By Jurie Steyn

Introduction

Our team has been working on a coal-bed methane (CBM) to power project in Botswana for many months.  The other day, a colleague asked me just how clean an energy source CBM really is.  A simple enough question, but perhaps not so easy to answer.

The only way to do this, is to compare the environmental and social impacts of CBM to that of other, non-renewable, energy resources.  Even then, one must keep in mind that every energy project is unique in terms of scope, location and impact.  Any direct comparison of energy resources will thus depend on some level of generalisation.

Although there are many different energy resources, I’ve decided to limit my comparison to the following five:

• Coal and coal mining;
• Oil extraction from reservoirs;
• Coal-bed methane (CBM) from coal seams;
• Shale gas (SG) from shale formations; and
• Conventional gas (CG).

In this article, I’ll describe each of these resources briefly, consider some energy predictions, give an overview of the approach followed for the comparison, and present the findings.  Having spent 40 years in the petrochemical and energy industries, I feel confident that I have the experience to attempt a comparison of this nature.

Energy predictions

Global economic growth is partly supported by population growth, but is primarily driven by increasing prosperity in developing economies, led by China and India (BP plc, 2019).  BP plc (2019), in their latest Energy Outlook, predicts a steady growth in primary energy consumption to fuel this growth over the next 20 years, in what they refer to as the Evolving Transition scenario, as shown in Figure 1.

Note: 1 toe = 1 ton oil equivalent = 1 metric ton of oil = 1.4 metric tons of coal = 1270 m³of natural gas = 11.63 megawatt-hour (MWh) = 41.868 gigajoules (GJ).

Figure 1:  Primary energy consumption by fuel (BP plc, 2019)

Coal consumption is expected to decline by 0.1% per annum over the period, with its importance in the global energy system declining to its lowest level since before the industrial revolution.  This is supported by the fact that it is extremely difficult to obtain finance for energy projects based on coal.

BP plc (2019) estimates that renewables and natural gas will account for almost 85% of the growth in primary energy.  Renewable energy is expected to grow at 7.1% per annum and is the fastest growing source of energy.  Natural gas, at 1.7% growth per annum, grows much faster than either oil or coal, and overtakes coal to be the second largest source of global energy by 2040.  Oil consumption is expected to increase at 0.3% per annum over the next 10 to 15 years, before plateauing in the 2030s.

Calculating the percentage, or share, contribution of each or the energy sources of the total energy demand, allows one to generate Figure 2. Figure 2 more clearly shows the actual and anticipated decline in the share of total primary energy of coal and oil. Figure 2 also shows the actual and anticipated rise in the shares of natural gas and renewable energy.  The natural gas share represents the total of conventional gas, coal-bed methane and shale gas.

Figure 2: Shares of total primary energy (BP plc, 2019)

Description of energy resources

Coal and coal mining

Coal is a solid fossil fuel that was formed in several stages as the buried remains of land plants that lived 300 to 400 million years ago were subjected to intense heat and pressure over many millions of years. Coal is mostly carbon (C) but contains small amounts of sulphur (S), which are released into the air as sulphur dioxide (SO₂) when the coal burns. Burning coal also releases large amounts of the greenhouse gas carbon dioxide and trace amounts of mercury and radioactive materials.

Coal can be mined from underground mines using a bord and pillar approach, where pillars of coal are left standing to support the roof structure, or with a continuous miner, where all the coal in the seam is extracted and the roof is permitted to collapse behind the mined-out area.  Coal can also be mined from open-cast mines where the covering layers of topsoil and rock are removed by drag-lines to expose the coal seams for blasting and collection.  An alternative to the latter approach is strip mining, where the coal is sequentially exposed in narrow bands, to reduce the environmental impact.Geological conditions determine the most cost-effective method of mining. 

Mining is one of the most dangerous jobs in the world. Coal miners are exposed to noise and dust and face the dangers of cave-ins and explosions at work.  Note that in this comparison, only the environmental and social impacts of the mining, preparation and storage of coal are considered, not including the downstream impacts of coal utilisation.

Oil extraction from reservoirs

Crude oil is found in underground pockets called reservoirs. Oil slowly seeps out from where it was formed millions of years ago and migrates toward the Earth’s surface. It continues this upward movement until it encounters a layer of rock that is impermeable. The oil then collects in reservoirs, which can be several thousand meters below the surface of the Earth.  Crude oil is frequently found in reservoirs along with natural gas. In the past, natural gas was either burned or allowed to escape into the atmosphere.

