a.sanchez part2 planning and scheduling construction projects_the schedule assurance review

Planning and Scheduling Construction Projects Guideline to develop and review baseline schedules Part 2: Schedule Assurance Review

Prepared by Alberto Sanchez

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Alberto Sanchez BEng, MsCLog, MIntBus, GradCertEnSt

Alberto has over 20 years of experience delivering capital projects with values from $100 million to over $10 billion in Asia-Pacific, Middle East, Europe and Central Asia and Latin America in the private and public sector. He has worked across different industries including oil and gas, chemicals, utilities and infrastructure throughout all project phases (feasibility studies through to commissioning) as project controls manager, head of project controls, planning manager and head of capital projects for international oil companies, E&C contractors and consulting firms

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Alberto holds a bachelor degree in civil engineering, master degree in logistics and operations, master degree in business and postgraduate in energy studies from recognised Australian universities. He is often requested as a keynote speaker at major companies and industry conferences worldwide on planning/scheduling, risk management and modular construction. He is always interested in hearing from former colleagues, clients, or just interesting folk, so feel free to contact him

Contents • Part 1: The Planning Process

• Common planning problems • The planning and scheduling process • The schedule basis • Productivity rates and construction durations • Resource loaded schedules and resource leveling • Some factors impacting the baseline schedule

• Part 2: Schedule Assurance Review

• Schedule quality review • Schedule risk review • Schedule benchmark review • Conclusion

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Schedule Assurance Review • The construction industry performs large investments in very

complex and risky environments

• To increase project success, clients and contractors perform independent reviews at specific project decision “gates”

• This review process is called Project Assurance Reviews and it seeks to assess the ability to meet the project objectives in terms of time, cost, quality, safety, operability performance, etc.

• The reviews are conducted by independent expert teams or Subject Matter Experts (SME) in all disciplines that help to identify weaknesses and shortcomings that may put the project at risk

• The independent expert teams present recommendations and other forms of guidance to ensure that stakeholders can meet their expectations

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Schedule Assurance Review • Key areas of Project Assurance

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PROJECT ASSURANCE

QualityAssurance

Procurement& Subcontracts Assurance

CommunicationAssurance

Risk Assurance

Schedule Assurance

CostAssurance

HSE Assurance

TechnicalAssurance

OrganizationalAssurance

NOTE: Project Assurance members should be independent and objective experts from each discipline or functional department who serve and report to the senior management during project assurance reviews

Applicability: Schedule Assurance • The purpose of this section is

to provide guidelines to assist both the creator of the baseline schedule (scheduler) and the reviewer, who receives the schedule for review and approval

• The focus of schedule assurance reviews is on the overall quality and completeness of the baseline schedule. The schedule review focuses on the following issues

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Inclusion of the entire project scope

Sequence and work flow

Constructability Timing and phasing

Adherence to legal and contractual requirements

Unambiguous and clear descriptions of the work

Resource usage and balance

Design and coding of activities(i.e. OBS & WBS)

Level of detail

Highlighting key or critical areas of risk & opportunities

Schedule Assurance Review • Schedule Assurance consists of the following steps:

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Schedule Quality Review

Schedule Risk Review

Schedule Benchmark

Review

ROBUST Baseline Schedule


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Schedule Benchmark

Review


Schedule Quality Review • The following is a recommended checklist that allows the

creator of the baseline schedule and reviewers to consistently check baseline schedules – example:

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Project Item Description

1 What is the name of this project? ABC project

2 What type of facility is being constructed (e.g., process, power, infrastructure, or other)?

Industrial process plant

3 Is this a joint venture project? No

4 Where is this project located (city, state, country)? Abu Dhabi, UAE

5 What is the total installed cost of this project (in millions)? 400 MM USD

6 Under what type of contract is this project being executed (e.g., lump sum, cost reimbursable, cost plus percentage, or other)?

Engineering, procurement and construction (EPC)

lump sum

7 What is the scheduled duration of this project in months? 36 months


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1 How well do you understand the project scope? e.g. process plant, infrastructure, greenfield, expansion

2 Does the company have previous experience with this client? e.g. similar scope, same location, same technology

3 Do you personally have previous experience with similar project? e.g. same client, similar scope, same location, same technology

4 How well do you understand under what type of contract is this project being executed? e.g. EPC, EPCm, cost reimbursable, cost plus percentage, or others

5 How well do you understand the partnering or joint venture split? e.g. personnel and technology, construction scope

6 How well do you understand the project location (city, state, country)? e.g. site access, local labor productivities, weather conditions, local customs

• Section 1: General Checklist Template General Engineering Equipment and

material supply Fabrication Subcontract Construction Pre-commissioning


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7 How well do you understand the local regulations? e.g. permitting, local approval authorities and processes, local design authorities

8 How well do you understand the schedule requirements and phasing? e.g. contract milestones, temporary construction phase, early production phase, pre-shutdown phase, etc.

