Project governance

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Project Governance – Assignment
Assignment Question
The date is 1 July 2016. Arrian Project Management Services Pty Ltd (APMS) is a medium-sized company that provides project management consulting services and advice on the engineering of systems across a range of industries, and does some manufacturing. According to demand and customer needs, APMS has established branches in Sydney, Melbourne and Canberra. APMS started its business 25 years ago designing and building electronic and mechatronic devices for customers’ projects typically involving some form of automation. APMS continues to have high levels of expertise in electronics and mechatronics design and the Sydney branch has a small, ultra-modern manufacturing facility, which can produce bespoke circuits and devices, usually in relatively small numbers for special projects.
APMS’s project management and systems engineering consultants are highly mobile and often are required to deploy to customer locations for periods of several months at a time to complete specific tasks. APMS employs some 65 staff and in the most recent financial year had total income exceeding $35m.
APMS is seeking to grow that aspect of its business where it undertakes high value, medium-to-high risk projects on behalf of clients. It is keen to expand in those areas where it has established expertise. APMS aims to develop its project management capability and offer world-class services to customers by delivering projects through every stage from conception to completion, typically culminating in handover to the customer for their sustained operating.
So far, APMS has achieved success in delivering projects spanning a diverse portfolio including establishing new electronics production facilities, one for themselves and a much larger volume production facility for a customer; integrating electronic sensors into a prototype robotic land reconnaissance vehicle to detect and neutralize improvised explosive devices, air traffic control communications upgrades in the USA and across Australia, and developing and installing a passenger movements monitoring and control system for international arrivals at a large airport located in South East Asia.
In anticipation of its first high value, high risk, cradle-to-grave project management role, APMS created a new company, Arrian Prime Pty Ltd. Whilst in a major project setting, Arrian Prime would be the prime contractor, in corporate terms, it would remain a subsidiary of APMS. This corporate arrangement does not preclude a division of APMS, or a substantial part of APMS being a sub-contractor to Arrian Prime.
Exactly this situation appears to be developing. For the last 18 months, Arrian Prime has been actively engaged in discussions with Capital University of Technology Australia (CUTA), with a view to creating a partnering arrangement to build a state-of-the-art production facility to manufacture nano-technology devices for specialist medical applications.
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Discussions with CUTA follow a decade of research whereby CUTA developed nano-technology electronics to the point where they were able to prove the concept and go on to develop a fully functioning prototype nano-electronic medical device, which CUTA calls the Implantable Nano-Monitor (INM).
The INM is the diameter of a grain of rice and about three times as long. It has two platinum probes, each less than the thickness of human hair, one extending from each end. The INM has been designed for implanting in ‘at risk’ patients with chronic circulation problems, heart disease, history of stroke and post-operative blood circulation problems, to monitor blood flow. It is designed to continuously monitor a patient’s pulse rate, blood pressure, and blood oxygen levels. It is surgically implanted just under the skin, adjacent the wall of an artery. Probes are inserted through the artery wall into the bloodstream. The device can remain implanted for years. Unlike medical stents (expandable mechanical devices, usually made of stainless steel mesh, implanted inside blood vessels to keep them open), which suffer from the build-up of deposits over time, the nano-probes are too small for deposits to form on them.
An INM is typically implanted in the forearm near the wrist or in the lower leg near the ankle. The INM has no internal energy source of its own, so does not have to be removed to have fresh batteries installed. The INM receives signals and low levels of radio frequency (RF) energy from a battery-powered transceiver worn on the patient’s wrist or ankle next to the implanted device.
The INM’s nano-circuitry receives sufficient energy to enable it to electronically ‘shape’ an array of tiny metallic strips which act as to reflect RF signals. The antenna array is wrapped around and incorporated into the shell of the device. Instant by instant, variations in the shape of the antenna determine the nature of the signal that is reflected signal back to a transceiver wristband / anklet. By shaping the antenna, the INM passes information back to the wristband / anklet transceiver.
