Session Title:

PMI Project of the Year Finalist

AP60 Phase 1

Session Code: NA14CAS01

Michel Charron, Rio Tinto Alcan

André Noël, Hatch
Marc O’Connor, SNC-Lavalin
 Objectives

• Understand AP60 success factors

• Describe AP60 experience in creating a strong project

culture

• Explain role of risk management in culture

development

• Understand lessons learned strategies

2
 Agenda

1. Why aluminum? Why AP60?

2. The project
3. Changing the culture
4. New technology best practices
5. Plan to learn
6. AP60 take away

3
 Aluminum Contributes to Solving some of
the World’s most Challenging Issues

• Lower GHG emissions

through lighter vehicles and
buildings and through its
recyclability
• Bringing energy efficiency
for cities and buildings in an
energy constrained world
• Preserving food and
medicines through its
unique barrier properties

4
 The World Will Need
More and More Aluminum

5
 Innovation: an Essential Component of
Making Aluminum a Sustainable Product

Made-in-Canada ingot has a footprint nearly

5 times smaller than that produced in China.

6
 Environmental Benefits of Innovation

• World productivity
benchmark

• More energy efficient

• Smaller environmental
footprint

7
 Stakeholders Economic Benefits
of Innovation

• More than 200 Quebec

companies associated with the
project
• More than 70% of the contracts
were awarded to Quebec-
based companies
• Allowing engineering firms and
our network of partners and
equipment suppliers to develop
and market their know-how

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 AP Technology Evolution

600,000 AP60

550,000
AP60
500,000
AP50
Ampere

450,000

AP40
400,000 AP30 AP39

350,000 AP35 36 37
AP33
AP18 AP30
300,000 AP28
AP24
AP18
250,000 AP3X

AP22 AP40
200,000 AP60
AP18
150,000
1971 1976 1981 1986 1991 1996 2001 2006 2011

Year

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 …. Aluminum

• The world needs more aluminum

• Aluminum produced in Quebec is the most responsible

– thanks in large part to innovation

• Innovation provides for economic, environmental, social

solutions

• With innovation and clean energy – Canada poised to

be the aluminum industry’s middle kingdom

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AP60 Phase 1
Delivering Superior Results

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 Key Facts

• 38 AP60 pots
– Gas treatment center
– Rodding shop
– Sow caster
• First industrial implementation of AP60 technology
• Built in Arvida City, on the same site where the first
aluminum smelter in Canada was constructed
– Location of demolished Soderberg smelter
• Owner: Rio Tinto Alcan
• EPCM: SNC-Lavalin and Hatch joint venture

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 Key Figures

• $1.3 B budget

• 23 months from notice to proceed to

handover/operation

• 4,300,000 M site hours

• Peak personnel at site: 1,600 people

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 Why Project Efficiency Matters?

• Project execution is a critical factor in delivering new

technology

• Large project performance can vary dramatically

– Potential destruction of value

• Large projects implementing new technology face major

challenges

According to industry success rates, less than 30%

of new technology mega projects are successful

14
 AP60 Challenges and Complexity

• New technology
– Major change during execution

• Strong commitment to ‘Zero Harm’

– Cultural change

• Global financial crisis

15
 Project Achievements

• Novel technology implementation

– Fully functional
• Exceeded expectations
– Facility completed 1 month ahead of schedule
– Within budget range
• Created outstanding HSE culture
• Benchmark performance
– Delivered with savings of $280 M, taking advantage of the
global financial crisis

16
 Project Achievements (cont’d)

Strong team with purposes delivered superior results

Better than individual performance
1+1>2

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 Learning from our Predecessors

• Identifying reference projects to obtain lessons learned

• Analyzing the lessons learned applicable for the project

at hand

• Incorporating the lessons learned into the project

execution plan

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 Learning from our Predecessors (cont’d)

• Key elements

Developing
and using
Labor Project &
Clear value complete &
alignment accurate
relations & operation = SUCCESS!
development integration
engineering
documents

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 Project Objective

FUNCTIONALITY

“Safely deliver a pilot

plant to demonstrate
AP60 technology with
AP60 PHASE 1
minimal capital OBJECTIVE

expenditure and a
realistic schedule.”