Drilling for oil, both on land and at sea, is disruptive to the environment and can destroy natural habitats. Drilling muds are used for the lubrication and cooling of the drill bit and pipe. The muds also remove the cuttings that come from the bottom of the oil well and help prevent blowouts by acting as a sealant. There are different types of drilling muds used in oil drilling operations, but all release toxic chemicals that can affect land and marine life.  Additionally, pipes to gather oil, roads and stations, and other accessory structures necessary for extracting oil compromise even larger portions of habitats. Oil platforms can cause enormous environmental disasters. Problems with the drilling equipment can cause the oil to leak out of the well and into the ocean. Repairing the well hundreds of meters below the ocean is extremely difficult, expensive, and slow. Millions of barrels of oil can spill into the ocean before the well is plugged.

Sulphur is the most common undesirable contaminant of crude oils, because its combustion generates sulphur dioxide, a leading precursor of acid rain. ‘Sour’ oils have more than 2% of sulphur, while ‘sweet’ crude oils have less than 0.5%, with some of them (especially oils from Nigeria, Australia and Indonesia) having less than 0.05% S.

Most oil spills are the result of accidents at oil wells or on the pipelines, ships, trains, and trucks that move oil from wells to refineries. Oil spills contaminate soil and water and may cause devastating explosions and fires. Many governments and industry are developing standards, regulations, and procedures to reduce the potential for accidents and spills and to clean up spills when they occur.

CBM from coal seams

Methane recovered from coal beds is referred to as CBM and is a type of natural gas that is trapped in coal seams. CBM is formed by microbial activity during coalification and early burial of organic rich sediments (biogenic process) and by thermal generation at higher temperatures with increasing depth of burial (thermogenic process). Methane is held in the coal seam by adsorption to the coal, combined with hydrostatic pressure of water in the coal cleats (cleats are natural fractures in coal). Production is accomplished by reducing the water pressure, allowing methane to be released from the cleat faces and micro-pores in the coal.

Coals have moderate intrinsic porosity, yet they can store up to six times more gas than an equivalent volume of sandstone at a similar pressure. Gas-storage capacity is determined primarily by a coal’s rank. Higher-rank coals, bituminous and anthracite, have the greatest potential for methane storage. CBM is extracted by drilling wells into the coal bed of coal seams of up to 500 m deep, that are not economical to mine.

Concerns over CBM production stem from the need to withdraw large volumes of groundwater to decrease coal seam hydrostatic pressure, allowing release of methane gas.  This water may contain high levels of dissolved salts and must be treated. In some cases, the coal seam is stimulated by limited hydraulic fracturing in order to improve methane movement to the well. Surface disturbances, in the form of roads, drilling pads, pipelines and production facilities impact regions where CBM extraction is being developed.  Subsurface effects from typical CBM extraction practices must also be considered. Because of the shallow depth of many CBM basins, the potential exists that well stimulation may result in fractures growing out of the coal seam and affecting freshwater aquifers.

Proper environmental management practices can minimise the effects of CBM production and make it more socially acceptable.  Innovative drilling technologies reduce damage to the surface. Better understanding of the surrounding rock properties improves stimulation practices. These options, plus responsible management of produced water, will lessen the impact of CBM extraction on existing ecosystems.

SG from shale formations

Shale gas (SG) is a form of natural gas found in sedimentary rock, called shale, which is composed of many tiny layers or laminations. Gas yield per well is low compared to conventional gas wells and many more wells are typically required for the same volume of gas production. 

SG is extracted from shale formations of between 1 and 4 km below the earth’s surface.  Because of the low permeability of shale rock, SG wells are drilled horizontally along the shale beds and hydraulic fracturing (fracking) of the shale is always required to liberate the gas and create channels for it to flow through.  Fracking involves the injection of fracking fluid (water, sand, gel, enzyme breakers, surfactants, bactericides, scale inhibitors and other chemicals) at high pressure down and across the horizontally drilled wells.  The pressurised mixture causes the shale to crack.  The fissures so created, are held open by the sand in the fracking fluid. 

Fracking of shale rock requires much larger volumes and chemical loading than the hydraulic stimulation of CBM seams.  The vertical growth of fissures can be up to 100m, compared to 4 to 10m for CBM. However, SG is typically extracted significantly deeper than CBM and, provided the geology and hydrogeology of the region is understood and considered in the fracking process, this need not have any detrimental effects on the surface or the potable water aquifers.

Surface disturbances in the form of roads, drilling pads, pipelines and production facilities, impact regions where SG extraction is being developed. The expected life of an SG well is much shorter than that of a CBM well.

Conventional gas

Natural gas obtained by drilling into gas reserves, is referred to as conventional gas (CG), to distinguish it from CBM or SG (unconventional gases). CG is trapped in porous and permeable geological formations such as sandstone, siltstone, and carbonates beneath impermeable rock. Natural gas was not formed in the rock formations, but has migrated and accumulated there. Conventional natural gas extraction does not require specialized technology and can be accessed from a single vertical well.  It is relatively easy and cheap to produce, as the natural gas flows to the surface unaided by pumps or compressors.