In turn, the transceiver communicates with an iWatch™ type communications device, which is also worn by the patient. The iWatch™ is programmed to receive data from the wristband / anklet transceiver. It stores and regularly forwards information via the Internet or mobile cellular data networks, as available, to provide a stream of patient health status and current location information. The regularity that such information is forwarded can be automatically adjusted according to specific parameters, chosen because they are early indicators that possibly deleterious changes are occurring in the patient’s condition.
Health status information and details of the patient’s location are forwarded as frequently as is needed to a remotely located, automated monitoring facility. When fully operational each one of these facilities will be able to simultaneously monitor several thousand patients. This is possible because a monitoring facility employs a sophisticated computer algorithm, which automatically determines if the patient’s vital signs are normal. If changing and possibly becoming abnormal, an alarm is raised to bring any change to the attention of a medical assessment team. The team is then able to decide what type of medical intervention, if any, is needed. Whilst it is expected that a small medical assessment team could cope with a large number of “hand-offs” from the
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automated monitoring system, the threshold number that would cause overload, as yet is unknown.
For Australia’s aging population, many of who suffer serious to chronic circulatory diseases, this monitoring capability coupled with an effective medical assessment capability, could be potentially life saving. A Federal Government commissioned feasibility study has determined that the health monitoring system for this class of patients, especially those in the 60-75 years age group with chronic cardio-vascular disease or who have recently had cardio-vascular surgery, could be both highly beneficial and cost effective, noting that:
1. Primary means of communication between the INM and the monitoring facility would be via the National Broadband Network (NBN), and where a patient is not near an NBN-connected modem, mobile data connection would be provided by the cellular telephone network.
2. A single automated monitoring facility, effectively a communications centre, could be created virtually anywhere provided it could communicate quickly and reliably with the medical assessment team located at a major city hospital. The automated monitoring software would provide an alarm for handing off to a medical assessment team. This team could communicate directly with the patient or intervene by calling for quick response by paramedics, as appropriate. The monitoring software and automated alarming computer algorithm exist, have been tested exhaustively, and are relatively cheap to install. It is expected that a single automated monitoring facility will have sufficient capacity to provide an adequate monitoring service for the first five years of operation, and would be relatively inexpensive to upgrade.
3. Assembling a medical assessment team of clinicians who would then be continuously available would involve both substantial set-up and operating costs. However, it has been estimated that these costs could be more than offset by a concomitant reduction in emergency department admissions for the particular class of patients. This offset may not be immediate, but is expected to be delayed somewhat. If substantial, the delay might create workload issues for the medical assessment team. Ultimately, it is believed that emergency department admissions, particularly those occurring because patients become concerned about apparently anomalous symptoms, could be significantly reduced over time because a medical assessment team could make timely and accurate assessments of the condition of these ‘at risk’ patients, and advise them, or a nominated care-person, when immediate medical attention was needed.
The need to make financial and staffing adjustments in the provision of emergency department services as a consequence of the roll-out of the INM monitoring and medical assessment (IMMA) system are beyond the scope of this project: they are matters to be resolved in future by Federal and State / Territory governments.
In recognition of the potential benefits of implementing the proposed system, the Federal Government has included substantial funding in this year’s Budget and has foreshadowed follow-on funding in the next two Budgets specifically to enable
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widespread deployment of the IMMA system, with the possibility that other nano-technology devices could follow.
The scale of the proposed manufacture and roll-out of INMs has been guided by the number of Australians undergoing cardio-vascular surgery each year. This is estimated to be 4,500 currently rising to 5,000 per year within three years.
The success of the IMMA system will be critically dependent upon the performance, reliability, availability and deployment of the INM devices. Now that prototypes of the INM device and wristband/anklet transceiver, and indeed the whole IMMA system, have been demonstrated, it is time to make preparations to build and roll out the system. INM kits will have to be produced in substantial quantities, each kit containing:
1. an INM sterilized and ready to be surgically implanted;
2. a sterile guide which will allow precise locating of the incisions for, and inserting of, the exceedingly fine probes into the artery;
3. a wristband / anklet transceiver; and
4. an iWatch™ programmed for Internet and/or mobile cellular data access; as appropriate.
