New possibilities

Proofing against unforeseen loss and overruns

We hear all too often about major projects in both the public and the private sectors being plagued by substantial overruns. The negative consequences and knock-on effects are serious and can even be commercially fatal to a company.

Incredible as it sounds, but among the several hundred projects which have been correctly analysed according to this principle in the last 25 years, not a single report of failure has been received. Analysis of a future end result is naturally beset with uncertainty. The analysis results therefore show both the average and the standard deviation of the result. This allows those with responsibility for the project to adopt a budget with the appropriate safeguard against overruns. In Norway, where the principle is in widespread use, project budgets are often chosen at an 80% degree of safety. 

Scheduling with the degree of safety you need

Delayed schedules normally cause a raft of problems in terms of project economy, quality and human factors. Analysis of a schedule using the Successive Principle produces a true mean and corresponding standard deviation for the project completion date. Such analysis is usually carried out over two full-day sessions by a select analysis group. Amongst the large number of analyses conducted correctly over the last 25 years there has not yet been a single failure.

A ranked list of optimisation potentials

A substantial benefit of the use of the Successive Principle is a ranked list of the most promising actions for expediting and optimise the project. In most cases, many of these prove to be new to the project management and yet experience has shown that they not only bring forward the actual finish date and /or reduces the costs by a considerable margin but also achieve a general reduction of uncertainty. A Norwegian contractor has been using the Principle for years to avoid loss-making orders; this is the fastest-growing company in Scandinavia and its performance in repeatedly achieving a positive bottom line is head and shoulders above the norm for the sector.

Strategic profitability analyses with aumented accuracy

The Successive Principle is also an effective profitability calculation tool. This is a natural correlative of its proficiency in managing complex uncertainties. One of the earliest examples was the successful analysis of the profitability of the Danish natural gas project for DONG. The profitability of Norwegian offshore projects is another. A more recent example is the annual updating of the Swedish nuclear power plants’ contribution to the national fund for the decommissioning programme.

Identification of new optimisation opportunities

A substantial benfit of any analysis conducted according to the Successive Principle is a ranked list of the most promising opportunities for optimising project performance. Experience shows that exploiting these opportunities, many of which will be new to the project management, adds normally between 2 and 5% value to the project. Among the pracical documentation is a Norwegian contractor who has used the principle for years to avoid loss-making orders. It is the fastest-growing company in Scandinavia in its area and its performance in repeatedly achieving a positive bottom line is head and shoulders above the norm for the sector. Another company was accused for dumping. They however just used this principle to optimise the project. They actually earned their planned positive profit.

Dramatic boost to teambuilding within the project group

When the key people in the project and the rest of the analysis group have been working together for a day or two analysing the causes of uncertainty within the project, their grasp of the project and the roles of the participants as a whole is improved beyond measure. This has proved to be a real “shot in the arm” for the teambuilding process.

The principle is most robust towards lack of knowledge in the early phases

It can be particularly beneficial to perform such analyses in the very early stages of a project, as the procedure is highly robust even with insufficiently detailed data. Because it allows you to be proactive, while having much more freedom to optimise your situation in due time.

Steen Lichtenberg

Dr. Steen Lichtenberg

Lichtenberg & Partners
Baneskellet 16
DK-2950 Vedbæk
Denmark
  • Tlf
  • +45 4586 1048
  • Mail
  • steen (at> lichtenberg.org


New management tools
Proofing against unforeseen cost overruns, scheduling with the safety you need, and a dramatic boost to consensus within the project team.