Dear Giovanni Migliaccio, thank you for sharing your experience with us! I'm writing from wonderful Arusha, Tanzania, where the City Council is finalizing its capital investment plan (live picture below!). Almost every step of the planning process hinges on the active collaboration between financial and technical staff, exactly as you say. Financial data makes sense only if backed by sound technical specifications.
The difference between a "wish-list" pipeline of projects and a meaningful one depends primarily on the interplay between technical/financial staff. A good capital investment planning process facilitates this collaboration. I think this issue applies everywhere so your contribution is extremely valuable. What are the key instances of collaboration in your experience? What are the signs that this collaboration is insufficient? What practical suggestions do you have to improve it?
Dear Joshua Gallo
I totally agree with your statement: "The difference between a "wish-list" pipeline of projects and a meaningful one depends primarily on the interplay between technical/financial staff," and, I would like to elaborate on what the role of a good capital good capital investment planning process could be.
Such a process is intended to rationalize the decision making at the onset of project development and management, so that agencies can invest (always limited) resources on projects that are worth pursuing in the larger scheme of things instead of wasting them on projects that lack the fundamentals to succeed or, even worse, pursuing the wrong projects for the communities. Another indirect advantage is that it may also shield city officers from unwanted political interference. Overall, the process should help generate project ideas (formation phase that results in producing a series of statement of needs and benefits) that must be evaluated for their costs and assessed for their risks before a decision can be made.
Regarding your questions, I try here to initiate some discussion on them, but it may take time and further input to help this forum to evolve them into help for others:
What are the key instances of collaboration in your experience?
In my experience, I noticed that there is a natural alignment between project "sponsors" (i.e. those city officers and/or departments who are exposed to the needs and convey them into project ideas), city financial officers, and high-level decision makers who interface the agency with the public at large and the political side. This results in very well defined statements of needs and benefits.
What are the signs that this collaboration is insufficient?
On the other hand, I have seen a gap between technical officers/departments and project "sponsors." Technical staff seems traditionally trained to get onboard much later in the process, so are hesitant to provide any cost evaluation due to a lack of project development repositories (i.e. formalized organizational knowledge). On the other hand, project "sponsors" are so focused on the "good" that a project can do that miss what can go wrong. Engineers, instead, deal everyday with what go wrong that don't want to provide any number until are not certain of it. As a result, it is very difficult to match the good quality statements of needs and benefits with equally reliable statements of costs and risks. Engineers' shyness may results in planner boldness in filling the gaps, which may constitute a major flaw in the rational decision-making of a CIP (which as all the processes based on logic can be fatally impacted by the traditional garbage-in/garbage-out issue). The reasons maybe contextual to each organization, but unfortunately, many agencies seem organized in a way that promote this separation of duties and competencies between engineers and planners. Signs of lacking collaboration are evident in the large number of projects that result in cost and schedule overruns.
What practical suggestions do you have to improve it?
This is a question that cannot be answered comprehensively in a single post. To outline my suggestions into bullets, I would say:
- Embed implementation of logical processes like CIP into a major organizational learning exercise that goes beyond a single entity, and involve the organization as a whole (or at least all the units that need to be involved into the CIP)
- Evaluate the organizational structure to identify systemic lack of front-end technical support
- Evaluate role and position of technical services within organization and implement change that would allow these individuals/units to "spread" their knowledge about the project life-cycle (beyond need formation)
- Evaluate if an educational gap exists between technical and financial side, and develop a training program that would reduce such a gap
- Reduce reliance on tacit knowledge on project delivery and development of technical staff by developing a project development database and conceptual cost estimating process
- Develop a process (e.g. CIP) that is comprehensive to most organizations, then use initial implementation to customize process to specific agency and streamline it.
- Institutionalize Gated Approach to Project Development and Delivery. A CIP process cannot work if it does not fit within a compatible project development and delivery process. In fact, even starting well does not assure a successful project.
Overall, my experience produced many additional lessons that are contingent to that specific agency, the educational background of professionals and other agency-contextual factors. However, I feel that the items above mentioned can have a broad application beyond any specific agency or country.
I would be happy to elaborate on any of the specific items, if there is a need for details.
Dear Giovanni, I can see you take questions VERY seriously! So now the challenge for other community members is to ask something more challenging for you! Thank you for the extremely insightful reply.
