mba project report m00328327 (1)
TRANSCRIPT
A Study on increasing Operational efficiency in EPC Projects using ‘Lean’ Principles
October 14
2011 A Consultancy Project Report
- For Dodsal Engineering & Construction Ltd., Dubai
Venkatesh Kumar Subburaj M00328327 MBA4800-Project Report Middlesex University Business School
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ACKNOWLEDGEMENT
I owe debt of gratitude to all those people who have helped me with this study. First, I
would like to thank my professors at University of Middlesex who helped me in understanding
the concepts of management and creating a way to develop myself as a potential leader.
Special thanks to Prof. Simon Speller and Dr.Vinaya Shukla, who has significantly influenced my
thinking about consultancy in Operations Management and guided me in the successful
completion of this text. I extend my thanks to Dr. Anjali Bakhru who refined my thoughts for
choosing this study in the initial stages.
I owe a massive debt of gratitude to people in Dodsal, Dubai, UK, who were the
respondents in the interview process and helped in identifying, solidifying the concepts
required for the study. I would also like to thank my family and friends for supporting and
encouraging me throughout the course of study.
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Declaration of Originality
I hereby declare that this project is entirely my own work and that any additional sources
of information have been duly cited.
I hereby declare that any internet sources, published or unpublished works from which I
have quoted or drawn reference have been reference fully in the text and in the
contents list. I understand that failure to do this will result in a failure of this project due
to Plagiarism.
I understand I may be called for a viva and if so must attend. I acknowledge that is my
responsibility to check whether I am required to attend and that I will be available during
the viva period.
Signed ________________________
Date _______________
Name of Supervisor / Mentor _________________
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Table of Contents
1. SCHEME OF RESEARCH ................................................................................................................. 10
1.1 INTRODUCTION...................................................................................................................................... 10
1.2 OVERVIEW OF EPC INDUSTRY IN UAE ....................................................................................................... 11
1.3 ABOUT THE FIRM ‘DODSAL’ ..................................................................................................................... 12
1.4 OBJECTIVE OF THE PROJECT ..................................................................................................................... 13
1.5 STRUCTURE ........................................................................................................................................... 14
1.6 SUMMARY ............................................................................................................................................ 15
2. LITERATURE REVIEW .................................................................................................................... 16
2.1 UNDERSTANDING DODSAL’S OPERATIONS ................................................................................................. 16
2.1.1 Business Models Used by Dodsal for delivering EPC projects: ................................................... 17
2.1.2 Brief outline of Downstream EPC projects ................................................................................. 18
2.1.3 Typical Construction sequence in EPC projects .......................................................................... 24
2.1.4 Project Organization structure ................................................................................................... 25
2.2 INDUSTRY TRENDS AND PRODUCTIVITY ISSUES ............................................................................................ 27
2.2.1 Key Industry Trends .................................................................................................................... 27
2.2.2 Common Management issues in EPC Projects ........................................................................... 29
2.2.3 Consultancy Problem definition ................................................................................................. 31
2.3 LITERATURE STUDY ON IMPROVING PRODUCTIVITY ...................................................................................... 32
2.3.1 Common issues in concurrent development projects ................................................................. 32
2.3.2 Lean approach to productivity improvement ............................................................................. 33
2.3.3 Value streams - the opening pace for Lean ................................................................................ 35
2.3.4 Analyzing information flow using Design Structure Matrix (DSM) ............................................ 36
2.4 SUMMARY ............................................................................................................................................ 38
3. RESEARCH METHODOLOGY .......................................................................................................... 39
3.1 INTRODUCTION...................................................................................................................................... 39
3.2 SIMON SPELLER CRACKER MODEL ............................................................................................................. 39
3.3 PROJECT APPROACH AND DESIGN ............................................................................................................. 42
3.3.1 Field Analysis .............................................................................................................................. 43
3.3.2 Interviews/Meetings .................................................................................................................. 43
3.3.3 Desktop Analysis ........................................................................................................................ 45
3.4 LIMITATIONS ......................................................................................................................................... 45
3.5 SUMMARY ............................................................................................................................................ 45
4. DATA ANALYSIS ............................................................................................................................ 46
4.1 INTRODUCTION...................................................................................................................................... 46
4.2 IDENTIFYING VALUE STREAMS .................................................................................................................. 46
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4.3 DSM ANALYSIS ...................................................................................................................................... 52
4.3.1 Planned iterations ...................................................................................................................... 57
4.3.2 Unplanned iterations ................................................................................................................. 57
4.4 ANALYZING THE RESULTS AND CREATING CAUSAL MAP ................................................................................. 59
4.5 SUMMARY ............................................................................................................................................ 64
5. RECOMMENDATIONS ................................................................................................................... 65
5.1 INTRODUCTION...................................................................................................................................... 65
5.2 VALUE STREAMS BASED ORGANIZATION .................................................................................................... 66
5.2.1 Proposed Organizational structure ............................................................................................ 66
5.3 POTENTIAL IMPACT ANALYSIS .................................................................................................................. 70
5.4 JUSTIFICATION FOR NEW ORGANIZATION STRUCTURE ................................................................................... 72
5.5 BARRIERS FOR IMPLEMENTATION ............................................................................................................. 74
5.6 LEADERSHIP STRATEGIES ......................................................................................................................... 75
5.7 FUTURE PACES ...................................................................................................................................... 77
6. CONCLUSION................................................................................................................................ 79
7. APPENDICES ................................................................................................................................. 81
APPENDIX 1: OUTCOME OF INTERVIEWS/DISCUSSIONS ............................................................................ 81
APPENDIX 2: WORK BREAKDOWN STRUCTURES FOR VALUE STREAMS .................................................... 85
APPENDIX 3: IBC CODE OF CONDUCT AND PROFESSIONAL PRACTICE ....................................................... 87
APPENDIX 4: UPDATED SCHEDULE FROM PRIMAVERA USED FOR THE ANALYSIS ..................................... 88
8. REFLECTIVE SUMMARY ................................................................................................................. 96
9. REFERENCES ............................................................................................................................... 100
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List of Figures
FIGURE 1 : ENGINEERING & CONSTRUCTION PROJECTS .......................................................................................... 12
FIGURE 2 : CLASSIFICATION OF EPC PETROCHEMICAL PROJECTS .............................................................................. 17
FIGURE 3 : BUSINESS MODELS IN EPC BUSINESS .................................................................................................. 18
FIGURE 4 : EPC VALUE CHAIN ........................................................................................................................... 19
FIGURE 5 : BASIC BLOCKS FOR INFORMATION FLOW .............................................................................................. 19
FIGURE 6 : TYPICAL PROJECT SCHEDULE .............................................................................................................. 21
FIGURE 7 : CONSTRUCTION EXECUTION SEQUENCE ............................................................................................... 25
FIGURE 8 : PROJECT ORGANISATION STRUCTURE .................................................................................................. 26
FIGURE 9 : ISSUES LEADING TO PROJECT OVERRUNS .............................................................................................. 30
FIGURE 10 : CONSULTANCY PROBLEM DEFINITION ................................................................................................. 31
FIGURE 11 : LEAN CORE PRINCIPLES .................................................................................................................... 34
FIGURE 12 : SIMON SPELLER CRACKER MODEL ..................................................................................................... 39
FIGURE 13 : STEPS TO ORGANIZE PROJECT ALONG VALUE STREAMS .......................................................................... 46
FIGURE 14 : DIFFERENT BOUNDARIES FOR EPC PROJECTS ...................................................................................... 47
FIGURE 15 : PLANNING LEVELS IN EPC PROJECTS .................................................................................................. 48
FIGURE 16 : CHARACTERISTICS OF VALUE STREAMS ............................................................................................... 50
FIGURE 17 : STEPS IN PREPARING VALUE STREAMS FOR DSM ANALYSIS .................................................................... 53
FIGURE 18 : STEPS IN CREATING DSM BLOCKS ..................................................................................................... 55
FIGURE 19 : DSM MATRIX ............................................................................................................................... 56
FIGURE 20 : COMMON BEHAVIORAL PATTERNS LEADING TO REWORK ...................................................................... 60
FIGURE 21 : CAUSAL ROOT MAP ANALYSIS ........................................................................................................... 62
FIGURE 22 : STRATEGIC MATTERS ...................................................................................................................... 65
FIGURE 23 : CURRENT ORGANIZATION STRUCTURE ............................................................................................... 68
FIGURE 24 : VALUE STREAM BASED ORGANIZATION STRUCTURE .............................................................................. 69
FIGURE 25 : TOP BUSINESS FACTORS ................................................................................................................. 81
FIGURE 26 : STAKEHOLDER MAPPING ................................................................................................................ 84
FIGURE 27 : WORK BREAKDOWN STRUCTURES STAKEHOLDER MAPPING .................................................................. 85
FIGURE 28 : IBC COMPETENCY FRAMEWORK ....................................................................................................... 87
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List of Tables
TABLE 1: STAGES IN EXECUTION OF EPC PROJECTS ................................................................................................ 21
TABLE 2: VALUE STREAMS IDENTIFIED ................................................................................................................. 52
TABLE 3: POTENTIAL IMPACT ANALYSIS ............................................................................................................... 72
TABLE 4: BARRIERS TO IMPLEMENTATION ............................................................................................................ 76
List of Gantt charts
GANTT CHART 1: CONSULTANCY PROJECT PLAN ................................................................................................... 42
GANTT CHART 2: IMPLEMENTATION PLAN ........................................................................................................... 79
List of Abbreviations
EPC - Engineering, Procurement and Construction
DSM - Design Structure Matrix
LSTK - Lump Sum Turn Key projects
RFI - Request for Information
RFQ - Request for Quotation
PO - Purchase Order
WBS - Work Breakdown Structure
TQM -Total Quality Management
P&ID - Process & Instrumentation Drawings
IFA - Issued For Approval
IFC - Issued For Construction
AFDE - Approved For Detailed Engineering
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Abstract
Lean principles originated from Toyota production system have made revolutions in
many sectors, especially in manufacturing sectors with the achievement of high productivity.
This report sets the stage to extend this philosophy into EPC industry, which is a conservative
industry and use of those principle has not been widely accepted yet in the region. Typically
EPC projects spans for 3 -4 years and involves coordination of various engineering functions.
This industry involves tremendous flow of information due to the high overlapping of tasks
called concurrent engineering. Several factors from the external environment have been
scanned to understand the increase in pressure with the EPC contractors to adopt concurrent
engineering setup. The current formal functional organization structures that exist in this
industry is not able to cope with the industry trends and lead to many productivity issues,
which in turn end ups with project overruns in terms of both schedule and budget.