SCHEDULING COSTS

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 Developing a Culture

• HOW WOULD YOU DO IT?

1. Strong contractual approach transferring risks and

responsibilities to contractors
2. Rigid and directive management with limited
communication of risks and issues
3. Clearly communicated objectives and open
communication of issues and use of adapted contracts

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 Creating the Culture

• Key values were identified at onset of

project
– Project charter
• Strong alignment constantly done by
both RTA and SLH PM
– Shared understanding of scope
management
– Very well defined scope at feasibility study
stage
– Early staffing of key production personnel
responsible for plant start-up

22
 Creating the Culture (cont’d)

• Clear and understood objectives

• Health, Safety and Environment (HSE) commitment
• Strong values – shared purposes
– New technology and HSE challenges create strong common
purposes
• Pro-active problem-solving
– Early identification
– Open communication of issues
– Empowered problem-solving at all levels

23
 Project Motto

“Rigor,
Courage
and
Passion”

24
 Creating the Culture (cont’d)

• In practice
– No blame culture – Seriously!
– Risk management used as an enabling tool
– Reward pro-activity using recognition program
– Frank discussion on difficult topics when required

25
 Risk Management

USEFULNESS OF RISK MANAGEMENT

1. Non value added chore - report to head office

2. A tool for project management

3. A core tool for all project members

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 Risk Management (cont’d)
A Key Tool for Culture Creation

• Successful risk management requires open

communication
– Management must welcome bad news
– Allows development of action plan

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©2012 Permission is granted to PMI for PMI® Marketplace use only. 27
 Risk Management (cont’d)
A Key Tool for Culture Creation

• Risk is a common language for all project participants

– From worker to management

• Reinforce early and open communication of risk items

– Early communication and management of trends

• Risk reviews with suppliers and contractors

– Including turn-key and lump-sum

• Introduced Lean risk reviews generating strong

participation

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 Risk Management (cont’d)
A Key Tool for Culture Creation

Execution
risks
• Multiple
dimension of risks
analyzed

Construction & Design

commissioning
risks HSE risks

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 Global Financial Crisis

• Turning problem into opportunity = Value improvement

• Building a culture = Maintaining team during difficult time

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 Value Improvement Opportunity

Idea Generation

• Complete redefinition during GFC Idea

• Clear and disciplined process

Selection

– Individual analysis including NPV

Idea Selected Idea Non-Selected

• All parties involved Technical Evaluation

Estimate (Oom)
– Technology–EPCM–Operations
Risk analysis
– Formal sign-off
Documentation

• Early consideration of execution Recommendation (Yes/No)

constraints Value
Advisory
Panel

Idea Validated Idea Rejected

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 Value Improvement Opportunity (cont’d)

• 138 ideas considered for implementation

• $280 M of CAPEX savings implemented
• Ideas breakdown
– 47% scope related
– 26% project execution

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 Zero Harm
Changing the Culture

• Dedication of the senior project

team
– line management (RTA & SLH)
• Monthly strategic performance
review
• Management team reflection on
performance and improvement
strategies
• Detailed review with project
steering committee

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Zero Harm
(cont’d)
HSE Policy

34
 Zero Harm (cont’d)
Time Schedule and HSE Impacts
Constructability
DATE input
Design influenced by safety
START ( Materials, configuration)

Specify safety in materials and methods

Ability to
Detailed work plan and risk assessment
influence
DATE
final safety,
START
Performance measurement
quality,
cost & time
DATE
START
DATE
START
DATE
START

Basic design Detailed Procurement Construction Start-up

design

Studies
Time – Project schedule
Constructability - Program’s ability to influence HSE results when applied to the Project life cycle.

