The Hidden Costs of Project Delays

Before diving into the solution, it's worth understanding the true cost of construction delays in industrial settings:

• Direct financial impacts: Extended contractor costs, equipment rental extensions, and additional labor expenses

• Opportunity costs: Delayed production start and deferred revenue generation

• Operational disruption: Cascading effects on interconnected processes and systems

• Reputational damage: Reduced trust in delivery promises, both internally and externally

• Team morale: Frustration, blame culture, and reduced motivation

For Shell Pernis, these combined costs ran into millions of euros annually. More importantly, the chronic delivery problems created organizational friction that hindered performance improvement efforts. When only 22% of projects meet their deadlines, teams begin to build buffers and contingencies that further distort planning and resource allocation.

Diagnosing the Root Causes

Our analysis revealed three fundamental issues behind Shell's project delivery challenges:

1. Flawed Project Management Systems

The existing approach to project management emphasized detailed upfront planning but lacked mechanisms to:

• Adapt to inevitable changes and disruptions

• Coordinate effectively across different teams and contractors

• Ensure prerequisites were fully satisfied before work began

• Create reliable short-term commitments aligned with master schedules

2. Poor Communication Models

Communication followed traditional hierarchical patterns that:

• Created information silos between functions and contractors

• Delayed critical updates about constraints and roadblocks

• Emphasized reporting problems rather than solving them

• Lacked structured forums for collaborative planning

3. Insufficient Contractor Integration

Contractors were managed through conventional contractual relationships that:

• Limited their involvement in planning and problem-solving

• Created adversarial rather than collaborative dynamics

• Reduced their sense of ownership and initiative

• Failed to leverage their practical expertise and insights

These issues manifested in practical problems: materials arriving late, rework due to quality issues, uncontrolled work-in-progress, and unreliable planning. Most critically, they created a culture where teams had little intrinsic motivation to meet deadlines they didn't believe were realistic.

The Last Planner System: A Lean Approach to Project Management

To address these challenges, we implemented the Last Planner System (LPS), a Lean construction methodology that fundamentally changes how projects are planned and executed. While the technical details are complex, the core principles are straightforward:

1. Collaborative Phase Scheduling

Rather than imposing top-down schedules, LPS brings together all stakeholders—including contractors—to create phase schedules collaboratively. This process:

• Aligns everyone around common milestones and handoffs

• Identifies dependencies and constraints early

• Creates mutual understanding and commitment

• Establishes realistic timeframes based on collective expertise

2. Systematic Workload Control

LPS introduces a multi-level planning hierarchy:

• Master Schedule: Long-range planning (low detail)

• Look-Ahead Planning: Medium-range constraint removal (6-8 weeks)

• Weekly Work Planning: Short-range commitment-based execution

The critical innovation is that work is only released for execution when all prerequisites are satisfied. This prevents the common problem of starting tasks that cannot be completed, which ties up resources and creates cascading delays.

3. Continuous Improvement Process

LPS embeds learning directly into the project management process through:

• Weekly measurement of plan reliability (Percent Plan Complete)

• Root cause analysis of any missed commitments

• Systematic constraint removal before work begins

• Regular improvement discussions focused on process, not blame

Implementation Approach

Implementing such a fundamental change in project management practices required a carefully structured approach:

Phase 1: Foundation Building

• Comprehensive training for Shell team members and key contractors (€400,000 investment)

• Development of standardized LPS processes and tools

• Creation of physical and digital visual management systems

• Establishment of new meeting rhythms and decision processes

Phase 2: Pilot Projects

• Selection of two representative projects for initial implementation

• Intensive coaching and support during early adoption

• Documentation of learnings and adaptation of approach

• Demonstration of results to build broader buy-in

Phase 3: Systematic Rollout

• Expansion to all active construction projects

• Development of internal capabilities to sustain the system

• Integration with existing project management tools

• Establishment of performance metrics and review processes

Quantitative Results

The transformation in project delivery was remarkable:

• Delivery reliability increased from 22% to 70% within 12 months

• Productivity (Percent Plan Complete) improved to 80%

• Lead times reduced by 40-50% across project portfolios

• Cost savings of 15-20%, averaging €592,304 per project

• Total financial returns: €740,000 (HSU Project) and €2,090,000 (Tank Project)

• Return on Investment: Total implementation cost of €722,000 yielded multimillion-euro returns

These numbers tell only part of the story. The real impact came from the cultural and behavioral changes the system enabled.

