ID: 58095

Lessons learned in engineering development for Major Projects

CERTIFICATION PAPER FOR CCE/CCC exam.

May 07, 2011

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Table of Contents
ABSTRACT ............................................................................................................................................................................. 4
INTRODUCTION AND PROBLEM STATEMENT ..................................................................................................................... 5
CRITICALITY OF DETAILED ENGINEERING ............................................................................................................................ 6
HOW MAJOR PROJECTS DIFFER FROM SMALLER PROJECTS?............................................................................................. 6
SCOPE OF THE STUDY ........................................................................................................................................................... 7
LESSONS LEARNED MAP ...................................................................................................................................................... 9
 FEL (FEED) DEVELOPMENT: ........................................................................................................................................ 9
 PROJECT EXECUTION: ............................................................................................................................................... 13
 ORGANIZATION CAPABILITY: ................................................................................................................................... 19
 PROJECT CONTROLS AND ESTIMATING: .................................................................................................................. 20
CONCLUSION ...................................................................................................................................................................... 23

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................................................................................................................................. 12 Figure 9: FEED ............................ 8 Figure 5: Lessons learned map .................................................................................. 7 Table 2: PEP content – findings ................................................................................ 21 Figure 18: Sample engineering discipline progress report ..................................................................................... 9 Figure 6: Permitting timeline sample ...................................... 11 Figure 8: Impact of open scope at the end of FEED ................................................................. 6 Figure 3: Study: project cost growth................................................................................................................................................................................................................... all at once approach ........................... 5 Figure 2: Factors impacted by detailed engineering ......lessons learned ................................................................. List of Tables Table 1: Scope of study ................................................ 21 Figure 17: Schedule assurance lessons learned..................................................... 10 Figure 7: Pending change orders at end of FEED ..................................................... 17 Figure 14: Sample KPI report .................. 16 Table 5: Engineering norms sample for estimate validation ....... 14 Table 3: Phased vs.................................................................................. 18 Figure 15: Engineering / Construction overlap ........ 8 Figure 4: Study .......................................................... 13 Figure 10: Health and process safety studies road map .......................................................................... 15 Table 4: Procurement and contracting strategy ............................................................................................................................................................................................................. 13 Figure 11: Phased vs..... 22 3 .................................................. 22 List of Figures Figure 1: Stage gate process ............................Pros and Cons ................................................................................................................................................................................................. all at once execution ....................................... 15 Figure 13: Quality management lessons learned ................................................Detail engineering overlap ............................ 19 Figure 16: Sample engineering budget development ..................................................home office cost growth..............................

From experience. This paper examines the challenges faced by five major projects during the front-end engineering and design (FEED) phase that led to significant performance issues and deliver a lessons learned map of key areas of interest to best develop and execute the detailed engineering phase. These projects often intended to reposition and expand existing refineries through building new process units and revamping existing ones. This resulted in complex engineering scope requirements and hence execution challenges and significant performance issues. operability issues. 4 . the market has witnessed an increased number of major refinery projects that were executed to meet the market demand and reap the benefits of commercial opportunities. start up delays and significant budget and schedule overrun. projects that fail in engineering often end up with construction and field problems.Abstract Over the last ten years.

It’s fair to say then that if the FEED phase is not complete. Unfortunately. However. The incomplete scope and poor planning will creep to the detailed engineering phase and cause rework in engineering deliverables produced during the FEED.Introduction and problem statement The decisions to execute major projects are typically based on the competitive analysis. without the appropriate scope definition. Most of the owner companies now adopt a stage gate process for the execution of their projects as shown in figure 1. authorization estimates and schedules may have been based on incomplete scope definition. field construction and eventually start up and commissioning. The process reaches a major decision point at the end of the FEED phase where project sanction (full authorization and funding) is sought. The perception is that any open scope and planning deliverables can be finalized after project sanction. The paper is structured as follows: 5 . The process emphasize on completing the deliverables at each stage and going through a stringent decision making process before proceeding forward. This exposes the project to the risk of major issues in detailed engineering. The FEED is the most critical stage where its easy to influence the design at a relatively low cost [7]. scope definition and execution planning performed during the FEED stage. Figure 1: Stage gate process The FEED phase typically focuses on preliminary design and execution planning deliverables that helps the stakeholders understand the process systems capabilities. projects that are under time constraints often shorten the timing of the FEED stage to meet their respective schedule. execution difficulties. The authorization request is typically supported by +/. This will eventually lengthen the detailed engineering and construction phase. schedules and most importantly the economics of the projects. This paper examines the challenges faced by five major projects during the FEED that led to significant projects performance issues. the project team will request full authorization to commit to procurement activities and detailed engineering work. yet the project is authorized to move forward to detailed engineering.20% estimate and appropriate schedule to depict the execution path of the project. Lessons learned map detailing key areas of interest is also presented to help direct the manager’s attention to some of the common occurrences during the life the project that often leads to poor performances. At the end of this stage. the sanction estimates will not carry the level of confidence needed at this stage.

