In the past, detailed examination of the project execution strategy has often not taken place until the Basis for Design has been developed and Concept Definition is underway, leading to the preparation of the Project Specification. Very often, the right project management skills and experience have not been available to enable credible examination of the strategy before this time. Experience in Shell and in the oil industry at large now firmly indicates that the time to address the fundamental aspects of project execution strategy is during the ORP Phase 2 – Select of the opportunity, with further refinement, expansion and detail taking place during ORP Phase 3 – Define. The right skills and experience must be defined on the Opportunity Roadmap and brought to bear at the appropriate time.
The Project Execution Plan (PEP) is one of the most important of the opportunity’s strategy formation deliverables and the framework for the document (and, hence, for the thinking process) should be established early in the Select Phase1. The decisions taken during this Phase will largely decide the project organisational requirements and lay the groundwork for detailed project planning and cost estimating. The PEP may be as short or as long as warranted by the size and complexity of the project but it is a required deliverable. Its main value is in inspiring and recording the strategic thinking process and acting as a blueprint for project staff as the project moves forward. For any significant project the PEP will generally cover the topics in the table alongside.
During ORP Phase 2 – Select, the project execution planning emphasis and detail will vary from section-to-section with far more emphasis on the strategic elements of the plan than on the management aspects. (The management aspects will receive much more attention during Phase 3 – Define.) Costs and schedule will be preliminary, to the level of accuracy allowed by the scope definition at the time, and thinking on Sections 6 to 10 and 12 to 15 will normally be at a high level only. The major emphasis in Phase 2 will be on the Objectives, the Contracting Strategy, the Human Resource requirements, the Risks and the Improvement (maximisation of value) possible within the opportunity. The importance of an early definition of the Work Breakdown Structure2 cannot be overemphasised. This is the framework for the development of the cost estimate, the schedule, the contracting strategy and the project team’s organisational structure.
Contents of Project Execution Plan
- Purpose/Vision/Mission/Objective
- Work Scope
- Schedule
- Budget and Funding Plan
- Third Party Approvals
- Design
- Procurement
- Logistics
- Construction
- Contracting Strategy
- HSE
- Quality
- Commissioning, Handover and Start-up
- Planning and Cost Management
- Information Management
- Human Resources
- Risk Management
- Improvement Plan
Purpose/Mission/Vision/Objectives
The purpose of the PEP document should be described, the team’s mission briefly explained, its vision documented and its specific major measurable objectives in support of its vision defined. (The majority of the above will have been developed during Opportunity Framing.)
Work Scope
Information briefly describing the background and scope of the project should be summarised with extracts, diagrams, figures etc. from the development plan, and project specification. Typically the following project particulars expressed in terms of quantified goals and objectives, should be included:
- summary of reservoir development considerations from the (field) development plan;
- summary of the development concept from the project specification, describing the main facilities/systems to be provided in order to fulfil the objectives;
- relevant location maps, lay-out and process flow schemes;
- description of the physical environment, if applicable;
- any additional external requirements (e.g. HSE, statutory, etc.) of specific importance to the execution of the project.
Schedule
Include both the Opportunity Roadmap and the Level 1 barchart schedule and indicate the major project milestones. It is also useful to include the Level 2 schedule as an appendix. Due allowance in the schedule should be made for such items as tendering procedures, contract negotiations, obtaining necessary permits and licences, etc. Cross linkages between contracts should be shown (e.g. output from the design contractor to suit fabrication/ procurement/installation bidding).
Budget and Funding Plan
Show the Level 1 cost estimate(The detailed Level 3 estimate may be included as an appendix if it is not formally documented separately.) The estimate must be compatible with the chosen Work Breakdown Structure, be phased by year and include all necessary allowances and contingencies. The accuracy of the estimate will vary with time but should follow the rules set out in 4.2, Cost Management. A plan to obtain the necessary funding for the project should be included together with a financial breakdown of the project at Request for Authority (RFA) level (sometimes known as Approval for Expenditure (AFE).
