0.25 Ways of Working
0.25 Business Acumen
Our Guest This Episode: Herbert Marshall
Who represents the owner on a project? Who looks out for the owner’s interest to achieve project success while maximizing project value? In this episode, Herbert Marshall talks about differentiating project oversight from project management. Hear about best practices for project oversight from the perspective of an owner or client. Herb says that owners often don’t have access to the key data and updates of those closer to the work, and this reality gives contractors and project teams an advantage over their clients. His goal is to close that gap.
Herb talks about the value of oversight and how it saves clients and owners money. He contrasts the role of project oversight versus project management as he describes the tension that exists between the oversight team and the project team. To address the gap in project management knowledge when it comes to the best interest of the owner, Herb authored The Project Oversight Guide. His book provides insight into all facets of project oversight so that the owner and the project manager are living in harmony and understand who should be doing what.
Herb Marshall is a retired nuclear-navy officer, and former lead field assistant for the Department of Energy, Naval Reactors (NR) with 20+ years’ experience overseeing major capital projects. Herb was the chief architect of the project oversight model for a billion-dollar decontamination and dismantlement of a U.S. commercial nuclear power plant. In that role, he wrote, developed, and implemented the core protocols and processes, key performance indicators, reporting structure, and the project oversight specialist training and certification programs. The lessons learned from that experience were the genesis for his book, The Project Oversight Guide and the founding of his company, Oversight Advantage.
Favorite Quotes from Our Talk:
"So the project outcome as measured by an owner won’t exactly align with the success factors of the project outcome for the contractor, nor do the risks perfectly align. And so that creates a natural tension between the two. And if not done right, there ends up being winners and losers."
"But for an owner, oversight is their primary role. And they need to be able to do that in such a way as not to usurp or interfere with the contractor self-governance."
The podcast by project managers for project managers. Who looks out for the owner’s interest to achieve project success while maximizing project value? In this episode Herbert Marshall talks about differentiating project oversight from project management. We look at some best practices for project oversight from the perspective of an owner or client.
01:44 … Nuclear Power Plant Project Role
02:55 … Lessons Learned from Project
05:00 … Defining Project Oversight
06:09 … Project Oversight vs. Project Management Roles
08:24 … Project Oversight Independence
10:32 … Inspiration for the Project Oversight Guide
13:40 … Oversight Advice
16:36 … The Role of the Oversight Professional
21:10 … When to Add an Oversight Professional
24:30 … Project Oversight Examples
28:30 … Get in Touch with Herb
29:47 … Closing
HERB MARSHALL: So the project outcome as measured by an owner won’t exactly align with the success factors of the project outcome for the contractor, nor do the risks perfectly align. And so that creates a natural tension between the two. And if not done right, there ends up being winners and losers.
WENDY GROUNDS: Welcome to Manage This, the podcast by project managers for project managers. We’re glad you’re joining us. If you like what you hear, please visit us at Velociteach.com and leave us a comment on our Manage This Podcast page. I’m Wendy Grounds, and joining me is Bill Yates.
BILL YATES: Hi, Wendy.
WENDY GROUNDS: Hi, Bill. So today we have an interesting guest; don’t we?
BILL YATES: Yes, we do. Herb Marshall is our guest. He’s a retired nuclear-navy officer and a former lead field assistant for the Department of Energy, Naval Reactors. He’s got over 20 years of experience overseeing major capital projects, including construction, fabrication, logistics, overhaul, operations, maintenance, and vessel decommissioning and dismantlement.
Herb brings a wealth of knowledge to us. And we’re going to talk about something that I bet none of our listeners have really considered before, and the topic is project oversight. So we’re going to distinguish or delineate project oversight from project management and talk about this gap that Herb has seen in the marketplace with projects, which is many times we don’t really have someone representing the owner. So we’re going to talk about that with Herb.
WENDY GROUNDS: Yes, it’s going to be interesting. And Herb wrote a book. It’s called “The Project Oversight Guide.” And we’re going to talk to him a bit more about that, as well. Hi, Herb. We’re so thrilled to have you join us today.
HERB MARSHALL: Thank you for having me.
