Introduction to Project Controls
Short Description
This should provide assistance to Construction Project Management courses....
Description
PROJECT CONTROLS DEVELOPMENT PROGRAM
MODULE 1 - INTRODUCTION TO PROJECT CONTROLS
PCDP Module 1 - Introduction to Project Controls. Rev 0
SPECIAL ACKNOWLEDGMENTS & THANKS: The Project Controls R5 management team would like to thank the following persons for their continuous support and contribution to the development of this training module Ahmed Hammad, Tony Isaac, Mark Deverell, Abkar Bannayan, James Lee, Suwit Suriyo, John Armstrong and Walt Falgout.
This document has been prepared for the exclusive use of WorleyParsons. Copying this document without the permission of WorleyParsons is not permitted.
MODULE 1 - INTRODUCTION TO PROJECT CONTROLS Rev
Description
Originator
Review
Approved
Date
0
Released for Global Implementation
Humphrey Kerger
Project Controls R5 Management Team
Project Controls R5 Management Team)
Mar 2011
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PCDP Module 1 - Introduction to Project Controls. Rev 0
I N T R O D U C T I O N TO P R O J E C T C O N T R O L S
Module Content 1.0 Project Controls Development Program
6
1.1 Introduction to the PCDP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
1.2 Project Controls modular training program. . . . . . . . . . . . . . . . . . . . . . . . . .
6
1.3 PCDP Competency Assessment survey. . . . . . . . . . . . . . . . . . . . . . . . . . . .
9
1.4 Coaching program. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 10 1.5 Staff Rotation program. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . 11 1.6 Project Management modular training program. . . . . . . . . . . . . . . . . . . . . . . 12 1.7 EMS/WPMP training videos. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . 12 1.8 Estimating modular training program. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 1.9 External training programs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.0 Introduction to WPMP / EMS
13
2.1 WPMP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 2.2 EMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 17
3.0 Preamble: Objectives & Assumptions
19
3.1 Methods, Philosophies & Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 3.2 Project and Contract formats. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.0 Project Breakdown Structures 4.1 Major Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
22 22
4.2 Analysis.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 4.3 Project life-cycle.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 4.4 Coding Structures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 4.5 Project Breakdown concepts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . 25 4.6 Segregated CBS/WBS concept. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25
4.7 Integrated CBS/WBS concept. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 4.8 Managing EPCM contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
32
4.9 Control Accounts and Cost Centres. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 4.10 Contract Administration and Cost Control. . . . . . . . . . . . . . . . . . . . . . . . . .. 33
5.0 Enterprise Coding Structures
35
5.1 Enterprise Codes and Attributes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
36
5.2 Attribute Codes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
37
6.0 Project Initiaton
41
6.1 Baselines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 6.2 Tool selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ……………….. 41
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PCDP Module 1 - Introduction to Project Controls. Rev 0
7.0 Schedule Development
44
7.1 Evaluate / Define Phase (FEED schedules). . . . . . . . . . . . . . . . . . . . . . . . . . . 44 7.2 Execute Phase.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . 46 7.3 Project Baseline - Control schedule.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
51
7.4 Project Baseline - Engineering.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 7.5 Control schedule - Procurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 7.6 Control schedule - Construction.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 7.7 Control schedule - Commissioning.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.0 Schedule Control
57
8.1 Schedule Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 8.2 Schedule reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.0 Progress Measurement
56
57
9.1 Engineering - Incremental Milestones method. . . . . . . . . . . . . . . . . . . . . . . .. 63 9.2 Procurement - Incremental Milestones method. . . . . . . . . . . . . . . . . . . . . . . . 65 9.3 Construction - Variety of methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 9.4 Commissioning - Incremental Milestones method . . . . . . . . . . . . . . . . . . . . . . 74 9.5 Earned Value for variable budgets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 9.6 EPCM: Consolidated progress. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 9.7 “House with the golden doors” scenario. . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 82
10.0 Cost Control
84
10.1 Engineering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 10.2 Procurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 86 10.3 Construction & Commissioning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
87
10.4 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 10.5 Contingencies & Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
11.0 Management of Project Change 11.1 Levels of change. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
92 92
11.2 Prime contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 11.3 Prime contracts: E & EPCM Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 11.4 Prime contracts: Management & Support . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 11.5 Prime contracts: Procurement & Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . 95 11.6 Prime contracts:Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 11.7 Prime contracts: Seeking approvals: PVNs and PCRs . . . . . . . . . . . . . . . . . 96 11.8 Client commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 11.9 Variances: budget and forecast impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
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PCDP Module 1 - Introduction to Project Controls. Rev 0
12.0 Cost and Schedule Performance
103
12.1 Self performing contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
103
12.2 EPCM contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
103
12.3 Performance indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
104
12.4 Variance analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
104
12.5 Forecasts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
106
13.0 Project Reporting
107
14.0 Document Management & Control
109
14.1 Document Control.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
109
14.2 Electronic Document/Data Management.. . . . . . . . . . . . . . . . . . . . . . . . . . .
109
14.3 Document Management Plan.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
110
14.4 Distribution Matrices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
110
14.5 Quality Audits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
110
15.0 Capital Cost Estimating
111
15.1 Methodologies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
111
15.2 Estimate build up. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
112
15.3 What is Known? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
112
15.4 What Experience tells us?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
112
15.5 What is Unknown. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
113
15.6 Estimating classes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
113
15.7 Class 1 estimates: Order of Magnitude. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
114
15.8 Class 2 estimates: Screening. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
114
15.9 Class 3 estimates: Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
115
15.10 Class 4 estimates: Definitive. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
115
15.11 Accuracy ranges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
116
15.12 AACEI Estimating Classes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
117
16.0 Cost and Schedule Risk Analysis
118
16.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
118
16.2 Cost Risk analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
118
16.3 Schedule Risk analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
121
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PCDP Module 1 - Introduction to Project Controls. Rev 0
1.0 PCDP - PROJECT CONTROLS DEVELOPMENT PROGRAM
1.1 INTRODUCTION TO THE PCDP
Whether you’re just beginning a new career, or you’re a seasoned professional, accepting a position in any WorleyParsons Project Controls department across the globe means you’re making a commitment to an ongoing learning process. Over the last 20 years, the industry has developed a general trend in the Project Management / Controls workforce which has resulted in a peak age group in the mid 50s’ with the next largest in the mid 20’s. This trend was, and still is, a major concern to the WorleyParsons Project Controls communities, as without sufficient development of our younger resources, many of our offices are going to experience a knowledge - gap in the near future. In addition to the potential skills and knowledge gap trend, most of our customers will have more stringent requirements and higher expectations of increasing the local content (skills & knowledge) on their projects. So where does our next generation of local Project Controllers come from? Project Controls is a relatively young discipline that has been influenced by the use of technology, creating a risk that system-skills (for instance Primavera) is becoming more of an entrance pre-requisite to Project Controls rather than project delivery background. Today, it is common to see a mix of young system literate people team-up with older, more experienced but less
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computer literate personnel. In order to accelerate the transfer of knowledge & maintain the commonality of Tools & Methods within the group amidst staff-growth and staffturnover, WorleyParsons has developed a program called the PCDP (Project Controls Development Program). The PCDP is a continuous development program, tailored for our business and using our language. It consists of :
• Annual competency assessment, to ’baseline’ the individual skills, knowledge & experience gaps;
• individual competency improvement targets based on the Gap analysis;
• a Development Program that can be customized to individual needs. Generally, there are three options to choose from when it comes to closing skills, knowledge and/or experience gaps: 1. Hands-on experience 2. Internal training 3. External training Since external courses run by consultants often fail to meet the specific WorleyParsons requirements, WorleyParsons
opted for a combination of the following competency development tools: 1. a comprehensive coaching program; 2. a variety of modular in-house developed and selected external training programs, addressing every aspect of Project Delivery; 3. Staff Rotation Plan to close experience gaps. The flowchart on the next page will outline the Overall PCDP concept. 1.2 PROJECT CONTROLS MODULAR TRAINING PROGRAM
The Project Controls training modules are designed to provide the participants with an overall introduction to the skills & knowledge required by Project Controllers when executing EPCM / PMC projects. All courses are written and delivered by WorleyParsons personnel. To compete in a global environment, WorleyParsons needs Project Controls professionals who are equipped with the full range of Project Controls skills and knowledge, armed with a solid base of good ethical values, who have been trained to think, to question, and who are able to “learn, unlearn and re-learn” all in the language which is understood by the rest of the world. As the external resource marketplace and education system mainly produces ’onedimensional’ Project Controls professionals (e.g. specialists in either Planning, Costing or Estimating), the prime focus of the PCDP will be on the development of a workforce with allround Project Controls capability
FLOWDIAGRAM - PROJECT CONTROLS DEVELOPMENT PROGRAM
1
2
3
4
5
INDUCTION
ASSESSMENT
ANALYSIS
DEVELOPMENT
TOOLS
• PCDP MODULE 1: “INTRODUCTION TO PROJECT CONTROLS”
• ANNUAL INDIVIDUAL COMPETENCY ASSESSMENT SURVEY
• INDIVIDUAL COMPETENCY GAP ANALYSIS
• DETERMINE COMPETENCY DEVELOPMENT TARGETS (KPI’s) — WHAT NEEDS TO BE DONE ?—
•
• CUSTOMIZED INDIVIDUAL COMPETENCY DEVELOPMENT PROGRAM FOR THE COMING YEAR — HOW TO ACHIEVE THE DEVELOPMENT TARGETS ?—
IDENTIFY & SELECT (AND / OR): 1. APPROPRIATE TRAINING PROGRAM / MODULE 2. SPECIFIC HANDS-ON EXPERIENCE / EXPOSURE (OPPORTUNITIES) 3. COACHING PROGRAM 4. EXTERNAL TRAINING PROGRAMS
TRAINING PROGRAMS
• EMS / WPMP VIDEO TRAINING • PROJECT CONTROLS MODULAR TRAINING PROGRAM
• PROJECT MANAGEMENT MODULAR TRAINING PROGRAM
• ESTIMATING MODULAR TRAINING PROGRAM
• SELECTED EXTERNAL TRAINING PROGRAM EXPERIENCE / EXPOSURE
• STAFF ROTATION PROGRAM COACHING
• PCDP COACHING PROGRAM
ANNUAL APPRAISALS
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HIGH LEVEL INTRODUCTION TO WORLEYPARSONS METHODS, SYSTEMS & PROCEDURES MANDATED INDUCTION FOR ALL NEW AND CURRENT WP PROJECT CONTROLS STAFF.
