Downstream Schedule Analysis for NON-Schedulers

Amanda M. Madl 55566 February 12, 2010

Table of Contents List of Figures Abstract Introduction Data Collection and Tool Development Data Analysis and Rules of Thumb Common Areas of Concern Resource Loading Conclusion Bibliography 3 4 5 6 9 10 12 14 15

List of Figures Figure 1 Figure 2 Figure 3 Example of a Schedule Data Collection Sheet Sample Phase Duration Comparison 8 Typical Craft Curves 13

Abstract

The objective is to discuss how someone without a scheduling background or access to scheduling software can perform simple, but powerful analysis of downstream project schedules based on historical data. The first topic covered will be the data that needs to be collected as well as how to relate dollars to durations. This information will allow for historical data to be used to develop equations to create an analysis tool. The paper will discuss some common sense rules of thumb for use in evaluating schedules such as typical phase overlaps. This will lead into the final topic which is top concerns to be on the look out for when evaluating a schedule. With this relatively simple information, anyone can perform a high level evaluation of a schedule for refining and chemical facility projects. This information can help non-schedulers to validate schedule information they are provided when developing estimates or benchmarks and catch disconnects before they become major issues for a project.

Introduction

Often times in downstream projects, the scheduler and the estimator operate independently. Both individuals may be integrated with the project team, both possibly communicating with the same project team members regarding scope, but not communicating directly with each other. It is this lack of communication that leads to disconnects not usually uncovered until the project has moved into the field when changes are most costly. This paper will discuss how someone without a scheduling background, for example an estimator, project engineer or project manager, and without access to scheduling software can perform simple but powerful analysis of downstream project schedules based on historical data. This communication outline can help to alleviate those problems caused by the independent development of the estimate and the schedule for a project by providing a way to ensure those two deliverables agree based on historical information. The first topic covered will be the data that needs to be collected in order to make historical comparisons. As a part of this topic, this paper will also discuss how to relate dollars to durations. This information along with some statistical regression work can be used to develop equations to create an analysis tool. This paper will not discuss the actual development of those equations, only the information required to begin development. The analysis tool as presented is appropriate for process projects in chemical plants and refineries, but not intended to be used for DCS, instrument and electrical only projects or other industries. An analogous tool could almost certainly be created for other industries; however, this paper will only touch on the tool for petrochemical facilities.

Following the discussion of how to get started with creating a schedule comparison tool, this paper will discuss the output from a similar tool and how to use that output for analysis purposes. As a part of this topic, the paper will also cover some typical rules of thumb for schedule analysis such as typical phase overlaps. This will lead to a discussion of the top items to watch for when evaluating a schedule. Following the discussion on common concerns, the final topic covered will be resource loading. Resource loading is of the upmost importance for schedule and estimate development for a project. Only with a properly resource loaded schedule which directly matches the hours in the estimate, can a project team be truly confident in their cost and schedule. The final section of this paper will cover the importance of resource loading and the key items to look at when reviewing a resource loaded schedule.

Data Collection and Tool Development Before someone without scheduling experience or software can hope to compare a schedule to historical norms, certain historical data must be collected and processed in order to create a comparison data set and hopefully a simple comparison tool. This data includes some very basic information on a project, namely the total installed cost and the phase durations. In order to collect this data in a uniform fashion, definitions of the project phases must be established. AACE International does not define these time periods in their Recommended Practice No. 10S-90 Cost Engineering, Terminology [1] or their Planning and Scheduling Professional Certification Study Guide [2]. For the purposes of this paper, the durations will be defined as follows: o FEED/Project Definition: Period between the initial organization of a team to consider the business issues surrounding a potential project and the completion of the basic design package. Includes both FEED 2 and FEED 3 as defined below. FEED 2/Scoping: Time from creation of the core project team to the completion of scope selection and the development of process flow diagrams. FEED 3/Design: Time from the completion of scope selection to the completion of the design package. o Detailed Engineering: Time from start of preparation of first issue-forconstruction drawings and development of the first equipment specifications through point when engineering is essentially greater than 95% complete. o Procurement: Period that begins with the placement of the first order for major equipment or bulk material and ends with the last delivery of major equipment or bulk material to the site. These purchases are typically made by the engineering contractor. This excludes purchase of small items in the field that may continue through mechanical completion. o Construction: Time between the start of first foundation work for a project to mechanical completion. Site preparation work is normally excluded from the construction period. Site preparation work includes grubbing the site, leveling, clearing, and piling. o Execution: Time from the start of detailed engineering through mechanical completion o Turnaround: A planned, temporary stoppage of operation of any portion of a facility, unit or process plant. The objective of the stoppage is to perform maintenance (like-for-like replacements, repairs, inspections, cleaning or catalyst change outs) and/or capital projects (upgrades, add-ons, or tie-ins of capital projects) that cannot be done while the facility is under normal operating conditions. o Startup: Time between mechanical completion and the point where steadystate operating performance is attained, regardless of whether nameplate capacity has been obtained. o Total Project Cycle Time: Period from the start of FEED 2 to mechanical completion. After the definitions of the durations to be collected are established and communicated, then data collection can begin. In the data collection effort a common collection form, like the example in 6