Dodsal Engineering and Construction Ltd, the flagship business of the Dodsal group is
the sponsor of this internship. They are in the business of executing large scale engineering and
construction projects for more than five decades. They are one of the major EPC contractors in
United Arab Emirates. They have been facing significant productivity issues as discussed above
in the recent years. The rationale behind this internship is to identify ways for applying Lean
Principles to address their productivity issues and recommend an environment where
continuous improvement is the fundamental nature.
Considering the crucial factor of information flow in the industry and based on the Lean
literature, value stream based organization was proposed based on the Lean concepts ‘Value
streams’ and Design Structure Matrix (DSM). The exercise of organizing a project along value
streams was done and the DSM identified the causes for rework, which is the most important
reason for project overruns.
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The DSM tool was used to identify the positive and negative iterations in the process.
Recommendations were made to reduce the negative iterations. Further, this report
demonstrates the need for this approach and explains how it is complementary to their growth
strategy. Currently there are several internal initiatives within Dodsal to adopt this proposal.
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Unit -1
1. Scheme of Research
1.1 Introduction
EPC project refers to engineering, Procurement and Construction projects. EPC
contractors are those who carry out such large scale engineering and construction projects on
behalf of clients. The client here generally refers to oil & gas companies. At a conceptual level
the most important challenge in managing an EPC project is to coordinate among the
engineering, procurement, construction groups and ensure proper & timely flow of
information/material. EPC industry over the decades had well defined systems to facilitate this.
However in recent times, there have been significant changes in the industry which disrupt the
flow. The major reasons are as follows. The first one being the dramatic increase in client power
and other one is the execution of project, which is globally distributed. This in turn has
shortened the project schedules. Meanwhile, the scope of activities has been drastically
increased in terms of safety regulations and information system that is handover to clients. As a
result, the activities in the project cycle were highly overlapped and inability to manage these
overlaps served as the basis for decline in Productivity. This methodology of parallelizing the
tasks or activities is called concurrent engineering (Backhouse, CJ and Brookes, 1996). Thus
concurrent engineering has led to problems in ensuring timely and orderly flow of information
between engineering, procurement, vendors and construction teams. This project involves in
identifying ways to address these problems and to improve operational effectiveness from a
lean perspective.
Today, traditional ways of performing and managing construction processes face
unprecedented challenges. The growing competition forces construction organizations to
rethink their construction processes for improving productivity, quality, and efficiency (Karna
and Junnonen, 2005). Especially the tremendous project complexities and uncertainties
contribute to this issue.
Dodsal Group, the sponsor company for the internship behind this project, is in the
business of executing such large-scale projects. Their EPC projects typically run for few years
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and involve coordination of efforts by hundreds of engineering staff. There are inherently many
productivity and information flow issues in such projects. Dodsal has been facing significant
operational efficiency difficulties, leading to cost and schedule overruns in recent years. The
main issue was identified as rework due to the fact that the existing project management
structure in Dodsal do not deal with concurrent engineering nature of the projects.
These issues being the hot topic in this industry, the Internship report is on formulating
Lean solutions for Dodsal engineering and construction, and providing them with
recommendations to make their operations more efficient.
EPC projects typically span over 2-3 years and new projects takes years to materialize.
Given the time frame of the internship, it was not able to fully observe a lifecycle
implementation of these concepts. However the report covers the phases of concept
generation, value stream definition and discusses the challenges in preparing a conservative
industry like EPC for lean implementation.
1.2 Overview of EPC industry in UAE
The prosperity of the United Arab Emirates and its rapid transformation from a
backward desert region to one with a booming economy has been made possible by revenue
from oil exports. The UAE possesses nearly 10 per cent of the world’s total reserves, and there
is no doubt that oil will continue to provide the income for both economic growth and the
expansion of social services for several more decades (Madhu Pillai et al., 2010). The Middle
East especially UAE is one of the main business hubs for EPC contractors in the world. It
possesses a number of upstream oil & gas companies in operations and grows at steady rate.
There are vast numbers of EPC contractors operating in this region. They range from
multinational companies to small sub-contractors supporting the major players. The region has
played host to some of the biggest tenders, most ambitious projects and the best prospects
anywhere in the oil & gas world. The competition is so intense here.
With the EPC industry going through a major expansion in the region, Dodsal has got
numerous projects in its pipeline for the next 7 years across the Middle East region. Taking
advantage of the industry upswing, Dodsal’s current main concern is to improve its operational
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performance so as to rebuild a healthy EPC business and to increase its global positioning
among the top EPC contractors.
1.3 About the firm ‘Dodsal’
Engineering and Construction is the flagship business of the Dodsal Group. As part of
Dodsal's EPC business, it undertakes Engineering, Procurement and Construction projects as
well as large scale complex Construction only projects in the Energy, Industrial and
Infrastructure sectors.
Dodsal has been successfully executing projects across the Energy, Industrial and
Infrastructure sectors in the Middle East, Asia, Africa and Europe for over five decades since
1960. The company with it two arms as an EPC and a Construction contractor has executed
wide range of projects (see figure 1) for leading international and regional Oil & Gas companies,
other reputed government organizations.
Figure 1 : Engineering & Construction Projects
Dodsal Engineering and Construction Limited have a combined team of experienced
professionals and skilled workforce who are well adept with the local laws, regulations,
procedures and client requirements in the region. Most of the project personnel have rich prior
experience of working with regional and international Energy companies and are readily
available as a part of the in-house task force for deployment.
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Dodsal is always committed to the integration of leading environmental practices and
sustainability principles into its core business strategy. Dodsal's Quality Management System is
certified to ISO 9001:2008 and the group's Occupational Health; Safety and Environmental
management systems are certified to OHSAS 18001:2007 and ISO 14001:2004 respectively.
The Dodsal Group routinely monitors and improves upon environmental practices, including:
Water and energy conservation
Waste mitigation, segregation, recycling and disposal
Heritage and habitat protection
These are the evidences that stand out for their interest on cleaner operations. In a whole,
Dodsal’s strategy can be defined in one line as "Optimize the whole: for the project and the
planet”.
1.4 Objective of the Project
This report set out the stage for adoption of Lean in EPC projects and provide
substantiation, that moving towards lean is sustainable for both the organization and the
environment it operates. After careful considerations and discussions with Dodsal, the project
was narrowed down to identify an approach for implanting lean tools and techniques that will
identify areas of improvement and mitigate issues discussed in the Unit-2, Section 2.2.
The Main objectives of this Internship project are:
To Study and analyze the productivity issues of Dodsal and identify areas where
improvements can be made specifically in align with Lean principles
Identifying from the literature the tools and techniques that can be adopted to have an
effective ‘Lean operations’ in EPC projects
To set an stage for creating an environment conducive for applying lean principles and
improving their operational effectiveness
To suggest Extensive recommendations on the research in the selected areas with the help
of the literature and case studies.
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1.5 Structure
This Report aims at explaining the need for the adoption of Lean principles in their
Operations and explains how it can improve their operational effectiveness with reference to
the Lean Literature. It also discusses the requirement that has to be incorporated with their
existing organization structure. Finally the recommendations are made to give an edge for the
organization to have a sustainable growth and greater chance of succeeding in a very
competitive environment. The remaining part of this report is organized as follows:
Unit-2 Literature review, describes things that are necessary to follow the rest of discussion. It
comprises of three parts as follows
-Understanding Dodsal’s Operations, details the basic background information about Dodsal’s
current operational practices in executing EPC projects. It discusses about the key phases in EPC
project, project management team and their structure.
-Trends and Productivity issues, discusses the significant problems caused by general industry
trends that has led to decline in productivity. It also describes key issues at Dodsal that formed
the basis of this internship study.
-Literature study on improving productivity in projects, briefly discusses about the past studies
that exist along the concurrent engineering contexts. It discusses the value stream as the first
step in implementing lean and the use of Design structure matrix to analyze value streams. It
also highlights issues that are involved in applying these concepts to EPC projects.
Unit-3 Research Methodology, discusses about the research method employed in the study.
Initially, the Unit discusses the purpose of the project. It also discusses the project approach
and the design. Various methods involved in data collection as On-field Analysis, Interview and
Desktop analysis are explained. The limitations of this project are explained in the end.
Unit-4 Data analysis and Discussions, describes a systematic approach to organize an EPC
project along Value streams. It demonstrates the way in which value streams were identified
and analyzed by Design structure matrix (DSM). The root causes for the issues recognized in
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DSM analysis, are identified by causal root map analysis tool. Then extensive process
improvement methods are suggested to mitigate the identified issues.
Unit-5 Recommendations, proposes a new organization structure along value streams which
will resolve many of their existing productivity problems. It also discusses the impact of new
organization structure and the rationale behind this proposal. Finally it describes the internal
initiatives taken by Dodsal to adopt this change. The leadership strategies that were followed to
buy-in their decision towards value stream are also explained.
Unit-6 Conclusion summarizes the discussion throughout this report.
1.6 Summary
This unit has presented a brief outline of the project. It has reviewed the UAE EPC
industry and the market for EPC contractors, the rationale and scope of the study. This Unit has
also explained the objectives of the project and has outlined the structure of the remaining
units. The next unit discusses about how EPC projects are executed within Dodsal, followed by
common management issues facing them and the review of existing literature explaining the
need for Lean operations
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Unit -2
2. Literature review
2.1 Understanding Dodsal’s Operations
As said earlier the term EPC industry refers general contractors who undertake large
construction and engineering projects on behalf of their clients. It is a broad industry and
consists of a wide range of facilities from large scale infrastructure projects like power stations,
metro rail systems to construction projects like roads, tunnels etc., Dodsal is into a separate
sub-sector, Oil & Gas EPC industry that focuses on industrial projects like offshore platforms,
chemical plants, petroleum refineries etc., According to Pillai et al (2010), “EPC in industrial
sector is a highly technology intensive business and is typically dominated by specialized
engineering firms that have over time, built the necessary technology and design expertise”.
Dodsal specializes and concentrates more on construction of downstream petrochemical
plants. Petrochemical plants are largely classified into upstream, midstream and downstream
projects as shown in following figure 2.
Pillai (2010) describes, facilities which are involved in exploration and production of oil
& natural gas are called upstream facilities. The midstream facilities usually deal with
processing, storage and transportation of oil and natural gas. Downstream activities include
facilities like petrochemical plants used for producing various end products from oil & natural
gas. In this internship, the scope is restricted to downstream projects. The project used here in
this report for data analysis is Ruwais sulphur plant, Abudhabi. Dodsal executed this project in
3.5 years, but supposed to be finished in 2.5 years originally.