MANDATED FOR ALL PROJECT CONTROLS STAFF
IEMBEDDED IN THE ANNUAL APPRAISALS PROCESS. MANDATED PROCESS FOR ALL PC STAFF AND THEIR LINE— SUPERVISORS
SELECTION OF APPROPRIATE PROGRAM IS A JOINT EFFORT BY THE PROJECT CONTROLLERS AND THEIR LINE SUPERVISOR
AVAILABLE PROGRAMS TO SUPPORT CAPABILITY DEVELOPMENT TARGETS
PCDP Module 1 - Introduction to Project Controls. Rev 0
The first module is a general introduction to the WorleyParsons philosophies and methodologies.
These specialist modules are designed and structured following the same concept: 1) Each training module should provide the participant with hands-on skills and knowledge for that specialized topic.
Completion of this Module is compulsory for all Project Controls staff, regardless of their experience and skills & knowledge level. For new recruits, completing the Introduction Module is part of the Induction process, together with the Competency Assessment Survey. The Introduction Module is followed by 7 specialized modules.
2) All modules will have the same “project theme”, so at completion of the program, the participant has covered the full range of services that are expected from a WorleyParsons Project Controls professional on one complete project.
3) The output of one module, and the deliverables generated through the exercises, are to be used as input and/or reference data for the following module(s). 4) Every module consists of a manual (“back-of-fag-pack” principle) and a systems part, where the manual exercises will be repeated using the WorleyParsons preferred tool-kit. Below is an overview of the Project Controls Training Modules:
Module 1
Module 2
Module 3
Module 4
Introduction to Project Controls
EPC Schedule Development
Services Management
Commercial Performance
Module 5
Module 6
Module 7
Module 8
Introduction to TIC Cost Estimating
TIC Management
Schedule Risk Analysis
Cost Risk Analysis
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“Hard work never kills anybody who supervises it” ~/~ Harry Bauer
PCDP Module 1 - Introduction to Project Controls. Rev 0
1.3 PCDP COMPETENCY ASSESSMENT SURVEY
PCDP participants are expected to continuously monitor and analyse their WorleyParsons work experience, in terms of competency elements. The basis for this will be the WorleyParsons Competency Assessment Survey, which every new recruit is required to complete as part of their induction. This Competency Survey (which is in essence a SWOT analysis) is the basis for monitoring the development and progress of all Project Controls Staff. The letters stand for Strengths; Weaknesses; Opportunities & Threats.
more than one quadrant, e g. a person can consider “inexperience in EPCM scheduling” as both a Weakness AND an Opportunity. Competency Assessment The participant’s competency score should be discussed with their supervisor to identify future experience and training needs. The initial competency score (the first one) will not be taken into account during the annual appraisals; whether someone performs to their capabilities/ competency level is a performance assessment and not part the annual competency assessment. However, achievement of future competency improvement targets will become a KPI (Key Performance Indicator) for the next year’s appraisal.
SWOT Analysis Annual Appraisal Interface The SWOT analysis template presents the 4 major categories of competencies:
“Rule number one is, don’t sweat the small stuff. Rule number two is, it’s all small stuff “ ~/~ Robert Eliot
Qualifications / Experience (self assessment)
The development targets are set during the Performance Appraisals and should be a joint agreement of both staff and their line manager.
Technical Skills (self assessment)
To ensure that the participants will be supported in achieving
their KPIs, they can be assigned a personal coach. Delivering on these KPIs will become a KPI for all parties involved in the Development Program. By making both staff and their line manager responsible for achieving the competency targets, WorleyParsons closes the loop and insists all stakeholders take their commitments seriously … and not just … “something to be attended to, once one has a spare moment”! The PCDP Competency Survey will be conducted for all Project Controls staff across WorleyParsons globally. The Competency Survey Questionnaires were reviewed and approved by all Regional Managers of Project Controls / Project Services and are, therefore an accurate reflection of what is expected from a WorleyParsons Project Controls professional in terms of skills and knowledge. The survey is conducted online around April, and can be accessed via a dedicated link in the new Global Project Controls & Estimating Website via Link https://www.tba.com
Systems & Software Skills (self assessment) Personal / Work scope Management & Organizational Capability/Teamwork (supervisor’s assessment) The theory of the SWOT is that Strengths & Weaknesses are internal and Opportunities & Threats are external, although the suggestion is not to be too restricted by this theory. Similarly, items could appear in
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PCDP Module 1 - Introduction to Project Controls. Rev 0
1.4 COACHING PROGRAM Coaching is regarded as an essential feature of the WorleyParsons Project Controls Development Program. The skills, knowledge and experience that you have gained in your professional career are valuable not only to you but they are of great benefit to the growth of the department. Coaching is a vital process in transferring this experience and knowledge to younger and/or new members of the Project Controls Department, and achieving the vision for WorleyParsons in promoting Project Controls excellence for everyone's benefit.
Differences between Mentoring and Coaching Component
Mentor
PCDP Coach
Driver
Human Resource Group
Project Controls Group
Focus
Career Path
Performance / Competency development
Role
Facilitator with no agenda
Tutor with specific agenda / Capability Targets
Relationship
Self selecting
Assigned by Supervisor based on Competency Assessment
Personal returns
Career Opportunities & Development
Teamwork / Skills & Knowledge Development
Arena
Life / Career
Capability Improvement
Coaching versus Mentoring The PCDP coaching program is different from the WorleyParsons mentorship programs, and our employees may confuse the two programs. In the WorleyParsons Mentoring program, the mentor acts as your counsellor, providing advice on career paths, development opportunities, and an overview of what it takes to become a leader in the company. (in essence; a sounding board) Typically, the mentor is a senior manager, at least two levels above you in the organization. The mentor must have broader experience in the company and the ability to place you into assignments that will help with your development. The PCDP coach is more of a tutor, observing your work and actions, providing comments on execution, and teaching skills which may be lacking.
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Coaches can come from many sources. A coach can be a colleague, a manager, or an employee, and have to come from the same function or division in which you work. It is critical in the coaching relationship for the coach to have opportunities to observe your work and for you to respect the coach and be open to feedback. Mentoring must be viewed as long-term relationships -- a commitment of two years should be obtained before the relationship is established. Mentoring is biased in your favour. Coaching, on the other hand, is impartial, focused on improvement of professional skills. A coaching relationship usually lasts only for the duration of the “gap-closure” period (quick hits).
