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2015 CII Annual Conference August 3–5 • Boston, Massachusetts
Successful Delivery of Mega-Projects
Dean Poillucci, Skanska
RT 315
RT 315
Carlos Caldas, UT-Austin
Ubaldo T. Ciminieri, Technip
Robin Duszynski, Wood Group Mustang
Ashish Gupta, UT-Austin
Steven Heise, eProject Management
Terence Henn, American Transmission
Mark Howard, Emerson process Management
Howard Irwin, FHR – Koch Industries
Jeff Knight, ConocoPhillips
David Luchtefeld, Black & Veatch
Samara Merrighi, Vale
Steve Owen, Southern Company
Dean Poillucci, Skanska (Co-Vice Chair)
Mike Pratt, Bechtel
Ronnie Stephens, The Williams Companies (Chair)
David Taylor, Emerson Process Management (Co-Vice Chair)
Mauricio Villegas, IHI E&C International Co.
John White, Department of Energy
Ward Witherspoon, ConocoPhillips
Have you ever been involved or think that you will be a part of a mega-project planning or execution team?
A. Yes
B. No
0%0%
Agenda
• Research Objectives and Methodology
• Data Analyses and Research Products
• IR 315-2 Mega-Project Assessment of Criticality Tool (MPACT)
• Case Studies
• Benefits and Conclusions
• Q&A – Panel Discussion
Research Objectives
• Describe the current state-of-the-art on the delivery of mega-projects
• Identify and prioritize the primary contributing factors of good and bad performance on mega-projects
• Identify mitigation strategies to address the primary contributing factors and improve performance of mega-projects
• Develop tools to support proactive mega-project planning and execution
Research Methodology
• Performance assessment– Plenty of metrics, especially for industrial mega-projects– Distinctive distribution of outcomes– Different behavior– Tendency for tragic failures
• General reasons for successes and failures• More unknown unknowns• Impact of changes during execution• People and organization aspects• Use of front end planning processes and tools
Literature Review
Research Methodology
• L.P ( $100M to $700M): n = 35• M.P (> $1B): n = 41• Seven case studies • Successful and unsuccessful mega-projects
$1 B- $2.5 B; 21%
$2.5 B- $5 B; 21%
$5 B- $7.5 B; 11%$7.5B- $10B,
11%
Above $10 B; 37%
N = 20 Oil Exploration and Production;
17%
Oil Refining; 9%
Mining ; 9%
Power Generation; 7%
Chemical Manufacturing; 4%Natural Gas Processing; 17%
Infrastructure; 3%
Heavy Industrial/Other Manufactur-
ing; 17%
Others; 16%
Project Types
• 12 completed• 8 on-going
Agenda
• Research Objectives and Methodology
• Data Analyses and Research Products
• IR 315-2 Mega-Project Assessment of Criticality Tool (MPACT)
• Case Studies
• Benefits and Conclusions
• Q&A – Panel Discussion
34IMPACT
FACTORS
130+ FACTORS
Literature Review+
Preliminary Interviews
Prioritization and Characterization
Survey on theOccurrence and
Impact of these Factors on Mega-projects
Real Case Examples
Data Analysis
Most Impactful Factors&
Differentiating Factors
Case Studies
Key Results
Impact Factor (IF) Categories• Category A- Location and Technology
– Four impact factors
• Category B- Team, Organization and Communication
– Six impact factors
• Category C- Planning and Execution Processes
– Thirteen impact factors
• Category D- Governance and Stakeholders
– Six impact factors
• Category E- Delivery Strategy
– Five impact factors
• Factor Description– Importance – Probable Causes – Potential Outcomes
• Factor Survey Findings– Occurrence and impact levels
• Factor Examples– Real case examples
• Factor Recommendations– Steps to plan effectively
Impact Factor Information
Case Examples
“•A mining and processing facility located in a remote location that lacked acceptable existing infrastructure to support ground transportation. The road conditions were poor… The heavy equipment had to be transported as small assemblies, rather than large assembled modules, increasing the number of trucks transporting equipment. …This meant more close oversight and also on-site work to reassemble the small assemblies. To address the challenge, a dedicated logistics manager was appointed to manage the logistics network….. The primary contractor, who was local, was able to better understand the in-country logistic challenges and communicate effectively with local logistic contractors….
