ESD.36 System Project Management

Instructor(s)

+

- Multi-Project Program Management

Prof. Olivier de Weck

Lecture 18

+

- Outline

Program Management

Definition, Distinction from Project Management

Example Program (BP Azerbaijan)

Project Portfolio Management

Project Selection Process

Example Portfolio (PreQuip)

2

+

- Concept Question 1

What is the largest number projects you have worked on or managed at the same time (in parallel)?

1

2

3

4

more than 4

Dec 1, 2009 3

+

- Programs – PMBOK Definition

Program. A program is a group of projects managed in a coordinated way to obtain benefits not available from managing them individually.

Many programs also include elements of ongoing operations. For example:

The “XYZ airplane program” includes both the project or projects to design and develop the aircraft as well as the ongoing manufacturing and support of that craft in the field.

Many electronics firms have “program managers” who are responsible for both individual product releases (projects) and the coordination of multiple releases over time (an ongoing operation).

Programs may also involve a series of repetitive or cyclical undertakings, for example: Utilities often speak of an annual “construction program,” a regular,

ongoing operation which involves many projects.

Many non-profit organizations have a “fundraising program,” an ongoing effort to obtain financial support that often involves a series of discrete projects such as a membership drive or an auction.

4

+

-

•Develop a product platform that can be “scaled” or “stretched” in one or more dimensions to satisfy a variety of market niches

Scale-based Product Families

Boeing 737 is divided into 3 platforms:

Initial-model (100 and 200)

Classic (300, 400, and 500)

Next generation (600, 700, 800, and 900 models)

• The Boeing 777 has also

been designed knowing that it will be “stretched”

© Aerospaceweb.org. All rights reserved. This contentis excluded from our Creative Commons license. Formore information, see http://ocw.mit.edu/fairuse.

+

-

Airbus Aircraft Program

Airbus A3XX Family: common height, width, cockpit

The A330 cockpit is common to all other Airbus types while Boeing’s 767-400 cockpit is common only with the 757. This enabled the A330-200, a less efficient “shrink” of a larger aircraft, to outsell Boeing’s 767-400ER, a more efficient “stretch” design of a smaller aircraft.

+

-

Sample Program: BP ACG (Azerbaijan)

Capex: $9bn total / $6m / day 90,000 te topsides 90,000 te jackets 1000 km offshore pipelines

80% of man-hours in Azerbaijan 20% across another 10 countries New Workforce - 9000 Azeris

One of world’s largest terminals 7 years of execute 74 million man-hours total so far Over 3 million man-hours/month Source: Adrian Luckins, BP

© BP Caspian. All rights reserved. This content is excluded from our CreativeCommons license. For more information, see http://ocw.mit.edu/fairuse.

+

-

ACG Reservoir Size

+

-

0

200

400

600

800

1000

1200

2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

mbd

Phase 3

Phase 2

Phase 1

Chirag

ACG Full Field Development - Production

+

-

Geographical Challenges

Baku

Jacket P re -

Fabrication, Ita ly

D rilling

Construction (CA),

France

Engineering &

Procurem ent, UK

Drilling Equipm ent,

Norway

Insta lla tion

Design,

C roatia

Topsides Fabrication, Jacket

Fabrication, Term inal Construction,

Engineering Design, Azerbaijan

Liv ing Q uarters

Fabrication, Sweden

Topsides Pre -

Fabrication, Dubai

D rilling

Construction (W A/

EA), Holland

C &W P/ term inal pre -

fabrication, Turkey

By Trailer

By Rail

By Sea

Transport routes:

Logist ics

• 5000 Trailer t rips

• 6000 rail t rips

• 200 river boats

Baku

Jacket P re -

Fabrication, Ita ly

D rilling

Construction (CA),

France

Engineering &

Procurem ent, UK

Drilling Equipm ent,

Norway

Insta lla tion

Design,

C roatia

Topsides Fabrication, Jacket

Fabrication, Term inal Construction,

Engineering Design, Azerbaijan

Liv ing Q uarters

Fabrication, Sweden

Topsides Pre -

Fabrication, Dubai

D rilling

Construction (W A/

EA), Holland

C &W P/ term inal pre -

fabrication, Turkey

By Trailer

By Rail

By Sea

Transport routes:

Logist ics

• 5000 Trailer t rips

• 6000 rail t rips

• 200 river boats

Baku

Jacket P re -

Fabrication, Ita ly

D rilling

Construction (CA),

France

Engineering &

Procurem ent, UK

Drilling Equipm ent,

Norway

Insta lla tion

Design,

C roatia

Topsides Fabrication, Jacket

Fabrication, Term inal Construction,

Engineering Design, Azerbaijan

Liv ing Q uarters

Fabrication, Sweden

Topsides Pre -

Fabrication, Dubai

D rilling

Construction (W A/

EA), Holland

C &W P/ term inal pre -

fabrication, Turkey

By Trailer

By Rail

By Sea

Transport routes:

Logist ics

• 5000 Trailer t rips

• 6000 rail t rips

• 200 river boats

By Trailer

By Rail

By Sea

Transport routes:

By T railer

By Rail

By Sea

Transport routes:

By T railer

By Rail

By Sea

Transport routes:

By T railer

By Rail

By Sea

Transport routes:

Logist ics

• 5000 Trailer t rips

• 6000 rail t rips

• 200 river boats

+

-

Project Schedules

2001 2002 2003

1H 2H 1Q 2Q 3Q 4Q 1H 2H 2004 2005 2006 2007 2008 2009

BTC

ACG Phase 1

ACG Phase 2

ACG Phase 3

Define 1st Oil

Execute

Select 1st Oil

Define Appraise Execute

Operation

Define Execute Select

Select Define

1st Oil West Azeri

Execute

1st Oil East Azeri

+

-

Production Line Strategy Development

CA jac k etC& W P

jac k etW A jac k et EA jac k et

CA

top s id es

W A

top s id es

EA

top s id es

C& W P

top s id es

Term inal

trains 1& 2

Term inal

trains 3& 4

Pip elines :

30"

Pip elines :

28"

Pip elines :

30"

CA jac k etC& W P

jac k etW A jac k et EA jac k et

CA

top s id es

W A

top s id es

EA

top s id es

C& W P

top s id es

Term inal

trains 1& 2

Term inal

trains 3& 4

Term inal

Shah Deniz

Pip elines :

30"

Pip elines :

28"

Pip elines :

Shah Deniz

Pip elines :

30"

BOS Yard

ATA Yard

CA jacket C&WP

jacket WA jacket EA jacket

DUQ

jacket

PCWU

jacket

CA

topsides

WA

topsides

EA

topsides

DUQ

topsides

C&WP

topsides

PCWU

topsides

Terminal

trains 1&2

Terminal

trains 3&4

Terminal

Shah Deniz

Terminal

trains 5&6

Pipelines:

30"

Pipelines:

28"

Pipelines:

Shah Deniz

Pipelines:

30"

Pipelines:

ACG 3

ACG Phase 2

ACG Phase 1

ACG Phase 3

Shah Deniz

Key :

Objectives : Learning Curve Benefits – Faster, Cheaper Elimination of Inefficiency Continually Reduce Unit Costs

Strategy : Standardization Contracting – Natural Choice at Right Price Organisation – People Continuity Right Pace for capital efficiency

E&P

KBR/

AIOC

MCCI Yard

AzTf

MCCI

+

-

Copied Building Block Seed Building Block To Develop New Design

CA- C&WP

CA-PDQ WA-PDQ

DWG-PCWU

50% Copy 95% Copy (WA)

31 Mhrs Per Tonne 11 Mhrs Per Tonne 42 Mhrs Per Tonne

DWG-DUQ

60% Copy (WA/EA)

28 Mhrs Per Tonne

21 Mhrs Per Tonne 19 Mhrs Per Tonne

20% Copy (C&WP/WA)

EA-PDQ

Topsides Detail Design

Topsides Detail Design

Project Challenges – ACG & Shah Deniz

CB-PDQ

30% Copy

30 Mhrs Per Tonne

Phase 1 Phase 2 Phase 4 Phase 3

+

-

Benefits realised through standardisation: Engineering

Engineering Benefits

Drilling Facilities - Engineering Costs (Eiffel/KCA)

Phase 1 Phase 2 Phase 3

Dir

ect

Ma

n-h

ou

rs/te

CA

(54)

WA

(30)

EA

(8)

DWG

(8)

Production Facilities Engineering Costs

Phase 1 Phase 2 Phase 3

Dir

ect

Ma

n

- ho

urs

/

te

CA

( 42 )

WA ( 31 )

EA

( 11 )

CWP (21)

DWG

( 29 )