As you made reference to Capital Investment Plans, I'd like to share here three slides from our Creditworthiness Academies, just to ensure we're all on the same page when we refer to such Plans (there are so many plans, often with multiple names... someone should better plan how to call these plans!).
The next slide explains even more explicitly the link between these plans and creditworthiness:
I believe these slides could be read also to prove your point: the importance of coordination (integration!) between technical/financial staff throughout the planning process.
If I may, I have a couple of clarifications to ask you:
- Can you elaborate a bit more on your statement: "project 'sponsors' are so focused on the projects' benefits that they miss what can go wrong" ?
- I'm particularly interested in one of your suggestions (but they are all great!): "Evaluate the organizational structure to identify systemic lack of front-end technical support". Can you clarify what exactly is meant by "front-end support"?
Thank you again!
Thanks for the additional resources on CIP. They well complement what I tried to summarize in short sentences. I will try to respond to your follow-up questions. At this time, my thoughts are still evolving and I actually would like to hear from others about them.
Can you elaborate a bit more on your statement: "project 'sponsors' are so focused on the projects' benefits that they miss what can go wrong" ?
My comment was a short and anecdotal observation that confirms the broad concept of "optimism bias" in project development and management of public works. Over the last decades, there has been significant research confirming the existence of optimism bias and highlighting some of its negative effects. Among many contributions, Flyvbjerg et al (2003) provided some empirical evidence to the existence of optimism bias. For anyone interested in this, here are a couple of freely-available internet sources:
- Blog post: http://www.projecttimes.com/kiron-bondale/overcoming-optimism-bias-in-project-decision-making.html
- Article suggesting a way to overcome optimism bias: http://www.ejtir.tudelft.nl/issues/2010_01/pdf/2010_01_03.pdf
I believe that project sponsors should be trained to learn these risks and agency's decision makers should enable checks and balances (gated approach?) to detect the occurrence of optimism bias in their decision making processes.
I'm particularly interested in one of your suggestions (but they are all great!): "Evaluate the organizational structure to identify systemic lack of front-end technical support". Can you clarify what exactly is meant by "front-end support"?
I meant that non-technical project sponsors do not seem receive enough technical support during the initial phases of the project lifecycle (front-end). In these phases (pre-CIP), funds have not been allocated for outside service contracts, so there is an over-reliance on receiving support internally from other agency's units. However, public agencies are frequently organized hierarchically (functional organizational structure), which results in having the technical departments (repository of technical knowledge and based on a workforce of architects and engineers) separated from other departments.
I think that this organizational structure may create a few problems for a correct implementation of the CIP and requires some ad-hoc calibration, which is contextual to the agency. To better explain, I list the issues I observed during my WB mission as well as in other organizations (public and private).
First, there is the way the performance of technical departments is evaluated. If a city's technical department only includes engineers, it is also usually in charge of certain projects (roads, drainage, other civil works). Therefore, engineers serve as project sponsors for these projects and are evaluated based on the performance of their projects. Still, there is some expectation on them to provide internal technical assistance to other department in the idea formation for other projects (e.g. schools, hospitals, parks, etc.). When funds are scarce, this may create some conflicts of interest (why engineers should help other departments to compete for funds they are trying to secure if their performance is mostly based on their projects). A technical department that includes both architects and engineers may mitigate this issue, but a wall-type separation may still create other issues (see later). This issue can be solved by a clear separation of duties, responsibilities, and authorities (meaning that some technical staff must be selected, trained and charged with technical assistance duties, and their performance should be evaluated - service surveys by internal clients, etc.).
Second, engineering education is frequently biased toward later phases of the project lifecycle. Engineering schools educate well students for detailed design and project development phases. As a result, most of the engineering graduates are not trained to work with non-technical project sponsors to develop some conceptual design needed to compute reasonable conceptual cost estimates (which is all you will have in the CIP phase - again, I am assuming that a project should undergo the CIP at the beginning of its project lifecycle, so human and financial resources are optimally used - i.e. gated decision-making). As an educator, I know there is not a clear solution to this issue. Academic programs are usually shaped to prepare graduates for the most frequent job duties. Since only few graduates will end up working in front-end tasks and compete against planners for these jobs, it would be difficult to justify such a change. However, I could see the development of a minor inter-disciplinary specialization across planning and engineering, so that those individuals who want to pursue this career can elect to take specialized coursework.
