Implications for Open Design and Construct management

Having heard the project manager's story, we can now establish:

1. To what extent did the project manager apply what we have called best practices PII as defined in the ten aspects of Chapter 3?

2. What other management concepts did the project manager use that are additional to our list of ten best practices?

Based on the project manager's view of the relation between his management tools and the four key issues (Table 9.4), it can be noted that a PII approach played an important role on the following aspects of Open Design and Construct management.

Firstly, in managing the key issue 'interlinkage', the PII best practice of conflict resolution by means of 'mutual aid' (Aspect 3) played a crucial role. Mutual aid means that if something can be resolved for € 100 by one partner, whereas it would cost the other one € 10 000, the former will solve it regardless which one of the two is the problem owner in terms of guilt or responsibility. Secondly, the PII best practice of division of tasks by means of roles rather than job description (Aspect 8) proved to be effective in regard to continuity in staff with changing roles in various phases.

In managing the key issue 'joint venture structure', the PII best practice integration and coordination of tasks by means of clear and flexible roles was important in the team and in the delegation procedures (Aspect 9). The shareholder representatives were fully integrated at source in the project team and the finance function to the satisfaction of the minority shareholder.

In managing the key issue 'technology' the PII best practice on progress control, paying attention to both 'hard' and 'soft' information (Aspect 7), was implemented through self-imposed audits which were helpful as opportunities to learn and anticipate better on future problems. By having the audits done by the best available experts, aware of global best practices and problems, information becomes available, which better enables problems to be anticipated. In doing so the informal global experience was used to be pro-active.

In managing the key issue 'new company in green field', the PII best practice of creating a climate for mutual adjustment of tasks (Aspect 9) was followed, in addition to extensively making use of advice from trusted individuals from the nearby Shell refinery.

So, our hypothesis has been confirmed by this case. There are, however, two important aspects that have to be added to the ten best practices PII of Chapter 3:

1. Selection of key personnel;

2. Commitment.

Selection of key personnel: The project team members must understand PII best management practices or the project leader will become isolated in his approach (a prophet in the desert). The spirit of Open Design and Construct management has to prevail in the whole project team. That requires special attention when selecting team members on the five criteria of Table 9.6.

Commitment: For about five years, the project manager worked on the project with full commitment. At the site he joined the gymnastic exercises with the Chiyoda staff every day at 8 o'clock (Fig. 9.5). Especially in the beginning, Frans and Arjen worked some fourteen hours per day which included

Figure 9.5 Gymnastic exercises at the site

an almost endless variety of activities, ranging from meetings to solve serious problems to rituals like gymnastics and well over sixty consecration ceremonies. Working intelligently helps, but it is not enough. There simply is no replacement for hard work.

Mr Frans's subsequent project: the Shell Nanhai project

A few years later Mr Frans was assigned as construction manager to another large complex construction project: a US$ 4.3 billion joint venture between CNOOC and Shell for a chemical plant in the Guangdong Province of P. R. China, known as the Shell Nanhai project. Successful start-up took place in early 2006. The great complexity of the project stems not only from the technologies and cultures involved, but in particular from its huge size:

• 428 hectares plot size,

• 25 000 person peak workforce,

• 100 million hours of direct construction labour,

• 16 million cubic meters of earthwork,

• 4100 pieces of major equipment,

• 547000 cubic meters of concrete,

• 1.4 million linear meters of pipe,

• 5.3 million meters of electrical cable,

In this section, we summarise similarities and differences between the two projects.

Similarities with the Seraya project

The managerial approach of the Seraya project was also followed in the Nan-hai project:

• Start with establishing the overall objectives of the project, based on the stakeholders' long term objectives.

• Identify key issues for important problem areas that are unique for the project concerned.

• Compile a key issue matrix of problem areas (issues) and management tools to address the identified issues.

• Apply PII best management practices where appropriate.

The resulting key issue matrix for the Nanhai project is given in Table 9.7. The boxes 1.1, 1.2, etc. of the matrix were systematically filled in and translated into concrete managerial actions (of which a description would be beyond the scope of this book).