The RFAs in the commitment plan should correspond to the major commitments, composed of packages of activities, as determined by the contracting strategy. Each RFA shown may cover one or more commitment, and each commitment in turn can represent either a single activity or several activities. The total of the RFA amounts should be the same as the project budget proposal. The commitment plan could be either in a tabular format or overlaid on the planned expenditure S-curve.
Third Party Approvals
Identify all third party technical and financial approvals and their timing needed throughout the project duration.
Design
Indicate the design strategy (e.g. how the Basis for Design and Project Specification will be arrived at, whether overlaps of design and construction are planned and how this will be managed, how constructability will be built into the design, what elements of design might be placed with construction contractors etc. etc.). Explain how the design activity will be managed to ensure its timeliness, cost effectiveness and quality.
Procurement
Describe the procurement strategy together with a description of the procurement process and a schedule for successfully achieving all of the procurement activities on the project. The procurement strategy should be developed jointly with the procurement department. The strategy should reflect corporate procurement policies (e.g. global procurement, e-procurement etc.) and host government requirements as well as identify what will be provided in-house and what will be procured by others. It should be developed at the same time as the contracting strategy.
A schedule should be developed to identify the key milestones for the critical material deliveries based on vendor data and ROS dates. Procurement procedures will need to be established. These preferably should be by exception where standard OU procedures are inappropriate or missing.
The procurement strategy should also consider the provision of equipment training for operations staff and the possibility of ‘health-care’ contracts, where the maintenance of the equipment for a specified period is included in the vendor’s scope. Vendor assistance during construction, commissioning and start-up should be addressed and the strategy for obtaining it.
The procurement strategy should also consider the provision of equipment training for operations staff and the possibility of ‘health-care’ contracts, where the maintenance of the equipment for a specified period is included in the vendor’s scope. Vendor assistance during construction, commissioning and start-up should be addressed and the strategy for obtaining it.
Logistics
The strategy for personnel and materials and equipment movement, and storage and materials and equipment preservation should be described.
Construction
Describe the construction strategy (e.g. what elements are to be prefabricated, how transportation, installation and hook-up will take place etc. etc.). Explain how the construction activity will be managed to ensure time, cost, quality and HSE objectives will be met.
Commissioning, Handover and Start-up
Prior to commencing the project, a strategy needs to be developed and agreed with the ‘owner’, defining the critical commissioning, handover and start-up stages of the project. This should define who the ‘owner’ is for each stage, who is delegated responsibility for ultimately accepting the facility on behalf of the ‘owner’ and the process to be followed in order to achieve a mutually agreed successful handover. Describe the commissioning philosophyand how it ties-in with the Procurement and Construction Strategies.
Contracting Strategy
Describe the contracting strategy9, together with a description of the contracting process and the schedule to be followed for successful award of the major contracts. The contracting strategy is defined as the combined plan for all the major contracts within a project, with respect to the decision on commercial form, method of contractor selection and combination and interfacing of activities. The development of the contracting strategy is a task which should never be underestimated. It should be tackled at the earliest possible time (Phase 2 – Select) and should be based on a thorough analysis of available options. It needs to be developed in close discussion with management and with any third-party who may have an input into the final decision.
With the trend towards life cycle service (Procure – Build – Operate), selecting the right form of contract is a crucial decision in the contract preparation. Most of the work within a project will be contracted out, representing around 80-90% of the project budget. The contracts plan, as part of the PEP, should be one of the aspects by which the OU management will judge the soundness of the proposed project before commitments are made.
With the trend towards life cycle service (Procure – Build – Operate), selecting the right form of contract is a crucial decision in the contract preparation. Most of the work within a project will be contracted out, representing around 80-90% of the project budget. The contracts plan, as part of the PEP, should be one of the aspects by which the OU management will judge the soundness of the proposed project before commitments are made.