Third, architecture education is frequently lacking an adequate training on project development issues. Architects are usually better trained than engineers for the initial phases of building design and development, but only few programs provide their students with a good understanding of practical matters (i.e. legal, cost and schedule) that strongly affect a project success. I am not very knowledgeable of accreditation processes for architecture programs, so I don't know if there are external barriers for providing more project management training to architecture students.
Last, the hierarchical approach results in promoting a career ladder, so that all senior architects and engineers - who are the only ones trained by life not school to perform front-end technical assistance - are in high level position in the technical department. It is difficult to ask these individuals to step down and provide helps to subordinates of their peers within the organization. On the other hand, allocating junior architects or engineers to the technical assistance duty is paramount to failure if it is not accompanied by a serious effort to train these individuals and to provide them mentoring from senior staff.
Again, this post is based on evolving thoughts, and I look forward to contributions and examples from any other participant in this forum that could either confirm or contradict them.
- Can you elaborate a bit more on your statement: "project 'sponsors' are so focused on the projects' benefits that they miss what can go wrong" ?
Hello Khalifeh Al-Dayyat
Thank you for your kind comment. In the past, I read some of your comments, and saw you are working hard to introduce and implement some innovative work to your city. Is your city currently involved in some infrastructure or building investments? If you can, I would be eager to know how my concepts have been helpful to you and how I could better share any further information. Cheers.
Dear Giovanni Migliaccio, this is becoming required reading for cities interested in improving their project preparation processes! As you said, it would be great to hear from other community members as to their experience linking engineers/architects with other officials (financial officers, managers, other project "sponsors"). Do they feel that initial concept notes for projects reflect adequate inputs from engineers/architects? Do they identify their situation with any of the problems outlined by Giovanni?
Now, you've listed a few very useful issues and solutions. As we continue to learn from your experience and to identify practical interventions that our members may want to adopt, can you help us understand how a well designed capital investment planning process can support some (if not all) of the solutions you've outlined? For example, how can a clever planning process align with better incentives for engineers to work across departments on early-design preparations?
Hello Joshua Gallo
thanks for your kind comment. Your questions required some thinking. Here are my responses.
- "Can you help us understand how a well designed capital investment planning process can support some (if not all) of the solutions you've outlined?"
Internal changes to public agencies often occur along two trends: (a) changes to the structure, and (b) changes to the processes.
Note: this is an oversimplified view and could certainly be expanded using the immense knowledge in the Organizational Behavior field, but it fits the purpose of introducing the rest of my response.
Introducing a CIP process to the decision-making of public works is certainly a change to the existing processes. However, implementing a new process into an organization is like performing an organ transplant into an organism. There is always the risk of rejection. A well designed CIP process should take into account the external environment an organization operates in as well as the internal rigid structure. Trying to implement a one-size-fits-all process results in frequent failures and rejections. Therefore, a well designed CIP process should incorporate those best practices to achieve the initial objectives without being too rigid to not allow customization. For example, the CIP process for KCCA was designed by Jan to take into consideration economic, resilience and environmental sustainability while allowing the local agency to "adjust" their target to their local needs.
Still, as any good organ transplanted in a organism may result in a rejection, a new process may encounter unexpected issues due to rigidity of the external environment or internal structure. Can a well designed CIP process solve all problems? I don't think so. However, the process of implementing a CIP would promote the learning necessary to creatively identify problems and implement solutions. i.e. If I did not participate in the CIP process for KCCA, I would not have been able to identify (potential) problems and/or suggest solutions for the future.
- For example, how can a clever planning process align with better incentives for engineers to work across departments on early-design preparations?
This is a difficult question. I am not sure the CIP process alone can incentivize engineering support across departments. On the other hand, a multi-pronged change that involves implementating a CIP process, changing the organizational structure, and modifying hiring and career advancement practices should work. On one side, separating the engineering support role (Group A - engineers who are tasked with providing support on early-design preparations) from the engineering delivery role (Group B - engineers who "own" their own project and carry on all activities on the project lifecyle) would allow Group A to retain independence. However, this alone may not work if the public agency does not select for Group A individuals who are willing to learn how to communicate with planners and assist them in the development of early-design information. This learning can occur hand-in-hand with the first implementations of the CIP process (with WB assistance). Later on, this engineering spinoff (Group A) would be able to provide the support needed by the other units.
