mhm. Good afternoon, ladies and gentlemen. It
is with great anticipation and pride that we are waiting
for this occasion every year. And so it is
with distinct pleasure that I welcome you to this Virginia
Tech tradition. The facility Distinguished lecture. I'm Chairman
Delagarza and I have the honor of serving as the
Vassiliou professor of construction, engineering and management. Before
we begin, I like to review some safety and
logistic details. There are four exits in this room
. Two exits on the back, one on each
side and two exits on the front, one on
each side. At the end of the lecture,
I invite each of you to join us at a
reception downstairs on the first floor of Torgersen Hall.
I'd like to now continue these proceedings by thanking the
vessel. Your family, who's endowment has made this
lecture series possible. Thank you for all that you
do to support us, our students and our program
. Now, I'd like to recognize some very special
guests we have among us Diane Bradley, who for
15 years was the executive assistant to leave Basilio and
his family. I'm glad that you were able to
make it there. Thank you for coming. I
also would like to recognize, uh, some individuals
who have very significant responsibilities for leadership. Hill,
Virginia Tech, The department head for the civil and
environmental engineering department. Dr. Sam is stirring the
director of the Myers Lawson School of Construction, Dr
Brian Kleiner, and the department head for the building
Construction department, Dr Ivan Bolado. Thank you all
very much for coming and more importantly, for greasing
the compass to keep this great university moving in the
right direction. A very important component of the Vasily
Endowment is the funding of scholarships and fellowships. Earlier
this summer, through a very competitive process, we
selected 10 Vassiliou undergrad scholars into Vassiliou Graduate fellows and
I would like to introduce them to you. At
this point. Drew Baldridge from Oh, Sago,
Illinois. Enjoy is the one on the right,
by the way, enjoy snowboarding, soccer and hiking
. After his BS in civil in construction, engineering
and management, he will get his M B A
and would like to work on large construction projects.
Derek Davis, also the right from Virginia Beach,
enjoys sports traveling and also would like to obtain his
N b A and work on International on international construction
projects. Marcel Dupre, from Saratoga, Florida,
enjoys rowing, fishing, hot air ballooning, and
he would also like to work for a large construction
management firm. Marcel is here with his parents,
who came all the way from Florida just to be
with him today. Thank you very much for coming
. Jose Guevara, from Cucuta, Colombia, enjoys
hiking, running and reading. He's in the PhD
program and would like to pursue a career focusing on
public private partnerships. Alec Lexus from Richmond, Virginia
, the second from the left, enjoy swimming,
rock climbing and kayaking. Uh, he's getting a
minor in green engineering and would like to work on
projects where the emphasis is on renewable energy. This
Vincent Mayberry from Roseburg, Virginia, enjoys target shooting
, restoring all furniture and sports. Uh, he's
getting his BS in civil engineering and his master's degree
in construction, engineering and management. Angela Neiman from
Mechanical, Mechanicsville, Virginia. NGOs Enjoys dressing up
, uh, snowboarding basketball, uh, and would
like to obtain what she will get her civil engineering
degree and then become a professional engineer. Uh,
she wants to use her degree to raise the standard
of living among those in rural poverty. Greg Pope
from Raleigh, North Carolina uh, is fascinated and
very happy about railroads. Uh, he also watches
the Red Sox. UH, he will obtain his
civil engineering degree and work in the railroad industry.
Kayla Sykes, from Richmond, Virginia, enjoys playing
the guitar, kayaking and watching hockey football. She's
getting both a master's degree while her BS in civil
engineering and her master's degree also in civil engineering.
And we like to focus her career on transportation projects
. Robin Willis from Blacksburg, Virginia. She didn't
have to travel very far. Uh, enjoys working
with K through 12 students, uh, teaching them
the magic of concrete. She likes Zumba and reading
. She will obtain her BS in civil engineering.
Uh, she will then focus on designing structures and
highways. Andres Sakowicz from San Jose, Costa Rica
, enjoys playing and watching sports, traveling and cycling
and playing with the big toys. I guess,
uh, he will get both his Bs in civil
engineering and his master's degree in construction, engineering and
management. Joshua Silky from Winchester, Virginia. His
hobbies include Campus Crusade for Christ Fitness and also targets
during and, I suppose, walking on Bridges.
He will obtain his master's degree and PhD license and
focus on infrastructure projects. Please join me in congratulating
these outstanding students. Yeah, yeah, Now to
our guest of honor. Bob Ferrero is the senior
vice president for floor corporation, responsible for strategy for
the firm's three major business lines infrastructure, with an
emphasis in public private partnerships, mining and industrial.
Prior to joining floor, he was the chairman of
Parsons Brinckerhoff. He's a prolific outer. He has
written four books. Strategic Program Management, the Giga
Factor, Topics in Strategic Program Management and the Application
of Life Cycle analysis in the capital Asset industries.
In addition, he has over 450 other presentations and
papers. I think you would agree with me that
he will qualify for tenure at Virginia Tech. He's
a member of the A C E Industry Leaders Council
and the National Academy of Construction, and he's also
a fellow of the Construction Management Association of America.
He served as one of three U S presidential appointees
to the Asia Pacific Economic Cooperation Business Advisory Council.
Most recently, he has served as floors executive sponsor
on the World Trade Center on the Abu Dhabi Public
Transportation Program and on the short crossing program. Program
in to Ladies and gentlemen, please Welcome floor Senior
Vice President and the 2013 Vassiliou Distinguished lecturer Bob Creative
. No. Yeah, yeah. While we're doing
this microphone change. Uh, the young, good
looking guy was my son, not me and the
other the other comment. I'm just going to make
on the Vassiliou felt by the way, uh,
congratulations again to you guys. Okay, I do
remember being young. You can tell by the disco
suit it was in a very different error. So
it's coming back. I don't know if I wanted
to come back. So anyway, so today,
tonight I'm going to talk about black holes, black
swans and black magic, and I'm sure you'll agree
with me. This is the typical subject of every
lecture you receive here at Virginia Tech. So let
me let me kind of begin. I engineer Tonight's
lecture will not be reprised of the 2000 and four
film I robot, but maybe it provides a good
analog for the challenges and duties that today's engineer faces
in executing increasingly challenging projects in an increasingly uncertain environment
. I robot is set in 2035 only a little
over 20 years from now, and maybe not as
much science fiction as the writers of the original screenplay
thought in 1995. In the movie Anthropomorphic robots enjoy
widespread use as servants for various public services. They
are programmed with the three laws of robotics directives.
