PM World Today – January 2011 (Vol XIII, Issue I)

PM WORLD TODAY – VIEWPOINT – JANUARY 2011

The new Project Leader:

What skills are needed for Megaprojects today?

Survey reveals increasing demands being made

on future generation of Project Directors in the
fast-evolving natural resources sector

By Luigi Slaviero and Hugues Mercier

Heidrick & Struggles

In highly competitive, complicated and fast-changing marketplaces, and for

professionals within industries where huge capital expenditures are required, sound
investment decisions have never been more critical. And in an age when mitigating risk
is more important than ever, the role of the Project Director in particular is becoming
increasingly demanding.

The new generation of Project Directors in the fast-evolving natural resources sector
(including Oil, Gas, Mining, Metals, EPC, Infrastructure, Power, Chemicals etc) are
expected to know as much – if not more – about the world of stakeholder management,
corporate communications, governance and leadership, as about engineering.
Management skills and accountability are growing in importance and the scarcity of
Project Directors willing and able to take on these new demands is compounding the
human resources challenge for the industry.

The risk managed by a single Project Director can represent up to one-third of a

company’s entire portfolio risk and can therefore have a huge impact on the
organisation’s financial health and corporate image. The savvier corporations have
recognised this and acknowledge the need for professionals with strong leadership
skills in addition to technical know-how. Projects have become so complex that no one
person can master all the technical challenges. Teamwork and communication are
therefore crucial.

Following in-depth interviews with leaders in the natural resources industry, Heidrick &
Struggles has identified the benchmarks and best practices that are being developed to
enhance project management capabilities and, in turn, sustain the pipeline of the future
generation of Project Directors.

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 PM World Today – January 2011 (Vol XIII, Issue I)

Survey findings
Talent challenges
The physical and political challenges of leveraging natural resource reserves in hostile
and remote regions are significant. Moreover, industry insiders are concerned that the
difficulty of finding talent equipped with the necessary capabilities are constraining
successful and timely project delivery. The risks of failing to address talent management
include financial loss, brand damage and team burnout, so it may come as no surprise
to learn that many organisations are now paying closer attention to their governance
and hiring policies.

These firms are looking at the way they drive projects and at how they address their
project leadership capabilities. By reassessing the competencies needed by their
project management function, they have identified the need for strong leadership and
commercial skills.

The governance environment has evolved too, along with the increased complexity and
multi-billion dollar capital expenditure level of projects. Collaborating with new partners
such as global supply-side alliances and larger consortia for complex projects with high
political visibility has increased the governance burden. And as the stakes and
expenditure increase, so do the risks.

Dealing with such challenges requires robust risk management, contract management,
accountability and front-end commercial astuteness, as well as insightful forecasting
ability. And with many Project Directors now responsible for managing stakeholders’
expectations – including those of politicians, suppliers, clients and external partners –
the ability to carry out a plethora of challenging and time-consuming responsibilities can
represent the key to success.

Generation gap
There is another area of concern, too – the acute generational gap in the natural
resources industry. Several interviewees, all executives in leading natural resources
corporations, admitted that the problem is “grossly underestimated”. Many engineering
graduates are no longer heading to exotic destinations to work on megaprojects, but are
instead turning to an urban career in finance or consulting and the more family-friendly
work-life balance that comes with it.

Respondents also noted a decrease in commitment to jobs and organisations, a stark

contrast to the historically committed ‘company people’.

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 PM World Today – January 2011 (Vol XIII, Issue I)

One VP global project services stated: “We are aware of the concerning phenomenon of
younger talent looking for immediate outcomes, or instant gratification. There does not
seem to be a high patience or willingness to work through the learning curves.” This
trend evolved in Generation X and seems to be even more acute in Generation Y.

The widening gap between aging engineers and Project Directors and the scarcity of
new talent, is compounded by risk-averse companies’ reluctance to give a younger, un-
proven project manager a high responsibility role. Likewise, project management roles
are often seen by potential recruits as ‘too risky’.

Transferable skills

There is also an historical tendency for the natural resources industry to look for talent
within its own sector or, worse still, within the same natural resource, such as gas. This
practice frequently ignores the widening role of the Project Director – that of a true
management professional first and foremost, over and above his or her capabilities as a
specialised engineer.

