Keys to Successful Capital Project Delivery

Early collaboration between team members will help to keep a project on track and eliminate added costs.

By Shawn Buchanan, Vice President/General Manager; and John Trussell, Operations Manager; Graycor Southern Inc.

Capital projects, because of their scope and size, have many “moving parts” during construction. It is important to keep all these parts aligned as the project progresses. Failure to do so results in delays and extra costs. Large-scale capital projects are known to suffer disproportionately from such overruns. A McKinsey report estimated “98 percent of megaprojects suffer cost overruns of more than 30 percent; 77 percent are at least 40 percent late.”1 Therefore, as construction activity resumes, it is imperative to find a smoother project delivery process.

Traditional design-bid-build project delivery, in which the design team makes all decisions and then sends a project to bid, purposefully keeps teams and tasks siloed in order to limit liability. Even as project delivery methods have diversified, with new methods — such as design-build, early contractor involvement (ECI), and integrated project delivery (IPD) — seeking to bring teams together more collaboratively, there is still room for improvement.

Payoffs associated with newer project delivery methods, or with better execution of existing delivery methods, are most likely to occur if collaboration happens early, has full buy-in from all participants, and is iterative.

Early Collaboration

Putting the team together early, and truly weighing the input from various members, achieves an active approach to the capital project as opposed to a reactive one. Creating a formal pre-planning or preconstruction phase is key. Pre-project planning helps identify strategic information that owners can utilize to address risks and commit resources to ensure successful project outcomes.

Many project delivery methods emphasize the importance of preconstruction. For example, ECI, while closely related to design-build project delivery, brings subcontractors to the table even earlier in the process, at the design concept or schematic phase. Such project delivery methods add value because they tap the expertise of the subcontractors, who are often able to contribute unique perspectives, ideas, approaches, and solutions regarding constructability.

• • ESTIMATING AND PROCUREMENT. A wider selection of options may be considered and items with long lead times can be ordered early, leading to improvements in both cost and scheduling. Accuracy of estimates is also improved. Often, the “boots-on-the ground” knowledge of the subcontractor can identify potential cost risks such as constructability, scheduling and sequencing, productivity, or unusual site conditions. The owner then becomes aware of these risks and can address them during the project funding stage.

• • SCOPE AND SCHEDULING. Project schedules can be coordinated with engineering and procurement timelines. Doing so can positively impact the project by shaving weeks to months off the construction schedule.

• • VALUE ENGINEERING. Creative solutions can be developed to bring costs under control. Subcontractors brought on as consultants can identify cost-saving opportunities associated with prefabrication, modularization, and more.

• • WASTE ELIMINATION. By finding ways to minimize waste, such as reducing order quantities and planning efficient routing, designs can be streamlined to simplify both construction and facility operations.

• • RISK IDENTIFICATION. Projects that progress through the construction phase with inadequate information are inherently riskier. ECI and other delivery methods that consult early with subcontractors lay the groundwork of information as well as pinpoint risk areas early, improving risk management and mitigation throughout project execution.

While there are costs associated with bringing contractors on as consultants early in project planning, the costs are mitigated by the fact that the subcontractors don’t have to cushion their price as they would with traditional bid models. Getting involved early informs the contractor’s strategy, which in turn results in the most accurate pricing and more predictable project outcomes. These projects also achieve faster permitting, better regulatory compliance, and fewer change orders — by orders of magnitude. Overall, these projects are delivered on time and on budget more often.

ECI can greatly improve progressive turnover, especially for projects that require extensive startup and commissioning. If the contractor understands the owner/ commissioning needs and the engineered process, the team can make a collective effort to incorporate items into the design that may allow construction to proceed while commissioning begins (for example, by adding in items for safety such as break outs or additional valves). This approach will also keep the focus of the team on the end goal. If hurdles or delays are encountered, the project team can respond with informed decisions.

There are many technologies that support project collaboration. Building information modeling (BIM), file sharing, RFI and submittal tracking, cost reports, safety checklists, scheduling tools, project management software, and more enable communication and accountability. The ways in which they streamline the construction process are almost limitless; they offer quicker documentation, access to real-time information, reduced delays, improved accuracy and, if the software is cloud-based, accessibility from any location. Technology tools have uses during every stage of a project, from planning through closeout. The result is greatly improved project quality.

In addition to cutting-edge project delivery methods and technologies, updating means and methods of construction (especially those associated with mechanical work and advanced welding applications) also offers a pathway to better productivity and quality. Companies can develop formal quality programs, invest in new equipment, or phase projects so that portions are eligible for progressive turnover of assets — which not only alleviates bottlenecks associated with construction resources, but eases the schedule for the operations teams’ testing and commissioning.