Once the competency gaps are closed, new competency development targets will be set for the following year, and achieving these new targets could require a completely different skill-set (and coach). In summary, the mentor provides guidance and opportunities for practice, while the coach observes and critiques the performance and provides you with an outside perspective on your skills. The PCDP Coaching Program hangs personal KPIs (Key Performance Indicators) of achievement of competency for both Coach and ‘student’. Assigning these KPIs is not only done to give the participants an incentive to deliver on their targets, it is also a commitment from their linemanager that they will support professional growth in their team.
“Inside every older person is a younger person -- wondering what the hell happened.” -/~ Cora Harvey Armstrong
PCDP Module 1 - Introduction to Project Controls. Rev 0
1.5 STAFF ROTATION
"If you really want something in life you have to work for it. Now quiet, they're about to announce the lottery numbers." ~/~ Homer Simpson
PROGRAM
The staff rotation program is a program designed to encourage the temporary rotation / exchange of employees between two WorleyParsons offices with the minimum of bureaucracy and cost. It is a simple process which benefits the company and employees alike, and can be considered one of the tools for closing experience gaps for those employees who want an overseas assignment, but are not necessarily available to relocate on a long term basis. How does it work? Location Project Controls Manager identifies an experience / specific project exposure gap during the annual appraisals, and posts the candidate particulars on the Global Project Controls & Estimating website.
own employee. Each home office will pay either actual expenses or a per diem, of its own employee. Each home office is responsible for any income tax implications for its own employee both from an individual and corporate perspective. Each home office will pay the visa costs incurred at that location for outgoing and/or incoming employee as appropriate. Personal goals/Company objectives to be pre-agreed, clearly defined and monitored. Who is eligible?
meets one of the following criteria: 1. Specialists with different skills/experience – to close a skills/knowledge gap; 2. Specialists with equal experience - to obtain experience in other locations/ overseas. 3. Younger employees – to obtain experience in other locations/overseas How to participate? Anyone interested to participate in this program can apply via their line Managers during the annual appraisals
In essence all Project Controls staff as long as the exchange
There has to be a valid need for the exchange, such as closing a skill or knowledge gap or it may be an opportunity for both specialists, as well as younger employees to obtain experience in other locations or overseas. Each set of candidates will, ideally, be of a similar level in terms of experience and qualifications. It is envisaged that the Rotation/Exchange program will last a maximum of six months. Each home office will pay the salary of its own employee. Each home office will pay the round-trip airline ticket of its
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PCDP Module 1 - Introduction to Project Controls. Rev 0
from one or more of these modules.
• Align newly recruited experi-
The Project Management training program is an in-house developed entry level project management training (using 10 training modules) for personnel starting work in project management at project engineer level.
These needs could be identified when determining the Competency development targets during performance appraisals.
• Train experienced construc-
The Program consists of 10 Modules:
The WorleyParsons Project Controls community developed a series of 9 Induction training videos to familiarize new employees with the Project Controls & Estimating specific content of EMS / WPMP.
1.6 PM MODULAR TRAINING PROGRAM
PM TRAINING MODULES 01. Project Initiation & Scope Management 02. Project Controls & Commercial Management 03. Risk Management 04. Business Management Systems
1.7 EMS/WPMP TRAINING VIDEOS
The following induction videos have been made available:
05. HSE Management 06. Proposals
02. Planning
07. Project Quality
03. Cost Management
08. General Management & Leadership
04. Management of Project Change
09. Procurement & Material Control
05. General Project Controls Guideline
10. Construction & Completions
06. CTR Preparation
The primary intent of this training is to deliver basic training in the principles of project management and explain the systems and processes that WorleyParsons use to meet these principles.
08. Contingency drawdown
It is possible that project controls personnel could benefit
Page 12
tion estimators in the field of EPCM estimating;
• Provide a structured EPCm estimating course for graduates or new recruits. The following 10 modules are currently developed by the Estimating community: ESTIMATORS TRAINING MODULES 01. Orientation 02. Introduction to Estimating 03. Estimating Components
EMS/WPMP VIDEOS 01. Project Controls Executive Directive
The intended recipients are personnel who have enrolled to join the project management discipline and experienced project managers/engineers wanting a ‘refresh’.
enced EPCm estimators;
07. Progress Measurement
09. Cost Estimation
The training videos can be accessed via the Project Controls & Estimating website: www.tba.com 1.8 ESTIMATING MODULAR TRAINING PROGRAM
The Estimating Training program will have an Entry Level focus and is developed to:
04. Initiating an Estimate 05. Direct Cost Estimating 06. Indirect Cost Estimating 07. Owners Cost Estimating 08. Design Allowances 09. Contingency Risk Analysis 10. Review & Prepare Estimate basis 1.9 EXTERNAL TRAINING PROGRAMS
There are several external training courses related to Project Management & Controls. Each region has a short-list of WorleyParsons recognized external training-programs which can be used to complement the existing in-house developed programs.
PCDP Module 1 - Introduction to Project Controls. Rev 0
2.0 INTRODUCTION TO WPMP / EMS
2.1 WPMP
“43.7 per cent of all statistics are made up on the spot” ~/~ Steven Wright
The Project Delivery process model is a process that will ensure that the value and risk is always known throughout the project life-cycle. Most clients and contractors will have such a model and the principle, in most instances, will be identical. The project life-cycle is usually divided into five phases. Each phase is subdivided into detailed management processsteps/activities. By having decision gates at the
IDENTIFY
1
Determine project feasibility and alignment with business strategy.
end of each project phase, the project can be stopped, authorized to proceed or re-cycled. To ensure a consistent Project Delivery approach that is aligned with the various project life-cycle models utilized by our clients, WorleyParsons developed the WorleyParsons Project Management Process (WPMP) below.
WorleyParsons is primarily involved in the Evaluate (studies), Define (Feed), and Execute (EPC) phases. The Identify and Operate phases are typically managed by clients.
The node points between each of the phases (commonly referred to as gates), demarks the completion of a projectphase, and is aligned with the “Go / No-Go” decision-gates for progression into the next phase.
EVALUATE
2
DEFINE
3
As the project progresses through the “phase-gates”, the level of definition in the projectscope increases.
WPMP aligns and interfaces with the project delivery sections of WorleyParsons Enterprise Management System (EMS) where all procedures, guidelines and forms are contained.
EXECUTE
4
OPERATE
Select the Finalize scope, cost, Produce an operatStart Up, operate preferred Developschedule and get ing asset, consistent asset to ensure perment Option(s) & project funded with scope, cost and formance specificaExecution schedule tions & return to Strategy. shareholders Key Deliverables
• Valuation Report • Development • Class 1 – Order of Magnitude Estimate (+ / 50%)
Plan
• Class 2 – Screening Estimate (+ / 30%)
• Business Pro-
• Functional Asset posal / Front End Engineering De- • Class 4 – Definisign (FEED) tive Estimate (+ / Package - 10%)
• Performance Assessment
• Class 3 – Control Estimate (+ / 15%)
• Level 2-3 EPC Schedule Key Decision Approve Feasibility Review
Approve Development Plan
AFE approval (Approved For Expenditure)
Operations Acceptance
Value Enhance
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PCDP Module 1 - Introduction to Project Controls. Rev 0
WPMP delivers useful guidance on project delivery best practise. Once the phase and risk category is defined using a simple flow process (below), WPMP provides a list of mandatory
tasks and recommended tasks (see next page).
plates associated with each Project Phase.
This helps the Project Team to quickly navigate though EMS using Task sheets and quickly identify and locate the specific Workflows, Procedures, Documents, Guidelines and Tem-
Once the task list has been selected, each task can be highlighted (see page 16) and hyperlinks take you to procedures, guidelines and forms in EMS.
“What you don't know hurts you…” ~/~ David Copperfield Page 14
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PCDP Module 1 - Introduction to Project Controls. Rev 0
Page 16
“If you can keep your head while all about you are losing theirs, you haven't understood the plan.” ~/~ Isaac Heyes
2.2 EMS
option is retrieved.
• Develop
EMS stands for Enterprise Management System and holds all our Procedures, Forms, Guidelines, Templates and Go-Bys, categorized in the Business Process Steps for each function.
Both Planning and Cost are divided in 5 process-steps. For Planning these steps are:
• Cost Control
EMS can be accessed via the WorleyParsons NOW page. (see screenshot)
• Develop
By selecting the location and Project Controls in the functional group list on the left side of the page, the two options will appear; Planning and Cost.