Natural gas deposits are often found near oil deposits, or with oil deposits in the same reservoir. Deeper deposits, formed at higher temperatures and under more pressure, have more natural gas than oil. The deepest deposits can be made up of pure natural gas. Natural gas is primarily methane, but it almost always contains traces of heavier hydrocarbon molecules like ethane, propane, butane and benzene. The non-methane hydrocarbons are generally referred to as ‘natural gas liquids’ (NGL), even though some of them remain gases at room temperature. NGL are valuable commodities and must be extracted, along with other impurities, before the gas is considered ‘pipeline quality.’

The benefit of CG is that it is cleaner burning than other fossil fuels. The combustion of natural gas produces negligible amounts of sulphur, mercury, and particulates. Burning natural gas does produce nitrogen oxides (NOx), which are precursors to smog, but at lower levels than fuels used for motor vehicles.

Approach followed for comparison

Parameters for comparison

The different energy resources were compared using 12 different parameters divided into two categories.  The first category consists of environmental parameters, as follows:

• Air Pollution: This covers dust generation, greenhouse gas emissions during production and contribution to acid rain;
• Water pollution: This considers the potential impact of the operation on surface waters and the effect on water users;
• Groundwater impacts:The potential for cross contamination of water aquifers and the depletion of groundwater sources and its impact on current users;
• Soil pollution: Potential impact of the operations on soil quality and use.  Does it impact the ability of the soil to be used for irrigation and livestock farming;
• Visual impacts: This considers the overall size, longevity, lighting and dust impact of the operation on passers-by;
• Biodiversity: The potential impact of the operation on the surrounding ecosystems, flora and fauna.

The second category consists of social, and socio-economic parameters, as follows:

• Health risks: Are health risks to the workers and community due to the impacts the operation, identified and properly understood, and can these be mitigated;
• Noise impact: Is noise from the operation expected to be a nuisance to the surrounding communities
• Worker safety: What is the safety performance of similar operations elsewhere in terms of worker fatalities and disabling injuries;
• Cultural impacts: What is the potential of the operation to impact on areas of high cultural significance to indigenous people;
• Infrastructure: What infrastructure (roads, schools, clinics, fire station, etc.) is required to support the operation and what will it contribute to the community; and
• Job creation: How many direct and indirect jobs will result from the operation and how sustainable is it.  In this case, more is better.

Forced ranking

An approach of forced ranking was used, whereby the different energy sources were ranked from best to worst for each of the 12 parameters described above. The best performer for each parameter was given a score of one and the worst performer a score of five.  Those in between, were given scores of two, three and four, depending on their rank.

In exceptional cases, where the impact of two, or more, of the sources were considered to have comparable impacts, the individual scores in question were totalised and averaged.  In other words, if energy sources ranked in positions two and three were considered to have almost identical impacts, each would be allocated a score of 2,5.

Elimination of bias

In any comparison, the elimination of bias is essential.  One way to reduce bias is to evaluate the different options against many parameters, as was done with the 12 parameters described above. 

Another way is to use several assessors, say four to six, when doing the evaluation, and reaching consensus on the ranking.  However, in this case it was not done and therefore I’m the only one to blame if my findings do not correspond with your opinions.  I have tried to be as fair as possible in ranking the energy sources.

Discussion of findings

The results of the evaluation of the energy sources against the environmental parameters are presented in Figure 3 as a 3-D column chart.  Remember that the impacts are not given absolute values, but results based on the ranking process.

Figure 3: Environmental impact assessment for various energy sources

From Figure 3, it is obvious that coal and oil score badly in terms of impact on the environment.  This is followed by natural gas from different sources, with conventional gas assessed as having the least impact.  CBM has a lower environmental impact for most parameters than SG, but because it is accompanied by high yields of mostly saline water from relatively shallow wells, the impact on the water and soil could be greater.

The results of the evaluation of the energy sources against the social and socio-economic parameters are presented in Figure 4. From Figure 4, the picture is not so clear.  Coal and oil again score the highest for most of the parameters considered.  However, in terms of number of jobs created and associated infrastructure requirements, they score the lowest, which means they require more personnel (a positive) and infrastructure.  CG is considered more dangerous than CBM and SG, because of the higher operating pressure and the known cases of blowouts.

The cumulative impacts of the energy sources are presented in Figure 5. In this case, the total score for the six environmental parameters for each of the energy sources was calculated and plotted. Similarly, for the six social parameters.  Lastly, the total score as shown by the grey column in Figure 5 reflect the totals for the environmental impacts’ score plus the social impacts’ score.  Coal is shown to be the least desirable source, followed by oil, SG, CBM, and CG.

Figure 4: Social impact comparison for various energy resources

Figure 5: Cumulative impacts of energy sources

Concluding remarks

Natural gas remains the energy source with the lowest negative social and environmental impacts.  Therefore, natural gas, is estimated to grow at 1.7% per annum, i.e. much faster than either oil or coal, and overtakes coal to be the second largest source of global energy by 2040 (BP plc, 2019).  Natural gas is a combination of CG, CBM and SG.  CG recovery is the overall winner in this comparison with the lowest social and environmental impacts.  In the second position we have CBM, followed by SG.  Even though SG is normally recovered at greater depths than CBM, the extent of fracking required to release the methane in shale is significantly more extensive.

