EVOLUTION OF PROJECT & PROGRAM MANAGEMENT AND ENGINEERING IN

Document Sample
EVOLUTION OF PROJECT & PROGRAM MANAGEMENT AND ENGINEERING IN Powered By Docstoc
					 EVOLUTION OF PROJECT & PROGRAM MANAGEMENT AND ENGINEERING
     IN PROCESS PLANT PROJECT-QATARGAS LNG PLANT PROJECT-


                                          MASAYUKI ISHIKURA
             ( Managing Director, Project Management Professionals Certification Center( Pmcc )


                                              1. INTRODUCTION

Chiyoda Corporation, a leading Engineering Contractor in Japan, completed multi billion US$ LNG Plant
Project in Qatar recently.

This presentation introduces the outline of Qatargas LNG Plant Project, and how managed in view of integration
of project & program management and engineering.

Under the global competitive environment in process plant EPC (Engineering, Procurement and Construction)
business, project management and engineering approach is rapidly evolving by implementing IT (Information
Technology).


Each of the plant EPC projects is quite unique and the business is hard to be formulated. There have been many
software applications and IT tools used in this industry. Until recently, they were used more or less as discrete
solutions. Now, things are changing because IT is now getting used in an integrated manner covering engineering
and project & program management.

One example is “i-PLANT21”. This is Chiyoda’s integrated and intelligent project & program management and
engineering system covering whole the project lifecycle from front-end engineering to construction and hand-over.

Engineering information is also being integrated spatially. An electronic document management system working
over the Internet is a typical example. Now, multi-office project operation is getting popular, as everybody is keen
to look for the best contracting formation, and the most economical and reliable material sources and human
resources from the world.

The largest benefit of such information integration is the fact that IT can virtually eliminate the distances in time
and space. Particularly it can be focused on elimination of the distance between engineering and construction.

Such evolution of project management and engineering occurs through many challenges and steady accumulated
efforts in the critical situation of actual project execution.

For this project, Project Management Institute of USA awarded the Project of The Year Award to Chiyoda, the first
recipient outside USA, in 1999.

                               2. DESCRIPTION OF LNG PLANT PROJECT

Background of Project
The low CO2 emission rate of natural gas makes it ideal for combating the global greenhouse effect. LNG
thermal power plants can achieve the lowest CO2 emission rate of any power plant using fossil fuels due to the
inherent high hydrogen content of LNG combined with the application of modern gas turbine technology. LNG
thermal power plants can achieve CO2 emission rates that are 35% less than for oil-fired thermal power plants
and 55% less than for coal-fired thermal power plants.

Better still, natural gas can minimize Sox and Ox emissions to the environment since it is a clean form of energy.

This makes LNG a key fuel for coping with worldwide concerns on global warming. So, promoting the
development of LNG or natural gas plants should expand worldwide market demand for natural gas.
It is often remarked that LNG development program is inter-linked projects like a chain and this led the linkage
being referred to as an “LNG Chain”. (Photo 1) The LNG chain typically consists of upstream facilities, a
pipeline, liquefaction plant, LNG shipping, LNG receiving, power generation and power distribution links. The
program or LNG chain costs more than US$ 10 billion in the QATARGAS LNG Plant Program case. Each
element of the project chain is inter-linked with and dependent on the other elements. Delay in completion or a
malfunction of any link in the chain or n the program will paralyze the total program, and the economic loss will
be considerable due to the scale of investment involved. Therefore, each element of a project chain should be
designed and installed to ensure stable and reliable operation for a long life of 20 to 30 years and, most
important, the each element of program must be completed on schedule.

Overall Flow Scheme -Process Units
The Plant process system is supplied with feed gas from Onshore Upstream Facilities.

 Filtration and fiscal metering then take place in Common Reception Facilities before the feed gas flow is
divided into three streams, one stream to each of the LNG process trains. Each LNG process train consists of
Reception, Acid Gas Removal, Dehydration and Mercaptan Removal, Mercury Removal, Gas Chilling and
Liquefaction

Systems,     Refrigeration, Fractionation,
Nitrogen Rejection, Sulfur Recovery, and
other units.