• Planning Report
By selecting one of the options, the Project Controls EMS page for your chosen
• Policy • Planning • Schedule Control
For Cost the steps are almost identical:
• Policy • Planning
• Cost Report The EMS page will list down all the Process-steps, the intent of each step, as well as the activities and documents associated with these Process steps. The search can be narrowed down by selecting the Workflow, Document or Form tab on top of the page, and can be filtered by CSG (Hydrocarbons, Infrastructure & Environment, Power and Minerals & Metals) An EMS webpage screen-shot is shown on the next page.
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PCDP Module 1 - Introduction to Project Controls. Rev 0
3.0
P R E AM B L E : O B J E C T I V E S & AS S U M P T I O N S
The objectives of Project Controls is to provide accurate timely information to Project Management that will enable informed decisions and action to correct any possible adverse situations or trends, and to advise the Client of the true status of the project. 3.1 METHODS, PHILOSOPHIES & PROCEDURES
The methodologies & techniques described in this module facilitate a consistent and methodical information flow process across the project phases, and enables compilation of all project status reporting / recordings in an agreed
format for: • Development of CBS / WBS structure for the project • Establishment of a Cost Control budget from the estimate • Expenditure and performance in relation to approved control budgets; • EAC (Estimate At Completion) and ETC (Estimate To Complete) forecasting in relation to approved control budgets • Change Control • Development of the Baseline control schedule and progress control base
• Project Progress in relation to the agreed control schedule; • Cost and schedule fore-
casts • Cash flow/Cash call man-
agement in relation to forecasted project expenditure. All Schedule & Cost controls methods, philosophies and procedures described in this Introduction-module are currently employed by WorleyParsons and accepted as ’best practice’ methodologies for the Define and the Execute phases of the project and are fully supported by the suite of WorleyParsons preferred Project Management tools & systems.
“Good control reveals problems early - which only mean you'll have longer to worry about them.” ~/~ Author Unknown Page 19
3.1 PROJECT & CONTRACT FORMATS
A project can be defined as an item of work that requires planning, organizing, dedication of resources and expenditure of funds to produce a concept, a product or a facility. A contract is a mutual business agreement recognized by law under which one party undertakes to do work (or provide service) for another party for a consideration. A written contract is the document by which risk, obligations, and relationships of all parties are established. For the client, the contract is the means by which the contractor can be controlled, and ensures that the work and end product meets their requirements. For the contractor, the contract specifies risks, liabilities, and performance criteria, and outlines the terms and conditions of payment. Throughout the training program references will be made to the following two contract categories:
• Prime Contracts • Sub Contracts Although the Contract and Project Management practices offer various, but similar definitions to explain the difference between these two contract categories, it is still used in many different ways by different people. In relation to the PCDP training program WorleyParsons differ-
Page 20
“A verbal contract is not worth the paper it’s printed on.”
entiate Prime and Subcontracts as follows: Prime Contracts A contract agreement between WorleyParsons and the client to do work, or to provide services. WorleyParsons will invoice the client directly for provided services on its own ‘letterhead’ paper. For the project controls function this means that cost, revenue and profit margin is managed and monitored against an internal approved control budget and a client approved contract value. The value of the contract (commitment) is the client’s cost to the project and WorleyParsons revenue. Sub Contracts As the prime contract holder, WorleyParsons can commit part of the work scope to a specialized third party contractor. This contractor becomes then a sub contractor or sub consultant of WorleyParsons, and as such, will invoice the WorleyParsons directly for their services. Unless special approval is required, clients will usually not be party to this contract arrangement; as far as they are concerned the subcontracted scope of work is still WorleyParsons responsibility. For the Project Controls function this means that the value of the committed subcontract will be part of WorleyParsons’ cost to the project. Internal cost and profit margin for this commitment is managed by the subcontractor, and is of no concern to WorleyParsons.
EPCM / PMC Contracts Prime contract holders are awarded total responsibility for the execution of the workscope. This includes cost, schedule, quality, project delivery risks & liabilities, as well as the commercial outcome of the project. The project is fully executed by own resources and/or (partly) subcontracted under their responsibility. Therefore Prime contracts are often referred to as ‘self performing’ contracts. Engineering & construction contracts can be drawn up in any number of formats, depending on the project objectives and drivers, contract strategy and the skills and resources of the client and /or the contractors. The PCDP training modules have a strong focus on:
• Self performing Engineering and Procurement Services contracts
• PMC (Project Management Consultant) contracts
• EPCm (Engineering, Procurement, Construction & Completions management) contracts. and to a lesser extent on Turn Key EPC contracts.
~/~ Samual Goldwin
PCDP Module 1 - Introduction to Project Controls. Rev 0
PMC PMC Projects are executed under a three-part contractual relationship among: 1. The Client - who establishes the form of contract and general terms & conditions. 2. The Project Management consultant - acting as the client’s representative in administering the contract (s) and managing cost, schedule, design, procurement and construction & completions of the overall development. 3. The respective contractors, who responds to the risk and liabilities of the general contract The usual contractual relationship amongst these 3 parties on a single project is for the client to have one contract with the Project Management Consultant (PMC), and separate contracts with the respective contractors. In short, the PMC is managing the commitments on behalf of the client. No contractual relationship exists between the PMC contractor and the other contractors.
“If everything seems under control, you’re just not going fast enough.” ~/~ Mario Andretti
ance is managed and monitored against a client owned TIC (Total Installed Cost) budget and a high level EPC schedule as opposed to the agreed Contract Value and detailed EPC execution schedule in self performing contract environments. The budget for the PMC contract usually sits outside the TIC budget so management of this contract does not fall under the remit of the PMC team. However, the contract arrangement between the client and the PMC contractor can contain risk and reward incentives for achieving the overall project goals, which means that all criteria for self performing contracts will be applicable to this contract. For that reason, the commercial health of this contract will only be managed, controlled and reported internally, separately from the PMC scope of works. Because the client has no direct benefit or interest in the commercial outcome of the PMC contract, the cost associated for controlling and managing the PMC contract itself is usually carried by WorleyParsons.
EPCM Identical to PMC projects, with two differences: 1. In addition to the tasks described for PMCs, the EPCM contractor has further responsibilities; carrying out detailed engineering work as well as purchasing equipment and material on client’s behalf. 2. The budget for EPCM services is part of the project TIC. This is a significant difference; it means that an EPCM services contract will be one of the commitments that needs to managed under the TIC budget on behalf of the client. To avoid area’s of conflict and confusion, EPCM projects are usually executed with two distinct ‘line-ups’; one team looking after the EPCM Services contract (the self performing bit), the other team with a focus on the responsibilities associated with managing the Overall EPC development and TIC budget on behalf of the client.
Unless agreed otherwise, the PMC contractor is not responsible or liable for the technical or commercial outcome of the project. The approach of the PMC project controls function is therefore different to that of a ‘self performing’ contract. Cost and schedule perform-
Page 21
PCDP Module 1 - Introduction to Project Controls. Rev 0
4 . 0 B R E AK D O W N S T R U C T U R E S
4.1 MAJOR VALUES
Good project controls require the effective integration of cost, schedule and technical information and the management systems that generate that information. However, many management systems used on projects are not well integrated because they were developed independently of each other to satisfy specific needs.
and high level General Ledger accounts, the scheduling systems’ focus is to support work planning and control (detailed project tasks), while technical management is mainly oriented to specifications, performance characteristics and technical goals (project deliverables).
For example, the accounting system can be designed primarily to keep track of expenses and payments, to meet payrolls, calculate taxes, etc.
Pulling cost, schedule and technical information together in a meaningful, coherent fashion is considered essential for effective project management and failing to do so will eventually lead to fragmented project reporting and may mislead the manager by presenting a distorted view of the project status.
Cost information is still in many cases related to organizational
A combination of 6 major measures is needed for project
analysis and to determine how well the project is performing according to plan:
• Planned Values • Earned Values • Committed Values • Cost Incurred • Forecast Values • Invoice/Payment Values
4.2 ANALYSIS
The system set-up must be structured in such a way that it can generate the required data to analyse project-performance in terms of: Planned Achievement
-
What is planned?
Actual Achievement
-
What is done?
Expenditure
-
What is the cost incurred to achieve this?
Commitment
-
What’s the amount committed?
Budget Control
-
What are the forecasted under/overruns?
