Learning from the Past, Part 4 – The Importance of Organization and Culture
Category: Thought Leadership
This article is the final installment in a four-part series. In the series, Jim Carter examines the lessons project owners can learn from the ways nuclear construction projects have gone wrong in the past. He shares observations from research and years of experience in nuclear power to help deliver successful deployments of all kinds.
In the previous blog posts in this series, I’ve talked about starting projects off right, keeping them on track, and developing and managing contracts more effectively. In this final post, I’m returning to the place where every project begins: the people. How have things like leadership and organizational structure failed the nuclear industry in the past, and how can they guide the way to a better future?
As usual, I’ll go through some of the challenges we’ve faced in past deployments. Then I’ll share my thoughts on how we can improve on those situations in future projects.
People and Leadership. Consider the number of nuclear power plants under development and construction during the 70s and 80s. Then consider that, during the early 70s, there were very few individuals with experience designing and building a nuclear plant.
Resources were drawn from fossil projects, shipyards, the navy nuclear program, aerospace, and other industries. New graduates and apprentice workers with little or no experience were placed in positions of responsibility — often with limited training and supervision until it was time to review or check the work. What training there was focused on safety and quality control programs – little on technical, project integration, schedule, budget or commercial matters.
The high demand/low supply of resources forced acceptance of below-standard performance. This was better than no performance, but it extracted a toll.
Management and supervisory personnel often were marginally qualified, sometimes exacerbating problems. Good engineers were presumed to be good managers, which wasn’t always the case. Management and supervision, often overwhelmed by day-to-day challenges, couldn’t do on-the-job training or personnel mentoring.
Usually the project results reflected the leadership skills in the team. These issues did not compromise plant safety or technical quality because of the rigorous technical quality controls, inspections, and tests in place, but they did contribute to cost overruns and schedule delays.
Structure. Some organizations were designed around the available people, rather than around the functional needs of the project. Too many (or maybe too few) levels or too wide a span of responsibility often resulted.
Many organizations were well designed, but some involved silos that inhibited coordination between groups. This was evident between corporate entities, such as owner / engineer / constructor / subcontractor. Quality control organizations – while necessarily independent – occasionally were adversarial, contributing to delays and morale issues.
Interface issues also arose within corporate groups, such as engineering (mechanical vs. electrical vs. I&C) and construction (bulk build vs. small components, area vs. system, piping vs electrical).
One of the most noteworthy interface issues was between engineering and construction. Disputes occasionally arose regarding constructability of the design (“How do they expect us to build that?”).
Plant staff was part of a different organization. They sometimes resisted turnover of systems due too very minor and often cosmetic issues, such as the paint on a gauge face, but they frequently had legitimate reasons for their position.
A certain amount of protectionism existed where organizations would conceal internal problems that were important to the overall project.
Communication. In addition to silo structure issues, communication on earlier nuclear projects was weak. Management teams tolerated silence and did not encourage problem identification or even constructive, innovative ideas. Goals and objectives were not uniform across all groups. In most cases, they were never articulated at all.
There was no “one project-one team” mentality. There were no effective, well-defined communication processes. “Dead messenger” syndrome was prevalent, and individuals were reluctant to raise concerns.
In many cases, ineffective management/leadership perpetuated these issues.
Accountability. Nuclear projects of the 70s and 80s suffered from a tolerance for mediocrity that continues to dominate many businesses and projects today. A lack of standards and metrics for group or individual performance precluded fair accountability practices. Scarce resources forced the acceptance of subpar performance. Cultural timidity and reluctant management often didn’t act until extreme situations.
Suggestions for New Nuclear Deployment
People and Leadership. The right people in the proper positions are a significant factor in the success of any project. But even the available experienced resources in the market today cannot support the activity that was underway during the earlier new build period.
The supply of capable and experienced professionals and construction workers is an issue that new nuclear deployment stakeholders need to address seriously. All stakeholders must devote time building a team of highly capable individuals. Individuals with experience during the 70s and 80s boom are rare in the marketplace, so they are valuable. It may be necessary to supplement staff with top-quality advisors who have large nuclear project management or oversight experience.
