implementing best practices in capital project management
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Implementing Best Practices In Capital Project Management
R.W. DietrichDirector, Engineering Servicessanofi pasteur limited
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Agenda
IntroductionContextBest Practices OverviewThe Seven Project StagesThe Stage Gate Review ProcessProject Performance MetricsResults to DateNext Steps
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Introduction
Who is sanofi pasteur?Where is sanofi pasteur?Engineering at sanofi pasteurCapital projects at sanofi pasteur
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Context
2002 benchmarking of capital projects determined…
0.90
0.95
1.00
1.05
1.10
1.15
1.20
1.25
1.30
Industry
Pharms
sanofi pasteur 2002
Absolute Capital Cost
0.90
0.95
1.00
1.05
1.10
1.15
1.20
1.25
1.30
Industry
Pharms
sanofi pasteur 2002
Overall Schedule(excluding qualification)
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Best Practices Overview
Derived principally fromCurrent sanofi pasteur practicesPMI PMBOKISPEIPA
Focuses on planning (aka Front End Loading, or FEL)
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Best Practices Overview
The 7-stage PM Process:Stage 0: Needs AnalysisStage 1: Feasibility StudyStage 2: Preliminary EngineeringStage 3: Basic EngineeringStage 4: ExecutionStage 5: QualificationStage 6: Close-Out
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The Seven Project Stages
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The Seven Project Stages
Stage 0: Needs Analysis‘Pre-project’ stage, concluded by a Go/No-Go decisionTypically involves a Project Sponsor, Engineering Director, Area V.P.Rarely involves external supportGoal is to establish technical solutions for end-user needs and develop a supporting business caseEstablishes order-of-magnitude boundaries for potential project (cost, schedule)
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The Seven Project Stages
Stage 1: Feasibility StudyProject Leader is identified in this phaseSME’s are used on an as-needed basisProject feasibility is assessed with respect to resources, riskOptions are assessed with respect to benefits, economic justification, functionality
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The Seven Project Stages
Stage 1: Feasibility StudyKey activities and deliverables:
Project charterInitial User Requirements SpecificationsProcess descriptionBlock diagramsMaterial balancesGeneral arrangement diagramsCost/benefit analysisEarly stage risk analysis
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The Seven Project Stages
Stage 2: Preliminary EngineeringProject team and steering committee are defined and engaged at this stageObjective is to define the project scopeExternal resources are assigned
Design consultantsConstruction manager
This stage (and stage 3) may be subject to capital funding
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The Seven Project Stages
Stage 2: Preliminary EngineeringKey activities and deliverables:
Team charterScope statementPreliminary project planFinal User Requirements SpecificationsProcess and utility flow sheetsImpact assessment (on site and environment)Preliminary cost estimate and time schedule (± 25%)Initial VMP developmentInitial procurement plan
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The Seven Project Stages
Stage 3: Basic EngineeringObjective of this stage is to develop the design based on scope established in stage 2At the completion of this stage, the project is ready for full capital funding
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The Seven Project Stages
Stage 3: Basic EngineeringKey activities and deliverables:
P&ID’sArchitectural layoutsMaterial, personnel, product flow diagramsMajor equipment specificationsProject reviews:
ConstructabilityMaintainabilityHAZOPFMEA…
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The Seven Project Stages
Stage 3: Basic EngineeringKey activities and deliverables (cont.):
Product impact assessmentFurther development of VMPFunctional design specificationsEnhanced design review and qualificationFinalized project plan with control schedule and cost estimate (± 5%)Final procurement planPurchase of long lead equipment
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The Seven Project Stages
Stage 4: ExecutionObjective of this phase is to complete the design details and carry out construction/installation
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The Seven Project Stages
Stage 4: ExecutionKey activities and deliverables:
Development of final drawings, specifications and tender packagesImplementation of cost and schedule monitoring and control systemsPermittingDevelopment of qualification rationalesFinalization and approval of the VMPDevelopment of IQ and OQ protocols
