STF Feature: Delivering Successful Cable Projects

DELIVERING SUCCESSFUL CABLE PROJECTS

BY GREG OTTO

INTERDEPENDENT PROJECT WORKSTREAMS

Delivery of successful submarine cable projects requires diligence across a multitude of skills as there are numerous sub projects within even the simplest of submarine projects. Aside from delivering the “System Supply Contract” which typically delivers beach manhole to beach manhole along with transmission gear, other critical portions of the project include:

• Governance – Informing key stakeholders so they can make critical decisions;

• Supply Contracts – going to market for all portions of system delivery and resources;

• System Definition - defining end to end functional and non-functional requirements;

• Land Acquisition – securing land rights for all onshore infrastructure and routes;

• Onshore Construction – engineering and constructing outside plant and cable sites;

• Permitting – obtaining permits and licenses for system construction and operations;

• Commercial Agreements – obtaining customer and end user financial commitments;

• Operational Readiness – Having contracts and skilled resources to operate post RFS; and

• Terrestrial Interface – Constructing interface to terrestrial telecommunication services.

As is further understood through deeper analysis, the above workstreams are highly interdependent and require an overarching project delivery methodology to be in place and referenced by project teams.

Examples of interdependencies are:

• Procurement process requires significant completion of the System Definition in order to properly and completely detail scope for potential suppliers.

• Land acquisition is required to confirm System Definition and specifically route and shore end construction along with completing onshore permitting.

• Operational readiness is needed to be in place once RFS is achieved if not prior so that the system can immediately be put into service and generate revenue and value for customers and stakeholders.

• Onshore facilities and routes need to be in place prior to cable landing so that final splices and testing can immediately be completed to order timely repairs as necessary.

THE DELIVERY FRAMEWORK

While it would be ideal to close each issue prior to moving on to the next issue, this could result in projects taking twice as long and losing significant front-end value. To consolidate this schedule, a certain level of risk has to be carried and managed through the project. This is where the project delivery methodology establishes its role. It provides a framework under which the project operates and provides guidance and direction to the project team. At a minimum, the project delivery methodology should document the following six items:

1. Documenting critical workstreams and their critical interdependencies;

2. Defining criteria and methods to achieve acceptable levels of confidence for interdependencies;

3. Risk management plan using a model that identifies risks with prevention and contingencies actions;

4. Organization and resource plan including internal and external resources;

5. Procurement strategy including how work stream are aligned to supply contracts; and

6. Governance model including criteria for decisions and information requiring notification and approval from governance.

Establishment of the project delivery methodology starts day one with the project during the earlier project development phases. It will be common for there to be open items in the early versions of the methodology and how and when these are to be resolved. For example, the first approved version will focus on procurement strategy and may have some decisions such as an open item on the approach for onshore construction which will be resolved based on the responses received. However, the strategy will explain this and indicate how the go to market will be structured to deliver on this decision such as RFP requests to multiple types of companies such as terrestrial and marine providers.

The methodology is refined throughout the project with several work-in-progress versions through the time when the project goes into full execution mode. At this point, the methodology should be generally complete and accepted. In addition, it should be written in alignment with the outcomes to date so as to be relevant. Ideally, the stakeholders as part of governance will approve this methodology as part of the approval package including the supply contracts, system definition, project plan and budget.

A TAILORED APPROACH

While project delivery methodologies will be similar across many projects, it is imperative they be tailored to each project based on the specifics of the project such as complexity, locations involved, desired project schedule, projects risks and issues and so forth. One project might have pre-existing landing sites while another project will be establishing landings in a brand new location that have never seen a submarine cable. In the first case, the risks are lower, and the process is better defined allowing for a more efficient and later start to the work as the risk is highly mitigated (prevented) on the front end.

Whereas in the second case, the risks have no inherent mitigations and must be fully managed and influenced the by the system owner. Therefore, the work needs to start early, as soon as the preferred landing sites are identified so that investigation, engagement, and negotiation can take place in order to get into the formal acquisition and permitting process. The last thing a project wants is a boat hanging out for weeks or months 100 km offshore waiting to make a shore ending to an unknown place – and yes it happens at the system owner’s expense. In a similar way, if a brand new operational team is to be utilized, staffing, and training the team will take much longer and benefit from higher levels of involvement with the project especially during the latter construction and commissioning days prior to RFS. These types of interdependencies and timing should be documented in the delivery methodology and project plan.

