Change management: project’s lifecycle

25 May 2016

Tim Fry considers the project manager’s role in dealing with change during a project’s lifecycle

All projects need firm ground, and getting some building blocks in place is best practice. So first of all, let’s be clear about the terminology we are using. The most widely accepted definition of a project is:

'a unique, transient endeavour undertaken to achieve a desired outcome'

(APM Body of Knowledge, 5th edition). Some examples of particular projects are outlined in Table 1.

Table 1: Examples of projects

It follows that:

'Project management is the process by which projects are defined, planned, monitored, controlled and delivered such that the agreed benefits are realised … Projects bring about change and project management is recognised as the most efficient way of managing such change'

(APM Body of Knowledge, 5th edition)

If we really take things back to first principles, Newton’s third law of motion states that:

'For every action, there is an equal and opposite reaction.'

The same law applies to the commercial world. Many organisations need to change in response to external influences or actions, such as legal reforms, increasing competition, a changing economy, outgrowing premises or so on. In all cases, there is an action that causes a reaction or, to put it another way, a change. To make this change successfully, a project needs to be managed in a controlled manner.

 

If you begin your journey without knowing your starting point or destination, you won’t end up in the right place

If you begin a journey without knowing either your starting point or destination, you won’t end up in the right place. So at the very beginning of a project, a business should ask itself three simple questions to understand whether it really needs to change.

1. Where are we now? (the “As is”)
2. Where do we want to be? (the “To be”)
3. How do we get there? (the plan).

The project manager should be involved in all three steps.

Enabling business

My current project is managing the design, building and operation of a research, education and clinical care centre. This will house two world-leading brands, Moorfields Eye Hospital and University College London’s Institute of Ophthalmology in one bespoke and integrated building of around 50,000m2 where, as Aristotle put it, “the whole is greater than the sum of its parts”. This also involves selling existing central London sites and buying a new one. The new building will act as a “wrapper” for the two organisations.

On appointment, I wanted to establish the need for the project, and so my first action was to ask “Why are we doing this?” There is no point in doing something well that doesn’t need to be done in the first place.

Both organisations had well-defined corporate strategies, and the need for a new building to help fulfil these was obvious. They had to change to retain their market leadership and improve the quality of their products. Their current buildings do not enable their businesses but constrain them, forcing people to work in inefficient ways, and therefore directly affecting the services and products they provide.

The clients also understood that change occurs in two ways.

1. Organisational change – i.e. changes to the way an organisation is structured, the goods or services it provides or the way it works. This can include improvements that are not always physically demonstrable but still bring positive results, such as changes in the way people work.
2. Capital projects – complex undertakings that have a significant impact on organisations before, during and after implementation. These include infrastructure, building, engineering, information and communications technology – in fact, any project involving capital rather than revenue expenditure.

To obtain stakeholder support and funding for a project, the case for change must articulate the benefits and how they can be measured. This process uses investment appraisal techniques and is documented in the business case, so it must be compelling – that is, projects should only be approved if it can be shown that their benefits outweigh their costs. It must therefore answer the key questions “Where are we now?” and “Where do we want to be?”, as well as including a plan to get there.

We then had to determine what the project would entail – for instance, whether it would be a new build or a refurbishment, whether it involved staying on an existing site or moving to a new one – and agree the best option to pursue. It was then necessary to work out how big it needed to be, predicated on current and projected activity that was informed by demographic and medical need data. This also entailed working out the new ways of working (clinical pathways); that is, more change.

This was used to understand how much it would cost to design and build (using benchmark data) and how much it would cost to operate – respectively, hard and soft facilities management over the building’s lifecycle. We had now described the “To be” position.

Both organisations are in existing premises with their staff, equipment and operational costs and constraints. Therefore we could establish the “As is”. By calculating the value of one and subtracting the other, we could derive the net cost of the change.

 

Best practice suggests maintaining a separation of powers between those who hold the corporate budget and those who seek to spend it

Best practice suggests maintaining a separation of powers between those who hold the corporate budget and those who seek to spend it, which creates a healthy and constructive tension. We therefore got the finance departments to model how much the organisation could afford to pay for a new-build project and its operation over a specific term, for instance 30 or 60 years. We also had the model audited. When compared to the costings, this showed we had an affordable project, not only in capital terms but also in terms of revenue over its whole lifecycle.

This was tested using sensitivity analysis by running “What if …?” scenarios. These are very powerful when talking about change with users, enabling discussions along the lines of: “If you want x, you realise it will cost y, and as we have a finite budget someone else will have to go without if you get your variation. Which of your colleagues should shoulder this burden?”

The cost of change is therefore real and tangible, as it affects users in a way that they understand. The converse argument can also be used to enable value-adding change, which I’ve found is one way to short-circuit some ‘wants’ and let you focus on ‘needs’. Always check your assumptions and inputs, and whether the model’s answer is in the right ballpark.

Another seemingly obvious point is not to proceed until a project is shown to be affordable and the client has signed up to its scope, cost, budget, key assumptions, evaluation criteria and so on. You then have a baseline from which to measure the effects of change as you move from project inception into implementation.

As project managers, we manage both ‘soft’ projects – organisational change – and ‘hard’ projects – capital ones. The former tend to drive the latter. I am fortunate to be involved in both, and therefore the whole lifecycle of projects.

The biggest challenges to project managers on change projects such as this centre are gaining stakeholder buy-in, keeping the project sponsors enthused throughout a process that is, in the main, alien to them, and plotting a path through layers of governance that still allows for timely decision-making. How do you manage these issues on your projects?

Tim Fry is Director of Capital Investment & Development at Moorfields Eye Hospital and Chairman of the RICS Project Management Professional Group Board

Further information

• This feature is taken from the RICS Construction journal (April/May 2016)