Figure 1, Example of a Schedule Data Collection Sheet, can be helpful in keeping the data consistent.

Figure 1: Example of a Schedule Data Collection Sheet

Cost data is important in this data collection effort. For the schedule analysis purposes all that is needed is a total installed cost (TIC) for the project, although more detailed cost information may be collected for other purposes. Initially, the most important data to collect is the project close out information. The project close out data is critical for establishing a comparison data set. As the amount of data collected begins to accumulate, a look at this data by phase will begin to show relationships between the total installed cost of a project and the length of each phase. Individual phase curves of duration vs. total installed cost can be developed from this information, as well as a curve of execution duration to total installed cost. These curves, which are simply trend lines that best fit the data collected, represent the equations needed to create a schedule comparison tool within a simple database. With the exception of FEED 2, regressions the other phase durations must have regressions developed for both the start of the phase and for durations. FEED 2 does not require a start-of-phase curve because the start of FEED 2 is considered the start of the project cycle. Developing both curves for the phases other than FEED 2 allows the data to be recast in a composite bar chart as shown in the historical averages section at the top of Figure 2, Sample Phase Duration Comparison.

Figure 2: Sample Phase Duration Comparison

Whether someone chooses to simply use the curves, or to translate those curves into an automated tool, this information provides a method of building an average historical schedule for a given TIC based on the data collected. This schedule can then be used to compare to planned schedules for ongoing or upcoming projects to the historical norms used to create the curves. It is important to include the duration estimates for each phase of the project as well as the total execution cycle time. These can serve as a check of the data. If the historical data set contains sufficient, quality data, then the execution estimated duration should be a close approximation of the engineering, procurement and construction durations developed from the curves. From this information, we can now start to analyze a schedule based on high level historical information for a typical process project in a chemical facility or refinery. 8

