Critical Chain Implementation at Kattupalli

Critical Chain ImplementationatKattupalliIntroduction by PRP: 1-2 minutes1Introduction Lot of complexityCentral/State/Local approvalsFunding issues50+ vendors/suppliersDay-to-day sync issuesGeo-political issuesLabor issuesTechnology issues Durations are estimatesLot of SlackWaste is embedded in the projectPossible to do much faster if proper methodology is usedBackgroundL&T decided to set up a Mega Shipyard on the east coast at Kattupalli, near Ennore north of Chennai in the year 2007. This facility would undertake building of Defense vessels and also have the capability to build commercial vessels and undertake repairs.The project got the management sanction in December 2008. The execution team was mandated with target of making the shipyard operational in the shortest possible time. This was a daunting task considering it involved setting up marine facilities (breakwaters, shiplift, jetties) and land facilities (shops, infrastructure and utilities). Based on our past experience in implementing TOC in manufacturing, we decided to use it for construction. We chose Realization Technologies as our implementation partner.Time: 1 minute for this slide3Project overviewA INR 1800 crores infrastructure project completed in 28 months19 Production Shops, with equipment & cranes installationAssociated services (power, roads, sewerage, fresh water, fire-fighting)3.5 km of Breakwater (completion of forward pass for navigational clearance)Shiplift

The 2nd shiplift in India. First is 175 m long, 25 m wide, manufactured and commissioned by a foreign company (with over 90% market share) in 25 monthsL&T is the only company in India to design, build and commission a Shiplift completely in-house (200 m long; 46 m wide) emphasizing its leadership in engineering & constructionSafety First - Throughout the 28 months of execution, and more than 2.5 million man-hours, there were zero accidents at site.Uncompromised Quality - Internationally acclaimed Lloyds Registrar of Shipping involved in thorough inspection from procurement of raw material to final commissioning.Time: 1 minute for this slide

Focus on getting it right first time and matching benchmark set by the leading company in the world L&Ts capability to match the bestPeople think faster execution means compromising quality and safety; proof that CCPM is not about compromising

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Shiplift the conceptANIMATION VIDEOWe need a 2 minute video for thisIll show you a short video to explain what a shiplift is5Due date importanceShipyard Due to large investment of over 1800 crores, interest and the depreciation would amount to over 1 Cr per day.Timely completion of the shipyard would enable the yard to bid for large orders as well as start the revenue inflows.Shiplift in particularA common facility between the new-build and repair business streams, as such it is longer lead time and hence readiness a important consideration.Enable starting of Repair business for which the market was expected to be good unlike new build orders.Time: 1 minuteFocus on Shiplift being the Critical Chain as without it Shipyard cannot be considered ready for business6Summary of resultsFK PhasePlanned3 months24 monthsOct 2009Site activity startsSep 2011Shiplift commissioned5 months of delays in supply of platesHard soil strata at 30-35 m depthBought outs delayed by 4.5 months3 excessive monsoons3 cyclonesHeavy manpower shortage due to CGBan on river sand5 months recovered through improved execution3 months28 monthsOct 2009Site activity startsJan 2012Shiplift commissionedFK PhaseActualTime: 2 minutesReason why we chose Realization is we wanted to ensure that uncertainties can be managed in such a risky ventureWhy this implementation is a big successUsually, in traditional PM delays cascade - 6 month delay multiplies to 12Here we not only absorbed most of the common uncertainties, we recovered 5 months on the biggest unavoidable ones7Other benefits observedNo fire-fightingEntire management capacity could focus on one or two problem areas at a timeAs a result, management team had the time to plan out stages in advance Various risk mitigation exercises were performed (in addition to those initially planned) during the course of execution to validate design and concept e.g. trial integration performed well ahead of timeRecovery actions were planned out well in advance, trial processes run and validated to minimize duration of actual activity