Phase 3 (Manhours / te

DWG: 29 contract 25 stretch DUQ: 28 PCWU: 20

10

20

30

40

50

+

-

Benefits realised through standardisation: Fabrication

Jacket Fabrication Costs

100

$/te units

-7%

Phase 1 Phase 2 Phase 3

-4%

$6181/te

$5751/te

$5521/te

Topsides Fabrication Costs

100

$/te units

-10%

-6%

Phase 1 Phase 2 Phase 3

$18042/te

$16122/te

$15228/te

Fabrication Benefits

+

- Concept Question 2

In our organization we pursue mainly:

Programs – sets of directly related projects

Portfolios – sets of indirectly related projects

Individual single projects

Not applicable

Dec 1, 2009 16

+

- Portfolio of Projects

A portfolio of projects is a collection of projects owned or managed by the same organization that are only indirectly related

Projects may not be directly related to each other, as in a program, i.e. outputs from one don’t necessarily feed into the other

Usually no or only minimal commonality and standardization

Portfolio is chosen with diversity of projects, some of them may be “negatively correlated”

Mix of large scale potentially less risky and small risky projects that act as “pathfinders”

Project portfolio may not have a single manager

17

+

- Project Portfolio Planning

Breakthrough Projects

New Core Processes

Next Generation Process

Single Dept. Upgrade

Tuning and Incremental

New Core Product

Next Generation Product

Addition to Product Family

Add-ons and Enhancements

Product Changes

Process Changes

Platform Projects

Derivatives (Enhancements, Hybrids, and Cost

Reduced Versions)

Advanced R&D Projects

1

2

3

4

5

Source: (Wheelwright & Clark, 1992)

+

-

Aggregate Project Plan Classifications

Advanced R&D Projects

Innovations and technology development that provides a precursor to commercial development

Breakthrough Projects

Projects that involve significant change in the product and process establish a new core product and process

Platform Projects

Projects provide a base for a product and process family that can be leveraged over several years

Derivative Projects

Cost-reduced versions of an existing product or platform or add-ons or enhancements to an existing production process

Allied Partnerships

Partnerships in any of these project areas to leverage development resources and activities

Source: (Wheelwright & Clark, 1992)

+

-

R&D

Breakthrough projects

R&D

Breakthrough

Platform

Derivative

Allied and Partnership projects Derivative

projects

Platform projects

Project Planning at PreQuip – Part 1

• PreQuip’s Development Projects (30) before the Aggregate Project Plan

Mass spectrometers

Liquid chromatographs

Gas chromatographs

Data processing and handling products

Adapted from: Wheelwright, S.C. and Clark, K. B.,1992,” Creating Project Plans to Focus ProductDevelopment,” Harvard Business Review, 70(2), pp. 70-82.

+

-

R&D

R&D

Platform

Derivative

Allied and Partnership projects

Derivative projects

Platform projects

Breakthrough

Aggregate Project Planning – Part 2

PreQuip’s Development Projects (11) after the Aggregate Project Plan

Mass spectrometers

Liquid chromatographs

Gas chromatographs

Data processing and handling products

Breakthrough projects

Adapted from: Wheelwright, S.C. and Clark, K. B.,1992,” Creating Project Plans to Focus ProductDevelopment,” Harvard Business Review, 70(2), pp. 70-82.

+

- Concept Question 3

What is the most challenging issue you have encountered working in a multi-project environment?

Conflicts due to financial resource contention

Inefficiency due to multi-tasking

Staffing dynamics (trying to get the “A” team)

Friction between program and project manager

Enforcing standard work procedures

Ensuring commonality at the parts and module level

Other

22

+

- Portfolio Management Issues

Risk Correlation across Portfolio

Constraints on Shared Resources

Late and over-budget projects delay ramp-up of downstream projects

Shared resources (e.g. test facilities) can also create bottlenecks

Staff working simultaneously on multiple projects create inefficiencies and delays

23

Typically dealt with via exogenous inputs to single-project models, or via portfolio models

+

- Program Manager Challenges

Creating a vision for the program as a whole

Scheduling and prioritization of individual projects in the program

Dealing with project interdependencies

Resource contention, CAPEX phasing

Staffing, avoid firefighting

Ensuring learning and commonality across projects

Program Manager is a very different and more strategic role than project manager

Typically requires more strategy and diplomacy than individual project management

Dec 1, 2009 24

+

-

Discussion / Q&A

25

MIT OpenCourseWarehttp://ocw.mit.edu

ESD.36 System Project ManagementFall 2012

For information about citing these materials or our Terms of Use, visit: http://ocw.mit.edu/terms.