Large and Complex Projects

A View from the Field Project Execution / Contracting Strategies Large and Complex Industrial Projects

May 6, 2013 By George T McLaughlin PMP CCM

This article from the Division 1 of the ABA Forum on the Construction Industry Newsletter “The Dispute Resolver” represents George T. McLaughlin’s “View from the Field” formed throughout the course of his 30+ year career in the industrial marketplace.[1] His article is broken into four parts. Part 1, below, describes the evolution of the delivery systems in large and complex industrial projects[2]. The remaining sections, which we will publish in our next three newsletters, will discuss the legal implications (Part 2), impact on claims, disputes, and resolutions (Part 3), and prevention and corrective processes (Part 4).

Part 1 of 4 – Framing the Issue

When the earth’s tectonic plates shift, unless there is a resulting earthquake, it goes unnoticed. The movement is not perceptible. Nevertheless, major changes are occurring. In large and complex projects, with three to five (or longer) year schedules, industry shifts may not be perceptible. Nevertheless, major changes and related impacts may be in progress. Trends and changes in project execution and contracting strategies are similar. These trends, however gradual and unnoticed on a daily or monthly basis, cause major impacts on existing and future projects. While industry experts cite or drive these changes, the impact on the field may be delayed or go unrecognized by many, if not all stakeholders. The business motivations driving the trends discussed below are varied and complex. Perhaps, the central theme is risk tolerance or management. The large worldwide prime contractors (typically Engineer Procure Construct) migrated toward limiting major risks by limiting scope of work, insisting on reimbursable cost (as opposed to fixed price) commercial terms, or both. Owners chose to limit or compartmentalize risks by breaking scope of work into smaller packages and seeking fixed price on these smaller packages. Construction Contractors retained a willingness to work on fixed price commercial terms; but, increased their tendency toward claims and disputes processes in order to manage their risks. Collectively, we see a myriad of fixed price scope of work packages being pieced together to form a complete project. Formerly, this mosaic of work scopes was under one Prime Contract. [Read more…]

Filed Under: Claims, Featured, General, Productivity, Project Planning, Projects, Uncategorized Tagged With: Construction Claims, Construction Contract Claims, Construction Contract Planning and Scheduling, contracting strategies, Disruption, George T. McLaughlin PMP, large and complex industrial projects, Large and Complex Projects, McLaughlin & McLaughlin, megaprojects, Productivity Management, Project Execution Plan, Time Management Strategy

STAFFING YOUR PROJECT MANAGEMENT TEAM (Part 8) –Project Manager and Industry, Domain and/or Technical Experience

January 21, 2012 By George T McLaughlin PMP CCM

This McLaughlin and McLaughlin’s Project Professional’s post is the eighth in a series of discussions regarding current challenges with the staffing aspects of your project management team. This post (like Parts 4, 5, 6 and 7) addresses acquiring the human resources (people) or staffing. In this case, we focus on the project manager. The Subject Series can be viewed here.

This, the fourth post on acquiring the project manager, addresses the relevance and/or importance of industry, domain and/or technical experience in a professional project manager.

According to Google, LinkedIn is the World’s Largest Professional Network. As a member of several Discussion Groups that pertain to project management, I posed the following discussion:

In Project Program or Construction Management, how important is industry, technical or domain experience?

“When project management candidates or persons are being considered, selected, and engaged or hired, technical or domain experience is frequently an expressed consideration. Often, criteria for the individual includes industry, project-specific scope, technical or other experience with the content of the project are expressed requirements. There are differing views on this subject. What are your views?”

“PMI’s PMBOK discusses many activities and skills that are (in part or entirely) focused on the Project or Program Manager. All of these process requirements are managerial in nature, virtually none are technical or domain related.”

“In his authoritative book PROJECT MANAGEMENT, A Systems Approach to Planning, Scheduling, and Controlling, Dr. Kerzner lists ten proficiencies for effective project management. Only one of the ten is Technical Expertise (assume same as domain expertise). Industry or similar project experience does not make the list.”

“Having managed many projects in many industries and with varying underlying technology, it is fair to say that opinions vary widely on this topic.”

“What is your perspective, opinion, experience or view?”

