The Challenge
A U.S.-based chemical company’s projects were experiencing significant cost and schedule deviations from their estimates at full funds authorization. As the company expanded through mergers and acquisitions, its portfolio changed from routine projects to more bespoke engagements. Although the estimating process was used successfully on standard plants in the past, the introduction of larger and more complex projects, implementation of new technology, and current market volatility proved challenging for the company.
What IPA Did
The first step IPA took was to assess the current state through a desktop review of several company projects to provide preliminary feedback on gaps to Best Practice in the company’s project process.
This review entailed closeout evaluations for a few completed projects and a prospective evaluation for an ongoing project. Looking at outcomes (cost, schedule, safety) of these projects and the drivers and practices (project definition, team development, and project controls) allowed IPA to identify common themes and gaps in practices that led to less-than-optimal results.
IPA found several opportunities for improvement:
- Estimating practices that did not match Best Practices, particularly at authorization
- Late assessment of site conditions and technology risks, leading to changes just before authorization or during execution
- Assumed (rather than defined) outside battery limits (OSBL) scope definition
- Key deliverables (e.g., end-to-end project schedule) were not required for project authorization
- Inconsistent discipline on the completion of FEL 3 deliverables before detailed engineering
To find a path forward, IPA participated in a multi-day workshop the company hosted to improve its Front-End Loading (FEL) work process and establish a phase gate process. One key to the workshop’s success was the commitment of company executives to meet in person over the span of a workweek. The interaction gave company personnel the opportunity to review IPA’s assessment results, ask questions, and determine how to adapt their company’s existing processes to meet Best Practices.
How It Worked Out
This client is working with IPA to fine tune the supporting procedures and implement the process and practices developed during the workshop. The engagement set up the mechanism to charter several multi-functional teams to define the desired future state and develop the change management plans to implement the new practices.