Other Facilities
In addition to the above, the plant consists of
other facilities as follows:
     LNG Storage and Loading
     Sulfur Loading
     Electrical Power Generation
     Steam Generation
     Cooling Water
                                                           PHOTO 1 LNG CHAIN PROGRAM
     Support Facilities

Project Milestones
The major Project Milestones of this project were:
     May 27, 1993            : EPC Contract for 1st and 2nd LNG trains awarded to Chiyoda with option for
                                 3rd LNG Train.
     September 1, 1996       : 1st LNG Train completed and handed over to QATARGAS one month ahead
                                 of schedule. Earlier completion of this milestone allowed QATARGAS to
                                 accelerate startup activities.
     December 8, 1996        : 2nd LNG Train completed and handed over to QATARGAS three weeks ahead
                                 of schedule.
     December 23, 1996       : 1st shipment of LNG aboard LNG carrier “Al Zubarah” left Ras Laffan Port in
                                 Qatar.
     January 10, 1997        : 1st shipment of LNG aboard LNG carrier “Al Zubarah” docked at Chubu
                                 Electric’s Kawagoe Terminal in Nagoya, Japan -- 12,000 km from Ras Laffan
                                 Port.
     March 31, 1998          : 3rd LNG Train and its associated facilities completed.

                                 3. MODERN TECHNOLOGIES APPLIED

Dynamic Simulation around Refrigeration Compressors
A dynamic simulation study of QATARGAS LNG plant was performed by a subcontractor, Special Analysis
and Simulation Technology Limited (SAST), on the MR and Propane Compressors. The study was conducted
using a SAST proprietary system called OTISS™ to build two dynamic models constructed according to the data
supplied by Nuovo Pignone, the compressor manufacturer. The models consisted of independent Propane and
MR cycles.
Plant Operation Information System (POIS)
The POIS premiered on this LNG plant project. Recent advances in computer technology have led to the
application of total plant-wide information systems in LNG plant operations. In this application, the POIS
provided a crucial link between the process control system and the business information system.

The main users of the POIS are plant managers, operation managers and engineers. The POIS enables users to
generate LNG production schedules, operator guidelines, summary and shift reports, and provides them with
information on the LNG plant, such as equipment performance, product quality, safety, and environmental
monitoring data.

Advanced Process Control (APC)
APC is used to increase production throughput, improve product quality, and/or reduce energy costs. LNG plants
are usually required to operate at maximum load and on this LNG plant project, model-based predictive control
algorithms were applied to achieve the following objectives:
     Maximize LNG production at Main Heat Exchanger
     Control quality at the fractionation section by maximizing valuable product and minimizing utilities
     requirements

                             4. PROJECT MANAGEMENT AND EXECUTION

Project Concept and Objectives
The Project Management established the following project mission at the start of the project:

                         “To complete the 1st and 2nd LNG Trains 2 month early”
All project members were educated about the project mission and its background; namely, to deliver the first
shipment of LNG to Japan by the end of January 1997. This delivery date was an absolute imperative in view of
the “LNG chain” project requirements, as well as the heavy contractual liquidated damages and penalty that
would be imposed on Chiyoda and QATARGAS respectively for any delay.

To ensure the contractual hand over date and scheduled LNG delivery to Chubu Electric Power Inc., Japan, an
internal target schedule for the project was established. This target schedule aimed to complete Train 1 and Train
2 each two months early, and Train 3 six months early. All detailed schedules were developed based on this
target schedule.

A project policy of
                        “utilizing only equipment proven for LNG plant projects”
was also adopted. The reason was the requirement for a highly reliable, high-performance plant of "at least
95% plant availability with a scheduled turnaround once every three years."

And, of course, cost control, quality control and a high standard of safety were pursued relentlessly.

Project Management Tools Developed
To optimize project execution, Chiyoda applied various types of tools and techniques to project management.
These techniques were mostly custom-developed for corporate project management use, and incorporated state
of the art technologies and commercial software. Some of the techniques, such as the Electronic Documents
Management System, were specifically developed for this project to improve its execution. Some examples are
introduced hereafter.

Taskal-Pro: Engineering and Document Control System
More than ten thousand engineering documents, including drawings, requisitions, specifications, data sheets, etc.
were developed and issued.

