implementing best practices in capital project management

Implementing Best Practices In Capital Project Management

R.W. DietrichDirector, Engineering Servicessanofi pasteur limited

Agenda

IntroductionContextBest Practices OverviewThe Seven Project StagesThe Stage Gate Review ProcessProject Performance MetricsResults to DateNext Steps

Introduction

Who is sanofi pasteur?Where is sanofi pasteur?Engineering at sanofi pasteurCapital projects at sanofi pasteur

Context

2002 benchmarking of capital projects determined…

0.90

0.95

1.00

1.05

1.10

1.15

1.20

1.25

1.30

Industry

Pharms

sanofi pasteur 2002

Absolute Capital Cost

0.90

0.95

1.00

1.05

1.10

1.15

1.20

1.25

1.30

Industry

Pharms

sanofi pasteur 2002

Overall Schedule(excluding qualification)

Best Practices Overview

Derived principally fromCurrent sanofi pasteur practicesPMI PMBOKISPEIPA

Focuses on planning (aka Front End Loading, or FEL)

Best Practices Overview

The 7-stage PM Process:Stage 0: Needs AnalysisStage 1: Feasibility StudyStage 2: Preliminary EngineeringStage 3: Basic EngineeringStage 4: ExecutionStage 5: QualificationStage 6: Close-Out

The Seven Project Stages


Stage 0: Needs Analysis‘Pre-project’ stage, concluded by a Go/No-Go decisionTypically involves a Project Sponsor, Engineering Director, Area V.P.Rarely involves external supportGoal is to establish technical solutions for end-user needs and develop a supporting business caseEstablishes order-of-magnitude boundaries for potential project (cost, schedule)


Stage 1: Feasibility StudyProject Leader is identified in this phaseSME’s are used on an as-needed basisProject feasibility is assessed with respect to resources, riskOptions are assessed with respect to benefits, economic justification, functionality


Stage 1: Feasibility StudyKey activities and deliverables:

Project charterInitial User Requirements SpecificationsProcess descriptionBlock diagramsMaterial balancesGeneral arrangement diagramsCost/benefit analysisEarly stage risk analysis


Stage 2: Preliminary EngineeringProject team and steering committee are defined and engaged at this stageObjective is to define the project scopeExternal resources are assigned

Design consultantsConstruction manager

This stage (and stage 3) may be subject to capital funding


Stage 2: Preliminary EngineeringKey activities and deliverables:

Team charterScope statementPreliminary project planFinal User Requirements SpecificationsProcess and utility flow sheetsImpact assessment (on site and environment)Preliminary cost estimate and time schedule (± 25%)Initial VMP developmentInitial procurement plan


Stage 3: Basic EngineeringObjective of this stage is to develop the design based on scope established in stage 2At the completion of this stage, the project is ready for full capital funding


Stage 3: Basic EngineeringKey activities and deliverables:

P&ID’sArchitectural layoutsMaterial, personnel, product flow diagramsMajor equipment specificationsProject reviews:

ConstructabilityMaintainabilityHAZOPFMEA…


Stage 3: Basic EngineeringKey activities and deliverables (cont.):

Product impact assessmentFurther development of VMPFunctional design specificationsEnhanced design review and qualificationFinalized project plan with control schedule and cost estimate (± 5%)Final procurement planPurchase of long lead equipment


Stage 4: ExecutionObjective of this phase is to complete the design details and carry out construction/installation


Stage 4: ExecutionKey activities and deliverables:

Development of final drawings, specifications and tender packagesImplementation of cost and schedule monitoring and control systemsPermittingDevelopment of qualification rationalesFinalization and approval of the VMPDevelopment of IQ and OQ protocols


Stage 4: ExecutionKey activities and deliverables (cont.):

Development of commissioning planConstruction coordination and inspectionSafety inspectionsFinal acceptance of construction works


Stage 5: QualificationThe objective of this stage is to start up, commission and qualify the systems constructed and installed in stage 4Commissioning and qualification are optimized per ISPE Baseline GuideIncludes training of end users and maintenance staff


Stage 5: QualificationKey activities and deliverables:

Pre-start reviewsMaintenance plans and task listsExecuted commissioning plan and reportsExecuted IQ and OQ protocols and reportsOperation and maintenance manuals and SOP’sInstrument calibrationRegulatory registrationsTraining


Stage 6: Close-outThis stage involves the transition from ‘Project’ status to ‘Operational’ statusIncludes closure of all external contracts and dissolution of project teamIncludes final reporting and financial closure of the project


Stage 6: Close-outKey activities and deliverables:

Engineering turn-over package (ETOP)Lessons LearnedRegistration of assetsFinal project reportEntry of project data into benchmark database


The Project Management Process Flowchart

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Com

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Cha

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Con

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Fac

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User DefinedNeed

Project Definition

Site StrategyReview and

Approval

UserRequirementsSpecifications

ProjectAssignment &

Number

I.O. Projec tManagement

Support

EstablishProject Team

& DefineScope

PreliminaryDesign

Review andApproval

DevelopProcess and

ValidationProtocol

Basic DesignEngineering

Project Plan Capital Reques tDocument Detail Design

EngineeringProject

ExecutionStart-up andCommission

Post-projectEvaluation

Stage 0:Needs Analysis

Stage 1:Feasibility Study

Stage 2:Preliminary Engineering

Stage 3:Basic Engineering

Stage 4:Execution

Stage 5:Qualification

Stage 6:Close-out

Owner Hand-over and

Acceptance

Qualification

GoodsReceipt

Asset RegistrationDocument

Issue SAPEquipment

Number

Validation MasterPlan

CapitalApproval

Change ControlNumber andNotification

Asset ChangeTemplate

Review andApproval

The Stage Gate Review Process


Performed at the end of key project stagesObjective is to review activities and deliverables and approve advancement to next stage


Originally, stage gate review board consisted of sponsor, senior area managementCurrently, stage gate review board consists of engineering services peersIn future, development of a dedicated global stage gate review team?


Stage 0:Needs Analysis

Stage 1:Feasibility Study

Stage 2:Preliminary Engineering

Stage 3:Basic Engineering

Stage 4:Execution

Stage 5:Qualification

Stage 6:Close-out

Go/No-goDecision

Pre-planning CapitalFunding

Turn-over to Owner andMaintenance

Change ManagementInitiated Change Control Initiated

StageGate

Review

Full Project CapitalFunding

StageGate

Review

StageGate

Review

StageGate

Review

StageGate

Review

StageGate

Review

Project Performance Metrics

FEL IndexTeam Development IndexProject Controls Index

Results to Date


0.90

0.95

1.00

1.05

1.10

1.15

1.20

1.25

1.30

Industry

sanofi pasteur 2004

Pharms

sanofi pasteur 2002

Absolute Capital Cost

0.90

0.95

1.00

1.05

1.10

1.15

1.20

1.25

1.30

Industry

sanofi pasteur 2004

Pharms

sanofi pasteur 2002

Overall Schedule(excluding qualification)

Results to Date


Overall, annual savings around $38 MCDNOverall, average schedule reduction of 10 months

Next Steps

Predictive MaintenanceValue EngineeringPlant QualityProcess ReliabilityDesign to CapacityTechnology Selection

Customizing StandardsWaste MinimizationConstructability ReviewsProcess SimplificationEnergy Optimization3D CAD

IPA’s Value Improving Processes:

implementing best practices in capital project management

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