project management (pm) update: recent policy changes bosco, pm... · recent policy changes paul...

Department of EnergyProject Management Workshop

2016

“Enhancing Project Management”

Project Management (PM) Update: Recent Policy Changes

Paul BoscoDirector, Project Management

Oversight and Assessments

• Office of Project Management (PM) Oversight and Assessments Organizational Chart

• DOE Order 413.3B, Program and Project Management for the Acquisition of Capital Assets – Admin Change…and

• Secretarial Project Management Policy Memorandums

• Project Management (PM) Questions

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Topics of Discussion

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PM Organizational Chart (Eff: 7/12/15)

PM‐1Paul BoscoDirector

Under Secretary(S3)

Tony ErmovickPM‐20

Departmental ProjectOversight

Melvin FrankPM‐30

Project Management Policy & Systems

Linda OttPM‐40

ProfessionalDevelopment

PM‐2Michael Peek

Deputy Director

John WhitePM‐10

[S3] Project Assessments

Jay GlascockChief of Staff

Deputy Secretary(S2)

Associate Deputy Secretary (ADS)

(Chief Risk Officer)

1. Accountability and clear ownership: Roles and Responsibilities

2. Independent oversight and project peer reviews3. Appropriate up front planning4. Funding stability during execution5. Rigorous, comprehensive analysis of alternatives (AoA)6. Cost estimates that are accurate, comprehensive and

reliable7. Accurate and timely project controls to inform senior

leadership8. PM discipline – Consistently following DOE Directives –

Requirements4

Vision: Project Management (PM) ExcellenceCulture and Some Other Big Challenges

• DOE Order 413.3B is NOT being updated• A proposed administrative change is in process–DOE Order 413.3B Admin Chg 1– “Incorporate Secretarial policy memos since the last update of the Order”, and

– One Law – Public Law 112‐74: Independent Cost Estimates (ICEs)

• If Admin Change cancelled today – no impact –recent Secretarial policies (and law) stay in force

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DOE Order 413.3B Admin Change

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DOE Acquisition Management System Critical Decision Milestones (Some Context)

CD-0Approve Mission

Need

CD-1Approve

Alternative Selectionand Cost

Range

CD-2Approve

Performance Baseline (PB)

CD-3Approve Start

of Construction or Execution

CD-4ApproveStart of

Operations or Project

Completion

CriticalDecisions(“CDs”)

RequestDesign Funds

External Independent

Review (EIR) to Validate Scope, Cost, Schedule

≥$100M

External Independent

Review (EIR) for Projects ≥$750M

Projects Report Earned Value ≥ $20M

DefinitionInitiation Execution Closeout

Project Assessment and Reporting System (PARS) for Projects ≥ $10M

Operating Funds

Operating Funds

DesignFunds

ConstructionFunds

Total Project Cost (TPC)

• Nine (S1 or S2) Secretarial Memos: (In chronological order)1. S2 Project Peer Reviews, Apr 12, 20112. S1 Improved Decision Making through Integration of Program

and Project Mgmt with NEPA Compliance, Jun 12, 20123. S2 Project Assessment and Reporting System (PARS II) Data

Quality, Jun 19, 20124. S2 Aligning Contract Incentives for CAPs, Dec 13, 20125. S2 Fee Determination, Jan 28, 20136. S2 Improve Capital Asset Project Documentation, Apr 22, 20137. S1 Improving the Department’s Mgmt of Projects, Dec 1, 20148. S1 Project Mgmt Policies and Principles, Jun 8, 20159. S1 Approval to Establish a New Organization – Office of Project

Mgmt Oversight and Assessments, Effective: Jul 12, 2015

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Secretarial Policies: (Since Last Order Update)

• Implemented the following:– Strengthened the Energy Systems Acquisition Advisory Board (ESAAB)

– Established a Project Management Risk Committee (PMRC)

– Improved the lines of responsibility, including “owners”; and, the independent peer review process

– Full funding mandate for projects with Total Project Cost (TPC) $50M or less

– Independent Critical Decision (CD)‐1 Alternative Analysis required; project TPC’s > $50M

– Compliance with DOE project management requirements – tethered to budget submission

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Secretarial Policy Memo (Issued Dec 1, 2014)Including PM Report, ESAAB and PMRC Charters

1. Deputy Secretary, Chair (CE – Chief Executive for Project Management)

2. Under Secretary for Management and Performance3. Under Secretary for Science and Energy4. Under Secretary for Nuclear Security5. Office of the Secretary, Senior Advisor (Financial)6. General Counsel7. Chief Financial Officer8. Executive Director, Loan Program Office9. Chair, Project Management Risk Committee (Refer to #5)10. Director, Office of Project Management Oversight and

Assessments – Secretariat

• Other Program Secretarial Officers or functional staff as needed (e.g., CNS, SPE, etc.)