In order to control and track the status of each engineering document, Chiyoda developed Engineering and
Document Control System called Taskal-Pro, and fine-tuned it for this project. This system was very useful in
handling the huge amount of engineering documents necessary to support detailed scheduling and progress
control of engineering work, as well as engineering document control, by producing various status reports and
document transmittals in real-time on a database platform.

The system was integrated with the index of the EDMS and produced various correspondence status reports,
including exception reports for outstanding items, exception reports showing documents behind schedule,
document revision history reports, distribution status reports for QA requirements and engineering progress
reports by earned value.

Electronic Documents Management System (EDMS)
We considered the huge amount of drawings and documents that had to be handled for the project, and decided
to utilize EDMS since it offered the following facilities and benefits which we had not fully realized on previous,
similar projects:

     Centralized, structured storage and control of drawings and documents by electronic means
     Easy searching and viewing of documents
     Simplified and documented fast revision control of documents
     Easier multi-office operation, especially between the site office, equipment and material vendors and the
     project office

The EDMS, together with Chiyoda's existing global communication network, undoubtedly enhanced the
efficiency of project execution. A dedicated Intelsat communication link was specially established for this
project between Chiyoda's Yokohama office and Ras Laffan site office.

Project Material Management System
Effective material management is one of the most critical factors for ensuring successful project execution,
especially for a project of this scale and location. Chiyoda made use of its highly integrated capabilities in these
areas which support all material classes with regard to specifications, quantification, requisitioning, purchasing,
expediting, material tracking and field inventory, and construction monitoring covering: bulk material take-off
and control, the Integrated Acquisition System, and at construction site, the Field Material Control System
(FMCS).

By means of this highly integrated Project Material Management System, the data flow from material take-off on
the 3D model at home office to field material control was electronically streamlined and overall material
management of the project functioned very effectively.

                                                5. PROJECT IT

Project IT Today
Project IT may not be familiar to most of the readers. Chiyoda started using this term implying the meaning of
“Use of Information Technology to achieve the basic project targets such as cost, schedule, quality, safety and
environmental at a higher and integrated level”.

In the front line of plant construction business, both a reliable steady approach and a challenging approach are
required. Therefore, it is important to establish a tight link among the corporate management, the project team
and the Project IT. It is particularly important that the Project IT is ready to provide reliable solutions to the
project team who needs advanced technology for competitiveness. Chiyoda has established such a Project IT
foundation through the long experiences of actual implementation of Information Technology to various
projects.

By the rapid growth of Information Technology well known as dog years, the environment around us has
changed drastically since the age of Qatar LNG Plant Project. The needs for the Project IT have also been
changed. Some key topics, we are focusing now, includes:
(1) Concurrent engineering
(2) Global operation
(3) Engineering information management through the plant life cycle
Chiyoda sees the trend that more and more engineering information is handled electronically and in an integrated
manner to meet these needs.

Integrated Information Management
Chiyoda is trying to manage engineering information in more integrated manner. There are two kinds of integration,
integration along the time and spatial integration.

One example of integration along the time is “i-PLANT21”. “i-PLANT21” is Chiyoda’s integrated and intelligent
project engineering system covering whole the project lifecycle from front-end engineering to construction and
turnover. It provides a uniform platform to realize project engineering with high quality, low cost and accelerated
schedule. Various “best of bleed” software applications are used as the sub-systems. But they are not merely a
collection of applications. The related applications are interfaced together so that engineering information can
smoothly flow among the subsystems maintaining the integrity as the project proceeds. What it achieved is an
integrated information management along the time,
                                                         • Compatible Data Base
which is illustrated in Exhibit 2.                       • Smooth Migration           Operation & Maintenance
                                                                                • Standardization                                   Phase

ICIMS shown in Exhibit 2 is an abbreviation of                                                       EPC Phase               PLANT OWNER’S
                                                                                                                                SYSTEM
                                                                                 FS / FEED Phase
“Integrated Control and Information Management                                                                     Business System (ERP)
System”, which is a typical plant owner’s system for                               FS / FEED IT     EPC IT         Maintenance Management System
                                                                                                                   Technical Document System
plant operation and maintenance. The smooth flow                                   Deliverables     Deliverables
                                                                                                                   Contracting, Procurement System
of information from the EPC systems like “i-                                                                       Material Management System, etc.

