reliable afe’s key drivers on mega projects jose c. herrero, vp project director fluor

RELIABLE AFE’sKEY DRIVERS on MEGA PROJECTS

Jose C. Herrero, VP Project Director Fluor

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RELIABLE AFE MEGA PROJECTSRELIABLE AFE MEGA PROJECTS

RECENT EXPERIENCES

EFFORT/TIME for a RELIABLE AFE

KEY DRIVERS

CONCLUSION

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RELIABLE AFE MEGA PROJECTSRELIABLE AFE MEGA PROJECTS

RECENT EXPERIENCES– Quality– Safety– Schedule– Cost

DO WE HAVE ANY HOPE ?

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EFFORT/TIME TO DEVELOPRELIABLE AFE MEGA PROJECTSEFFORT/TIME TO DEVELOPRELIABLE AFE MEGA PROJECTS

Gating Process

Terminology

Engineering Effort

Duration

Accuracy and Confidence Level

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KEY DRIVERS forRELIABLE AFE MEGA PROJECTSKEY DRIVERS forRELIABLE AFE MEGA PROJECTS

6 Basic Elements – Scope of Work (Facilities and Services)– Cost Estimate– Schedule– Execution Plan and Change Management– Risk Management– Prime Contract

Consistency

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KEY DRIVERS forRELIABLE AFE MEGA PROJECTSKEY DRIVERS forRELIABLE AFE MEGA PROJECTS

SCOPE OF WORK– SOS and SOF– Methodologies– Suitable for the Purpose– Support AFE Estimate– Consistent with AFE Schedule– Written endorsement by stakeholders

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KEY DRIVERS forRELIABLE AFE MEGA PROJECTSKEY DRIVERS forRELIABLE AFE MEGA PROJECTS

COST ESTIMATE– Translate the Base Line into cost and contingencies – Identifies anticipated cost of Project Execution– Input by all stakeholders – Upper Management reviews– Escalation – Contingency assessment– Event Driven Risks– Stated level of probability– Consider an intermediate estimate

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KEY DRIVERS forRELIABLE AFE MEGA PROJECTSKEY DRIVERS forRELIABLE AFE MEGA PROJECTS

SCHEDULE– Start with the end in mind– Articulate and visualize the Path of Construction– Precedence diagram– Benchmarking– Modularization– Resource loaded and leveled– Stated level of probability– Risk assessment

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Schedule Considerations ISchedule Considerations I

Engineering

Construction

Time T

% C

om

ple

te

0

0.1

0.2

0.3

0.4

0.5

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0.9

1

1/3T

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Schedule Considerations IISchedule Considerations II

10 20 30 40 50 60 70 80 90 10000

100

10

20

30

40

50

60

70

80

90

ENGINEERING

CONSTRUCTION

CHECKOUT/STARTUP

Percent of Total Contract Time

Pe

rce

nt

Co

mp

lete

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Schedule Considerations IISchedule Considerations II

10 20 30 40 50 60 70 80 90 10000

100

10

20

30

40

50

60

70

80

90

ENGINEERINGMODULES ONLY

CONSTRUCTION

CHECKOUT/STARTUP

Modularized Project Life Cycle

Percent of Total Contract Time

Pe

rce

nt

Co

mp

lete

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Schedule Considerations IIISchedule Considerations III

25% T

15% T

T

Construction Progress versus Duration

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Construction Duration

Pro

gre

ss

Site Prep, Piling, etc.

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KEY DRIVERS forRELIABLE AFE MEGA PROJECTSKEY DRIVERS forRELIABLE AFE MEGA PROJECTS

PROJECT EXECUTION PLAN – Strategy to meet contractual requirements– Execution Flow Chart– Project Management structure– Basis for the AFE Estimate/Schedule– Addresses the Total Project– Written endorsement of all stakeholders– Includes the Change Management Plan

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KEY DRIVERS forRELIABLE AFE MEGA PROJECTSKEY DRIVERS forRELIABLE AFE MEGA PROJECTS

CHANGE MANAGEMENT PLAN– Definition and Alignment– Different responses– Change Management Process– Deal with all changes promptly– Change Management log– Direct Impact and Disruption

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Where do you stand as a PM?Where do you stand as a PM?

Could Be Should Be

We manage and report services cost, but don’t drive to it

Manage and drive TIC and schedule to the Baseline

Maintain a current Baseline through effective Change Management

We forecast TIC, don’t manage to it

We don’t manage or forecast schedule, but drive to it!

The only thing that’s missing is a conversation.As Manager, I am responsible for the way it is.

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KEY DRIVERS forRELIABLE AFE MEGA PROJECTSKEY DRIVERS forRELIABLE AFE MEGA PROJECTS

RISK MANAGEMENT– Guided and facilitated– Formal and systematic– Assess, mitigate, manage execution risks– Integrated and positive approach– Proactive and forward looking – Updates– Other benefits

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KEY DRIVERS forRELIABLE AFE MEGA PROJECTSKEY DRIVERS forRELIABLE AFE MEGA PROJECTS

PRIME CONTRACT– Legal relationship– Reimbursement, liabilities, notifications– Documents commitments– Notification matrix– Can’t cover all eventualities– Behaviors

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CONCLUSIONYES, THERE IS HOPE!CONCLUSIONYES, THERE IS HOPE!

No replacement for experience

Alignment

Mega Projects are RISK projects

Decision making process

Different execution models

Solid organization, populated with competent/experienced people and proven work processes