In some projects. delay in construction and start up and operability problems. Additionally. One must consider the impact this has on the project economics and project feasibility. Criticality of detailed engineering Engineering performance will likely affect the parameters listed in Figure 2. This becomes extremely challenging if different projects are competing for these 6 . For example.The environmental and regulatory requirements may dictate the availability of permit before authorization. field rework. It’s important to note that a 10% engineering overrun will increase the project cost by 2% (impact of engineering only). I will discuss what characterize major projects and add to their complexity. the greater impact will be due to the extension of the engineering schedule.Due to their size. Since the study focuses on the detailed engineering aspect of major projects. is mainly dependent on the stakeholder requirements and analysis of the overall project. The magnitude of cost and schedule overrun and how acceptable they are. To declare a failure in detailed engineering in a specific project will be dependent on cost and schedule overruns. Is the project still economical with this overrun? These overruns can definitely be avoided! Figure 2: Factors impacted by detailed engineering How major projects differ from smaller projects? – The Project’s cost is 200MM – 1BB . I will then construct a lessons learned map and discuss the respective areas of interest. this may trigger changes in scope.This is however is not a standard – May trigger complex environmental and regulatory requirements . – Will stir the labor market (engineering and construction) . these projects will require huge labor pool to execute engineering and constructions. Using data from the five major projects. building a new process unit to handle sulfur levels or firing limits.I will first address the criticality of the detailed engineering phase. process safety issues and if the unit is not performing according to design specs (operability).

Brownfield & Greenfield (projects A&B) Owner’s Companies represented 3 EPCm represented 2 Table 1: Scope of study A series of interviews were conducted by the project team with 15-25 people on each project. Projects that consisted of revamp and brownfield scope have typically experienced more cost growth than those of a greenfield type projects. Scope of the study Lessons learned were based on a study performed on five major projects as outlined in the table below: Project Execution Schedules 2003 . This increase is above the project contingency plus management reserves. OSBL estimates are often understated. Since OSBL engineering often lags ISBL. D & E) 2 Mix of Revamp.2007 Project Sanctioned Cost 280MM – 850MM Project Type 3 Greenfield “All Process Units” (projects C. resources which will impact cost and schedule (projects will pay more to acquire these resources).This also poses a challenge and requires stringent plan to manage the interface among the various parties. specifically for 7 . – Process engineering and OSBL (outside boundary limit) complexity – the complexity in the ISBL (inside boundary limit) will drive complexity in the OSBL. This is not uncommon considering the amount of discovery that could be encountered on site. The execution requires an integrated project management team to manage the changes and scope evolution and assess the impact on other projects within the same program. – Requires significant owner’s organization and financial profile – It is extremely important for the projects to have dedicated owner’s team to oversee and review the work being executed by the contractors. – May be part of a program – Major projects are often part of major modernization programs. it was found that the average cost overrun for these five projects was about 6% and ranged from 4% to 9% as seen in figure 3. – Have longer schedules > 40 months. from alternative selection through start up. Upon analysis of the project data. – May require the use of several contractors .