Building trades personnel are critical to project success. While there are some “travelers,” the largest compliment of craftsmen must come from “local” sources. Training of all project personnel is critical and cannot succeed if it is an afterthought. This is particularly true where certifications are required, such as for welders.
Plans for recruiting, staffing and training cannot be developed too soon. Executing the plan may be difficult and will take time.
Leadership is the most important factor in achieving successful nuclear deployment. Senior members of a project team strongly influence the behavior of all parties. Leaders should be involved as early as possible to set the tone and establish the culture that will drive expectations, accountability and project success.
Many will assert that good leaders are difficult to find and that leaders are born, not made. Both notions are myths. If the stakeholder wants strong leadership, it can be found and developed. Don’t pass on this.
Structure. There is an old saying that says, “Organizations are perfectly designed for the results they get.” All parties on a project have an interest in optimizing the organization.
Considering the impact of organization structure, nuclear stakeholders should weigh the benefit of professional organization design consultants to advise on the pros and cons of structure alternatives. It makes perfect sense for such a review to focus on the integrated project organization and encompass all involved organizations, rather than just one group.
The clarity of responsibilities and decision authority is an important aspect of nuclear project organization design. Duplication of effort and disputes can be avoided if a clear Division of Responsibility (DOR) document is developed and formally accepted by all parties.
There will always be differences of opinion, but they should not result in an impasse that affects project success. Decision authority cannot be so far removed from the work that it’s difficult to obtain. A clear path to the decision maker must be visible and available to all, and there should be no reluctance to traverse the path.
Communication. Today’s nuclear plants have a formal program for stimulating the identification of problems related to plant safety. Nuclear stakeholders should consider similar programs for project performance and commercial matters, as well as technical quality issues. An independent, confidential ombudsman may facilitate such communication. However, strong communicative leadership stimulating an open win-win culture would be strongly preferred.
The Construction Industry Institute (CII) has developed guidelines[i] for establishing mutual goals among all project parties. Nuclear stakeholders should consider whether all or some of these guidelines can apply to their projects. The CII arrangement requires the appropriate culture and senior personnel personality and commitment to work effectively.
Accountability. Large capital projects are not social clubs. They are business enterprises with significant financial exposure. Expectations must be clearly defined and all work groups and personnel must understand expectations and be held accountable for achieving those objectives.
Managers must not operate with a short fuse, but must do what is necessary to ensure performance standards are achieved. Clearly, disciplinary action in today’s world requires compliance with various legal mandates and corporate policies. That cannot be ignored. However, neither can poor performance.
Positive reinforcement and recognition goes a long way in motivating people and should be liberally and fairly applied.
There is a lot at stake in deploying the first wave of standard nuclear plant designs. But, with rigorous planning and proper execution, it can be accomplished very effectively within cost and schedule projections.
However, one doesn’t have to look far in the nuclear industry to find situations where responsible and well-meaning individuals and corporations fail to deliver on a complex project. Two of the many lessons the nuclear industry has learned (or should have learned) from past failures are: a) experience counts and b) accurate, objective project planning and reporting are essential.
The nuclear industry has achieved technical excellence far exceeding any objective expectations. A significant contribution to that excellence is a well-defined and well-executed quality assurance and quality control program. QA/QC personnel operate as independent, objective overseers and inspectors reporting outside the project management organization.
For a multibillion-dollar project, isn’t a similar “Commercial Quality Control”[ii] function in order, for the wide range of activities that affect cost and schedule and other project management functions? Effective, objective observers/advisors who are not encumbered by the fog of daily activity, who understand the problems of the past and the best practices of the present, and who are focused exclusively on project success without personal or company agendas can contribute significantly to the likelihood of project success.
There is precedence. Independent and objective experts, serving as non-adversarial overseers, have made a difference on a number of large capital projects, including nuclear units. Nuclear stakeholders should give serious consideration to Commercial Quality Control.
Jim writes more extensively about this topic in his paper, “Small modular reactor deployment: Learning from the past and the present,” which was published in The Electricity Journal. Download the paper here.