MSc in Marine Technology (International) Cover Sheet for Assignment Submission Student Name: Aproop Ponnada Student Registration No: B5066065 Module Code: MAR8202 Module Title: Marine Project Management Assignment Title: Parametric project assessment for a CALM buoy EPC contract COVER NOTE This report has been written as part of the requirements of the module in “Marine Project Management”. The module is part of the MSc. Program in Marine Technology at Newcastle University, Singapore under the school of Marine Science and Technology (NUIS MAST). The views expressed in this report are solely my ownership and responsibility and are not necessarily shared by the organizations involved in the case study. For confidentiality purposes, the names of entities, as well as any indirect references (for example document numbering) have been omitted. I would like to thank the module leader, Professor George Bruce for his supervision and valuable insight into the report writing process. Reference materials used as a basis for this report are duly acknowledged and listed in the reference section. Aproop Dheeraj (Student ID: B5066065) 2016 Cohort MSc. in Marine Technology (By CPD modules) MAST, NUIS
Transcript
MSc in Marine Technology (International) Cover Sheet for Assignment Submission
Assignment Title: Parametric project assessment for a CALM buoy EPC contract
COVER NOTE This report has been written as part of the requirements of the module in “Marine Project Management”. The module is part of the MSc. Program in Marine Technology at Newcastle University, Singapore under the school of Marine Science and Technology (NUIS MAST). The views expressed in this report are solely my ownership and responsibility and are not necessarily shared by the organizations involved in the case study. For confidentiality purposes, the names of entities, as well as any indirect references (for example document numbering) have been omitted. I would like to thank the module leader, Professor George Bruce for his supervision and valuable insight into the report writing process. Reference materials used as a basis for this report are duly acknowledged and listed in the reference section. Aproop Dheeraj (Student ID: B5066065) 2016 Cohort MSc. in Marine Technology (By CPD modules) MAST, NUIS
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TABLE OF CONTENTS 1 INTRODUCTION ......................................................................................................................... 3
1.1 OBJECTIVES ...................................................................................................................... 3 1.2 LIST OF ABBREVIATIONS AND DEFINITIONS ................................................................ 3 1.3 REFERENCE LIST ............................................................................................................. 3
2 OUTLINE OF ASSESSMENT SYSTEM ...................................................................................... 4 2.1 BUILDING THE CASE ........................................................................................................ 4
This report aims to establish a well-rounded rating system of a recently concluded turnkey contract for supply of a CALM buoy to moor a FSO unit in the Gulf of Thailand. The provisions under the contract, covering various aspects risks, sub processes etc. are analyzed and rated on the strength of each of these aspects from both the client (FSO Owner/operator) and subcontractor (CALM buoy supplier) perspectives. Concepts from Trevor L. Young’s text book and the module lectures have been used as reference text for identifying key areas of the contract to be evaluated. A simple three-point grading system is used to assign scores for the identified scoring parameters, and a weighted average method is used to obtain a normalized score for comparative evaluation of the two contract entities. Scoring on each parameter is done using a number of sub parameters, giving due consideration of the applicability in the context of the party (CONTRACTOR vs. OWNER) as the case may be. For a detailed description of the project used for case study, please see section 5.
1.2 LIST OF ABBREVIATIONS AND DEFINITIONS
BOPD Barrels of oil per day CALM Catenary Arm Leg Mooring CB CALM Buoy CHARTERER Oilfield Company who is leasing the FSO system from CONTRACTOR CALM buoy supplier, who is undertaking the EPC scope EPC Engineering, Procurement and Construction FSO Floating, Storage and Offloading FSO system FSO unit along with associated subsystems and components OWNER/COMPANY Company which owns and operates the FSO system QHSE Quality, Health, Safety and Environment UNIT CALM buoy
1.3 REFERENCE LIST
1. The Handbook of Project Management : A Practical Guide to Effective Policies, Techniques and Processes – Trevor L. Young
2. Overall Field layout – Production and Export Facilities 3. Mooring Layout 4. CALM buoy General Arrangement 5. Project Execution Plan (FSO) 6. Project Quality Plan 7. Supply of CALM buoy
a. Schedule B – Scope of Work b. Schedule C – Programme and Schedule of Key Dates c. Schedule D – Project Instructions d. Schedule E – Vendor HSE Requirements e. Schedule F – Quality Requirements f. Schedule G – Performance Bond g. Schedule H – Supplier Document Requirement List
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2 OUTLINE OF ASSESSMENT SYSTEM
2.1 BUILDING THE CASE
2.1.1 STAKEHOLDER ANALYSIS
As defined in Young’s text (page 57), “A stakeholder is any person or group that has an interest, can influence or be impacted by the programme or project.”