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Energy Systems Acquisition Advisory Board (ESAAB) Membership

1. Office of the Secretary Senior Advisor, Chair2. Director, Office of Project Management Oversight and

Assessments (Secretariat)3. Director, Independent (EM) Peer Review Group, Office of the

Under Secretary for Management and Performance4. Associate Administrator for Acquisition and Project

Management, Office of Under Secretary for Nuclear Security5. Director, Office of Project Assessment, Office of Under

Secretary for Nuclear Security6. Director, Office of Project Assessment, Office of Science7. Deputy Director for Science Programs, Office of Science8. Deputy Assistant Secretary for Acquisition and Project

Management, Office of Environmental Management9. Chief Operating Officer, Loan Programs

• Others (e.g., GC, CNS, SPE, etc.) 10

Project Management Risk Committee (PMRC) Membership

• Goal: Improve project management, and removal from GAO High‐Risk List for “Contract (Project) Management”

• “…provisions outlined within…attachment… implemented as required project management procedures”– (13) subsections, within (7) pages

• “All requirements of DOE Order 413.3B… applicable to all DOE Elements (unless excepted or exempted…) for all capital asset projects” with TPC ≥ $10M (vice $50M)

• “Immediately initiate a limited update” to (413) Order “incorporate all recent Secretarial policy memorandums since the last update of the Order” (Nov 29, 2010)

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Secretarial Policy Memo (Issued June 8, 2015)Project Management Policies and Principles

1. Ownership, Accountability and Responsibility:– Under Secretary will: “designate a project owner”– Owner will: ID requirements; request budget; visit project and review progress

– Project Management Executive (PME) will:• Ensure FPD has…organization(s) prepared to execute the project• Ensure contractor has competent manager – qualified team• Ensure adequate staff for federal oversight• Visit the project site – review progress• Oversee project change control IAW Project Execution Plan (PEP)

– Federal Project Director (FPD) will:• Ensure early warning systems and communication channels in place

• Exercise project change control IAW PEP

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The Secretarial Memo Attachment (June 8, 2015)

2. Analysis of Alternatives (AoA):– AoA “independent of contractor organization”– Applicable for projects with total estimated cost > General Plant Project (GPP ‐ $10M), prior to CD‐1 and with performance baseline deviation and/or with new technologies, as warranted (PME call)

– “Consistent with published GAO best practices” and impending new Guide

– “Integrate National Environmental Policy Act (NEPA) into project planning”

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3. Design Management for Hazard Category Nuclear Facilities:– Comply with DOE‐STD‐1189* and DOE Order 413.3B– “Achieve at least 90 percent design completion before CD‐2”

– Defines 90 percent design complete:• Complete final drawings and specs – may be released for bid• (8) other criteria, plus (4) design and safety documents

• Non‐nuclear construction:– “Project baseline with 80‐90 percent confidence”– Projects > $100M: PMRC review – review project design plans at CD‐1

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* DOE‐STD‐1189‐2008: Integration of Safety into the Design Process, March 2008

4. Design Management Plans for Major System Projects (MSPs): (>$750M)– Project Engineering and Design (PED) cost estimate prior to CD‐1, along with design management plans

– Design cost target will be breached…PMRC shall be notified

– System‐level requirements for technology development and design maturity clearly defined –include legal or regulatory constraints

• TPC < $100M: PED funds limited to a two‐year duration; unless approved by PME – PMRC notified

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5. Technology Readiness: (For MSP* > $750M or first‐of‐a‐kind engineering endeavor)– CD‐1: Technology Readiness Level (TRL)‐4: component and/or system validation in lab

– CD‐2: TRL‐7: full scale, prototype in relevant environment

6. Align Priorities to Program Appropriations:– Annually, each program develop an integrated capital asset project priority list…to optimize budget resources

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* MSP = Major System Project, defined at greater than $750M

7. Project Funding Documents:– Provide CFO & PM project funding document for all projects

– Operating Expense (OE) projects (non‐line item) funding documents, similar to Project Data Sheet (PDS), will be internal DOE document

8. Capital Asset Project Scope:– Scope determinations adhere to Federal statutes, regulations, policy and guidance – comply with OMB Circular A‐11 and associated Capital Programming Guide

– Achieve a complete and useful asset and mission need– Operational activities that occur solely to support accomplishment of the capital asset scope, between CD‐0 to CD‐4, are to be included in capital asset project TPC

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9. Cost Estimating:– “Shall be developed, maintained, and documented in a manner consistent with methods and the best practices identified in GAO Cost Estimating and Assessment Guide,” and, as applicable, Federal Acquisition Regulations and OMB Circular A‐11

– “OAPM* will update specific cost estimating best practices in DOE Order 413.3B…consistent with these published best practices.”

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* OAPM: Now “PM” – Office of Project Management Oversight and Assessments

10. Planning and Scheduling:– “Projects shall develop and maintain and Integrated Master Schedule (IMS)”

– “IMS shall be developed, maintained, and documented in a manner consistent with methods and the best practices identified in the Planning and Scheduling Excellence Guide (PASEG), published by the National Defense Industrial Association (NDIA) and the GAO Schedule Assessment Guide”

– (PM) “will update specific planning and scheduling best practices in DOE Order 413.3B consistent with these published best practices.”