Next in line is oil recovery from geological reservoirs. This is understandable when one considers the oil-related environmental disasters we have witnessed.  Associated gas is also continuously flared from drilling operations.  However, low yielding (i.e. nearly emptied) oil reservoirs can be used as a suitable geological formation for storage of carbon dioxide.  The action of injecting carbon dioxide into a low yielding well will temporarily boost oil production from such a reservoir.

It comes as no surprise that coal is the energy source with the greatest negative impact on the environment.  In terms of negative social impact, it also rates the highest, but by a very small margin.  This result helps us understand the current furore over coal and the difficulty to obtain finance for coal-based projects.

References

BP plc, 2019, BP energy outlook, 2019 edition.  Electronic document available from https://www.bp.com/en/global/corporate/news-and-insights/reports-and-publications.html.Downloaded on 10 April 2019.

By Jurie Steyn

Introduction

All projects are risky ventures: the larger and more complex the project, the higher the risk of an unsuccessful outcome.  It is generally accepted that a critical success factor for any megaproject (projects > $1 billion) is the presence and participation of an effective project sponsor (Barshop, 2016).  In fact, the Project Management Institute reports that the top driver of projects meeting their original business goals is an actively engaged executive sponsor (PMI, 2018).

According to the Association for Project Management (APM, 2006), the project sponsor is the primary risk taker and owner of the project’s business case.  The sponsor is tasked with ensuring that all benefits of a project are realised by the organisation’s top management.   The sponsor chairs the project steering committee, ensures that risks are properly managed, that obstacles faced by the project are dealt with, and is the person to whom the project manager is accountable. The project sponsor focuses on project effectiveness, while the project manager focuses on project efficiency (APM, 2006).

An average of 38% of projects do not have active executive sponsorship, which highlights the need and opportunity for executive leaders to be more involved in the realisation of strategy (PMI, 2018).  Barshop (2016) maintains that the main reason why companies lacked strong project sponsorship was that senior management of these companies did not understand the project sponsor’s role in project governance.

In this article, we consider several scenarios for the executive sponsorship of projects and suggest ways to deal with problematic or absent sponsors.

Four scenarios

Several books (Englund & Bucero, 2006; West, 2010), and many more articles (Christenson & Christenson, 2010; Schibi & Lee, 2016), have been published on project sponsorship which describe personality traits, required training, as well as the role and responsibilities of project sponsors.  Whilst it is true that an effective sponsor is essential for project success, it is also true that not all sponsors are equally effective.

Four scenarios regarding the effectiveness and availability of project sponsors are described, with ways to deal with potential problem. The scenarios are described in some detail in Figure 1.

Figure 1:  Four sponsor scenarios

The four sponsor scenarios are:

• Effective sponsor: The effective sponsor knows what to do and has the executive power and resources to do it;
• Ineffective sponsor: The ineffective sponsor can have gaps in his training and/or may be at a too low level in the organisation;
• Missing sponsor: The missing sponsor has either left the project for other responsibilities or has not been appointed yet; and
• Reluctant sponsor: The reluctant sponsor may meet all the requirements, but doesn’t want to accept the responsibility.

Each of these scenarios is discussed in more detail in the following sections. 

The effective sponsor

According to West (2015), the value of an effective project sponsor is the product of the value of the project to the organisation, and the role that the project sponsor plays in a successful project.  He states that above all else, it is the effectiveness of the project sponsor that is critical to a successful project.

Truly effective sponsors are hard to find and should be nurtured by their owner organisations and appreciated by the project manager and project team.  The effective sponsor will be of appropriate seniority in the organisation, work closely with and mentor the project manager, understand the basics of project management, negotiate support and resources for the project, and be able to make decisions based on facts. Depending on the size and complexity of the projects, the effective project sponsor may be able to sponsor more than one project. In most organisations the project sponsor will have other responsibilities which may lead to time constraints. The effective sponsor will be able to manage his/her time properly and obtain assistance when required.

An effective sponsor has some key requirements that must be met by the project management team.  They have a need to feel involved in the project process, require a constant stream of timely information, must be able to trust the project manager (and vice versa!), need help with managing their project commitments, and assistance with the preparation for meetings with stakeholders.

An effective sponsor will also be able to stop a project when there is no real justification to proceed, in other words when the intended business objectives are no longer achievable.  Stopping a project in the front-end loading phase, when there is no longer any justification to proceed, does not constitute a failure, but rather shows strength of character and a keen business sense on the part of the sponsor and his project management team.