The minor surgical procedure to implant an INM could be completed under local or general anesthetic as a day-surgery procedure, or may be included as part of a major cardio-vascular surgical procedure. Before the patient leaves hospital, the correct functioning of the INM, wristband/anklet, iWatch™ and remote monitoring will be confirmed.
Implantable devices and wristband / anklet transceivers will be manufactured in a yet to be established specialist high-technology facility. Bespoke items will have to be manufactured, but ancillary like the iWatch™ will be acquired as needed to complete each kit. Completed kits will be stored in a clean room co-located at the production facility until assigned by the Department of Health and Ageing to be dispatched to hospitals or day-surgery facilities for implanting.
In the context of the Federal Budget in May this year, an announcement was made that funding would be provided for the IMMA system initiative: $27m will be available over the next three years. (Note: This is not an actual Federally funded project, so please do not contact the Government to obtain information).
Early advice from the Department of Health and Ageing, who will be responsible for managing the funds allocated in the Budget(s), is that funding allocations are likely to be as follows:
1. Current (First) Fiscal Year $12m:
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a. $10m: Capital expenditure allocated to establishing a high-technology manufacturing facility, proving the production processes and “pilot” manufacturing of 500 INM kits.
b. $2m Purchasing computers, software and proving of the communications and monitoring systems. Creating a remote monitoring facility. Hiring a small team of clinicians and conducting initial training for a ‘pilot’ monitoring scheme.
2. Second Fiscal Year $8m:
a. $6m: Ramp-up to full production. 4,500 kits to be completed and available for delivery.
b. $2m: Bring monitoring facility up to full capacity. Pay wages for the medical assessment team.
3. Third Fiscal Year $7m:
a. $5.5m: Continue full production. 5,000 kits to be completed and available for delivery.
b. $1.5m: Operate the monitoring facility at full capacity. Pay wages for the medical assessment team.
The estimated cost of the project to establish the production facility, to ramp up to full production and continue full production rate for a further year is 1.a + 2.1 + 3.a, that is, $21.5m. Department of Health and Ageing have also indicated that after successful delivery of 10,000 INM kits, which is the target at the end of three years from start of the project, the winner of the contract would be invited to take up the option of buying the facility and all related equipment. To be eligible, the winner would be required to produce 5,000 INM kits per year for a further three years and deliver these at no cost to the Department of Health and Ageing.
Manufacturing the wristband/ anklet transceivers will involve miniaturized but not nano- electronic circuits. This is considered to involve a low-medium level of risk, as the manufacturing processes use many commercially available components, and would be no more technologically demanding than manufacturing a slightly oversized electronic, digital wristwatch. Arrian Prime believes that this is well within the current capability of the APMS’s Sydney production facility.
Manufacture of wristband / anklet transceivers could be undertaken at APMS’s Sydney facility, though one additional combined pick-and-place surface mount and wave soldering machine for assembling and soldering miniaturized circuits would have to be acquired. Such machines are common in electronics mass production and could be readily sourced from Taiwan or Japan, though acquiring such a machine would involve a three-month’s delivery day, a further month for installation, and another month for pre-commissioning testing.
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Production line manufacturing INMs will be a whole different story. To build five prototype INMs, CUTA used their specialized research laboratory equipment. It took 12 months to successfully make the first prototype. The last of the five prototypes was built in four weeks. Using the same research laboratory techniques and equipment, CUTA believe that building a single INM could be reduced in time to one week (40 hours).
For full-scale production it would be necessary to build around 20 INMs in a single 8-hour shift. No machines currently exist to do this. To achieve this rate of production would be a risky undertaking, as two nano-electronics circuits, two nano-probes, the micro-array antenna, and the INM shell have to be custom made, before the device is assembled.
To engage in full-scale production would require highly specialized production machines to be designed, built, calibrated, tested, and the volume production processes proven. Whilst CUTA scientists and engineers are experts in nano-technology, they are academics with specialist research skills. They have no experience in production line manufacturing or the design of machines for volume production.
How to develop these highly specialized production machines, associated processes, and quality control instrumentation in order to reliably manufacture INMs in substantial quantities continues to cause angst between CUTA, Arrian Prime, and APMS.