PLANT21” to such an owners system like “ICIMS”                                               i-PLANT21
                                                                                                                                      ICIMS
is important from the view of total plant life cycle                                                      Integration
information management.
                                                                                      Exhibit 2 Information Integration Along Time

i-PLANT21
Exhibit 3, “i-PLANT21”, shows the concept for “i-PLANT21” which consists of seven major sub-systems
covering front-end engineering to plant completion. It is integrated electronically and utilizes standardized data
and workflow. The seven major sub-systems are:
(1) “i-FRONT”: The front-end engineering system which provides integrated functions of process simulation,
     database driven PFD, intelligent P&ID and automatic plant layout. The information from “i-FRONT” is
     electronically transferred to downstream systems as required.
(2) “i-ENG”: The engineering database system for discipline’s design activities. The information is open and
     available to all relevant engineers working for the project.
                                                                                                           (3) “i-3D”: The integrated 3D design system
                          i-FRONT                                                  i-DMS                       which all relevant engineers will use to
                                                                               Project Document
                       Front End Engineering
                                                                                  Management                   develop the spatial plant models, and the
                                 1               1                          8
                          ASPEN-Plus* , CAPES, ZYQAD* ,                         i-DMS, ProjectWise* ,
                             2               3
                          PDS P&ID* , EQDB, ASD OPD* , PLS                      C-COSMOS                       developed models including equipment,
                                ENGINEERING                                                                    piping, instrument, electrical, civil and
                             i-ENG                                      i-3D                                   underground components can be reviewed
                                                              Integrated 3 D Plant Design
                      Engineering Database

                       IDDB, PDDB, MDDB,               2       4
                                                                  (PDS 3D Model DB)
                                                                 PDS 3D* , ISOGEN*
                                                                                                               at any time by discipline engineers and the
                       EDDB, LLDB
                                       PROCUREMENT CONSTRUCTION                                                client’s engineers using model review
                                                                                                               tools. All items will be constructed on a
         i-PMS                                   i-MAT                                  i-FIELD                basis of shared understanding between the
     Project Management                      Material Management                   Construction Management

              6      7
    Primavera* , Artemis * ,             5  MARIAN* , CHIYOCAPS,        4            SPOOLGEN* , PIC,
                                                                                                               client and Chiyoda.
                                                                                                           (4) “i-MAT”:       The      project    material
    CPC Series , Precommi-kun               PROTEUS, FMC, CPC-PRC                    FMC, QC-Info., C-Link



                                                                                                               management system, which will control
                                Exhibit 3 “i-PLANT21”
                                                                                                               all materials at all, project phases from
                                                                                                               material take-off, procurement, and
     transportation to field construction. The material take-off information is electronically transferred from “i-
     3D”.
(5) “i-FIELD”: The field construction system which provides the functions for field material control,
     preparation of isometric/spool drawings linked to “i-3D”, piping welding control, plant turn-over control
     and schedule, cost and progress management.
(6) “i-PMS”: The project management system which provides the platform to plan and execute the work,
     mobilize the resources, monitor schedules, costs and progress and take corrective actions.
(7) “i-DMS”: The document management system which provides the platform to retrieve, review and monitor
    all project documents electronically including vendor prints.

Spatial Integration of Information
Now, multi-office project operation is getting popular, as everybody is keen to look for the best contracting
formation, and the most economical and reliable material sources and human resources from the world. To cope
with such needs, an integrated information management system like “i-PLANT21” and global communication
infrastructure is required. This is an example of engineering information integrated spatially. An electronic
document management system working over the Internet is a powerful tool used for such purpose.

                                            6. LESSONS LEARNED

Chiyoda’s Project Operation Division requires its Project Managers to hold a lessons learned session before
closing out their project. This is normal practice. Usually, the overall session lasts 1 to 2 days, and in addition to
the overall session, individual disciplinary sessions are also held. A 2-day session was held on this project.
Participants included QATARGAS’s PTF Engineering Manager, the project team members, managers of all the
disciplines, as well as the Project Manager. Detailed discussion focused on construction issues relevant to the
EPC disciplines. To be constructive, the sessions are deliberately not blame sessions, but rather aimed at
learning not only from our mistakes but also the good things that were done on the project.