WENDY GROUNDS: To start off with, let’s get a little bit about your background. You were previously hired as the chief architect of the project oversight model for a billion-dollar decontamination and dismantlement of a U.S. commercial nuclear power plant. Can you describe your role on that project?
HERB MARSHALL: Oh, sure. Well, I was brought in when they were struggling in the beginning, and they decided we need some subject matter expertise if we’re going to oversee this contractor doing this decommissioning while we’re retaining the nuclear license. So I began where you probably need to begin, which is designing the organizational structure, working with the leadership, writing the job descriptions for the oversight staff and management positions. And then I worked with various department heads and wrote about 20 or so of the protocols and processes, developed the key performance indicators, the reporting structure, the project management manual, and developed and administered about 40 hours of training. I also developed an Oversight Professional Certification Program and chaired the final certification oral boards for those would-be candidates.
WENDY GROUNDS: So what was your lessons learned from this experience?
HERB MARSHALL: Boy, it was an eye-opener. The lessons learned were actually the genesis for the book, the Project Oversight Guide, “POG” I affectionately call it. And I would say there’s four primary lessons learned from my experience.
First, there’s no textbook out there on the best practices for project oversight, from the perspective of an owner or client. And if you do a search online, you’ll find there’s no shortage of literature on expertise and the art form of project management and its tools and techniques. So with there being no real standard for owner oversight, my opinion is owners are disadvantaged by this asymmetric information deficit as it gives contractors and project teams a built-in inherent advantage over their clients. So I really wanted to close the gap on that.
The second thing is that policies, procedures, and protocols are no substitute for oversight culture. So, you know, if you know my history at Naval Reactors, they have a “75 years of oversight” culture. And that needed to be paired with procedures and processes in order for it to be effective.
The third thing I would say is that the leadership there tended to think that by virtue of a person being a smart and high-performing engineer, that made them competent to fulfill an oversight role. And most folks don’t realize that oversight is somewhat its own discipline requiring experience and training and a firm grasp of its best practices. So that was an important lesson that drove me to wanting to write the book.
And lastly I’d say most of the leadership sees oversight as overhead, when it’s actually a value center that pays for itself, much like project controls does. Studies have shown you get a 3X return on your project controls if you spend the money on it. So those are my four primary lessons learned.
BILL YATES: Those are great. And we want to spend the majority of our time talking about that book, and I appreciate you calling it the “The POG.” That’s the way we’ve been affectionately referring to it as we’ve been going through and reading and taking notes. And it’s called “The Project Oversight Guide: An Owner’s Guide to Oversight of Capital Projects, Project Teams, and General Contractors for Delivering the Expected Return on Your Investment.”
Now, one of the first things that we want to talk about is because we agree with you. When you search, when you look, there’s tons of information out there about project management, the role of the project manager, program management, the role of the PM in that regard, but not about project oversight. So first, give us a definition. How do you define project oversight?
HERB MARSHALL: As a straight definition, I would define it as advocating the owner’s interest in order to achieve the owner’s project success factors while maximizing project value by providing a risk benefit, a certainty benefit, and a quality benefit. And those three benefits add up to the value of oversight and how it saves clients and owners money.
BILL YATES: Excellent. You made that distinction between project management and project oversight. So spin that out for our listeners. What’s different with the role of project oversight versus project management?
HERB MARSHALL: Well, the example I like to use is that of a homeowner. If you’re a homeowner, and you are going to build an extension on your house, and you pay this fixed-bid contractor to build that extension on your house, no homeowner is going to vacation in the Bahamas and drink piña coladas on the beach and wait for the contractor to tell them that the extension is done. Right? That homeowner has an interest in ensuring the safety of the home because his children are going to play there. He has an interest in the stewardship of the money, so it’s not poorly spent. He has, for resale value, he has an interest in that they comply, whatever their governing rules are, building inspectors and the like. And he also cares that it’s done prudently. So those are the foundational elements of oversight.
And the other thing I would say is that project management does do some oversight; right? In “The POG” I lay out that there’s elements that go into project management that are related to oversight functions. But it’s really a collaborative duty. Anyone who’s been in like a major capital project knows that a first-line supervisor has to oversee his folks. But half the time he’s chasing down supply chain and receipt inspection and dealing with personnel issues, and there’s that little bit of time you have to go to the site and make sure they’re doing what they’re supposed to be doing. So in that respect, oversight as a collaborative duty is secondary. But for an owner, oversight is their primary role. And they need to be able to do that in such a way as not to usurp or interfere with the contractor self-governance.
