Value through Innovation, CEPEX

News & Publications

Project Execution in 2016 and Beyond: Secrets for Achieving Best Results (Part-1)

The economics of the commodities’ sectors have changed dramatically over the recent years, including the oil and gas sector, and these changes have seriously impacted countries whose economies are heavily dependent on commodities, e.g., Canada, Middle East countries, Russia, Nigeria and so on.

The situation is expected to remain uncertain and volatile in the coming years. Under the prevailing circumstances where capital for new projects will be allocated after most rigorous financial analysis, the project execution will require a different approach and mindset, almost akin to modern day special ops forces approach, skills development, training and implementation.

Project management methodologies, tools, softwares etc. are well known and already in place. But the key differentiator between ‘mission success’ (on time, within budget project completion) and ‘mission failure’ (delays, cost over-runs, complications) will be the people who make up the project management teams because they will ensure the proper implementation of the ‘mission strategy’.

Some key elements of a typical modern day special ops force operating concept are:

  • Culturally-aware and skilled/trained Operators
  • Understanding and influencing narratives
  • Deliberate macro- and micro-level operations linking engagement activities and operational missions in time, space, and purpose
  • Dispersed vs episodic engagement
  • Command, Control, Communications network
  • Networking, relationships and partnerships

How do the above relate to project execution in 2016 and beyond, and how can they be adapted to ensure ‘mission success’ in project execution? We will look at each element one at a time.

Project management is now viewed as a tactical and competitive weapon part of a wider project execution strategy. In the light of this, let’s look at first element: “Culturally-aware and skilled/trained operators” – this is perhaps the most important ingredient towards ensuring mission success.

Gone should be the days when people would be just rotated or randomly picked and placed in the project management teams. This approach will need to be overhauled.

So, what’s meant by: “Culturally aware Operators”? This would mean people who share, breathe-and-live the mantra of finding and implementing most cost effective solutions during project execution are also aware of the organization's core culture. It is the mindset that will make the difference between a mediocre approach and an innovative approach.

On to the second part: ‘Skilled/trained Operators”: This connotes that there should be no ‘square peg in a round hole’. The project management team – right from the project director to the project engineers – need to comprise of people who have the necessary skills and who have been trained too for their roles. People with the proper skills set and the training are fundamental to successful integration of the other elements cited above.

Without the successful integration of all the key elements, the mission can fall apart – whether a special ops mission or project execution mission. Thus, the first step is to have the ‘round pegs in the round holes’ – the right people in the right role.

The above holds true for project management teams for both the owner companies as well as the EPC/M companies. Numerous projects have failed because the folks in the project management teams were not competent for the roles assigned to them. It is, therefore, very critical that the companies realize the importance of this aspect and act accordingly.

What structured ways for developing the project management teams would you suggest?

 

 

 

Partho (Parth) Mukherjee is also Co-Sponsor/Coordinator of the Center of Excellence in Project Execution, Calgary, Canada.

Grateful reference acknowledgement: USSOC reading material available on internet.

Anirudh Kumar
Project Execution in 2016 and Beyond: Secrets for Achieving Best Results (Part-2)

As explained in Part-1, project execution in 2016-beyond will not be business as usual – it will need to be viewed as a mission of that of a special ops force (SOF) unit. Accordingly, the planning, training and preparation of the project execution team will need to be adapted based on the concept of SOF. 

As mentioned in Part-1, some key elements of a typical modern day SOF operating concept are:

  • Culturally-aware/astute and skilled/trained Operators
  • Understanding and influencing narratives
  • Deliberate macro- and micro-level operations linking engagement activities and operational missions in time, space, and purpose
  • Dispersed vs episodic engagement
  • Command, Control, Communications network
  • Networking, relationships and partnerships

The fundamental to mission success will be ‘Culturally-aware/astute and skilled/trained Operators’, i.e., properly trained and honed project directors, project managers, project engineers. ‘Hire for attitude, train for skill’ has to be the underlying principle for developing the winning team for project execution. The training of the human domain would need to address, inter alia:

  • 100% commitment to succeed
  • Critical forward thinking capability
  • Eagerness to embrace culture of ‘Innovate-Adapt-Integrate’
  • Understanding different ways of thinking
  • Ability to see the whole picture as well as the parts of it
  • Basic knowledge relevant to the project
  • Mastering the interpersonal skills
  • Ability to operate fluidly within the project group
  • Understanding the second and third order effects of project management team’s decisions

Now, let’s move to second key element of SOF concept and see what is meant by ‘Understanding and influencing narratives’ and how it would relate to project execution in 2016-and beyond.