The comments are both thoughtful and revealing. In the following, we have extracted typical (but not all) of these comments. [Read more…]

Filed Under: Claims, Featured, General, Projects Tagged With: Acquiring Project Human Resources, Best Practice, Doctor Harold Kerzner, George T. McLaughlin PMP, Large and Complex Projects, McLaughlin & McLaughlin, PMI, Project Execution Planning, Project Management, Project Manager, Project Planning, www.mclaughlinandmclaughlin.com

STAFFING YOUR PROJECT MANAGEMENT TEAM (Part 7) – Acquiring the Project Manager

January 14, 2012 By George T McLaughlin PMP CCM

Industry, Domain and/or Technical Experience

This McLaughlin and McLaughlin’s Project Professional post is the seventh in a series of discussions regarding current challenges with the staffing aspects of your project management team. This post (like Parts 4, 5 and 6) addresses acquiring the human resources (people) or staffing. In this case, we focus on the project manager. The Subject Series can be viewed here.

This, the third post on acquiring the project manager, will address the relevance and/or importance of such considerations as industry, domain and/or technical experience in a professional project manager.

So, what are the skill-sets that are needed in the year 2012 (and beyond) environment? Let us drill down into or unpack the subject a little. [Read more…]

Filed Under: Claims, Featured, General, Projects Tagged With: Acquiring Project Human Resources, Best Practice, Construction Contract Planning and Scheduling, Doctor Harold Kerzner, George T. McLaughlin PMP, Human Resource Plan, Large and Complex Projects, McLaughlin & McLaughlin, PMP, Project Execution Plan, Project Execution Planning, Project Management, Project Planning, www.mclaughlinandmclaughlin.com

STAFFING YOUR PROJECT MANAGEMENT TEAM (Part 4) – Acquiring People from the Market

December 17, 2011 By George T McLaughlin PMP CCM

This McLaughlin & McLaughlin’s Project Professionals post is the fourth in a series of discussions regarding current challenges with the staffing aspects of your project management team. The focus is on the managerial aspects of human resource planning and acquisition. This post (like Part 3, our last post) addresses acquiring the human resources (people) or staffing. While the planning may be the most important activity or action in the process, the challenge ultimately is obtaining the people to implement your intended execution strategy.

There are many acquisition strategies. These acquisition strategies differ for various market conditions, organizational situations, project needs and other project variables. Markets that are very active/hot [oil and gas, mining, natural resources, etc.] present unique challenges. Skill-sets that are in high demand [project controls, planning, scheduling, technical, etc.] present further unique challenges. The project Human Resource Plan must address these unique challenges. Further, the project plan and schedule must allow the time to complete the acquisition process as well as the requisite training/indoctrination. Finally, the project budget must realistically provide for the cost of these resources (often expensive non-employee persons) as well as the acquisition costs (e.g. recruiters). If this planning is not in place, do not launch into project execution.

Please Remember –Teams of people [not machines and not software] build projects. Consequently, if you cannot acquire the requisite staffing, you are not prepared to execute the project [at least as planned].

Please Remember –This is a team, not a group of individuals. Have you noticed that so many sports teams with superstars rarely win championships? Further, have you noticed that championship teams have few, if any, superstars? It is the project team, not the individual that must be staffed and developed. As they say, there is no “I” in team. [Read more…]

Filed Under: Claims, Featured, General, Projects Tagged With: Acquiring Project Human Resources, Best Practice, Chartered Institute of Building (CIOB), Doctor Harold Kerzner, George T. McLaughlin PMP, Human Resource Plan, Large and Complex Projects, McLaughlin & McLaughlin, PMBOK, Project, Project Execution Plan, Project Execution Planning, Project Management, Project Management Institute (PMI), Project Management Plan, Project Staffing, www.mclaughlinandmclaughlin.com

STAFFING YOUR PROJECT MANAGEMENT TEAM (Part 3) – Acquiring People

December 10, 2011 By George T McLaughlin PMP CCM

This post is the third in McLaughlin & McLaughlin’s Project Professionals series of discussions regarding current challenges being encountered in today’s efforts/environment associated with the human resource aspects of your project management team. More specifically, we have titled the series STAFFING YOUR PROJECT MANAGEMENT TEAM, and we intend to focus heavily on the managerial aspects of human resource planning and acquisition. This post focuses on acquiring the human resources (people) or staffing. While the planning may be the most important activity or action in the process, the challenge ultimately is obtaining the people to implement your intended execution strategy. There are many acquisition strategies. These acquisition strategies differ for various market conditions, organizational situations, project needs and other project variables.

Please Remember –Teams of people [not machines and not software] build projects. Consequently, if you cannot acquire the requisite staffing, you are not prepared to execute the project [at least as planned].

Please Remember –This is a team, not a group of individuals. Have you noticed that so many sports teams with superstars rarely win championships? Further, have you noticed that championship teams have few, if any, superstars? It is the project team, not the individual that must be staffed and developed.

In order to present this topic in a logical manner and with an industry-recognized lexicon, we are using the PMI Project Management Processes for a Project as presented in A Guide to the Project Management Body of Knowledge (PMBOK^® Guide).