Data Analysis and Rules of Thumb For this section on data analysis, assume that Figure 2 reflects the estimated schedule for an actual project. For discussion purposes, we will assume that the project is a standard, brown field construction project in a refinery or chemical facility. This project has a mandated end date which results in the schedule durations shown in the bottom half of Figure 2. As the project moves forward to its funding gate, the information provided by a high level analysis, as discussed in this section, can be used to prepare the project team to address concerns and highlight risks associated with the projects plan for further investigation in the detailed schedule reviews and schedule risking sessions. Rule of Thumb #1: Speed kills From the graphical output of the scheduling tool used to create the example, anyone reviewing this information can see that based on historical norms, this projects plan is aggressive. A schedule analysis done for this project based on this information should highlight those areas where large discrepancies are seen, namely project definition, engineering, and construction. The overall EPC cycle time for the project is also considered somewhat aggressive. This project has premised an engineering duration that is approximately 35% faster than the historical norm shown. Perhaps there is a reason the project has premised such a short duration. It may be that this project team is buying a packaged unit and believes it will require less time in detailed engineering. However, FEED and engineering durations are not typically affected by utilizing a basic design package from a licensor. Using a basic design package only reduces the number of process hours required; it does not decrease the hours required for scope development. This shortened engineering duration along with the obviously short project definition phase should be emphasized as risks to the project team along with the possible consequences of short engineering and project definition durations. The most serious impact of a short engineering phase and a short project definition phase is incomplete definition and consequently the potential for late changes in the field. Changes are most costly once a project is in the field, both in cost and schedule. It is better to lengthen project definition and engineering to allow time for complete scope development and engineering than to move into the field too early and suffer changes as a result. Those changes in the field will cause a longer delay in the schedule and cost more than the same changes done in the project definition and engineering phases. Rule of Thumb #2: Engineering should not overlap construction by more than 30%. In the example project schedule shown in Figure 2, construction is shown to begin when engineering is around 40% complete. This is an optimistic target. While it may be possible to execute a project well while moving into the field at 50% complete on engineering, that large overlap certainly increases the risks to the project in the field. Large overlaps in phases, particularly overlaps between project definition and procurement as well as engineering and construction, significantly increase the risk of late changes such as changes in tie-in locations, pipe routings, even line sizes. When these types of changes occur after construction has begun, the chance of re-work increases. Rule of Thumb #3: Know the ranges of your historical performance When performing an analysis on a schedule like the example in Figure 2, it is important to be aware of the outer bounds of past project performance included in the data set. For example, if it is known that the best performance in past projects is 10% faster than historical average for construction duration, then this project team is planning to attempt something that has never been achieved. However, if that outer limit is 20% faster, then this project teams plan of completing construction 9

13% faster than the historical average could be reasonable. This assumes the conditions surrounding construction are right, for example a clean plot and complete engineering. Rule of Thumb #4: Know your project team The makeup of a project team is not something that most people would consider when evaluating a schedule, but sometimes knowledge of the project team can be quite insightful. It is worth noting in an analysis whether or not this project team has worked together before on past projects. If the core project team has worked previous projects, the performance of those projects versus both historical averages and their planned schedule should be included in the schedule analysis. This information can help the project team to either build their case for their proposed project plan or it can serve as a reminder of where the team ran into problems previously. Rule of Thumb #5: 1 week worked in turnaround = 4 weeks worked on a regular schedule Turnarounds are intense periods of work during which an operating facility or unit is shut down to complete maintenance or capital project work. The time periods are carefully planned to be as short as possible since each day of operation lost is a loss of revenue for the business to which it belongs. For that reason, turnarounds are usually worked with 2 twelve hour shifts rather than the typical construction schedule of a 50 hour work week. The obvious result of this fact is more work is complete during week worked during a turnaround than in the typical week of capital project construction outside of a turnaround. The general rule is that one week of turnaround is the equivalent of four weeks worked outside of a turnaround. This rule is important to take into consideration when comparing projects completed without a turnaround to projects completed with a turnaround. The high level view of the schedule provided by the tool is not meant to replace communication with the project team or scheduler; it is meant to facilitate communication. The recommendations of a schedule analysis done from a tool like this should always include risk analysis of the resource loaded schedule and a review of the schedule logic. The recommendation can also include a list of common areas of concern for project schedules, discussed in the next section, which should be emphasized at a true schedule review before finalizing the plan. Common Areas of Concern The high level schedule analysis discussed to this point is only a tool to be used as a sanity check for the large issues that can plague a project plan. This analysis in no way takes the place of a true detailed schedule review. The items discussed in this section are the typical areas of concern to be aware of when participating in a project schedule review. Out of sequence work Common sense says that a project cannot install piping in a rack until that rack is built. Remarkably, work sometimes does not get scheduled in that manner the first time around. It is imperative that a project schedule be checked and rechecked for out of sequence work. Some typical items to look for are piping being completed before steel, or electrical being completed before piping. If a project gets to the field with a schedule that includes out of sequence work, the project can be sure there will be significant delays and cost increases as a result. However, even with a properly sequenced schedule, out of sequence work can still occur in the field. That is why physical progressing is important during construction. Physical progressing during construction can help the project team to identify out of sequence work much faster, and set the project back on course. This fact should be highlighted to a project team as early as possible so that 10