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 Zero Harm (cont’d)
HSE Performance of AP60

• Better overall performance than Quebec’s construction

industry

AIFR LTIFR
AP60 Project 0.48 0.27
Quebec’s construction industry
(2003-2009 average) 23.5

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 New Technology Best Practices
Engineering

• Detailed planning and

follow-up
• Specific technology
exchange approach
• Pro-active HSE design

37
 New Technology Best Practices (cont’d)
Engineering

• Engineering completeness
prior to bid
• Specific technology transfer
approach
• Detailed planning of
technology packages with
project requirements
• Early input of EPCM
• Close collaboration
• Confidentiality management

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New Technology Best Practices (cont’d)
Constructability and Engineering

Clash detection 3D detailed schedule

39
New Technology Best Practices (cont’d)
Constructability and Engineering

Design detail optimization Detail logistic planning

40
 New Technology Best Practices (cont’d)
Procurement Approach
HOW WOULD YOU DO IT?

1. Lump-sum contracts

2. Time and material

3. Adapted risk sharing approach

41
New Technology Best Practices (cont’d)
Procurement Approach

• Procurement strategy developed taking into account

– Risks
– Capacity of suppliers/contractors
– Specific approach developed for technology-related contracts

• Target costs open contracts where

– Technology risks are with RTA
– Routine execution risks are with suppliers/contractors

42
 New Technology Best Practices (cont’d)
Procurement Approach
Including Substation

• Local impacts
– Specific effort with local community based Other
countries
Saguenay-
Lac-St-
on competitiveness 25% Jean
50%

– Leveraging RTA local initiative including Other

areas in
development funds Quebec
25%

• Despite technology complexity

n Excluding Substation

– Best performance ever on a RTA project Other

countries
er y- 16%
es St- Saguenay-
Other
% an Lac-St-
areas in
50% Jean
Quebec
58%
26%
er
s in
ec
25%

43
 New Technology Best Practices (cont’d)
Construction

• Early involvement
• New specific AP60 technology
developed methods
– Including modularization
• Constant attention during
engineering
• Strong planning, tracking and
coordination

44
New Technology Best Practices (cont’d)
Construction

Pre-assembly

45
 New Technology Best Practices (cont’d)
Lean Principles
• Current practices erect
barriers between parties
• Exchange of information
is often inefficient
• Issues and critical items
are not known by team
– Empowerment
• New issues are not
known in time to act

46
 New Technology Best Practices (cont’d)
Lean Principles

THE 5 "Lean" PRINCIPLES

Continuous Respect the

Challenge Go & See Teamwork
improvement individual

If there is a problem,
you move and go
If you cannot see. Collect relevant Each person has A team is
Simple, quick,
justify a situation, information, find the a role to play: stronger than a
root cause, get cheap!
do not accept it! respect him! person
consensus and take
the initiative.

47
 New Technology Best Practices (cont’d)
Process Improvement Workshop
• Improving a process by involving all stakeholders to find
ideas to make their job easier through a simple process
HSE
Equipment – Tools
Organization – Productivity
Matérials – Logistics
Studied activity Quality
presentation Various
Current work process
definition/presentation Brainstorming to identify
High Level possible improvements
classified in six differents Define for each possible
areas improvement :
Action to take, Who, When

During the AP60 Project, one of the

workshops carried out led to a 62%
reduction in welding time for positive raiser.
A SAVINGS OF 19,000 HOURS.

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 Plan to Learn

• Objectives
– Capture all significant lessons specially linked to technology
– Capture lessons in a structured format
– Capture knowledge before personnel demobilization
– Easy consultation
• We benefited from lessons learned; we must provide
learning for future projects
• First generation new technology creates very important
lessons influencing future implementation

49
 Plan to Learn (cont’d)

• Formal process implemented

using facilitated workshop

• Detailed planning
– Is essential
– People do not stay on a project
when the mandate is completed

• Develop specific database

50
 AP60 Take Away

• Extraordinary results can be

achieved by:
– Understanding the importance of
building and maintaining a high
performance team
– Creating a passionate culture
where all employees are invested
with a strong sense of ownership
– Applying rigorous project
management principles
– Consider lean project management
approach

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 Contact Information

• Michel Charron • André Noël • Marc O’Connor

• Rio Tinto Alcan • Hatch • SNC-Lavalin
• Michel.Charron- • Anoel@hatch.ca • Marc.Oconnor@snc
maison@riotinto.com • 514 864-5500 lavalin.com
• 514 848-1060 • 514 458-3088

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