Sources that are used in this post are:

Filed Under: Claims, Featured, General, Projects Tagged With: Acquiring Project Human Resources, Best Practice, Chartered Institute of Building (CIOB), CIOB, Doctor Harold Kerzner, George T. McLaughlin PMP, Human Resource Plan, Large and Complex Projects, McLaughlin & McLaughlin, PMBOK, PMI, Project Execution Plan, Project Execution Planning, Project Management, Project Management Institute (PMI), Project Management Planning, Project Planning, www.mclaughlinandmclaughlin.com

Managing Risk Of Delay – Earned Value Management (Part 5)

April 16, 2011 By George T McLaughlin PMP CCM

This post is the fifth in a series of discussions regarding various aspects of time management. More specifically, we have titled the series MANAGING RISK OF DELAY, since we focus heavily on the managerial aspects of program / project management. This post addresses some ideas regarding preparation and maintenance of time management related to overall bulk progress. Some might refer to this as Earned Value Management.

The challenge associated with managing all (critical and non-critical path) work is common to virtually all Lump Sum Turn Key (LSTK), Engineer Procure Construct (EPC) and other similarly executed projects. In addition to the normal issues associated with bulk progress, actions or inactions by the owner can add considerable complexity to this challenge. Owner/Employer delays can be masked among the myriad of activities that are the responsibility of other (than the Owner/Employer) stakeholders. Even when detected or disclosed, these variances to plan are often dismissed as simply consuming available float. Hence, the Owner/Employer (or other stakeholder) may rationalize these variations as having no impact. Of course, the reality is that these sorts of departures may (or may not) add risk or disruption to the project execution. Further, they may delay forecasted completion. The managerial challenge becomes detection, assessment and quantification (should it be appropriate to compensate the contractor for the impacts). [Read more…]

Filed Under: Projects Tagged With: AACE International, Accepted Programme, As-Planned Schedule, Change Order Impact, Change Orders, Changed Work, Construction Contract Delay, Construction Contract Notice, Construction Contract Planning and Scheduling, Construction Disputes, Contract Change, Delay, Disruption, Field Labor Productivity, Impact, Impact Factors, Large and Complex Projects, Productivity, Project Execution Plan, Project Execution Planning, Time Management, Time Management Strategy

Owner Furnished (Supplied) / Free Issue Equipment and Materials

March 15, 2011 By George T McLaughlin PMP CCM

Introduction

Owner furnished (supplied) equipment (OFE), also known by other terms such as “free issue” presents unique planning and scheduling challenges. The idea is that another party to the contract procures / orders and supplies equipment, material (even services, such as utilities or scaffolding) to the contractor. The notion is that the contractor receives the equipment, goods or services and then erects, installs or otherwise uses these items.

The motivation for this type of arrangement can be one or more of several seemingly logical concepts. Equipment with long lead times for fabrication and delivery may be ordered in advance of placing a contract for the equipment erection or installation. Another motivation relates to cost savings. Some believe ordering equipment and commodities (bulk materials) can be done by a general contractor or owner (owner, developer, employer) and thereby save a markup by a subcontractor. In these cases, an interface is created between the ordering/procurement entity and the execution (engineering, erection, installation, fabrication, etc.) entity. The creation of this interface becomes the issue. [Read more…]

Filed Under: Projects Tagged With: Construction Disruption, Construction Productivity, Free Issue Equipment, Free Issue Materials, Large and Complex Projects, Owner Furnished Equipment, Owner Supplied Equipment, Project Execution Planning, Project Execution Strategy, Project Management, Project Planning

Project Management – Single Asset Owners

March 4, 2011 By George T McLaughlin PMP CCM

This post discusses unique project planning and management challenges associated with projects that are owned by single asset owners. Examples include power plants, large commercial facilities and process plants. These assets tend to be project financed using the single asset as collateral. The financing typically relies on revenue generated from operation of the asset. Hence, delays in achieving revenue generating status can be extremely problematic. Our conclusions and recommendations are based on decades of experience with many such projects.

Introduction

Revenue generating facilities (e.g. power plants, chemical process facilities) are sometimes owned by a standalone entity. The design, engineering, procurement, construction, commissioning, startup and turnover of these plants and facilities can be particularly challenging for both owners and contractors. The planning, scheduling and execution of these requires attention to some unique and compelling factors. [Read more…]

Filed Under: Projects Tagged With: Construction Contract Delay, Disruption, Large and Complex Projects, Project Financing, Project Management of Large and Complex Projects, Project Planning, Single Asset Owners

Introduction

Introduction

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