The conference was jointly hosted by the Construction Industry Institute (CII), the Construction User Roundtable (CURT) and the Excelencia em EPC (EPC Excellence Center). On the first day Carlos Nazario and I presented, "Change Management and Lessons Learned” in both English and Portuguese via live translation. Rather than discussing the traditional process of the administration of change orders on a project, the presentation delved deeper into the business environment and why corporations should manage the overall change process, starting with “do I need the change at all?”
I started the presentation by stating, "The Management of Change (MOC) concept is like reviewing the drop in the pond that has ripple effects extending far from the initial event." MOC is intended to look at all aspects, risks and effects of the change, wherever they may lead. The process has six simple steps:
- Identification of potential change
- Risk assessment and analysis
- Review with peers or third parties
- Close out and capture of lessons learned
The importance of this process in the energy and hydrocarbon industries can be seen in that the ramifications of failing to properly asses the full effects of a change can be catastrophic. While a formal MOC is used for large changes, the concept can be used in any situation where the need for a change becomes apparent. I illustrated that we teach our children of this concept at a young age, for example, walking safely down a sidewalk and then deciding to cross the road. “What do we tell our children? Stop, look, listen and only cross when it is safe to do so. These are simple steps that save lives.”
The essential stage in this process is taking the time to do the risk assessment thoroughly. To do this properly a corporation needs a framework in which this step is undertaken to ensure that appropriate factors are included. The largest factor of which is tolerance to risk. It is known that different people have varying risk tolerances, such as extreme athletes and racing teams.
The following 10 factors generally influence personal risk tolerance:
|Overestimating Capability/Experience||↑ Risk tends to increase|
|Familiarity with the Task||↑ Risk tends to increase|
|Seriousness of Outcome||↓ Risk tends to decrease|
|Voluntary Actions and Being in Control||↑ Risk tends to increase|
|Personal Experience with an Outcome||↓ Risk tends to decrease|
|Cost of Non-Compliance||↓ Risk tends to decrease|
|Confidence in the Equipment||↑ Risk tends to increase|
|Confidence in Protection and Rescue||↑ Risk tends to increase|
|Potential Profit & Gain from Actions||↑ Risk tends to increase|
|Role Models Accepting Risk||↑ Risk tends to increase|
Due to the above variances in personal risk tolerance it is imperative for corporations to set out their tolerance to risk. Most corporations require a more conservative approach to risk, safety and an orderly process to manage change. Their tolerance levels are generally documented in policies and procedures so that teams undertaking formal risk analyses have a reference point to measure themselves. The peer review of the analysis is used to verify that the policies have been followed and that the personal risk drivers have not adversely affected the outcome. This allows the approvers to have confidence when signing off, prior to implementation.
The final part of the process is the close out and to capture the lessons learned. This allows the time to review and ensure that everything was identified and picked up and any new risks documented. The MOC process is a very powerful tool in business. It is scalable and should be used whenever a significant or complex change is required.