RELIABLE AFE’s KEY DRIVERS on MEGA PROJECTS Jose C. Herrero, VP Project Director Fluor

2 RELIABLE AFE MEGA PROJECTS u RECENT EXPERIENCES u EFFORT/TIME for a RELIABLE AFE u KEY DRIVERS u CONCLUSION

3 RELIABLE AFE MEGA PROJECTS u RECENT EXPERIENCES –Quality –Safety –Schedule –Cost u DO WE HAVE ANY HOPE ?

4 EFFORT/TIME TO DEVELOP RELIABLE AFE MEGA PROJECTS u Gating Process u Terminology u Engineering Effort u Duration u Accuracy and Confidence Level

5 KEY DRIVERS for RELIABLE AFE MEGA PROJECTS u 6 Basic Elements –Scope of Work (Facilities and Services) –Cost Estimate –Schedule –Execution Plan and Change Management –Risk Management –Prime Contract u Consistency

6 KEY DRIVERS for RELIABLE AFE MEGA PROJECTS u SCOPE OF WORK –SOS and SOF –Methodologies –Suitable for the Purpose –Support AFE Estimate –Consistent with AFE Schedule –Written endorsement by stakeholders

7 KEY DRIVERS for RELIABLE AFE MEGA PROJECTS u COST ESTIMATE –Translate the Base Line into cost and contingencies –Identifies anticipated cost of Project Execution –Input by all stakeholders –Upper Management reviews –Escalation –Contingency assessment –Event Driven Risks –Stated level of probability –Consider an intermediate estimate

8 KEY DRIVERS for RELIABLE AFE MEGA PROJECTS u SCHEDULE –Start with the end in mind –Articulate and visualize the Path of Construction –Precedence diagram –Benchmarking –Modularization –Resource loaded and leveled –Stated level of probability –Risk assessment

9 Schedule Considerations I Engineering Construction TimeT % Complete /3T

10 Schedule Considerations II Pe r ce n t C omp l e t e ENGINEERING CONSTRUCTION CHECKOUT/ STARTUP Percent of Total Contract Time Percent Complete

11 Schedule Considerations II Pe r ce n t C omp l e t e ENGINEERING MODULES ONLY CONSTRUCTION CHECKOUT/ STARTUP Modularized Project Life Cycle Percent of Total Contract Time Percent Complete

12 Schedule Considerations III 25% T 15% T T Construction Progress versus Duration 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 10%20%30%40%50%60%70%80%90% 100% Construction Duration Progress Site Prep, Piling, etc.

13 KEY DRIVERS for RELIABLE AFE MEGA PROJECTS u PROJECT EXECUTION PLAN –Strategy to meet contractual requirements –Execution Flow Chart –Project Management structure –Basis for the AFE Estimate/Schedule –Addresses the Total Project –Written endorsement of all stakeholders –Includes the Change Management Plan

14 KEY DRIVERS for RELIABLE AFE MEGA PROJECTS u CHANGE MANAGEMENT PLAN –Definition and Alignment –Different responses –Change Management Process –Deal with all changes promptly –Change Management log –Direct Impact and Disruption

15 Where do you stand as a PM? Could BeShould Be u We manage and report services cost, but don’t drive to it u Manage and drive TIC and schedule to the Baseline u Maintain a current Baseline through effective Change Management u We forecast TIC, don’t manage to it u We don’t manage or forecast schedule, but drive to it! The only thing that’s missing is a conversation. As Manager, I am responsible for the way it is.

16 KEY DRIVERS for RELIABLE AFE MEGA PROJECTS u RISK MANAGEMENT –Guided and facilitated –Formal and systematic –Assess, mitigate, manage execution risks –Integrated and positive approach –Proactive and forward looking –Updates –Other benefits

17 KEY DRIVERS for RELIABLE AFE MEGA PROJECTS u PRIME CONTRACT –Legal relationship –Reimbursement, liabilities, notifications –Documents commitments –Notification matrix –Can’t cover all eventualities –Behaviors

18 CONCLUSION YES, THERE IS HOPE! u No replacement for experience u Alignment u Mega Projects are RISK projects u Decision making process u Different execution models u Solid organization, populated with competent/experienced people and proven work processes