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• What is an IMS?– GAO Schedule Assessment Guide (Dec 2015): An IMS constitutes a program schedule that includes the entire required scope of effort, including the effort necessary from all government, contractor, and other key parties for a program’s successful execution from start to finish.

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Integrated Master Schedule (IMS)

11. Enhancement of Project Management Controls:– “Department will adopt project management control best practices equivalent to those implemented by DOD”; “includes a DOE version of the DOD IPMR*”

– Enhance PARS II* “in the format specified in the DOE version of the IPMR…to ensure consistency”

– “Deploy improved cost and schedule analysis tools” (in PARS II)

– “Contractors will upload in PARS II the required…data at the lowest element of cost in the specified format”

– PM “will provide this direction in updates to DOE O 413.3B” and Guide

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* IPMR = Integrated Program Management Report; PARS II = Project Assessment and Reporting System II

• Projects > $100M: PM certify• Projects < $100M:

– Contractor use compliant system– Request alternative project controls: PMSO approves

• EIA‐748C* is the contractual requirement– Minimize interpretive documents

• EVMS surveillance:– Annual: contractor conduct self surveillance – provide results

– Projects > $100M: PM will conduct risk‐based, data driven during contract tenure…extensions…as requested

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EVMS* – Equivalent to DOD

* EVMS = Earned Value Management System; EIA – Electronic Industries Alliance

12. Performance Baseline (PB) Breaches:– When PB to be breached – program to “conduct an independent and objective root cause analysis”

– “Will be provided to PME as part of rebaseliningprocess”

– “Corrective actions shall be identified and presented to PME”

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13. Exemptions: (from specific ‘413 provisions)– “Programs present cases to PMRC for an exemption from a specific DOE O 413.3B provision” or other mandatory guide

– With PMRC consensus – PMRC endorses to Under Secretary for consideration

– No consensus – program may elect to forward to CE, after PMRC review, outlining advantages and disadvantages

• Submitted via Department’s formal collaboration process

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The Secretarial Memo Attachment(June 8, 2015)

• Per Secretarial June 8th policy memo– “…to incorporate all recent Secretarial policy memorandums since the last update to the Order.”

• Update would be essentially an Admin Change –verbiage is verbatim from policy memorandums

• Some exceptions:– Per S1 memo, provided more specific guidance on cost estimating, planning and scheduling, and project management controls – “consistent with methods and best practices”

– Corrected office (aka, PM) and position (aka, PME) titles– Updated references and definitions

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Order 413 Impending Limited UpdateAn Administrative Change

• DOE’s efforts…having some success…moving in right direction

• Recom #34: Maintain focus on increasing… capability and imposing greater discipline in implementing DOE project guidance2…there should be more peer reviews and “red teams”...

• Additional recommendations:– Lower CD‐1 revision threshold to 25% (vice 50%)– Applauds (new) full funding policy ($50M) – supports raising even higher

– Improve estimation of contingency– Budget presentations should be more transparent

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CRENEL1 Report (Oct 28, 2015)

1. CRENEL = Commission to Review the Effectiveness of the National Energy Laboratories2. S1 Policy Memos (December 1, 2014 and June 8, 2015)

• DOE agrees that managing effectiveness and efficiency is a critical element. DOE’s objectives in this area…(include): Improve Project Management

• Outlines recent Secretarial enhancements; namely Dec 2014 and Jun 2015 policy memos

• DOE is in the process of revising its project mgmtorder to incorporate these enhancements

• NLDC2 is strongly supportive…agree with Recommendation #34…more emphasis on peer review and red teams (Nov 16, 2015)

• SEAB3 endorses CRENEL Report (Jan 26, 2016)

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CRENEL1 Departmental Response(Report to Congress: February 2016)

1. CRENEL = Commission to Review the Effectiveness of the National Energy Laboratories;2. NLDC = National Laboratory Directors Council; 3. Secretary of Energy Advisory Board

• Project management is not easy• We get intense scrutiny – continuous improvement unending

• Other people’s money: We all are the stewards of the U.S. taxpayer

• Keep charging!

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Closing Thoughts

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Questions?

• Public Law 112‐74, Consolidated Appropriations Act, 2012 – SEC 310. None of the funds made available in this title may be used to approve critical decision‐2 or critical decision‐3 under Department of Energy Order 413.3B, or any successive departmental guidance, for construction projects where the total project cost exceeds $100,000,000, until a separate independent cost estimate has been developed for the project for that critical decision.

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Independent Cost Estimates (ICE) – Law

• Report entitled, “Securing America’s Future: Realizing the Potential of the Department of Energy’s National Laboratories” (October 28, 2015)

– Co‐Chairs: Mr. TJ Glauthier & Dr. Jared Cohon

• Chapter 6, Managing Effectiveness and Efficiency; Section C, Project and Program Management– Recommendation 34: DOE should maintain focus on increasing institutional capability and imposing greater discipline in implementing DOE project guidance, which is currently being incorporated into its DOE directive 413.3B. Expanding on recent DOE efforts, there should be more peer reviews and “red teams” within DOE, among laboratories, other agencies, industry, and academia when appropriate.

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Commission to Review the Effectiveness of the National Energy Laboratories (CRENEL)