Project success is as likely to be contingent upon overcoming the technical issues relating to the design of the production machines and processes as it is on the creation of a workable arrangement between CUTA, Arrian Prime, and APMS. CUTA continually state that it is they who designed and built the INM and own the intellectual property. They are very reluctant to allow other parties to become involved in the detailed design of the machines needed for production and the production processes. CUTA acknowledges that contractors other than Arrian Prime and APMS will have to be involved in building the production facility, but do not want any other third party involved in overseeing the proving of the production process.
In any future contracting arrangements, the Department of Health and Ageing, herein after referred to as ‘the Commonwealth’ will be the customer. The Commonwealth has sought expressions of interest (EoI) for a major project, which involves building a new specialist production facility, building the specialist manufacturing machinery and overseeing the proving of production processes for the production of INM kits.
CUTA and Arrian Prime have prepared a joint EoI for the delivery of this project. The rationale behind the EOI is:
1. CUTA scientists and engineers developed the INM. Despite having little or no industrial experience they have a unique understanding of the technology and, hence, believe that they are best able to define the requirements of the project as they relate to manufacturing IMNs.
2. CUTA scientists and engineers could be integrated into the project management team to assist in overcoming technology issues as they arise.
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3. CUTA owns the intellectual property for the INM, which they are extremely cautious about safeguarding;
4. Arrian Prime has the ability to manage the project;
5. Arrian Prime could draw key manpower from APMS to establish the project management team, as they have experience in managing similar, albeit less complex, projects.
6. APMS could use their Sydney production facility to produce wristband / anklet communications devices, though this would require the acquisition of one electronics assembly and soldering machine.
7. As part of the Arrian Group of companies, APMS could provide additional engineering advice and guidance about setting up the production processes and conducting proof of the production processes.
Under this proposed contract arrangement CUTA and Arrian Prime would jointly share responsibilities for managing the project on behalf of the Commonwealth: they would be joint contractors working under contract to deliver the project to the Commonwealth, who would be the customer.
Employees from APMS who might be selected to form the project management team would become salaried employees of Arrian Prime, rather than remain employees of APMS. APMS would become a sub -contractor to Arrian Prime. Arrian Prime would also be responsible for establishing the contracts with other divisions of APMS specialist contractors, for:
1. facilities design;
2. surveying, site preparation, construction, and road-works;
3. development of production processes, acquisition of production plant and machinery, production proving;
4. purchasing raw materials and components, inventory management, production control;
5. quality management; and
6. warehousing of finished product and product distribution.
Assignment 1 Task
Your task is to identify strengths and weaknesses of the proposed teaming arrangements between CUTA and Arrian Prime. Identify threats that are likely to impede delivery of the IMMA system. Explain how you would create a project
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governance structure designed to assure successful delivery of this project through every stage.
Preparation and General Guidance
In preparation for answering the assignment question, you might review what the Victorian Government (Treasury and Finance) have done recently in the area of project governance to avoid a repeat of project failures experienced by the Victorian Government.
You should study the guidance provided by ISO/IEC 15288: 2015 in the delivery of system outcomes, and how such success naturally leads to project success. Consider how this has implications for the design of project governance frameworks.
Consider what needs to be done to ensure that the views of the various stakeholders are taken into account, as is appropriate, in planning to deliver the ‘right’ project outcomes.
As the project progresses, it is essential that project performance is monitored. You should give particular consideration to establishing KPIs that are most useful in informing those who are responsible for monitoring project performance about the real progress being made.
Remember that, effective project governance requires that:
1. ultimately, a single entity or person must be accountable for what is delivered;
2. whoever owns the delivery of the project, owns the project;
3. stakeholder management and project decision-making activities must remain separate;
4. project governance structures must remain separate from organizational governance structures; and
5. the Project Board (or project steering group) includes the project’s owner, senior user, senior supplier and project director, where the project director reports to the project owner, and the project manager reports to the project director.
Specific Guidance
For specific guidance regarding your preparation of this assignment and its marking, please refer the Assignment Completion / Marking Guide for Assignment 1.

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