PROJECT MANAGEMENT SHARING

SESSION
(Introduction to Planning, Scheduling, and Controls
in Oil and Gas Projects)

Sharing Session Fakultas Teknik UNDIP

Semarang , 23 September 2016

Ir. Roedhy S. Triasto, MM, MBA

Project Services Director
BP – AsPac Region
 EXPLORING DISCOVERY RESERVOIR COMMERCIAL
FOR OIL/GAS ENGINEERING DEVELOPMENT

ENGINEERING PROCUREMEN FABRICATION / START-UP

T CONSTRUCTION

EPC

COMMERCIAL OPERATION

1
 Why Project Management ?

1. World oil and gas markets are extremely competitive

2. Today’s hydrocarbon projects are challenging and

complex
3. Effective management of a project's cost / schedule /
quality significantly impacts investment efficiency,
profitability and competitive position

2
 Project Management
What is Project Management
Project
•A temporary endeavour undertaken to create a unique product or service

Project management
•The application of knowledge, skills, tolls, and techniques to project
activities to meet project requirements
 Project Management
What is a Project
• Is limited in time
• Has a start and an end date
• Has defined deliverables
• Has interrelated activities
• Requires resources
• Has a sponsor/customer
• Has not been done before
 Project Management
Project Management and Complexity
• Project management focuses on:
 Scope management
 Quality management
 Time management
 Cost management
 Risk management
 Human resources management
 Contract/procurement management
 Communication management
 Integration management
 Project Management
Project Management and Complexity
• Global Projects Increase Complexity
 Number of interfaces
 Temporal differences
 Physical distance
 Language issues
 Cultural differences
 Country specific laws and regulations
 Permitting
 Major Project Phases
Proje
Capital Value Process (CVP)
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Rese t &
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Defin
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A SELECT PHASE
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E P
N R
C R
A STAR O
T DEFINITION PHASE T O
G UP
G O J
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E EXECUTION PHASE S
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TIME 1/4 TIME 2/4 TIME 3/4 TIME 4/4
 Project Management
Capital Value Process
Appraise Phase
•Determine project feasibility and alignment with business strategy
Select Phase
•Select preferred project option(s)
Define Phase
•Finalize project scope, cost and schedule and get project funded

Execute Phase
•Produce an operating asset consistent with scope, cost and schedule
Planning vs Scheduling

Plan Schedule

High Level Detailed activities and sequence

Top Down Bottom Up

End date is usually set and plan developed End date is not constraint and schedule
backwardly developed forward looking

Planning: Identification of work activities to achieve project goals

Scheduling: The process to detail the plan and allocating resources on the work activities

Planning and Scheduling Requirements evolves with the Project Phase

FEL during Project Life Cycle Gate

APPRAISE SELECT DEFINE

STAGES

Site Factors
ELEMENTS Engineering Definition
Project Execution Plan

COST
ESTIMATE
RANGE
EXECUTIVE SUMMARY EXECUTIVE SUMMARY EXECUTIVE SUMMARY

Project Decision & Project Decision & Project Decision &

Overview Risk Analysis Overview Risk Analysis Overview Risk Analysis

SCOPE
Business Plan for Project Business Plan for Project Business Plan for Project
Case & Next Stage Case & Next Stage Case & Next Stage

SCHEDULE
Planning in Project Stages

medium-low to medium level of detail

medium to medium-high level of detail

greatest level of detail

Good Plan sets the expectations…

1. Is made in the form of Network Activities, using a Critical Path

Method (CPM) and is structured based on the Work Breakdown
Structure (WBS)

2. Each of team member understand the plan and believe it is

achievable

3. Management being prepared to take action to rectify deviation

from plan

The Appraise Stage ‘First Product’ Date sets the

Expectation
for Completion for the Rest of the Project
Before Making The Plan

• Establish Project Objectives that align with Project

Mission and Vision.
• Set up clear and measured success criteria : Cost,
Time, Quality/Deliverability product)
• Assess Technology Options and Selections and the
Construction Method for the Project (i.e LNG Dual
MR vs APCI, FPSO vs Fixed Platform, Onshore vs
Offshore LNG Plant
• Create WBS which reflects the major components of
the work scope and project organisation
• Develop Contracting Strategy that align with WBS and
selected technology (major contractors,
supplier/vendors)
• Get management approvals and feedback on the key
milestones (First Gas / First Oil, First Cargo, etc)
Tools - WBS

Level 1 Project ABC

OVERALL PROJECT

Level 2 Infra-
Offshore Onshore Wells Owners UAP
DELIVERY AREA structure

Level 3 Sub Sub (topsides,

DELIVERY PACKAGE Project A Project B subsea, etc.)