Brow nfield 9% & Greenfield 8% 7% Greenfield 6% 5% 4% 3% 2% 1% 0% Project A Project B Project C Project D Project E Figure 3: Study: project cost growth Furthermore. the average home office cost growth for these five projects was about 14% and ranged from 11% to 19% as shown in figure 4.Cost Growth 10% Mix of Revamp. when considering the impact of the overrun on the IRR and the economic feasibility of the project.home office cost growth One may perceive the results as typical cost growth (9% isn’t that bad). Total Project . It’s important to note that projects with highest engineering growth contributed to the highest overall cost growth. market strategy and conditions. if the project was built as part of a program. Project Definition & Detailed Engineering Cost Growth 30% Project Definition Detailed Engineering 25% 20% 15% 10% 5% 0% Project A Project B Project C Project D Project E Mix Greenfield Figure 4: Study . This would result in engineering design rework and field delays which can extend the turnaround (TAR) window. is dependent on the stakeholder requirements.older process units. I believe an acceptable level of overrun. 8 . the impact of the scope change and cost overrun will drive changes downstream on other projects being executed. However. this may present a serious issue. The 9% overrun becomes multiplied for the overall program. Additionally.

these challenges can be minimized and even avoided by simply following best and recommended practices around project execution and understanding business priorities.Regardless of the magnitude of the overrun and the perception of its adequacy or not. The results were then analyzed and categorized into four different main categories and six sub categories as shown in figure 5. the level of scope definition and the impact of the environmental regulations on 9 .4] Without the appropriate definition. cost. a series of questionnaires to the project team and personal interviews. I intend to present some of the shortcomings that major projects always experience and how they can be converted into lessons learned to help deliver projects with best in class safety. any work that is estimated and planned may not reflect a true picture of what the project is intending to build. Lessons learned map The lessons learned on these projects were generated using workshops at close out. schedule and operability performance. Figure 5: Lessons learned map  FEL (FEED) Development: Research in the construction industry has always identified good scope definition as a critical factor in executing a successful project [3. The lessons learned generated around this area were focused on the team’s understanding of the business priorities.

Additionally. This area also tested the importance of applying the value improvement practices and the outcome they generated. the early project schedules didn’t allow sufficient time for the receipt of permit (sample high level schedule in figure 6). If the permit application from submittal to receipt required two years. When the business objectives remained unclear after sanction.the scope and schedule. the change in sulfur specifications would have increased the estimated cost for one project by more than 50 million but was not incorporated until late FEED.  Clear business objectives: it was found that projects personnel didn’t believe they had a clear understanding of the business objectives and even when decision criteria’s and boundary conditions were set on the project. This might also require the team to commit funding before sanction which increases the risks of regret spend in the case the permit was not approved. This would have also supported minimizing the number of alternatives going into the next stage and hence shorten the FEED duration. This caused not just an increase in the project cost but delayed the schedule as well.  Environmental regulations and requirements: During the feed development. Year 2011 2012 2013 Quarter 1 2 3 4 1 2 3 4 1 2 3 Project Selection Review Permit Strategy Prepare Permit Application Application Submittal Permit Review & Issuance Project Sanction Figure 6: Permitting timeline sample  Soil data and site information: The workshop conducted revealed that soil data and hydrology were not definitive by the end of the FEED stage. It was also noted during one of the interviews that economical evaluations of the alternatives didn’t consider any inherent specific risks or opportunities within each alternative. For example. this might have rendered some alternatives infeasible. A SWOT (strength-weakness-opportunities-threat) workshop would have generated risks or opportunities list to support the financial analysis. some projects didn’t identify accurately the impact of permitting and potential environmental regulations on the cost and schedule for each alternative. they were changed multiple times causing the development of more project alternatives. they triggered major late scope changes which are costly. As such the test for 10 .

