ESD.36 System Project Management
Instructor(s)
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- Multi-Project Program Management
Prof. Olivier de Weck
Lecture 18
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- Outline
Program Management
Definition, Distinction from Project Management
Example Program (BP Azerbaijan)
Project Portfolio Management
Project Selection Process
Example Portfolio (PreQuip)
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- Concept Question 1
What is the largest number projects you have worked on or managed at the same time (in parallel)?
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2
3
4
more than 4
Dec 1, 2009 3
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- Programs – PMBOK Definition
Program. A program is a group of projects managed in a coordinated way to obtain benefits not available from managing them individually.
Many programs also include elements of ongoing operations. For example:
The “XYZ airplane program” includes both the project or projects to design and develop the aircraft as well as the ongoing manufacturing and support of that craft in the field.
Many electronics firms have “program managers” who are responsible for both individual product releases (projects) and the coordination of multiple releases over time (an ongoing operation).
Programs may also involve a series of repetitive or cyclical undertakings, for example: Utilities often speak of an annual “construction program,” a regular,
ongoing operation which involves many projects.
Many non-profit organizations have a “fundraising program,” an ongoing effort to obtain financial support that often involves a series of discrete projects such as a membership drive or an auction.
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•Develop a product platform that can be “scaled” or “stretched” in one or more dimensions to satisfy a variety of market niches
Scale-based Product Families
Boeing 737 is divided into 3 platforms:
Initial-model (100 and 200)
Classic (300, 400, and 500)
Next generation (600, 700, 800, and 900 models)
• The Boeing 777 has also
been designed knowing that it will be “stretched”
© Aerospaceweb.org. All rights reserved. This contentis excluded from our Creative Commons license. Formore information, see http://ocw.mit.edu/fairuse.
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Airbus Aircraft Program
Airbus A3XX Family: common height, width, cockpit
The A330 cockpit is common to all other Airbus types while Boeing’s 767-400 cockpit is common only with the 757. This enabled the A330-200, a less efficient “shrink” of a larger aircraft, to outsell Boeing’s 767-400ER, a more efficient “stretch” design of a smaller aircraft.
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Sample Program: BP ACG (Azerbaijan)
Capex: $9bn total / $6m / day 90,000 te topsides 90,000 te jackets 1000 km offshore pipelines
80% of man-hours in Azerbaijan 20% across another 10 countries New Workforce - 9000 Azeris
One of world’s largest terminals 7 years of execute 74 million man-hours total so far Over 3 million man-hours/month Source: Adrian Luckins, BP
© BP Caspian. All rights reserved. This content is excluded from our CreativeCommons license. For more information, see http://ocw.mit.edu/fairuse.
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0
200
400
600
800
1000
1200
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024
mbd
Phase 3
Phase 2
Phase 1
Chirag
ACG Full Field Development - Production
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Geographical Challenges
Baku
Jacket P re -
Fabrication, Ita ly
D rilling
Construction (CA),
France
Engineering &
Procurem ent, UK
Drilling Equipm ent,
Norway
Insta lla tion
Design,
C roatia
Topsides Fabrication, Jacket
Fabrication, Term inal Construction,
Engineering Design, Azerbaijan
Liv ing Q uarters
Fabrication, Sweden
Topsides Pre -
Fabrication, Dubai
D rilling
Construction (W A/
EA), Holland
C &W P/ term inal pre -
fabrication, Turkey
By Trailer
By Rail
By Sea
Transport routes:
Logist ics
• 5000 Trailer t rips
• 6000 rail t rips
• 200 river boats
Baku
Jacket P re -
Fabrication, Ita ly
D rilling
Construction (CA),
France
Engineering &
Procurem ent, UK
Drilling Equipm ent,
Norway
Insta lla tion
Design,
C roatia
Topsides Fabrication, Jacket
Fabrication, Term inal Construction,
Engineering Design, Azerbaijan