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Figure 2 : Classification of EPC Petrochemical Projects
2.1.1 Business Models Used by Dodsal for delivering EPC Projects
The most predominant business models used for delivering those large scale
engineering and construction projects are lump-sum turnkey projects and reimbursable service
contracts. They are explained in the figure 3.
For the rest of our discussion, we concentrate only on lump-sum turnkey (LSTK) projects
as this is the most common model used by Dodsal.
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Figure 3 : Business Models in EPC Business
2.1.2 Brief outline of Downstream EPC projects
A Typical LSTK downstream project spans around 2-3 years and involves a multi- million
dollar effort. According to Bertelsen & Nielsen (1997), construction of such industrialized
facilities involves a specialized supply chain where EPC contractor acts as the channel co-
coordinator. The typical players involved in the value chain are shown in Figure 4.
It includes a swarm of players from process technology firms, equipment manufacturers to
construction sub-contractors. There are four key stages involved in the execution of EPC
project. We briefly discuss these four stages in the Table 1 below.
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Figure 4 : EPC Value Chain
The general flow of information between the various phases in an EPC project is as
follows (informational flow: figure 5).
Figure 5 : Basic Blocks for information flow
This is only a general direction. In reality these functions are highly dependent and
overlapped. The information flows ‘To and fro’ between these functions and are explained in
the following Units. A typical downstream project schedule at Dodsal is shown in Figure 6. It
displays the extent of overlap between different function in the form of Gantt chart.
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Table 1: Four Stages in execution of EPC Projects
Figure 7
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Figure 6: Typical Project Schedule (p21-p23)
Figure 6
: Typical Project Schedule
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23
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This schedule was created by the planning engineers using the project management
software tool called primavera. It is the most leading tool in its kind in the industry. It is used to
develop project plans and schedules, network plans for each function, create work break down
structures, and helps in tracking the project progress both in terms of schedule and budget. It
also creates reports used to indicate the deviation of the project progress to the management.
The left Pane describes the various milestone activities across each function. The right
pane shows the time frame for each milestone and also explains the overlap between these
milestones. This is a base line schedule created at the initial stage used for tendering. Then this
is developed further with all the necessary network plans for each activity. This is shown in the
Appendix-4. This overlap occurs mainly in two ways. The first kind is the overlap of activities
within a same function and other way is the overlap between activities between different
functional disciplines. This overlap creates many issues.
2.1.3 Typical Construction sequence in EPC projects
The outcome of the first three phases provides the necessary work front for
construction. The construction involves the majority of time in an EPC project. The construction
in itself has a typical sequence which is shown below (See Figure 7). It is very important to have
a general understanding of the execution sequence in construction, as these are assumed as
the internal end customers and form the basis for identifying value streams as discussed in the
section 4.2.
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Figure 7 : Construction Execution Sequence
2.1.4 Project Organization structure
The formal functional organization structure that executes engineering and construction
projects is shown in figure 8. This is the most commonly used structure in the industry. In this
section we will discuss about the key roles involved in execution of those projects. Later in unit-
5, let us see how this structure is reorganized to form a value stream based organization
structure.
The project director/ manger (PM) is the top authority who executes the entire cycle of
EPC projects and wholly responsible for the profit from the project. There are number of other
managers from different functions giving support to the project manager. (See Figure 8)
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Figure 8 : Project Organization Structure
The engineering division consists of several engineering functional disciplines. Each of
these functional disciplines is a team, directed by a senior lead engineer. Project engineers are
those who coordinate between those functional teams and regularly assist the project manager
in resolving the issues that pops up in a project. According to Ballard & Howell (2003), “project
engineers are seasoned engineering leads and report either directly to the project manager or
to engineering managers”.
Procurement manager handles a team, who are specialized in handling all supply chain
related activities like vendor identification, purchasing, coordination with vendors and material
handling etc.
The construction manager is solely responsible for the on-site construction progress and
reports directly to the project manager. It involves managing various skills (from labors to
engineers), which is very different from engineering and procurement phases. In Dodsal, most
of the construction work is outsourced to sub-contractors.
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The Projects managers are the most powerful in a project, but when it comes to reality
they will have to cooperate with a matrix of other organization managers in order to ensure
smooth project execution. In addition to these functional departments, Project control and
planning group plays a significant role in executing the projects smoothly. They are responsible
to track the project progress in terms of schedule and the budget, and report to the
management if there are any deviations. Then accordingly measures are taken to put the
project back in track. They develop the project plans, schedules and prepare the work break
down structures for each engineering functions. Later in section 4.2, planning and creation of
WBS along value streams is discussed in detail. There are also few other departments involved
in the front-end project bidding and project grant phase. Those groups are estimation,
budgeting and contracts management. Other supporting functions include material
management, Project IT, Quality group/ TQM.
In Dodsal, there is a practice of creating task force in order to accelerate the works in
larger projects. It is a cross functional team that comprises of engineers from different
functions. It is formed on the basis of the task that has to be accelerated. During this phase,
members are literally brought out of their functional discipline and located separately. This
team mainly focuses on the project progress rather than working for their corresponding
functional departments. This is the most preferred method for project managers in critical
situations and is hated by the functional heads as it disturbs their regular working.
2.2 Industry Trends and Productivity issues
This section gives a brief overview of common management issues and their root causes
from the industry. This will facilitate the process of finding lean literatures on productivity tools.
At the end of this section, the most common productivity issues faced by Dodsal was drawn out
and hence the problem definition for the report was defined.
2.2.1 Key Industry Trends
For the last few decades, there has been no change in the organization and structure of
EPC projects. But there is a drastic change and trends in the external environment factors that
have made the current organization structure unable to cope with them. This has led to many
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common management and productivity issues. The key trends that led to such issues are
discussed in detail as follows:
Increase in Client Power: As the prospects of industry grew, there was a huge increase
in low cost contractors. This has led the clients to choose from many, based on their
expediency. This in turn has affected the EPC contractors, by increase in client pressure to
reduce the project cycle time and compress on their profit margins; in spite of increase in
project complexity. According to Repenning and Sterman (2001), the major factor behind this
trend is the lack of significant process or technology innovation in the industry over the last few
decades. Thus this imbalance between the client and the contractors has led to less motivation
for the contractors to invest in productivity improvements.
Increase in Global Execution: The distributed pattern of petrochemical investment has
led to execution of projects globally across the world. Also, the increase in pressure of reducing
cost has moved the contractors for outsourcing in low cost countries. Result is the
fragmentation of projects, where most of the engineering and procurement activities are
spread out to reduce the cost (Backhouse and Brookes, 1996). This has led to various complex
coordination issues adding up to their regular work.
Increase in project complexity: The intensification of petrochemical plants in both
scope (Client handover requirements and Safety) and scale have led to new challenges in
coordination (Ballard, 2008), which the current structures might not deal effectively.
Increasing IT complexity: Information flow is critical in such complex projects. The range
of IT tools from auto-simulators to 3D designs has fundamentally changed the work process in
this business by declining project performance rather than increasing their efficiency. The
reasons claimed for this are:
- Reduction in computational cost of change has an impact on 'behavioral change' where both
engineers and clients can make frequent design modifications.
- IT has changed the meaning of 'Project deliverable', while project procedures remain the same
(George Reichard et al; 2007). For instance, the process departments delivers P&ID as physical
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document, for which input information are obtained from multiple engineering groups. IT has
changed this into mere report with no critical value added. Progress monitoring and control
have also become complicated due to this IT impact.
- The software tools for these IT applications undergo a frequent change, which means that a
project with 2-3 years duration has to adjust to this IT changes every 1-2 projects. These tools
have still not yet grown to deliver full productivity promises (Ballard, 2008).
2.2.2 Common Management issues in EPC Projects
Concurrent engineering: As discussed in the previous section, the increase in pressure
to reduce the cost, project cycle time in spite of increase in scale and scope of the project has
led the EPC contractors to parallelize the tasks heavily. To compress the project cycle time, the
activities are overlapped in spite of being sequential (Ballard, 2001). This setup is called
concurrent engineering. It has resulted in complex coordination issues and serious impacts on
information flow as discussed in Section 4.3 DSM Analysis.
Insufficient Traditional coordination mechanisms: Given rise to serious coordination
issues as discussed above, the traditional way of doing it is no longer sufficient (Ballard &
Howell, 2003). Earlier the execution was mostly sequential and it worked well with the teams
that located closely. However this cannot help in the current situation, where concurrent
engineering, globally distributed sites and outsourcing has become very common. This again
adds up to serious coordination issues, that only pops up in the last minute and give rise to
costly rework cycles.
Wrong incentives encouraged in the industry: As said earlier in Table 1, around 80% of
the project cost is represented by procurement and construction and while engineering
represents only 20%. But the engineering cost has direct influence over the procurement and
construction cost. The importance of this is not preached in reality during project contract
negotiations. During this process, both the contractor and client are ready to compensate for
the engineering cost incurred. This way of emphasizing on controlling the project cost at
expense of engineering costs, place the project at risk. It also put the engineering leads in
30
pressure to minimize the cost incurred and will lead to issue like sub-optimizations that will
have serious impacts on the construction phase.
Unworkable budgets: Due to decline in pricing power as a result of poor performance
and industry changes, most of the EPC contractors tend to start a project with schedule and
cost budgets that are not attainable (Patty& Denton, 2010). This sort of environment causes
serious behavioral patterns into the teams; make them lethargic about the targets as they know
that it is not possible to achieve the targets. The managers knowing this can even set tighter
targets to the team and thus create a negative spiral.
Functional focus amplifies problems created by man-hour focus: The problem of
excessive focus on man hours is further amplified by with functional focus. Since this business is
characterized by low profit margin and evaluated based on the manpower utilization
(Costa,2009), the functional departmental heads are in a continuous pressure to make their
staffs fully engaged and get the job done in the minimum period. This in turn doesn’t provide
enough time for the different functional engineers in the review cycles, which can lead to
finding of an issue at later stage. This can lead to rework and can have serious impacts in the
downstream activities. Thus this hides the problem and creates a wrong sense of progress.
Figure 9 : Issues Leading to Project Overruns
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2.2.3 Consultancy Problem definition
Many of the issues discussed above have been encountered with Dodsal and develops
into two major problems: Project Overruns in terms of schedule and budget, ending up in
depletion of profit margins (Refer figure 9 above). The scope of this internship program was to
find ways to improve their operational efficiency and avoid overruns in the project using lean
principles. This report finds ways to address those issues by using the following approach as
shown (Refer figure 10).