physical progressing can be incorporated into the execution planning as a way to safeguard the schedule. Open ended activities/Faulty logic A project schedule with open ended activities and faulty logic can be misleading to everyone. This is an item that only someone able to review the logic of the schedule can see, however, making it important for a project schedule to undergo a peer review. The project may seem to have appropriate durations when looked at with the simple scheduling tool above, but without the proper ties and logic within those durations, the true critical path of the project cannot be identified. The critical path is a calculation, not an event. The scheduler should be asked to run a critical path on any schedule being reviewed. If a critical path cannot be run, then there is faulty logic to fix. If the critical path is run successfully, the activities on that critical path should be identified and reviewed to ensure that the critical path makes sense. Without knowing the critical path, the project cannot truly know when completion should be expected. Delivery of Long Lead equipment This item also ties in to the previous discussion on open ended activities and faulty logic. All long lead deliveries should be accounted for in the schedule to ensure that they do not impact the critical path. For example, if a project has a large compressor, past experience indicates that it takes approximately 6 months after delivery to complete installation. If that compressor delivery is not tied to the associated installation activities in the schedule, the project may not realize that the critical path of the project actually runs through that compressor and its delivery until it is too late to expedite the delivery leading them to ultimately exceed the planned schedule. Negative Float A schedule should always be double checked for negative float. Negative float in a schedule that is being used at an approval gate means that the project is already behind schedule or there is some other problem with the logic in the schedule and is reason enough for a project to be rejected at the approval gate. Negative float indicates serious problems with the project plan, specifically that the end date as planned is not attainable. The presence of negative float in a schedule at any stage merits investigation to discover the cause. Not integrating project and turnaround schedules Often times, capital projects done in operating chemical facilities and refineries must wait for a turnaround to complete their work, or in some instances, do the bulk of their construction work within a turnaround. When this happens, for both the project and the turnaround to be successful, it is imperative that an integrated schedule be developed. Turnarounds bring large numbers of workers into concentrated areas of the facility. Only an integrated and resource loaded schedule will ensure that the turnaround work and the project work can be planned in a manner that each will not interfere with the other causing delays and potential safety issues. Check that the estimate basis and schedule basis agree Although the criteria for the schedule basis and the estimate basis are likely set by the same people, it is important that during a schedule or estimate review that the basis is checked for accuracy and completeness. Many projects find upon review that changes have been made that were not fully communicated to either the estimator or the scheduler. This miscommunication can lead to serious issues later in the project if it is not discovered early. The review of the basis documents should include a check of the man-hours to ensure that the schedule and estimate agree, as well as a check of the scope covered by each. Both of these items can cause problems for the project, but the scope is of the upmost importance. The project team should review in detail the scope covered by the 11

schedule to ensure that all scope has been covered. Missed scope items will cause the schedule to provide an incomplete view of the project and possibly and inaccurate view of the critical path of the project. This may seem like a simple task, and it should be an easy check, but overlooking the simple items like ensuring the scope is completely covered by the schedule, can lead to serious problems in the field. By being aware of the common areas of concern when participating in a full schedule review, the project team can participate more effectively. Resource Loading Resource loading is an extremely important aspect of a good schedule as a project is heading through its last gate and into execution. Without a resource loaded schedule, the project team is blind to see logistical hurdles that lie ahead in the field. For that reason, resource loading is of high importance as is checking the validity of that resource loading during a schedule review. Some project teams would argue that resource loading a schedule is the job of the construction team that is hired. That construction team is responsible for putting together a plan and executing the work accordingly. However, if that construction team is not hired on until after the last gate is passed, the project team and their upper management may be in for a surprise once that final plan is put together. Near the end of FEED 3, a schedule is an estimate as well, and should be checked accordingly. By doing their own resource loaded schedule, the project team is better prepared for setting realistic expectations for their management as well as evaluating those plans put together by the construction contractors. The project team should always request that the scheduler provide a copy of the discipline craft curves when they are reviewing a resource loaded schedule. Figure 3, Typical Craft Curves [3], shows an ideal example of average craft resource loading and the relationship of one craft to another.