INTERNAL STAKEHOLDERS Sl. No.
Title Influence Scope/Interest
1 Project sponsor
High
Responsible for overall project delivery
Charterer’s interface point
Final project decision authority
2 Commercial
director
Contract attorney powers
Approving commercial decisions
Interface with external stakeholders for major commercial and legal matters
3 CEO
Final authority on all company decisions and company board representative
Is reported to by Project Sponsor and Commercial Director
4 Subsea
Engineering Manager
Reports to project sponsor
Interface with all discipline managers
Interface with contractor’s Project Manager
Oversee contractor’s day-to-day activities
Oversee discipline team’s daily work
5 Engineering
Manager
Oversee implementation of company Engineering and Quality standards in all
contractor work
Keep an eye on interface engineering amongst various sub-systems
Liaise (jointly with Subsea Manager) with Quality Manager, Class and Charterer (as
required)
6 Procurement
Manager
Medium
Liaise with Subsea Manager for cost and schedule control
7 QHSE
Manager
Implement company corporate quality and safety practices, example technical compliance,
audits etc.
Intervene and make decisions in case of non-conformity or safety incidents
8 Head of
Operations
Be involved in design phase and give relevant inputs for operability of the unit
Ensure smooth takeover upon Project completion
9 Contracts Manager
Ensure contractual and legal obligations are watertight and in line with company board
expectations
Legal support where conflicts are unresolved
10 Accounts
department Low
Assist in milestone, payment processing, variation settlement and project close out
11 Administrative All necessary support functions for project
(IT, HR, secretaries etc.)
EXTERNAL STAKEHOLDERS Sl. No.
Title Influence Scope/Interest
1 Charterer
High
End user who specifies all project boundaries, viz. specifications, scope, cost and schedule
2 Contractor’s
Project Manager
Main point of contact for overall EPC scope
Engage with all Contractor’s stakeholders for project (internal as well as external)
3 Contractor’s
CEO
Intervene as necessary to liaise with Company’s Project Sponsor for high level
matters and escalated disputes
4 Class Society
Main regulatory authority for the project
Conducts post-project periodic surveys and re-certification
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5 Contractor’s
Site Representative
Reports to Contractor’s Project Manager and for delivery of the unit
Closely coordinates visits by Company, Class and Charterer for witnessing key fabrication
and testing activities
Oversees all fabrication work and maintains regular communication with fabrication yard’s
Project Manager
6 Fabrication yard owner
Appoints Project Manager for interfacing with Contractor’s Site Representative on day to day
basis
Key stakeholder who controls labour and material movement which affects delivery
schedule of the unit
Interface with labour and trade union
7 Local
Petroleum Ministry
Medium
For addressing case-specific requirements, generally tackled through Charterer’s
representative who verifies requirements concerning the entire field development
8
Regulatory bodies
(SOLAS, MARPOL etc.)
Indirect stakeholders, whose requirements are mainly satisfied through Class Society
9 Flag state Low Minimal impact since the unit is under the
larger umbrella of the FSO system
Below organization network represents the relationships (solid lines represent primary relationships and dashed lines are indirect or partial working lines as described in the tables above)
Figure 2-1
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2.1.2 RISK FACTORS
Young’s text (page 107) refers to risk management as “the means by which risk is systematically managed to increase the probability of meeting the project’s objectives.” The main steps to risk management are recognizing, understanding and mitigating them. The following representative risk factors are identified
Sl. No.