BILL YATES: Got it. And you bring up a key word here, which is owner. Well, the analogy of the homeowner because, yeah, the project teams, you know, when I’m building a home or a major addition, project teams come and go. They all may have different project managers. Maybe there’s a general contractor overseeing the whole thing, but at the end of the day, they leave, and it’s my house. I’ve got to live in it. Right? So to your point, I’m not drinking piña coladas on the beach. I’m down there looking at the jobsite, and I’ve got this interest.
HERB MARSHALL: Right.
BILL YATES: And one of the keys that I like about this is this oversight role is serving the owner. Therefore, they need to be independent from the project manager, independent from the project team. Talk about the need for that independence.
HERB MARSHALL: When you think about it, the quality control is built into the PM. So sometimes you can get project oversight confused with quality control. And I like to say there’s stuff that is inside the project management bubble, and there’s stuff that’s outside the project management bubble. So when you look at the PMBOK, the Project Management Body of Knowledge, it doesn’t talk about owners at all. I mean, owner is just another stakeholder. Right? And so when you think of oversight, you’ve got to think of being outside the project management infrastructure. So that by essence makes it independent.
And then the other thing is, even a good faith contractor and owner have different measures of success and different considerations, different motivations. Even, you know, so the project outcome as measured by an owner won’t exactly align with the success factors of the project outcome for the contractor, nor do the risks perfectly align. And so that creates a natural tension between the two. And if not done right, there ends up being winners and losers.
So one of my pet peeves is you read stats about project failure, as if it’s some monolith. But there are plenty of cases where the contractor wins. Westinghouse Building Global is a great example of that, where Westinghouse goes bankrupt, but the Shaw Group actually made a lot of money and were sold later for a premium. So was it a project failure or not? Well, it was a project failure for Westinghouse. And so that’s that dynamic of intention and difference between being independent oversight representing the owner, advocating for the owner’s interest, because who else is going to do it, right and being a private project manager team.
BILL YATES: Yeah, that’s so good. One of the things that I wanted you to describe to listeners is the basis for this model. You had a long career in the Navy. You worked with Naval Reactors program. How did that program inspire your book?
HERB MARSHALL: So there’s no better place to learn about owner representation than at Naval Reactor. So I was a nuclear-navy guy. I came up through the ranks. Initially was enlisted. Got my commission. As a part of that commission I interviewed with Naval Reactors department head, and was selected to go work for one of the field offices. And I did that for a little over 11 years. And like I say, there’s no better place to learn. They have a 75-year culture of overseeing the fabrication of national assets, submarines and aircraft carriers, but they also have a lot of land-based facilities that they oversee. And you don’t hear about them in the news; right? So they must be doing something right; right?
It’s also one of the things I took away from it was an understanding that oversight is a particularly nuanced discipline to master. And even more so in the Naval Reactors program because when you’re in the field, I was a reactor servicing lead of the largest shipyard for doing reactor servicing in the country. And you’re dealing with a fleet, you know, so the ship has its own infrastructure going up in the Department of Defense and the Navy. You’re dealing with a prime contractor who could be a number of the major contractors that you may know of. And then you’re dealing with a shipyard who’s actually the general contractor for whatever major project you’re doing.
So you have all of these giants with their own infrastructure and power structures and interests. And there you are, giving them comments about things that are going on that could affect a ship going to sea, or it could affect shipyard managers’ promotions, and those kind of things. And I like to refer to it as “dancing with elephants” because, if you screw up your oversight, any one of those groups’ leadership could just step on you. So that to me was like the greatest environment to kind of hone in on what makes good oversight versus bad oversight. And there’s nothing I dislike more than bad oversight. In my experience, no contractor likes oversight. Especially bad oversight. But no contractor likes oversight. And it’s common sense; right?
So if you’re an underperforming contractor, the last thing you want is people in the field identifying your poor performance; right? If you’re a high-performing contractor, the last thing you want is some oversight from the owner, in your knickers, interfering with your self-governance. So in either case you’re not in a likeable role. And so you really need to be good at it and build up your credibility and show the contractor that you’re not out to get them, that you’re not going to be overbearing, you’re not going to usurp their authority, you’re just advocating for the owner’s interest for a win-win outcome.