9 Is the project being benchmarked against a similar project? e.g. similar plant, industry averages, productivity metrics

10 Is the work breakdown structure (WBS) or work packages being defined? e.g. process area, utility areas, buildings, etc.

• Section 1: General Checklist Template General Engineering Equipment and



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11 Is the basic information being reviewed? e.g. license, process flow diagram (PFDs), equipment list, process units, utility units

12 How well do you understand the plant layout or general layout? e.g. major equipment location, key layouts

13 Does this project have a complete basic design or FEED package? e.g. incomplete design, outstanding design items, degree of definition, basis of design

14 Does this project have multiple engineering execution locations? e.g. special consultants, architectural design, local designers

15 Does this project have adequate site studies available? e.g. soil investigation, topographic surveys, initial plant surveys

16 Is the list of engineering deliverables defined? e.g. specifications, drawings, supporting documents for permits

• Section 2: Engineering Checklist Template General Engineering Equipment and



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17 Does the company have previous experience with the selected technology or license? e.g. process design basis, process equipment list, P&IDs

18 Does the company have previous experience with the project specifications and codes? e.g. high end, industry standards, local design codes

19 How well do you understand the engineering approval requirements? e.g. review cycles, third parties, local approval authorities and processes

20 Is the list of design deliverables and engineering activities being defined and identified in the schedule? – refers to the project scope and client requirements

• Section 2: Engineering Checklist Template General Engineering Equipment and



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21 How well do you understand the procurement policies and procedures of this project? e.g. minimum number of vendors/bidders, approval of alternative vendors, purchase order approvals

22 Is the requirement for local vendors defined? e.g. local content, approval of alternative vendors

23 Is the list of materials or equipment supplied by client defined? e.g. lead times, novated orders, free issues, vendor design interfaces

24 Is the list of long lead items (materials and/or equipment) defined? e.g. completeness of engineering datasheets for early purchasing, licensed equipment, single sources, lead times

25 Are lead times for equipment and material defined? e.g. based on preliminary quotes, previous orders, historical database, required on site dates (ROS)

• Section 3: Equipment & Material Supply Checklist General Engineering Equipment and



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26 Is the location of vendor(s) for critical purchased items defined? e.g. transport period from vendor shop(s) to site, multimodal transport (by rail, sea and road), border crossing times

27 Are weather windows for transportation of materials or equipment defined? e.g. storms, icy roads, high winds

28 How well do you understand the customs clearance and in-country transport process on this project? e.g. transit times, closure of custom points, port capacity, inland transport and handling

29 Does the company have adequate laydown area defined? e.g. availability of warehouse, storage capacity, distance from/to construction site, alternative sites

30 Is the list of procurement activities being defined and identified in the schedule? e.g. RFQs, technical and commercial evaluation, negotiation and purchase order, vendor design, fabrication, factory acceptance test (FAT), packing and transport, etc…

• Section 3: Equipment & Material Supply Checklist General Engineering Equipment and



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31 Is the pre-fabrication scope or strategy defined? e.g. rack modules, process modules, pipe spools, pre-cast elements, prefabricated buildings

32 Is the fabricator(s) subcontract plan defined? e.g. single or multiple prefabrication shops

33 Does the company have previous experience with the proposed fabricator(s)? e.g. similar facility, same location

34 Is the material purchasing scope for fabricator(s) defined? e.g. purchasing by company or fabricator(s), interfaces between material deliveries and fabrication schedule

35 Is the location of major fabricator(s) defined? e.g. productivity of workforce, fabrication shop/yard capacity, distance from/to closest port and/or construction site

36 Is the transport and delivery strategy defined? e.g. large deliveries vs multiple small-sized deliveries

• Section 4: Fabrication Checklist Template General Engineering Equipment and



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37 Are weather windows for transportation of pre-fabricated items defined? e.g. storms, icy roads, high winds

