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  • 2010 Mark Kozak-HollandTitanic Lessons for Projects www.lessons-from-history.com

    Titanic Lessons for Projects

    Presentation to PMI MilanOctober 1st, 2010Mark Kozak-Holland

    Avoiding Project Disasters

    Lessons From the Past that Assist the Projects of Today to Shape the World of Tomorrow

    www.lessons-from-history.com

    http://www.lessons-from-history.com/http://www.lessons-from-history.com/http://www.lessons-from-history.com/http://www.lessons-from-history.com/http://www.lessons-from-history.com/

  • 2010 Mark Kozak-Holland

    Objectives: Analyze Titanics construction project and voyage

    It uses lessons learned to understand key project issues.

    It looks at key decisions that led to project compromises.

    It questions why captain was unable to prevent disaster.

    It makes a step by step comparison to todays Projects.

    Please prepare questions for the end of the presentation.

    Page 2 Titanic Lessons for Projects www.lessons-from-history.com

  • 2010 Mark Kozak-HollandPage 3

    The success rate of Projects is stubbornly low as first shown by the Chaos reports from Standish Group

    Hypothesis:

    Projects set seeds for future operational failures.

    Problems attributed to poor decisions making in the project.

    Check www.lessons-from-history/Project Success or Failure/

    Source: Chaos, a

    recipe for success,

    Standish Group,

    280,000 projects

    evaluated

    1994 1996 1998 2000 2002 2004 2006 2008

    Succeeded 16 27 26 28 34 29 35 32

    Failed 31 40 28 23 15 18 19 24

    Challenged 53 33 46 49 51 53 46 44

    0

    10

    20

    30

    40

    50

    60

    Titanic Lessons for Projects www.lessons-from-history.com

    Through 2010, government agencies will

    cancel 30% of the IT projects that they

    initiate, including at least 10% of projects

    budgeted at more than $200,000 (0.7

    probability).

    Source: Garner Group

  • 2010 Mark Kozak-HollandPage 4

    Some notable project failures during the project implementation or into operation

    Oct. 2009, eHealth Ontario, 30 full-time employees and 300 consultants many in senior positions.

    Aug. 2009, Digital trunked radio system failures Public-Safety Radio, Technology in Government

    May 2009, Google suffers major failure, various Apps kicking back in after widespread outage

    Sep. 2008 London Stock Exchange failed for 7 hours hurting clients who trade $17.5 bn a day.

    February 2008 - American LaFrance (ALF), leading brand of custom-made fire fighting, rescue vehicles, and ambulances, declared bankruptcy, blaming IBM and failed ERP implementation.

    Nov. 2007, passengers lineup terminal length (1 km), after glitch in Air Canada resv. system.

    January 2007, Sweden's largest Bank, Nordea, the biggest heist of customer accounts on record more than $1m was stolen.

    2006 LCH.Clearnet shut down its Generic Clearing System (GCS) project at a cost of EUR67.9 m.

    2006 Maine Medicaid Claims System project 1 year on is a disaster of major proportions. Since the new system went live, it has cost the state of Maine close to $30 million.

    Hersheys ERP implementation failure ($112m), distribution problems, 27% marketshare loss.

    The FoxMeyer Drug ERP system implementation failure led to collapse of entire $5 bn company.

    June 2004, RBC fell behind processing salary deposits thousands of Canadian workers as millions of transactions were affected by a computer glitch that caused payroll delays.

    June 2004, an air traffic control computer failure saw massive air disruption across the UK. All flights from UK airports were grounded after a problem at the National Air Traffic Service.

    Check www.lessons-from-history/Project Success or Failure/

    Titanic Lessons for Projects www.lessons-from-history.com

  • 2010 Mark Kozak-HollandPage 5

    Notable project failures during projects. Why do problems still occur and Projects fail catastrophically?

    August 2008 Unencrypted memory stick lost with names/dates of birth of 84,000 inmates, England 's entire prison population. Home addresses of 33,000 who had six convictions.

    Feb. 2007 20bn UK NHS computer system 'doomed to faila senior insider has warned.

    2007 laptop with records of 600,000 recruits was stolen from Royal Navy recruiter's car

    2006 Department of Homeland Security scuttles its $229m Emerge2 program (new financial IT system).

    2005 US Justice Department stated $170m FBI Virtual Case File project a failure, after 5 yrs & $104m. In a 18-month period, FBI gave contractor 400 requirements changes.