This need for flexibility resulted in significant project cost and schedule overrun. This would have helped the project in increasing their FEED score when external and internal reviews are conducted.  Value improvement practices (VIP): All project team personnel reported pressure from senior management to apply as much VIPs as possible. Figure 8 below supports this argument. 0% Project A Project B Project C Project D Project E Mix Greenfield Figure 7: Pending change orders at end of FEED Projects were allowed to go through to detail engineering knowing too many scope items were still open. The teams felt however that some VIPs workshops were compressed to the point they lost their true value and noted more benefits could have been attained if only critical and relevant VIPs were conducted. some of the assumptions around site plan could have been narrowed if several walkthroughs were conducted with the engineering and construction contractor and led by the site operations team. 70-80% engineering complete will support the start of construction effort. The first Gantt chart depicts high level project schedule with a common overlap between engineering and schedule. Eng Cost Grow th 16 25% % Cost Growth Pending Changes 20% 12 15% 8 10% 4 5% . Typically. 11 . contamination was not done and triggered the involvement of the remediation contractors which extended the project schedule. specifically in site and civil work. Furthermore. This might have been a reflection of unclear business objectives but the correlation with the cost overrun was expected. This would typically happen because the business would like to maintain some flexibility as the project go through the stage gate process. Pending Changes Count @ End of FEL 20 30% Pending Changes Count Det.  Scope definition and offsite utility requirements: The analysis of the data set as shown in figure 7 depicts that all projects in this study had pending design changes that rolled over to detailed engineering.

the results are weak engineering products and cost overrun. Most projects in this set didn’t perform any comprehensive OSBL scope studies in the FEED and allowed for a percentage in their estimate. This typically results in delays in the engineering schedule and eventually delays in the construction schedule and start up. Once in the execute stage. Figure 8: Impact of open scope at the end of FEED The second Gantt chart depicts a project with open scope items at the end of FEED. While this is typically done to accelerate the schedule. the team realizes that the engineering schedule is slipping but decides to maintain the construction schedule as is. the project is allowed to go through the stage gate. Unfortunately. However. maintaining the construction schedule would mean that construction work would start early. to finish the project on time. cost and schedule. Because there is a perception that these open items can be finalized in execute without any impact to the schedule. the project team finds themselves doing the actual FEED work in execute. Other engineering schedule slippage revolved around underestimating the OSBL scope of the project. changes in ISBL costs and schedule drove changes in the OSBL scope. 12 . In the third Gantt chart. This results in major rework when engineering deliverables and issue for construction (IFC) are issued. Some projects overlaps the FEED with detail engineering. Figure 8 shows how the overlap undermines the importance of the FEED stage and increases the project’s minimum exposure / cancelation costs.

hazop (hazard and operability study should be performed on IFD (Issue for design) drawings at the end of FEED to assess any risks/ causes of loss of containment and the existing safe guards and whether they are sufficient. while maintaining good cohesion between all aspects of the project [6.Detail engineering overlap For health. This would help ensure that the alternative selection process account for the process safety risks that would be incorporated into the preliminary design for that selected option. These studies would be eventually be followed by a detailed review on mature and vendor packages P&IDs (Process and instrumentation diagrams) before IFC are issued. Figure 9: FEED . Furthermore. Figure 10: Health and process safety studies road map  Project Execution: The success of major projects largely depends on how well the team plan the work and work the plan to achieve the project objectives. The road map outlined below depicts the team’s perception of what process safety and health studies need to be completed over the project life cycle. the questionnaires identified the criticality of conducting process safety studies early in FEED.10]. The questionnaires and interviews focused next on the project execution plan (PEP) 13 . environmental and process safety studies.

If this is not planned from the outset. Permitting timeline As addressed in the previous section. schedule delays is expected. If the project is being done under a joint venture (JV) umbrella.  Project execution plan: Table 2 finalizes the findings from the different projects in this study regarding the content of the project execution plan. The PEP should reference detail plans to address the “hows” Roles and Responsibilities This was an area that caused issues and scope shifts in three of the five projects. some stakeholders may require thirty to sixty days to make a decision on specific gate. The PEP should clearly state the scope areas and responsibility division between the owner and contractor. The critical performance indicator here was to ensure that the final PEP addressed all project functions to close out.developed for each project during the FEED stage. topics such as procurement and contracting. Interface with the The TAR process in most of the companies turnaround / shutdown may include constraints regarding the review of IFCs. This should also be part of the estimate assurance review to ensure that the estimate covers all costs. quality management. key permitting dates and assumptions should be stated in the PEP. This will allow internal and external stakeholder to account for these reviews in their schedule. Stage gate review timeline The PEP should include key dates for any reviews needed in the schedule. PEP document – length PEP should be concise and simple and reference the “what” in the project. Table 2: PEP content – findings 14 . material on site and any other plant reviews. Additionally. Delegation of authority / Some projects faced serious schedule issues Financial authority due to change order approval delay. cashflow constraints and the interface with the plant projects and turnaround process were assessed. Projects should incorporate these specific milestones in their schedule and state the assumptions clearly in the PEP. The PEP should include the first line approval authorities and their delegates in the instant critical approvals are sought.