To ensure the lessons learned cycle is effective, Chiyoda deliberately assigns home office engineers to
construction supervision positions wherever possible, which is rather unique in this field.

                                7. INDEPENDENT PROJECT EVALUATION

The overall project performance was specifically evaluated by Independent Project Analysis Inc. (IPA). This is a
summary of their benchmarked analysis:

Cost Deviation                  :       Overall, there was a nine- percent under run for the QGL
                                        project, which surpasses the Industry Average of no deviation.
Absolute Cost                   :       Chiyoda's cost was 11 percent less than the Industry Average
                                        based on a cost-capacity relationship. However, the cost was
                                        within the range expected for this type of facility.
Execution                               The execution duration was 42 months, 1 month shorter than
Schedule Deviation              :       the contract plan of 43 months. The two percent under run
                                        compares favorably to the Industry Average of a nine- percent
                                        slip in schedule.
Safety                          :       The lost time incident rate was 0, which is low compared to the
                                        Industry Average of 1.5.

                      8. NEW TREND OF PROJECT & PROGRAM MANAGEMENT

“The Guide for Project and Program Management for Enterprise Innovation” or abbreviated as P2M, issued by
the Engineering Advancement Association of Japan (ENAA) and maintained by MCC is intended to provide
readers with an overview of the innovative program and project management guide for enterprise innovation by
way of program and project management, which hopefully will serve as a gyrocompass for enterprise growth and
survival in this globally competitive business and public services environment and will supplement each other
with the existing international project management bodies of knowledge and project management competency
standards.

P2M has been developed by the Committee for Innovative Project Management Development Committee, a
team of selected visionaries and practitioners of project management and program based business management
drawn from project industries, academia and consulting disciplines, The key word throughout P2M is value
creation to enterprises, either commercial or public, and a consistent chain from a mission, through
strategies to embody the mission, a program(s) to implement strategies, to projects comprising a program.
Cyclic Project Combination
If a development type program has favorable results, future development will utilize successful experience for
further improved programs. A development type program start with a conception project, prototyping a product
and, if successful, proceed to a commercial design-build project. However, while structural data can be obtained
in design and construction, comprehensive data can only be collected after the project is started. These
comprehensive data are reflected in the subsequent program development.

                                   Scheme                                            Three projects of the scheme model, system model and
                                    model
                                                                                     service model are combined as a cyclic combination and the
Apply service know-                                             Propose a new type
   how to a new                                                     of system
      scheme                                                       development

                                                                                     next project will spin off from the original cyclic model.
                                                                                     This is called the cyclic project combination. In software
                      Service                          System
                      model                            model                         development projects, this type of development is called a
                                                                                     spiral model since phases form spirals, and sequential
                                                                                     combination is usually called a waterfall model. The
                                Propose improvement
                                with system know-how                                 concept of a program extends the scope of the project
                                                                                     concept to both, the upper stream and lower stream, acquires
   FIGURE 4 INTEGRATION OF PROJECT                                                    products from project systems or products, which is
                CYCLES                                                                reinforcement of processes, but does not stop there.

A program recognizes the scheme model to plan a system and service utilizing the system as component
projects. They also comprehensively collect, accumulate and process knowledge, know-how and data and have
a mechanism to incorporate intellectual productivity improvement supported by knowledge management into
design. What is important in program design is a viewpoint of pursuing value in the chain and not in segmented
phases or projects, using knowledge and know-how acquired under a program; such value can offer a chain
effect.

                                                                             9. CONCLUSION

The essence of this presentation is that complex projects in remote locations can be successfully completed if
sound, innovative project management techniques and modern technology -- such as for data transmission,
mechanical and chemical engineering, are used and the procurement, transportation, and fabrication of
equipment and materials is carefully coordinated.

The QATARGAS LNG Plant Project was one such example, and the new industry it developed will serve Qatar
for many years to come. Qatar is now in the forefront of world-class suppliers of LNG as a source of secure and
environmentally friendly energy for the 21st century.

Finally, it is our considered opinion that applying the technologies and techniques described above, among
others, advanced the technical values and image of the project management profession.