Description Type Category Mitigation
1 Quality issues in
fabrication Technical
Known Known
Reduce through Quality Procedures and share/transfer with class society, contractor
2 Interface mismatch
Technical Unknown Known
Reduce through proper design reviews, transfer partially to contractor through technical
specifications
3 Technical
compliance to class
Technical Known
Unknown
Reduce by establishing, transfer to contractor through work scope
assignment
4 Load out activity Process Unknown Known
Reduce through insurance, transfer by appointing Warranty
Surveyor and imposing contractual penalties
5 Schedule Slippage
Process Known
Unknown
Reduce through Project Controls, transfer by contractual
penalties
6 Budget Control Process Known
Unknown
Reduce through cost control, variation order and work scope
definitions
7
Trade Union strikes (common
in fabrication yard)
Process Unknown Known
Transfer to contractor, who in turn manages by close
coordination with yard and union stakeholders to ensure minimal
project disruptions
2.1.3 WORK BREAKDOWN STRUCTURE (FSO SYSTEM)
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2.1.4 ESTABLISHING SCORING PARAMETERS
This section will briefly outline the concepts which will form the evaluation framework for the rating matrix. Relevant checklists from Young’s text are used as the basis for developing questions and criteria (identified as 1a, 1b, 2a etc. in below list) for each of the main parameters (numbered 1, 2, 3 etc.) that are relevant to the project and context. Representative examples will be used for assessment on whether these criteria are satisfied or not (which in turn will be used in the Grade Point System described in Section 2.2)
1. Planning and Progress (Young’s checklist 21 and 23)
a. Are the deliverables broken down to a measurable level? b. What mechanisms exist to correct schedule slippage? c. How is progress reported, and what is the communication protocol? d. Are project progress review meetings conducted effectively?
2. Team Management (Young’s checklist 3 and 4) a. Are clear responsibilities for the work established? b. Does the team have relevant technical expertise/knowledge? c. Are there other project commitments? d. Is there an experience of similar projects?
3. Risk Management (Young’s checklist 9 and 19) a. Was a risk matrix used? b. How is Quality control during fabrication addressed? c. Have performance measures been derived? d. How is interface engineering risk dealt with?
4. Class Society Management (Young’s checklist 2) a. What needs to be known about their requirement? b. Could they seriously hinder or block the project progress? c. Is there any history of behaviour from previous projects? d. How is information related to class review disseminated amongst
a. What process and procedures are in place? b. Are predetermined solutions being proposed already? c. Is responsibility at each step clearly defined? d. Are acceptance criteria clearly established for smooth closure?
2.2 GRADE POINT SYSTEM
A three-scale grade point system will be used as follows, for each of the criteria defined in the previous section with relevant checklists.
Grade A – More than 75% of the checklist questions are addressed. The equivalent grade point for this score is 3.
Grade B – 50-75% of the checklist questions are addressed. The equivalent grade point for this score is 2.
Grade C – Less than 50% of the questions items addressed. The equivalent grade point for this score is 1.
To maintain homogeneity, questions associated with the checklists have been evenly distributed across each grading criterion, i.e., 4 questions are asked per criterion with equal weightage assigned to each question. This ensures that percentage values are consistent whole numbers, without bias error. The grade will be assigned as illustrated below:
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Sl. No. (Parameter)
Criterion Example
evaluation Pass/Fail? Score
(%) Grade
P1
1a
1b
1c
1d
P2
2a
2b
2c
2d
… ..
2.3 OVERALL SCORE COMPUTATION
For each of the criteria defined in section 2, a weightage is assigned given the context of the entity (Contractor or Charterer). This is a simple priority order of the five criteria from 1 to 5, 5 being the most important factor. The overall score is thus compared for the two cases and will lie between 1 and 3 (inclusive).
