to the Construction industry and a governance based on this approach could be helpful, although there is not much hard evidence on the literature. However, for the researcher there is a breach in this type of process that should be treated by the public governance. The questionnaire data and the literature has evidenced that infrastructure projects that are conducted based on preliminary design resulted in overruns due to the uncertainties that are brought by the changes of the detailed design. The researcher also acknowledges that it would be better to treat the root causes of the issues, uncertainties and overruns from these major projects as suggested by Flyvbjerg et al. (2003), Flyvbjerg (2007), Miller and Hobbs (2005) and by Miller & Lesser (2000) instead of applying a framework to mitigate the problems caused by the real factors. However, to apply the changes suggested by these authors is a Herculean effort that needs a very strong political will or a huge popular demand.
  65. 65. 56 7. Conclusion Cost overruns and schedule delays have already been deeply studied as shown by the literature review. Although there are data on technical reasons, the root causes for these overruns could be lock-in, bad decision-making process, lack of proper planning, optimism bias or strategic misrepresentation. Therefore, for this research, it is assumed that once the procurement process was done wrongly because of any of the root causes, there will be many problems caused by the inconsistency between the preliminary design and detailed design as evidenced by the data analysis and by the literature review. Although there is no physical evidence of the result of the implementation of this framework, the researcher recommends the use of this empirical framework to ameliorate the risks and issues arising from the contracts awarded without the technical detailed designs. Besides, the framework introduces accountability, openness and transparency, which seems to be essential in improving governance of public programmes.
  66. 66. 57 Appendices APPENDIX A. Questionnaire Questions Interviewee Identification 1 - For which government do you work? City hall State Federal 2 - What is your function? PMO analyst Executive Secretary Manager Engineer Project Manager 3 - How long have you worked in Projects? 4 - What type of projects do you usually supervise? Health Education Mobility World Cup Dams/Hydroelec tric plants Others Project(s) Characteristics 5 - How many projects are you supervising or monitoring or managing at the moment? 6 - Does your main project belong to any governmental programme or major project or megaproject? Project Program major project Megaproject Not sure No 7 - Are they aligned to any strategic objective? Yes No 8 - If so, what is it? 9 - What is the funding source for your main project? Town/City State Federal 10 - How large is your main project? (in Brazilian Reais) Up to 10 million 10-50 million 50-100 million 100-500 million Over 500 million 11 - What is the Object of the Contract of your main Project? Possible Answers BID/BIRD
  67. 67. 58 12 - What is your main project objective? 13 - Does your organisation normally identify the stakeholders of the projects? Yes No 14 - Are the projects objective known by the most of the stakeholders or just by the main ones? Main ones Most of them 15 - Normally who are the main stakeholders? 16 - What is the average duration of the projects you are working on at the moment? Governing Strategy 17 - Is your main project part of another project, i.e., is it part of a bigger project or program? Project Program Major project Megaproject Not sure 18 - Are there any project prioritization criteria? Yes No Not sure 19 - If yes, what are those criteria? 20 - Are the criteria well known and defined? Yes No 21 - Is there any prioritization in contracting or execution of the projects? Yes No Not sure 22 - If so, what are these criteria based on? Politics Strategic relevance Popular pressure Natural order of execution, that is, it needs to be completed in order to start a different one Economic Reason Other 23 - How would you assess the process of approval, choice and acquisition of projects? Complex and well defined Simple and well defined Unstructured Structured, but lacks management Not sure 24 - Is there, normally, a prior study on cross-project interference? That is, is it normally known whether the contracted project may interfere with other projects? Yes No 25 - If yes, do you also consider as a prioritization criteria and how is this information used? 26 - If no, why?