38 How well do you understand the shop inspection and test requirement? e.g. time and test duration, interfaces with client/owner, third-party inspections

39 Is the list of pre-fabrication activities being defined and identified in the schedule? e.g. shop drawings, purchasing of raw materials, fabrication and assembly, inspection and tests, packing and transport

• Section 4: Fabrication Checklist Template General Engineering Equipment and



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40 Is there any requirement for local subcontractor(s)? e.g. local content, approval of alternative subcontractor(s), necessary local licenses, permits, additional mobilization times, visas

41 Is the construction subcontract plan defined? e.g. scope of works, work packages, single or multiple subcontractors, interface plan

42 How well do you understand under what type of contract is subcontracting executed? e.g. cost-plus, unit rates, guaranteed maximum price, fixed price, incentive

43 How well do you understand the subcontractor(s) capability? e.g. experience in similar work, workforce capabilities, equipment availability, current on-going commitments and pending awards

44 Does the company have previous experience with the proposed subcontractor(s)? e.g. worked together in similar project, similar scope, same location, available historical productivities

• Section 5: Subcontract Checklist Template General Engineering Equipment and



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45 Is the material purchasing plan for subcontractor(s) agreed? e.g. purchasing by Company or subcontractor(s), interfaces between material deliveries and construction schedules

46 Is the list of subcontract activities being defined and identified in the schedule? e.g. preparation of bid packages, bid evaluation and reviews, bid negotiation and award, subcontractor(s) mobilisation to site

• Section 5: Subcontract Checklist Template General Engineering Equipment and



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47 Does the company have performed a constructability review? e.g. construction methods, modularisation or pre-assembly designs, standardised design elements, site fabrication vs. shop fabrication

48 Is the construction plan defined? e.g. temporary construction facilities, construction methods and procedures, site access and restrictions, heavy lift and rigging studies, safety requirements, etc.

49 How well do you understand the proposed construction sequence and priorities? e.g. installation sequences, sequence of transport and erection of modules, sequence of installation of heavy lift equipment, sequence of tie-ins, sequence of handover of site areas

50 Does the company have access date(s) to construction site defined and identified in the schedule? e.g. site preparation complete by client, demining complete, shutdown start date, site permit approved

51 Is the list of preparatory works defined and identified in the schedule? e.g. labor camp, temporary facilities, laydown areas, demolition, soil remediation, asbestos removal, etc.

• Section 6: Construction Checklist Template General Engineering Equipment and



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52 How well do you understand interfaces with other contractors and/or communities? e.g. future or on-going construction site works, works by others, traffic and local roads

53 How well do you understand the working calendars and/or constraints? e.g. max. hours per day, overtime, rosters, non‐work periods, 24x7 coverage, SimOps calendar

54 How well do you understand local customs, practices or traditions? e.g. public holidays, religion celebrations, language barriers, safety culture

55 Are construction labor sources and resources availability known? e.g. union or open shop labor, local content requirements, current labor market conditions

56 Are special construction equipment requirements defined? e.g. heavy cranes, barges, mobilisation time, equipment/plant inspections, road closure and escorts, etc.




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57 Are weather windows for construction defined? e.g. winter, rainy season, sand storms, extreme heat, etc.

58 Are key construction quantities available? e.g. number of piles, m3 of concrete, ton of steel, DiaInch of pipes, meter of cables

59 Is the list of construction activities being defined and identified in the schedule? e.g. site preparation, underground, foundations, major steel structures, large-bore pipes, cable trays, equipment installation, etc.

60 Are estimations of activity durations defined? e.g. based on quantities (BOQs), productivities, etc. (please refers to part 1 for details)




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61 How well do you understand the scope of project completion? e.g. punch lists, site test requirements, hydrotest, loop checks, solo run test

62 How well do you understand the pre-commissioning sequence and priorities for this project? e.g. storm water, potable water, firewater, power generation, instrument air, DCS and control room, cooling water, water treatment, steam, flare s, process trains, etc.

63 How well do you understand the pre-commissioning support activities for this project? e.g. mobilisation of vendor representatives, notification to third parties or client representatives

64 Is the list of pre-commissioning activities being defined and identified in the schedule? e.g. power energisation, hydrotest, running trials, cleaning and flushing, loop checks, etc.

