ECIs 21st Annual Conference 2010 & Global Construction Summit Construction Project Management Best Practice 2010

- A Springboard for the Next Decade

24 & 25 June 2010 Marriott Rive Gauche Hotel, Paris

Front-End Planning
(ADPs, Scope Definition, and Alignment)

Stephen P. Mulva, Ph.D.

Associate Director Construction Industry Institute (CII) Austin, Texas (USA) smulva@cii.utexas.edu June 24, 2010

FEP Saves Money

Owners Use of Front End Planning
15% 10% Cost Growth 5% 0% -2.2% -5% -10%
= Standard Error of the Mean (SEM) (90% Confidence Interval)

6.4%

-15%
High Use (N=59) Low Use (N=37)

CII Cost Influence Curve

MAJOR INFLUENCE High RAPIDLY DECREASING INFLUENCE LOW INFLUENCE Large E

I
N F L U E N C E INFLUENCE EXPENDITURES

X P E N D I T

U
R E S

Low PERFORM BUSINESS PLANNING PERFORM FRONT END PLANNING EXECUTE PROJECT OPERATE FACILITY

Small

Hoop Diagram
Effort
Project Execution Conceptual Planning Detailed Scope Definition (Detailed Design & Construction) Start-up, Operations, Maintenance, & Decommissioning

Feasibility Analysis
FEASIBILITY

Project Life Cycle

FRONT END PLANNING DETAILED ENGINEERING & CONSTRUCTION

TURNOVER, START-UP & OPERATIONS

Asset Development Process (ADP)

Industry Proprietary
Texacos BRAVE Amocos Common Process Phillips Rocket

General Industry Processes

CIIs Front End Planning (FEP) Process Westneys Strategic Project Planner PMIs Project Mgmt. Body of Knowledge

Texaco BRAVE

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(Texaco BRAVE)

Phillips Petroleum Rocket

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(Phillips ROCKET)

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(Amoco Common Process Slide 1)

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(Amoco Common Process Slide 4) Best Practices Use

CII Project Execution Roadmap

Determine Resource Requirements and Sources Organize for Front End Planning Select Project Alternatives Identify Corporate Objectives and Constraints Develop Detailed Design Manage Operation of the Facility Monitor Operating Conditions

Procure Equipment & Materials

Develop a Project Definition Package

Decide Whether to Proceed With Project Project Definition Package

Construct the Project

Evaluate Operating Conditons

Propose Improvements Implement Improvements Decommission

Develop Project Concept

Startup Facility

Business Opportunity

PERFORM BUSINESS PLANNING

Validated Project Concept

PERFORM FRONT END PLANNING

Decision to Proceed

EXECUTE PROJECT

Completed Project

OPERATE FACILITY

Product

Project Execution
Defined Business Need Requiring Facility Total Project Budget Authorized Release of All Approved Drawings & Specifications All Engineered Equipment Delivered to Site End of Substantial Construction Activity

Front End Planning Detailed Design

Design Basis

Procurement Construction

Start-Up
Procurement Plan for Engineered Equipment Beginning of Continuous Substantial Construction Activity

Mechanical Completion

Custody Transfer to User / Steady State Operation

Project Deliverables
Project Site
(1) PHYSICAL AND NON-PHYSICAL CONTEXT OF THE PROJECT (Especially Codes, Standards, and Regulations and Site Characteristics) (3) PROJECT EXECUTION PLAN (PEP)

External Parties

Owner & Operations Team

(2) PROJECT DEFINITION PACKAGE (PDefP)

(4) PROJECT TEAM DEFINITION (PTD)

Construction Team

A/E Systems Design Team

(5) PROJECT DESIGN PACKAGE (PDesP) Product Definition

(6) PRODUCTION PROCESS PLAN (PPP) Process Definition

Vendors / Suppliers Team in the Supply Chain

(7) WORK BREAKDOWN STRUCTURE (WBS) Integrated Product/ Process Definition Feedback

Feedback

(8) 3-D MODEL

(9) COST MODEL

(10) TIME MODEL

(11) PRODUCTION PROCESS MODEL

(12) INTEGRATED PROJECT DEFINITION MODEL (IPDM)

Project Definition
Project Stakeholders

ALIGNMENT

Project Risks

Project Objectives

CII PDRI
PROJECT DEFINITION

Project Scope Non-Physical Context of the Project

Physical Context of the Project

CII Best Practices

Project Planning Phase Alignment of Project Objectives Team Building Partnering Front End Planning Design Phase Constructability Materials Management Construction/Startup Phase Planning for Start-Up Zero Accidents Techniques Project Life Cycle Benchmarking Change Management & Scope Control Implementation of CII Products Quality Management

Alignment Defined
Projects participants working in harmony to develop and meet a uniformly defined and understood set of project objectives.

Elements of Alignment

CII Alignment Thermometer

CII Alignment Thermometer

Alignment Categories
Culture
Effective Project Leadership Open, Effective Communications Trust, Honesty, and Shared Values

Execution Processes
Appropriate Stakeholders Represented Structured, Resourced Front End Planning Process Suitable Reward and Recognition Systems

Information
Priority Between Costs, Schedule, and Features

Tools
Timely, Productive Team Meetings Teamwork and Teambuilding Programs Use of Planning Tools

Project Definition Rating Index (PDRI)

PDRI: Project Definition Rating Index, Industrial Projects, Second Edition, IR113-2

Comprehensive checklist with 70 scope definition elements.

Identifies level of scope definition, areas for improvement on industrial projects.
Min score 70 Min recommended score 200 Max score 1000

IR 155-2 PDRI- Buildings

SECTION I A. Business Strategy B. Owner Philosophies C. Project Requirements SECTION II D. Site Information E. Building Programming F. Building/Project Design Parameters G. Equipment SECTION III H. Procurement Strategy J. Deliverables K. Project Control L. Project Execution Plan

IR 113-2 PDRI- Industrial

SECTION I A. Manufacturing Objectives Criteria B. Business Objectives C. Basic Data Research & Development D. Project Scope E. Value Engineering SECTION II F. Site Information G. Process/ Mechanical H. Equipment Scope I. Civil, Structural & Architectural J. Infrastructure K. Instrument & Electrical SECTION III L. Procurement Strategy M. Deliverables N. Project Control P. Project Execution Plan

PDRI Example

PDRI Benefits
A Checklist of Steps for Scope Definition Standardized Scope Definition Terminology Facilitation of Risk Assessment Means to Monitor Progress During FEP Aids Communication, Promotes Alignment Means to Reconcile Differences Training Tool

Benchmarking Tool

PDRI Scoring During FEP

CII Front End Planning Process

Feasibility

Concept

Detailed Scope

Design and Construction

Review 1 (550 800)

Review 2 (450 600)

Review 2i (300 450)

Review 3 (Below 200)

Parting Thoughts
Economic/Risk Model Change Management Progress Reports Implementable Programs IT Strategy Business Strategy Planning Policies Political Considerations Compliance Statements Program Definition Package Implementable Programs Company Planning Objectives Other External Risk Factors Asset Development Process Corporate Planning

Strategy Alignment Program Management Change Management Plans Program Considerations Corporate Guidelines Implementable Projects Progress Reports Program Objectives Risk Model Risk Mitigation Risk Model Project Definition Package Project Planning Project Management Program Objectives Change Management

European Construction Institute www.europeanconstruction.eu