IPA is launching a multi-company study on project practices and project performance outcomes specific to China.  The goal of the study is to advance industry knowledge on successful project execution in China. This study will define what it means to achieve a successful project and will identify local factors that impact project results.

Multi-Client Study

Globally, commodity chemical, specialty chemical, and refining companies are investing in assets in China at a fast pace. According to industry experts, by 2015, China will lead Asia in competing with the US, the EU, and will be a truly global source for chemical and specialty chemical production. As a result, the entire chemical industry has experienced major changes in the past decade. Investments in the US and Europe have been in decline while China has seen a significant increase in capital projects.

China will remain a cost competitive region for capital investment and chemical operations for the foreseeable future. Perceived low wage rates is the primary driver of cost competitiveness. Past IPA studies have confirmed the capital cost advantage in China as compared with similar commodity asset development in Western regions.

However with fast changing environment, the current practices necessary for Western companies to build the most cost and schedule efficient projects in China are not well understood. What defines a successful capital project in China? What are the key success factors for executing projects in this region?

IPA understands that companies seek up-to-date quantitative information on executing projects in China. In direct response to client interest for data on project performance of projects in China, IPA is conducting a study of projects recently completed in China to advance industry knowledge on executing projects in China. This study will define what it means to achieve a successful project and will identify local factors that impact project results.

The study will examine china-specific issues as:

• A comparison of local design institutes versus outside design contractors
• Why some joint ventures work better than other joint ventures.
• Effective approach for using expatriates (cost, experience, special skills)
• Best methods for integrating Chinese and Western project management practices
• Logistics Management
• Quality Control (materials, equipment)
• Labor Management (rate variance, use of temporary housing)
• Contracting and Procurement Strategies
• Technology Protection
• Planning and Managing Construction Safety
• Environmental Regulations

IPA will accomplish these goals by analyzing capital projects already in our project database and by using more recent projects provided by companies participating in this study.

It is not the intent of the current study to compare and contrast practices and results of projects executed independently by Chinese companies with those of projects executed by western companies. However, we anticipate being able to undertake such a study in the future.

Deleverable

Each participating company will receive an executive summary report and a copy of a briefing identifying the findings from this research study. The results will be presented at a meeting of all participants at the conclusion of the study, which will take place in late September 2005. The briefing will cover a discussion of expected outcomes, best practices, lessons learned, and a path forward to address newly identified opportunities.

Requirements for Participation

To participate in this study, each company will contribute at least one recently completed China project. If a participating company has not completed one China project in the past 3 years, they may instead contribute two “authorization grade” ongoing China projects.

Cost

The all-inclusive (including IPA travel expenses incurred in collecting project data) cost per company participant is $30,000.