Figure 10 : Consultancy problem definition
In the following Units, the relationships between these concepts and ways to adopt are
discussed.
1. Using lean and value streams to take system level approach to productivity improvement
2. Using DSM approach to analyze information flow in concurrent engineering setup
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2.3 Literature Study on improving productivity
In this section, concepts related to Lean productivity tools used in the environment of
concurrent engineering setups are discussed. Initially value streams are defined as the first step
in implementing the lean and then we explore the concept of DSM (Design structure Matrix),
which is powerful tool to analyze flow of information in an information centric environment.
Along this discussion, few past studies along this theme have been highlighted. Lastly, the ways
to adopt these concepts in EPC project is discussed.
2.3.1 Common issues in concurrent development projects
Many problems that are associated with EPC project management in a concurrent
engineering setup has been explored deeply. According to Backhouse and Brookes (1996), the
execution of concurrent engineering setup doesn’t succeed most of the time because of
misalignment with resources, metric, process, tools and also the focus of the organization in the
need of efficiency. He also adds that inappropriate organizational structures, policies and
decisions take place due to the mismatch between the technical organization, dynamic
complexity of the projects and also mental models used by the managers.
DSM is a powerful technique that can be used by the managers to look at those
complexities in new perspective and can help them manage the projects efficiently. Sterman
(2000) describes about how to overcome the behavioral patterns that is been developed from
the sequential working, by analyzing an EPC paper mill project using DSM. Ford and Sterman
(2003) discuss the short sighted management policies as the reason for project failure. The
project appears to be on schedule until 90% progress and freezes. It is then completed after
consuming about the two times the duration of planned schedule.
Repenning et al (2001) explains about the models that help understand how fire
fighting, recognition of unplanned allocation of resources are discovered last in the project
cycle and these are very familiar in concurrent development projects. They explain about how
the manager’s attempt to push the resources to do a bit more in a short time, forms the basis
for their decrease in concentration to the upfront task and finally ending up with issues in
downstream activities.
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Though the literature gives enough insights that can identify and resolve the problems
that occur in the engineering and construction projects, it is not easy for the organization to
utilize these recommendations to put them in action. Repenning and Sterman (2001) calls this
space between the accessibility to proven solutions and the lack of ability to implement them
as "improvement paradox". They propose that this inability is not because of the specific
improvement tool, but because of the influence by the physical and psychological factors and
situations, in which the new development programs are introduced. The need for this stability
was very significant and the leadership strategy that was used to attain this stability in the
internship program is discussed in section 5.6.
2.3.2 Lean approach to productivity improvement
With reference to the interview and discussions made with the Dodsal (Appendix -1),
they stated Lean as the preferred methodology to improve their productivity and thus defined
the internship scope. So this context explains about the key concepts of lean and how this could
be applied within their EPC projects.
According to Womack and Jones (2003),” Lean Principles concentrates on five core
principles” as shown below (figure 11).It was derived from the highly successful practices of
Toyota production system. Being motivated by its achievement in the manufacturing domain,
this concept is being extended into the EPC projects (Lean engineering) and an organization
providing the environment for Lean engineering is developed (Lean enterprise). This involves a
huge impact on the organization and the implementation can be achieved through a fundament
shift in management attitude.
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Figure 11 : Lean core principles
Lean requires system wide thinking and decentralized action. Hence renovating the
current traditional approach with lean is very difficult and demands for process preparations
called stability conditions.
Marchini (2004) explains the importance of expanding lean thinking into the
associations between the different firms involved in the entire construction value chain. Also
there are several initiatives to adopt lean philosophy in engineering & construction industry,
from industry key players. Lean Construction Institute (LCI) plays a significant role in defining
new lean tools and techniques for the industry. Most of them has been adopted and in practice
across the globe.
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2.3.3 Value streams - the opening pace for Lean
Lean lay emphasis on system wide thinking. Most of the Lean experts and practitioner’s
insist to look at a system as a whole, before getting down to optimize any individual process or
process group in it. It can be accomplished by the use of value stream mapping. It creates an
end to end process map of material and information flow in a system. Thus by creating a high
level conceptual view of a system, it promotes to identify areas where improvements can be
made to increase the efficiency. Without doing this, any improvement done in the sub process
doesn’t work efficiently to bring end value for customers. This can even lead to sub
optimization that affects the other part of the system (Howell and Ballard, 1998) as discussed in
the section 2.2.2.
As a result, most of the lean practitioner’s and experts use value streams as the opening
step in implementing lean. According to Rother and Shook, (1999), Value stream is defined as
the set of activity involved in producing a finished good from raw materials or bringing concepts
to reality. The value stream analysis involves elimination of non value added activities in the
system process flow and makes the system capable of reacting rapidly to the end customer. The
first step in conducting a value stream mapping is to create the current state of process map
that capture the flow of material and information in the system. It also captures other key
information that creates value and non value in the process. This information serves as the
basis for applying lean principles and enables creating a future state map with the proposed
process improvements. The most important thing in creating the future map is to classify the
activities into value added and non value added activities. The non value added activities can
give rise to waste and supporting activities. These concepts are very predominant in
manufacturing sector and several initiatives are being taken to extend these concepts into
other areas. Morgan (2004) and McManus (2002) argue about the implementation of value
streams in product development in automotive and aerospace industries. In large engineering
and construction projects, these value streams can’t be applied directly as explained in the
section 4.2.
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This report sets the stage for Dodsal, for a value stream based organization and
proposes an environment, favorable to such lean concepts and provides a way for continuous
improvement. The various initiatives taken by Dodsal in implementing the value stream
approach are being discussed in the section 5.7.
2.3.4 Analyzing information flow using Design Structure Matrix (DSM)
DSM- Design Structure Matrix is a compact and also powerful method for analyzing the
information flow and dependencies between the components in a system. DSM is otherwise
called as Dependency system matrix. It normally represents the components in a system as
rows and columns in an n-square matrix. Rows and columns represent information exchange
and dependency relationships between these elements and their corresponding intersection
shows the interaction between them. The off-diagonal cells in the matrix indicate system
interactions. It captures interaction between the system elements in such a way that, it brings
out feedback iterations in the system design. Petrakis and Pultar (2005) illustrate that, DSM also
involves mathematical analysis and many algorithmic tools which are used to improve the
system design. Eppinger (2001) provides an excellent overview of DSM. DSM representation is
also used to analyze various other factors such as project activities, process parameters, system
components or team organization. Many types of DSM can been seen based on the system
elements.
In this report, Time based DSM was used to analyze the information with respect to time.
Eppinger et al (1994) classify task relationships based on informational dependencies as
follows:
Parallel (no information flow),
Sequential (A feeds information to B),
Coupled (A and B mutually dependent on each other for information).
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Coupled tasks are the most common feature in a concurrent engineering setup and the
resultant feedback loops that occur between the coupled tasks are called as iterations.
Iterations can be planned or unplanned. Unplanned ones cause delay in the projects.
Traditional planning process ignores such feedback loops which leads to rework and hence
causes delay in the project. Ford and Sterman (2003) uses systems dynamics models in
concurrent engineering setup to identify that, delay in discovery of rework leads to unplanned
Iterations.
The most important value of DSM is to see a complex system as a whole and understand
it. Traditionally, managers were not able to figure out complex systems, but now using DSM,
they can capture a complex system in a single view. By DSM analysis of a single value stream,
the root cause for rework in Engineering & Construction projects has been identified for Dodsal
management (Refer Unit 4). Eppinger (2001) explains that DSM allows not only identifying the
issues but also helps mangers to fix them. McManus and Millard (2002) suggest, DSM is a useful
tool for mapping and analyzing value streams in product development and project
management where information flow is large compared to material.
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2.4 Summary
Thus this unit gives a brief outline on Dodsal’s current operational Practices, the internal
issues facing them, productivity problems as result of industry trends and the lean literature
showing the Lean tools and techniques that can be used in this industry. Unit-4 explains about
how the Lean tools and techniques discussed in the literature part can be applied in large scale
Engineering and Construction projects, which served as the basis for formulating the
recommendations for Dodsal.
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Unit -3
3. Research methodology
3.1 Introduction
This Unit deals with the overall research design adopted in this project to explore the
operations of Dodsal in order to identify new areas of improvement by Lean principles. The
objectives formulated in the Unit 1 have been recognized and discussed further. Also, the
literature discusses the choices of research methodology and how they are used to gather the
required information for the study.
3.2 Simon speller cracker Model
The Simon’s speller cracker model was used as the frame work to do this consultancy
piece of work. This frame work served as basis to define the role and responsibilities as a
consultant, scope of this internship and plan the process required for an effective action
learning approach to this piece of consultancy work. It consists of three phases as shown in the
Figure 12. They are as follows
Figure 12 : Simon speller cracker Model
Pre Consultancy
Market Suspect Prospect Sale
Client Review
Company Review
Team Review
Personal Review
Beginning Middle End
Review
Consultancy Project
“Speller Cracker Model” – Framework for Managing Consultancy
TIME
PID
Post Consultancy
Review
Reflection-in-Action
Reflection-on-Action
40
Pre-Consultancy: It involved understanding the need of this internship from Dodsal. Two
different strategic matters that involved strategic decision were identified. These were
identified with the series of discussions and meeting with company personnel representing Top
management. This phase identified the necessity of Lean principles for Dodsal in order to avoid
the problem of project overruns and to increase their position in the list of top EPC contractors
globally.
Consultancy: Once the direction for the project is set, this phase involved the design,
development and implementation of the project by the use of a project plan. It defines the
roles, responsibilities, timescale and illustrates the actions required to complete the task. The
Project plan for this internship is shown in the Gantt chart 1.
Post –Consultancy: This phase is about the outcome or the key learning from this piece of work
undertaken. It is the time taken to reflect on this internship effort and establish key learning
points about your working practice, working relationships, knowledge management and
personal development. The reflective summary outlining the above is listed in the Unit -8.
Also, this internship gave an opportunity for me to work as a business consultant for
Dodsal, and I had worked with utmost honesty and integrity in my own actions as well as with
interactions with the employees in Dodsal, and the organization as a whole. This approach of
consultancy was conducted as per IPC code of conduct for consultants, attached in the
Appendix-3.
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3.3 Project Approach and Design
Initiation of the contact with the client company was through the support from Mr.