Cash flow / Call
-
What is the projects’ Cash flow position?
“Ability is what will get you to the top if the boss has no daughter “ ~/~ Author Unknown
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PCDP Module 1 - Introduction to Project Controls. Rev 0
“It is not enough to do your best; you must know what to do, and then do your best”. ~/~ W. Edwards Deming
4.3 PROJECT LIFECYCLE
of WPMP.
The table below represents WorleyParsons’ Project Management Process (WPMP).
The Define phase is a very important phase, because this is the decision-gate for proceeding with the execution of the project.
Like most of our clients, WorleyParsons has an “Opportunity and Project realisation” process model in place that ensures that the value and risk is always known throughout the project life-cycle. Decision gates at the end of each phase allow us to proceed with, stop or recycle a project at each gate.
The key deliverables of the define phase are:
• The FEED package (technical definition of what needs to be done)
• The Class 3 Total Installed Cost (TIC) Estimate (cost of the execution stage)
• The level 2–3 EPC Schedule
This PSDP training module focuses on the Phase 3 "Define" and Phase 4 "Execute" portions
IDENTIFY Determine project feasibility and alignment with business strategy.
1
The class 3 estimate becomes the basis for the Control Budget.
(what the project duration will be)
EVALUATE
2
DEFINE
3
The level 2-3 EPC schedule becomes the basis for the Detail Execution Schedule. The project initiation process begins once the project passes this gate. At this point we want to break the project into manageable units. We do this with coding. The Project Controller must understand the use of each section of code structure, since this structure drives cost collection, performance measurement and data interchange among several company systems.
EXECUTE
4
OPERATE
Select the Finalize scope, cost, Produce an operatStart Up, operate preferred Developschedule and get ing asset, consistent asset to ensure perment Option(s) & project funded with scope, cost and formance specificaExecution schedule tions & return to Strategy. shareholders Key Deliverables
• Valuation Report • Development • Class 1 – Order of Magnitude Estimate (+ / 50%)
Plan
• Class 2 – Screening Estimate (+ / 30%)
• Business Pro-
• Functional Asset posal / Front End Engineering De- • Class 4 – Definisign (FEED) tive Estimate (+ / Package - 10%)
• Performance Assessment
• Class 3 – Control Estimate (+ / 15%)
• Level 2-3 EPC Schedule Key Decision Approve Feasibility Review
Approve Development Plan
AFE approval (Approved For Expenditure)
Operations Acceptance
Value Enhance
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PCDP Module 1 - Introduction to Project Controls. Rev 0
4.4 CODING STRUCTURES
Coding structures, in their hierarchical and dynamic index forms, are the foundation of all management systems. Project delivery, financial and other corporate business systems & tools exchange relevant data based on defined coding structures at any required level: from detailed execution levels, all the way up to the summary dashboards and executive reporting. In order to meet ever changing and increasing demand of our business, the code values contained in the various coding structures should satisfy several criteria, like being robust, intelligent, intuitive, uniform or expandable. Coding structures and codes also have additional attributes. These attributes can be variable (i.e. code values that change from project to project), or can be fixed (i.e. pre-defined codes applicable to all projects, also referred to as ‘constants’). The degree of adoption, alignment and implementation of coding structures is a key factor in the organizations’ ability to successfully manage and deliver projects in a consistent, reliable and fast, yet flexible and easy way. The same applies for the organizations’ functional lines of managing and reporting on all aspect of its business. The most familiar coding structures are listed below: • EPS (Enterprise Project
Structure) In a broader sense, the EPS is viewed as a reflection of company’s diversification and
Page 24
its market presence. In essence, the EPS breaks an organization down into CSG’s (Customer Sector Groups. EPS facilitates projects portfolio management and prioritization, enterprise wide project and functional reporting, efficient management of resources’ requirements / assignments across projects and business units, etc. • WBS (Work Breakdown
Structure) The WBS is a deliverableoriented hierarchical breakdown of the project scope into smaller, easier managed components. With each descending level of the WBS, the definition of the project scope increases in detail. A WBS is project specific, therefore varies from project to project based on technical, schedule and costs risks and execution strategies. The WBS is typically accompanied by a WBSD (dictionary). • CBS (Cost Breakdown
Structure) A “flat”, pre-defined, enterprise wide dictionary of cost codes (also referred to as Codes of Account). The CBS is identical across all projects and business entities and in itself contains little valuable project performance information, but when tag linked to elements in the project WBS, it forms a structure that facilitates finding, sorting, compiling, summarizing, defining and management of the information the code is linked to. Chapter 5.0 will address the principles of the Codes of
Accounts in more detail. **Note: In project management practice the CBS is defined in two distinct ways: One, already described above, and second, being a project specific code structure that breaks down the Control Budget into small manageable components for cost management purposes. Although the latter is not the WorleyParsons preferred approach, this model can be encountered in some parts of the world. Section ‘4.6 - Segregated CBS/WBS’ concept will elaborate further on this CBS concept.
• OBS (Organizational Breakdown Structure) A hierarchical arrangement of the company’s organization, also depicting reporting relationships (in essence, the Company Org-chart). • RBS (Resources Break-
down Structure) Closely related to OBS, with one major difference that company’s personnel functionally assigned to OBS element, can and does perform different role(s) on projects (Project Org-chart). • Client Codes
List of pre-defined codes provided by the client to facilitate cost and progress reporting and analysis against Client specific breakdown structures. Defined as any of the following, but not limited to: AFE (Approved For Expenditure), OAG (Operational Asset Grouping), Owner’s Cost Centre, Asset Management WBS (closely related to fixed and assets under construction settlement rules), Work Order numbers, etc.
“If I wanted you to understand, I would have explained it better” ~/~ Johan Cruyff
PCDP Module 1 - Introduction to Project Controls. Rev 0
4.5 PROJECT BREAKDOWN CONCEPTS
The previous four sections of this chapter defined the general framework related to the coding structures definitions, major values and required analyses considerations, as well as the gated approach to the project delivery through its lifecycle. As mentioned in section 4.4, WorleyParsons preferred approach for establishing breakdown structures is the integrated WBS-CBS concept. There are no straightforward “rights” or “wrongs” when it comes to breaking down projects into manageable units for cost and progress management purposes; it really comes down to the collective experiences of the various stakeholders to determine what would make the most sense for the project at hand. In general, Cost and Work breakdown structures can be developed following one of the two basic concepts:
• concept that returns separate Cost and Progress status info (Segregated CBS/WBS)
• Concept that returns integrated Cost & Progress status info (Integrated CBS/WBS)
The following sections will address some of the issues related to the degree of synchronization between WBS and CBS coding structures: 4.6 SEGREGATED WBS/ CBS CONCEPT
In this approach, the WBS and CBS are developed independent from each other. Both structures are project specific.
Subsequently, the Project ends up with two different breakdown structures, one for collecting cost and another for measuring progress. Both WBS and CBS are not aligned because they serve a different purpose to different stakeholders, and they don’t correlate with each other at the adequate level for management, control and reporting purposes. While this concept is not favoured by WorleyParsons, it still may take place due to a variety of reasons, such as:
• different project stakeholders having uncoordinated objectives;
• timing of both structures definition may be different;
• there could be a lack of understanding of differences between an asset driven WBS on one side (operating organizations) and execution strategy driven on the other side (project delivery oriented organizations). An example of a scenario that can easily lead to a segregated CBS/WBS set-up is described below: “ A Class 3 TIC estimate is generated in the Define phase and taken up by the cost control function in the Execute phase. The estimate components are rolled-up to a manageable level of detail and adopted as the Control Budget. Subsequently, cost will be collected and controlled against these CBS elements. Because the elements are rolled-up estimating line-items,
odds are that the cost baseline will be commodity-oriented. On the other hand, the project planning function is tasked with the development of the project execution strategy and division of the project scope into smaller, activity based components. They will use a WBS as the tool, and the result will be the work packages and underlying activities logically connected to reflect the way the project progress will be executed, monitored and reported. (activity based elements)”. In such an environment, the scheduler monitors and expedites progress and completion of the detail project activities, while the cost engineer manages the project cost. Interfaces between the two groups are usually minimal. Pro’s
+ Easier to develop a breakdown structure in isolation. Almost everyone is capable to develop a separate CBS and/ or WBS when you only have to consider your own requirements
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PCDP Module 1 - Introduction to Project Controls. Rev 0
+ Seamless flow of cost data from Estimate Breakdown into the CBS, and from there into Benchmark Database Code Structure
return data across projects for benchmarking or business intelligence reporting purposes
The following graphical representations illustrates how a segregated WBS-CBS coding structures could look like on projects:
+ Relatively straight forward
to develop a WBS when scope and execution strategy are defined
Overall Project Ro ll u p
+ Clients are very familiar with Area / Facility
ld ril ow
Area / Facility
Con’s
/d
this concept
na bil
− No performance measure-
− Regular re-visit of the control
Cost Centre
Scheduling/Planning Function Overall Project
p /d ld ril ow bil
Area / Facility
na
Area / Facility
ity
− Complex environment for Activity Detail
Trade / Discipline
Activity Detail
Activity Detail
Activity Detail
ss re
Trade / Discipline
og pr
and planning to interact/ interface
Page 26
Project Stage
ll u
Project Stage
− No ‘natural’ incentive for cost
Since both WBS and CBS are project specific, it will be difficult to collect consistent
Cost Collection
Cost Management Function
knowledge development of project controls staff — you’re either a cost engineer or a planning engineer
−
Cost Centre
CBS - COST BREAKDOWN STRUCTURE
− One-dimensional skill &
implementing enterprise wide systems.