So to set the stage, let me review those
three laws substituting Engineer for robots. Yeah, the
first lot. An engineer must never harm a human
being or through inaction, allow any harm to come
to a human. The second law, an engineer
, must obey the orders given to them by human
beings. Except where such orders violate the first law
and the third Law, an engineer must protect its
own existence unless this violates the first or second laws
. So when first conceived by Isaac Asimov, North
Boston University biochemist, these laws might have described the
engineers he saw being trained across the Charles River.
But even as of North, with his commitment to
science and so called hard science fiction, which we
might today call hard science prediction, he most valued
his role as president of the American Humanist Association.
As a humanist, he embraced human reason, ethics
social justice and philosophical naturalism, This latter element founded
on empirical investigation and reliance on material properties, which
are the hallmark of engineers. So that's where my
talk tonight will begin on the human element of project
conception, development, execution and utilization. It is
the need to better consider and address our needs and
behaviors as human beings, which so often fall short
, creating what we might describe as the as the
black hole of project execution. Recognizing understanding and importantly
, addressing and, if possible, constraining this black
hole are central to the success or failure of project
execution. These black holes undermine the foundations required in
our project universe and if not recognize and address,
they grow over time, consuming all of our good
works as they plunge uncontrollably into this abyss. So
what are black holes? How are they created?
And importantly, what can we do to avoid or
limit their destructive effects in physics? A black hole
is a region of space time where gravity prevents anything
, including light from escaping in the universe of projects
. The analogous region is one which prevents a strongly
founded project from being initiated. These black holes may
manifest themselves as weak or absent project definition processes with
well defined stage gates that ensure a well founded project
. Alternatively, they may be masked by perception of
a well founded project, only to discover later on
that the fundamental assumptions underpinning the project suffer from the
so called planning fallacy. So this brings me to
my first admonishment on the challenges we increasingly face in
project execution, namely, the need to ensure that
our projects are well founded. This requires both a
changed perspective as well as augmented tools. So let
me spend a few minutes discussing each. I'll start
with change perspectives. Projects today requires to adopt expanded
perspectives to ensure our projects foundations are truly well formed
. There are many changes in perspective that I could
discuss, but let me focus on just three points
. First, our project perspective must become increasingly holistic
. It is no longer sufficient to be a good
engineer from across the Charles or from Blacksburg. We
must add the broader perspective of the humanist, not
only addressing in a check the box fashion, the
so called environmental and social bottom lines, but rather
embracing them is fundamental to successful project. In a
very real sense, we must move beyond as of
north three laws and embrace what he later added as
the so called zero law. This war with state
that an engineer may not harm humanity or, by
inaction, allow humanity to come to harm. This
requires us to adopt a perspective more encompassing in scope
than perhaps we've been trained for. This is a
question not just for this institution, but for the
society that we, as engineers, served. We
must return to the pre Renaissance definition of the arts
, encompassing both arts liberals, the liberal arts and
arts mechanic. A the mechanical arts. Second,
our project perspective requires a temporal adjustment. Today we
think about planning, design and construction, but that
in many ways represents only the birthing of a project
. It's real value lies in the balance of its
lifetime, and in many instance, its biggest impacts
are in sometimes even longer societal affecting, post lifetime
period, even as major projects grow grow into what
I refer to as Giger programs. With project execution
periods often measured in decades, actual project lifetimes are
even longer. Today we see projects with design basis
lifetimes of a century or more, and we know
many of the works of engineers have lasted even longer
. Our project foundations must consider these fuller life cycles
across all the broader perspectives of the humanists that I
previously described. Importantly, as we consider these longer
temporal horizons, we must challenge our confidence in knowing
or predicting the future. Uncertainty must become a fundamental
project planning basis and a key factor in project execution
. Things become more uncertain over time, just as
black holes grow over time. My third point on
change perspectives is quite simple. Consider, look at
and challenge of projects foundations. Its very raison d
tre from every available perspective develop frameworks that help you
adopt these different perspectives, such as the spring framework
that I've used for years in looking at international construction
and development project projects. Esprit is an acronym for
economic, social, political, religious, intellectual and
technology. And it's allowed me to better ensure that
foundations are strong before we set out to boldly go
where no one has gone before. So let me
turn now to the augmented tools that will require to
ensure our projects are well founded and that we do
not have an undiscovered black hole at the center of
our Project universe. Daniel Kahneman is book Thinking Fast
and Slow returned his concept of the planning fallacy to
the Project Management Center stage when, when considering large
, complex projects and programs first coined by uh Kahneman
and Amos Tversky in 1979. The planning fallacy is
the tendency of people and organizations to underestimate how long
a task will take even when they have experienced similar
tasks, overrunning perhaps the poster child for the planning
fallacy, a large scale public works projects. In
a 2006 paper in the Project management Journal uh Fly
, Berg describes transportation projects, quotes in accuracy and
cost. Forecast in constant prices is, on average
44.7% for rail, 33.8% for bridges and tunnels and
20.4% for roads. Works by condiment over ski and
fly. Berg and others show that errors in judgment
are systemic and predictable. They reflect bias. They
persist even where, even when we are aware of
and require corrective measures that reflect recognition of this bias
, these natural tendencies are further exacerbated when motivated individuals
frame questions in such a way as to constrain the
range of possible answers. Today's project execution environment can
no longer afford to be held hostage to this planning
fallacy, which deludes us to believe we have a
well founded project. When reality is very different,
we require new tools. If we're to observe the
zeroth law, an engineer may not harm humanity or
, by inaction, allow humanity to come to harm
. New tools exist. Or perhaps better stated.