Level 4 Engineer
Engineer Procure-
Procure- Construc-
Construc-
FELFEL -ing-ing ment tiontion Start-Up
Start-Up
WORK TYPE ment

(modules, quarters,
Level 5 Work
Work Work
Work etc.)
WORK PACKAGE Package
Package 11 Package
Package 22
Contracting Strategy

• Mapping the Scope of Work and major work activities at

each stage against the expected type of contract and
construction method
• This will help identify potential contractors and vendors
and procurement process
Contracting Types

Project KPIs and the quality of scope definition should shape contract type selection

Company Definition Contractor Contractor

Influence Required Risk Motivation
Maximum Maximum Maximum
Type

Lump Sum

Bill of Quantities / Unit Rates

Target Fee and Reimbursable

Reimbursable
Maximum

The degree of scope definition required for any given stage is independent of the type of contract
Tools – Contracting Map

DIVISON OF WORK OPTION I

  Civil E&I DCS

Build. Infrastr. Infrastr. Field Instr. ESD Infrastr. Applications
General Project Management Owner Team
Define Package A: Define -
Feed Reimbursible Execute - Mix Package B:
Execute Detailed Engineering Define - Reimbursible
Execute - Mix
Procurement Equipment &
Materials    
Prefab Application Package C: Mix Package C: Mix  
Development Configuration
Applications

Construction / Installation

Training Various / TBD      

Testing    
Demolishing      
Commissioning
Owner Team / Operations
Handover
Operate Operate Operations
Plan and Schedule Development

• The integrated project plan covers all disciplines i.e Reservoir, Facilities, Commissioning,
Operations, Drilling & Completions
• A good plan has to Proactive, not Reactive. An effective plan reflects the latest situation and
updated progress
• Level 1 Plan made in the Appraise Stage evolved into Baseline Schedule which will be
monitored and controlled as project progresses.
• The baseline schedule serves as Master Control Schedule, showing integrated activities with
clear critical path and should be able to be rolled up from level 3 to level 1 or Management
Summary level.
• ‘Plan’ and ‘Schedule’ has to meet standard minimum of
Schedule Health Check (made with CPM method,
critical path, no dangling modifiers, no open ended tasks,
minimum/no constraints)
Schedule Pyramid
Maintenance of Schedule

• After the scope of work is freezed, the schedule has to be baselined and made as the
reference (MCS) to monitor and control project progress and expenditures.
• There should be one consistent progress measurement method and criteria for each
of contractor working on the project.
• The plan and schedule has to be monitored and updated periodically, trend is
analysed and reported to avoide suprises to management
– Progress update is done at the agreed cut off (weekly, biweekly, monthly) 
Different level of plan/schedule goes to different report
– Rebaseline of the MCS needs to be done if progress has experience
significant deviation from the approved baseline schedule i.e >5% on
critical path that push the completion date from original target date.
Tools - Schedule Risk Analysis

• Objective of Schedule Risk Analysis

– Running several simulation “what-if” scenarios
– Review the project target date and determine schedule contingency

• Why do we need schedule risk analysis ?

– Help to identify potential problem areas faster
– Help to ensure our schedule is “robust”
– Understand interaction and connection between each activities
Expected Outcome:
• Meningkatnya tingkat
kepercayaan untuk
mencapai tanggal
penyelesaian deterministik
• Menentukan Index
kritikalitas suatu aktivitas

Tools: Acumen Fuse

 Project Management
Cost Engineering
Cost engineering provides project management with forward
looking information identifying expected project performance
and comparisons against performance targets

This presents an early warning of potential overruns and provides

project management with information to influence outcomes
 Project Management
Cost Engineering

The primary function of Cost Engineering is to track the current

level of commitments, actuals and value of work done and
proactively provide project management with accurate, timely
and rigorous estimate and reports of Forecast Final Costs (FFC)
 Project Management
Cost Engineering

Cost Engineering team will provide an effective analysis by:

•Develop, realistic forecasts of the overall project cost.
•Implement processes which encourage early recognition and assessment of
risks and opportunities that could affect project out-turn costs.
•Manage project cost reporting and forecasting efficiently. Tracking
allocation, controlling change and managing UAP.
•Ensure all invoice-supporting documentation is readily available for auditing
by Joint Ventures, Partners and Government to facilitate cost recovery.
 Project Management
Cost Engineering include
• Cost Control Basics
• Project Funding - FMs , AFEs, SAP
• Pre-sanction Costs
• Forecasting
• Management of Change (MoC)
• Risk Management Principles
• Funding Variances - UAP Drawdown
• Cost Reporting
 Project Management
Cost Engineering
• Aim of Cost Control ?
– Enable PM to complete project to budget & give advance warning of problems
– To help PM make more informed decisions
– Cost Control is a misnomer, it is actually Cost monitoring

•How performed?
– Compare actual spend with budget for that portion of work
– The Cost cycle

• When exercised?
– Throughout the project, usually monthly cycle for standard major projects in Oil & Gas
during Execute stage
– Simplistic method in Appraise, Select, and Define stages, detailed in Execute
 Project Management
Cost Engineering
•By whom?
– The Cost engineering team comprising Cost Engineer, Project Accountant, Estimating
engineer, Quantity Surveyor and helped by Project Engineer

A different of cost engineering and project accountant

•Project accountant is historical focus

•Cost engineering is forward looking or forecasting

The Project Control Cycle
Define Work scope
Project Manager Estimate Cost
Implements Decision Establish Phased Budgets

Act Plan

Project Progress Meetings

Decide Do Execute this
month’s work list

Compare

Cost Report
Progress Measurement
Earned Value
Report
 Project Management
Cost Control Basics
• Starting point is the sanction estimate

• Format the estimate into WBS, then subdivide each bottom level workpack into CBS
designations, i.e. direct vs indirect costs

• Cost Breakdown Structure vs Work Breakdown Structure. What costs are directly
attributable to a specific deliverable, and what are not ?

• Phase budgets through time

• Establish a complimentary system to record any changes to the baseline work-scope

and its associated budgets - i.e. the MoC process

• Synchronise the MoC with the Cost Control system so the forecast final cost (FFC) at
any time, can be traced back to sanction
Phased Budgets through time
$
Activity Est Start End 2003 2004 2005 2006 2007
Total
Cost
$mm

Pre Sanction 15 Jan Sept 10 5       15

03 04

Detail Design 25 *Oct *Mar   12 13     25

04 05

Procurement 125 Jan Sept     125     125

05 05

Fabrication 110 Oct Mar     50 60   110

05 06

Installation 50 Jan Dec       50   50

06 06

Test & Comm 25 Oct Dec       25   25

06 06

Capex 350     10 17 188 135 0 350

Phasing Annual

Capex Cumulative       10 27 215 350 350  

Phasing

Cashflow 350     8 13 140 110 79 350

Phasing Annual

Cashflow Cumulative       8 21 161 271 350  

Phasing

1%     0 0.17 3.8 3.9 0 7.87

Escalation Allowance p.a.

*Start & end dates from WBS level 3 roll-up

Summary
APPRAISE STAGE
•Level 1 Plan
•Realistic natural pace and shows the
target date for each key events.
•Shows overall scope for each options
•Shows major interface with other
stakeholders/work area
SELECT STAGE
•Level 2 schedule evolving to level 3
schedule at the end of Select Stage
•Clearly shows differences of total project
duration for each options development –
shown in the form of critical path
•The activites represents risk profiles for each
options
•Corresponds with progress measurement
criteria for DEFINE STAGE
Best in Class: Conduct benchmark against
internal database from past projects and
include adequate contingency for the total
project duration.
DEFINE STAGE EXECUTE STAGE
•Schedule expanded to cover contractor’s Focus on progress monitoring and
scope and interface within each contractor performance management
- Progress measurement based on
•Level 3 schedule updated and expanded to
completed
be resource loaded schedule and include
physical progress not
PMT, detailed engineering and procurement
manhours or time spent.
•For construction phase and commissioning, - Identify work productivity and
schedule can be updated in the Execute phase ensure trend is generated
using resource information from EPC based on actual data from site
Contractor and reflected in the forecast
•Schedule Risk Analysis to determine mahours and activity duration.
contingency level - Ensure project
schedule always reflect
Best in Class : Conduct external benchmark latest updated situation
(IPA), to evaluate FEL scope and project - Rigourosly monitor Schedule
readiness to enter Execute Stage Risk Register
and mitigation plan
- No change to MCS shall be
made without
proper MoC
- Ensure integrity of reporting
system, and do frequest audit
 Project Management

• End of Presentation