Cost Centre
Ro
budget by the estimator or quantity surveyor required to confirm the ETC (to-go) and EAC (at-completion) forecasts.
Cost Centre
st
formance-to-date results, and tend to be more of a guessing by involved project stakeholders
Project Stage
Co
− Forecasts not based on per-
Project Stage
ity
ment possible, unable to compare cost and progress against the same breakdown elements
Activity Detail
WBS - WORK BREAKDOWN STRUCTURE Progress Collection
PCDP Module 1 - Introduction to Project Controls. Rev 0
4.7 INTEGRATED WBS/CBS CONCEPTS
The integrated WBS/CBS concept is gaining fast momentum in the Project Delivery community because of its ability to return credible cost and schedule forecasts based on performance-to-date indicators for both expenditure and progress in parallel. Integration of Cost and Work breakdown structures can be achieved via the following two methods: • By having the Cost Breakdown exist within the Work Breakdown Structure.
The lowest level where cost and progress coincide is called the Control Account level:
ning skills. This concept is also known as the “CTR” model is widely used for Asia, Middle East, Australia and some parts of Europe & Africa
The project performance baselines are established in a way that allows full implementation of EVM (Earned Value Methodology) according to the best and recommended practices in project management.
Pro’s
+ Ability to capture and compare cost & progress against the same breakdown elements (see page 28)
In essence, this means capturing, monitoring and control of cost & progress against the same elements at the lowest levels of breakdown structures, and the ability to roll-up and report on project cost and progress (schedule) at any level of detail.
+ Ability to perform Project Performance Analysis (and management).
+ Forecasts-to-go are based on Performance-to-date data & trends (defendable forecast as opposed to ‘best guess’)
From the project controls prospective the Integrated WBS/ CBS concept calls for involvement of personnel with a broader project management and integrated cost and plan-
• By tag-linking ‘projectspecific’ WBS elements to a ’fixed’ CBS (predefined, enterprise wide dictionary of Codes of Accounts).
+ Improved interface between Cost & Schedule groups. Concept requires Schedule and Cost engineers to work together to find a common structure that contains breakdown elements that suit both cost and progress requirements.
Integration via the WBS
ll u p/ dr d ill na
Project Stage
ow
Project Stage
bil i ty og pr
Area / Facility
& st co
Area / Facility
s re pe s( an rm
Trade / Discipline
rf o
Trade / Discipline
) ce
~/~ Author unknown.
Overall Project
Ro
“He who smiles in a crisis has found someone to blame”
To create an integrated WBS/ CBS, the various team functions will have to work together to find a common structure that contains breakdown elements that would satisfy both cost and schedule requirements, taken all execution strategies and client/contract requirements into consideration.
Control Account
Control Account
Control Account
Control Account
Control Account
Example integrated WBS - CBS Cost & Progress
Page 27
CODE
CONTROL ACCOUNT
CONTROL BUDGET
COST TO DATE
% COMPLETE
ESTIMATE TO COMPLETE
ESTIMATE AT COMPLETION
UNDER-/ OVERRUN
CONTRACT ‘A’ A-100
Site Survey
$4,000
$5,750
100%
$0
$5,750
$1,750
A-200
Prepare Site Design
$4,500
$5,600
100%
$0
$5,600
$1,100
A-300
Procurement Equipment/Materials
$1,000
$750
100%
$0
$750
-$250
A-400
Commissioning BTS
$750
$0
0%
$750
$750
$0
A-300
Transmission Connection
$750
$0
0%
$750
$750
$0
A-400
Integrate BTS
$500
$0
0%
$500
$500
$0
$11,500
$12,100
70.3%
$2,000
$14,100
$2,600
TOTAL CONTRACT "A" CONTRACT ‘B’ B-100
Procurement Equipment/Materials
$4,000
$5,250
100%
$0
$5,250
$1,250
B-200
Equipment Installation
$1,000
$1,250
80%
$200
$1,450
$450
B-300
Antennae Installation
$2,000
$1,800
80%
$400
$2,200
$200
B-400
Installation Feeder Lines
$4,000
$3,500
90%
$400
$3,900
-$100
B-500
Testing Antennae Line System
$1,500
$1,600
33%
$1,000
$2,600
$1,100
B-600
Installation BTS Cabinet
$1,000
$800
50%
$500
$1,300
$300
TOTAL CONTRACT "B"
$13,500
$14,200
81.5%
$2,500
$16,700
$3,200
$15,000
$13,500
100%
$0
$13,500
-$1,500
$1,000
$0
0%
$1,000
$1,000
$0
$500
$0
0%
$500
$500
$0
$16,500
$13,500
90.9%
$1,500
$15,000
-$1,500
$41,500
$39,800
85.5%
$6,000
$45,800
$4,300
$39,800
85.5%
$6,000
$45,800
-$1,925
EPC MANAGENT & SUPPORT O-100
Procurement Long Lead Items
O-200
Produce Site Folder
O-300
Site Assessment TOTAL MANAGEMENT & SUPPORT
TOTAL CONTINGENCY (15%) CONTROL BUDGET
$6,225 $47,725
PCDP Module 1 - Introduction to Project Controls. Rev 0
Page 28
EXAMPLE PERFORMANCE REPORT INTEGRATED CBS/WBS
+ Seamless roll-over Control Budget elements - Control Schedule activities
+ Creates a multi-dimensional skill level in the Project Controls Group. (Very effective way to gain an understanding of the complexities of each other’s tasks is to let a Cost Engineer develop and monitor a schedule and a Schedule Engineer manage a Control Budget). Con’s
− Many Clients are not familiar with this concept (see Segregated Concept) and mostly do need some encouragement before they fully comprehend and accept this concept.
− The Contract Strategy needs to be firmed up before the CBS/WBS can be locked in.
− Developing an Integrated CBS/WBS breakdown structures requires all-round EPC Cost and Schedule capability.
− Two-dimensional; slicing & “Few things are harder to put up with than the annoyance of a good example” ~/~ Mark Twain.
dicing, sorting, filtering or summarizing of project data is restricted to the elements and levels of the WBS.
− Project specific, structure, therefore it will be difficult to collect consistent return data across projects for benchmarking or business intelligence reporting purposes Project specific WBS + Predefined Enterprise codes. This concept facilitates a tailormade work scope breakdown for each individual project (through the variable WBS components), but still enables com-
parison, data collection, crossWBS elements reporting as well as statistical & benchmarking analyses across multiple projects via a ‘common denominator’ (fixed CoAs).
As described in section 4.4, Project management practice defines Cost Breakdown Structures in two distinct ways: one, the project specific budget breakdown (CBS = Project Control Budget), and second, the enterprise-wide coding structure (CBS = pre-defined cost codes across the company ). The latter is the basis for the WBS+ enterprise codes model. With this approach, Control Account = WBS + CBS (+ Attributes, as and if required). The Project Management Institute (PMI) defines Control Accounts as follows: “a management control point where scope, budget (resource plans), actual cost and schedule are integrated and compared to earned value for performance measurement “ (PMI PMBoK 4th Edition). While not directly included in the control account, other cod-
ing structures can be used as attributes or mapping codes. When cross-referenced, all these matrices of EPS, WBS, OBS, CBS, RBS, etc., create a variety of control points enabling management and reporting by any selection criteria, level of detail, or angle, a project and/or business may require. (such as shown in the pyramid representation). The next page shows the principle of the Integrated WBS-CBS concept using the examples of page 25 and 27. The project specific WBS+CBS+ attributes method has all the benefits that comes with an integrated WBS/CBS model plus: • It allows for the transfer of data between enterprise-wide systems and tools within WorleyParsons. • it has the potential to collect consistent return data across projects for benchmarking or business intelligence reporting purposes Examples of both WBS/CBS integration models are shown on page 30 - 31.