Liv ing Q uarters
Fabrication, Sweden
Topsides Pre -
Fabrication, Dubai
D rilling
Construction (W A/
EA), Holland
C &W P/ term inal pre -
fabrication, Turkey
By Trailer
By Rail
By Sea
Transport routes:
Logist ics
• 5000 Trailer t rips
• 6000 rail t rips
• 200 river boats
Baku
Jacket P re -
Fabrication, Ita ly
D rilling
Construction (CA),
France
Engineering &
Procurem ent, UK
Drilling Equipm ent,
Norway
Insta lla tion
Design,
C roatia
Topsides Fabrication, Jacket
Fabrication, Term inal Construction,
Engineering Design, Azerbaijan
Liv ing Q uarters
Fabrication, Sweden
Topsides Pre -
Fabrication, Dubai
D rilling
Construction (W A/
EA), Holland
C &W P/ term inal pre -
fabrication, Turkey
By Trailer
By Rail
By Sea
Transport routes:
Logist ics
• 5000 Trailer t rips
• 6000 rail t rips
• 200 river boats
By Trailer
By Rail
By Sea
Transport routes:
By T railer
By Rail
By Sea
Transport routes:
By T railer
By Rail
By Sea
Transport routes:
By T railer
By Rail
By Sea
Transport routes:
Logist ics
• 5000 Trailer t rips
• 6000 rail t rips
• 200 river boats
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Project Schedules
2001 2002 2003
1H 2H 1Q 2Q 3Q 4Q 1H 2H 2004 2005 2006 2007 2008 2009
BTC
ACG Phase 1
ACG Phase 2
ACG Phase 3
Define 1st Oil
Execute
Select 1st Oil
Define Appraise Execute
Operation
Define Execute Select
Select Define
1st Oil West Azeri
Execute
1st Oil East Azeri
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Production Line Strategy Development
CA jac k etC& W P
jac k etW A jac k et EA jac k et
CA
top s id es
W A
top s id es
EA
top s id es
C& W P
top s id es
Term inal
trains 1& 2
Term inal
trains 3& 4
Pip elines :
30"
Pip elines :
28"
Pip elines :
30"
CA jac k etC& W P
jac k etW A jac k et EA jac k et
CA
top s id es
W A
top s id es
EA
top s id es
C& W P
top s id es
Term inal
trains 1& 2
Term inal
trains 3& 4
Term inal
Shah Deniz
Pip elines :
30"
Pip elines :
28"
Pip elines :
Shah Deniz
Pip elines :
30"
BOS Yard
ATA Yard
CA jacket C&WP
jacket WA jacket EA jacket
DUQ
jacket
PCWU
jacket
CA
topsides
WA
topsides
EA
topsides
DUQ
topsides
C&WP
topsides
PCWU
topsides
Terminal
trains 1&2
Terminal
trains 3&4
Terminal
Shah Deniz
Terminal
trains 5&6
Pipelines:
30"
Pipelines:
28"
Pipelines:
Shah Deniz
Pipelines:
30"
Pipelines:
ACG 3
ACG Phase 2
ACG Phase 1
ACG Phase 3
Shah Deniz
Key :
Objectives : Learning Curve Benefits – Faster, Cheaper Elimination of Inefficiency Continually Reduce Unit Costs
Strategy : Standardization Contracting – Natural Choice at Right Price Organisation – People Continuity Right Pace for capital efficiency
E&P
KBR/
AIOC
MCCI Yard
AzTf
MCCI
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Copied Building Block Seed Building Block To Develop New Design
CA- C&WP
CA-PDQ WA-PDQ
DWG-PCWU
50% Copy 95% Copy (WA)
31 Mhrs Per Tonne 11 Mhrs Per Tonne 42 Mhrs Per Tonne
DWG-DUQ
60% Copy (WA/EA)
28 Mhrs Per Tonne
21 Mhrs Per Tonne 19 Mhrs Per Tonne
20% Copy (C&WP/WA)
EA-PDQ
Topsides Detail Design
Topsides Detail Design
Project Challenges – ACG & Shah Deniz
CB-PDQ
30% Copy
30 Mhrs Per Tonne
Phase 1 Phase 2 Phase 4 Phase 3
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Benefits realised through standardisation: Engineering
Engineering Benefits
Drilling Facilities - Engineering Costs (Eiffel/KCA)
Phase 1 Phase 2 Phase 3
Dir
ect
Ma
n-h
ou
rs/te
CA
(54)
WA
(30)
EA
(8)
DWG
(8)
Production Facilities Engineering Costs
Phase 1 Phase 2 Phase 3
Dir
ect
Ma
n
- ho
urs
/
te
CA
( 42 )
WA ( 31 )
EA
( 11 )
CWP (21)
DWG
( 29 )
Phase 3 (Manhours / te
DWG: 29 contract 25 stretch DUQ: 28 PCWU: 20
10
20
30
40
50
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Benefits realised through standardisation: Fabrication
Jacket Fabrication Costs
100
$/te units
-7%
Phase 1 Phase 2 Phase 3
-4%
$6181/te
$5751/te
$5521/te
Topsides Fabrication Costs
100
$/te units
-10%
-6%
Phase 1 Phase 2 Phase 3
$18042/te
$16122/te
$15228/te
Fabrication Benefits
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- Concept Question 2
In our organization we pursue mainly:
Programs – sets of directly related projects
Portfolios – sets of indirectly related projects
Individual single projects
Not applicable
Dec 1, 2009 16
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- Portfolio of Projects
A portfolio of projects is a collection of projects owned or managed by the same organization that are only indirectly related