The ineffective sponsor

As mentioned before, an effective sponsor is essential for successfully completing a megaproject.  The direct corollary is that an ineffective sponsor greatly increases the probability of an unsuccessful project in the form of schedule and cost overruns, and not delivering on the organisation’s strategic objectives.

Project sponsors may be ineffective for several reasons, some of which are listed below:

• Uncertainty on the actual role of the project sponsor on a project;
• Insufficient training in, or experience with, project sponsorship;
• The sponsor may be unwilling/unable to make decisions;
• The sponsor is at too low a level in the organisation to be effective;
• Too busy with other management obligations and not available to project team;
• Deliberately wasting time on less important matters to avoid sponsor responsibilities;
• Preoccupation with personal matters which takes focus off the project; and
• The sponsor may be reluctant to take on the role of sponsor (more later).

Some of these causes are relatively simple to overcome.  For instance, a sponsor who is insufficiently trained on the ‘why’ and the ‘how’ of sponsorship, and is willing to learn, can be trained.  Training can involve formal courses, or on-the-job training by other experienced sponsors.  Very experienced project managers can also lead and assist the ‘inexperienced’ sponsor, as illustrated in Figure 2.

Figure 2:  Assisting the ineffective sponsor (Adapted from van Heerden et al, 2015)

Sponsors who are unwilling to make decisions, may also be too low in the management hierarchy.  The project manager can attempt to deal with the problem by using a formal scope management procedure and taking the inexperienced sponsor through the motivation in detail.  If this does not deliver the desired results, or the sponsor is at too low a level to have an impact, the project manager will have to approach a trusted member of the organisation’s management team to discuss the concern and the potential negative consequences on the project.

Sponsors with insufficient time to deal with the project related matters can be addressed by discussions between sponsor and project manager.  If the reason is that the sponsor wants to remain in his/her comfort zone, training may be the answer.  If not, the project manager can offer to temporarily take on some of the sponsor responsibilities while the sponsor delegates some of the other responsibilities.  Sponsors who are preoccupied with personal problems can transfer some of the sponsorship responsibilities to the project manager or other subordinates. 

Lastly, sponsors who are reluctant to take on the role of sponsor will be discussed under a separate heading.

The missing sponsor

‘Missing’ sponsors are unavailable to meet project responsibilities (sometimes right from the start, or at some later point in the project) because nobody has been appointed to the position or they are otherwise occupied.  Sponsors can be ‘missing’ from the sponsorship function for any of the following reasons:

• No sponsor has yet been appointed for the project;
• An existing sponsor was moved or promoted to another function;
• An ineffective or reluctant sponsor was removed from the position;
• Top management does not consider it necessary to appoint a sponsor;
• Medical or family emergencies, resulting in time away from the office; and
• The sponsor may be overloaded with other projects and/or responsibilities.

There are ways to overcome the gap left by a ‘missing’ sponsor, although it places an additional burden on the owner project management team.  Several members of the project management team can act as project sponsor, as shown in Figure 3.

Figure 3:  Filling the gap of a missing sponsor (Adapted from van Heerden et al, 2015)

There are typically four key players in the project management team of any megaproject, namely the project manager, the business manager, the operations manager and the engineering manager.  Any one of these should be able to act as project sponsor.  When the sponsor post is expected to remain vacant for an extended period, the sponsor responsibilities can be divided up amongst the different managers.  Alternatively, each of the managers in the project team can rotate to the position of acting project sponsor for a specific period, say a month at a time.  Keep in mind that an acting sponsor in the place of a ‘missing’ sponsor can keep the project moving along, but can never be as effective as a dedicated and committed sponsor.

The structure for a programme is depicted in Figure 4, with similar acting arrangements as before.  Programmes are typically larger, more complex and subject to more uncertainty than projects, which implies that the need for a full-time sponsor is even greater if a successful programme is desired.

Figure 4:  The elusive sponsor of a programme (Adapted from van Heerden et al, 2015)

The reluctant sponsor

A reluctant sponsor, as the name implies, is a person who does not want to be in that position of responsibility.  Perkins (2015) refers to them as resistant sponsors, and states that resistant sponsors may be blatant or passive-aggressive in their efforts to block progress: indeed, a very dangerous situation.  In my opinion, having a reluctant project sponsor on board is far worse than having an ineffective or ‘missing’ sponsor.

Sponsors can be referred to as ‘reluctant’ for any of the following reasons:

• They consider the project to be a career-limiting disaster;
• They don’t wish to be tied down for the multi-year lifespan of the project;
• They anticipate that the project will diminish their current responsibilities;
• The project proposal was not their preferred option; and
• They want to fulfil their prophecy that the project will be unsuccessful.

Reluctant sponsors can have very negative effects on project success and can demoralise project management teams (Perkins, 2015). This can lead to project team members leaving the project, rather than work in a toxic environment.