Determining the preferred contracting strategy involves many aspects:
- Contractor availability and compatibility
- host government position and influence
- OU’s own resource availability CHR and activity assets • market forces
- local content issues B. O. Q
A common way of presenting the overall contracting strategy in a summary form is through a contract matrix. As well as the proposed contract strategy, the contracts plan should highlight the prequalification/tender/award process to be followed10 and a timetable for achieving the scheduled major contract award dates.
Health, Safety and Environment (HSE)
The HSE Plan essentially describes how an HSE management system is to be applied to the project. In certain projects and environments this will be called an HSE case.
The detail of the documentation should be in keeping with the complexity and level of risk associated with the project. The HSE Plan should, where possible be a customisation and extension of the Company HSE Management System.
Key HSE Plan deliverables are:
- Health, Safety and Environmental Management Systems
- Design Safety Case
- Construction Safety Case
- Operations Safety Case
- Environmental Impact Assessment
- HSE Improvement Plan
Quality
The Quality Assurance process to be described comprises the following steps:
- establish what the customers’ needs are
- plan how to achieve them
- assess what activities and products are critical
- allocate responsibilities and define appropriate controls (including audit and review)
- check methods/results and correct any mistakes
- keep records to document all the above
- improve
Both Quality Assurance and Quality Control (e.g. Inspection Plan) need to be addressed.
Planning and Cost Management
Explain the different levels of schedule planning (Roadmap, levels 1, 2, 3, 4 schedules), planning responsibilities and reporting and progress analysis methods for the various elements of the work (design, procurement, construction, commissioning.)
Describe the cost estimating and reporting process and responsibilities and how cost will be controlled by way of the technical change management process.
Information Management
Describe the project interface management and communications plans with respect to joint venture partners, corporate management, government, other major stakeholders, project team, contractors, including:
- Document distribution and control
- Computer and other communication networks – local and international
- Meetings
- Reports
- Posters and newsletters etc.
Human Resources
The resources and their organisation are generally determined or shaped by the project complexity, work breakdown structure and the proposed contracting and procurement strategies above. Conversely, availability or non-availability of Shell staff can have an impact on the project strategy. The PEP should describe and map the proposed resources and organisation across the project life, in line with the main project phases or contracts. A manpower histogram and proposed organisation chart(s) should be included. The required skill levels/disciplines for the key positions in the organisation chart should be identified.
The positions should be described in terms of purpose, responsibilities, accountabilities, and experience/ qualifications required. The position descriptions should also address the occupational health hazards of the job (e.g. amount and type of travel, work location/ environment, living accommodation and conditions) and the PEP should propose how these hazards will be addressed.
The proposed organisation then needs to be resourced. The PEP should describe how and from where the incumbents will be provided. It is normal practice to begin by filling the positions from local/existing resources, where possible. The PEP should also address how staff planning will be actively managed during the project, in order to man up on a timely basis, ensure continuity and then to manage the run down at the end of the project.
The strategy should also address any extra facilities project staff may require, such as office space, computing equipment, clerical support, transport, etc. Domestic facilities may have to be provided if any of the staff are to work away from their normal home environment.
Finally, the strategy should include reference to the resourcing plan for ORP Phase 5 Operate.
Risk Management
As part of the preparation for the PEP it is necessary to identify the major risks to the successful execution of the project as planned. This can best be undertaken via a brain storming session with all relevant parties. This identification exercise should seek to highlight the major risks to the project, their criticality, their probability of occurrence and their consequences1. The PEP should record the major identified hazards and contingency measures that the project team intend to take to remove or minimize these risks. They should be reflected in the cost estimate and/or the project schedule and if necessary some allowance made in the contingencies.
Improvement Plans
Describe how the project intends to maximize the value of the opportunity through use of the ORP Toolbox to obtain reduced scope, cost and schedule. (The highlights of this plan will have been identified on the Opportunity Roadmap.)
In general, the Project Execution Plan should be:
• succinct but clear
• started as early as possible in the project lifecycle (Phase 2 – Select)
• completed by the time of the FID
• updated both before and after FID as more information becomes available or
strategies need to adapt to changing circumstances
• made widely available to the project team, decision makers and key stakeholders.