“A $10 billion oil development project…execution of the project was well underway,….an extensive, $5 billion expansion of the surrounding ports and roads system…. significant delays in transporting workers … losing almost two hours of work each day ….project team proposed to build on-site worker canteens …additional investment of about $20 million…but was worth the increase in craft productivity…”
Collected real case examples representing how impact factors occurred and impacted project performance.
Total 135 examples for the 34 impact factors
Research Products
RS 315-1IR 315-2RR 315-11
Agenda
• Research Objectives and Methodology
• Data Analyses and Research Products
• IR 315-2 Mega-Project Assessment of Criticality Tool (MPACT)
• Case Studies
• Benefits and Conclusions
• Q&A – Panel Discussion
MPACT (Mega-Project Assessment of Criticality Tool)
Section-I Mega-project Information
Cover Sheet- Capture
Assessment Details
Session Attendance
Sheet
Section-II Mega-project Impact Factor
Criticality Assessment
Factor Survey Findings
Factor Description
Factor Examples
Factor Recommendations
Section-IIIOutput Reports
Summary Assessment
Report
Detailed Assessment
Report
34 Impact Factors in 5 Categories
MPACT Structure
*MPACT can be customized
How to Use the IR 315-2
Feasibility
Concept
Detailed Scope
Execution
Operation
MPACT Assessment 1 MPACT Assessment 2
Extra assessments might be needed if the time period between assessments is greater than one year or if there is a significant change in project conditions
MPACT Implementation
Complements other practices and tools, such as the IPRA and PDRI
• Recommended process of use (Each Assessment):
First Phase One on One Assessments
Second PhaseFacilitated Group Assessment
MPACT Implementation
Discussion and agreement on criticality of factors and mitigation strategies.
Individually with key project team members.
Agenda
• Research Objectives and Methodology
• Data Analyses and Research Products
• IR 315-2 Mega-project Assessment of Criticality Tool (MPACT)
• Case Studies
• Benefits and Conclusions
• Q&A – Panel Discussion
Impact Factor A2- Logistics ChallengesProject Environment and Planning
• Site had good access and infrastructure
• Large modules had to be transported to the site
• Good transportation routes were available and selected
• Owner had arranged all necessary permits
• Experienced logistics contractor managed transportation
Based on this information, what should be the “criticality” of this impact factor on this project?
A. No Criticality
B. Low Criticality
C. Medium Criticality
D. High CriticalityNo Criti
cality
Low Criti
calit
y
Medium Criti
cality
High Critica
lity
0% 0%0%0%
Impact Factor A2- Logistics Challenges
Impact Factor A2- Logistics ChallengesConsequences and Impact of this Factor on the Project
• Population near local roads protested the continuous movement of large trucks
• Lawsuits were filled to bar the transportation of the modules. This caused more than a year of delay
• Larger modules had to be dissembled into smaller components and then transported using smaller trucks
• Modules had to be reassembled at the site, impacting cost and schedule
Research Findings: A2 - Logistics Challenges
Impact Factor A2- Logistics ChallengesMitigation Recommendations
• Consider potential concerns of local communities (site,
routes, fabrication facilities, other).
• Incorporate adequate contingencies for managing
transportation and logistics risks.
• Consider regional transportation resources, infrastructure,
and permit requirements.
Impact Factor C2- Optimism BiasProject Environment and Planning
• Project area was experiencing a significant growth
• Cost and schedule estimates were based on available benchmarking data from similar projects in the area
• The project was cost driven. There was pressure from the business to reduce costs
• The team to reduce cost knowingly adopted optimistic benchmarking numbers
A. Less than 15%
B. 15% to 30%
C.30% to 45%
D.More than 45%
Less
than 15%
15% to 30%
30% to 45%
More th
an 45%
0% 0%0%0%
How often do you think a situation like this occur on mega-projects?
Impact Factor C2- Optimism Bias
Impact Factor C2- Optimism BiasConsequences and Impact of this Factor on the Project
• The impacts of project risks were underestimated
• Project had unrealistic contingencies
• The team chose not to consider impact of a nearby project,
which was known when preparing the estimates
• Planned labor productivity was assumed to be high but
ended up being very low, increasing costs and durations
Research Findings: C2 - Optimism Bias
Impact Factor C2- Optimism BiasMitigation Recommendation
• Establish a realistic risk assessment and mitigation process.
