Hydrocarbon Processing - May 2022 - 79

Plant Turnarounds
and Project
Management
J. CORRALES and J. P. VEIGA,
Técnicas Reunidas, Madrid, Spain
Managing complexity in engineering
and construction projects
It is widely accepted that new management
methods are needed to curb the frequent
delays and cost overruns observed
in engineering and construction projects.
New approaches, such as the Last Planner
system of production control and advanced
construction packages, can help to
increase construction efficiencies; however,
none of them address the root causes of
problems, which is the difficulty of managing
the inherent complexities of large
engineering and construction projects.
This article highlights the deficiencies
of today's working practices and proposes
a practical method to manage complexity.
The failure of conventional project
management. Numerous surveys
conducted in recent years have shown
that conventional management methodologies
are incapable of avoiding schedule
and cost overruns in engineering and
construction projects. A macro survey
conducted by Ernst & Young (EY) on 365
oil and gas projects revealed that 65% had
long delays, 78% had suffered significant
cost deviations, and the average budget
overrun was 53%.1
For some time, it was thought that
tools such as 3D computer-aided design
and building information modeling
would solve the problem; however, while
they have contributed to substantial improvements
in safety and technical quality,
their impact on cost and schedule has
not been very significant.
The first attempt to abandon the traditional
project management approach was
made by Glenn Ballard and Gregory Howell
in the 1990s when they developed the
Last Planner methodology. In essence,
they applied lean management concepts
developed by Toyota. Inspired by the
" pull " principle-which states that things
must be done " when and as required by
the last links in the project chain " -and
under the conviction that the detailed initial
schedule is always totally wrong, they
proposed to start with a simple master
schedule and to leave the detailed planning
to the construction foremen.
While the Last Planner methodology
is widely used by building and civil works
contractors, it has had little success on oil
and gas projects. The reason could be
that oil and gas projects involve multiple
contractors-therefore, it is very difficult
to obtain timely feedback from construction
foremen.
Information technology (IT) and new
product development projects have already
abandoned the traditional management
approach. A group of software developers
launched the Agile Manifesto for software
development in 2001, which implies a total
departure from conventional project practices.
Today, these software developers use
methodologies such as Scrum, which does
not have an overall schedule. Instead, the
project is divided into sequential steps
of no more than 4 wk. The final scope is
frequently redefined, and the contractual
relations are totally flexible. This approach
has been so successful that many wonder
why our industry does not apply it to engineering,
procurement and construction
(EPC) projects. The primary reason is that
oil and gas EPC projects are drastically different.
The problem encountered in IT
projects is that the objective is not entirely
defined, and the design specifications are
few or totally nonexistent. Conversely, in
EPC projects, the objective for the final
product is clear from the beginning, and
the volume of design codes and specifications
is overwhelming.
The last divergence from conventional
project management is the Advanced
Work Packaging (AWP) methodology,
which was co-developed by the Construction
Industry Institute (CII) and the Construction
Owners Association of Alberta
(COAA) in Canada. These organizations
found that the average hands-on-tools
time for construction personnel is below
37%, and that the rest of their time is wasted
in document/material searches or from
idleness. To try to solve this challenge, the
researchers proposed a procedure based
on dividing the construction work into
packages and transferring the responsibility
for planning to the field. Instead of
leaving it to the foremen, as the Last Planner
system does, they employ specialized
construction planners. Each week, the
planners prepare the packages that are
fully ready for execution and deliver them
to the foremen. Additionally, to enforce
a construction-driven design and an orderly
delivery of information and materials,
engineering disciplines are required to
prepare a separate information package for
each of the construction packages.
According to the CII, this method can
lead to improvements of up to 25% in timeon-tools
efforts for construction labor.
Depending on the type of project and geographic
area, this would represent savings
of approximately 5% of the total project
cost. This is an impressive savings, but it
Hydrocarbon Processing | MAY 2022 79
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