• Section 7: Pre-commissioning Checklist Template General Engineering Equipment and



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Schedule Benchmark

Review


Schedule Risk Review Once you completed the schedule quality review and the preliminary baseline schedule is ready, the next step consists of:

• Assessing the potential variability in the schedule duration resulting from identified project risks

• Assessing how risks and opportunities may influence the estimated activity durations and overall schedule

• Understanding which activities have the highest probability of impacting the project completion date or key milestones

• Understanding which risks have higher impact on key milestones or overall schedule

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A brief to Schedule Risk Review • Using schedule risk analysis allows you to enter extra

information about the uncertainty of the duration of the schedule activities

• This extra information is used to produce more accurate or realistic schedules. It also help you manage your project more effectively by answering questions such as: • What is the chance of finishing the project on time? • What risks have higher impact on the schedule? • What is the best case? what is the worst case? • What activities are most likely to cause delays?

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Schedule Risk Review • Level 1: Identify the project risks and

opportunities. Typically, this includes the use of a risk checklist and the start of the project risk register

• Level 2: Analyse project risks using a qualitative method based on a probability x impact matrix. It helps to prioritise the list of risks

• Level 3: Analyse project risks using a quantitative method based on Monte Carlo simulations. It helps to estimate the potential impacts of risks and determine the probability of meeting the project target

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Risk Category

Availability of sufficient amount of suitable soils from nearby borrow pits, resulting in increase in transport costs

Cost

Shortage of skilled workers, resulting in longer construction schedule Schedule

Extreme

High

MediumLowLow

Medium

HighMedium

Low

Impact

Likel

ihoo

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Schedule Risk Review • Example:

• Estimated cost: US$ 420 MM • Target duration: 25 months • Project location: Africa • Project award date: Jan 2011 • Target finish date: Jan 2013 • Contract type: EPC lump sum • Industry: Oil & Gas (offshore)

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E = Engineering; P = Procurement; and C = Construction

Preliminary project schedule

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Project risk register • Example: risks identified during the risk workshop with

project team members

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Risk Pre-mitigation Response Post-mitigation

ID Title Probability Impact Type Probability Impact RBS

001 Decline by qualified subcontractors to bid VL M Reduce VL M Commercial Risk 002 Extended contract sanction period H M Reduce H L Commercial Risk 003 Late comments and/approvals from client or local authorities VL M Reduce VL L Technical Risk 004 Inappropriate selection of subcontractor(s) L H Avoid VL H Commercial Risk 005 Bankruptcy of local subcontractor(s) or supplier(s) VL H Avoid VL H Commercial Risk 006 Late design changes during fabrication L H Reduce L M Technical Risk 007 Late delivery of equipment to fabrication yard L M Reduce L L Fabrication Risk 008 Late material deliveries to fabrication yard L M Reduce L L Fabrication Risk 009 Current workload of preferred fabrication yards in the region M H Reduce M M Fabrication Risk

011 Unavailability of vessels for transport from yard to Africa (missing the window) M H Reduce M M Transport Risk

012 Storms - wind, waves, high currents (Autumn/Winter Period) during transportation of platform from fabrication yard M VL Accept M VL Transport Risk

013 Damages to modules during transport from fabrication yard VL H Reduce VL M Installation Risk 014 Piles failure or damage due to unexpected subsea soil conditions L H Avoid VL M Installation Risk 015 Severe weather conditions during offshore heavy lift (especially in winter) H L Accept H L Installation Risk 016 Shortage of local skilled manpower during installation offshore M M Reduce M L Installation Risk 017 Incorrect selection of the flotel L M Avoid VL M Installation Risk 018 Issues with vendor representatives during installation/test offshore L M Reduce L L Commercial Risk 019 Difficulties to meet high local labor content requirements H L Accept H L Commercial Risk 020 Limited access during demolition and revamp works (SimOps) H L Accept H L Installation Risk

021 Delay during final interfaces with existing systems (e.g. telecomm, electrical) M L Reduce L L Installation Risk

Output of the schedule risk review • Q: What is the

probability of finishing the project on or before 25 months (Jan 2013)?