    2005 UK Inland Revenue gave $3.45 bn of tax overpayments because of software errors.

    April 2005 Australian inter-departmental warfare resulted in failure of $64m federal project.

    2005 British food retailer J Sainsbury wrote off $526m in automated supply-chain system.

    IRS project on taxpayer compliance took decade to complete and cost $50 bn.

    Oregon DMV conversion to new software took 8 years and public outcry killed the project.

    State of Florida welfare system plagued with numerous errors & $260m in overpayments!

    May 2005 major hybrid car manufacturer installed software fix on 20,000 vehicles. The automobile industry spends $2 to $3 bn per year fixing software problems.

    July 2004 new welfare management system in Canada costing $200m unable to handle simple benefits rate increase. Contract never tested this in 6 weeks of acceptance tests.

    Check www.lessons-from-history/Project Success or Failure/

    Titanic Lessons for Projects www.lessons-from-history.com

  • 2010 Mark Kozak-HollandPage 7

    Bad IT service performance, IT project success rates, & IT investments are not a CIO problem affect all c-levels

    Most project management mistakes are either lack of adequate planning or

    communications breakdown (among project team or with project sponsors).

    Source: Chaos, a recipe for success, Standish Group, 2008

    serious deficiencies in senior executive skills with IT projects. Lack of PM

    skills cut benefits of IT projects by 25%.

    Executives are involved in selecting and approving projects, but rarely

    delivering them. 49% experienced one project failure in past 12 months.

    Source: KPMG's Global IT Project Management Survey, July 2005.

    C-levels need to understand:

    Relationship projects / operations

    What can go wrong in complex on-line operation?

    Titanic Lessons for Projects www.lessons-from-history.com

  • 2010 Mark Kozak-HollandPage 8

    To understand relationship between operations & Projects imagine yourself in 1912 in a Titanic lifeboat being rescued.

    Titanic Lessons for Projects www.lessons-from-history.com

  • 2010 Mark Kozak-HollandPage 9

    In 1908 White Star facing businesses pressures and responded with strategy that leveraged emerging technology

    Competition and new entrants.

    Aging technology infrastructure,

    inferior service, loss of market

    share & customers.

    Invest in technology - 3 new

    super liners to sweep Atlantic.

    Push emerging technology to

    limits.

    Address all 3 passage classes,

    priority on first-class.

    Quality of crossing, customer

    experience.

    OlympicMauretania

    15% faster23% greater capacity

    Titanic Lessons for Projects www.lessons-from-history.com

  • 2010 Mark Kozak-HollandPage 10

    The strategy required new technology investments but the business case was really solid

    Profitability analysis breakeven 2 yrs.

    6 year construction project.

    75% of revenue first-class.

    1st class suite - $4,350,

    2nd class suite - $1,750,

    3rd class ticket - $30-46

    Titanics class segregation = todays

    customer segments.

    Passenger space allocated: 60% for 905 first-class.

    7% for 1134 third-class.

    Titanic Lessons for Projects www.lessons-from-history.com

  • 2010 Mark Kozak-Holland

    Project Integration and Scope Management

    Project Charter developed by Project

    Sponsor Ismay, and Pirie

    Transform White Stars business

    model & replace aging fleet

    Luxury drives customers back, not speed

    Project objectives (purpose)

    Deliver 3 super liners over 7 year period

    Staggered delivery revenue for revenue flow

    Principal considerations safety, comfort and

    luxury, with a reasonably fast speed.

    Projects criteria for success

    Each ship is in operation within 4 years

    Meets terms and standards of contract

    Change Control performed

    Through contract

    Titanic Lessons for Projects www.lessons-from-history.comPage 11

  • 2010 Mark Kozak-Holland

    Project Time Management - Schedule (High level)

    Titanic Lessons for Projects www.lessons-from-history.com

    H 1 H 2 H 3 H 4 H 5 H 6 H 7 H 8 H 9 H 10 H 11 H 12 H 13

    Design

    Construction

    Sea

    Trail

    s

    Olympic

    Titanic

    H 14

    1907 1908 1911 19131909 1910 1912

    Sea

    Tr

    ail

    s

    Construction

    Construction

    Gigantic

    1914

    H 15

    Launch

    Launch

    Gantry

    Idea

    Page 12

  • 2010 Mark Kozak-Holland

    Other PMBoK Areas

    Cost Mgt

    Estimated Budget

    Final cost fixed price contract of 3 million

    for the pair

    Control costs with regular audits

    Quality Mgt

    Premium world ship builder

    Best reputatio

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