Innovative Project Management for Large Scale Process Projects

"Innovative Project Management for Large Scale Process Projects"

When we look at today's Oil & Gas industry, we see projects that dwarf anything we have executed in the past. LNG projects in Australia are running anywhere between $10B -$50B, petrochemical companies in the Middle East are talking about projects in the $20B range, Offshore production projects start the meter at roughly $5B - $10B and on and on.  These projects, in addition to being very costly, have all sorts of execution and technical challenges. They are being sited in remote regions of the world, the components are being fabricated in all corners of the globe, technologies are being tested, and design and construction resources are stretched to the maximum or beyond. All of this is happening in addition to the fact that the engineering and construction industry is seeing more resources exiting the industry (retirements, career changes, natural attrition, etc.) than we are bringing in.

Facing this myriad of issues, owners today have to look to innovative execution alternatives to address the challenges facing global mega projects.  Typical considerations include the most effective contracting strategy, techniques for resourcing the team, logistical issues around fabrication, and transportation logistics, etc.  For example, many owners today are considering hiring a Project Management Contractor to oversee the project on the owner's behalf.  This can be effective but there are many pitfalls that need to be addressed in order to make this type of organizational and contracting arrangement work. 

The planning, scheduling and estimating also has its challenges.  The sheer magnitude of these projects means that there are thousands of work packages.  The work packages are segregated into major work areas which all need to come together into a master schedule and defined cost estimate, in order for the owner to fully understand what they are committing to.  The owner needs to truly understand the financial commitment they will be making before approving expenditures of this magnitude.  Most of these projects are so massive that, to reduce the risk to any one owner, they enter into a joint venture arrangement.  This in itself provides issues, as the partners on one project can then become competitors on another project.  Confidentiality, intellectual property, trade secrets, etc. all become issues.

In addition, most of these assets are either entirely or partially owned by local governments and, as such, are mandated by local content, social and infrastructure requirements.  These may include building local schools, hospitals, roads, telecommunication systems, etc. as well as utilizing up to 80% of local labor for the engineering, contraction and operation of the facilities.   

This paper/presentation will address many of these challenges and will provide proven/tested execution alternatives when planning these mega projects.  One will note that, in addition to the above, we are stretching our technical and engineering expertise and trying things that are larger, deeper, stronger, faster, etc.  The combination of the technical and execution challenges makes mega projects very difficult to manage and control.