• A: The probability of completing the project on 25 months (Jan2013) is less than 5% • Most Likely (P50) = 28M • Worst Case (P90) = 31M

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31 06-Dec-12 25-Jan-13 16-Mar-13 05-May-13 24-Jun-13 13-Aug-13 02-Oct-13 21-Nov-13

Distribution (start of interval)

0

20

40

60

80

100

120

140

160

180

200

220

Hits

0% 04-Dec-12

5% 07-Feb-13

10% 26-Feb-13

15% 12-Mar-13

20% 21-Mar-13

25% 01-Apr-13

30% 09-Apr-13

35% 17-Apr-13

40% 29-Apr-13

45% 03-May-13

50% 10-May-13

55% 16-May-13

60% 23-May-13

65% 30-May-13

70% 06-Jun-13

75% 13-Jun-13

80% 21-Jun-13

85% 02-Jul-13

90% 16-Jul-13

95% 05-Aug-13

100% 07-Nov-13

Cum

ulat

ive

Freq

uenc

y

OFFSHORE EXAMPLESchedule Risk Review

Output of the schedule risk review • What risks are most likely to cause delays?

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32 16%

18%

19%

20%

22%

25%

27%

28%

41%

48%

Damages to modules during transport from fabrication yard

Delay during final interfaces with existing systems (e.g.telecomm, electrical)

Decline by qualified subcontractors to bid

Issues with vendor representatives during installation/testoffshore

Incorrect selection of the flotel

Unavailability of vessels for transport from yard to Africa(missing the window)

Late design changes during fabrication

Piles failure or damage due to unexpected subsea soil conditions

Current workload of fabrication yards in the region

Shortage of "local" skilled manpower during installation offshore


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Schedule Benchmark

Review


Schedule Benchmark Review • Benchmarking has long

been used by clients and contractors to improve the accuracy of project performance

• It is the process of comparing one’s own baseline (or proposal) schedule against the results of similar projects to validate our proposed project schedule

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PREPARE BASELINE SCHEDULE

DEVELOP PRODUCTIVITY

METRICS

SCHEDULE DATA COLLECTION

SYSTEM

COMPANY PROJECTS DATABASE(INTERNAL)

SIMILAR PROJECTS/

NORMS(EXTERNAL)

CONDUCT SCHEDULE

BENCHMARK COMPARISON

VALIDATE SCHEDULE

SPECIFIC FACTORS AFFECTING THIS

PROJECT

YES

ACCEPT BASELINE SCHEDULE

NO

Schedule Benchmark Review • Example: contractor historical data

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Project Project location Duration (Months)

Cost (USD MM)

Project A Europe 27 320 Project B Middle East 28 400 Project C Middle East 30 450 Project D Asia 33 580 Project E North America 35 720 Project F Middle East 36 780 Project in Analysis Africa 25 420

Schedule Benchmark Review • Example: contractor historical data

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320

400 450

580 720

780

420

200

300

400

500

600

700

800

900

24 25 26 27 28 29 30 31 32 33 34 35 36 37

Proj

ect C

ost (

USD

MM

)

Project Duration (Months)

• The expected duration of 25 months is below the benchmark for similar projects

• The expected duration, from historical data, should be in the range of 27 to 28 months

Observations Suggestions/Recommendations

The expected duration of 25 months is shorter than similar projects completed by the company. The benchmark data suggests that the project duration should be between 27 and 28 months. Also, the schedule risk analysis shows that the most likely scenario or P50 should be 28 months (3 extra months)

1. Consider the use of “reusable” engineering or standard design library in some areas to reduce engineering

2. Consider overdesign vs. waiting for detailed information from vendors 3. Simplify the process of cycle time review (e.g. cross-functional team) 4. Assess the time-cost effect of selective overtime, double-shift, or additional

resources during design and fabrication 5. Relocate appropriate engineering resources to fabrication yards to expedite

technical queries 6. Consider “schedule” as major criteria to evaluate fabrication bids 7. Consider the use of incentive/bonus in the contract for early fabrication

completion 8. Consider the use of single source for critical procurement items to reduce

time of vendors selection 9. Assess the time-cost effect of allocating premiums for early supplier

deliveries 10. Confirm capabilities and capacity of proposed fabrication yards, and

perhaps assign the fabrication of jacket and piles to a separate yard 11. Assess the time-cost effect of using international subcontractors instead of

local subcontractors (e.g. penalties for non-compliance with local content) 12. Consider a cost contingency for eventual penalties and/or prolongation

costs in case schedule cannot be compressed 13. Negotiate a 3-month grace period to prevent cost penalties from LDs

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by

A. S

anch

ez

(am

sanc

hezu

@gm

ail.c

om)

37

Conclusion: Project Assurance

38 Contact: [email protected]

End of Part 2: Schedule Assurance Review

mailto:[email protected]