According to one executive “The companies that say ‘talent must come from our sector’
are living in the past, because what they are really saying is ‘a Project Director is a
super technician, a super engineer, a super process wizard.’ The more advanced and
informed view is ‘a Project Director equals a project management professional and a
leader of people.’”

Locating talent from other sectors, such as IT, infrastructure or transport, is slowly
becoming more commonplace. Anecdotal evidence shows that there have been several
successful cases of senior Project Directors moving from one sector to another, such as
from aerospace technology to gas or oil. After a few months (or even weeks) of learning
the jargon they are frequently operating on a par with their peers.

One executive agreed, “The Project Director profession has been elevated to a
leadership role, with communications expertise a necessity, plus the ability to manage a
project via management information dashboards. Precisely because of these additional
skills, it is possible to attract Project Directors from other sectors.”

Managerial and leadership behaviours

Project Directors are no longer simply accountable for delivery. They are acting as ‘mini-
CEOs’ covering a large spectrum of activities. Intellectual and technical skills are of
course necessary but behavioural and communicative dimensions – or leadership
intelligence – are now crucial for success.

One VP global projects said: “We as a firm believe that the winning Project Director has
the talent of the general manager, or a mini-CEO – who creates a ‘company’ (the multi-

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 PM World Today – January 2011 (Vol XIII, Issue I)

billion dollar project), manages its lifecycle and also manages its ‘closure’ (i.e.
commissioning for hand-over to operations).”

Another executive concurred “We realised quite rapidly that three-quarters of the skill
and competency sets that are required for successful project leadership are the same
as for the company’s general, firm-wide leadership programme through which it
develops its business and general managers.”

This change in skill set is starting to be recognised by organisations and is evidenced in

recent hires. A large international oil company has recently started recruiting future
Project Directors from the Navy, for example. “Engineering and technical skills are nice-
to-have but leadership skills are a must-have. This trend has emerged in the last
decade and we try to bear it in mind when appointing new Project Directors,” confirmed
its VP Human Resources.

Effective teamwork

In addition, Project Directors are increasingly finding themselves in the position of

“talent officer”, acting as human resources managers as they take on accountability for
managing and developing their project team. Projects have become so complex that no
one person can master all the challenges. The required expertise is so vast that
specialisation at the top of the organisation can in fact be damaging to the project, with
the risk of time and money being spent unwisely on the smallest engineering details,
rather than the bigger business picture.

Teamwork and the presence of varied expertise have become crucial. Teams need to
be multi-disciplinary and multi-cultural. To manage such a diverse team, an efficient
Project Director must have an entrepreneurial or commercial (“P&L”) attitude and excel
at developing and communicating with people.

This new focus on the need for emotional intelligence and astute communication skills
in Project Directors cannot be underestimated, especially in the face of increasingly
demanding projects and with billions of dollars at stake. One of the executives
interviewed commented, “There is a risk of underestimating the psychological profile of
a Project Director. Not all engineers or technical profiles have the right psychological
decision making profile – far from it.”

For another executive, recognising “good work on a dirty job” is a vital part of appraising
Project Directors. He explained, “Acknowledge people who are stepping up to the plate
on a train-wreck project where no one else would or could. It is a sign of leadership and
courage.”

The role of Project Director has become so important that one global transport and
infrastructure company is now telling its young talent that “for an advanced, executive

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 PM World Today – January 2011 (Vol XIII, Issue I)

level career in our company, project manager or Project Director experience is a must-
have on your CV.”

It will no longer be surprising to see a mega-Project Director holding a vice-president or

even a senior vice-president rank, reporting directly to the CEO of the firm, especially if
they are involved in projects of high-value to the overall organisation.

A word of warning

Project Directors, however, are not always the saints of megaprojects. With the scarcity
of Project Director talent and the increase in responsibility has come an increase in
power, something that some Project Directors are wielding to the detriment of the wider
company.

Business efficiency suffers – and company risk increases – when Project Directors have
a low acceptance of firm-wide methods, for example, or yield too easily to client
demands. As one global HR director explained, “Today, the Project Director is king.
They have a high degree of freedom and discretion. With the liberty and empowerment
they enjoy, some Project Directors have conceded business too much or too easily to
clients.”

