Throughout my career I have been asked many times the same question: What is the biggest cost control “knob” on projects, within maintenance, on turnarounds, etc.? Each and every time, my answer has been the same: It all comes down to planning. Planning is indisputably the biggest cost control “knob.” If we can get our hands on planning, we can get our arms around the “critical few” cost items.
Everyone in our industry can agree complexity is the enemy. We must have complete engineering and also have great execution plans every time. Project complexity that causes cost overruns must be addressed more effectively. The current history of cost overruns is pervasive.
Very quickly, this trend of cost overruns has to be addressed if multimillion and billion-dollar projects are going to go forward and be efficiently constructed. Experts forecast petrochemical manufacturers will invest hundreds of billions of dollars in the next five years to build as many as 200 new plants on the Gulf Coast.
Overview
- Advanced work packaging (AWP) is a disciplined approach to improving project productivity and predictability. It accomplishes this by aligning planning and execution activities throughout the project lifecycle, from project setup to start-up and turnover.
- Workface planning (WFP) is a work-packaging model for organizing execution in the field of a construction project to achieve optimal craft productivity.
Embracing the concepts
Through the years, while participating in numerous energy industry conferences and seminars, I have been fortunate enough to have encountered many experts in all aspects of our business. There is growing concern related to the time it is taking our industry to grasp, implement and monitor AWP and WFP. Recently I was surprised at a conference of young professionals in our industry when only 10 percent of those in attendance were familiar with the concepts of AWP and WFP. Even fewer of these well-educated professionals — less than 5 percent — had ever heard of work sampling. I drew blank stares from many when a representative from a major consulting firm and I started talking to them about these practices and processes. This led to a facilitated exercise with the groups to help them grasp these valuable concepts.
The exercise
The exercise was to construct a child’s toy, a bridge composed of 58 pieces of multicolored plastic piping and fittings. We divided the group into teams of four and instructed them to put together an estimate of how long it would take them to put this toy together. They had everything they needed, including complete engineering and considerable time to estimate and prepare a construction execution strategy.
Further, based on our discussions, it was decided all participants would actively work sample each other as each individual team was assembling the toy bridge during the workshop so they would understand work sampling and how that process works.
To put the degree of difficulty of assembling the toy into perspective, my 9-year-old son put this toy bridge together in less than 10 minutes with nothing but a picture the first time he ever saw it.
After completing the competitive bidding process, the top three teams were given the chance to execute the project as per their estimate and plan in front of the entire contingent of approximately 35 workshop attendees per class. As you can imagine, the entire room was quite loud and entertained as each team assembled the toy bridge according to their estimate and plan while being work sampled every 15 seconds.
After each of the first three teams had not managed to assemble the bridge in well over 10 person minutes (participants x minutes = total person minutes), we allowed the original low-bidding team to attempt the exercise again with 20-percent less time than their original bid. The difference in this attempt was they now had some familiarity with the toy and received approximately 60 seconds of pointers from a subject matter expert on this particular toy assembly. After receiving a few suggestions, the team succeeded in assembling the toy very quickly. We broke down the work sampling analysis into three areas: primary time, secondary time and recoverable loss time. Primary time was actual work time, secondary time was devoted to planning and sorting the pieces, and recoverable loss time was anything that wasn’t covered within the scope of primary or secondary time.
When the original group tried a second time, their effective tool time went from less than 30 percent to between 60 and 70 percent, and the new recoverable loss time went down significantly. They had all the elements of WFP because they had some experience working with the toy and incorporated a WFP plan. It was a powerful example to them about planning.
When we asked the successful group why it looked so different so quickly after all those previous failed attempts, the answer was unanimous: They had a great plan. I’ve utilized this bridge-building exercise with over 750 teams. The initial success rate without WFP is always the same, which is exactly 0 percent. (This happens every time putting together a child’s toy).
What is the value of an hour?
AWP and WFP is a living, breathing plan that evolves and improves. Implementing such a strategy involves processes, tools and a commitment to improvement. One invaluable tool is “engagement” boards. These are movable whiteboards located in lunchrooms and breakrooms that have the work implementation plan scheduled out by day for four weeks in plain sight of the crews who will perform the work. Each day, multiple times the workers get a chance to affect the plan by adding their input, which builds an engaged team environment.
Technology is another tool whose value cannot be understated. On any given construction site, effective tool time represents approximately 35-40 percent of a worker’s day while 50-plus percent of the remaining time in a worker’s day is spent waiting or traveling.
Radio-frequency identification, or RFID, technology makes it eight times faster to find materials. It also tells us where equipment is, how many hours it has run, when it needs to be serviced and where it can be serviced, without having to dispatch supervisors to track down locations and utilize critical personnel.
The value
What is the value of an hour saved per day on the daily cost of a project? The answer is about 20 percent when indirect and direct equipment is factored into the hourly cost. It has been objectively calculated RFID technology alone will yield an extra hour of effective tool time each day on a project.
Efficiency strategies
Strategies and tools for growing the “new” pie:
- Vertical contracting
- Incentive contracts, all levels
- Multiskilling/multicrafting as a requirement
- Modular construction/performing more work offsite
- Technology
- AWP and WFP
Summary
The key difference in the “Genesis” pie and the “new” pie is the increased efficiency related to effective tool time (60 percent) and planning (20 percent).
There are many elements rolled into the planning. A few examples are: crew team huddles after each break in work activity to enhance engagement and improvement opportunities, time allotted for gang box and housekeeping “grading,” time for management “listening walks,” designated runners so foremen can be with their crews in the field 100 percent of the time, committed time for work sampling, etc.
A good plan is a great investment
Documented benefits include minimums of a 25-percent productivity improvement, a 10-percent decrease in total installed cost, a 20-percent increase in quality, more predictability of costs, as much as 30 percent in improved safety and performance, and improved contractor and stakeholder relations.
The biggest cost control “knob” more than ever is planning. Through AWP, WFP and these complementary tools and strategies, we are able to achieve all the aspects of the “new” efficiency pie.
For more information, visit www.jvdriverusa.com or call (866) 391-5816.