Old tools can be better utilized. Two worth highlighting
include reference, class forecasting and development and utilization of
what I call Hagen projects. Reference class forecasting is
one method for suspending one's impressions and providing a more
critical evaluation of the tasks at hand. It addresses
the natural tendency to underestimate costs, completion time and
risks, while at the same time overestimating benefits.
It squeezes out biases when considering considering the inevitable improbable
risks that all projects face. The Association for the
Advancement of Cost Engineers has recognized has recognized the value
of estimate validation, utilizing separate empirical based evaluation techniques
to, uh to benchmark the estimate, the equivalent
of reference course class forecasting. This estimate benchmarking process
is widely used in the process industries but needs not
to be constrained to them. they must become a
standard tool in developing and assessing the very foundation of
projects. The second tool we must develop and deploy
relies on so called Eigen projects. So what Oregon
projects an analogy would be in the area of facial
recognition where multi variant statistical techniques are used to create
an Eigen face. In this analogy, we may
take 10 pictures of an individual over time, and
we would expect the 10 images to Statistically Group.
If we took similar sets of photos over time of
other individuals, we would expect similar images to group
examples might be Caucasian men, Southeast Asian women,
Eskimo women and the such The Age of big data
opens up the application of pattern recognition to the field
of project execution. The tools we require may not
be created from whole cloth. Rather, they may
be adaptation of tools from other efforts or endeavors to
the field of project execution or, in the case
of big data, old tools on steroids, change
perspectives and augmented tools are essential to ensure our projects
are well founded and that we can avoid or at
least minimize, the strong, silent, destructive powers
of black holes that might otherwise sit at the centre
of our Project universe, a universe with a century
long design basis. Before I move on to discuss
black swans, there is one last aspect of black
holes that I would like to touch upon, and
that is the changing context in which black holes may
form and exist. Historically, a client hired a
designer and a builder, either separately or in an
integrated manner to execute his project. By and large
, each of these three players was a singular entity
that is less so today. And the introduction of
multiparty entities in each of the three rolls is no
longer uncommon. The use of collaborations in accomplishing strategic
business objectives has grown considerably over the years, with
two thirds of the business leaders in a Bank of
America Merrill Lynch Research survey indicating that they had worked
closely in collaboration with at least one other organization and
90% indicating that the future depends on even more collaboration
. This represents not only an added level of execution
complexity but, in effect, new foundational dimensions.
Our confirmation of project readiness must now be complemented by
an assessment of joint venture readiness not only within each
of the parties to the project. But importantly between
them, a recent survey on joint venture readiness in
the engineering and construction industry and the project teams they
are part of was not encouraging. Clarity and communication
of strategic business objectives absent in two thirds of large
projects that fail are even more importantly and challenging in
a joint venture context. So now let me turn
to black swans. All swans were white until they
weren't William developing Sighting of Black Swan during his 16
97 exploration of Australia. Change perceptions that all swans
were white. It was not that black swans had
not previously existed, but rather we hadn't looked in
the right places to find them projects. And for
that matter, all human endeavors have been victim to
unexpected encounters with black swans. We know black swans
are more appropriately unknown. Unknowns exists, and when
encountered, often produced disastrous outcomes. So what do
we do? A couple of years ago, I
had a protracted exchange with a recognized international risk expert
commenting on an article I had written on black swans
. The essence of his point was that black swans
, at least true black swans, were unknowable.
I did not then and do not now accept that
premise. While black swans were known to Europeans,
at least until the flaming sighting in 16 97 clearly
they were noble. What had changed, what it
allowed us to see. A black swan. First
and foremost, our perspective. The world in which
we lived had changed. At that time, explorers
built on chance encounters with various parts of Australia to
considerably say, seek out the postulated continent of terror
Australis. He reminds a lesson for those engaged in
project execution. Seek out the breeding and nesting grounds
of black swans and other rare birds we suspect may
exist. I'll talk more about these breeding and nesting
grounds in a second, but remember this you must
look and see before you can find. Second,
we must persevere. Merely citing a black swan is
intellectually rewarding. But more rewarding would be to be
able to hold it in your hands and control its
destiny. I say persevere, since it was almost
30 years before black swans had actually been captured,
will require new methods, strategies and tools to capture
and control black swans. But if they are knowable
unknowns, then shame on us if we don't develop
and deploy those tools. So let's talk about the
black Swans of Project execution today. We refer to
them as unknown unknowns. I believe this is not
a sufficient description of what we really mean. Okay
, let's step back for a second and look at
how we categorize risk of project May encounter. We
group them into four broad categories. Known knowns,
unknown knowns, known unknowns and unknown unknowns. No
, no known knowns we handle in our plan.
Unknown knowns are the assumptions we make known. Unknowns
are the things we know. We don't know.
That is to say, the knowledge is out there
. We just don't we just don't have it.
Everything that is left over is an unknown, unknown
or pure risk, as others would have you believe
. But our world of project execution, especially as
it relates to what I refer to as Giga Projects
, is increasingly complex, growing in scale and encompassing
extended time periods. So what does this new world
of project execution suggest? Simply put more undiscovered territory
in which black swans can nest and breed and low
and longer time frames over which they can make a
surprise appearance again, often with disastrous effects. So
let's examine what we know about this new, risky
territory of project execution. And let's call it terror
, terror extremists. And then think about the changes
of perception and the new tools we will need to
satisfy and shift many of these unknown unknowns into noble
unknowns and ultimately, into known unknowns. Terror extremists
is a land not often visited, and each prior
exploration has only touched one small part of it.
