Chemical Engineering February 2016 - 54

Engineering Practice
Managing Small and Medium-sized
Capital Projects
A real-life example is provided to show how to stay on program and within budget
Construction Business Associates, LLC
Peter Hessler
Construction Business
Associates, LLC
O
ver the past few years,
much has been written
in the trade press about
how to manage large, $1billion-plus
plant-construction and
expansion projects in the chemical
process industries (CPI). However,
when it comes to managing projects
with a smaller scope - say, projects
in the $25-250 million range
- a variety of nuanced management
issues arise. Such projects
include small new plants, additions
to existing plants, and expansions
of currently operating facilities. This
article suggests practical and immediate
ways to deal with some of the
unique management challenges that
often arise.
Large mega-projects are usually
managed by one of the larger, worldrenowned
contractor firms, which
have a full suite of project-management
tools, capabilities and expertise
at their disposal. Such contractors
have built larger-than-life projects,
using tried-and-true project-management
protocols that have been
successfully used on hundreds of
projects over many decades around
the world. Although problems do
occur, they are more often related to
misunderstandings than surprises,
and the contractor usually has the
deep expertise needed to address
any of these problems as they arise.
However, smaller, more frequently
incurred projects, such as plant expansions
or conversions, are often
managed by smaller, less-experienced
contractors, who do not always
have expertise or experience
with the sophisticated project-management
processes that are used by
the mega-contractors. As a result,
such projects often run way over
54
Figure 1. Can the owner of this chemical plant expansion be assured that this relatively small project
will be completed on time and within budget? Yes, and with relative ease, if the team follows the recommendations
proposed here
budget, defy timeline constraints,
present numerous surprises, and
even lead to lawsuits.
One reason is that the CPI plant
personnel who are frequently tasked
with the responsibility of overseeing
such projects are not, by training,
project managers. Rather, their
expertise lies in running the plant on
a day-to-day basis - ensuring that
raw materials are available, that existing
equipment is ready for production,
and that trained personnel are
available to make the product. Their
expertise does not lie in the realm
of managing engineering manhours
for plant design, or in procuring and
expediting the delivery and deployment
of large tanks, reactor vessels,
pumps, motors and more. And the
experience and expertise required
to determine if the construction portion
of the project is progressing as
promised and as needed to meet
budget, schedule, quality and safety
norms is typically beyond the skill set
of most plant personnel - they are
simply not experts at managing a
team of contractors.
Nonetheless, many CPI organizations
still try to manage the contractors
who are building their small or
medium-sized new plant or expansion
projects by using only their existing
plant personnel. Sometimes they
derive comfort from assurances from
their contractors, who say " nothing
will go wrong. "
Often this is due to a reluctance
to spend extra money on third-party
overseers. Sometimes it is due to a
perception that since project building
and construction management
are not based on finely tuned formulas
and recipes, these activities can
simply be overseen by existing plant
personnel, adding just a few hours
per week of extra duties to an already
full-time schedule.
Unfortunately, as is often the case,
the result of such an approach is a
scenario characterized by budget
overruns, schedule delays, and at
times, lawsuits.
ChemiCal engineering www.Chemengonline.Com february 2016

http://www.Chemengonline.Com

Chemical Engineering February 2016

Table of Contents for the Digital Edition of Chemical Engineering February 2016