Essential Elements of a Successful Engineering and Construction Project

SUMMARY This paper discusses the essential

elements of a successful engineering and construction project. These in­clude clearly defined objectives, defi­nition and criteria, procedures, controls, and management tools. Equally important are a professional, participatory climate and a high­performance management team to implement the program. Examples from a minerals project are presented to illustrate major points.

INTRODUCTION Persons who are engaged in the

engineering and construction busi­ness and those who are owners and operators of minerals industry facili­ties realize that the success of an engineering and construction project is frequently determined during the comparatively short and sometimes hectic period between completion of research and development work and the beginning of design and construc­tion activity that follows. During that time, what many professionals call the six axioms of successful proj­ect performance must be observed and tenaciously obeyed. The first three axioms are: communicate, communicate, communicate; and the last three are document, document, document.

The purpose of this paper is to discuss the basic fundamentals and essential elements of project man­agement which will produce an ef­fective project management plan and a successful engineering and con­struction project.

The essential elements of an effec­tive project plan include clearly de­fined objectives, criteria, procedures, controls, and management tools. It should be noted that regardless of project size, e.g., $10 million or $1 billion, the same elements should be utilized; only the complexity of their detail will vary. In addition, para­mount to the achievement of a suc­cessful engineering and construction project is the selection of a "high performance" project management team to direct the program. Of equal importance is the development and

Lyn E. Wiele and Martin E. Messner

maintenance of a professional, par­ticipatory climate in which all per­sonnel feel responsible for the operation's success and from which they receive satisfaction and reward.

OBJECTIVES

First, let us look at the formula­tion of the objectives out of which a successful project will evolve. Ob­viously, the objectives of a project can be viewed from two perspectives, that of the owner and that of the engineer/contractor.

When the owner has dedicated a large sum of money to a capital project, realization of adequate re­turn on that investment in the shortest possible time is of major importance. In addition to the finan­cial commitment, the owner has made a sociological commitment to the community area where this facility will be located. Therefore, for the owner to fulfill these commit­ments, the engineer/contractor select­ed for the work is expected to com­plete the project on time and within budget.

Owners are practical people and ordinarily do not expect miracles from the engineer/contractor. Neither do they expect the engineer/contrac­tor to give so much blood toward the achievement of nearly impossi­ble schedules that the engineer/con­tractor will lose large sums of money. Rather, they want to main­tain a good business relationship and receive a fair return on their investment.

Engineering contractors are In

business for several reasons, and a principal one is to make a profit. In addition, by accepting responsibility for the work, they too have made a sociological commitment to provide jobs for their own employees and the owner's employees at the new plant. They are also eager to complete proj­ects on time and within budget, not only for contractual reasons, but also out of a sense of pride and for the sake of their reputation in the industry. Achievement of these goals is unequivocally in the best inter­ests of the owner and the engineer/

JOURNAL OF METALS • February 1984

contractor, since it will also contrib­ute to maintenance of a good busi­ness relationship and receipt of a fair return on investment for both parties.

CONTRACT

Since the overall objectives from both the owner's and the engineer/ contractor's viewpoint are similar and interrelated, successful project execution requires mutual under­standing. Therefore, the project ob­jective must be clearly and concise­ly defined by the owner. Generally, that definition will result from re­peated meetings between the owner, the engineer, and third parties. Subsequently, the means of achiev­ing the objective, which for the pur­poses of this discussion will be the design and construction of a miner­als industry plant of a specified size and capacity, must be explicity expressed in a contractual agreement between the owner and the selected engineer/contractor. Since minerals industry capital projects are continu­ally increasing in cost and complexi­ty and frequently in magnitude, owners typically prefer extensive participation in project progress and control. Thus, contracts based upon turnkey, cost-plus-fixed-fee (CPFF) conditions are commonly selected be­cause they allow for the desired lev­el of owner involvement in the project. A good CPFF contract agree­ment will include the following provisions:

1. A detailed description of the project

2. A detailed statement of work to be pe.rformed

3. Compensation terms 4. Dates for starting and complet­

ing the work 5. Special provisions, including:

a. Changes b. Insurance c. Termination and suspension

6. General provisions, including: a. Agent of owner or independ­ent contractor b. Books and records c. Ownership of drawings d. Responsibility and liability

41

e. Notices f. Applicable laws g. Assignment h. Entire agreement

PROJECT DEFINITION AND CRITERIA

During the period of negotiation of a mutually agreeable contract, de­velopment of the project definition, and the project and design criteria frequently begin.