The results are often akin to the different perspectives of
three blind men, each touching a different part of
an elephant, the trunk, the tusk and the
leg. The experience and findings from all of all
, voyages to terror extremists have never been adequately compiled
, and thus our perceptions governed. And these,
by their very nature, are not rigorously confirmed and
even necessarily fact base. Thus, the first tool
that we require is a common language that recognizes the
particular challenges of terror extremists and allows us to consolidate
our understandings of what makes it different from more familiar
territory. Explicitly, today's new giga projects require some
new vocabulary or, at the very least, a
recognition that meaning and syntax may have changed, if
only in subtle ways. This is not hokey,
but it may be something that can be addressed by
the Hokies of Blacksburg. Terror extremists is a complex
land, but not every approach to executing a project
in this land is equally complex. We need to
better understand, measure, score and manage project complexity
so that we can have the best possible outcomes on
the projects that we undertake there. New tools such
as psychological, aromatic complexity analysis, uh, that
provides a measure. Relative complexity needs to be an
integral part of our project planning and risk tool sets
. So what are the sources of complexity and terror
? Extremists? I can't at least five, and
on a deeper reflection, I'm sure more are identifiable
. These sources of complexity include the global nature of
these projects. Application of new technologies are significant modifications
to existing ones, scaling effects, dynamic dynamic project
execution environments and finally extended time durations. So let
me spend a minute discussing each of these projects and
terror. Extremists require mobilization of management, engineering and
construction resources from across the globe. They are not
typically undertaken by singular companies, adding to institutional complexity
as policy procedures, practices, communication and decision frameworks
differ and must be coordinated. All work is not
performed in one location as global engineering centers span the
continents and more extensive fabrication efforts are also located at
multiple locations remote from the project site supply chain.
Similarly, tap primary suppliers from around the globe,
with major components coming together for the first time in
a mod yard or the final project site. The
primary suppliers own. Supply chains are equally global,
and on one recent project, one primary component arrived
at the final project site, with items of supply
from 80 different countries. Incorporated in effect, this
one component had traveled around the world several times before
arriving at the final project site. Project Execution and
Terror Extremists requires us to be cognizant of not only
our own primary supply chain, but to have even
deeper insights to 2nd and 3rd tier suppliers. This
requires radically different tools to manage and maximize the contributions
from our supply chains. Unlike the advanced tools we
use in more traditional logistical industries, ours will require
an ability to deal with a stream of bespoke facilities
and a bespoke supplier base often driven by a complex
set of project external externalities. Moving a standard shipping
box is an easy logistical problem compared to those we
increasingly have to wrestle with in real time projects and
terror, extremists often push the limits of technology.
Sometimes this is driven by the need to operate in
more remote or more extreme environments, such as those
one often finds in terror extremists. Increasingly, the
shift in technology is driven by the more holistic perspective
I talked about at the outset of the lecture,
with considerations around lifecycle energy, water waste and societal
impacts. Driving Project Solution Sets Terror Extremists is a
land of scale, I suspect, much like the
first inland explorers of Australia thought about about upon encountering
the Outback, the normally small things become big and
important and grow as contributors to project risk. Optimization
points need to change and change in significant ways.
Optimal optimizing steel members or the size of bolts on
the flanks were great engineering endeavors on smaller or less
remote, less complex projects. But not so in
terror. Extremists optimization will be more holistic. Across
all, three of the bottom line is described,
and importantly, must happen earlier on be done on
a life cycle of life cycle basis and explicitly address
uncertainty and risk. Option earing must begin at the
1% stage of project execution, if not before multi
variant options analysis, one with uncertainty that that sounds
like the beginning of a good doctoral thesis title.
Global execution, technological complexity and Giga Scales would be
enough to describe the complex environments in which black swans
can nest and breed. But the picture would not
be complete without recognizing the added complexity associated with the
dynamic environment that exists in terror. Extremists myriad externalities
act not only on the various nodes that are encompassed
by project execution of these Giga projects the final site
, the Mod Yard, primary secondary and tertiary manufacturing
locations, but importantly on the extensive networks that are
linking them. Whether labour costs, politics and competition
for constraint suppliers and resources change through the project life
cycle, often shifting what the optimal path forward should
be. It is only through skills in all of
the arts that we have any hope of achieving Good
project execution performance. The final contributor to complexity derives
from the extended project durations, whether these are the
15 to 20 year project execution time frames that we
see 100 year asset or longer operating lives or millennial
post closure concerns. The longer the time frame we
consider, the more likely we will see a black
swan. Longer time frames are also associated with increased
uncertainty around the assumptions we make when looking at unknown
unknowns and unknown notes. For that matter, Assumption
Migration is an important contributor to overall complexity but well
within our capabilities to better manage. If we choose
our perspective on risk and unknown unknowns must change.
Black swans are knowable. If not today, then
maybe tomorrow. I've suggested some tools and strategies to
deal with elements of complexity which provide the breeding and
nesting grounds for these rare birds. But let me
also suggest that we're using less than our full risk
assessment tool today. And that's and suggests that,
perhaps, are dozens of different risk tools need to
be assembled and deployed in more creative ways, addressing
concerns such as the thin tails that are inherent in
Monte Carlo analysis similar to black holes, black swans
do not have to be unmanaged eventualities, change perspectives
, drawing on all of the arts and application of
new and existing tools in new ways provide the promise
of being able to increasingly and successfully deliver the most
challenging and complex projects of the 21st century. So
that brings me to the last element of improving the
art of project execution, an element that would be
the antithesis of Asan AUVs, philosophical naturalism. And
that is black magic. By now you've come to
recognize the project. Execution is growing ever more challenging
, driven by factors such as complexity, scale and
duration. Weak foundations have ever more deleterious effects and
cannot be sustained. But today's project execution environment faces
added challenges from things which some have individually referred to
as being the result of black magic. Now,
before I go any further into this part of tonight's
lecture, let me make it clear I am not
a believer and I will not be providing you with
any spells to undo the effects. Some of subscribed
to black magic. If only it were that simple
. Okay, so what are some examples of black
magic acting on projects today? And what can we
do to bring arts other than the dark ones to
bear the projects of terror? Extremists are often in
foggy environments where every feature cannot be clearly seen.