Dinesh, The Senior Project Manager of Dodsal. The initial briefing by Dinesh and Santhosh
(Senior Project Engineer, Dodsal) led me to understand that the company is in full swing to
identify areas of improvement which would maximize efficiency of their operations, with
minimal impact on the environment. With the ideas obtained from the initial meeting, a
proposal was prepared based on the discussion and submitted to Mr.Dinesh and Mr. Santhosh,
who was the contact person in the company. The proposal presented, highlighted the objective;
approach and timeline of the project which at a later stage was acknowledged by the company.
The next stage after the proposal approval was to collect data and discuss with the
concerned employees. Data collection process involved collection of both primary and
secondary types. When the experimental data is been gathered by the researcher themselves,
then it is defined as primary data. In contrast, when the experimental data is gathered from an
already existing resource and utilized for study, then it is defined as secondary data (Eriksson
and Kovalainen, 2008).
In this project, data set has been collected directly from the field work and hence
primary data is the prime source of information for this study. Secondary data has also been
used at few occasions in the analysis Unit to support certain key discoveries from the field work
and strengthen the validity of arguments. With respect to the data, qualitative and quantitative
data are the two extensively used terminologies in management research where the former
constitutes all the numerical form of data and later comprises of non-numerical data. Both
types have its own traditional data collection and analysis techniques (Saunders, Lewis and
Thornhill, 2007). Thus this stage was focused on gathering all necessary data about Dodsal,
which would be informative to support the project. The primary and the secondary data
required were collected through three main methods.
On-Field Analysis
Interviews/Meetings
Desktop Analysis
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3.3.1 Field Analysis
The field analysis was started with the help of Santhosh, senior project engineer for
Dodsal. Initial visits were scheduled with meeting people in various departments of Dodsal to
learn and understand their operations. The First few visits were dedicated to have a clear idea
of what is happening. Discussions with each of the department heads gave a clear light on how
an EPC project is executed in Dodsal. Reviewing company documents also provided a base for
understanding how the company operates and is structured.
After this initial phase of understanding their entire value chain and operations, more
importance and time were spent in the Project Planning and control department. This
department plays a significant role in planning and tracking the EPC projects. They prepare the
base line schedule for projects used for tendering and once the project is being awarded the
detailed schedule is being developed from the base line schedule. Planning engineers working
in this department assisted in developing value streams, the corresponding WBS and network
plans for value streams as discussed in section 4.2.
On the field visit days with the mid- level employees gave a better knowledge regarding
the technical aspects and real time scenarios. A few visits were made accompanying the project
and site engineers to learn about the typical issues they face in a project. Necessary data’s were
collected with the help of them, which served as the basis for this project.
3.3.2 Interviews/Meetings
A traditional reason for opting for an interview as an effective data collection method is
to develop a sense of trust with the participants that would encourage them to provide
answers to the questions as transparent as possible (Saunders, Lewis and Thornhill, 2007). And
also, since the employees are the major contributors in the company operations and efficiency
score, it was critical to meet key people face to face to get their input. It was important to talk
with people starting from the upper management to front line employees to understand if the
information flow and the company strategy are uniformly spread. Hence the interviews were
scheduled with the required people as shown below:
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Interview with Taral kumar, Projects Director (Upper Management):
Interview and discussions with Dinesh, Senior Project Manager (Middle Management)
Meetings and discussions with Santhosh, Senior Project Engineer (Lower Management)
Meetings and discussions with Thilak, Lead Planning Engineer (Lower Management)
The Interview with Taral, the Projects Director was aimed at understanding the Company’s
Competitive strategy, contract management and their current position in the industry. In
addition, this interview provided information on Company’s goals, future plans, current
performance of the company and other aimed future Growth strategies. This was an important
interview as this decided to narrow my work on finding ways to improve their productivity
using lean principles, as this was in align with their interest. This narrowed down my research to
find ways to improve their productivity using Lean tools and techniques.
Discussions with Dinesh, Senior Project Manager were very helpful in knowing the entire
cycle of EPC projects. He helped in getting the insights of their entire value chain and to
understand the common management issues facing the industry.
And the interview with Santhosh was designed to know the issues faced in a day to day
basis at site and if there are any bottlenecks in their daily actions. This interview gave a clear
idea of how the changes or delay at engineering and procurement phases drastically affected
their work at site.
With the knowledge of how an EPC project is being executed, the discussions with Thilak,
Lead planning engineer helped to understand how the project is being planned, updated and
tracked for control. The time taken for each phases of the project was understood through him.
He played an important role in collecting data to identify value streams and to evaluate the
same as discussed in Unit 4.
This phase was the most insightful and informative to our data finding step, providing with
the ability to flexibly interact and probe on necessary points. Since a good number of people
were interviewed, it was able to highlight common themes and trends in the feedback, which
contributed to the formulation of recommendations.
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3.3.3 Desktop Analysis
The Desktop research helped in understanding and learning the current industry trends
and the productivity issues in EPC industry. The official web page of the Dodsal
(http://www.Dodsal.com/) is very user friendly and informative. Due to previous working
exposure in the industry, it was easy to understand the technicalities of the industry and how
the company is setup.
Desktop research was also utilized to gain an understanding of various tools and
methods used by the other big companies in their supply chain to improve performance.
Various research journals and case studies prepared by Lean construction institutes and other
major companies in the region were studied which was very helpful in designing the
recommendations.
3.4 Limitations
There were few limitations in terms of project. The typical EPC projects executed in
Dodsal was around 3-4 years. This was the major concern as the outcome of the
recommendations from this internship was not feasible to observe due to the limited internship
period of 4 months. Though it was a problem, initiatives were taken to implement the
recommendations in a low risk project as discussed in section 5.7.
3.5 Summary
This Unit discussed the various methods used for collecting the relevant data. The
research method and the methodology are dealt in detail. The data collected through the above
mentioned methods are analyzed in the next Unit.
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Unit - 4
4. Data Analysis
4.1 Introduction
In this Unit, we are going to look at how to organize an EPC project along value streams.
In unit-2, we have gone through the concepts of value streams and DSM and let us see how this
could be applied in a large scale engineering and construction projects. This part of the report
was really significant as this convinced to buy-in the management decision towards Lean and
was the important step in facilitating the mental shift. The following were the steps identified
to organize a project along value streams (refer figure 13).
Figure 13 : Steps to organize project along value streams
4.2 Identifying Value streams
The key difficulty in identifying the value streams was to define the start and end points.
Unlike Product development or manufacturing where value streams can be defined by using
the existing process boundaries or by using physical area of a plant, the same methodology
can’t be used to define the value streams in EPC projects, as it involves characteristics of both
design and manufacturing domain. The Engineering, Procurement and Construction feature of a
project can be considered as combination of design, supply chain and manufacturing
environment. For instance, consider the generation of engineering drawings, which starts from
basic design, then gets into production of final drawings and finally been sent for fabrication.
Thus it was too complex to decompose the project. The following figure shows the different
47
concepts used across the globe to split an Engineering and construction project. Here we will
look at the limitations and difficulties, when we try to adopt the boundaries shown in the
figure-14.
Figure 14 : Different Boundaries for EPC projects
EPC functional boundaries:
Initially it was thought to use these broad functional boundaries as value streams, as it
had a good boundary definition. But once looking after those set of activities under these
groups, it was realized that those set of activities were highly interrelated and can’t be isolated
to define them as value streams. As we could see in Unit-2, most of the inputs for onsite
construction come from engineering and procurement functions. Also, many of the engineering
details can be finalized only with vendor information, this in turn can to lead to procurement
delays and thus these functional groups are highly interrelated, dependent on each other and
can’t be used as Value streams.
Functional Sub-divisions:
This is the most common way an EPC project can be viewed. As we saw in the Unit-2,
there is lot of information exchange between these functional Departments. The project
deliverables are measured & tracked on the basis of these departments. But none of these
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departments can provide a substantial end result for onsite construction by themselves. Thus it
is not suitable to define the value streams based on the functional sub divisions, as it is highly
interdisciplinary. Moreover the concept of creating value stream is to eliminate this mental
boundary and create a new cross functional frame work for executing projects enabling
superior productivity and avoid project overruns.
Project Phase Gates:
Like most of the EPC contractors, Dodsal also defines and uses project phase gates like
IFA, IFC etc to split projects into different phases. The problem here to define the value streams
based on these phase gates is that the scope of these phase gates was too broad.
Figure 15 : Planning levels in EPC projects
Detailed Project plans and Schedules:
The Detailed project schedules prepared using Primavera, was used to define the value
streams. The updated Gantt chart, with the list of activities was used to do this. It was the
obvious choice to interpret the sequence and interrelation between the tasks and hence form
49
the value streams. The project schedule used for this purpose was a level -4 schedule. This
industry uses level 1-5 to define the details of their planning which is illustrated in detail on the
above figure 15.
The main reason that stood behind choosing the project schedules from primavera to
identify value stream was that, it was possible to derive a CPM/PERT network out of all
activities in the project, which illustrated the critical deliverables in the project and hence
formed the basis for forming the value streams.
The Updated schedule used for this purpose is shown in the Appendix-4. It is partially
shown for few functions for the purpose of understanding it. This was the most time consuming
process in the internship and the support of the planning department helped in getting this job
done. As a result of this exercise nine value streams were identified as shown in the following
Table 2. One of the main objectives behind creating the value stream is to create a master
template for each value stream upon which project plans could be derived.
Now Let us see the methodology used to define value streams and the procedure that
was used to evaluate them. To follow the discussion further, there should be a general
understanding of the construction sequence. This was discussed in the Unit 2. Here the
methodology refers to some of the key points that were considered the most important in
defining the cross functional value streams.
Construction was identified as the internal customer and all value streams were
identified by considering the construction work front as their end customer. Construction work
front refers to the materials and information that needed to enable on-site construction.
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The following characteristics were used to define them:
Figure 16 : characteristics of value Streams
The value streams identified, closely resembled the construction execution sequence.
After the exercise of grouping the activities under each value stream, there were activities that
were duplicated in more than one value stream and were unavoidable. In the case where an
activity was duplicated, it was further decomposed and added with the corresponding value
streams. There are also cases where the possibility of decomposing was less. In that situation it
was added to one of the value stream and added as a constraint to other value streams. For
Instance, this could be seen in the value stream ‘procurement’ as it depends on other value
stream for the final information about the materials and equipments to be purchased.
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Table 2: Value Streams Identified
4
52
The next process was to create a WBS for these values streams. According to Allen and
Hamiltion (2001), “A work breakdown structure (WBS) in project management, is a deliverable
oriented decomposition of a project into smaller components. It defines and groups a project's
discrete work elements in a way that helps organize and define the total work scope of the
project”. The WBS for each value stream can be seen in the Appendix-2. This activity helped us
to draw out a master template for each value streams and that would serve as the base for
creating Project Plans out of it. Each of these WBS defines a network plan for the corresponding
value stream. This exercise helped in convincing mangers, that it covers the entire aspects and
scope of a project.