• Define appropriate contingency levels relative to the
uncertainties and level of scope definition.
• Establish appropriate hold points during front end planning
to validate cost and schedule assumptions.
Impact Factor D2- Inadequate Size, Skills, and Experience of the Project TeamProject Environment and Planning
• Very competitive labor market.
• Both owner and contractor expected high personnel
turnover
• A plan was put in place to hire new staff in key management
positions to fill in the gaps caused by the high attrition
Based on this information, what should be the “criticality” of this impact factor on this project?
A. No Criticality
B. Low Criticality
C. Medium Criticality
D. High CriticalityNo Criti
cality
Low Criti
calit
y
Medium Criti
cality
High Critica
lity
0% 0%0%0%
Impact Factor D2- Inadequate Size, Skills, and Experience of the Project Team
Impact Factor D2- Inadequate Size, Skills, and Experience of the Project TeamConsequences and Impact of this Factor on the Project
• Due to the remote location, hiring and retaining experienced and skilled personnel was more difficult than anticipated.
• The subsequent lack of experienced personnel in the organization lead to ineffective decision-making
Research Findings: D2 - Inadequate Size, Skills, and Experience of the Project Team
Impact Factor D2- Inadequate Size, Skills, and Experience of the Project TeamMitigation Recommendation
• Continuously evaluate the measures to address the attrition of personnel.
• Consider additional staffing positions and cross training local resources to build bench strength.
• Understand the specific skills required for critical roles and budget to pay accordingly.
• Define a career path and maintain appropriate wage levels to attract and retain professionals.
Impact Factor D3- Cultural Differences among Stakeholders Project Environment and Planning
• Multiple engineering and fabrication centers.
• Manpower was imported from all over the world.
• Team members were from more than 10 countries, speaking 10 different languages.
Based on this information, what should be the “criticality” of this impact factor on this project?
A. No Criticality
B. Low Criticality
C. Medium Criticality
D. High CriticalityNo Criti
cality
Low Criti
calit
y
Medium Criti
cality
High Critica
lity
0% 0%0%0%
Impact Factor D3- Cultural Differences among Stakeholders
Impact Factor D3 - Cultural Differences among StakeholdersConsequences and Impact of this Factor on the Project
• Project team made big investments to maintain effective communications and address cultural differences
• Mandatory safety and worker orientations were conducted
• Training materials in ten different languages were provided
• Translators were available to assist with communication
Research Findings: D3 - Cultural Differences among Stakeholders
Impact Factor D3- Cultural Differences among StakeholdersMitigation Recommendations
• Engage locals to better understand cultural needs.
• Define communication methods that can be more effective for the project team.
• Educate and enforce safety practices and incident reporting
• Consider using different work practices to comply with local customs and expectations (e.g., work hours, dress code, holidays)
Agenda
• Research Objectives and Methodology
• Data Analyses and Research Products
• IR 315-2 Mega-project Assessment of Criticality Tool (MPACT)
• Case Studies
• Benefits and Conclusions
• Q&A – Panel Discussion
Value of IR 315-2
• Help project teams better assess impact factors
• Gain alignment on the criticality of impact factors and
mitigation strategies
• Can be customized and expanded
• Support detailed mitigation planning
• Complement other project planning and execution processes
Conclusions
• RT 315 prioritized, categorized, and detailed 34 impact factors that have
higher occurrence and performance impacts on mega-projects.
• Developed a methodology and a tool to assess the criticality of these
factors.
– Factor importance, probable causes, and potential outcomes
– Library of lessons learned from completed mega-projects
– Recommendations on how to mitigate the impact of each of these factors
during the front end planning and execution phases of a mega-project.
Mega-Project at Mobilization
Agenda
• Research Objectives and Methodology
• Data Analyses and Research Products
• IR 315-2 Mega-project Assessment of Criticality Tool (MPACT)
Case Studies
• Benefits and Conclusions
• Q&A – Panel Discussion
Moderator:• Dean Poillucci, Skanska
Implementation Session Panel:• Dave Taylor, Emerson
• Howard Irwin, FHR – Koch Industries
• Carlos Caldas, UT-Austin
• Robin Duszynski, Jacobs
• Ubaldo Ciminieri, Technip
Q&A - Panel Discussion