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Figure 3: Typical Craft Curves [3]

These craft curves are estimated at the beginning of a project and should be updated as the project progresses. There are some specific items to look for when reviewing these curves that provide a strong indication of project cost and schedule performance. [4] Those items are as follows: Rate of completion per week [4] Resource loading at the peak of a discipline curve [4] The relationships of the peaks to each other [4] Peak to average labor ratios [4] The first item to review is the rate of completion per week. In general a project schedule should not show more than 2-3% of completion per week. This percentage of completion is a reasonable expectation. Planning for any greater rate of completion per week, the project is setting itself up for failure. After reviewing the rate of completion, the peak resource loading for each discipline should be reviewed. The peak represents the maximum number of workers scheduled to be onsite at any one time in the project. The project team should be aware, from labor studies done either for their project or other previous projects, of how many workers can effectively work on the project site at one time. If that number is 500, but at the piping peak the resource loading is based on 800 workers in piping alone, the project team will need to consider lengthening their schedule. 13

Looking at a composite graph of all of the craft curves on a single graph makes it easier to see the relationships of the discipline peaks to each other and whether or not those peaks are in an appropriate order. The curves in Figure 3 peak in the ideal order: civil, steel, mechanical, piping, and electrical. It is important to check that the craft curves peak in the right order to avoid rework. For example, if electrical peaks prior to piping, the project opens itself to the risk of significant electrical rework caused by conflicts when installing the piping. Also important is that the work starts in an appropriate order. A review of these relationships will help to ensure that the project is executed in an efficient manner by minimizing the risk of rework and the chance of a discipline being idle because they ran out of material or have to wait for another discipline to complete before continuing. This is also the reason that these curves should be updated throughout the life of the project. The peak to average labor ratio is a simple check. As previously stated, the peak of the curve represents the maximum number of workers scheduled to be on site at any one time during the project. The average labor is calculated by dividing the area under the curve by the total number of weeks. By comparing the manpower at the discipline peak to the average manpower for that discipline for the life of the project, we can see whether or not the planned peak is reasonable. In general this ratio should be approximately 2. If it is greater than 2, it suggests there are too many workers on the site which is a safety concern as well as a cause of congestion which slows down productivity. A ratio above 2 should be highlighted as a potential risk to the project with regards to discipline staffing and as a result meeting their schedule. In addition to the items discussed above, another fundamental consideration is religious and cultural holidays. It is expected that holidays are taken into consideration when developing a schedule, but they must also be considered from the resource perspective. Data indicates that during the last two weeks of December, staffing levels historically drop by 80 percent. There is also strong evidence that the time lost cannot be regained by increasing the construction hours in January. [4] The result of inappropriate resource planning for holidays is that the project will need to work overtime hours, which can lead to a decrease in productivity leaving the project behind schedule and in cost over run.

Conclusion As discussed in this paper, with the collection of consistent, high level data on project close out, a simple comparison tool can be developed. By using your own historical norms to develop this tool, you will be able to compare on-going and up-coming project plans to past performance at a very high level. Using a simple schedule comparison tool as discussed, along with the application of some general rules of thumb, can provide a sanity check on the durations planned for a project based on its TIC. Keeping in mind the typical areas of concern for a project schedule, this relatively simple information can enable anyone, for example a cost estimator, project engineer or project manager, to complete a high level evaluation of a schedule for refining and chemical facility projects. This high level evaluation does not replace a detailed review by someone trained in the use of scheduling software. However, this information can help non-schedulers to validate schedule information they are provided when developing estimates, benchmarks, or execution plans and catch disconnects before they become major issues for a project.

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Bibliography

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Description AACE International 2009 Recommended Practice No. 10S-90 Cost Engineering Terminology 2009 AACE International Recommended Practices United States of America AACE International 2008 Planning and Scheduling Professional Certification Study Guide 2008 AACE International United States of America Whiteside, J.D. 2009 Data Analysis, Statistical Modeling, and Estimate Review Techniques 2009 AACE International Technical Board - Seminar United States of America Whiteside II, James D. 2002 Craft Curves for Estimating and Project Evaluation 2002 AACE International Transactions United States of America AACE International 2006 Recommended Practice No. 14R-90 Responsibility and Required Skills for a Project Planning and Scheduling Professional 2006 AACE International Recommended Practices United States of America

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