1. Executing Small Projects Research Team
Small Capital Projects
Executing Small Projects Research Team
Hi. We’re excited about our research and findings and I think you will be too…
The nature of new capital projects in the US is changing.
Gareth Williams
Bechtel
August 3, 2001 Revision

2. The Circumstances Industries maturing
Small capital projects are a larger percentage of most budgets
Small project processes less well understood
Small project managed instinctively
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Chemical, petroleum, steel, pulp and paper and manufacturing industries are maturing in the US. Most of the large facilities have already been built. Today, companies are spending their capital dollars adding on, retooling, upgrading or de-bottlenecking their existing facilities...
…And these projects are of a different nature.
On average CII owner companies are spending about twenty-five million dollars per year at each of their US sites on small capital projects, about 15 to 20% of their overall capital expenditures.
Then you begin to realize that we as an industry don’t understand the nature of this small project work very well. We don’t understand the best practices and the majority of our research and literature applies to large grass roots projects.
Certainly there are people that understand how to manage small projects , but there is no scientific basis! CII for example has one publication on the subject of small projects published ten years ago. Through the years we have been able to make significant progress on our understanding of the processes to manage large projects, but not so on small project processes.
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3. Let’s Break Out of Our Old Ways of Thinking!
It Is Time to Rethink
Let’s Break Out of Our Old Ways of Thinking!
We have a paradigm in the business that big projects are important and sexy and glamorous and small projects are what you do when there’s nothing else. We relegate the small projects to the “new guy” or the second string team. We put our strongest project manager and our exciting new “up and comer” on the “big jobs”. So we unwittingly feed a cycle of behavior.
Let’s break out of our old ways of thinking!
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4. Executing Small Projects Research Team
Gertraud Breitkopf General Services Administration, Chair
Coy Campbell Kværner
Terry D’Souza 3M
Jon Dutcher Abbott Labs
Eric Johnson Solutia
Tony Kanaly BMW Constructors
Matthew Nissen Watkins Engineers & Constructors
Gary Smith North Dakota State
Jim Staudt Rohm & Haas
Gareth Williams Bechtel
With this as a backdrop, CII formed a team to update the research and establish a basis for small project execution led by Gertraud Breitdopf. We had a cross section of owner companies and contractors representatives that do small projects and had a variety of experiences.
Our first step was to agree on what a small project is...
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5. What Is A Small Project? Total cost  $100,000 to $2 million
Part-time, multi-disciplined team
Operating facility environment
Short duration
initially there was a lot of disagreement..
The definition we finally settled on was:
Projects with a Total Installed Costs between one hundred thousand and two million dollars. The organizations we surveyed had many different limits. Really, though, the key identifiers of small projects is:…
They need a part time multi-disciplined team.
Typically, these projects are modifications to existing facilities and are conducted while they are operating.
And these projects usually don’t take long to do…
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6. The Approach
Focused on practices that are different for small projects.
Surveyed 36 diverse organizations that do small projects.
Compiled an exhaustive survey of practices and results.
Visited and interviewed leaders face to face.
Next we had to decide on a course of action. Small projects is a wide open subject with hundreds of different facets and components…
So we decided that we needed to baseline industry practices, and focus on the practices and components that are different than large projects. Best practices for large projects are well documented and understood, so we figured we didn’t need to plough that ground again.
Although the assembled team had a broad range of experience in small project execution, we felt that we needed to broaden the base further still. So we decided to conduct a baseline survey of industry small project practices. The team compiled a list of organizations and contacts (thirty-six in all) that did small projects. We reviewed it to make sure that the cross section was diverse across industries and across contractor/owner organizations.
We compiled an exhaustive survey to document practices and the results, and sent Gary Smith out to talk to these people face to face. We figured that unless we visited these folks face to face, we couldn’t be sure of our data and we wouldn’t get very good or consistent responses.
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7. Results Across the Board
Interviewees had experience with projects per year
Inconsistent data
Inconsistent organizational structures
Inconsistent work processes
The results were all over the board.
Each of the people we interviewed managed or had knowledge of between 30 and a 150 small projects a year at their facility.
It was surprising how many organizations did not keep good records of their performance. Only 58% of them could give us data on budget and schedule performance. The rest, 42% could not.
Organizational structures were wide and varied.