What it connotes in the context of project execution is that the project management team must understand the ‘narrative of the project’, i.e.,

  • The Business Case of the project (including project basis),
  • Project objectives
  • Project Charter, Project Scope (current and provisions for future, if any)
  • All the stakeholders
  • Resources available, including capex
  • Summary of PESTEL analysis

‘Understanding the narrative’ is part of Front-End-Planning (FEP), and all the time that is required for it should be spent on FEP and the project execution team should be thoroughly up to speed on this. Proper FEP is the second most important key to mission success. Quite often the owner companies allocate less time and resources for this very critical activity (FEP) and they end up spending more time and money during project implementation.

FEP (including ‘Innovate-Adapt-Integrate’ approach) will be discussed in greater detail in the next part of this series in the context of ‘Deliberate macro- and micro-level operations linking engagement activities and operational missions in time, space, and purpose’ and we will see how important this activity is.

Once the ‘project narrative’ is clearly and comprehensively understood by the project execution team, the members of this team should be able to ‘influence/manage the narrative’ during the project implementation sequence of the activities. This involves making sure the other groups of the project team, namely, technical support group, procurement, construction and the start-up and operations groups are all aligned with the project objectives (scope, time, cost, quality and risk).

By knowing the ‘project narrative’ thoroughly, the project execution team can manage the ‘narrative’ with external as well as other internal stakeholders too. Projects can get negatively impacted if the narrative during the whole project implementation is not managed properly – we all know the narrative tends to digress as the project progresses. Managing the narrative requires skillful handling by the project management team which has been alluded to above as ‘Ability to operate fluidly within the project group’.

In the next part of the series, we will look at FEP, including ‘Innovate-Adapt-Integrate’ approach in the context of ‘Deliberate macro- and micro-level operations linking engagement activities and operational missions in time, space, and purpose’ – quite a mouthful perhaps but it has its own deep significance.

What is your view on criticality of understanding and influencing project narrative?

 

 

Partho (Parth) Mukherjee is Co-Sponsor/Coordinator of Center of Excellence in Project Execution and also Owner/Principal at InnoFusion Consulting, Calgary, Canada.

Grateful reference acknowledgement: USSOC material available on the internet.

Anirudh Kumar
Project Execution in 2016 and Beyond: Secrets for Achieving Best Results (Part-3)

As explained in Part-1 &2, if you need to win in project execution during 2016 and beyond you need to change your approach and new approach needs to be that of a special ops force (SOF) unit. Accordingly, the planning, training and preparation of the project execution team will need to be adapted based on the modern concept of SOF. It might surprise you but it is true!

Just to recap for you, some key elements of a typical modern day SOF operating concept are:

  • Culturally-aware/astute and skilled/trained Operators
  • Understanding and influencing narratives
  • Deliberate macro- and micro-level operations linking engagement activities and operational missions in time, space, and purpose
  • Dispersed vs episodic engagement
  • Command, Control, Communications network
  • Networking, relationships and partnerships

In part-1 and part-2 we looked at the first two bullet points. In this part-3, let’s look at the third bullet. 

The third bullet point states: “Deliberate macro- and micro-level operations linking engagement activities and operational missions in time, space, and purpose.” What does it mean in the context of the project execution?

What it means that the project execution team, including the project management team, needs to have a thorough view of the macro as well as micro aspects of the project ‘in time, space, and purpose’. How does the ‘macro’ aspect relate to project execution?

