Technical Program Abstracts

(TCM) Total Cost Management

(TCM-2392) Reviving Entrepreneurial Thinking and Behavior in Capital Projects

Authors: Scott Whitbread; Nathaniel D. Greene

Abstract: As capital project development has become increasingly structured and formulaic, to enable scalability and consistency, many projects have become devoid of the entrepreneurial thinking and behavior required to minimize costs and maximize returns. Adherence to industry best practices has become a primary measure of success for a project team, and the sense of individual responsibility for the project’s ultimate financial outcome has largely dissipated; each individual can succeed by performing their scripted activities “well”.

This paper identifies five key barriers that must be overcome to revive the entrepreneurial practices in any project, and discusses a case study where overcoming these barriers led to a significant increase in project value. The barriers are:

1. Accepting false trade-offs between cost, quality, and schedule,

2. Over-relying on benchmarks,

3. Failing to determine the value of improvement ideas,

4. Dismissing proposed design changes prematurely, and

5. Maintaining competing incentives to hide money in the project case.

 

(TCM-2500) The True Power Of Estimate And Schedule Bases Documents

Authors: Robert Mathias; Paul G. Williams

Abstract: It is well understood that a project’s cost estimate and schedule become more refined as the project scope progresses through the early stages of the Owner’s Front End Loading process. What is not as well understood is that simply moving through certain FEL phases does not automatically guarantee the accuracy of the estimate and schedule. This accuracy is supported by the level of scope definition, the data available, the team developing the deliverables, etc. In today’s world, Owners rely more and more on outsourced resources to develop these FEL deliverables, and it is imperative that the above-mentioned estimate/schedule influences are documented and well-understood by all stakeholders receiving the deliverables. It is equally as important to know what was involved/included in the development of the estimate/schedule (and what was not), as it is to get a final estimate and schedule.

This paper will provide the Estimate and Schedule Bases Document content, coverage and application, as well as case studies on how these documents are applied in today’s Lean Owner heavy project delivery Sectors.

 

(TCM-2503) The Cost To Save The World

Authors: Desmond Orsinelli, PE CCP CEP

Abstract: OK, the world doesn’t need saving.  But maybe we do.  We rely on a stable climate currently at risk due to human emissions.  So what do problem-solvers do with risk?  They evaluate the costs of mitigation; then act.  This paper reviews the cost of proposed legislation that would place a small, but annually increasing fee on fossil fuels (on a $/ton of greenhouse gas emissions basis) and place a similar fee on emission intensive imports.  The collected money would be “revenue neutral”, that is, not congressional revenue.  Instead it is assumed cut into equal monthly checks to each household in the IRS database.   An economic model of the first 20 years under such legislation is reviewed, and compared with other studies and British Columbia’s real world example.  So what would happen to our economy if we wean ourselves off of fossil fuels? And, how much would it cost to save the world?

 

(TCM-2534) Mining and Mineral Processing Uniform Cost Coding Structure

Authors: Tas Hellis

Abstract: The global mining and mineral processing industry lacks a standardized cost coding structure. Without a standardized cost coding structure for mining and mineral asset development projects, it is difficult for owner, contractor, and investor companies to collect and collate project cost data. Such data are vital to efforts to improve capital project cost performance. To fill this industry-wide void in cost coding, a joint industry group was commissioned with reviewing existing codes and standards and proposing a uniform coding structure. This paper describes the drivers behind and the approach followed in developing the Mining and Mineral Processing Uniform Cost Coding Structure (MMP-UCCS) [1], as proposed by the industry group. Mining and mineral processing industry owner companies and contractors are encouraged to use the proposed UCCS to facilitate reconciling project cost records, streamlining of cost databases and facilitate reliable benchmarking and evaluation of mining and mineral projects with the view of developing the MMP-UCCS into an industry recommended practice.

(TCM-2535) Portfolio Scheduling - How to Achieve Success and What Does Success Look Like?