Work processes were anything but standard across the industry and it was surprising how secretive people felt they needed to be about their work processes. A number of organizations with processes that weren’t particularly inventive or unique and who didn’t get particularly good results felt they needed to keep their processes secret because it was a “competitive advantage”.
Even companies at multiple sites had completely different work processes and different results at each site.
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8. The Analysis Documented standard industry practices.
Separated organizations into groups.
Analyzed differences – practices and performance.
The inconsistencies made analysis of the data difficult too.
We were able to base line standard industry practices.
To correlate practices to results we grouped the organizations in various ways and compared the differences.
For example, we grouped the organizations into better and poorer schedule performers so that they were divided evenly. Then we compared the practices of the two groups. There were several practices that correlated strongly. With the correlation we have a basis to claim these practices as small project practices that improve schedule performance.
Similarly, we broke the organizations down into better and poorer budget performers.
In some cases half of the organizations used a certain process and the other half did not. In those cases, we could analyze the performance of the two groups, and that gave us a basis to claim a particular practice as a best practice..
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9. The Industry Needs Improved body of small project knowledge
Clear, documented small project best practices
Consistent small project measures
More attention paid to small projects
The survey clearly demonstrated that the industry has some urgent needs in regards to small projects.
We need to improve the body of knowledge.
We need to clarify, document and use small project best practices
We need to standardize and routinely use measures by which we can judge performance
We need to shift some focus from glamorous large projects to small capital projects where more and more of the money is going.
So given all these needs, we the CII Small Projects Execution Research Team figured we could respond by...
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10. The Small Projects Toolkit
…developing a Small Projects Toolkit in which we begin the process of standardization trying to back-up practices with data.
And providing hype!
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11. The Differences
So…
From an analysis of the numbers we see there is, depending on how you choose to calculate it, a 6% difference in the budget performance of the Better budget performers and the Poorer budget performers.
We’ll see later on that the better performers consistently use many of the Small Projects Best Practices and the Poorer Performers don’t. It’s clear, doing these things saves money. One of the surveyed companies demonstrated a 12% savings by using many of the best practices consistently across a number of their sites.
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12. Four Percent Improvement Equals25
Small Cap Annual Budget
($ Million)
Various Size Projects
$1 Million
Our research found that on average, the CII member companies we interviewed spent about twenty-five million dollars every year on Small Capital Projects for each site.
If we assume conservatively that your organization can realize four-percent improvements over your current practices….
On a twenty-five million dollar capital budget, that equals…
…a Million dollar project every year for Free!!!…
Free Project!
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13. Free Projects! Other Benefits Higher returns on investment
Improved schedule compliance and improved budget compliance
Improved customer satisfaction
Reduced average project duration
So what are the other benefits of this research?
For owner companies there will be higher returns on investment and faster pay-off on the projects they do.
Improved schedule and budget performance.
Improved customer satisfaction.
Reduced overall project durations and faster time to market which leads to…
…Free Projects!!!
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14. CII Knowledge Structure
Front-End Planning
Design
Procurement
Construction
Start-Up and Operations
People
Organization
Project Processes
Project Processes
Project Controls
Contracting
Safety, Health & Environment
Technology & Information
Global
As part of the Small Project Execution Team’s research, we interviewed 43 different people in owner and contractor small project organizations around the country. Each interviewee managed or had knowledge of 30 to 150 small projects a year at their site.
In the interviews we covered the gambit of issues and practices consistent with CII Knowledge Areas. There were three areas that emerged of particular interest. The practices with the most areas for improvement in Small Projects were…
People or Resource Management…
Organization, Contractor Alliances for example and…
Project Processes like estimating and budgeting.
People
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Organization
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15. Best Practices – People
So what did we learn?… People and the project team play a key role in the success of small projects.
One of the practices with a strong correlation to better performance was a consistent small projects core team that works on a steady stream of small projects.
The core teams usually develop standard work processes that don’t have to be reinvented each time the team does a project.
With a core team it’s clear who is responsible when a project goes well or poorly.
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16. Percent of Small Project Delivered On Schedule
100%
90%
Savings!
80%
For this correlation, the organizations divided pretty evenly between those with core teams and those without.
