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6th February
2012
Overruns in Offshore Projects: Toward Productivity and Performance ImprovementProfessor Peter ED Love
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Between 1993-2003 (Merrow, 2003)
1 in 8 major offshore projects with a CAPEX ranging from US$1 million to US$3 billion a financial disaster
Exceed cost and/or schedule by 40% or producing less than 50% of production capacity
Offshore projects
2010 (Det Norske Veritas, DNV)
On average experience a cost overrun of 35%, and 7 months behind schedule
Why?
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Recurrent factors contributing to cost overruns include:
Poor scope definition
Optimistic scheduling of design, engineering and construction
Placing of orders before engineering is complete
Implementation of new technology without qualification
Poor interface management
Fabrication yards having to build competence and resources during the project
Hibernia Platform – construction costs alone increased by US$870 million
≈US$3.8b US$5.2b
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Forms of waste in offshore projects
Non-value adding
activities
Correction
Wai
ting
Pro
cess
ing
Motion
Over-
productionC
onveyance
Inventory
Repair
and/or
rework due
to change,
errors, and
omissions
Any wasted motion to
pick up or stack parts.
Also wasted travel time
Any
non
-w
ork
time
wai
ting
for
equi
pmen
t, su
pplie
s an
d pa
rts
Und
erta
king
mor
e w
ork
than
is
nece
ssar
y
Maintaining excess materials
and parts
Producing
more than
is needed
before it is
needed
Wasted
effort to transport
materials,
parts into or out of
storage
Labor-
allocation
Changes, errors, omissions → rework
Estimates of rework costs found to range from 10 to 50% of CAPEX
Lower rework in new build FPSOs
Design errors materialize during operation
Downtime:Inspection of ballast, cargo tanks, and propeller shafts, which involves the mobilization of inspection teams.
Over
manning/poor
use
technology
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Common design errors found during maintenance and inspection of FPSOs include:
• Bow –inadequate structural design and consideration of environmental loadings
• Breakdown of coating systems – poor selection and application
• Tank – inadequate construction techniques
30.07.2010Footer text - slideshow title
Preliminary observations
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Generic dynamics of rework
The ‘+’, and ‘-’, respectively, classifies positive and negative consequences of an increase of the original variable on the relying variable.
Relationship contracting
Production
Project scope
• Negative impact of workflow
• Production pressure
FPSO interface with subsea/topside/vessel/pipeline
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Design errors: Sleipner A failure
Loss resulted in 2 year delay, loss of structure and revenue US$780m
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Lean construction “Way to design production systems to minimize waste (materials, time, and effort) to generate maximum value”
• Eliminate wasteful practices• Streamline production flow
• Optimize resources• Improve efficiency
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• Remove lowest cost – go for value
• Eliminate competitive tendering
• Introduce performance measurement into contracts
• Integrated project teams
• Improve workflow predictability ( eliminate buffers/wasted capacity)
Re-think project delivery
Source: Lean Construction Institute
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A methodology to manage the essential design and project data in digital format throughout the an assets life cycle
BIM: From 3D → nD modelling
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Augmented reality
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Dynamic planning: real-time
RFID Sensors and tracking
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