Combined with the complexity previously described, we find ourselves
experiencing risks and realizing execution difficulties where none should have
existed. It was if, as if they were
conjured up from thin air. So let me use
an example to illustrate this apparent black magic at work
. Multi Project program includes a project not on the
critical path. This project slips in time, but
it's still not on the critical path and will still
be done before the original program completion date. It
provides no input inputs and has no apparent precedence is
with the Critical Path project. Yet the program is
delayed because of this slippage, black magic or something
else. In this case, the project drew labor
from a constrained labor pool, consuming a critical skill
common with the Critical Path project. At exactly the
same time. Had it stayed on its original schedule
, this coupled constraint would never have manifested itself.
Many types of coupled constraints exist, such as the
competition for critical skills, shared logistical chokepoints and precedence
is lost in uncertainties and contingencies. Couple of constraints
are one example of a broader set of roof of
risks that I referred to as white Space risks things
that happened between projects, facilities or project activities,
which have an impact in ways not contemplated and often
significant. So let's turn to a second example of
black magic at work. Two options exist for executing
a particular type of project, each with equal cost
duration and a project an apparent project delivery risk.
Certain features of the plants are different, but plant
nameplate ratings are identical. Two owners each build a
plan next to each other but choosing opposite alternatives.
Both projects start at the same time, cost the
same and opened the same day. Did their choices
matter? If you believe in black magic, the
answer is yes. Subsequently, both plants experience a
black swan type event at exactly the same time and
experience identical damage. One plant is restarted in 30
days, the other in six months. It turns
out that those slightly different features in the otherwise identically
performing projects resulted in dramatically different inherent resiliency. Black
magic can play havoc on system level properties such as
resiliency, business continuity and inherent flexibility, but only
if we let it as designers, builders, operators
and owners of today's projects and tomorrow's capital assets.
We have the obligation and the opportunity to bring a
fresh perspective and new tools to bear to improve project
execution. In these two examples of black magic at
work, new tools focused on deeper probing of possible
whitespace risks, such as constrained coupling or better assessment
of system level properties such as resilience. And that
probing would have made a difference back at our earliest
option. Hearing stages. Understanding the efficiency of project
execution alternators and deploying new metrics to assess and measure
relative project. Disruptions from planned and unplanned changes would
similarly improve our performance. So the future is now
. Hi Robot was set in 2035 I Engineer can
be set in 2014 if we choose to do so
. Many of the many of the changes essential to
improve project execution revolve around change perspectives, including more
strongly embracing arts. Other than just the arts mechanic
, a perceptions can be changed, but only if
we broaden our perspectives and adopt a more holistic approach
to project execution. Truly considering the entirety of the
life cycle, the balance of the changes largely build
a new and better tools, or at the very
least, applying the ones we have in different and
more creative ways. Institutions such as Virginia Tech are
essential. And echoing the words of Leo Vassiliou,
Junior Project Execution is an ever evolving field that needs
high quality research, education and well trained personnel.
Black holes, black swans and black magic are not
impediments to the successful art of project execution. If
only if we only but reach to the future,
embracing today's technologies and create the new tools and paradigms
that tomorrow requires. Like Sonny and I robot,
we can fulfill our purpose. Perhaps best summed up
in the zeroth law, an engineer may not harm
humanity or, by inaction, allow humanity to come
to heart. So I thank you for your time
and hope you enjoy the presentation. Uh huh.
Mhm. Yeah. Thank you, Bob. We
have time for a few questions, and so I
like to at this point, turn it over to
you for your questions. You must put a spell
on them. Well, I'll start with one question
. If I may, how do we build organizational
resiliency to keep blacks ones away? Okay, so
I'll do this by example after 9 11, I
co chaired the Infrastructure Task Force in New York and
, uh, was tasked to, uh, look
at lessons learned by the National Academy. And what
we had in New York on 9 11 was the
simultaneous destruction of various infrastructure systems all at the same
time. And yet each of those infrastructure systems,
both from after the first plane, struck two after
everything. Well, everything is not rebuilt yet until
everything is ultimately rebuilt. Um, we've seen very
different responses by the various infrastructure system, so I'll
use two examples. The New York City subway,
perhaps the oldest piece of infrastructure in New York and
probably the oldest part of that piece of infrastructure.
New York was destroyed. A piece of it was
destroyed on 9 11, but before it was destroyed
, as smoke began to fill the station, the
stationmaster stopped all trains from coming in. And later
on, after the second plane hit struck and it
became clear that we were dealing with something very different
and the order went out to evacuate lower Manhattan,
uh, transit system immediately reconfigured into an evacuation boat
. And then the next day, as people now
had to find alternative work locations and alternative travel paths
as a result of the destruction in New York,
the system was reconfigured. In fact, it was
recon figured continuously over the next nine months, until
the damaged section was rebuilt and restored and put into
service. So nine months for that infrastructure two respond
and recover. Connecticut Sun. Maybe in some ways
, the most extensive network in the city struggled,
struggled in response, struggled in recovery. So why
do these two infrastructures both respond very differently? Both
were buried infrastructures, if you will, So why
did they respond very differently? Well, the reason
was New York City subway was used to dealing with
unplanned events. So whether that was water main breaking
and flooding, a section of tunnel of police action
that caused the station to be isolated or even planned
events, major sporting events or demonstrations or riots,
or whether or whatever it was the normal state of
the organization called the New York City subway system,
was to deal with the unexpected. And through practice
and training, it built an organizational resiliency so that
on 9 11 it was just dealing with a different
unplanned event, and nothing was exceptional. Authorities have
been delegated to the lowest possible level for decision making
. And that's why the station master's in New York
control the station and they can stop the train from
coming or leaving from the station. They're the boss
. They own the station. When they go into
the next shift, they literally turn the keys over
to the next station master coming in. And so
that change in framework provided organizational resiliency. Con Edison
was very much a command and control very extensive pre
planning before anything happened out in the street. And
even when you see a failure in the combat system
and his responses are are slower for many reasons,
some of them good not all good. So organizational
resiliency is about recognizing that unplanned events can happen.