Project Definition The project definition should be a

short narrative statement describing briefly and concisely what the proj­ect is and where it will be located. For example, the project definition for a representative minerals project would include the nature or type of ore, the amount of overburden or waste, products, and the like. It would also include the location of the mine or mines, the plant components, such as ore preparation, leaching, separation, purification, refining, and ancillaries which typi­cally include the office, warehouse, power plant or distribution system, and maintenance facilities. Of equal importance (if applicable) is the loca­tion of tailings disposal facilities and water collection or impoundment reservoirs. A statement of battery limits and exclusions from the proj­ect scope may need to be included for clarity.

I PROCUREMENT

MANAGER

PROCUREMENT

- PURCHASING

OWNER'S R EPR ESENTATIVE

I ENGINEERING

MANAGER

ENGINEERING

- OESIGN

Project Criteria

Project criteria are the technical scoping and descriptive statements, approved by the owner which estab­lish all parameters required for the project. They define the project in terms of (1) the scope of work, process and operating criteria, and general outline specifications for equipment, buildings, and infrastructure; and (2) the schedule and various control methods to be utilized in accomplish­ing the job, This document is gener­ally developed within the first 10-20% of the project schedule. Fre­quently on projects where a sufficient­ly detailed study has been completed, the project criteria will be essential­ly developed before the detailed design, procurement, and construc­tion begins. The project criteria should be sufficiently comprehensive to provide mutual understanding be­tween the owner and the engineer/ contractor regarding what is to be done, the key dates for completion of work by element, all pertinent data, and most important, the basis for project control.

Design Criteria

Design criteria are usually con­tained in a separate document that establishes the basis for detailed de­sign by each applicable design disci­pline which is to be employed by the engineer/contractor. Items cov-

ORGANIZATION CHART FAROUT MINING COMPANY BUFFALO URANIUM Mill

SOUTH FORK COUNTY. MONTANA

VICE PRESIDENT MINERALS DIVISION

I

PROJECT MANAGER

I I

PROJECT CONTROLS MANAGER

ered in the design criteria should include:

1. Conceptual drawings. 2. Plant site conditions such as

geology, hydrology, and meteorology. 3. Codes and regulations for local,

state, and federal compliance. 4. Material and equipment outline

specifications and standards. 5. Design criteria for each engi­

neering discipline.

PROJECT MANAGEMENT PROCEDURES

The project criteria provide the needed definitions and information for starting the work. But how the work is to be done, who is responsible, what documentation will chart progress, when the various mile­stones are to be passed and targets met, where the many activities of project execution are to take place, and how this large assortment of people, functions, entities, and work can unite in harmony, and efficiently produce the desired outcome - these are questions that can be answered only by imposing the discipline of appropriate procedures. If the proj­ect procedures are well conceived and if the personnel are competent and motivated, then adherence to the procedures, which include plan­ning, cross-checking, and coordinat­ing, should assure a successful project.

I CONSTRUCTION

MANAGER

t

DUALITY ASSURANCE MANAGER

PROJECT CONTROL FiElD OPERATIONS QUALITY ASSURANCE & CONTROL

- ESTIMATING - E)(PEOITI NG - PROCESS/PROJECT - SCHEDULING

- CONST RUCTION SUPERVISION

- FOR ENGINEER ING. PROCUREMENT. CONSTRUCTION - TRAFFIC - TECHNICAL - COST - CONSTRUCTION

COOROINATION - PROCEDURES ADMINISTRATION - FielD PROCUREMENT - ACCOUNTING - INDUSTRIAL RELATIONS - FIELD ENGINEERING

Figure 1. Tvplcal task-force functional organization chart.

42 JOURNAL OF METALS • February 1984

FAR OUT MINING COMPANY BUFFALO URANIUM MILL SOUTH FORK COUNTY, MONTANA

MANPOWER AND ENGINEERING DESIGN FORECAST ENGINEERING, SUPERVISION AND PROCUREMENT

JOB NO DATE APRIL 30, 1982

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Figure 2. Manpower forecast and report of personnel in engineering, supervision, and procurement in the home office.

