Mike Nartker
NS&D Monitor
12/19/2014

In a new effort to further improve project management, the Department of Energy is moving forward with plans to conduct additional reviews of major projects to better identify and resolve potential problems before they have significant impacts. DOE’s new approach, unveiled late this week, involves what Department officials have described as a strengthened Energy Systems Acquisition Advisory Board (ESSAB) and the creation of a new Project Management Risk Committee consisting of senior project managers. Both organizations will be tasked with examining projects. “We have historically had trouble with inadequate planning and design in the early stages of projects. There are many reasons for that, they’re not all the fault of the Department of Energy, but it is a fact,” John MacWilliams, a senior advisor to Secretary of Energy Ernest Moniz, told NS&D Monitor late this week. 

MacWilliams added, “This is exactly the kind of problem when you’re sitting there and you have to go up through this project risk committee, which is a group of the senior-most project managers and led by someone like me, who is going to be challenging, and then you have to go defend that at the ESAAB in a dynamic—not a static, let’s get through a meeting kind of way—that is the hope, that we will avoid those kinds of problems.”

DOE Continues to Struggle Managing High-Value Projects

DOE has been working for years to improve its project management capabilities, with both the Office of Environmental Management and the National Nuclear Security Administration having come under heavy scrutiny for cost-and-schedule increases seen on major projects.  In early 2013, the Government Accountability Office partially removed EM and NNSA from its biannual “high-risk” list, narrowing its remaining concerns to EM’s and NNSA’s major construction projects and high-value management and operating contracts.

Last summer, Moniz created a new Contract and Project Management working group to help further identify ways to improve project management. In a report released late this week, the working group identified as areas in need of improvement insufficient front-end planning, inadequate funding, a lack of sufficient independent oversight and “unclear ownership” of projects within the Department. “Currently, weaknesses in the organization of DOE’s projects create barriers to successful project delivery,” the report says.  “In some cases, insufficient line management, ownership and authority, routine decision making at the wrong levels, and focus on reporting projects as ‘green’ rather than on sustained performance improvements are all emblematic of the deep cultural issues underlying project performance.”

The report goes on to say, “In other cases, there appears to be a lack of strategic prioritization for project funding, as well as a lack of a transparent funding allocation process. Often for government agencies, an internal prioritization list of programs and projects does not exist, or if it does exist, the agency does not adhere to it. This causes projects to fall victim to their budget allocations. Project managers also develop an optimism bias in delivering the project on cost and schedule despite the changes to a project’s funding profile.”

DOE to Increase Frequency of Reviews

As part of DOE’s new approach, the ESAAB, which is led by the Deputy Secretary of Energy and includes senior Department officials, will now meet quarterly and examine all projects with a total cost of at least $100 million. Previously, the board met when a project reached a specific Critical Decision point. “The problem is because we had not had decisions of that type in the last couple of years, the Board actually hadn’t met in a couple of years. … So it really became static,” MacWilliams said.

The new Project Management Risk Committee will meet biweekly to examine projects and consist of senior project managers, including one from DOE’s Loan Program office. The committee has also been tasked with reviewing the recommendations made by the Contract and Project Management working group and report to Moniz within 60 days as to whether each should be accepted, modified or rejected. “I was really trying to create a more matrixed, holistic, view of project management,” MacWilliams said. “I think it’s going to be a very dynamic organization that I’m actually very excited about because when I look at some of the mistakes that we’ve made in the past, I think that [with] a group with this experience who’s meeting this regularly and challenging each other, we won’t miss some of the things that we have in the past.”

He noted, “So when the NNSA representative is sitting there telling the story about what’s going on with MOX, they are going to be challenged by all these different programs and all this different expertise. And it will happen on all of the projects.”

Each Project to Have ‘Owner’

Going forward, each of DOE’s program offices will designate a “project owner” for each project that will report up through the relevant Under Secretary to help improve “accountability,” according to MacWilliams. “Clear ownership helps drive successful project management,” the Contract and Project Management working group’s report says. “It is imperative during the life of a project (CD-0 through CD-4) that someone has ownership, and that person is the one person responsible for the project’s execution. There is a lack of accountability when ownership is unclear, and it is perceived that everyone is responsible, but no one is in charge.”

MacWilliams also said that each program office has moved forward with creating an independent peer review process for projects. “When I say ‘independent,’ it has to be independent from that project owner so that it is really within the program but independent in terms of reviewing the work of the folks doing the project,” he said.

No Plans for Separate Organization to Manage Large Projects

One of the Contract and Project Management working group’s main recommendations had been for DOE to consider creating a separate project management organization that would be responsible for capital construction and major environmental remediation projects across all program offices in an approach similar to the Army Corps of Engineers. The working group noted that DOE has experienced a drop in the number of major projects underway—from more than 120 active capital asset projects in 2008 to 39 active projects currently. “In that context, there may be an opportunity to consider transformational organizational changes that would concentrate the best and brightest project managers on this reduced workload,” the report says. “By leveraging the best practices of DOE into one construct that consolidates DOE’s project management experience, DOE could significantly improve project management and project execution.”

However, MacWilliams said DOE has decided not to create such a new organization. “As we then took this report over a period of several months and worked it through the programs, worked with the Secretary, thought about it more, we felt that the best way to accomplish the substance of that was to really do these several things, which is first of all is to create this Project Management Risk Committee, then to make that reporting into the ESAAB, which is now, frankly, a completely different organization and a real active, dynamic body,” he said. “And so that was the way, as we looked at it and distilled it, that we felt that we would be able to make the most meaningful change, in addition to these structural changes in the programs … and these peer reviews.”

This article was corrected on 12/22/2014 to include the correct name of the Contract and Project Management Working Group.