An example is improving welding processes by using semi-automatic or mechanized equipment that can decrease the amount of time a welder spends under the hood. The time saved improves all upstream and downstream activities associated with welding (e.g., material preparation and staging, pipe fit-up, weather protection, fitter to welder ratio, etc.).

Team Buy-In

Because competitive, and even adversarial, relationships were built into architecture/engineering/construction contracts for so many years, companies must be open to changing their culture to truly achieve collaboration and open, honest communication.

At the level of owners and senior managers, active participation and a time commitment during preconstruction are required. In exchange for the time invested, owners quickly gain insights that help determine if a project is viable or not. As the project progresses, the owner retains greater control than with traditional delivery methods, since the decisions that were made upfront tend to require fewer alterations than they do with traditional project delivery. Owners also reap the benefits of greater cost certainty throughout the project.

At all levels of each organization involved, team members must have a sense of shared interest in the project outcome. Employees need to fully understand their roles and responsibilities, including how their tasks relate to overall project activities and the scope of work. Giving all stakeholders input and decision-making capabilities will help create shared goals. Benefits accrue not only by improving task-specific efficiencies, but by creating a rewarding work culture, which in turn builds a strong talent pool.

Training on the benefits of collaborative workflows will help all team members form the right mindset and habits. Such training should address:

• • How responsibilities will be distributed;

• • Specific benefits, such as reduced competitiveness and improved trust; and

• • Reassurance that the company will offer ongoing support to ensure the process functions optimally.

It should be noted that for training to reflect the reality of day-to-day experience, owners must be diligent to work with the right consultant at the project’s outset. The consultant chosen should have proven ability to provide proper technical support and superior project management. In addition to formal training, informal sessions or even individual conversations should not be underestimated when it comes to creating confidence among team members.

Companies must be willing to work together, sometimes at a sacrifice. Keeping the long-term picture in mind will help everyone on the team overcome resistance to this sacrifice, since the better project outcomes achieved through collaboration will translate to better client relationships and a better firm reputation.

Iterative Processes

Sophisticated project controls should guide data gathering and analysis. Project controls include initiating, planning, monitoring, communicating, and closing out project costs and schedule. They are iterative processes for measuring project status, forecasting likely outcomes based on those measurements, and then improving project performance if those projected outcomes are unacceptable.

Every project should have some form of alignment document, such as a Division of Responsibility document or Project Execution Plan (PEP). These documents provide a road map of how construction should proceed. A good alignment document will include information on who, what, why, when, and how work gets done, offering guidance over every applicable element of a project. This level of organization is particularly important for heavy industrial projects where safety, quality, schedule, and cost are paramount. The exact nature and details of an alignment document will depend on project scope, scale, complexity, resources, and other factors. Statements of Work (SOWs), PEPs, and other high-level documents should be accompanied by sub-plans such as

those for project procurement (or supply management), project risk identification and mitigation, project staffing, construction execution, cost/budget management, project controls, and project quality. For aligning roles and responsibilities of team members, the Construction Industry Institute (CII) has long provided a useful tool. Known as the Owner-Contractor Work Structure (OCWS), it provides owners with “a decision-making process to identify project competencies, determine whether these competencies are core or non-core to the owner, and decide upon the most effective approach to outsourcing different project competencies.” An updated and simplified version of the OCWS, the Core Competency Toolkit, was issued in 2005. The Core Competency Toolkit provides a practical framework for allocating various project activities among contractors. It also guides hiring and outsourcing decisions. Once processes and documents are in place, the team should conduct ongoing measurement and recordkeeping. Because each step in a capital project is connected to, and builds upon, the previous step, frequent review processes (for document control, materials management, construction work package execution, etc.) should be performed to enPutting the team together sure that work is meeting the criteria early, and truly weighing established by the the input from various group (including the owner) at the members, achieves an beginning of the active approach to the project. Having a capital project as opposed formalized routine for review processto a reactive one. es — even when it comes to smallscale items — ensures the project stays on track. Throughout the project, regular meetings with clients, along with open lines of communication, should be used to manage day-to-day issues. At the end of a project, customer satisfaction surveys help all parties learn from their experience. When adopting a new workflow or delivery method, openness to feedback and change is essential. Documenting lessons learned (both the positive and negative aspects of a project) and applying them to future projects will enable true growth and improvement. Underlying each of the individual keys to success is early — and then ongoing — analysis, control, and risk mitigation for various project variables. Using a combination of formalized structures and responsive team management, owners, consultants, contractors, and vendors can improve upon the historic shortcomings of capital projects when it comes to on-time, on-budget delivery. n 1 https://www.mckinsey.com/business-functions/operations/our-insights/the-constructionproductivity-imperative

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