FAR OUT MINING COMPANY BUfFALO URANIUM MILL SOUTH FORK COUNTY, MONTANA

MANPOWER FORECAST AND REPORT CONSTRUCTION AND CONSTRUCTION MANAGEMENT

LEGEND _ ~ CONSTRUCTION ACTUAL ___ = CONSTRUCTION FORECAST

JOB NO DATE APRil 30, 1982

0000 0 ~ CONSTRUCTION MANAGEMENT FORECAST

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A S o N 0 F M A M J A S o N 0 J

1981 1982 1983

EXHIBIT C

Figure 3. Manpower forecast and report for construction and construction management.

Although each project will have its own unique requirements in ad­dition to elements common to most projects, the procedures will describe in . succinct terms the understanding between the owner and the engineer/ contractor as to the method of carry­ing out the following:

Engineering '- including design, specifications, bid analysis, vendor data review, and assistance with construction and startup.

Procurement - including bid requests, bid analyses, purchase or­der and subcontract awards, expedit­ing, and traffic.

Accounting - including billing for services.

Reporting - for physical progress, cost trends, and actual cost compared to the control budget.

JOURNAL OF METALS· February 1984

Project Control - including esti­mating, scheduling, progress, cost, and quality assurance controL

Field Operations - including con­struction and/or construction manage­ment.

Miscellaneous Work Related Activi­ties - covered by: • a general description of each proj­

ect function and responsibility • up-to-date organization charts • delegations of authority for key

personnel • communication and document dis­

tribution charts • brief outline of checkout, accept­

ance, and start-up procedures • a summary description of the proj­

ect criteria document, It seems that frequently the big­

gest problem is getting the proce-

dures manual issued, Our advice is to issue those procedures which can be defined within the first few weeks of the job and then later fill in the blanks when needed,

PROJECT MANAGEMENT CONTROLS

Scope

Project work must be controlled so that the amount of work done is neither more nor less than required by the contract, Control in this area is applied by reference to the proj­ect criteria and in particular to the detailed scope of work. Any devia­tion from the project criteria or the defined work, either a reduction or an increase, must be the subject of a contract scope change or a design development change and be approved by the owner prior to execution.

Schedule

One of the most vital elements of control is the project schedule. This document formally establishes the sequence for performing all engineer­ing, procurement, and construction services and the duration of these activities,

Cost and Progress

Monitoring and reporting actual cost, time, and physical progress of the work as compared to the budget and schedule are elements of con­trol vital to completion within budget and on time, Timely reports of cost and progress provide data needed to perceive adverse trends and imple­ment corrective action when warrant­ed,

Quality Assurance

A fourth element of control that is most critical and vital to timely project completion within the budget is an effective quality assurance pro­gram applicable to all engineering, procurement, and construction activi­ties, Skillful implementation of a good quality assurance plan will re­duce wasted time and money spent to correct needless errors and en­hance the completion of the project objectives on time and within budget.

PROJECT MANAGEMENT TOOLS

Having defined and discussed the project objectives, project definition and criteria, project management procedures, and project management controls, our next point of emphasis covers the means or tools of project management needed to efficiently perform the work,

43

Project Plan

The project plan is the basic man­agement "tool" needed for effective and timely implementation of all work. Actually it is a group of man­agement tools including the follow­ing: Work Plan. The work plan describes the engineer/contractor's method of performing all work outlined in the project scope. (The scope tells what is to be done; the work plan tells how it will be dOhe.) The work plan interrelates the various services and ties them to specific activities and personnel. It should be written in a narrative format with an emphasis on ease of reading, Organization Plan. A task-force or­ganization led by a project manager is ideally suited for the execution of an engineering/constructioh project. All key positions should be shown on an organization chart and supple­mented by a narrative description of the responsibilities of each princi­pal position. Figure 1 is a typical task-force functional organization chart.