Qualitative Transformations

Beyond the impressive financial results, the implementation created fundamental changes in how project teams functioned:

Enhanced Team Motivation

Contractors reported significantly higher motivation and job satisfaction. Being involved in planning and having greater control over their work created intrinsic motivation that external incentives couldn't match.

"Now I can actually plan my work effectively," explained one contractor supervisor. "I only commit to what I know can be done, and I have the authority to ensure prerequisites are in place before we start. It's completely changed how I feel about coming to work."

Improved Collaboration

The structured collaborative processes broke down longstanding silos between Shell teams and contractors. Regular planning sessions created mutual understanding and trust that transformed how teams worked together.

"Before, we'd get a schedule and try to follow it, even when we knew it wasn't realistic," noted a contractor manager. "Now we're part of creating the plan, which means we're committed to making it happen."

More Reliable Planning

As weekly plan reliability improved, teams gained confidence in the planning process. This created a virtuous cycle where better planning led to better execution, which in turn supported more accurate future planning.

"We used to joke that project schedules were fantasy documents," admitted a Shell project manager. "Now our schedules actually mean something because they're built on reliable commitments from the people doing the work."

Proactive Problem Solving

The Look-Ahead planning process identified constraints weeks before they would impact execution. This shifted teams from reactive firefighting to proactive constraint removal.

"We're solving problems before they become crises," explained a quality control specialist. "The systematic constraint identification process means we address issues when there's still time to find good solutions."

Key Success Factors

Several factors were critical to the successful transformation:

1. Leadership Commitment

Shell's leadership demonstrated unwavering commitment to the new approach, participating in training, attending planning sessions, and consistently reinforcing the importance of the new practices.

2. Contractor Engagement

Rather than imposing the system on contractors, Shell engaged them as partners in the transformation. Their practical knowledge and buy-in were essential to making the system work.

3. Focus on Learning, Not Blame

The implementation emphasized that missed commitments were opportunities for process improvement, not occasions for blame. This created psychological safety that enabled honest communication about constraints and challenges.

4. Balanced Metrics

Performance measurement balanced traditional outcome metrics (cost, schedule) with process metrics (plan reliability, constraint removal effectiveness). This ensured teams focused on the right behaviors, not just the end results.

5. Technology Support

While the core of LPS is about human collaboration, digital tools (including Primavera integration) supported the process by making information visible and accessible to all participants.

Applying These Lessons Beyond Construction

While this case focused on industrial construction, the principles apply to any complex operational environment where coordination, reliability, and continuous improvement matter. We've successfully adapted this approach for:

• Product development teams struggling with release schedules

• Marketing departments managing complex campaign rollouts

• E-commerce operations coordinating multiple functions for launches

• Supply chain transformations requiring cross-functional alignment

The core insights remain consistent across these contexts:

1. Those closest to the work should plan the work (with appropriate guidance)

2. Only release work when prerequisites are satisfied

3. Make and keep short-term commitments rather than pushing for unrealistic targets

4. Measure plan reliability and improve the planning process

5. Focus on flow and coordination, not just individual task efficiency

Is Your Organization Ready for Operational Excellence?

If your organization struggles with project delays, coordination challenges, or unpredictable execution, consider whether a systematic approach to workload control might be the solution.

The most successful implementations share these characteristics:

• Leadership willing to change how work is planned and managed

• Cultural readiness for more collaborative approaches

• Commitment to developing new capabilities and processes

• Patience to allow the system to demonstrate results

At Nate&Partners, we specialize in adapting these proven principles to diverse operational contexts. Through our unique model of embedding trained consultants within your team, we can help you implement the right system for your specific challenges.

Chrystian Moreno is the Partner & Chief PMO at Nate&PartnersNate&Partners, a strategic consulting firm that embeds exceptional talent within ambitious organizations. With expertise in Lean methodologies and operational excellence, Chrystian has helped companies across industries transform their performance through systematic process improvement.