A FOCUS ON PROJECT LIFECYCLE

Starting with the early days of the project and all the way through completion of the system and movement into operations, strong project management skills with a common project manager is critical. While it is enjoyable and appropriate to highlight and celebrate successes and on track progress, Project Management needs to focus on:

1. Having a viable and achievable project plan;

2. Tracking, updating and actively mitigating risks;

3. Understanding, prioritizing, and developing plans to resolve open issues;

4. Monitoring and adjusting address project team efficiencies and conflicts;

5. Tracking and forecasting of financial and other benchmarks;

6. Quality assurance and reviews to ensure work meets specifications including field reports

7. Tracking and managing parties’ compliance with supply contracts including payments; and;

8. Raising and managing issues with stakeholders.

The above activities mean that in reality, most project managers will focus on what is not quite right and figuring out how to deal with it and get it back as close as possible to the desired outcome. As projects become larger and span wider geographies, the project team demands will grow with virtual international teams and access to a multitude of skillsets including technical, financial, legal, procurement project management, documentation, and communications. Smaller projects might be able to use multi-disciplined individuals as the work is limited in depth and breadth.

Certain projects may dictate the need for highly skilled with local knowledge dedicated resources for specific topics such as permitting and licensing related. Each project will have to truthfully evaluate those needs. Another example would be if the project interfaces with any specific industries such as offshore energy such as oil and gas platforms which require a whole other set of engineering and project management skills to integrate technically and coordinate with the facilities.

This also means that project resources will vary throughout the project as work proceeds, risks and issues are closed, new workstream ramp up and so forth. The project manager and delivery methodology will have to capture and manage these changes.

ASSESSING REALISTIC PROJECT COSTS

In discussing the project methodology, it should become apparent there is a significant amount of additional cost a project will incur during the life of the project. Good project teams will acknowledgethis early and ensure that an estimated 5-10% of the total costs is related the internal project management (including use of third-party consultants and representatives) is included in project financial plans. These costs not only cover personnel but also their travel, documentation, and other related costs.

As previously mentioned, project team resources may and most likely should include external experts. External experts although appearing more expensive (hourly rate) provide significant advantages which can lower overall project costs especially benefits such as:

• Already trained and ready to deliver – reduces training time;

• Used as adjunct staffing – no longterm commitments required or expected;

• Familiarity with suppliers – able to clearly communicate and represent project needs and expectations;

• Existing methods to manage and address issues – high level of confidence in positive outcomes; and

• Dedicated effort – reduced impact to other system owner initiatives and needs.

Projects should be careful to avoid thinking of just the “System Supply Contract” and instead ensure all critical contracts receive proper attention throughout the project lifecycle as to ensure they meet project needs and properly interface with other contracts.

DEVELOPING PROCUREMENT STRATEGY

In developing the procurement strategy, it is always a balance between several factors to decide how many supply contracts to execute. Projects should be careful to avoid thinking of just the “System Supply Contract” and instead ensure all critical contracts receive proper attention throughout the project lifecycle as to ensure they meet project needs and properly interface with other contracts. Each item, service and individual to be hired by the project needs to have an underlying contract. Some of these may be as simple as using a standing master services agreement while several may require a formal RFP process including issuance, response, adjudication, negotiation, and award such as those related to:

• Desktop Study;

• Marine Survey;

• Wet Plant;

• Dry Plant;

• Marine Installation;

• Onshore Construction;

• Industry Unique Work (e.g., oil and gas riser);

• Project Management Team; and

• Operational services.

Often, the above will be packaged into fewer contracts though they can be done as individual contracts. The decision on how many contracts to issue will balance between:

1. Scope and capability of internal resources to manage multiple contracts;

2. Model best able to manage project risks such as specific/unique project risks;

3. Local concerns including perceived constraints and limitations; 4. Financial analysis and overhead costs versus internal overheads.