When dealing with a reluctant sponsor, the following approaches can be considered (Perkins, 2015):

• Remain professional: Don’t resort to personal attacks on a reluctant sponsor. Rather blame the work processes and seek or offer solutions;
• Keep the reluctant sponsor informed: Discuss matters requiring difficult decisions with the reluctant sponsor prior to formal meetings to avoid time being wasted during project steering committee meetings;
• Document thoroughly: Project management practice requires the team to document agreements, motivate change requests, keep a risk register, list and follow up on action items, etc. Ensure that all documentation is timely and thorough with a reluctant sponsor;
• Call in supporters: Ask high-level supporters of the project in the organisation to highlight the project’s value. Stubborn reluctant sponsors will find it hard to continue destructive behaviour in the face of continuous enterprise-wide support;
• Informal engagement: Ask a senior member of the organisation’s management team, respected by the reluctant sponsor, to discuss the project with him/her. If the discussion is penetrating enough, reluctant sponsors may modify their destructive behaviour; and
• Auto-ignition: Let reluctant sponsors destroy themselves through their actions. This is a risky, last-ditch effort, based on the hope that the rest of the organisation will recognise the reluctant sponsors’ poor decisions, and remove them from the sponsorship responsibilities.

Concluding remarks

Ashkenas (2016) states that the project sponsor should be the first appointment to be made when steps are taken to implement corporate strategy.  Before launching a new project, the sponsor and the project leader should meet to set, clarify, and align expectations. This is particularly important if the sponsor was not actively involved in the project initiation phase, and may not understand the background and risks.

Several authors have expressed the concern that due to the growing number of megaprojects in the world, good project sponsors are becoming increasingly difficult to find in the open market or inside the organisation (Merrow, 2011; Barshop, 2016).  Organisations are encouraged to train their executives for future roles as project sponsors.  If your company has a need for project sponsorship training, do not hesitate to contact us at OTC.

References

APM (Association for Project Management), 2006, APM Body of knowledge, 5^th edition. Association for Project Management, High Wycombe, Buckinghamshire.

Ashkenas, R., 2016, Before starting a project, get your sponsor on board. Available from https://www.forbes.com/sites/ronashkenas/2016/05/09/before-starting-a-project-get-your-sponsor-on-board/#127c26f779c9. Accessed18 February 2019.

Barshop, P., 2016, Capital projects: what every executive needs to know to avoid costly mistakes and make major investments pay off. John Wiley & Sons, Inc., Hoboken, New Jersey.

Christenson, D. & Christenson, J. 2010, Fundamentals of project sponsorship. Paper presented at PMI® Global Congress 2010, in Washington, DC. Project Management Institute.

Englund, R.L. & Bucero, A., 2006, Project sponsorship: achieving management commitment for project success., Jossey-Bass, San Francisco, CA.

Merrow, E.W., 2011, Industrial megaprojects: concepts, strategies, and practices for success., John Wiley & Sons, Inc., Hoboken, New Jersey.

Perkins, B., 2015, 6 ways to cope with a resistant sponsor.  Available from https://www.computerworld.com/article/2883748/6-ways-to-cope-with-a-resistant-sponsor.html. Accessed on 14 February 2019.

PMI (Project Management Institute), 2018, 2018 Pulse of the profession. Project Management Institute, Philadelphia, PA.

Schibi, O. & Lee, C., 2015, Project sponsorship: senior management’s role in the successful outcome of projects. Paper presented at PMI® Global Congress 2015, EMEA, London, England. Project Management Institute.

van Heerden, F.J., Steyn, J.W. & van der Walt, D., 2015, Programme management for owner teams: a practical guide to what you need to know., OTC Publications, Vaalpark, RSA. Available from Amazon.

West, D., 2010, Project sponsorship: an essential guide for those sponsoring projects within their organizations., Gower Publishing Limited, Farnham, Surrey.

By Jurie Steyn

Introduction

This article was triggered by four recent events, which caused me to reflect on what the future holds for projects.  These events are:

• A thought-provoking Insight Article on the future of project controls (Mattheys, 2018);
• The Insight Article on the role and responsibilities of a project management office (PMO) (Taljaard, 2018);
• Cenpower Generation’s recent termination of its contract with the construction company, Group Five, to complete the $410m Kpone power station in Tema, Ghana (Claassen, 2018); and
• A second down-scaling in a period of four years of the engineering and project management departments at a petrochemicals company where I spent most of my working career.

Literature is freely available on future trends in project management and what would be expected from future project managers (Alexander, 2018; Evamy, 2017; Jordan, 2017; Schoper, Gemünden & Nguyen, 2016).  However, discussions on the widening of the trust gap and its impact on project success is extremely limited.

Keep in mind that I’m based in South Africa, and my observations might be unique to Africa and third world countries.