Figure 1

The skills and expertise of

the new Project Director

A typical Project Director in natural

resources has an Engineering
degree, often complemented by a
business education. They have
occupied various roles in project
engineering, project construction
and corporate project/function, and
have been exposed to project
complexities. A successful Project
Director will have had experience in
leadership and people development,
finance and technology.

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 PM World Today – January 2011 (Vol XIII, Issue I)

Developing Project Directors

Best practices
The methods adopted by the most forward-thinking organisations to nurture and
develop Project Directors are evolving to meet the increasing demands of the role.
These companies are using three main strategies, which, when combined, can
significantly impact individual development.

Our research indicates that individual development is driven by:

 on-the-job training
 internal mentoring/external coaching
 formal academic training (which can also be delivered internally)

1 On-the-job training

Successful companies have developed initiatives to encourage efficient on-the-job

training opportunities, including internal reorganisation, streamlining reporting processes
and methods for early detection of potential talent.

Internal organization

Organisational models have evolved to help support projects and develop talent. Large
projects are being divided into packages and smaller semi-autonomous tasks, for
example, which not only increases individuals’ responsibilities but also aids in managing
the risk associated with the project. Being given the opportunity to lead these tasks
helps to develop talent and represents an opportunity for future Project Directors to
experience the company’s standard processes and protocol. Project control or
executive assistant positions are also a way to increase exposure to political, project
and control complexity. Moving between functions and projects allows junior staff to
cross-fertilise experience and expertise while mitigating company risk.

Reporting line

Large projects may have multiple partners, which can create complex relationships
between project teams (which can be composed of different companies’ staff) and
parent companies. Streamlining reporting routes shortens the decision-making process
while ensuring efficiency. Given that natural resources Project Directors bear a
significant part of the company’s financial risk, many organisations have adapted their
reporting line to aid communication with top management.

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 PM World Today – January 2011 (Vol XIII, Issue I)

Early detection of potential

A major tool in improving staffing decisions is a ‘people review’, in which a leadership
team reviews a group of people and collectively builds a consensus on each individual.
This enables the organisation to identify potential next steps for career development
while ensuring any potential risks are acknowledged. These collective decisions
emphasise the fact that no manager owns his or her resource pool. Not only does early
detection of talent shape careers, it also helps to ensure that staffing decisions take into
account individual development needs as well as project requirements.

2 Internal mentoring or external coaching

Successful companies are using mentoring to enhance and to improve the transfer of
knowledge and experience between seasoned Project Directors and more junior project
managers. The mentor relationship reinforces the feeling of community within the
‘project population’ and is a way to impart non-written information or unofficial protocol.
Mentoring can be complemented with external coaching to accelerate career trajectory.

3 Formal Academic training

In order to ensure Project Directors are effective and best practice is shared, some
companies are sending their high performers to top academies to provide them with
training in finance, HR, legal, PR and negotiation skills. This training is often completed
by in-house workshops. This is an effective way for companies to create a community of
seasoned managers. It also supports the sharing and use of company standards, tools
and processes, ensuring structured project delivery, and making talent more portable
within the organisation.
The need to develop leadership and behavioural competencies has led forward-thinking
companies to invest in leadership development training too. In order to measure the
impact of this training, companies have developed competency models tailored to their
population of Project Directors. These frameworks are similar in terms of emphasis and
scoring to those used by executive search firms when assessing executive level
candidates.
Training can be used at different stages of the Project Director’s career. In the early
stages, the emphasis will be on technical skills such as finance, HR and law. Later the
focus is on leadership.
The impact of such strategies is two-fold. Individuals are developed faster and more
effectively, while staffing risks are mitigated by balancing inexperience with control and
by supporting people with processes and expertise. The head of a project academy for
an international oil company said, “We have been pleasantly surprised by the power of
combining development training and community building. Project Directors regularly go
to the academy to learn, close a specific competence gap or to teach. This reciprocity
has proven highly motivational for all involved.”

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 PM World Today – January 2011 (Vol XIII, Issue I)

Is your company growing the new breed of Project

Directors?
Analysis of the survey findings identified three critical questions that organisations need
to consider in order to optimise project management and to control related risks:

 What project governance is in place?