  68. 68. 59 27 - Is there any legal instrument requiring the government to bid with all approved detailed designs? Yes No Not sure 28 - Does your organisation normally identify stakeholders' power and influence? yes no 29 - Does your organisation normally identify stakeholders' conflicting interests? Yes No 30 - If no, why? 31 - Do the main stakeholders take part on the project management and decisions made throughout the Project life cycle? Yes No Not sure 32 - If no, why? 33 - Are the main stakeholder normally Communicated on the decisions made throughout the Project life cycle? Yes No Not sure 34 - if yes, how often? Weekly Bi-weekly Monthly Every three months Every six months Other 35 - If yes, How is this communication made? Reports E-mail Meeting presentations Informally Whatsapp Other social network Other 36 - In your opinion, which option best defines success in a project? Products delivered Products delivered within the quality contracted Products delivered within the budget contracted Products delivered within the time contracted Products delivered within the quality, budget and time contracted. Stakeholder's satisfaction Benefits or value brought by products delivered Other Scope, Time and Risk 37 - In your projects, what is the main issue regarding the scope? The scope is unknown Project lacks requirements definition The Project designs are not fully available for its execution Lacks Project detailed design Lacks Project architectural design Other 38 - Who does normally elaborates the project(s) design(s)? Government technician Third-party business (contracted) Functional manager Product Supplier Other
  69. 69. 60 39 - Are the products usually approved by someone? Yes No 40 - If so, by whom? Government technician Functional manager Executive secretary State or City Hall Secretary Governor/Mayor 41 - Who does normally estimates the project budget? Government technician Third-party business (contracted) Functional manager Product Supplier Other 42 - How is done/based the budget estimation? based on the elaboration of preliminary designs based on the elaboration of the detailed designs based on market survey Based on expertise elaboration Based on supplier elaboration Based on third-party business (contracted) other 43 - Is there any method for a continual planning along the projects, where you suggest or pact on new deliveries or services needed? Yes No 44 - Is it common to know beforehand whether a project will have amendments? Yes No 45 - If so, why? There isn't any Project detailed design The scope was poorly elaborated The cost was poorly estimated It has been made that way in order to be deployed quickly, due to political pressure It has been made that way in order to be deployed quickly, due to popular pressure Other 46 - Considering that there will be Project amendments, is the new scope monitored before its formalization? Yes No 47 - Is there any change process informing how the new scope will be monitored? Yes No 48 - Has any of your current projects suffered amendments? Yes No 49 - If so, what type? Time Scope Cost All 50 - How many amendments do they have, on average?
  70. 70. 61 51 - Among the projects you supervise, how many of them have been bidden with all the Project detailed designs needed? 0% 0-25% 25-50% 50-75% 100% 52 - Normally why? Lack of planning Political pressure Disorganization Bureaucracy Lack of prioritization Popular pressure Other 53 - At the beginning of a contract, are the main risks and issues known? Yes No 54 - At the beginning of a contract, is there usually a reliable delivery schedule? Yes No 55 - Is there usually a clear understanding of this Project's purpose? Yes No Not sure Methodology 56 - Which of the following methods does your organisation use to mange projects? Scope management processes Integration management processes Time management processes Cost management processes Risk management processes Quality management processes Stakeholders management processes Other 57 - Are there well defined KPIs? Yes No Not sure 58 - Do you judge them reliable? Yes No Not sure 59 - If not so, why? They don't reflect the actual situation They are imprecise They are hard to be understood They are hard to be collected Other 60 - Are these indicators based on an existing technique? Yes No Not sure 61 - If so, which? 62 - Was there any study or method to create these indicators? Yes No Not sure 63 - If so, which?
  71. 71. 62 64 - Are Status Reports created regularly? Yes No 65 - if so, how often? Weekly Bi-weekly Monthly Every three months Every six months Other 66 - Who normally creates the status report? PMO Project Manager Contractor Company hired to manage the Project Not sure 67 - Is there any risk assessment? Yes No not sure 68 - If so, how is it done? 69 - Are there well defined processes for changes in scope, time and cost? Yes No Not sure 70 - Is there any agile approach where the execution is based on partial delivery, where the project is built over time? Yes No Not sure 71 - If so, how is it done? 72 - Are the project's Vision and purposes monitored and measured? Yes No Not sure 73 - If so, how often? Weekly Bi-weekly Monthly Every three months Every six months Other 74 - How are they Monitored? Reports E-mail Meeting presentations Verbally Whatsapp Other social network Other
  72. 72. 63 APPENDIX B. Data on four major projects within the 2014 World Cup Programme Table 9. Data on the four major projects within the 2014 world cup Programme
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