WENDY GROUNDS: You have designed a very practical, very helpful list of do’s and don’ts that offer advice for the oversight professional so that they can know what to say or what to write, and how to act in the field. Can you just give us an example of one of those?
HERB MARSHALL: Oh, there’s a long list in there.
BILL YATES: Yeah, real long lists, yeah.
WENDY GROUNDS: We’re going to make you pick one.
BILL YATES: Pick your favorite child.
HERB MARSHALL: Most of them I have lived. So let me break it down into two main categories. The first one would be shifting the contractor’s risk to the owner. And there’s a number of ways and do’s and don’ts that relate to not shifting the contractor’s risk to the owner. One of the ways that’s done is by you’re in the field, and you become the contractor’s sounding board and test laboratory for ideas. And that contractor you’ve got to know, hey, your authority is derived from oversight.
And as soon as you start, there are cases where you need to provide a helping hand to the contractor. You just need to be careful about crossing that line when you’re agreeing with ideas that he may have about how to do one thing or another. I mean, a lot of this stuff has already been planned for months and months in advance. And you don’t know all their planning. So you giving him your input and then acting on it shifts risk from the contractor to the owner.
And then the other example that I would give is the example that I talk about in the book as being the “best inspector” scenario. And what that really entails is when an oversight person, who is a subject matter expert, starts to cross out of the oversight role and in essence work as an inspector for the contractor. So the example I would give, I was once on an oversight team pouring a pad for an interim state fuel facility. And the pouring of that concrete pad is very detailed because it’s got to last such a number of years, and the concrete mix has got to be such-and-such. We had a guy who was in an oversight role who was an expert at that.
And he would go down, and he would inspect and give the foreman direction, and he knew more about it that anybody else onsite. And he became the best inspector for the contractor, to the point that one time he needed to be somewhere else, and they had scheduled a pour. He wasn’t there at the pre-job brief. And the foreman was like, oh, we can’t go on with this pour today because this oversight guy isn’t here. And I was like, uh, that oversight guy is not part of your infrastructure. You’re not going to delay the work because our guy is not going to be your best inspector today. And in being the best inspector, obviously he’s crossing out of the oversight role, and he’s assuming risk for the owner because, if he’s wrong, the contractor can go, oh, wait a minute, you know, the owner told us.
BILL YATES: That is so true. I found these lists to be so helpful. There were, like, four or five pages just dedicated to lists of do’s and don’ts, like internal communication, external communication, actions in the field. They were so practical. And it really helped me understand what is the difference in this role of someone on the oversight team versus the project team. Because to your point, that’s actually the one that I enlisted as one of my favorites, too, is don’t become a sounding board. Don’t become part of the testing team for the contractor. Because then guess what? You’ve just taken on that risk, you know, to your point.
HERB MARSHALL: Right.
BILL YATES: I remember hearing a comedian talking about he doesn’t like the self-checkout lines because he’s like, I didn’t go to the store to work for the store. I just came here to buy something.
HERB MARSHALL: That’s a good example, yes.
BILL YATES: And he talked about turning the light on and putting on his apron or whatever, okay, I guess I’m working here now. That’s what the oversight professional is doing if they step over it. But that leads me to my next question. This position, it’s really got to be hard to hire for and to train correctly because you need somebody with that subject matter expertise. That person is likely – there’s going to be a natural inclination of whoa, whoa, whoa, that’s not right. Let me show you how that should be done.
You know, they’re going to try to get in the business of that contractor because that’s what they’re good at. So there’s that natural tension of wanting to get too involved, basically become a part of their project team. So how do you address that, and is that just something I perceive as an issue, or is that for real?
HERB MARSHALL: Oh, that is a for real. And it’s one of the biggest, I would say, issues with getting it right. So a small section of the book I talk about an example of when and how you go about giving the contractor a helping hand, where you step out of that role. But it’s actually a clear-cut thing where you talk to your leadership, and you see that they’re struggling on something, and you either have third-party or a personal experience that could help them, and you go, hey, boss, owner, whoever, I’m going to go, have to have this sit-down, whatever, and I’m going to give them some insight to how they can improve this procedure. This is what I’m going to do. It’s defined. And then I’m going to put my oversight hat back on.