So it's about contingency planning scenario planning so good project
managers in developing project plans will understand that there are
certain items that are in a plan that from experience
from the situation they're in, they recognize that at
some point some element of that plan may become disruptive
. So whether it's the logistical chain bringing things up
to 13,000 ft in the Andes, whether it's the
potential for labour disruptions in Western Australia. They recognize
this may happen. And so they're planning for the
project. Incorporates a process of thinking through contingencies.
Now, does the actual event resemble exactly one of
the contingencies or one of the scenarios that considered?
Most likely, not. So what was the benefit
of it? The benefit was to think through What
were the challenges of project might face? What were
the resources available to you and what were the decision
? Mechanisms that might be used to respond to uncertainty
, to change, to challenge. And that,
to me, is how you build organizational Brazilian.
See, it practice does make. Maybe not perfect
. Makes you a lot better. Thank you.
Broke? Yeah. Mike, mention the word option
in option earing. So right. All right.
There's quite a bit of evidence and even cited some
resistance that our new ability to sort option there is
a bias of averages. Right? So what kind
of advice might you give us as educators, too
? Yeah, in cocaine that our education? Okay
, that we do those Here we go. All
right. So, uh, I'll I'm going to
divide the world into two chunks as it relates to
Virginia Tech. If you will, um, I'll
call it the technical chunk and then I'll call it
the management Trump and the approaches are a little different
, but not not all that much. I'll start
with the technical chunk. So when we look ahead
to the next generation of designs, the things that
will be building 10 years from now, uh,
it's important that as we're designing those projects that we
bring forward in time things that we used to treat
much more sequentially, we now need to deal with
those things in parallel. So in the course you
and Ed are teaching on materials management. I think
at some point in the course, you probably talk
about floors, Pepsi process and all Pepsi means is
that we're bringing the major procurement procurement way up front
, together with the engineering and not waiting to complete
the engineering. Before we begin the procurement, I
have a an owner that I'm working with on a
confidential endeavor where the owner has, uh, really
wants to have a construction driven design because he knows
his real challenges. It's remote, hard, labour
constrained situation. He needs those construction means and methods
to be that will work in his setting to be
reflected in, in fact facilitated in the design that's
gonna evolve. Yes, the design has to meet
all the process requirements, but it also has to
directly support construction. And so there's an interesting notion
that we're talking about and I don't know where it's
gonna end up. So we have basis of design
. Okay, we're looking at the notion of a
construction basis of design so that we may be in
a more formal way, bring some of that construction
requirements and thinking very much forward. A lot of
what we're doing in supply chain is certainly about bringing
the procurement set of activities to supply chain considerations further
. But I'll also tell you from our mining business
and because I can speak to in particular if we
do not have the people that will ultimately operate the
facility with us at the study phase, we will
end up making changes, had a very expensive point
in the project, But yet if we get the
benefit of that operations and maintenance input right up front
, so what I just described is really taking the
whole life cycle and engaging it right up at the
earliest stages of the project. What auctioneering does is
, in effect, says as it relates to those
technical aspects, is, let's try to do that
and put in place some tools that help us do
that in more formal ways. You know, tomorrow's
deliverable is not a set of drawings. It's a
database since the database that will roll over and be
used in the operating and maintenance phase. And we
will serve to as a basis for estimating and planning
your next construction project if you will. But that's
not enough, Um, and now come across the
two aspects and management that deals with kind of the
hard stuff in the sense hard in the sense of
we we know we can touch it, we can
feel it. But now you got to deal with
some of the soft stuff, and the soft stuff
deals with what I'll call the other two bottom lines
of the triple bottom line environmental and social aspects.
So the notion of a social license to operate is
a given in the natural resource industries. If the
local inhabitants, at 13,000 ft in the Andes do
not want that mining project to move ahead, I
can assure you it is not moving ahead. Okay
, You need to address their concerns. Which means
you need to understand and reflect not only in your
design, but in your approach to construction and procurement
and operations. How you're going to deal with those
societal concerns. So an example. At one particular
, very remote location where we might normally have gone
in and just built the construction camp Temporary construction camp
built the project, take a few years, then
leave and take. Take the construction camp with us
. We instead built the construction camp as permanent housing
, which will be turned over to the local residents
at the end. So, uh, what did
it cost us at the margin? Nothing. What's
the good will of God? A lot. A
lot. Um, and you can see that even
with local purchasing. So what are the consumables?
Uh, that we will need when the plant goes
into operation. And of those consumables, which ones
can we, at the very beginning of the stage
use to start creating a local supply chain to service
that longer term supply chain long after we're gone?
So it's It's thinking like that. The second thing
on the management side gets into some of the mathematical
stuff that I talked about. So we all have
these very network project management schedules, thousands of thousands
, tens of thousands of activities sometimes okay. And
in that complexity, what does the project manager do
? I'll tell you what the project manager does.