Differences of Nanhai with Seraya project

In hindsight two fundamental differences with the Seraya project can be identified:

2. Degree of uncertainty.

Table 9.7 Resulting Key Issue Matrix Nanhai

Key Issue 1: Key Issue 2:

Key Issue 3:

Key Issue 4:

Key Issue 5:

Key Issue 6:

Leadership Human resources

Open to nonconformance

Communication

Lesson

Control

Management Tools:

1. Project management for new company in green field 1.1 2.1 3.1

4.1

5.1

6.1

2. Huizhou DB infrastructure and experience with petro-chem industry

1.2 2.2

3.2

4.2

5.2

6.2

3. Chinese EPC methods

1.3 2.3

3.3

4.3

5.3

6.3

4. Mindset and language

1.4 2.4

3.4

4.4

5.4

1.5 2.5

3.5

4.5

5.5

6.5

6. Size

1.6 2.6

3.6

4.6

5.6

6.6

Figure 9.6 Nanhai project divided into eleven 'silos'

The size of the project is enormous, which brings along that the project has to be subdivided into manageable sub-projects, referred to as 'silos'. The coordination of the eleven silos constituted a major planning problem (see also Chapter 3 of Open Design, Cases and Exercises).

The degree of uncertainty was relatively low in the Seraya project. There were risks as addressed by the key issue matrix, but few unknown dangers. The environment was stable and known from experience. In the Nanhai project, by contrast, the environment was both to a large extent unknown and changing rapidly during the construction phase. (For the difference between uncertainty and risk see Chapter 4 of Open Design, a Collaborative Approach to Architecture.) The unknown and rapidly changing environment brought along unforseen issues on-the-run which could not have been anticipated by means of the key issue matrix. Among the issues which arose:

• Overheating of Chinese economy in 2004 resulting in:

- materal cost increase (50%)

- labour cost increase ( average 30%, welders 100%)

- Shop Loading (some in LOP 6 months late)

- power and water shortage

• Rate of Exchange

• SARS epidemic and typhoon in 2003

• Sinopec Design Office and Construction Contractors overloaded in 2003, 2004, 2005

• Crude oil price increase in 2005, hurting commissioning budget

How could these issues be addressed? Basically by a redundancy of capable people and other resources. All these unforseen issues required a PII approach to resolve them. A comparison of the application of PI and PII practices for the Seraya and Nanhai projects is shown in Table 9.8.

The Nanhai project satisfied all stakeholders' performance criteria:

• HSE Health very good

Safety acceptable Environment very good

• Cost Within budget of feasibility 1997

• Schedule As planned

• Quality Above expectation

• Reputation Pro-actively managed and delivered

In retrospect, this can be attributed to a large extent to the application of an optimal mix of PI and PII best practices in addressing emerging problems on-the-run.

Table 9.8 Application of best practices in Seraya and Nanhai

Seraya

Nanhai

Aspect:

1. Goal setting -fixed vs. floating

The strategic scope and set up of the project was set and fixed according PI practices.

The strategic scope was according PI practices, the implementation according PII practices, especially in 2005, prior to start up.

2. Leadership - boss focused vs. stakeholder focused

Mutual support played the important role and non-manipulative cooperation in a PII manner, to align contractor and owner.

Vulnerable leadership based on PII practices in unknown territory.

3. Conflict resolution - compromise vs. synthesis

The shareholder alignment was successful according PII practices.

Special risk of joint ventures in china required daily PII approaches.

4. Design process - solution point vs. solution space

A PII scope, omissions managed on the run (offices).

Outsourcing air separation unit after approval project scope reduction (Rail).

5. Communication - information oriented vs. decision oriented

Weekly meetings by Arjan and Frans on information needs as PII.

PII weekly metrics/trends plus 'light management' mitigation.

6. Persuasion of players - window dressing vs. valid and relevant information

A good and open PII approach.

Tried to achieve decisions based on facts (PII) rather than power play (PI).

7. Progress control - hard info oriented vs. soft info oriented

PI hurdle by construction ignoring metrics, PII recovery by parallel commission & construction.

PII engagement key to 'mood' and hard results: PI Blocks in construction die-hards.

8. Divisions of tasks-job descriptions vs. roles

Arjan/Frans working in PII allowed overlapping roles resulting in quick decisions and effective teamwork.

PII the same as in Seraya, and very effective in off-site scope.

9. Co-ordination of tasks - project manager's coordination vs. mutual adjustment

The same experiences as with Aspect 8.

Owner on board, PMC after two years, contractors never.

10. Standardisation - where possible vs. where functional

PI technical law originated from oil standards applied to chemicals; PII solved on the run.

Technical deviation on the run, 2004/2005 PII.

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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