The ‘macro’ encapsulates doing a thorough Front-End-Planning (FEP) and assessing all aspects:

  • Project Objectives, Project Scope
  • Interfaces, integration
  • Stakeholders
  • Detailed PESTEL Risk Analysis and Mitigation Plans
  • Project Execution Plan (including value engineering, modularization, WBS, CBS, procurement, constructability, construction, smooth pre-commissioning, commissioning aspects etc.) – this is time when the project execution needs to apply ‘Innovate-Adapt-Integrate’ approach with great vigor and honesty
  • Scenario Analysis vis-à-vis capex

The ‘micro’ encompasses the nitty-gritty of project implementation:

  • Detailed Project Schedule
  • Engineering (DBM, FEED DE phases), Procurement and Construction and Start-up activities
  • Stakeholder management, communication plan
  • Continuous Improvement, Change Management
  • Project Controls
  • Project Reporting, KPIs
  • Project Close-out

Besides the above activities, the other key aspects of team management, motivation need to handled carefully and delicately.

In the next part of the series, we will look at “Dispersed vs episodic engagement.” Interesting phrase, isn’t it? Sure it is!

What is your view on criticality of Front-End-Planning?

 

Partho (Parth) Mukherjee is Co-Sponsor/Coordinator of Center of Excellence in Project Execution and also Owner/Principal at InnoFusion Consulting, Calgary, Canada.

[Grateful reference acknowledgement: USSOC material available on the internet.]

Anirudh Kumar
Why Alberta Oil patch Needs Cost Reduction More Than Ever Before

 

Plunging oil price had already crimped the revenue of the owner companies in the Alberta oil patch which resulted in reduction of planned capex in 2016. On top of that came the devastating Fort McMurray fires which has, as per some estimates, resulted in more than $1 billion of oil sands production lost and counting. If that was not enough, potentially crushing burden might have to be borne by oil and gas companies in Alberta (and other Western Canadian provinces) to support the ambitious commitments made by Canada in Paris last December to reduce greenhouse gas emissions.

In view of the abovementioned situation, each oil company is assessing its own revenue based on different WTI numbers and thereby its ability to spare capital for its new projects. The owner companies are understandably hesitant to commit capital for new projects unless there is stability in oil prices at a level that supports their financial plan. Almost intuitively, the company bigwigs are looking for more ways to reduce costs. The top global oil companies have reportedly reduced capex in 2016 by more than 30% as compared to 2015.

Cost cutting is being driven mainly through deferring new capital projects, cutting non-essential expenditure and layoffs. While this provides interim mitigation to the balance sheet, the fact remains that the oil companies will necessarily have to implement new projects to drive revenue growth and profitability. It is also getting obvious that WTI price will stabilize towards end of 2016 and inch slowly upwards north of $50/barrel in 2017. Thus, the revenues will increase and pressure on capital for new projects will ease.

So, what should the companies need to do in the new reality world of lower-for-longer and limited capital? This question brings us to a very important point: Companies will have to change the way they have been implementing their new projects as of now – whether new capital projects or sustaining capital projects. It should be pointed out here that whereas most of the new capital projects will be a combination of greenfield and brownfield, the sustaining capital projects will be mostly brownfield in nature.

Next, how should the owner companies change their way of implementing their projects (new or sustaining capital projects)? The answer is: The owner companies will need to find innovative ways to implement cost efficiency, in a holistic manner. Cost efficiency could be achieved through one or the combination of the following:

·         Cost reduction

·         Cost avoidance

·         Performance/Value Improvement

·         Cost Containment

The above can be achieved without doubt – it just needs a structured, systematic and patient approach and most likely this would need help of specialist folks who can parachute in to the project implementation group of the companies for a limited period. Goal of achieving cost efficiency is, at a high level, akin to goal of weight reduction – abstract and devoid of specifics. The specialists alluded to above can help achieve the goal of finding cost efficiency by working with the key personnel of the owner company, identifying areas where cost and work efficiency can be found, and then developing suitable strategies and specifics to derive those efficiencies.

CEPEX is equipped to provide support to owner companies in finding cost and work efficiency. It is up to the owner companies to make the move and take advantage of the expertise CEPEX brings to table.

What are your views about finding cost and work efficiency in regard to new projects?

 

 

Partho Mukherjee is Owner Principal of CEPEX.

Anirudh Kumar