Sl. No. Parameter Weightage
Point Grade Point
Weighted score
P1 Planning & Progress W1 G1 G1 x W1
P2 Team Management W2 G2 G2 x W2
P3 Risk Management W3 G3 G3 x W3
P4 Class Society Management W4 G4 G4 x W4
P5 Client Requirements W5 G5 G5 x W5
Overall score ∑GiWi
∑W i
Given the context of each aspect, the following weightages are assigned for company and contractor:
Parameter Company’s Weightage
Remarks Contractor’s Weightage
Remarks
P1 5 Due to heavy
liquidated damages
2 Limited liquidated
damages
P2 1 Small size team 4 Relatively big team
P3 3 - 3 Higher technical risks
P4 2 Transferred to CALM buoy contractor
5 Due to onus of
technical compliance
P5 4
End user (Charterer) is considered
immediate Client
1
Company is considered immediate
Client
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3 SCORING
3.1 COMPANY
Sl. No.
(Parameter) Criterion Example evaluation Pass/Fail?
Score (%)
Grade
P1 (Planning and
Progress)
1a – deliverable breakdown
Given the supervisory work scope deliverables were defined in terms of documents and revisions which were tracked on weekly basis as per agreed schedule and allowed
for suitable corrective action where lapses were found
Pass
75% B 1b – schedule
control
Charterer’s liquidated damages were quite high in comparison to
the contract value and accordingly this became a prime focus of the
project. All subcontracts were written with correspondingly heavy
penalties for late deliveries, however the exposure risk still
stayed largely with the company
Fail
1c – progress reporting
A regular pre-established schedule of weekly, fortnightly and
monthly progress reporting was maintained diligently
Pass
1d – review meetings
Pre-established schedule for fortnightly meetings with the
Charterer was followed Pass
P2 (Team
Management)
2a - responsibilities
Responsibilities and reporting lines were not completely clear as tasks were sometimes assigned
on ad-hoc basis
Fail
25% C 2b – technical
expertise
All team members had atleast one core expertise, however these
were not optimally utilized through role assignment
Fail
2c – project commitments
Multiple reporting lines and clashing priorities were common
Fail
2d – experience
Team members had experience in execution of similar projects
Pass
P3 (Risk
Management)
3a – risk matrix A formal risk matrix was not
developed or used in the project Fail
75% B
3b – fabrication quality
A detailed Inspection and Test Plan as developed and monitored to witness and sign off on all key
fabrication work, with involvement of Charterer and Class as required
Pass
3c – performance
measures
Key performance indicators were identified in the Project Quality
Plan covering all disciplines and project activities, and these were
continuously monitored to indirectly control the overall
execution
Pass
3d – interface risk
Several “interface meetings” were organized over the course of the
project to ensure design was compatible across interfaces.
Pass
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Where applicable physical fit-ups and trial fits were carried out
P4 (Class Society Management)
4a – class requirement
Company had a good handle on class requirements and applicable
design code, since the FSO system was directly under Class
scope.