The trust gap

Independent Project Analysis (IPA) have been analysing megaprojects for over 30 years to determine the requirements for project success and to help their customers create and use capital assets more efficiently.  They’ve highlighted the crucial role that a strong, fully staffed, owner project management team, with the appropriate work and governance processes in place, plays in delivering successful projects (Merrow, 2011). It is the owner project management team that typically leads the front-end loading phase of projects.  Merrow (2011) emphasises the extraordinary degree of trust, cooperation and communication required between the owner organisation, as represented by the project sponsor, and the owner project management team.

van Heerden, Steyn and van der Walt (2015) build on these principles and propose a preferred structure for theowner project management team, as shown in Figure 1.  The owner project management team is shown as a collection of four blue triangles, representing business management, project management, engineering and operations, arranged in a larger triangle.  Below this, and shown as a red box, we have contracted in functional services, technology suppliers, and engineering and project management contractors.

Figure 1:  Trust gap between owner PMT and contractors(Adapted from van Heerden, et al, 2015)

I refer to the interface between the owner project management team and contractors, suppliers and service providers, i.e. the gap between the blue triangles and the red box in Figure 1, as the trust gap.  Obviously, the working relationship between these parties, responsibilities and deliverables must be described in numerous carefully worded contracts, but significant trust is essential for project success.

Before getting to the factors that contribute to a widening trust gap, let us first consider the different roles and perspectives of the owner organisation and the owner project management team on the one hand, and the contractors on the other.

Different roles and perspectives for owners and contractors

Owner organisations, and specifically the owner project team, have a different role and perspective than the contractors in projects.  This difference stems from the fact that owner organisations implement projects to achieve strategic business objectives, whereas contractors only focus on delivering projects which meet the agreed performance standards, on time and within budget.  A summary of the different objectives, roles and perspectives of owners and contractors is given in Figure 2.

Figure 2: Different perspectives for owners and contractors

Project scope changes can lead to cost overruns and schedule slip and should be diligently managed to that which can result in significant, demonstrated improvement to the project, or that which is essential to achieve safety and compliance objectives.  However, from the point of view of an engineering contractor, scope changes could mean thousands of extra, recoverable, engineering hours.  Scope changes can also be used as an easy excuse for schedule slip by contractors.

Current trends at owner organisations

Owner organisations can be public companies, private companies and state-owned enterprises (SOE). Owner organisations typically own and operate the production facilities and/or infrastructure delivered by projects.

Over the past number of years, we’ve seen a gradual eating away at the numbers and experience base of primarily the engineering and project management departments in owner organisations.  Reasons for this are plentiful, and range from the inability to raise capital for projects, to poor strategic vision for the company.  Restructuring of top management and personnel cuts in the operations department also result in fewer individuals in these areas being available to focus on capital projects. Business and operations management are important stakeholders in any project, and play a significant role in the commissioning of facilities and the running of a sustainable business.  This situation is reflected in Figure 3 as mice eating away at the underbelly of primarily the engineering and project management departments, and so widening the trust gap.

Figure 3:  Widening of the trust gap (Adapted from van Heerden, et al, 2015)

In SOE, most top positions are political appointments.  In South Africa and in the Gupta state-capture era, important project and tender decisions were often made by individuals with little or no project management or engineering background.  The primary focus seemed to be self-enrichment, and not project success. There are many instances where SOE’s ignored their own tender regulations when awarding contracts, for example, South African railways officials imported brand new locomotives from Europe worth hundreds of millions of rand, despite explicit warnings that the trains are not suited for local rail lines (Myburgh, 2015). 

In South Africa, we have the additional burden of complying with Broad-Based Black Economic Empowerment (BBBEE) requirements, with the implication that individuals with extensive experience are made redundant, or are replaced with candidates with limited experience.  Project management and engineering departments thus not only become smaller, but tend to be staffed with less experienced personnel.

Trends at engineering and PM companies

Referring to Figure 3, it is obvious that the widening of the trust gap is not only as a result of personnel cutbacks, loss of project and engineering experience, and greed from the side of the owner organisation.

The trust gap can also open from the side of contractors, suppliers and service providers, as illustrated by the erosion of the red box in Figure 3.  Some of the factors that can contribute to this erosion of trust are listed below:

• Financial standing:Construction companies in South Africa are in a difficult situation at present and personnel cutbacks are frequent.  Companies are downsizing and/or put up for sale;
• Bribery: Attempts at bribery of technology suppliers, service providers and contractors by personnel from state or owner organisations prior to the signing of a contract or during the execution thereof can lead to strained relationships and would impact the chance of project success;
• Communication:Unclear project objectives and charter, from an immature or understaffed owner project management team, combined with ad hoc and incomplete communication will erode trust;
• Interface management: Insufficient effort or resources for proper client liaison by contractors and service providers, most likely due to in-house cost cutting at the contractors and service providers;
• Relationships: Soured relationships following a history of schedule and cost overruns on previous projects for same owner organisation.  This can also be a concern based on underperforming end-products from previous projects and outstanding claims;
• Coordination:No experienced managing contractor to keep a project on track, despite poor decision-making from the owner project management team.  This is a certain recipe for disaster; and
• Incompetence:Disregard of owner company tender procedures may lead to the selection of incompetent contractors and service providers, often with catastrophic results.