And so there’s ways to do it. I mean, I actually wrote in the book a lot about staffing, which gets to your question about having the soft skills and the social intelligence to be in an oversight role. And, you know, a lot of PMs, to their credit, are go-getters; right? They are alphas who are driven to get the job done. And so you take a guy like that, you put him in an oversight role, he’s going to have that tendency to want to cross over…
BILL YATES: It’s going to be a struggle, yeah.
HERB MARSHALL: …and help. Right? And so I’m doing a project right now in Canada, and they did that very thing. They had some really sharp PMs, and but they didn’t think that the contractor was being proactive enough and doing enough. And they inserted themselves. And you know where they are now? They’re in litigation. Yeah, so there’s that natural tension. And so you can’t be overly assertive, and you have to be very careful about hiring management people with the right kind of pedigree and temperament to be in an oversight world, to know to sit back and go, “Hey, I understand your question. Have you vetted that question with your leadership?” As opposed to going, well, you should do this, this, this, and this. Right.
So we take the homeowner example. You build an extension and they’re putting the framing up. And you know a lot about framing. And you go out there, and you start directing his workers about how to do the framing. Well, when their supervisor comes to the site, and it’s not the way he wanted, that’s a problem.
BILL YATES: Yeah. And guess who’s going to pay for it?
HERB MARSHALL: That’s right.
BILL YATES: Right. Man, yeah, that is so good. And I see, like back to your first experience when you were starting to assemble these thoughts and codify and come up with the thoughts for this book, you must have seen the good, bad, and ugly out in the field and said, okay, we need to come up with some firm checklists. We need to delineate this role because it’s tricky. It’s not typical for most projects.
HERB MARSHALL: Yes. There’s about 20 oversight insights in there, and I would say three quarters of them were from lived experience of things that – the good and bad and ugly of things that I’ve done. I changed the names. I think it’s Bob and John all the way throughout.
BILL YATES: Yeah, yeah. That was you. Okay, those scenarios, I thought, man, he’s quoting. This is a really good memory he’s got. Okay, that’s good, that’s good.
I’ve got a general question, Herb, and this is for those project managers that are listening to this, some are thinking, okay, I’m lucky. My project is so small, and I’ve got a close enough relationship with the owner. The owner is giving me that oversight. But for others they’re thinking, ooh, boy, my owner’s distant. I can never get a hold of him when I need to. I feel sometimes we’re moving on with our milestones when I’m not really sure there’s going to be a bigger issue later. This role of an oversight team, or at least a team member representing the owner, could really be helpful. Can you give some guidance as to, okay, how big or complicated does a project need to be when somebody needs to go, hey, this is a great opportunity for an oversight team or professional.
HERB MARSHALL: Yes. I certainly can. I mean, let me say first that, when oversight is done right, and the contractor is a learning organization, they can work together to get the best outcome for both of them. And I actually have a spreadsheet that can calculate the return on investment for an oversight staffing team. And so obviously you need less oversight staff, depending on the size of the project. Let me go to the smallest project first. So in my little town they were putting an extension on the hospital. And the extension was somewhere around $5 million. And there’s no oversight professional in a town of 4,000. So you had the City Chamber of Commerce. And they said, well, who all in here is going to watch this contractor?
And a friend of mine who is the bar owner and former quarterback of the football team in town said “I’ll do it” because he’s got that personality, he’s not afraid of anyone. So he started watching the contractor and had feedback on what the contractor was doing, how he was showing up and meeting his commitments and the requirements of the project and this, that. So he started poking at the contractor. Contractor went to Chamber of Commerce and got him fired. And why is that? Because the Chamber of Commerce or the City Council was, they, were insecure about understanding their oversight role. And the power and skill and history of this contractor was able to overpower them so that they capitulated and said, you know, basically got rid of the oversight and said do what you want.
And so I gave my friend the book, and he read, and he’s like, I wish I or anyone in this City Council had this before because we would have been able to maintain our credibility and stand our ground with the contractor to get a better result of that hospital wing. So in that case, if it’s a $5 million project, just having one oversight guy, who all-in costs you $200,000 for a project that goes 20% over budget, which would be an extra million dollars, the net on that is $800,000. So even a small project, you know, you can adjust to having just one oversight guy, or just training someone to understand that role so they could do a better job of advocating the owner’s interests.