Pass
100% A
4b – project hindrance
Company played a pivotal role in controlling class influence on
subcontractor since it controlled the larger FSO contract
Pass
4c – history of behavior
Previous system of similar work scope was classed under the
same society and requirements were fairly apparent
Pass
4d – information
sharing
Official portal for class technical communication was used for the FSO, and contractor’s comments were accessible under the same
project code as the FSO
Pass
P5 (Client
Management)
5a – process and procedures
All procedures went through a formal review process and vetted
by client, which ensured clear definition of specifications and
work scope
Pass
100% A
5b – predetermined
solutions
Predetermined solutions were being used however this was
driven by the Charterer’s preference for having similar field
developments
Pass
5c – responsibility breakdown
Responsibility was clearly stated in the Charterer’s FSO system
specifications and contract Pass
5d – acceptance
criteria
Clear acceptance criteria and approved testing procedure were
used for all equipment on the project
Pass
Sl. No. Parameter Weightage Point Grade Point Weighted score
1 Planning & Progress 5 2 (B) 10
2 Team Management 1 1 (C) 1
3 Risk Management 3 2 (B) 6
4 Class Society Management 2 3 (A) 6
5 Client Requirements 4 3 (A) 12
Overall score 35/15 = 2.33
3.2 CONTRACTOR
Sl. No. Criterion Example evaluation Pass/Fail? Score Grade
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(Parameter) (%)
P1 (Planning and
Progress)
1a – deliverable breakdown
Deliverables (documents) followed on from the methodology
prescribed by Company in their contractual requirements for
Contractor. These were in turn used to cover the whole
Engineering, Procurement, Fabrication and testing workscope
Pass
50% B 1b – schedule control
In spite of high penalties, Contractor had poor control in
imposing their will over Fabrication Yard for meeting targeted
milestones. This was due to excessive bureaucracy and
inefficient practices in the Yard (based in Indonesia), and long-standing relationship with the
Contractor that set in a sense of sluggishness and inertia
Fail
1c – progress reporting
Reporting calendar followed on from overall project reports being
sent to Charterer Pass
1d – review meetings
Contractor was not proactive in participating in review meetings
and showed poor behavior in this context.
Fail
P2 (Team
Management)
2a - responsibilities
Team responsibilities were well defined and modularized
according to the organization chart Pass
100% A
2b – technical expertise
Contractor’s team was qualified as the hiring process was for specific
job roles and skill sets Pass
2c – project commitments
Contractor had multiple parallel projects and had a sufficiently large organization to be able to
run a “programme based” execution as described in Young’s
book
Pass
2d – experience
Contractor had reasonable experience in the design and
supply of CALM buoy units over the previous decade
Pass
P3 (Risk
Management)
3a – risk matrix No formal risk matrix was
generated or used for the project Fail
25% C
3b – fabrication quality
A full time site representative at the yard ensured Quality Control
Pass
3c – performance
measures
Contractor did not have its own performance indicators and relied
on Company’s mechanisms Fail
3d – interface risk
Contractor did not proactively identify or mitigate interface risks
Fail
P4 (Class Society Management)
4a – class requirement
Contractor was well versed with the class code requirements and
had standardized the design, however this was an issue as will
be shown under 4b
Pass
50% B
4b – project hindrance
Contractor pursued an extremely aggressive construction schedule,
Fail
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taking the risk of procurement basis unapproved drawings, failing
to understanding that certain aspects were still checked on
project basis and minor differences in design were still to
be implemented
4c – history of behavior
Contractor had previous experience with the Class society, however as previously described
this proved insufficient in fully understanding the Class society’s
behavior and thinking
Fail
4d – information
sharing
Sharing of technical comments was facilitated under the FSO project number as described
Pass
P5 (Client
Management)
5a – process and procedures
Process and procedures followed on smoothly from Charterer to
Company to Contractor Pass
75% B
5b – predetermined
solutions
Pre-determined solutions were used, with Charterer’s blessing. However, Contractor’s general
resistance to change and lack of appreciation of risks proved to be
a hassle for the execution
Fail
5c – responsibility breakdown
Responsibility breakdown was clear-cut in the contract
Pass
5d – acceptance
criteria
Acceptance criteria and procedures were clear as
previously described Pass
Sl. No. Parameter Weightage Point Grade Point Weighted score
1 Planning & Progress 2 2 (B) 4
2 Team Management 4 3 (A) 12
3 Risk Management 3 1 (C) 3
4 Class Society Management 5 2 (B) 10
5 Client Requirements 1 2 (B) 2
Overall score 31/15 = 2.07
4 DISCUSSION
4.1 CRITICAL ANALYSIS
In general, both parties are seen to score around the mid-range of the 3 scale score, which is explained by the neglect or insufficient depth in handling atleast one key rating parameter.
