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Power Industrial Project Scheduling Consultants

Read the second in Holloway’s series of articles on project management techniques used by owners and contractors to speed-up delivery of power and other industrial facilities, through the compression or reduction of engineering, procurement and construction schedule and time frames. The primary objective of these articles is to identify and outline techniques that should be used in the industry, with emphasis on techniques that have proven successful on Holloway’s power and industrial facilities. This article embellishes techniques that were introduced and summarized in Part I.

OWNER PROJECT MANAGEMENT

1. Promote a “Make it Happen” attitude among owner personnel and all project team members

Plan projects proactively and address uncertainties as early as possible. Take on difficult issues (such as government permitting) as early as possible. As one client stated to us, “Think of projects as falling into two classes: fast-track and ultra-fast-track.” When problems are encountered, maintain and promote a “work around” attitude, doing what must be done to maintain project objectives.

2. Formalize the Project Execution Plan

A comprehensive Project Execution Plan should be prepared as soon as the financial commitment for the project is obtained. This document should fully define project scope, the project team and organization chart, the construction philosophy and sequence, work packaging, and start-up priorities and sequence. The Project Execution Plan should be treated as a living, working document and should be updated as necessary.

3. Promote and enforce a win-win attitude between owner and contractor personnel

Consider allowing contractors to correct obvious bid and arithmetical mistakes and omissions. Don’t let denial of reasonable contractor profit become an objective of the owner’s organization. If the project is truly “schedule-driven”, know what the contractor’s real costs are, allow him a fair and reasonable profit, and require him/her to deliver. Work with the contractor to establish high performance expectations and make sure these are agreed upon and well communicated throughout all organizations. Don’t be reluctant to ask for the details of the contractor’s estimate or to question any discrepancies (high or low) between his numbers and the owner’s.

4. Conduct cross-training and rotate personnel assignments in order to promote the integration of plant construction and plant operation

Successful projects and effective project schedules are often associated with senior project managers who are fully knowledgeable in both plant construction and operations. A planned, long-term personnel development program that integrates training and experience in both construction and operations will serve the long-term interests of the owner.

5. Project performance improves with fewer layers of management

A current trend in large corporate organizations and a noticeable characteristic of many other firms is reduced layers of management. Experience has shown that, with this approach, both communication and accountability can improve dramatically. At the project level, owners should investigate ways in which the number of management personnel can be reduced.

6. Tie project manager salaries to plant operating profits and/or construction cost savings

Good project management performance can become even better when project managers’ compensation is tied to plant operating profits and/or construction cost/schedule savings. Highly motivated project managers attribute their success to the fact that their salaries are tied to plant financial performance, which is usually closely related to project performance.

ENGINEERING AND DESIGN PHASE MANAGEMENT

Formalize the constructability program and make use of respected industry guides. Cost and schedule performance can be significantly enhanced with an effective project constructability program. In a study of 75 industrial projects, focused on determinants of project success, it was found that the probability of schedule performance success improved from 2 percent to 33 percent, when combined with a sound constructability program.

1. Establish a common purpose between engineering and construction

Don’t view engineering and construction as competing organizations with competing objectives. Have the team involving both engineering and construction personnel develop an integrated project schedule, which effectively merges engineering, procurement, construction and start-up schedules. From day one, promote a shared vision of what constitutes project success, but be fully aware of the need for balancing schedule performance tradeoffs between engineering and construction. Don’t be afraid to let field construction need-dates “drive” the engineering schedule and be prepared for engineering overtime when it becomes necessary.

2. Assemble the project team and start-up managers and fully plan the start-up sequence in detail

Thoroughly plan the start-up sequence. Get the right people involved and allow adequate time for this activity. Do it early and do it right the first time.

3. Produce fast-track/semi-detailed engineering packages that allow early field starts

For many conventional or standard plant designs, it is possible to produce a fast-track/semi-detailed bid package (including both plans and specifications) at the 10-20 percent design stage that can be used to acquire unit price, fixed price or lump-sum bids. This package should include a conceptual plot plan, general arrangement diagrams listing of major equipment, design criteria specifications for all major systems required system redundancies, mechanical turnover and performance test procedures, and may even include standard foundation sizes, one-line diagrams, and standard piping isometrics. In addition, the package should include conceptual quantities and labor-hours, which can be used as the basis for quantity and cost tracking.

In order to accommodate follow-on changes in actual quantities during the bid process owners should solicit unit prices on selected quantities that will likely change. These unit prices can then be used to either increase or decrease the contract amount when quantities change based on completed plans and specifications. In this way the change order process can be efficient, abuses can be minimized, and the lack of incentives associated with Time and Materials and cost reimbursable work can be avoided.

4. Engineering should be “package-driven” and focused on the critical path

Engineering needs to be “package-driven”, rather than “discipline-driven.” For example, the initial focus should be on the excavation package rather than the entire civil package. The Project Execution Plan should clearly layout how the entire project will be “packaged.” Engineering must also stay focused on its critical path activities, such as long lead equipment.

5. Standardize plant designs to the greatest extent possible

Promote plant design standardization as a way to accelerate repetitive “off-the-shelf” engineering, procurement, and materials management. For example, independent power producers have developed standard “reference plants” that will incorporate 40-50 percent off-the-shelf components, and result in an estimated 12-month overall schedule savings. Strict adherence to established standards can facilitate an accelerated schedule.

Review deviations from established standards at the end of every project. If necessary, as economic conditions change or as technology advances, modify the standard and reassert the company commitment to the standard. Standardized component designs are particularly appropriate for equipment foundations, pipe racks, pipe spools, and equipment skids. Whenever possible, avoid “extras” which can increase requirements placed on other components of the design, and project cost and schedule.

An EPC consortium was awarded three power plant projects at one time with the idea that they would be constructed consecutively and that significant benefits from standardization and the learning curve would accumulate. The effects of this approach have included standardization of design, effective reapplication of lessons learned, higher degree of trust among contractor and owner personnel, and less design “gold-plating.” Overall, this approach was a success for both owner and contractor. However, with increased design standardization, procurement activities become more significant to the overall critical path. Lack of standardization and design changes for valves and system control loops can be devastating to the project schedule, and thus should be avoided.

6. Optimize the extent and approach to modularization/pre-assembly

One recent study concluded that the greatest opportunity for plant cost savings appears in shortening the construction schedule through the use of modular construction techniques. Schedule compression is a major potential benefit of modularization and pre-assembly. Although it may not come without a price, such as increases in engineering, materials, transportation expense, or coordination effort, modularization promotes concurrent activity, which can lead to reduced project durations.

7. Enforce a strict change control procedure from the outset

Except for extreme circumstances, allow no changes to the construction contract that extend the project schedule. If the scope of the work grows, work with the contractors to obtain sufficient additional resources to perform the work concurrent with base contract work.

8. Promote engineering performance excellence with financial incentives

Initiate an incentive bonus program for plant engineering and base engineering year-end or project-end bonuses on bulk quantity usage compared against quantity targets or on annual plant operations efficiency/profits. Although, admittedly, these programs can be difficult to administer fairly and effectively, several IPP and design consultants have implemented such programs with a fair amount of success.

9. Expedite small, critical projects through “construction-based engineering”.

One large utility client, in order to better service small projects within their operating plants, has established “Plant Assistance Teams”, composed of a half-dozen or so engineers that relocate to the site in order to expedite and improve the quality of engineering. Communication lines are improved as engineer availability is improved and as site conditions become better known; also, projects appear to be less “gold-plated” and only required construction drawings are produced.

Schedule planning and control techniques that result in reduce durations will be addressed in Part III of this series.

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