4.3 DSM analysis
Thus once identifying the value streams, it was approved with the Planning department.
The next phase is to do a value stream analysis using Design structure matrix (DSM) as
discussed in the literature review. Due to the internship time limit, the value stream analysis
was restricted to a single value stream. The value stream chosen was based on the critical
activities of a project, and the area where the frequency of rework is high within a project. The
‘Above ground Piping/conveyor’ value stream was selected for the analysis along with the
approval of planning department. The resultant finding of this analysis was the most significant
factor in shifting the mental gap of the management towards organizing Engineering &
Construction project along value streams.
As discussed in the value stream Table-2, the ‘Above ground piping/conveyor systems’
refer to those set of activities that provides construction with sufficient work front for installing
the rack and process piping systems above ground. This activity is marked as a significant
milestone in executing petrochemical construction projects and most prone to rework. With
this value stream almost all the piping in line with plant design is laid and allows procurement
to finish up with their bulk buy.
The major reason to choose DSM as the mapping tool is that it is a proven tool for
tracing the flow of information (Millard, 2001). It works well in an environment where
information flow is crucial (Yassine, 2003). This industry involves mostly coordination of
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information flow, which is very important in executing such large scale Engineering &
Construction projects. The major pattern of such flow of information includes
- To and fro information interchange between functional departments to produce detailed
engineering drawings
- Informational flow between various engineering functions, vendors and buyers from
procurement department to purchase materials and equipment
- Material/Information flow to provide work front at construction sites in proper sequence
Doing a value stream analysis with Design structure Matrix involves few preparatory
steps before being analyzed. They are as follows and shown in the following figure 17.
Figure 17 : Steps in preparing value streams for DSM Analysis
With the value streams identified using the updated schedule from primavera, it was
easy to form the network plan for DSM analysis. This sets out to be the master template for
creating DSM blocks. This may vary and would change as the scope of project changes. But the
sequence of the blocks is based on actual time frame it happens in the real project but differs
from the current planning method. Figure 18 explains how the DSM blocks for the ‘above
ground piping’ was drawn out for the analysis and Figure 19 show the interactions between the
DSM blocks plotted in a matrix. Each DSM block represents a group of activities as in the
network plan and each interaction in DSM is the consolidation of information flow between the
component activities. It is very important to identify the exact flow of information between the
DSM components and mark the interactions for a better analysis.
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As expected, most of the interactions between the DSM blocks were below the diagonal
of the matrix. But some interactions were found plotted above the diagonal of the matrix.
Those are called as the feedback loops. These feedback loops provided the basis for a detailed
analysis.
There was few common iteration patterns found in the matrix and was marked with
different color codes as shown in figure 19. There were 2 main types of unplanned iterations
and a planned iteration. The next portion will discuss about those patterns, problems identified
through this analysis and some possible solutions are suggested.
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Figure 18 : Steps in creating DSM blocks
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Figure 19 : DSM Matrix
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4.3.1 Planned iterations
The method of producing the Process & Instrumentation drawings, corresponding
datasheets are highly iterative as shown in matrix (refer figure 19). This was very clear as it
involves lot of information exchange between the project team and the design engineers, to
generate the final plot plan.
It involves derivation of the process flow diagrams from the scope of the project and
generation of the corresponding Process & Instrumentation drawings. This is then made out to
be a preliminary plot plan and the necessary equipment design activities are started in parallel.
Design of equipments might propose a change in the plot plan for reasons like space, erection
feasibility etc., which can lead to an alternate process flow diagram forming a feedback
iteration loop. Thus in this stage the process is kept open for change that are unavoidable.
Those iterations are harmless as it denotes the early stage of design and iterations are also fast
between the engineers working at the same location.
4.3.2 Unplanned iterations
Vendor information not on time:
As we can see in the matrix (figure 19), there are some unplanned iterations between
the vendors and process of generating the final Process flow drawings. This is basically due to
following reasons:
In few cases, there is a delay in finalizing the vendor list which can lead to late arrival of
required engineering information for the process design. Also even in some situations,
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procurement people can lead to schedule and information delays, from the vendors due to
their activities which intend to keep their cost down. There are also instances, where engineers
don’t respond to the vendor enquires in time or they might not follow up thoroughly with
vendors to get the necessary information. This lack of accountability leads to vendor
information coming in late after the documents have been issued for the next stage.
On the other hand the DSM analysis also unrevealed the fact that the changes caused by
the information delay from vendors was not really necessary to complete those design
drawings. Information like paint finish, commissioning procedures might only be available at
end of delivery from the vendor. This piece of information is not really required to produce the
process flow drawings. However when this information is released it has to be updated and
provided as a single document to the field. But in some cases when the engineers reopen the
document for revision of these changes, they tend to modify few things that lead to rework.
This clearly implies that there is need to differentiate the engineering revisions from
documentation updates and a proposal was made on the same.
Delayed Client feedback:
Most of the time, client review comments doesn’t come back in time and it was very
common in the industry. The client teams have a trend of putting off their reviews and raise
issues related to design before each project phase gates like AFD, IFA etc signs off. This is
mostly due to the reason that the client team doesn’t have the operational team taking over
the facility. So the client approves the design at the initial stage but keeps on making small
changes over the time.
For instance, the client might approve the design for an area of the facility and when
reviewing a subsequent area, might find some issue and make changes in design. In order to
make the design consistent all over the facility they tend to reopen the reviewed area and make
changes. However these issues are overcome by use of change orders and negotiated at Top
level management.
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The worst problem is that the internal engineers know that there is going to be design
changes from client and they tend to accumulate all these changes over time. This in turn
generates rework to all other areas where the changed design is going to have the influence.
4.4 Analyzing the results and creating Causal map
Based on the results from DSM analysis and issues discussed in Unit 2, most of them
seem to be highly interrelated. To bring this out, a powerful representation tool called causal
root map analysis was made. In this causal root map analysis, issues identified from DSM
analysis and issues discussed in Unit 2 were all brought together. It was all coupled to three
common tendencies that resulted in rework as shown below (See Figure 20).
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Figure 20 : Common behavioral Patterns leading to rework
The following section discusses about the root causes of these behaviors as shown in
the figure 21 and provides measures to avoid this.
Breakdown of schedule discipline:
With increase in overlap of tasks, the information handoffs between the different
groups are becoming highly uncertain leading to an increase in the frequency of rework on the
released documents. The impact of such frequent changes creates a behavioral pattern that
tends internal engineers to become careless in information they handover, as they know it will
change later anyway. And whenever an engineer reopens a document they tend to make few
other modifications when they really work on it. For instance making a change in one area may
come up with a calculation flaw and that can lead to changes in other areas due to the
consistency of design. Such addition of desired but not mandatory changes leads to schedule
and cost overruns.
The other underlying reason behind this issue is that information transfer happens in
multiple stages and the documents are released with multiple release states.
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Figure 21: Causal root map Analysis
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Such use of information on a probabilistic basis generates rework. The possible way of
avoiding this could be done by splitting the deliverables based on the content of information
and release can happen with a subset of data that is fully matured.
Lack of system view of internal workflow:
The extreme focus on the functional groups can lead to lack of system wide approach.
This affects system wide decision making process, by leading to decisions based on local
functional priorities that affect other functions adversely. For Instance, a Design engineer might
accept a change from the client which is going to be small work for him, but can have major
rework for the downstream activities.
This lack of system view also manifest schedule problems in the other way. In order to
show progress, a Lead mechanical design engineer might make his division to work on the
deliverables that can be finished easily and that can be of no use in the early stage. This can
lead to additional cost and effort.
Figure 21 : Causal root map Analysis
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Vendor finalization takes time:
Most of the procurement activities are done by public contracts. This is done to achieve
low cost purchases. It is a time consuming process and the vendors will not commit to prices
until all the design specification are ready. This in turn delays the vendor information coming in
late and can cause rework by changing the engineering documents that has been issued
already.
This could be avoided by allowing vendors to be involved in the initial design process.
This allows to exchange and share information/knowledge between the vendors and internal
engineers. This could avoid deviation in design and could reduce the overall cost. This is the
kind of change that is expected out of this transformation to Lean enterprise.
Misleading Metrics:
The metrics based on engineering man-hours doesn’t work well at all the situations.
These metrics are basically tied up with the external commercial reporting as clients often pay
according to the progress based on milestones. These metrics used to measure the internal
performance doesn’t handle the rework issue properly. For instance the monthly productivity
figures were calculated on incremental progress achieved and the effort spent on that month. If
rework occurs in a project, ideally the progress of the project should decline, but it is not done
so, as this reflects negative progress to the clients and their payments get affected. The effect
being the metrics measuring the productivity becomes inaccurate when there is rework. Such
wrong feedback can mislead the team and also makes them attached to the same way of
working. Thus it is very critical to realign these metrics to change these behavioral patterns.
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4.5 Summary
Thus the use of Value streams, DSM and causal map analysis brought together all the
internal problems that lead to rework at the expense of schedule and cost overrun in the
project. The DSM was the powerful tool to persuade the attention of top management towards
the existing issues that reinforced the rework cycle. It proposed a system wide approach to
mitigate them. It also identified specific process improvement methods like tracking the
progress based on the content of information rather than on probabilistic basis, separate
engineering changes from the documentation updates and use of progress metrics that are
devised to consider rework. However the report didn’t look at the improvement options fully,
but to devise a system for project control team to identify such areas for improvement and
work on it in continuous improvement basis.
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Unit -5
5. Recommendations
5.1 Introduction
In this internship, two different types of strategic matters: a series of organizational
problems as well as an organizational objective desired by the top management were dealt.
Based on the above discussions, recommendation was made in line with those strategic
matters as shown below in figure 22.
Figure 22 : Strategic Matters
It is quite evident from our findings that main challenge in such projects is the
management of information flow. The DSM analysis and other subjective evidence, repeatedly
strengthen the need for the full system view of operations. The following organizational
structure was proposed based on the literature and internal discussions. By adopting this
approach, there would be an extensive impact on the Dodsal’s project management structure.
The following section would outline the organization proposal based on the value stream, its
rationale and its impact on the organization as a whole and the preliminary steps needed to aid
the implementation.
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5.2 Value streams based Organization
The value stream approach required re-drawing the mental map of engineering and
construction projects; hence project organizations structure had to be re-oriented. Also,
Metrics and supporting process had to be realigned and changed respectively.