Where multiple contracts are issued, then the system owner becomes responsible to identify and capture the interdependencies between the different contracts. The most critical of these should be captured in the project delivery methodology – procurement strategy. These interdependencies often take the form of:

• Timing – Supplier A needs to complete Item A by Date X so Supplier B can do Item B (e.g., Supplier A must complete CLS by a specific date so Supplier B can install SLTE)

• Technical Interface – Supplier A must provide Supplier B information on Item X by Date Z (e.g., Supplier A must supply requirements for BMH to

Supplier B by a specific date)

• Scope Demarcation – Supplier A will do XYZ, and Supplier B will do MNO e.g., Supplier A will provide the BMH installed, and Supplier B will install cables and complete splice)

The more contracts there are, the more points of interface that have to become documented. Otherwise, the system owner will attempt to put a lot of risk back on the suppliers which they will return in the form of increase project cost thereby reducing the financial benefit of a piecemeal contract. The ability to manage this will be most directly related to the skills and level of resourcing including external resources.

As a general rule, though work that is specific to an industry should typically be left to those industry experts such as engineering a new riser for an offshore deep-water platform. This work will be governed by facility owner standards and processes which will be rigorous and time consuming with significant overhead. Direct management of this work will most likely be the most time and cost efficient as some suppliers will either underestimate and under deliver or heavily overestimate their risk and highly elevate cost position.

OPERATIONAL READINESS

Before closing out, it is sensible to say a few words on operational readiness. A $200M investment in a submarine cable system can only realize an ROI if the system operates reliably for decades to come. The wet plant or marine maintenance program is vital as repairs will take weeks to complete and minimize the mobilization time, ensuring a repair response is available and is critical.

Proper evaluation of repair options including using consortium approaches or other private and dedicated solution needs to be determined in the first quarter of the project so that allowances can be made in the procurement process, including extended service and warranty features from suppliers. Actual implementation may be delayed into the last quarter of the project.

In addition to the marine, reality is that most issues on a submarine network will occur onshore at the CLS or Data Center, such as:

• Power systems – loss of utility power, failure of generators, battery failure;

• Environmental systems – failure of HVAC and dehumidifiers;

• Grounds maintenance – maintaining safe, secure, and aesthetically pleasing; and

• Equipment failure – failure of SLTE, PFE and similar.

To deal with these issues, NOC facilities, monitoring systems, remote management tools (element management systems) and underlying networks need to be implemented. Furthermore, trained resources at the NOC and for field repairs need to be brought on board and trained with general and system specific knowledge. The recruiting, training, and onboarding process will take several months and should start during early phases of detailed engineering. This also allows for requirements from equipment suppliers to be addressed early. All of this operational work will be captured in an operational strategy which will be a deliverable by the project in the early days, ideally prior to system approval, though some details will be forthcoming. Capturing a high-level schedule for operational readiness in the delivery methodology will help to ensure focus on this work is not lost during the engineering and construction. Often a dedicated team will focus on this work.

CONCLUSION

The development of a submarine cable system and movement into operations requires work across many different workstreams. The best way to capture these so all project members can understand the project is through the creation of a project delivery methodology. Without documenting the less obvious projects so progress can be managed, the immediate and most pressing issues as well as the ones individuals are most comfortable with will take all the attention. This leads to last minute and less than ideal outcomes for the project as a whole.

Developing and then executing a fit for purpose project delivery methodology using skilled, experienced, available, and capable resources with strong project management is the best tool in a system owners’ arsenal to deliver a successful submarine cable project.

Greg Otto, WFN Strategies Technical Director

GREG OTTO is the Technical Director for WFN Strategies and holds a Bachelor of Science in Electrical Engineering. He has worked with multiple Oil & Gas companies during his career. Besides working for Shell Oil and BP, Greg was a co-founder of a consulting company and is currently working as an independent consultant. Greg was the program leader on technical and commercial matters on BP’s fiber in Gulf of Mexico Fiber and has supported similar projects in multiple countries. In addition, Otto is the President/CEO and firefighter/medic for a nonprofit company where he furthers the use his entrepreneurial skills and capabilities to help others.

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