WENDY GROUNDS: Herb, can you give us some examples of when you’ve seen resources, opportunities, or money that’s been wasted in a project, something that’s not been executed to its full potential?
HERB MARSHALL: If you’re a student of project management, then you know that a lot of the failures of major capital projects really can be laid at the foot of the owners. There’s a lot of error precursors are associated with the owner in terms of their planning, having the right set of requirements, knowing the project end state, allowing for scope creep, interfering with the contractor self-governance, the list goes on and on and on of things that that the owner can do that can lead to project failure.
But I’ll give you a more recent example of why this whole owner oversight thing is this gap in project management. So there’s a company who just signed a $100 million project to dismantle. I won’t say what they were dismantling so I don’t give away who it is. And they were a billion dollar company. They contracted with an EPC, and they signed a contract, and there’s four people that are on the owner’s oversight team that were left after the plant was shut down. And they just said, “Oh, you’re smart engineers, we’re going to leave you here to oversee this.” Right?
So the leader of that went and saw the project manager for the contractor after the signing. And the project manager’s reaction was, uh, who are you again? And why are you here? Right? And it’s like, oh, you didn’t build in your oversight authority into the contract. You didn’t start talking, creating this relationship with the project management during contract conformance. He has no idea what your role is. That’s going to be a problem.
But even worse than that, the four of them got back to the office, and one of them looked at the rest of the team and said, “Well, what do we do now?” So you could see that there’s this void of knowing how to build into the whole process from beginning to end, from planning to the contract to execution, the oversight role. And these folks are really, really smart folks.
But I like to use the playing chess analogy; right? So I’m a former competitive chess player, a book player, where you study all the openings and that kind of thing, middlegame, and you do it for hours or whatever. You learn the game by being a book player. And I’ve traveled around a lot, I RV’d for six years, and I would meet people who were like the best chess player in their little town or whatever. I would win every game. And the difference is that having the rigor of having studied it, it outmatches a person who’s just smart and trying to figure out chess as they go. And so that’s the difference between having an oversight professional who is up there helping them out on this project, and having smart people trying to figure it out as they go.
BILL YATES: That’s good. That’s sobering. It’s so true, and it’s sobering. And just one other quick plug for your book. I remember as I was reading through on page 62 you’ve got key contract considerations. So talking about contracts. And contracts come first; right? No work is done until that contract gets signed. And to me, this was always important to me as a project manager. First thing I’d do if I was assigned to a project is, okay, give me a copy of the contact. I want to see what we’re legally obligated to do because this can vary from project to project.
So the contract considerations that you have in here are written in the book. This is gold. This is such a perfect checklist that people should have before they start breaking ground; right? Like you said, you want to have that relationship set up. You want to have the roles and responsibilities defined upfront so that that project manager is not coming back later and saying, hey, who are you? So this is powerful stuff.
HERB MARSHALL: Oh, thank you.
WENDY GROUNDS: Herb, if our listeners want to reach out to you, what’s the best way that they can get in touch with you?
HERB MARSHALL: The best way to get a hold of me is honestly email, which is mailto:email@example.com. Or you can call my personal business number, 307-222-6350. That’s 307, 222-6350. And you can follow me on LinkedIn or Twitter. My Twitter handle is @oversightadv. Website: https://oversightadvantage.com/
WENDY GROUNDS: We’ll put links to that in the transcript so that our listeners can go straight to them.
HERB MARSHALL: Fabulous.
BILL YATES: Herb, this has been tremendous. Again, this book, I was teasing you before we started recording, this is not a page-turning novel, you know, suspense novel type thing. This is a textbook that goes through the steps that one should take to properly insert project oversight into those projects so that the owner and the project manager are living in harmony and understand who should be doing what. So well done with this. This is a great contribution. I agree, this is not something that I see out there. And when we started having conversations with you, and you were describing the role, this was a conversation we really wanted to have with you for our listeners to be able to pick up on. So thank you for your time.
HERB MARSHALL: Thank you for having me.
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