​Better upfront planning could result in significant savings on oilsands project costs: survey

With ample oil supplies leading to longer-term lower prices, getting oilsands supply costs down is job number one across all sectors of the industry.

New engineering designs, technologies and business models are all being tested to make oilsands production competitive on the global market.

But another area with great potential to save costs is in project management. A study released by the Alberta Projects Improvement Network (APIN) in late 2016 shows using project management processes like stage-gating and advanced work packaging could result in major savings in capital costs in developing oilsands projects.

Stage-gating breaks a project into manageable pieces, with the project team having to meet specific criteria before moving on to the next stage in the project. By thinking in terms of staging, owners can closely monitor deliverables and planning as the project moves through its life cycle.

Advanced work packaging is the extension of front-end planning across the project life cycle. It starts at the initial project set-up and, through interactive planning, guides the project through engineering and construction work packages.

APIN analysis shows when advanced work packages are implemented, there is a 25 per cent improvement in productivity and a 10 per cent reduction in total installed costs of a project.

Yet, despite the benefits of both project management practices, they have been slow to be implemented by industry in Alberta.

In late 2016 APIN surveyed more than 160 leaders in the industrial construction sector ranging from executives at operator, engineering, procurement and construction management, and construction firms to members of project management teams.

What it found was an industry that knows it needs to change but has been slow to adopt project management best practices to spur that change.

Over 70 per cent of survey respondents agreed Alberta’s project delivery and execution practices need improvement, while only two per cent said things are fine as they stand now.

The number one way to cut costs, they said, was to improve front-end and workforce planning.

The APIN study found that the biggest cause of poor project delivery is insufficient design completion before beginning construction. Alberta projects average 55 per cent design completion before starting construction compared with 75 per cent in the U.S.

APIN has been promoting the 80/100 rule: 80 per cent of engineering and 100 per cent of construction drawings and specifications completed prior to construction. Around 60 per cent of those surveyed said they were aware of the rule, but only one-fifth of this group had actually implemented the rule in their projects.

Fast tracking—sending designs to site or ordering materials before the project design is completed and reviewed—continues to be common practice in the industry with 60 per cent of survey respondents reporting they sometimes or always fast-tracked projects.

Using stage-gating to break up projects and ensure work is completed before moving on to the next phase of the project has also been slow to become a best practice in the industry, with only 37 per cent of survey respondents reporting having applied the system.

Only 28 per cent of respondents said project owners actually follow the process where it does exist.

Around 75 per cent of respondents said they were somewhat or very familiar with advanced work packaging and workface planning, with half reporting they had been involved in a project using the practice.

On projects where the processes have been used, almost half of respondents said they were unsure whether they were effective.

One possible reason for the slow uptake of best practices in oilsands project management could be a lack of training for workers. Nearly 45 per cent of respondents said their company doesn’t currently offer project management training.

Around 40 per cent of respondents said they had no training in project management.

JWN's Build Better content is provided as part of our partnership in the Alberta Projects Improvement Network with COAA, GO Productivity and Supply Chain Management Association Alberta.

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