Time: 1 minuteIn traditional PM fire fighting is a norm. Everybody wants to prepare well but under pressure of dates and lack of time that is the easiest to compromise. Here we went beyond the scope in mitigating risks8Single core team for PMPresident, L&T HEDFinance/ LegalOperations/ Supply ChainHRMarketing and SalesRealization DirectorRealization Site teamFocused on managing scheduleTechnical ConsultantsVendorsContractorsKey Management TeamProject TeamFocused on technical solutionsPlanning Ensure Critical Chain rulesReviews Project true delays and prioritiesMonitoring Full kit completionsAlignment of contractorsEnforcing right resource allocation on groundDriving Task Preparation on groundRecovery Driving recovery plansTime study and critical process improvementLook out for upcoming problem areasTime: 2 minutesRealization has come up with this concept of PEO which did not exist then.Our Project team and Rz team worked as a single core team. We reported to the President and interacted as one body with the support functions and external parties. These were the things they ensured happened in the project with our wholehearted supportWe fought and debated but always came up with solutions togetherI guess that is the core concept of their PEO offering9Critical Success Factor - 1Create the right plan ensure buffers at the right placesShiplift Civil WorksCommissioningPlatform FabricationPlatform ErectionHoist ErectionHoist ManufacturingTransfer System ManufacturingTransfer System CommissioningLow WIP plan with buffers for risk mitigationFull Kit for commissioningCommissioningPlatform FabricationPlatform ErectionHoist ErectionHoist ManufacturingTransfer System ManufacturingCommissioningShiplift Civil WorksPBFBFBFBTime: 2 minutesIll now move in to some specific solution elements through examples to show how this methodology is different front traditional PM. There are so many stories to tell that it is difficult to chose the most importantThis is the plan which existed when Rz came in. After our discussions on the methodology we went back to the drawing board challenged all projects, brought all our contractors on board to ensure buffers were in place.In traditional PM there is slack which exists by chance, but in this methodology buffers are there by design. On hindsight, we feel without this it is impossible to have control on the plan. Also, we shared our plan with all our contractors, got the buy-ins of their top management that this is how execution has to happen. e.g. How we planned piling from the sea to crush Civil works cycle times, how we got buy-in of using 7 vendors for machining of hoists (which was the critical activity)10Critical Success Factor - 2Apply lean on Critical Chain maximize improvement through time studyProject requirement: 40 rows of piles to be driven in the sea (length of each pile 50m)Uncertainty faced: Hard strata at 30m-35m depth Planned cycle time was 5 days, achieved was 12 daysImproved Piling rigs could only get us a 10 day cycle time

We were staring at a 200 day delay on the project

Time Study on piling showed cycle time can be improved to 7 daysQuick implementation of improvement actions cycle time brought down to 7Investigated spare capacity in available equipment1 month of Jack up rig support employed to reduce cycle time on 15 rows to 6

Stable process created with a known delay of 120 days

Time: 1 minute (2 slides combined)(This is something which I will cover in another presentation)Mention Rz spent 7 days 24 hours on the gantry. How the entire team reacted in ensuring the suggested changes to accelerate results. Important: Once process was stabilized in 14 days (2 cycles) the focus was completely on post civil recovery of execution. 11

Project Execution Piling WorksCritical Success Factors - 3Control open work fronts challenge cycle times, avoid multitaskingRequired Welders: 130, Mobilized number 75-85Planned time: 43 days Delay discovered 27 daysActual time: 70 days + Delay projected: 100+ days Ensure completionDo not start moreActual duration: 70 days40 days33 days30 days27 days70 days recoveredTime: 1 minute (2 slides combined)(In all probability, this will be covered by Sourav in another presentation on controlling WIP)Focus on actual vs projected delays and how it helps management to focus on the right thingsRz was not getting buy-in from the supervisor on the ground level. Move to next slide:So they convinced the PM and he imposed rules that nobody should be seen on the frozen modules even if it leads to idling. The truth is the supervisor once restricted started planning better to complete activities in parallel so that resources are never idle and that cut down the cycle times in every iteration13Module Assembly in batch of 3