Authors: John C. Philbrick, PE CCP; Francisco A. Cruz Moreno, PE

Abstract: Initiated, implemented and maintained properly, portfolio scheduling can provide invaluable information to its users.  This paper will provide examples of some of the benefits that portfolio scheduling can achieve.  The paper will also discuss the implementation of some of the key processes required to ensure success in the development of a portfolio scheduling system.  Some of the key components to the development of successful portfolio scheduling systems are engagement of the project stakeholders; uniformity in the project schedules; quality of scheduling; and effective dashboards, tables, and reports that deliver useful data to the end user in an easily discernible manner.  The goal is to provide insightful and actionable information to the executive management responsible for managing a complex and seemingly disparate portfolio of projects.  The authors have drawn upon their experience working for a large electric utility and a government agency with a multi-billion dollar per year work program.

 

(TCM-2600) Data Integration for Enterprise Project Control

Authors: Ochamuke Ejofodomi

Abstract: Project control can be classified as the quantitative arm of project management. Organizations, whose businesses are focused on capital intensive projects, rely heavily on data interface between project control and other corporate disciplines such as commercial, accounting, procurement and administration. However, a centralized depository for project data is still a technical and strategic encumbrance at the enterprise level. For most organizations, project control application is dependent on ERP software and manual computations of spreadsheets which hardly convey data interpretation as a single version of the truth. This paper aims to develop a novel methodology for collating and analyzing organizational project data into a web based Enterprise Project Control (EPC) system. The project control system is described with emphasis on its methodology and data flow process. A modular structure is developed providing a robust technical functionality for data integration and analysis.

 

(TCM-2625) Analysis of a Series of Potash Project Successes

Authors: David M. Myers, P.Eng.

Abstract: The Potash mining sector experienced a major boom in the past decade, during which AMEC Foster Wheeler provided Engineering, Procurement, Construction Management (EPCM) services for a series of projects totaling $10 billion CAD. The projects followed a natural progression in size dictated by their economic return on investment, and grew with and finally exceeded local construction capacity. They spanned general economic cycles and unexpected global events. As such, the projects provide a rich data set to analyze the effects of changing market conditions, competing projects, and management strategies compared to project size. This paper summarizes these projects' characteristics relating to cost performance in a highly challenging business environment.

 

(TCM-2678) Project Controls Management for Mega-Projects

Authors: J. Michael Devine, CCP

Abstract: Typically, a mega-project can be classified as a project spanning several years and costing more than one billion US dollars [1, p.15]. Projects of this duration, size and cost are most often associated with very large civil works, research, military, transportation, or aerospace. As our technology, science, research, manufacturing and engineering abilities have evolved, more and more large projects, previously not feasible, or not possible, are now undertaken. One should note that many, if not all, mega-projects have endured considerable schedule and cost overruns; some as high as 1900% [2, p.15]. As one might imagine, in this type environment, emotions can run high and, like it or not, the Mega-Project Controls Manager (M-PCM) is often the focal point. The term “don’t shoot the messenger” [3, p.15] is very appropriate.

This paper will provide insights to the M-PCM for delivery and survival in the very political and often harsh mega-project environment.

 

(TCM-2693) Economic Benefits of Green Buildings

Authors: Dr. Satish B. Mohan; Benjamin Loeffert

Abstract: Buildings account for 40% of the nation’s CO2 emissions, 68% of electric consumption, 41% of total energy use and 14% of water consumed in the United States; these trends are unaffordable and must change. Studies have shown that green buildings can save approximately 30% in energy usage and lead to increased worker productivity and occupant’s health benefits. Also, green buildings have the potential of lower insurance premiums, lower waste disposal charges, reduced water and sewer fees, and increased rental rates. However, their initial cost can be 1 to 5% higher than the conventional buildings. These additional initial costs are recouped in energy savings over a few years. This paper gives the design and construction steps of green buildings, and presents the results of a few studies done on the short term and long term costs and savings of green features. Actual data of four green buildings, built in various regions of USA, has also been included. All the sampled green buildings cost an additional 2-3%, and are consuming significantly less energy of up to 33%.

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