Impact of a widening trust gap

IPA measure five dimensions of project effectiveness in their assessments to determine whether a project is a success, or not (Merrow, 2011). If a project surpasses the threshold limit for failure on any one of these dimensions, the project is considered a failure.  The five dimensions are cost overruns (>25%), cost competitiveness (>25%), schedule slip (>25%), schedule competitiveness (>50%) and production vs. plan in year 2 of operation.  Project success is defined as a lack of failure.

As the trust gap widens, the probability of remaining below the threshold limit for failure on any of these dimensions decreases, i.e. the wider the trust gap, the larger the likelihood of an unsuccessful project. 

Closing the trust gap

Given the state of the South African economy and political uncertainties, the question is whether the trust gap can be reduced to improve the likelihood of project success.  Two options immediately spring to mind:

• Eliminate corruption: Elimination of corruption in specifically SOE should receive attention at the highest level and proper governance should be instituted to ensure that tender procedures are always followed.  The decision of which contractor to employ should always be made by a team of professionals with the necessary experience and knowledge, and using a predetermined decision matrix; and
• Use external resources: The southern African market is awash with highly competent engineers and project managers, many of whom were put on early retirement due to the factors described in previous sections.  Many of them are available as consultants to fill critical vacancies on owner project teams, especially during the early project stages. These are people who understand the business requirements and can translate strategic business objectives into clear project objectives.

The future of the Project Management Office (PMO)

Taljaard (2018) describes the roles and responsibilities of the PMO very clearly in his recent article.  Based on the trends described above, it is obvious that owner organisations must make a fundamental mind-shift where it involves project implementation.  Although all the PMO functions remain relevant, I forecast a downscaling of some of the functions, and a possible sharing of some of the PMO roles, like project portfolio management and optimisation by other senior business leaders.

I forecast a growth in the number and utilisation of owner project team support professionals.  Lastly, the role of the owner project sponsor will become increasingly important.  For large and complex projects, the project sponsor is seen as an executive, full-time position by competent individuals who have been trained as sponsors, understand the business objectives and can make decisions based on facts

Figure 4 is summary of my view of the future of the PMO and the project sponsor.

Figure 4:  The future of the PMO

Closing remarks

The widening of the trust gap is very visible in southern Africa and may be applicable in most third world countries.  The wider the trust gap, the lower the probability of project success… Fortunately, the widening can be curtailed by improved governance and the elimination of corruption, as well as the use of freelance project management and engineering professionals.

OTC, and other consulting groups like us, should see an increase in the demand for our services, once owner organisations make a mind-shift in their approach to projects.

References

Alexander, M., 2018, 5 Project management trends to watch in 2018. Available from https://www.techrepublic.com/article/5-project-management-trends-to-watch-in-2018/.  Accessed on 28 December 2018.

Claassen, L., 2018, Ghanaian power firm ends troubled contract with Group Five.  Published in BusinessDay of 2 December 2018. Available from https://www.businesslive.co.za/bd/companies/energy/2018-12-02-ghanaian-power-company-ends-troubled-contract-with-group-five/. Accessed on 28 December 2018.

Evamy, M. (ed),2017, Future of project management., Publication by the Association of Project Management, Arup and The Bartlett School of Construction and Project Management at UCL.

Jordan, A., 2017, The technology-driven future of project management: capitalizing on the potential changes and opportunities.Publication by Oracle, projectmanagement.com and Project Management Institute.

Mattheys, K., 2018, Insight Article 052: Disrupting project controls – fast forward 20 years.  Available from https://www.ownerteamconsult.com/publications/  Accessed on 14 December 2018.

Merrow, E.W.,2011, Industrial megaprojects: concepts, strategies, and practices for success., John Wiley & Sons, Inc., Hoboken, New Jersey.

Myburgh, P-L., 2015, SA’s R600 million train blunder.Available from https://www.news24.com/SouthAfrica/News/SAs-R600-million-train-blunder-20150704.  Accessed on 28 December 2018.

Schoper, Y-G., Gemünden, H-G. & Nguyen, N.M., 2016, Fifteen future trends for Project Management in 2025.Published in the Proceedings of the International Expert Seminar in Zurich in February 2016 on Future Trends in Project, Programme and Portfolio Management.

Taljaard, J.J., 2018, Insight Article 054: The project management office (PMO).  Available from https://www.ownerteamconsult.com/publications/  Accessed on 14 December 2018.

van Heerden, F.J., Steyn, J.W. & van der Walt, D.,2015, Programme management for owner teams: a practical guide to what you need to know., OTC Publications, Vaalpark, RSA. Available from Amazon.