Labor shortage Significant need for large and skilled pool of labor Team interface Larger Owner’s organization to manage the interface. PROJ A PROJ B PROGRAM A “Phased PROJ C approach” PROJ D PROJ A PROJ B PROGRAM B “all at once” PROJ C PROJ D Figure 11: Phased vs. multiple major projects were executed concurrently within the program which posed various execution challenges. a comparison was made between programs that utilized a phased approach for their execution against projects that were executed concurrently (figure 11). all at once approach . all at once execution While the impact affected procurement and construction. It was realized that in this study set.  Program / project interface: The survey questioned the considerations that were assessed for each project that was executed within a program. the emphasis here was on the FEED and detailed engineering work. problem is magnified. Cash flows Heavy annual cash flow is needed. Table 3 depicts the advantages and disadvantages of the two approaches. Table 3: Phased vs.Pros and Cons 15 . Program B Program A Engineering design Risk that changes in design in one project are not incorporated into other projects Possibility of Rework Team & knowledge Potential Project team transfer continuity/learning curve benefits OSBL Can be negatively impacted by inefficient construction of infrastructure to support the phased investment. If program becomes cash flow constrained. To understand the consequences of this approach.

This would prevent the schedule. Team members reported that a thorough analysis of the impact of the cashflow constraint was never conducted by the respective personnel. cycle time.lessons learned  Cashflow constraints /Schedule driven projects: Multiple projects in this set had experienced cashflow constraints several times during their life cycle. This will help set the standard for negotiating cancellation terms or pay only effective execution and a contract that can for preliminary vendor engineering data to be easily controlled support the preliminary design at the end of FEED Consideration a competitive bid process Vendor and fabrication shops limited for FEED and detail engineering if the capabilities may add significant time to the schedule allows. Procurement and Contracting Strategy: The lessons learned identified in the survey are summarized in table 4 for procurement and contracting: Procurement Contracting Projects must invest some time in FEED Ordering equipment during FEED will help (through a contract strategy workshop) set the pace for a faster execution and investigating an effective form of provide an understanding of the project performance or hybrid contracts (mixed scope which will drive minimum scope strategy contracts) changes. Surprisingly. staffing and caused the loss of key team members. This was demonstrated by the team going through the FEL 2 and FEL 3 stages with incomplete deliverables because the funds were not available. Allow sufficient time in the schedule for a Allow the risk analysis workshop “contractor” change out. Develop a licensor-EPC interface plan / clarify roles and responsibilities regarding design package delivery. the message to senior management was the ability of the project to conform to the cashflow constraints and still meet the project schedule. If there is a shift conducted early FEED to reflect the risks of in contractors. consider the time and cost major equipment fabrication and delivery it takes for a smooth handover. Table 4: Procurement and contracting strategy . The incomplete FEED 16 . This impact was even multiplied when the project was schedule driven. The cashflow constraints triggered major changes to project execution planning. Project controls must participate in Since minimum exposure is increased now shaping the contracting and procurement for the project (if cancelled). consider strategy. Hence the importance of existing contractor from becoming historical experiences and prequalification complacent. assessments in understanding the vendor’s performance and impact on schedule.

 Quality management: A quality management system (QMS) provides the basis to develop and deliver quality requirements by integrating quality management processes into the design. the lack of a clear interface plan with the contractors and suppliers and lack of standard tools to measure key performance indicators on the projects. 3) quality controls and 4) quality improvements. inconclusive scope and major execute stage delays. This also would serve as a 17 . 2) quality assurance. work was thought to be non-critical because deliverables would be finalized in execute. Typically every discipline would have an activity plan that determines all procedures to be followed. Figure 12: Quality management lessons learned Main findings as noted by the core teams in these projects were around having ambiguous roles and responsibilities. the team noted that contractors in three of the projects didn’t provide any details on how they would go about self assessing their quality levels. specifically around the design. construction and handover activities. The study conducted on the five projects revealed areas that were not incorporated as part of the PEP. procurement. The results were deliverables rework. Furthermore. 1) quality planning. The areas are highlighted in figure 12 in the context of the standard quality management processes. or didn’t work according to plan.