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PCDP Module 1 - Introduction to Project Controls. Rev 0
Example: CBS exists in WBS
OVERAL PROJECT
1
EPCM
PROCUREMENT & LOGISTICS
FACILITY
FACILITY
2
AREA / SUB FACILITY
AREA / SUB FACILITY
AREA / SUB FACILITY
AREA / SUB FACILITY
3
DETAIL ENGINEERING
PROCUREMENT SERVICES
EPC MANAGEMENT & SUPPORT
PROCUREMENT
LOGISTICS
DETAIL ENGINEERING
4
DISCIPLINE
DISCIPLINE
DISCIPLINE
DISCIPLINE
DISCIPLINE
5
CTR / CONTROL ACCOUNT
CTR / CONTROL ACCOUNT
CTR / CONTROL ACCOUNT
PROCUREMENT PACKAGES
SERVICE CONTRACTS
6
CONTRACTORS’ DETAILED CBS/WBS LEVELS
EPCM CONTRACTOR
VENDORS‘ / SUPPLIERS’ DETAILED CBS/WBS LEVELS
PROCUREMENT & LOGISTICS CONTRACTS
PROCUREMENT
FABRICATION
INSTALLATION / ERECTION
DISCIPLINE
DISCIPLINE
DISCIPLINE
DISCIPLINE
CONTROL ACCOUNT
PROCUREMENT PACKAGES
CONSTRUCTION WORKPACKS
CONSTRUCTION WORKPACKS
CONTRACTORS‘ DETAILED CBS/WBS LEVELS
EPC CONTRACT A
DETAIL ENGINEERING
PROCUREMENT
FABRICATION
INSTALLATION / ERECTION
DISCIPLINE
DISCIPLINE
DISCIPLINE
DISCIPLINE
CONTROL ACCOUNT
PROCUREMENT PACKAGES
CONSTRUCTION WORKPACKS
CONSTRUCTION WORKPACKS
CONTRACTORS‘ DETAILED CBS/WBS LEVELS
EPC CONTRACT B
PCDP Module 1 - Introduction to Project Controls. Rev 0
Plant 3
Example Relational WBS+CBS WBS : a hierarchical structure
CBS : Pre-defined Enterprise-wide codes
WBS + CBS = Control Account
Civil
Unit 2.3
Structural
Area 2.1.3
Buildings
Unit 2.2 WP2.1.1.5.1 Plant 1
Unit 2.1
Area 2.1.2
Equipment Piping
WP2.1.1.4.1
Electrical Insulation
Area 2.1.1
WP2.1.1.3.1 EPCM Services WP2.1.1.2.1
Constr.Indirects Capital O/H
Level 4
Level 3
Level 2
Level 1
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Level 0
WP2.1.1.1.1
Contingency
Project
Plant 2
Project
Unit 2.4
PCDP Module 1 - Introduction to Project Controls. Rev 0
4.8
MANAGING EPCM CONTRACTS
they see fit (don’t dictate how to execute their work), without handing them a ‘blank cheque’ as they still need to fit in the overall integrated WBS-CBS. Another benefit is that cost & progress will flow in ‘bottom-up’, allowing roll-up through the breakdowns of the respective contracts into the control accounts. This also provides more transparency and the ability to drill down to each individual contract and monitor performance for both the overall project as well as the individual contracts.
The role of the EPCm project controller is to manage cost and schedule for all commitments on behalf of the client. Since the EPCm contract is just one of the many contracts, the project controller responsible for the overall EPC needs to take an umbrella-view, and treat the EPCM contractor ( WorleyParsons ) in the same manner as the other contracts awarded under the TIC budget From an EPCM perspective, the level of control is usually the Control Account level.. Below Control Account level, each vendor / contractor is free to develop its own breakdown structure in as much detail as they desire, as long as it satisfies the criteria of data roll-up to the EPC Control Account level. The advantage of this approach is that the respective contractors will maintain the flexibility to breakdown their work scope as
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4.9 CONTROL ACCOUNTS AND COST CENTRES
Both Segregated and Integrated breakdown models are following the same hierarchical principles:
• project actuals are collected at the lower levels in the breakdown structure
• Ability to roll up/drill down along the breakdown levels to suit the required level of detail reporting. Cost Centre - Unit of activity or area of responsibility against which costs are accumulated; defined sections in the corporate system, representing units of responsibility as well as accounting units. (AACEI –RP 10S-90) Cost Centres are not be confused with Control Accounts. A Control Account is the breakdown element in the project breakdown structure where cost
and progress elements coincide. In the segregated WBS-CBS example on page 26, the lowest CBS elements can be considered cost centres, while the control account level is the ‘top of the pyramid’; the overall project level (WBS and CBS will not “meet” until rolled up to project level 1). The examples for the integrated WBS-CBS models on page 30 and 31 shows that the cost centres and control accounts are one and the same. In the Integrated WBS-CBS concept, the control account is the backbone of the cost control and progress reporting system. It is not uncommon, however, that cost and progress are captured at a different, more detailed level, against different WBS or CBS elements. In that event, the project data needs to be rolled up to control account level in order to feed into the integrated WBS-CBS. In other words, there is flexibility to expand the integrated WBSCBS structure below control account level to meet specific cost and planning requirements, as long as they can be summarized back at the control account levels. A good example of this can be found in engineering scopes, where progress is usually captured at the deliverable level, and cost is recorded at the higher level, i.e. by groups or types of deliverables.
“Success always occurs in private, and failure in full view” ~/~ Murphy's Law
PCDP Module 1 - Introduction to Project Controls. Rev 0
4.10 CONTRACT ADMINISTRATION AND COST CONTROL
In a ‘self-performing’ EPC environment, the Project Controller manages the overall project cost and schedule. This includes both the ‘selfperforming’ portion as well as the sub-contracted work scope. Detail management of the subcontracts (variation control, progress verification, invoicing & payment authorization etc) is usually the responsibility of the Contract Administration group, who feeds the cost and sched-
ule updates back to Cost Control and Planning. As mentioned before, in an EPCm environment the coretask of Project Controls is to manage commitments & contracts on behalf of the client. This can cause some confusion between the Cost Control and Contract Administration groups; managing the Overall Project Cost & Schedule performance on an EPCm will be, in principle, the same as managing all the contracts and commitments! One common way to address
this, is to combine the Contract Administrators’ role and the Cost Controllers’ role, and include a Project Controls representative in the EPCm siteteam to verify the contractors cost-, schedule and progress claims as well as the validity of the Change Requests and site instructions. There are various alternative scenarios possible, but the aim should always be to have a single-point accountability for cost and schedule management, and that there is no overlap or ‘double-dip’ of tasks and responsibilities between the Contract Administration and Project Controls functions.
“ Project Management is far too important to leave to the Project Managers” ~/~ David Packard Page 33
PCDP Module 1 - Introduction to Project Controls. Rev 0
5.0 ENTERPRISE CODING STRUCTURES
There are almost as many different Work Breakdown Structures as there are projects. This is not surprising, Work Breakdown Structures are tailored to the specific nature and reporting requirements of projects while, at the same time, trying to comply with financial codes to meet accounting requirements.
Fig. 5.1 Example CTR Concept WBS Code
WBS Level
1-0-00-0-0-00
Project
Project X
1-2-00-0-0-00
Project Stage
Engineering
1-2-44-0-0-00
Area / Facility
Central Processing Platform
1-2-44-1-0-00
Sub Area / Facility Cellar Deck
1-2.44-1-6-00
Discipline
Piping
1-2-44-1-6-08
CTR
Isometrics
Due to their unique characteristics, a project WBS can seldom be recycled in full for the next project. All projects are the product of team endeavors in which the flow of project cost, resource, progress, and other information is essential to project success or failure.
