In a recent pellet plant upgrade project, several challenges caused the project to arrive late and over budget.
The basis of the success of a great project is communication.
Whether it’s verbal or written conveying of people’s roles and responsibilities, when and where things happen, or specific metrics for success, a shared understanding among stakeholders is essential. Another component of this is the value of visual communication. In engineering projects, visual communication can include flowcharts, project schedules, budget tracking, and drawings, all of which are essential to project execution. Without these, misunderstandings, costly overruns, frustrations between project members, deviations in project scope, and utter chaos can occur.
In the example of a recent pellet plant upgrade project, it initially had a clearly defined project scope and budget, leading to the belief that it would be a very manageable, not requiring the rigor and project controls one would typically see. The schedule was simply based on promised equipment deliveries, and installation would begin accordingly. Pretty simple, no calendar needed as some believed. The project budget incorporated a strong reserve for the intended scope, reserved for items or circumstances generally described as “what we don’t know we don’t know”. Thus, budget expenditure controls were not fully in place and should not be used.
In some cases, when subject matter experts think a project is easy or obvious, the tendency may be to “skip on the details” and skimp on things like technical drawings. As this project is a narrow scope modernization, the endpoints and connection points (where the old process meets the new process) were found to be simple and not requiring the additional project diligence from the proper engineering cycle . Projects of a certain size and scope can be led and managed by one person. But when projects are big or small, it’s usually best for a project team to work together to achieve success. Since this project seemed simple, one person was expected to manage the budget, scope and schedule, as well as serve as the technical expert for the design, installation and commissioning. With that in mind, here are some valuable lessons learned and the recommendations that go with them.
Communication: Open, Often and Visual
Establish a project schedule. As the project progressed from groundbreaking, contractors stepped up and sought to begin planning for the installation based on equipment delivery dates. At first everything seemed fine, with some minor slip-ups and setbacks, but then came the notification of bigger delivery delays. To compound these delays, items were delivered out of order and not complete, leaving the installation contractor to figure out how to put the puzzle together. Naturally, questions arose: “When will this happen? When can this be finished? Do we have enough resources to complete it? » If a project schedule had been used to communicate the impact of delays to all stakeholders, better decisions could have been made to reduce costly overruns when having too many resources with not enough work, and vice versa . would have been beneficial when it became apparent that the project deadline for commissioning completed would not be met.
Establish a project budget. For this project, spending was fast and furious, as with most capital projects where expensive equipment requires larger upfront payments. As the project progressed, subject matter experts anticipated great contingency for the initial scope, but didn’t want to miss the opportunity to include a few more items while the factory was down. At first it was just a few things here and there, but the list quickly grew, expanding the scope of the project to encompass the entire factory site. Since the current expenses of the project are not universally known, the budget has turned to the management of the emergency levy to cover the additional scope. When the unknowns became reality, the costs were unavoidable. With more delivery delays, cost overruns have become inevitable. When contingency was used early for increased reach, the entire project went over budget for the duration. Had budget controls been in place, with visibility of current status and an estimate to be completed, various decisions could have driven the project to stay on budget.
Make the plan and work it. A good set of technical drawings is just a tool to communicate what to do and how to do it. He can clearly define the plan and, at the preliminary stage, identify areas of concern that require more diligence. A good example of this was in the planning for the installation of new equipment and conveyors. Equipment locations were pre-determined, but the adjustment of the feed conveyors was simply left to the installing contractors to modify, move and adjust. Leaving this to contractors can lead to misalignment, misconfigurations, and inappropriate design changes.
As the scope of the project increased, more areas of the factory were changed without proper drawing sets. This left the installing contractor to increasingly determine the design themselves, leading to costly rework during inspection and commissioning. Had the plan been defined from the start and adjusted accordingly (e.g. drawing sets approved, then revised and released), the plan would have worked to better align with the original budget and may have mitigated a large portion frustration between stakeholders.
Share project execution. When managing small or simple projects, you may want to manage all aspects alone. As projects grow, it is imperative to use a team to manage the different parts of a project. A project manager or subject matter expert trying to handle everything will lead to missed details, misunderstandings, frustrations among stakeholders and ultimately burnout. Having people take on specific responsibilities within a project and communicating regularly about status, past performance, and what lies ahead can mitigate common pitfalls of projects that go beyond the initial project constraints. Specifically, when a group takes care of budget, scope, schedule, and performance, collectively they can make better and more informed decisions than any one person can alone. As observed, this would likely have helped this project stay under control and finish on time and on budget.
As we seek to have good definition in all phases of pre-project planning, it is essential to know and communicate the plan effectively. When projects are approved for financial expenditure, stakeholders want to know what the risks are and how they are mitigated. Having a good plan that can be communicated, whether written, verbal, or visual, is key to mitigating risk and ensuring project success.
Author: Jeffrey Tuma
Senior Project Manager, Evergreen Engineering Inc.