This is mainly because if the overlap is larger. A sample KPI report is shown in figure 13. Root cause analysis should have been done also to understand reoccurring quality issues. This for example should have checked by the owner’s lead during the FEED for compliance versus their policy and procedures. One contractor did have an activity plan for each discipline but upon review. 18 . The commitment to improvement as viewed by these projects should have been apparent by the team dedication to record all issues and disseminate the information internally and externally as part of a bigger knowledge management effort. Figure 13: Sample KPI report  Engineering / Construction interface: Engineering typically should not overlap construction by more than 30. checklist for future quality audits. The KPI report could assesses the number of non conformance reports generated on design versus or number of audits performed versus planned.40% [1]. it was found out that the discipline lead didn’t need to comply with all checklist requirements in some areas.

Projects often underestimate the size of the owner’s team and in many cases resources are brought in at partial capacity (resources not fully dedicated to the project). project managers responded to schedule delays by bringing in more labor. the market ability to respond to the demand is often constrained by the availability of the resources in both the owner and contractor organization. 19 . This contributed to the schedule delays in two projects in this study.  Market conditions and labor shortage: With the execution of more major and mega projects. The lessons learned recorded from the five projects emphasized the same message. The early construction efforts will likely trigger rework in the field as engineering deliverables are finalized. Figure 14: Engineering / Construction overlap  Organization capability: The criticality of the availability and dedication of resources to the project success are often understated.  Owner’s organization: The owner’s team is the backbone to the success of any project. Any deliverables produced on the project will require the owner’s team approval before proceeding forward. This area is also overlooked when assessing the capability of the contractors. only to realize the additional labor was not as efficient as they expected. Additionally. In three of the projects in this study. The project schedule must allow time for the ramp up of the resources. the project team must assess carefully the quality of the resources brought on the project during peak time. engineering is still not matured enough to start construction. Project teams often reports that they don’t have the resources to provide the necessary oversight on the project. This in turn affects cost and schedule. suppliers and fabricators.

Schedules and estimates can’t be divorced. The effective planning for project controls should start early in FEED and involve owners and contractor team members. retaining key team resources must be a priority in all projects. Hence. However. A sample engineering budget template for mechanical engineering is shown in figure 15. o Detailed engineering estimates should be based on discipline hours by drawings and should directly link to the engineering schedule. understood and audited consistently. but is critical for knowledge management transfer internally within the project and externally with the business. Potential changes should be identified regardless of the team’s conception of their relevance and size. 20 . o The contractors physically progressing procedures should be evaluated. standard reporting template would support and accelerate the reporting process. The resource loaded schedule generates the resource histograms and man-hours curves. Their late involvement caused rework issues and had greater impact on the schedule. allowing for supervision hours. due to the wide range of resources needed in the peer review.  Project controls and estimating: A successful project controls system will serve as an early alarm system to depict deviation from the project plan and recommend the appropriate actions. Key lessons learned identified in this area are shown below.  Stakeholder management: The lessons learned recorded in this study suggested that stakeholders might not have been involved enough in the stage gate review and decision making process.  Budget development: An effective way to develop engineering budgets is to prepare a deliverable based cost estimate by determining at the discipline level. the amount of hours needed by drawings. This task not only fosters a homogeneous environment within the team.  Team alignment / retaining: Managers always agree that “people” is the number one contributor to the project success. recycling and revisions.  Project controls requirements: Effective project controls starts with strict project controls requirements. o A cost risk analysis must also reflect the changes and risks identified in the schedule. A successful system will start with the development of processes and procedures for effective budget and schedule development and the respective monitoring and reporting effort. The hours generated by discipline are then reflected in the detailed engineering schedule and resource leveling occurs to ensure a feasible schedule. early planning is needed to secure their attendance at the meeting. One of the early activities would be in finalizing the project controls calendar for cost and schedule reporting timeline.  Peer review: Peer reviews are always planned on the project for assurance purposes and to capture the peer’s experience in executing similar projects. o A rigorous change management program should be implemented early in the process. Additionally: o For projects executed by multiple contractors.