He picks out the dozen things he's always managed by
, and he pays attention to him and the other
350 that he could track. He does it because
he has information over. So how can we tell
him when one of those 350 features that he's not
paying attention to started to show some signals? And
maybe things were amiss? And when those signals are
shown, they in effect reflect maybe a bad possible
outcomes, not at the end of the job,
but maybe in the next phase of the job,
whatever that is or in some other activity. So
we know when process drawings when process development process engineering
is late, we know that we're gonna be,
uh, late and expensive on electrical installation. Why
? Because the whole schedule gets pushed. Okay,
If those process drawings are done, the supply chain
activities slip construction slips, and we try to make
it up at the very end of the job and
what's at the end of the job doing the electrical
work. So knowing that allows us to think about
how we might do electrical differently, maybe begin dealing
with that problem much earlier on if we can make
those linkages. So in that data, there's huge
amounts of of linkages. But, uh, it
would be the same as me trying to understand from
from here, Mike, you know the exact peculiarities
of your left ear. Okay, I can't see
it well enough to do that. But with the
help of tools like facial recognition tools, I can
know whether your face, uh, in general looks
like some other subset of faces. And And if
and if they And if it does Okay, what
are the implications of that? Okay, you become
a professor at Virginia Tech, so Okay, so
you know, I think option earing is about taking
those tools and quite frankly, bringing them up to
that 1% stage where we can now run lots of
scenarios. Okay. Not knowing which is right at
that point in time, not having enough information to
know that. But to know that certain approaches,
whether it's designed or supply or execution are more likely
to address a wider range of scenarios or another way
of saying it is. Our approach to the management
of the project of the delivery of the project is
a resilient approach. It's able to it's able to
handle a wide range of potential futures. So I
saw a hand. Yes. Yep, That was
not good. Sorry. Can you repeat the question
? Mhm. So you're gonna give me your microphone
, your other microphone since I managed to pull that
one off and dropped the battery out of it.
So the question was about how, um and correct
me if I'm wrong about how new engineers in effect
get trained and get the experience that they need.
Is that is that fair core? Mhm. Is
that correct? Okay, so, um, let
me, let me, uh, kind of deal
with it this way. There is no possibility,
no possibility that you can come out of even the
best university and have everything you need for that first
job. And the reason is, actually, I
guess there's two reasons the first is you don't spend
enough time in university to ever cover all of the
things you will need in that first job. And
second, each of those first jobs is bespoke.
It's a function of the company. You work for
the project that you're involved with, how that company
is organized, the management approach of that company.
And no university can anticipate that. So what happens
? Okay, so what happens? So, uh
, in in floor? I use it as an
example we created a few years ago. Something called
Floor University. Okay, we don't compete with Virginia
Tech. Okay, We augment Virginia Tech, okay
. And so what floor University is is is,
uh it consists of several colleges, and it's a
home for our various training programs, and some of
those are very short, half hour online kind of
thing. Okay, Uh, and some of them
are, uh, in person trainings that we don't
give every year we give every couple three years,
whatever it is. And there are in floor university
about 1000 courses. Okay. 1000 course. A
lot of short online skills based training. How to
use excel. Okay. How to use word how
to whatever. And And they cover the full gamut
, not just engineers, but all of our staff
. So in today's world, uh, companies have
to obligations, in my view, one which they've
always had, which is to provide a degree of
on the job training to new employees that happens in
every company, uh, whether they intended to or
even recognize that they're doing it. That's just a
real life. You know, I I I saw
a part of your ah, your your class one
of your classes today. And there was a point
in the class where the small groups broke up and
and and and, uh, worked the problem or
a piece of the problem. Um, you learn
by doing, you know, there's a theory of
education that says no lectures in class. You read
that before you come, we're gonna work the problem
in class, okay? And if you think about
what happens in a real life setting, your boss
does not sit there and teach you. He says
, Do this, do it this way. Here's
some stuff that may help you. So when I
first start, I'm a nuclear engineer by training,
not a civil engineer. So the very first thing
I was given when I showed up, uh,
to start work as I was given the Project Management
Manual and I was told, Read it and I
figured out later was because they didn't know what they're
gonna do with me yet. Okay, so I'm
a really, really fast reader, so I got
through that a lot faster than they thought. So
I told them I was done. I've heard the
Project management manual learned a bunch of things. I
got some insights, and more importantly, I know
where to go and who to ask if I don't
remember or don't know or don't understand something very valuable
skill. Okay, so what did they do?
They gave me the quality assurance Manual said. Now
read this, okay? And so I I figured
out at that point in time, I may have
been the only guy in the firm that actually read
those two manuals, which made me seriously dangerous,
by the way. Now you have Google, so
you can just Google stuff. I think that's great
. So that on the job training, though,
uh, becomes very important. Now I'm going to
say a couple of things which, uh, is
going to make a couple of you uncomfortable. Okay
, so especially in a firm like floor. But
I'll argue even more so in our business projects don't
come to you. You may need to go to
a project. There are some places in the world
where their project rich environments You know, if you
want to hang out in New York City and do
transportation infrastructure, believe me, there's enough of it
for the rest of your natural life time because there's
always new things and things break all the time and
they're gonna be replaced and fixed. But there's maybe
that many places in the world where there's enough of
whatever your discipline, whatever your practices, that you
can actually stay in one place. Increasingly, you
have to go to projects. So the second thing
is you want to go to a project. You
want that project, experience that field experience, and
I'll tell you from a very embarrassing personal perspective at
a very young age. I'm a project manager for
the nuclear area, and one of the things I
did is I checked in great detail and asked lots
of questions and had lots of Independent reviews two by
two by a set of nuclear steam supply system.
Uh, safety safety relief valves. Okay, I
could tell you that those valves we bought were absolutely
the right thing. Okay? We had gone out
, We got competitive bids, We did technical evaluations
. We did price evaluations. And I was 100%
comfortable. And what, what had been bought?
And several years later, I found myself out in
the field at the project site. Were previously I
had approved buying these valves at a very, very
early stage. They were long lead items, and
so we were buying them. We hadn't even finished
the hell. We hadn't even finished licensing. We're
buying the valves, okay? And I get into
the warehouse at the project site, and this is
big 50 ft long thing. And in fact,
there's a whole bunch of and I turned The guy
says, What are those? And he went pale
, and he said, Those are the nuclear steam
supply system safety relief valves. You approved buying 50
of them. I didn't know what they looked like
. I had no sense of scale. Okay?