 How do we nurture talent within the project management function?
 How do we promote the leadership competencies that are necessary for
successful Project Directors?

All this requires support from senior management as well as a robust training and
development programme. Those responsible for nurturing the talent pipeline – which
should include the Executive Committee as well as HR – need to have a clear
understanding of the necessary skills and competencies in this ever-changing
profession. They need to know that there is now a need for an emphasis on ‘soft’
metrics as well as technical expertise. Successful project management is not just about
delivering projects on time and within budget. It must also involve a focus on the team,
effective people management, a persuasive leadership style and true client and partner
satisfaction.

A talented Project Director will display managerial flair by building internal and external
relations, fostering open participation and non-hierarchical communication, proactively
leading teamwork across a variety of situations and thinking ahead while also learning
from past experiences. Tomorrow’s success depends on growing this talent and on
helping this new breed of Project Directors to deliver ever more complex, multi-billion
dollar projects.

Methodology
Heidrick & Struggles conducted the survey on project management in the natural
resources industry involving 38 in-depth and confidential interviews with Project
Directors and other senior executives in 2009/2010. Almost 40% of Project Directors
interviewed had a distinct non-technical experience within their career – such as a
managerial, financial or commercial position. The scale of project management
represented in the survey exceeded US$63 billion.

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 PM World Today – January 2011 (Vol XIII, Issue I)

About the Authors

Luigi Slaviero

Author

Luigi Slaviero is a Partner at Heidrick & Struggles, and

co-leader of their global Natural Resources Practice. As
a partner in the firm, Luigi Slaviero focuses on energy
sectors such as oil & gas, power, nuclear and renewable
energies. He co-leads the natural resources - including oil & gas - business worldwide,
and is a member of the firm’s global renewable energy, team which specialises in wind,
solar and other cleantech industries. Prior to joining Heidrick & Struggles, Luigi worked
at Shell for nearly 20 years in roles covering various regions including Latin America,
Asia and Eastern Europe and Western Europe. Most recently, he was general manager
of Shell Lubricants Latin America, where he doubled the company's financial results
through growth initiatives, turnarounds and divestments. Before that, he was
commercial manager for a $2 billion lubricants & fuels business in Shell Europe, at the
same time leading Shell’s global strategy team for B2B markets. He also led Shell’s
lubricants & fuels business in ASEAN and Hong-Kong, as well as a lubricants joint
venture in Vietnam. Luigi received his MBA from INSEAD and a chemical engineering,
biotechnology degree from the University of Groningen, Netherlands. Luigi is fluent in
Dutch, Italian, French and English, is comfortable with Spanish, Portuguese and
German, and has a basic understanding of Romanian. Based in Paris, Luigi can be
contacted at lslaviero@heidrick.com.

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 PM World Today – January 2011 (Vol XIII, Issue I)

Hugues Mercier

Author

Hugues Mercier is an Associate Principal in the Paris

office of Heidrick & Struggles and is a member of their
global Leadership Consulting Practice. Prior to joining Heidrick & Struggles, Hugues
was a management consultant for Schlumberger Business Consulting, where his areas
of expertise included performance improvement, organisation and planning processes
for national as well as international oil companies in Algeria, Angola and the Congo.
Previously, he worked for Roland Berger on strategic due diligence projects in retail,
aerospace and defence. Hugues holds a masters degree from ESCP-EAP. Hugues
Mercier is based in Paris, speaks fluent French and English, plus basic German and
Portuguese, and can be contacted at hmercier@heidrick.com.

Heidrick & Struggles International, Inc. is the world’s premier provider of senior-level
executive search and leadership consulting services, including talent management,
board building, executive on-boarding and M&A effectiveness. For nearly 60 years, the
company has focused on quality service and built strong leadership teams through our
relationships with clients and individuals worldwide. Heidrick & Struggles is
headquartered in Chicago, Illinois, but with more than 60 locations in 35 countries
around the world, and the resources and contacts necessary to conduct a global,
multinational, national, or local market search. This capability enables the company to
serve clients wherever they are located within the framework of a responsive
international partnership. http://www.heidrick.com/

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