SCHEDULE ASSURANCE SCHEDULE SYSTEM QUALITATIVE QUANTITIAVE VALIDATION Alignment of the schedule with the business objectives Permitting timeline Review of the native files High level project Contracting strategy Constraints duration comparisons Average activity float against similar industry Procurement long lead Resource loading projects items Schedule logic review Excessive lag check Other metrics check – Cashflow assumptions Project schedule Drawings IFCs to Progress stated installation Critical path Risk analysis Design model reviews timeline Figure 16: Schedule assurance lessons learned 21 . the basis of schedule or quantitatively through benchmarking with industry projects.2]. Schedule assurance activities may depict areas of concerns in the native file. This is shown in figure 16. Figure 15: Sample engineering budget development  Schedule assurance: There are many papers that identified excellent techniques for evaluating and assessing the quality of the schedules [1.

equipment. Additionally.The estimate validation process in general should assess alignment of the estimate with the schedule and execution plans.11] . One of the key issues that projects experienced in this study was the inconsistent and “out of order” reporting of physical progress (for example: piping leading process engineering). Estimate validation: Current trends in cost estimation of major projects are driving owners to emphasize on the importance of producing reliable and accurate estimates to avoid any potential overruns [5.8. Engineering hours per drawing type. international offices. Staffing plan analysis in Engineering labor rate / use of comparison to the schedule. Table 5: Engineering norms sample for estimate validation  Productivity measurements: This area is concerned by having a detailed physical progressing plan that has been reviewed and agreed on among all parties. Construction quantities per piece Engineering hours per construction of equipment. field or equipment costs. quantities. quantitative analysis could address engineering norms such as: Engineering norms Detailed engineering costs as a % of Isometric drawings per piece of Total costs. Figure 17 depicts a sample progress report that could be utilized to verify the contractor’s progress: Figure 17: Sample engineering discipline progress report 22 .

The impact of market conditions on the availability and quality of resources must be taken into consideration during the planning phase of the project. – Methodologies for scope deletion / scope addition change order estimates should be agreed. understand and periodically audit this system for inconsistency or overstatement.  Project controls audits: The owner’s team must always be involved in auditing the contractors’ processes and procedures. ambiguous business objectives will often result in major late changes. Projects must define the quality control requirements and set the process to periodically evaluate and measure improvements in all aspects of the project. cost and schedule reporting. a scope and design basis that is frozen at the end of the FEED stage will help accelerate the schedule and minimize changes in the detailed engineering phase and eventually rework in construction. Owner must review. This does not mean that projects should take their time during the FEED. The analysis was married with a study on the lessons learned captured from these projects to demonstrate how certain aspects of the planning and scoping during FEED may have contributed to the cost growth. Projects must spend sufficient time developing a project execution plan that emphasizes a good contracting and procurement strategy and understands the impact of the interface with other projects being executed concurrently. The audits should be planned per the quality control audit schedules and should be as periodic as needed to assure continuous compliance and improvements. The project controls organization must also participate in shaping the contracting strategy in order to support the controlling of the cost and schedule. An efficient project controls system will allow for detailed estimate and schedule reviews before a baseline is finalized. The study revealed that successful projects will have clear business objectives. This study also reviewed the impact of the organization capability on the performance of the project. One area that is found to be typically weak is the assurance about the physical progress reporting system. – The team should be encouraged to freeze the design and execution strategy by the end of FEED stage. This study concludes in general that projects that are pushed through a concise FEED stage often end with significant cost overruns and delays. 23 . Conclusion This paper presented metrics and analysis on detailed engineering from five major refinery projects.  Change management: The following are essential for implementing an effective change management program: – Changes in scope that impacted the estimates from FEL1 and FEL 2 must be recorded because the trend in estimates from the early feed phases to sanction often catches the stakeholders by surprise [9]. It was concluded that projects must have sufficient and dedicated resources to execute the work and provide adequate oversight. – A clear process to accept/ reject a change should be documented and agreed. Additionally. but it means that the scope and planning basis should be complete to enable the projects to move forward with minimal changes.

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