The fundamental approach is to break an Engineering & Construction project in to mini
projects and it should be along the lines of the value streams. The aim of this exercise is to
facilitate decentralized operational decision-making, foster cross-functional working, and create
a system flow and line up incentives to the needs of the final customer. This Segregation of
projects is a common method used in upstream oil & gas business where the projects
themselves are composed of standardized units. This is also common on most of the onsite
construction as projects are divided into independent sectors. This is usually considered very
useful and it tends to give clarity on the operations and also aims at achieving high productivity.
Thus, Value stream organization helps us to advance this approach further by moving it
to design, Engineering and procurement phases.
5.2.1 Proposed Organizational structure
Project is managed as a sequence of mini projects, each with its own hours related to
manpower and budgets related to procurement. So, the final output of each value stream
would provide us with necessary work front for construction like materials and drawings at the
appropriate time.
Cross functional team with engineers and senior buyers will have unswerving control
from each value stream. Home office construction personnel will be scattered line reporting
back into one or more value streams. Managers purposely skilled to supervise cross-functional
teams will run each value stream. The responsibility of the manager will be to supervise
multiple value streams, as these value streams are spread out in various time phases.
There is a need to create a separate strategic team within the supply chain to manage
over procurement and logistics of engineering materials needed for the entire project. This
team will encompass technical personnel like expeditors, quality inspectors, materials
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coordinators, requirement planners etc. The senior buyers from the procurement team will be
aligned into this group. A value stream champion for each stream of the work in the
organization will be nominated from the outer side of the projects.
The following Figures 23 and 24 compare the current organization structure with
proposed organization structure.
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Figure 23 : Current Organization Structure
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Figure 24 : Value Stream based organization
Structure
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The Following are the key changes:
Currently functional departments have straight line control while project engineer’s role
which is usually a coordinating role is a staff role. The proposal aims to change these roles. The
underlying principle behind this change is that a team can be efficiently managed in a staff
function, but in order to achieve coordination within cross functional teams in a concurrent
engineering project, line roles are required in the project.
Due to this change, the functional roles will become staff roles. For instance,
Engineering leads will be responsible for maintaining technical quality and have to ensure
standard procedures are always adhered to. Subsequently, the existing responsibilities of the
functional leads like maintaining budgets and monitoring deliveries would be moved to the new
Value stream Managers.
As part of the project executive team, the managers from engineering and procurement
division will allot operational responsibility to the value streams. They will focus on managing
interfaces with clients and external contractors and provide needed supervision. The home
office organization, exterior to the projects, is unaffected and will continue to be along with
functional lines.
5.3 Potential Impact Analysis
The Impact of these changes are carefully analyzed as there are many other supporting
function for executing such large scale complex projects, being affected by this proposal. This
has been discussed in detail as shown in the Table 3 below.
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Table 3: Potential Impact Analysis
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5.4 Justification for new Organization structure
The first step in implementing as well as enabling lean & productivity improvements
have to begin with an effective team organization. We all know that teams are natural units for
information flow. In order to achieve this there needs to be right management structure which
would give additional responsibility and full control to teams in order to create value to the
final customer. This structure would also aid us to create incentives and measures. These would
in turn, help us to achieve project goals. These are not achieved in the current organizational
structure. The value stream approach thus solves many of the issues by creating a suitable
organizational structure. This structure aligns the actual workflow in projects. The positive
implications of value stream are as follows:
Allow faster informational exchange with Vendors:
By collating manpower and procurement budget under a single manager, a better cross
functional trade-offs is achieved. For Example, procurement decisions can be made more
holistic by including logistic schedules and overall landed cost in the purchasing decisions. There
is also significant impact on behavioral patterns by creating cross functional teams. For
example, the metrics used for engineers will measure final delivery to construction. As such
engineers will be able to respond faster and follow up with vendors more meticulously. Buyers
will advance certain orders to guarantee the goals they set, as part of scheduling are met
instead of waiting for batching orders. This in turn increases administrative efficiency.
Efficient management of client changes:
The value stream manager has extensive responsibility. The delayed decisions on some
projects can affect the overall system flow and it’s the responsibility of the manager to observe
the impacts and to supervise the review process. At present, the leads of the project measure
client changes with regards to the increment efforts for their own department and they do not
base their decision with regards to cost to other downstream functions.
Project /engineering mangers are not expected to be there in all client technical
meetings and so the overall decision making on operational flow has to be pushed down to the
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projects which is considered to be a system wide approach. As a result, value streams create a
mental map facilitating the system view. This gives clear visibility of the total system cost of
changes, and it also helps provide solid basis to push back client changes.
Effectively address common Issues:
From the Causal Analysis explained in the unit-4, it can be clearly seen that a value
stream organization solves many of the common project issues. As Millard (2001) describes, it
avoids sub-optimization, avoids focus on man-hours, helps looking at holistic system view,
creates appropriate metrics, avoids out of sequence work, reduces matrix conflicts and enables
closer procurement and engineering coordination. The most critical benefit of the value stream
is that it creates a correct mental picture on the final goal in any Engineering & Construction
projects both internally and externally.
This clearly defines that EPC is not merely getting engineering work done in lowest
possible man-hours or achieving lowest procurement costs. It re-iterates the focus of delivering
a time effective and cost effective end results on the site.
Facilitate Lean:
The most important aspect of value streams is that it helps in meeting tighter budgets as
well as deadlines by enabling clear and continuous interactions within cross functional teams.
As a result of a system wide approach of moving down the decision making capabilities, an
environment is created for continuous improvement.
Thus according to Millard (2001), “value stream creates a homogeneous modular
approach to projects by enabling new cross-functional procedures, data/information handoffs,
benchmarking etc., leading to extensive productivity improvement”. It creates operational
teams that have enough capabilities to monitor the information flow, skill requirements and
work dependencies on their own.
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As it can be seen clearly, teams are now aligned towards project goals and in order to
have more informed decision-making capabilities at project’s operational level, they can/should
be given more authority.
5.5 Barriers for Implementation
The proposal for changing the project organization can give rise to many issues. The key
issues that came up during the analysis are discussed below in the Table 4 with the possible
suggestions.
Table 4: Barriers for Implementation
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Table 4: Barriers for Implementation
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5.6 Leadership Strategies
In order to build a broader support for this proposal few leadership strategies were
followed, as depicted below. The initial interviews, discussions/meetings were useful to draw
out a stakeholder mapping (refer Appendix-1), which was very useful to frame these strategies.
It was useful to indentify the internal champions and the necessary work was done to gain their
support. As discussed in the Appendix-1, there were evidences to understand their inertia
towards lean was very positive. It made the things easier to convince the management and to
buy in their decision towards this value stream approach.
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5.7 Future Paces
Given the results shown from this report, Dodsal started adopting the proposal, with
their first initiative of planning and scheduling a project along value streams using the WBS
created. There are steps taken within the Project planning and control department to do the
DSM analysis for all other value streams and identify areas for process improvements. The
metrics for measuring performance along value streams are yet to be started. As a result of the
discussions in the report, the internal initiatives that will be launched will have a span of 2-3
years for complete execution. The following Gantt chart 2 with time frame was depicted below
to show the different levels of activities in implementation. This was done on the basis of
discussion with the project Manager and projects control and planning team.
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Unit - 6
6. Conclusion
The UAE Oil & Gas industry is spurred with rapid growth rate and resultant external
factors has forced the EPC contractors to adopt for concurrent engineering setups to execute
projects. The existing functional organization structure in Dodsal has led to many productivity
issues, raised due to the inability of handing concurrent engineering tasks, resulting in project
overruns. This report has set the basis for adopting Lean principles to address those issues
effectively. The idea behind this report is to split the macro sized projects into micro mini
projects using value streams. This concept has been adopted from the upstream EPC businesses
and onsite construction processes. The value streams were identified using the updated project
schedule of an executed project, developed using Primavera. The methodology used to identify
them is very well explained. The value stream identified in this report clearly defines the
boundaries between them and the WBS created for each value streams evidently demonstrated
that it is better than functional boundaries in handling such complex projects.
Then a key value stream identified was analyzed using design structure matrix to
identify the planned and un-planned iterations in the value stream. The steps involved in
preparing a value stream for DSM analysis was explained. Then a causal root map analysis was
made on the outputs from DSM exercise. It highlighted the existing behavioral patterns that led
to rework. The idea of this approach was used to show Dodsal, how value streams and DSM
analysis can be used to identify specific areas that needs process improvement. It also showed
that this approach facilitates orderly flow of information/work, better accountability and
enables cross functional culture. As a result, this exercise played a significant role in shifting the
management mindset towards value stream based organization.
The last part of this report proposes a value stream based organization structure, an
implementation plan with its implication. It also discusses how these principles complement to
their strategic decision of acquiring IDEA engineering and membership with Lean Construction
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Institute (Refer Appendix-1). The effort in this internship has helped to get buy-in the
management towards value stream based organization. It also discusses about the leadership
strategies used to build a broader support for this proposal. The implementation starts from
project planning & scheduling for a new project, along value streams and is expected to
continue at stages. Building on the effort of Millard (2001), we demonstrated the suitability of
value streams and DSM in an industry like Engineering and Construction, which is information
centric. This strategic move towards value streams will open a new window for Dodsal,
providing a comprehensive solution to the issues discussed in this study and can help them
provide their customers more lucrative EPC business solutions.
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7. Appendices
Appendix 1: Outcome of Interviews/Discussions
The following questions were asked during various phases of the client visit to get
essential information about Dodsal. These questions helped in analyzing the issues further and
provide feasible recommendations for the project. As said, the questions were divided into
three phases.
In the first phase- the first 5 questions gave us an understanding about the operations of
Dodsal and the interest of Dodsal towards lean initiatives.
1. Give us an overview about your EPC construction model and please explain the
characteristics, advantages having this model?
2. Please list the Lean initiatives that you have been involved with in your organization?
3. Please list the departments and/or areas of your organization in which the Lean
initiatives have been implemented?
4. What was the original aim of the Lean initiatives your organization has implemented?
5. What are the business factors to commence a lean initiative?
From these questions we were able to analyze from the information, the top business
factors for adoption of lean as shown below (Figure 25).
Figure 25 : Top Business Factors
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The Second phase consists of 6 questions from which Dodsal’s previous lean initiatives
were probed to understand the procedures they follow to adopt lean. It also gave
understanding about their strategic moves through lean adoption.
6. Does your organization have any plans to implement Lean in other areas / departments?
7. What proportion of your overall organization has been involved in implementing Lean
Initiatives?
8. What have been the other resource (time, finance) implications of implementing the
Lean initiatives?