Dear Giovanni and Community Members,
Here is a short video released by the City of Kampala that discusses the recently implemented climate smart Capital Investment Plan (CIP). It's the World's first such CIP in a developing country. Giovanni needs no introduction to this topic as he himself contributed to this project!
What does a climate smart CIP entail? Please watch the video to find out.
Thanks for the video. It is a great summary of the World Bank's initiative to support KCCA's implementation of the first climate smart CIP. As you have mentioned, I had a minor contribution to the implementation of Jan's developed CIP methodology, and some of my lessons are based on that experience. The KCCA experience certainly provided me with new insights, however, my previous posts link my experience with KCCA implementation to my research work on implementing changes in Project Development and Management of Public Works that I initiated in 2003. I will soon reply to Joshua Gallo 's follow-up questions and hope the discussion could interest KCCA as well as any other public agency that is interested in implementing a CIP methodology.
Giovanni, you are so modest! Your introduction of a gated approach to project approval for development was instrumental in explaining at KCCA - especially for the financial experts - how planning and engineering improve and refine cost estimates as projects are designed.
Projects may be given their first public budgets when the concept and need of the project can be described and understood and conceptual designs begin (i.e., when an initial concept note is ready). This is just the beginning of the design process, however, and the cost estimate at this stage of development is often a "rough order of magnitude" estimate. Uncertainty about cost estimates comes down as designs become more detailed and complete, through schematic and then detailed designs, followed by construction drawings and specifications. For the financial experts, this means that they should evaluate projects for budgeting more than once as designs are developed, because cost estimates can change quite a bit. They can also choose to make changes to design early in the process, during conceptual and schematic design, when the cost of making changes is a tiny fraction of what it will be during construction. The CIP (capital investment plan) provides a reliable procedure that planners and engineers, as well as financial experts and budget officers, can use to evaluate and approve their projects. The first time a project is approved in a CIP would be during conceptual development, when it is given its first budget. The same project can be reviewed again in the CIP, for approval during the schematic phase, and then again during detailed design. For any large or complex projects, multiple reviews make sense.
Dear Giovanni Migliaccio, your suggestions on how to improve the interaction between technical and financial staff over the investment planning cycle are very practical and, at the same time, very strategic. I checked on our online toolkit (LINK) designed to help cities identify issues and solutions to creditworthiness: there are various actions related to the project preparation/planning process. Below is a snapshot from the toolkit with the first three action-items listed to improve capital investment planning (there are 16 action-items on this specific topic). Frankly, there is no explicit reference to the issues you've highlighted in this blog. It would be great to incorporate some of your suggested approaches in the toolkit's action-items. Note that each action-item in the toolkit has a more detailed explanation available by clicking on the "review" button (see below). What do you think? You never thought this blog would lead to this, uh?
Dear Joshua Gallo
I think this is a great idea, and would be happy to integrate my comments and lessons learned into that tool. Any suggestion on how to do that beyond cutting and pasting the text from the toolkit into a Word file and marking it up with suggestions?
Dear Giovanni, I'm copying my colleague John Iwan Probyn who may have more specific (and always more brilliant) suggestions than mine. That said, I really think a Word-document with your suggestions marked-up is the easiest way. In some cases it will be a matter of expanding on existing action-items. In other instances you may want to suggest new, additional, action-items. The text-size of these action-items is relatively limited, as we try to keep them focused on key issues. Feel free to add links to additional resources as needed. We look forward to incorporating your suggestions!
Giovanni, as you mentioned your work in Kampala, I thought it appropriate to share a feature story I just read from Citiscope , on another fast growing Ugandan city, Jinja (where the source of river Nile is believed to be!). The article is by Amy Fallon and is titled In Uganda's small but fast growing cities, 'one planner is not good enough' (LINK). While capacity constraints will always be an issue, it would be great to provide some ideas on how to improve the planning capacity of cities as part of our review of action-items to suggest to cities. I'm copying our colleagues Jan Whittington and Adrienne Greve for their information. Ciao!