1. Company’s performance analysis a. Strengths
i. Risks are actively dealt with, although not formally documented ii. Compliance to Client and Class requirements is taken quite
seriously b. Weaknesses
i. Company’s management of personnel is poor ii. Cost control is a prime focus, however leads to one-track thinking
c. Opportunities for improvement
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i. Engaging human resources expertise in handling project staffing affairs
ii. De-centralizing cost control functions by giving discipline leads more responsibility and accountability for individual subcontract budgets (whilst maintaining confidentiality and visibility of information)
2. Contractor’s performance analysis
a. Strengths i. Organization structure and personnel management is robust ii. Tendency to stick rigidly to agree contractual basis is seen as a
strength in the context of a tight schedule, however was detrimental in certain cases.
b. Weakness i. Compliance issues are viewed as malleable and “good to have” ii. Risk management is not done proactively
c. Opportunities for improvement i. More top-down communication to stress the importance of quality
and company reputation and the role of strict compliance in achieving these goals
ii. Engaging with all stakeholders more actively and maintain an open-minded attitude towards their requirements
4.2 CONCLUSIONS
The scope of this scoring system is representative and not holistic, and a high score need not necessarily translate to a successful project execution. However, it has been able to identify some of the obvious issues which were evident. The use of systematic concepts in a scientific way helps capture the essence of how the project was, could and perhaps not be executed. It can also be seen that stakeholders, both internal and external play a central role in almost every key project aspect and an analysis of their requirements, influence and how to manage them can make or break the project. The outlook of the organization plays a big role on how various project parameters are assessed and dealt with (or not), and this is where top management play a key role in steering the organization at achieving desired results (Young’s Program Steering Committee plays this role). Understanding the organization’s key strengths and translating them to effectively deal with project risk and setting priorities gives a solid foundation to build upon. In the author’s experience very often organizations tend to gravitate towards tried and tested routes from past projects, which results in inertia to change. Past project experience is indeed valuable and helps create “shortcuts” to getting familiar work done. Although corporate guidelines exist in both the contractor and company’s archives as a means to accumulate and record past experience, they tend to get overlooked in the mayhem of day to day project fire-fighting. Taking a step back, and trying to frame and review the high-level strategy for the project, and applying corporate guidelines while keeping in view the context of the project will give the user a greater sense of appreciation for the process. This may be time consuming and involve engaging not only senior but middle management, spending time to doing things right the first time is often the safest option. As each project is unique, adding varied aspects and doing a parametric evaluation exercise as covered in this study will better help the project manager in making good decisions before, during and after the project. All in all, an overview of project management principles is deemed to be quite beneficial for putting project priorities into perspective, and rooting out poor practices that would otherwise go unnoticed.
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5 APPENDIX
5.1 PROJECT DESCRIPTION
The CALM buoy supply was part of a soft-moored FSO system for production in relatively shallow water (75 m) in the Gulf of Thailand (Figure 5-1).The upstream production is controlled by a wellhead platform and a wellhead production platform, with subsea pipelines terminating in a PLEM, as illustrated in the field layout (Figure 5-2)
Figure 5-1
Figure 5-2
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The FSO system is comprised of the following main components
Subsea risers
In-loading floating hoses
CALM buoy
Soft mooring gear (nylon hawsers)
FSO
Offloading floating hose The battery limit for the FSO system starts at the outlet flange of the PLEM, and ends at the tail end of the offloading hose (Figure 5-3)
Figure 5-3
The main design parameters of for the FSO and CALM buoy system are as follows
Parameter Value
Water depth 71 meters
100 year significant wave (Hs) 7.75 meters
Design temperature 900 C
Design pressure 46 bar
Production rate 30,000 BOPD
Number of paths 2 (crude oil + produced water)
Nominal diameter of paths 6 inch
Mooring layout 6 x 1 symmetrical
Chain size 76 millimeters
Buoy displacement 240 Metric Tons
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The General Arrangement and isometric views of the CALM buoy are presented in figures 5-4 and 5-5.