Pause for 10 seconds… 1 – 1,000, 2 – 1,000, 3 – 1,000…
As you can see the group with core teams consistently had better schedule performance. On average 85% of the projects came in on schedule versus 54% for the organizations with no small project core team...
…Pause…
…This of course leads to project savings!
70%
60%
50%
40%
30%
20%
10% 0% No
Core Team
Core Team
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17. Best Practices – Organization
In the organizational arena…
…Generally speaking Owner/ Contractor alliances is a standard practice in the industry now. As it turns out, it’s a best practice too..
With alliances or preferred relationships with engineering and construction contractors:
Owners can quickly mobilize contractors that are familiar with the facility and the owner requirements;
Contractors can quickly come up to speed on the project, and
Plant personnel feel more comfortable with the project when they already know the guys that will be doing the work
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18. Organizations with Alliances
Engineering Alliances
Constructor Alliances
100%
100%
Of the companies we interviewed, most had engineering and construction contractor alliances. In general alliances were favored for small projects over large projects, probably because owner companies can afford the time and money to bid and negotiate with contractors on large projects. On small projects they can’t.
These charts show the percent of organizations with engineering and construction contractor alliances.
90%
90%
80%
80%
70%
70%
60%
60%
50%
50%
40%
40%
30%
30%
20%
20%
10%
10% 0% 0%
Large Projects
Small Projects
Large Projects
Small Projects
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19. Budget Performance of Teams with and without Alliances
8.0%
7.0%
From our metrics committee who has collected a bunch of data for large projects, we have data that shows the value Alliances bring to projects.
As you can see, there is a 2.1% improvement on cost growth for those organizations that use alliances. So preferred Alliance relationships are another best practice that...
…leads to small project savings!
Savings!
6.0%
2.1% Improvement
5.0%
Project Cost Growth
4.0%
3.0%
2.0%
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1.0%
0.0%
No Alliance
Alliance
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20. Best Practices – Work Processes
Standard work processes are a best practice. A written procedure, though, isn’t enough. The team has to follow it through.
In our studies we found that the organizations that used project checklists tended to have more successful small projects. You know the ones… Design checklists and front end planning checklist, perhaps using some form of the PDRI. These come from years of experience doing the same things time after time. They keep the processes standard. Nobody gets to skip something they don’t enjoy doing or don’t see value in. They leave little to chance.
So what did the data show?…
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21. Small Project Organizations with Front-End Planning Checklists80
Savings! 70
Here’s data showing our grouping of better and poorer schedule performers and the percentage that used Front End Planning Checklists.
Our better and poorer budget performers had even more divergence.
Pause for 8 seconds… 1 – 1,000, 2 – 1,000, 3 – 1,000…
By using checklists, companies perform better on their small projects and better budget and schedule performance of course pays off in…
…Cost Savings! 60 50
Percent Using Checklists 40 30 20 10
Better
Poorer
Better
Poorer
Schedule Performer
Budget Performer
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22. Free Projects! Best Practices Improved Return on Investment
Improved Schedule and Budget Reliability
Improved Customer Satisfaction
Summing it up,
consistent core teams,
contractor Alliances and
project checklists lead to…
…Improved Returns on Investment
…Improved Schedule and Budget reliability,
…Improved Customer Satisfaction...
...and the savings adds up to…
…Free Projects!!!
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23. It is Time to Get out of Our Jar!
Let’s re-examine:
Where we put our best people
Where we invest our time
Our practices
Our operations
It’s time to get out of our jar!
Small Projects comprise a significant portion of our companies capital budgets and we can’t continue to do them the way we’ve always done them!
Let’s re-examine:
...Where we put our most valuable people
...Where we invest our time
…Let’s reevaluate our work processes
…And our operations
We need to do small projects as effectively as we do large ones. After all, it’s worth a free project or two!
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24. A Few of the Tools in the Toolbox
Come to the Implementation Session and See More!
I’ve only been able to cover a few of the tools in our toolbox here. We have a small projects execution toolkit that I encourage you all to read and we will cover much more in the Implementation Session.
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25. Implementation Session
Introduction
People
Scenario
Research
Best Practices
Front End Planning
Organization
Conclusion
We’ll be going through some scenarios and we’ll review the research and Best Practices for People, Front End Planning and Organization. I invite you to come visit us
August 3, 2001 Revision