And it is not off. Not unusual for me
. to go out to a project site that is
troubled. Where I asked two questions. The first
question is, when was the last time that the
design engineer that designed this came the project site?
The traditional answer is never. Okay, This might
explain why the projects in trouble, and the second
is I'll go back into the engineering office. I'll
find the engineer for the problem area, and I'll
ask him what he was trying to optimize and he
won't hesitate. He'll be very proud of you tell
me design and can explain at great length why?
So are most of you construction, engineering and management
majors? Yeah, Okay, I gotta go to
Monahan. So, um, I'll tell you,
my some of you guys who I was with earlier
I heard this. So I'll tell my nuts and
bolts of construction story fairly quickly. So I'm out
in the outback and I'm I know nothing about mining
when I'm out there. And so before I go
and give management advice to clients would be really cool
to go out and see what actually happened out at
a construction site and how they actually built these things
and what were the challenges they faced. So I'm
getting the tour driving all around the site for all
day. We're gonna stay in the construction camp that
night, and we keep going through the main intersection
on the plant. And every time we go by
, I noticed that there are two guys and they're
bolting up a large hopper and it looks like the
most inefficient operation I've ever seen. And every now
and then, let's see one of the folks walking
down the road or coming back from the warehouse down
the road with another bucket of nuts and bolts or
another, uh, tools slung over their shoulder.
And so, at the end of the day,
I asked the construction manager. I said, You
know, I looked and there's eight different sized nuts
and bolts. What were they trying to optimize?
This is beats me. So I get back to
the design office a few days later. I haven't
find me the designer who designed that hopper. It
was late thirties, very enthusiastic guy, and I
said, Hey, I saw you, Hopper.
It's being put together out there. Looks great.
I just want to know. I saw there were
eight different size, nuts and bolts. What were
you trying to optimize? He doesn't hesitate. He
says Design. I said Design. He says.
Yes, he says, because as the stresses get
less towards the outside the flange you can use smaller
bolts and smaller bolts cost less than bigger boats.
I said, That's fantastic. I said, I'd
like you to go back and tell me how much
that optimization saved on just that one hopper, because
I really want to know. So he comes back
the next day very proudly, and he tells me
he saved$157 on just that one hopper. So
I called the construction manager. I said, Hey
, you know that happened. We saw if all
the nuts and bolts were one size, can you
get back to me? Just tell me how much
how many mandates of time would you say? So
he calls me back a few days later, and
he says it's going to take a 60 60 man
days to both up this hopper, and we could
have done it in 50 if all the boats were
the same. And I said okay, and what's
unskilled labor cost you in the middle of the Outback
. It's$1000 a day. Believe me, you
don't want to go for the money. Okay,
so it's$1000 a day. So I said$10,000
he says. Yes, I said, Thank you
and he says, No, I'm not done He
says. For every dollar of direct costs, I
have$2 in indirect because I got to fly these
guys back to Perth for a week every month.
Okay, I gotta put them up in the construction
camp. I gotta feed them very well because even
the ones that get out here on average, only
stay six months, even with the pay, because
the work conditions, the environmental conditions are that bad
. I said Okay, so it's like$30,000 He
says, Yes, I said, thank you very
much. He says. No, I'm not done
, he says. I've now had to order eight
sets of nuts and bolts and tools, and I've
had over order all of them because I'm so remote
. I can't just go down to Home Depot and
buy another bag of nuts or bolts, so I
now have eight times as many skews in the supply
chain. Okay? And I'm going to have eight
times as much waste at the end of the job
. And we started going on and getting silly to
the point that we figured out that optimization of design
had cost us somewhere between 50 and$100,000. So
the moral of this story is you really need to
pay attention to the nuts and bolts of construction.
Thank you, Bob. Okay. It's right here
before. Thank you. Before we Yeah. Mm
. No, I appreciate. Okay. Uh,
today, because And so, Andy, uh,
you need to be honest. Thank you. Do
I need to open an hour? Okay. All
right. So I have my official official D T
shirt, so this is good. So just okay
, So I can I can I can wear this
at our construction sites since the dress code is not
suit and tie, I'll tell you that if you
ever show up at a construction site in a suit
and tie, forget it. You're going to go
to a job site, then you need something else
we would like to present you. Okay. All
right. Okay. All right. This is good
. I'm debating whether I wear this through security on
the plane tomorrow or packet. That's the only challenge
. And then to help you with your writings,
uh, we would like to present you with a
Virginia Tech captain chair. Fantastic. You're really black
on the back. It says Robert Pierre Toe,
toe toe 2013. Basilio distinguished. That is fantastic
. That is fantastic. You're gonna ship that?
I Yeah. So I You done? Because if
I got one last thing, Okay, so I've
spent the day here. I've had a chance to
talk with students and faculty, and I have to
tell you whether it's inside the firm or outside the
firm. Uh, the hope for the future is
our young professionals. This is a room full of
and, you know, as much as maybe I
can tell some stories and maybe even in part,
uh, 11 little bit of wisdom to you.
I have to tell you that that when I leave
here, I have more those encounters. I have
more energy than I do when I arrived. Um
, you have You're collectively, you are great students
. It's a great institution. Clearly, Um and
I the future is yours. It's not yours to
conquer. It's yours to create and define. And
so if you become unhappy in the future, you're
partly responsible. Okay, So guys like us,
the best we can do is try to Amy in
the right direction. But you'll pick the direction and
you'll succeed. And the last thing I'm gonna say
is I have copies of tonight's speech, which I
really need to give you because my baggage is already
too heavy. I've been on the road you got
around the world in the last week and a half
. So I'm gonna leave some up here and please
help yourself to them. Thank you. Have a
reception downstairs. Been there out of that reception,
so I heard. Please join you, okay?