Pre-Project Planning Lessons from the Construction Industry Institute Construction Industry Institute Michael Davis, P. Eng, PMP Ontario Power Generation

Objectives Demonstrate the importance of pre-project planning Describe a pre-project planning process Review some CII planning tools

Construction Industry Institute

The Construction Industry Institute Unique organizational model –90 to 100 corporate members –Owners and contractors Conducts research into best practices for construction projects –Research done by academics under guidance of member project teams Assists in moving the research into practice with implementation tools All information is available in the public domain:

What is a Best Practice? A process or method that, when executed effectively, leads to superior project performance

CII Validated Best Practices Pre-Project Planning AlignmentConstructability Design Effectiveness Materials Management Team Building Partnering Planning for Startup Quality Management Change Management Disputes Resolution Zero Accidents Techniques

Value of Best Practices: Project Cost Performance N=73 N=74 N=71 N=75 Cost Category: Greater than $5MM Project Budget Factor vs. Practices Use Index By Practices Use Index

Value of best practices: Project Schedule Performance N=60 N=55 N=65 N=57 Cost Category: Greater than $5MM Project Schedule Growth vs. Practices Use Index By Practices Use Index

“Best” Best Practices Pre-project planning Change control Planning for startup

Impact of Best Practices

Pre-Project Planning

That part of the project planning process that takes place before the project is authorized to proceed Sometimes called “front-end loading” An Owner responsibility Expect to spend 10-25% of engineering cost (up to 8% of total project cost) Assign project manager and best staff Have key stakeholders represented

Major Influence Rapidly Decreasing Influence Low Influence Scope Definition Influence Expenditures Conceptual Analysis and R&D Pre-Project Planning Basic Data and Scoping Project Authorization Production Engineering and Procurement Construction Engineering Complete Turnover and Start-up Level of Influence Project Expenditures Project Life Cycle Opportunity for Influence

Pre-Project Planning Provides a basis for: Informed business decisions – “doing the right project” Efficient project delivery – “doing the project right”

CII Pre-Project Planning Process ORGANIZE PRE-PROJECT PLANNING SELECT ALTERNATIVE(S) DEVELOP A PROJECT DEFINITION PACKAGE DECIDE WHETHER TO PROCEED WITH PROJECT Prepare Analyze Technology Evaluate Site(s) Prepare Conceptual Scopes and Estimates Evaluate Alternatives Analyze Project Risks Document Project Scope and Design Define Project Execution Approach Establish Project Control Guidelines Compile Definition Package Make Decision Select Team Draft Charter Pre-Project Planning Plan Project FOR PROJECT Business Case

Key Elements Organize for pre-project planning – –Create a team – –Draft the charter for the planning phase – –Plan the planning: tasks, deliverables, responsibilities, etc. Select the alternative – –Alternatives definition – –Technology – –Site/location – –Conceptual scopes, estimates (-30 to +50%) – –Evaluate the alternatives Financial High level risk analysis

Key Elements Create project definition package – –Project objectives and priorities – –Scope and preliminary design – –Risk analysis – –Project delivery strategies – –Project Execution Plan Prepare the business case Submit package to approval authority Decide whether to proceed or not

Project Objectives Establish project success criteria - define the target Sets priorities consistent with business drivers Basis for decision making Refined as project progresses

Conceive DevelopExecute +100% Expected Percent Variance Excluding Contingency -50% Order of Magnitude Release Definitive(Detailed) Most Probable Cost +15% -10% +5% -2.5% Pre-Fund AuthorizationPost Fund Authorization Scope Definition - Estimating Accuracy

Elements of a Project Execution Plan Objectives & priorities Scope and deliverables Execution and delivery strategies Organization and responsibilities Cost estimate & budget Schedule & milestones Permitting Safety, quality, environment ProcurementCommunications Project controls Risk assessment and management Commissioning and start- up Closeout

Sponsor’s Role Verify correctness of objectives, priorities and scope Review and concur with execution strategy Verify assignment of roles & responsibilities Concur with estimate and contingency Concur with schedule milestones and completion date Verify acceptability of project controls and change management process Review and concur with risk management plan Approve significant changes to the PEP

Planning Outcomes Understanding of objectives & priorities Optimum solution identified Project scope defined - what’s in/out Alignment of participants and stakeholders Knowledge of risks Credible estimate and schedule Sound business case Effective, achievable project plan

Pre-Project Planning Tools

PDRI Project Definition Rating Index Planning assessment tool developed by CII through extensive research Evaluates how well the scope definition and pre- project planning has been carried out Provides an early indication of the probability of project success Validated - tested against actual project results Proven effective on both small and large projects

PDRI 70 elements are grouped into 3 categories: –Basis of decision/scope (50%) –Front-end definition/preliminary design (42%) –Execution approach (8%) Each element is given a weighted score The more completely an element has been addressed, the lower its score. (Similar to golf: lower is better) Maximum score of 1000 Score of <200 correlates with more successful projects

PDRI Score sheet

Project Alignment Common, clearly understood set of project objectives is in place All project team members working toward the same set of objectives

Alignment Tool Developed from workshops, surveys, interviews Involved more than 100 experienced individuals at all levels 66 alignment issues analyzed for correlation with project success over 20 projects  10 key factors identified

Factors Affecting Alignment Stakeholders are appropriately represented on the project team Project leadership is defined, effective, and accountable The priority between cost, schedule, and required project features is clear Communication within the team and with stakeholders is open and effective Team meetings are timely and productive

Factors Affecting Alignment The team culture fosters trust, honesty, and shared values The pre-project planning process includes sufficient funding, schedule, and scope to meet objectives The reward and recognition system promotes meeting project objectives Teamwork and team building programs are effective Planning tools (e.g., checklists, simulations, and work flow diagrams) are effectively used

Alignment Thermometer

Questionnaire

Other CII Resources Team Building Partnering Change Management Project Delivery and Contracting Strategies Zero Accident Techniques

Benefits of Pre-Project Planning Fewer scope changes Increased predictability of cost & schedule Better definition of risks Reduced probability of project failures Improved operational performance Better achievement of business goals

By the time a project is released, the conditions for its success or failure are essentially established.

Questions