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The Seven Project Stages
Stage 4: ExecutionKey activities and deliverables (cont.):
Development of commissioning planConstruction coordination and inspectionSafety inspectionsFinal acceptance of construction works
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The Seven Project Stages
Stage 5: QualificationThe objective of this stage is to start up, commission and qualify the systems constructed and installed in stage 4Commissioning and qualification are optimized per ISPE Baseline GuideIncludes training of end users and maintenance staff
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The Seven Project Stages
Stage 5: QualificationKey activities and deliverables:
Pre-start reviewsMaintenance plans and task listsExecuted commissioning plan and reportsExecuted IQ and OQ protocols and reportsOperation and maintenance manuals and SOP’sInstrument calibrationRegulatory registrationsTraining
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The Seven Project Stages
Stage 6: Close-outThis stage involves the transition from ‘Project’ status to ‘Operational’ statusIncludes closure of all external contracts and dissolution of project teamIncludes final reporting and financial closure of the project
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The Seven Project Stages
Stage 6: Close-outKey activities and deliverables:
Engineering turn-over package (ETOP)Lessons LearnedRegistration of assetsFinal project reportEntry of project data into benchmark database
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The Seven Project Stages
The Project Management Process Flowchart
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Sys
tem
Ow
ner
I.O. P
roje
ctM
anag
emen
tE
ngin
eerin
gS
ervi
ces
Man
ufac
turin
gT
echn
olog
y
Cap
ital
Inve
stm
ent
Rev
iew
Com
mitt
ee
Cha
nge
Con
trol
Fac
ilitie
sS
yste
ms
and
Pla
nnin
g
User DefinedNeed
Project Definition
Site StrategyReview and
Approval
UserRequirementsSpecifications
ProjectAssignment &
Number
I.O. Projec tManagement
Support
EstablishProject Team
& DefineScope
PreliminaryDesign
Review andApproval
DevelopProcess and
ValidationProtocol
Basic DesignEngineering
Project Plan Capital Reques tDocument Detail Design
EngineeringProject
ExecutionStart-up andCommission
Post-projectEvaluation
Stage 0:Needs Analysis
Stage 1:Feasibility Study
Stage 2:Preliminary Engineering
Stage 3:Basic Engineering
Stage 4:Execution
Stage 5:Qualification
Stage 6:Close-out
Owner Hand-over and
Acceptance
Qualification
GoodsReceipt
Asset RegistrationDocument
Issue SAPEquipment
Number
Validation MasterPlan
CapitalApproval
Change ControlNumber andNotification
Asset ChangeTemplate
Review andApproval
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The Stage Gate Review Process
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The Stage Gate Review Process
Performed at the end of key project stagesObjective is to review activities and deliverables and approve advancement to next stage
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The Stage Gate Review Process
Originally, stage gate review board consisted of sponsor, senior area managementCurrently, stage gate review board consists of engineering services peersIn future, development of a dedicated global stage gate review team?
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The Stage Gate Review Process
Stage 0:Needs Analysis
Stage 1:Feasibility Study
Stage 2:Preliminary Engineering
Stage 3:Basic Engineering
Stage 4:Execution
Stage 5:Qualification
Stage 6:Close-out
Go/No-goDecision
Pre-planning CapitalFunding
Turn-over to Owner andMaintenance
Change ManagementInitiated Change Control Initiated
StageGate
Review
Full Project CapitalFunding
StageGate
Review
StageGate
Review
StageGate
Review
StageGate
Review
StageGate
Review
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Project Performance Metrics
FEL IndexTeam Development IndexProject Controls Index
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Results to Date
2004 benchmarking of capital projects determined…
0.90
0.95
1.00
1.05
1.10
1.15
1.20
1.25
1.30
Industry
sanofi pasteur 2004
Pharms
sanofi pasteur 2002
Absolute Capital Cost
0.90
0.95
1.00
1.05
1.10
1.15
1.20
1.25
1.30
Industry
sanofi pasteur 2004
Pharms
sanofi pasteur 2002
Overall Schedule(excluding qualification)
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Results to Date
2004 benchmarking of capital projects determined…
Overall, annual savings around $38 MCDNOverall, average schedule reduction of 10 months
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Next Steps
Predictive MaintenanceValue EngineeringPlant QualityProcess ReliabilityDesign to CapacityTechnology Selection
Customizing StandardsWaste MinimizationConstructability ReviewsProcess SimplificationEnergy Optimization3D CAD
IPA’s Value Improving Processes: