2015 CII Annual Conference August 3–5 Boston, Massachusetts Successful Delivery of Mega-Projects Dean Poillucci, Skanska RT 315

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




• Case Studies



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




• Case Studies



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



• IR 315-2 Mega-project Assessment of Criticality Tool (MPACT)

• Case Studies



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


A. No Criticality

B. Low Criticality



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.


A. No Criticality

B. Low Criticality



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




• Case Studies



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




Case Studies



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

Documents

2015 CII Annual Conference August 3–5 Boston, Massachusetts Successful Delivery of Mega-Projects Dean Poillucci, Skanska RT 315