Projects may not be directly related to each other, as in a program, i.e. outputs from one don’t necessarily feed into the other
Usually no or only minimal commonality and standardization
Portfolio is chosen with diversity of projects, some of them may be “negatively correlated”
Mix of large scale potentially less risky and small risky projects that act as “pathfinders”
Project portfolio may not have a single manager
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- Project Portfolio Planning
Breakthrough Projects
New Core Processes
Next Generation Process
Single Dept. Upgrade
Tuning and Incremental
New Core Product
Next Generation Product
Addition to Product Family
Add-ons and Enhancements
Product Changes
Process Changes
Platform Projects
Derivatives (Enhancements, Hybrids, and Cost
Reduced Versions)
Advanced R&D Projects
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2
3
4
5
Source: (Wheelwright & Clark, 1992)
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Aggregate Project Plan Classifications
Advanced R&D Projects
Innovations and technology development that provides a precursor to commercial development
Breakthrough Projects
Projects that involve significant change in the product and process establish a new core product and process
Platform Projects
Projects provide a base for a product and process family that can be leveraged over several years
Derivative Projects
Cost-reduced versions of an existing product or platform or add-ons or enhancements to an existing production process
Allied Partnerships
Partnerships in any of these project areas to leverage development resources and activities
Source: (Wheelwright & Clark, 1992)
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R&D
Breakthrough projects
R&D
Breakthrough
Platform
Derivative
Allied and Partnership projects Derivative
projects
Platform projects
Project Planning at PreQuip – Part 1
• PreQuip’s Development Projects (30) before the Aggregate Project Plan
Mass spectrometers
Liquid chromatographs
Gas chromatographs
Data processing and handling products
Adapted from: Wheelwright, S.C. and Clark, K. B.,1992,” Creating Project Plans to Focus ProductDevelopment,” Harvard Business Review, 70(2), pp. 70-82.
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R&D
R&D
Platform
Derivative
Allied and Partnership projects
Derivative projects
Platform projects
Breakthrough
Aggregate Project Planning – Part 2
PreQuip’s Development Projects (11) after the Aggregate Project Plan
Mass spectrometers
Liquid chromatographs
Gas chromatographs
Data processing and handling products
Breakthrough projects
Adapted from: Wheelwright, S.C. and Clark, K. B.,1992,” Creating Project Plans to Focus ProductDevelopment,” Harvard Business Review, 70(2), pp. 70-82.
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- Concept Question 3
What is the most challenging issue you have encountered working in a multi-project environment?
Conflicts due to financial resource contention
Inefficiency due to multi-tasking
Staffing dynamics (trying to get the “A” team)
Friction between program and project manager
Enforcing standard work procedures
Ensuring commonality at the parts and module level
Other
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- Portfolio Management Issues
Risk Correlation across Portfolio
Constraints on Shared Resources
Late and over-budget projects delay ramp-up of downstream projects
Shared resources (e.g. test facilities) can also create bottlenecks
Staff working simultaneously on multiple projects create inefficiencies and delays
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Typically dealt with via exogenous inputs to single-project models, or via portfolio models
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- Program Manager Challenges
Creating a vision for the program as a whole
Scheduling and prioritization of individual projects in the program
Dealing with project interdependencies
Resource contention, CAPEX phasing
Staffing, avoid firefighting
Ensuring learning and commonality across projects
Program Manager is a very different and more strategic role than project manager
Typically requires more strategy and diplomacy than individual project management
Dec 1, 2009 24
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ESD.36 System Project ManagementFall 2012
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