Major oil and gas construction projects in Alberta have long suffered from cost and scheduling overruns compared to similar projects in the U.S., but the Construction Owners Association of Alberta (COAA) is hoping to start closing the gap with a new three-pronged approach to benchmarking.
COAA is currently working on a third phase of assessments for major construction projects in Alberta, which will report on their budgeting and scheduling performance compared to similar projects being built on the U.S. Gulf Coast.
The foundation of the report will be based on conventional benchmarking procedures, but will also include two new elements: a new high-level productivity metric that is in development and the 10-10 program, which was designed by the Construction Industry Institute (CII).
“The 10-10 tool is a quick-win kind of tool that the project teams can use for self-analysis for actioning their own course correction for project execution,” says Larry Sondrol, co-chair of the COAA benchmarking committee. He is also director, major projects, project controls governance and project controls for offsite fabrication at Suncor Energy.
Conventional benchmarking typically consists of a report before the project is started and a follow-up report once it is completed. While the data compiled at the end of the project can provide lessons for future projects, it doesn’t offer any opportunity to fix known problems or inefficiencies while the project is still ongoing, Sondrol notes.
The 10-10 approach involves choosing 10 input parameters to serve as warning signs for potential problems. Additionally, the project team chooses 10 output measures that help track progress to ensure the project remains on course. This allows the team to correct problems during the development of the project rather than waiting until the end.
“I always call it more of a proactive benchmarking test on the health of your in-flight project, versus a reactive approach that is taking your lessons learned at the end of the project,” Sondrol says. “By that time, you’ve not had any chance to optimize those [processes] for any existing project. You can only apply them to the next project.”
The 10-10 approach differs from typical benchmarking because it focuses on short but frequent surveys of several levels of the project team, according to Steve Revay, co-chair of COAA’s benchmarking committee and vice-president, western region for Revay and Associates.
“There’s a fair deal of effort in terms of filling out a benchmarking survey, but the 10-10 survey takes a fairly short period of time. It just has more input from various team members, but each team member doesn’t spend a lot of time on it…. It’s getting input from all the various team members, as opposed to having a couple of people just getting all the data to fill in the survey,” he says.
Revay thinks the new approach will help Alberta be more competitive on the global stage.
“The ideal is we start to see an improved performance and Alberta is more competitive. We have certain disadvantages, certainly when you think of Fort McMurray, where everything has to be trucked in or flown in, versus say Houston, where everything can come in by boat,” he says. “If we can improve productivity, we can become more competitive and reduce costs.”
Alberta can be at a disadvantage because of its harsh weather, the cost to get employees to the workface and access to labour, although that isn’t an issue today during the downturn, according to Sondrol.
One of the biggest problems with construction in Alberta is the propensity to fast track major projects, which are often bigger in scope than American projects, Revay says. According to COAA’s second performance assessment report, projects in Alberta typically only have 55 per cent of engineering completed when construction starts, whereas U.S. projects have 75 per cent of engineering completed by that time. Research has shown that fast tracking like that has led to a lot of problems, including delays and costs overruns, Revay says. But team alignment and communication is also vital, which is where the 10-10 approach comes in.
“Communication becomes particularly important as the projects become larger and everyone is working on the same page and with the same drivers. With 10-10, that will help things get there,” he says.
COAA did see an improvement in efficiency from its first report, which was published in 2009, and its second report from 2014. But while the results were better, Revay is careful not to give improved benchmarking too much credit for the change.
“Phase one was completed during the very heavy economic times and the subsequent one was done during the slowdown. There is some improvement, but you can’t say it’s all because of the benchmarking improvement,” he says.
Training for phase three of the benchmarking project started in January. Companies are already feeding data to COAA for a future report, and the association is looking for more willing to contribute. The 10-10 program is currently being configured and should be ready for companies to apply to start using by the second quarter of 2017.
Note: The benchmarking project is part of the Alberta Projects Improvement Network, which includes COAA, GO Productivity, the Supply Chain Management Association of Alberta and JWN.