Time: 14Critical Success Factor - 4Acknowledge project risks and mitigate themPlatform erectionHoist ErectionSL commissioningInitial planPBRevised plan due to delaysPlatform erectionHoist ErectionSL commissioningFurther delay on BOsPE of 13 modHE for 13 modSL commissioningPlan executedPE of 13 modHE for 13 modSL commissioningFKAll unknown risks absorbed hereAll known risks absorbed hereTime: 2 minutes (3 slides combined)First revision due to delay in Civil works, plate deliveries and sheave delays. We also realized there will be a lag once dates for deliveries were confirmed by Pranay Pathak. Mention how you ensured that they are shipped before coming back from KoreaNote: arrows are tilted which means platform has a queue in front of the locationFocus on FK. How we planned the last 3 erections once sheaves were also delayedMove to the completeness of FK. Apart from all material, teams (multiple teams), hoist drum etc. readiness 2 tough jobs which were planned and executed. Next 2 slides15

Project Execution Risk mitigationLoad Test Rig 3500 Tons

Results Achieved (pictographical)

Crisis faced due to cycle time increase in Marine Piling: Advance Warning signalProject brought back through de-bottlenecking efforts 1. Lean methodology applied on top constraint 2. Additional equipment mobilized to accelerate executionScope increased to 200m and timeline extendedControlled execution by the following methods:Multiple entities met and planned out activities 15 days prior to execution of tasks on top chainsEnsured co-ordination, availability of material and resourcesEnabled resource concentration in right areas No delay in project despite resource shortage all overTop management met project teams regularly on top chains to drive priorities and set aggressive targets for executionTop, middle and lower management all aligned on the most critical activitiesDont know how to explain this. This is how trend chart depicts the true project situation at all times. Maybe you should leave it on the screen for audience for a minute. 18Shops & Infrastructure

2 slides combined: 1 minuteThat we did not taste this level of success in shops and we felt we must have made a mistake in application somewhere. Critical Chain should ensure no fire fighting which we did not see. After the project we RZ and we analyzed in detail. L&T HED being committed to CCPM we need to learn from our mistakes as this is not a one time application as this is not something that neither L&T not RZ can ignore 19Areas for improvementThe Shops and Associated facilities project consisted of 19 Production Shops with cranes and equipment installation and associated Services (Roads, Drainage, Fire-fighting, Electrical, Fresh Water and Sewerage over 150 acres of land)It was finished within the overall project timeline but we were delayed on all our internal targetsThough there were a lot of big uncertainties that we faced, we felt that our application of the solution got compromised somewhereThe main symptom behind our belief was that priorities kept fluctuating and we were in a fire-fighting mode for the initial half of the project

Shortage of manpower for PEB worksSand not availableSevere cash flow issues for contractorsUnanticipated dewatering requirements3 severe monsoons3 cyclonesProject comparisonShipliftShops and UtilitiesFK completed before starting execution Designs, Vendor on-boarding, Integrated planFK released at 50% under due date pressure incomplete designs, POs pending, high level planManagement focused on 1 2 areas in execution no. of open fronts controlledHigh WIP of execution and pending FK; incorrect sequencing in Services worksManagement focused on limited emergent issuesHigh number of emergent issues; No time for preparationManagement capacity wasted in chasing missing inputs; no time for proper on-boarding local plans with infeasible due datesTime available for detailed preparation and planning for each stageStage-wise FKs planned and executed, Time studies for faster executionToo many stuck tasks; fluctuating prioritiesTime: 1 minuteWe realized that there was one mistake we made right in the beginning compromising FK. IF we did not start and planned for faster execution, we feel we would have achieved successBottomline is there are 4 simple rules, but if you compromise on one part of the solution, the benefits of the other elements cannot be realized. 21Key LearningsImplementation is not possible without Top Management commitment to solutionCompromising Full kit is equivalent to losing control on projectWithout contractor alignment, buffers will be lost in no timeEven when resources are scarce, delays can be contained by controlling amount of open workTime: 1 minuteThese were our (L&T + Rz) takeaway from the implementation. (I do not remember if PRP mentioned anything more on this)Give examples of 1. No. of top level reviews and KMT reviews. 2. Just explained3. Contractor alignment means deliverables of both sides to be agreed upon and planned as FK.4. Shown through our examples22