Project Performance management is facilitated by measuring expenditure and progress against the same project breakdown elements. As explained in the previous chapter, the Project Breakdown element where cost and progress coincide is called a Control Account. Within WorleyParsons there are currently two commonly used methods for creating Control Accounts: the CTR Method and the WBS+CBS+attributes method.
e.g
Deliverable Register (Progress) Time Cards - (Manhour Expenditure)
Using the CTR method A CTR (Cost, Time & Resources) is the lowest level in an integrated WBS/CBS where cost and progress coincide. Below CTR level, WBS and CBS can split into separate detailed levels e.g deliverables (WBS) or Expenditure categories (CBS). Because it is a level of the WBS, CTRs are always project specific. To drive some consistency across projects, some companies impose the use of standard CTRs where possible. In terms of return-data generation, the CTR model is considered “two-dimensional”; slicing & dicing, sorting, filtering or summarizing of project data is restricted to the elements and
levels of the WBS. The CTR model is widely used for Engineering scopes in Asia, Middle East, Australia and some parts of Europe & Africa. Fig 5.1 illustrates the principle of the CTR concept Using the WBS+CBS Method With this method, control accounts are a combination of a WBS code and a CBS code.
The WBS code is unique to the project but the CBS must be selected from a company standard list of Cost Codes. Additional code attributes will add more detail to the Control Account. An example is shown below in Fig 5.2
Fig. 5.2 Example WBS+CBS+Attributes Concept WBS
CBS
Attribute (e.g Activity Detail Code)
Code
WBS Level
e.g
Code
CBS Level
1-0-00-0
Project
Project X
W000000
EPCM Services
1-2-00-0
Phase
Execute
W030000
Engineering
07.000 Design Documents
1-2-44-0
Area / Facility
CP Platform
W030300
Piping
07.300 Drawings
1-2-44-1
Sub Area
Cellar Deck
W030302
Piping Design
+
Control Account
Page 34
Code
+
ADC Level
07-311 Isometrics
PCDP Module 1 - Introduction to Project Controls. Rev 0
“The sooner you begin coding the later you finish.” ~/~ Author Unknown
The ‘relationship’ between the project specific WBS and predefined codes/attributes makes it possible to generate flexible, but consistent return-data for individual projects and across multiple projects. It is therefore also considered a multidimensional structure.
CBS+ Attributes).
The WBS+CBS+Attributes model is very common in Canada, the US, Latin America and some parts of Europe.
In addition, there is a growing business demand to collect consistent return data for the purpose of benchmarking and business intelligence reporting.
Global Project Execution Effective project cost and schedule performance reporting is heavily reliant on the coding structure that breaks down the project scope and budgets. As long as projects are executed in a single location/entity, this can be achieved via either a project (or location) specific coding structure (CTR model) or via a combination of a flexible and pre-defined codes (WBS +
However, for projects that are executed via work share across multiple entities, it is imperative to globally align methods, procedures, systems as well as the coding structures that support these methodologies.
The CTR model does not have the ability to accommodate all these enterprise-wide requirements, because CTRs are an integrated part (level) of the project WBS, and it is a keyrequirement for projects to keep the WBS project specific.
CTRs that would cater for every possible project environment. For a company that executes projects globally across all industries, these were not viable options. The WBS+CBS+Attributes model on the other hand, can potentially meet all the these requirements providing that the CBS and some of the key attributes are globally adopted and consistently applied across all projects. The enterprise-codes will then act as a ’constant’ across projects. (see Fig 5.3)
The combination of a WBS code and global enterprise codes has the following advantages:
• It provides the project with a
To achieve this by using the CTR method, it would either require the use of Standard Work Breakdown Structures, or introducing a list of standard
Fig. 5.3
Ability to Control...
Control Account
WBS
CBS
coding structure that meets the specific requirements of the project, i.e. size, complexity, execution strategy, control and reporting requirements, etc. Attributes
EPS
OBS
RBS
CCS
Single project, single entity Multiple projects, single entity Single project, multiple entities Multiple projects, Multiple entities Statistics, Business Intelligence Global Benchmarking Minimum Requirement Required Not Required Project specific Code Structure Location specific Code Structure
Legend (refer to Chapter 4.4) WBS CBS EPS OBS RBS CCS
Work Breakdown Structure Cost Breakdown Structure Enterprise Project Structure Organization Breakdown Structure Resource Breakdown Structure Client Coding Structure
Strategic Directive
Global Code Structure
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PCDP Module 1 - Introduction to Project Controls. Rev 0
• It provides a common understanding and quick interpretation of historic project data and facilitates the collection of this data at a meaningful level of detail.
• It allows for the transfer of data between enterprise-wide systems and tools within WorleyParsons. For these reasons, WorleyParsons adopted the WBS+CBS+ Attributes model as the preferred project breakdown method going forward.
It is designed as a four tiered structure in a 1-2-2-2 coding format with the first character representing the major code (alpha).
porting by its components EPCM Services and TIC codes share the same format. Global Code of Accounts most recent revision is published on EMS (Project Controls - Document PCP-0008)
The second, third and fourth tiers are numeric, as shown below.
For project controls purposes, the Codes of Accounts is always used in combination with a WBS code and some additional project and/or enterprise attribute –codes.
The samples below were taken from the Global CoA dictionary. It shows that the code composition is uniform at any tier enabling sorting, grouping and re-
A Civil Works B --- Spare ---
N O
--- Spare ---
AND ATTRIBUTES
C --- Spare --D Structural Steel
P
Pipelines
Q
--- Spare ---
In order to support this method, a set of enterprise-wide coding structures were developed and rolled out to the Project Delivery group;
E
--- Spare ---
R
Other Direct Costs
F
Buildings & Architectural
S
Construction Indirect Costs
T
--- Spare ---
U
--- Spare ----- Spare ---
5.1 ENTERPRISE CODES
• An enterprise-wide CBS - the Global Code of Accounts (CoA)
• A set of Attribute Codes to provide more detail and reporting flexibility to Engineering and Management services scopes: the Activity Detail Codes (ADC)
• A set of Attribute Codes to provide more detail and reporting flexibility to TIC (Total Installed Cost) scopes: the Cost Type (CT)
• A set of standard Expenditure Categories to be able to specify and distinct project expenditure (EC) Global Codes of Accounts WorleyParsons Global Code of Accounts format is an alphanumeric, seven characters long code.
G Mechanical H Turnkey Packages I
Infrastructure
V
J
Marine & Offshore
W EPCM & Consulting Services X Taxes & Duties
K Piping L Electrical M Instrumentation
Alpha X Tier 1
Y Z
Numeric X
Numeric
X
X
Tier 2
X
Tier 3
Contingency & Escalation Owner's Costs
Numeric X
X
CoA Composition
Tier 4
W000000 EPCM & Consulting Services W 030000 Engineering (and Sciences) W030200 Mechanical W030201 Mechanical Engineering (Example Services CoA)
W030202 Mechanical Design
“Nothing is impossible for the person who doesn't have to do it.”
A000000 Civil Works A040000
Earthwork A040500
(Example Civil Works CoA)
Page 36
Protection & Coating
Excavation A040501
Excavation - Machine
A040502
Excavation - Hand
~/~ Ruud Lubbers
PCDP Module 1 - Introduction to Project Controls. Rev 0
5.2 ATTRIBUTE CODES
The codes contained in the WBS and CoA coding structures are usually not sufficient to address the level of detail that is required to manage and monitor projects. For instance, example 5.2 on page 34 shows that the combination WBS Code 1-2-44-1 and CoA W030302 would only return cost and progress data for the Piping Design scope on the Cellar Deck.; it will not give us the ability to drill down deeper. In order to create that next level of detail, the WBS & CoA codes need to be “tag-linked” to additional attribute codes. These attributes can be projectspecific and/or pre-defined by the company. This section will address the 3 main attribute-codes that are enterprise pre-defined; the Activity Detail Code, the Cost Type Code and the Expenditure Category Code. Activity Detail Codes Activity Detail Codes (ADC) provide additional detail to the W-series of the CoAs (Engineering & Management services), allowing:
• A lower than a discipline level (CoA) of data capture by type of activity or type of deliverable/task performed on projects.
WBS Code (Project Specific)
1-2-44-1 Cellar Deck
• Analysis of project(s) by types of deliverables or tasks performed and their relative ratios, in addition to discipline based breakdown
support development and maintenance of the historical data, benchmarking and engineering norms by type of deliverable or task.
• Analysis of performance at the disciplines’ types of deliverable, i.e. studies, specifications, drawings, etc. by comparison of earned value and actual data capture
At the same time, flexibility is built into the ADCs design in a way that supports all project sizes. For instance, for very small project (
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