9. What tools and techniques have been used in the Lean?
10. What external support is your organization utilizing to assist with the implementation of
any lean initiatives?
11. If you have utilized external support, how effective has this support been?
The findings from these questions were pretty much satisfactory as it gave us an insight
towards their lean approach and the strategic moves behind this adoption. It can be concluded
that they were in the right path towards achieving operational excellence. The Acquisition of
India’s AE&E IDEA (India) Pvt. Ltd was considered as a strategic fit and further strengthens the
company's existing business footprint in the energy, industrial and infrastructure sectors. This
acquisition has further helped in achieving its core mission of serving customers globally.
There had been outstanding results by aligning with external agents for their lean
operations. This can be confirmed by the fact that they have a membership with Lean
Construction Institute to further leverage their competitiveness. This was also considered to be
a strategic move towards operational effectiveness. The following passage briefs about the
Lean construction Institute.
The Lean Construction Institute, (LCI) was founded in August 1997 and is a non-profit
corporation. They are involved in developing expertise related to project based production
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management system in the field of executing large scale engineering and construction projects.
They are the pioneer in extending Lean production revolution started in manufacturing, into
construction industry. These are following benefits Dodsal can enjoy by being a member of LCI.
The membership can give them the best opportunity to learn about the new concepts and
techniques that are developed for executing large scale engineering and construction
projects.
The employees are up to date with the current trends and practices in the industry and
this act as source of motivation for them to adopt those practices in their work.
The members can build a competitive advantage in the industry through a long term
relationship with LCI. It is by fitting new tools and techniques to the organization and
association with leading thinkers and implementers will bring the firm out in front as the
industry changes
In the third phase that consists of 5 questions, the questions aimed at finding the ways of
communicating the lean principles in to the organization as a whole and any obstacles that can
occur. In addition to this, evaluation methods of lean initiatives had been sought.
12. What strategies have been used to engage staff in the Lean initiatives?
13. How has progress on the Lean initiatives been communicated through the organization?
14. What have been the barriers to implementing Lean Initiatives and/or realizing success?
15. Has there been any evaluation of the impact of the Lean Initiatives?
16. How long do you think the implementation phase of the Value stream would take?
From these questions, it was concluded that by changing the organizing structure, the
value stream can be smoothly implemented. From the information received we were able to
develop a matrix for stakeholder analysis as shown in the below figure 26. It can be clearly seen
from the figure, there are four major blocks. We were able to identify those personnel.
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Change Agents: It was the Engineering Director and Senior Project Manager who had the power
to influence to change gave a broader support.
Change Facilitators: They were the Managers and Engineers from the Project control & planning
department.
People to Convince: Managers and staff from the Engineering & Procurement functions are
reluctant to the change but they have higher levels of authority.
Minor Skeptics: These are usually laborers and front line employees for whom the change
would be trivial.
Figure 26 : Stakeholder Mapping
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Appendix 2: Work Breakdown Structures for Value streams The Work breakdown structure for each value stream is shown below. These were created by
the use of primavera as discussed in the Unit 4. Refer the following figure 27.
Figure 27 : Work Breakdown Structures
Stakeholder Mapping
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Appendix 3: IBC Code of Conduct and Professional practice
The Institute of Business Consulting is the professional body for business consulting. It is
an organization within the Chartered Management Institute. Both Institutes combined to form
a code of professional practice to be followed and competencies to be followed by consulting
professionals. It defines the responsibility to the consulting professions in relation to the
professional conduct, levels of competence and standards of behavior in the consulting
Business. This entire piece of consulting works was in line with IBC Code of professional
practice.
Figure 28 : IBC Competency Framework
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Appendix 4: Updated schedule from Primavera used for the analysis
The Updated Schedules used for the analysis part is shown here. The Updated schedule
is comprises of 900 activities and 80 pages long. So the first 10 pages have been attached for
the purpose of understanding. The Project name used for this purpose is Ruwais sulphur plant,
Abudhabi. Dodsal executed this project in 3.5 years, which was planned for 2.5 years originally.
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Updated Project Schedules from Primavera (p89- p95)
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8. Reflective Summary
Acknowledgement to the Transformation:
When I try to look back after my past from now, I see things entirely in a different
perspective than when I did the same thing a year before doing my MBA. My Previous
experience is around a technical environment in steel construction industry. I had been myself
in a variety of roles starting from technical roles to team leader and to managerial roles.
My professional role taught me a great deal not just about the construction industry,
but also about project management, team building, and challenges with cultural diversity. I
would like to believe that my extrovert nature, good communication and negotiating skills, and
my sheer ability to work hard made me successful even in a very demanding economic
environment. As I stared progressing in my career, I noticed that other than technical expertise
there is something one has to posses to become an efficient Manager. It was then I realized the
importance of a good management degree that would not just teach me business skills, but also
hone my leadership abilities and help me understand trade and business from a global
perspective. So I finally decided to pursue MBA from the University that matches my learning
abilities and I was firm on getting admission in Middlesex University Business School. It was
here that I learnt firsthand, how a single managerial decision qualitatively and significantly
affected performance in every facet of the organisation.
As part of my MBA, I got an excellent opportunity to do an internship with Dodsal, which
is one of the biggest achievements in life. I can see myself transformed from an Engineer to
Engineering Business Consultant. It all happened only with things I learned from my MBA and I
owe a massive debt of gratitude to all my professors in Middlesex University for this
transformation.
Consulting Project:
Reflective practice suggests that the development of professional practice can be
brought about by the analysis of significant events or "critical incidents". Here I mean my
consultancy project as a critical incident in my life.
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In a broader sense, management consultancy refers to the activities done by an
individual or a group of people aimed at making the firms improve their performance. The IBC
model & Simon speller cracker model have suggested that whole consultancy process starts
with identification of the issue, then focus moves on to analyze such issues and formulate
recommendations for the firm to resolve the issues identified. The final stage is to help the firm
or client in implementing them. Salder (1998) states that each of these stages are unique,
serves it own purpose but in the mean time inter linked with each other and occurs in a
sequence. This reflective summary is going to explore the learning outcome from the practical
process of consultation with Dodsal. The implementation stage is not covered, as this didn’t
happen due to the time limit. However the implementation plan was made with the
consultation of Dodsal.
Consulting Process with Dodsal:
The entire piece of consultancy work with Dodsal consisted of three phase as explained below:
The Entry Phase
Understanding their Concerns/Identifying the issue
Agreeing the Brief and its scope
The first official meeting in this was phase was really important for both of us. According
to the literature, in reality, a good first initial meeting normally would mean the winning of
contract for the consultants. The whole atmosphere was pleasant. The client was very friendly
and polite. They were ready to help me on any information I was asking for. The three main
objectives achieved in the first meeting were:
Understanding the issue
Building the relationship
Selling and getting the contracts.
There were few negotiations on the key objectives of the project. This was largely
because of the different perception they had on the problems. It was all explained and the
project scope was narrowed down to Lean solutions. This was achieved by the knowledge
gained on the Lean literature before meeting them.
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Data collection and Analysis Phase
During this phase, there were frequent visits to Dodsal‘s Head office and their
construction sites. The data was collected from almost all the points of contact. This was very
constructive, as both client and I were able to learn something from each other on the industry
and about the possible solutions for the problem.
Presenting Advice and solutions phase
This was a formal power point presentation, and it was a big success. The proposal was
accepted by the client and initiatives have been taken by the client to start the implementation.
The presentation was in a lively manner as the client got involved rather than just listening to it.
It was a very open discussion in a relaxed way. This turned out to be the success for my
proposal. However this didn’t work out with my presentation at the University. The problem
here was that, the presentation was more into technical things rather than speaking about how
I have applied the management principles to attain that. I was also marked for the same. But
instead I got a good constructive feedback from my mentors and it is incorporated as such in
the report. The most important thing I learned here is that “I have to suit the theme according
to the place”.
The Process Evaluation:
Looking back at the overall piece of this consultancy work, it was reflecting the model
suggested by IBC and the framework followed Simon speller cracker model.
- Consulting Approach:
Different situation requires consultant to be in different mode in order help the client.
There is always a dilemma faced by a consultant during the process and either he take up the
role of an ‘expert’ to give advice on resolving the issue or plays as an ‘facilitator’ to help the
client to figure out the solution for themselves. So it is very critical to understand what role a
consultant should play in different situations. This was clearly understood and was followed in
the right way by the use of “IBC code of conduct & Competency frame work”.
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- Client Consultant Relationship in ‘Dodsal’:
My relationship dimension with Dodsal was half way between contractual and idealized
relationship. The relationship had four dimensions: Knowledge, Skills, Attitude and Emotions.
These dimensions vary at different situation and the important thing is to use these dimensions
at right level.
This is because of the fact; I was there to help Dodsal to improve their operational
effectiveness. On the other hand they were looking me as an MBA student and helping me to
complete my MBA Project work. As a result of this, there was a constant change in the role I
had played. In the initial stage, it was like I was there to learn and show them what I can do. In
the Later stage, I become more like an expert trying to persuade them in accepting my ideas
and findings for the Project. Thus there was no particular role to play in this consultancy work.
What is important is that to choose the right role for a particular situation as discussed in the
section consulting approach.
Overall Evaluation:
Overall from my experience in doing this consultancy project for Dodsal, was priceless. I
had learnt a lot from this consultancy and from my MBA. Personally I had gained knowledge,
required skills and attitude to become an efficient Manager/Consultant. In addition to this, I
had acquired key emotional traits in managing client relationships. Also on my entrepreneurial
side, the key lesson learnt from the course is that for any organization, the core objective is the
achievement of competitive advantage or the edge that the business firm has over its
competitors in the industry.
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9. References
1. Eppinger (1997), A Planning Method for Integration Of Large-Scale Engineering Systems,
ICED 97 Tampere, August 19-21, 1997
2. Millard, R. "Value stream analysis and mapping for product development" MIT Master's
thesis, June 2001
3. Rother, M., and Shook, J., "Learning To See: Value Stream Mapping to Add Value and
Eliminate Muda" Lean Enterprise Institute, 1999
4. Backhouse, CJ and Brookes, NJ (1996). Concurrent Engineering, What's Working Where,
Gower, Brookfield, VT: The Design Council
5. Ford D,N and Sterman J.D, The Liar's Club: Concealing Rework in Concurrent Development,
Concurrent Engineering: Research and Applications, September 2003
6. McManus, H.L, and Millard, R.L, "Value Stream Analysis and Mapping for Product
Development" The International Council of the Aeronautical Sciences, 2002
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