You must log in to edit PetroWiki. Help with editing

Content of PetroWiki is intended for personal use only and to supplement, not replace, engineering judgment. SPE disclaims any and all liability for your use of such content. More information


Monitoring and reporting progress and cost of projects

PetroWiki
Revision as of 14:36, 16 July 2015 by Denise Watts (Denisewatts) (talk | contribs)
(diff) ← Older revision | Latest revision (diff) | Newer revision → (diff)
Jump to navigation Jump to search

The project team is now fully assembled, and it is time to start the physical project work with all members becoming involved in the engineering, purchasing, and contracting effort. These accomplishments must be measured and reported to determine the efficiency of the work and the true financial impact of the project.

Progress

Real progress on a job is determined by a counting of such things as the number of documents delivered vs. the total number or the number of welds made vs. the total number required. Progress is not measured by comparing the money spent vs. the money allocated. The requirement for real progress monitoring increases as the job grows in size and complexity. How to account for and measure real progress is a topic not discussed here because of its complexity and the cost of accomplishing it, but your engineering contractor can assist you with this task if necessary.

Monitoring costs

During this period, you need to quickly establish a project cost monitoring method. The word "monitoring" is used by choice because "cost control" is accomplished by timely and effective project execution and procurement methods. As shown in Fig. 1, the optimum time to affect the cost of a project is in the concept and front-end engineering phases, not by itemizing what you have already spent or committed in the detailed design and following execution phases. See Table 1 for a listing of some items that are helpful to keep in mind during project execution.

It is very important that a project manager not fool himself or herself by thinking that "we will save enough money tomorrow to cover today’s overexpenditure." Cost monitoring will allow you to determine quickly the quality of your AFE estimate and indicate trouble spots that require your personal attention. If an item costs significantly more than the original estimate, the project manager should determine the reason for the difference and assess any other potential project impacts that may be caused by similar reasoning.

An example cost status summary is shown in Table 2. This is based on the original cost estimate that is maintained for comparison. Columns for "committed" (signed PO amounts), "invoiced to date," and "estimated final costs" (accounting for prospective changes) are added. It is important from a presentation standpoint that the cost monitoring report be an extension of the original project cost estimate and that it be updated weekly or monthly. Note that, as new information becomes available, the updated estimated final cost of each item is inserted, and these are summed to determine the new estimated total project cost. The cost monitoring report should also clearly note any project equipment or services not considered in the original estimate as a new line item. Any estimated overexpenditure outside AFE tolerances should be reported to management immediately with a short explanation of the reason for the overexpenditure.

Table 3 shows an example project status report format. The centerpiece of this report is the cost control report. The project status report is the vehicle that you will use to formally communicate project progress to your management and the partners. It should cover the necessary topics (cost and schedule) simply but completely. Problems, their solutions, and any cost or schedule impacts should be presented in a clear, concise manner as soon as they are recognized. If a problem and its solution require more explanation than can be discussed in several sentences, attach a short discussion to the back of the report explaining the issue.

Managing personnel

With your project team in place and actively working on the project tasks and your cost monitoring and reporting functioning, you should now concentrate on personnel management techniques. It is important that you have face-to-face conversations with the project team supervisors every week to discuss the project progress in more detail than can be handled with e-mails and phone conversations. The formality of this meeting is up to you, but at the least, an action item list noting the required action, the person responsible for handling the action, and the completion date should be compiled and circulated to the attendees and project team supervisors.

Change

One thing to remember now that the project is in the execution phase is that one of the best ways to stop project momentum and efficiency is to allow change for change’s sake. Unless you find that part of your plan is wrong and will not work as planned, do not change. You will constantly be shown "better and cheaper ways" to do things that are already in progress. You should review each proposal carefully and be very resistive to any change. Any change will disrupt more plans and have greater schedule impact than you initially can identify and can lead to errors in engineering, which result in costly change orders and lengthy schedule impacts that are not immediately evident.

Communication with vendors

It is important that a project manager visits the engineering contractor and vendors often. During these visits it is important for you to determine that everyone on the project is working to the same goals and is "playing off the same sheet of music." Ask the fabricators and equipment suppliers what documents and drawings they are using for their work and assure yourself that these are the correct versions. Do not approve scope and execution plan changes without discussion with your boss and engineering company manager to assure that you see the full picture. Do not change the project equipment for a "better way" unless the original equipment was incorrect or would not function correctly. Changing project scope or equipment on the fly is one of the better ways to assure project failure. Do not be afraid to say, "I don’t know, but I will find out quickly," and keep your promise. Pay attention and ask questions that will increase your knowledge of this type of work and try to understand how the contractors operate and what generates their cash flow and profits. Good people to talk to are the engineering contractor’s engineering manager, operations people, and the shop and field inspectors. This is the time to learn how the system is supposed to work as the final exam is on the horizon.

Commissioning and startup

In the course (not necessarily a smooth course) of the project, the purchase orders (POs) will be turned into fabricated equipment and purchased materials and shipped to the site. Working under service contracts, field labor will clear the site and pipeline right-of-way and install the various pieces according to plans furnished by the engineering company. Now comes the final test—how to make it work. This part of the project is known as commissioning and startup and is the payoff for all the previous work. It is important enough that it should be considered in all phases of the project design and that a full-time instrument engineer or technician should be assigned to help accomplish the task.

Commissioning is the site checking of all equipment installed on site to ensure final compliance with the design and specification standards to which it was fabricated, purchased, and installed. Shop inspections and factory acceptance tests are considered precommissioning by this definition. The commissioning manager’s job is to confirm that the equipment is installed as per the design, is correctly tested, and is safe for the introduction of hydrocarbons. This includes:

  • Piping
  • Electrical
  • Instrumentation
  • Safety equipment

Planning, executing, and writing the startup and operating manual is a full-time job over the last half of the project schedule and maybe even longer if the installation is complex. All commissioning and startup documentation should be reviewed by the appropriate project team members before work begins. The commissioning manager is assisted by the site installation contractor’s personnel. It is very important that the installation operator be involved in this part of the project. This is his or her chance to do a final check and plan the operation program.

When the commissioning manager has completed his or her work, the installation operator confirms that it is done and begins the startup procedures. The installation operator will be in charge of the installation startup and has final approval over the commissioning manager’s work. When the installation operator is satisfied that the commissioning is complete, he or she will start up the facility. This is the final test of the project. The installation operator is assisted by members of the project commissioning team for the initial startup.

References

Noteworthy papers in OnePetro

Use this section to list papers in OnePetro that a reader who wants to learn more should definitely read

External links

Use this section to provide links to relevant material on websites other than PetroWiki and OnePetro

See also

Project management of surface facilities

Project execution of surface facilities

AFE and initial project cost estimate

PEH:Project_Management_of_Surface_Facilities

Category