Vital supplements to the organiza­tion plan are manpower charts which show cumulative forecasts and actual personnel employed on the project. Figure 2 shows a manpower forecast and report of actual person­nel employed for engineering, super­vision, and procurement in the home office. Figure 3 shows the manpow­er forecast and report of actual per­sonnel required in the field for con­struction and construction manage­ment. Schedule. The master schedule identifies planned activities, estab­lishes the sequence and order of importance, and defines the time re­quired to perform each activity and the total project. Figure 4 shows a typical project overview schedule for use at the executive management level to develop a contract agree­ment. As the work progresses, more detailed schedules must be prepared. Estimate of Cost. A detailed estimate of cost should be developed on the basis of approved conceptual engi­neering and an approved schedule. It should be organized in accordance with a standard classification of cost accounts to readily provide for iden­tification of project charges. This es­timate should then be established as the control budget. Quality Assurance Plan. The quality assurance plan is actually part of the work plan; however, it is such a vital part that it deserves special emphasis. First, let us clarify this somewhat confusing terminology by providing two definitions. The first

44

PROJECT OVERVIEW SCHEOUlE FARQUT MINING COMPANY BUFFALO URANIUM Mill

SOUTH FORK COUNTY, MONTANA Job No ---O~I~

1980 19S1 1982 1983 ACTIVITY

N DJFMAMJJASONOJFMAM j J A SON 0 J F

PROJECT MANAGEMENT/ENGINEERING

DETAil DESIGN

PROCUREMENT

CONSTRUCTION

STARTUP

~-

EXHIBIT 0

Figure 4. Typical project overview schedule for use at executive management level to develop a contract agreement.

definition is for the word "quality" and the second is for the term "quality assurance."

The dictionary definition of "qual­ity" is "the degree of. excellence"; in other words, it is the conform­ance to a pre-established standard. Engineers pre-establish these stand­ards through their drawings and specifications. There can be a quali­ty Ford car as well as a quality Lincoln Contihental; both are quality to their individual standards.

Quality assurance comprises all of those planned and systematic actions that a project manager takes to pro­vide adequate confidence that a structure, system, or component will perform its intended function In

service or achieve its desired quality. Three major elements of a success­

ful project are cost, schedule, and quality. Project management has al­ways paid much attention to the first two, i.e., cost and schedule. Fig­ure 5 is a cartoon that shows the effects of primarily considering cost and schedule to the exclusion of quality.

What about quality, the third ele­ment of a successful project? Should it be taken for granted and assumed that quality is going to happen with­out planning for it? What would happen to cost and schedule if left to chance? Obviously, the effects of not achieving the desired quality can have an enormous impact on cost and schedule due to associated re­work and repair costs resulting from riot doing a job right the first time. The establishment of a plan for achieving the specified quality should be as well defined as the plan for assuring that cost and schedule objectives are met. .

Standard Forms

Standard forms are additional project management tools that should be utilized for implementing the following services: design, procurement, engineerihg/construc­tion management, plant checkout and start-up, and project control.

These forms promote efficiency, timeliness, and uniformity In the performance of these tasks and mini­mize the hours required to complete the work.

Electronic Data Processing Systems

Computers are another tool that every engineer/contractor should be using to enhance the speed, accuracy, and timeliness of project execution and control, particularly for large projects. Computer programs are in common use today for design and drafting, cost estimating and control, schedulihg and progress, procure­ment control, reporting, and account­ing.

PROJECT MANAGEMENT TEAM Paramount to the achievement of

a successful engineering and con­struction project is the appointment of a "high performance" project management team to direct the program.

In the selection of a project manager, technical competence and applicable experience are usually judged most important. However, the project manager should also be ex­ceptionally competent in employee relations, labor relations, and public relations. He or she should be diplo­matic and cooperative. Also, he or she should be a skillful negotiator,

JOURNAL OF METALS • February 1984

However, we can save 700 lira and two months by not taking soil tests .

Figure 5. Example of quality suffering when cost and schedule are the primary considerations.

assertive, resourceful, cautious, an articulate communicator, a pragma­tist, a synthesist (i.e., able to pull loose ends together), and maintain a good personal appearance.

Similarly and ideally, the other key members of the management team, i.e., engineering manager, project controls manager, procure­ment manager, construction mana­ger, quality assurance manager, and their immediate subordinates will also possess most of these attributes.

Another vital factor is the devel­opment and maintenance of a

,'OJaiIWAtlJWl1VIJUI) (Continued from page 40)

Sponsor: Iron and Steel Society of AIME The conference, held in conjunction

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Contact J. P. Hoffman, Homer Research Laboratories, Bethlehem Steel Corpora­tion, Bethlehem, Pennsylvania 18016; tel­ephone (215) 694-7778,

JOURNAL OF METALS • February 1984

professional, participatory working climate where all personnel feel re­sponsible for the operation's success. Development of this environment will be enhanced by delegation of responsibility downward to the "point of action" - the point at which the individual or group capa­ble of taking action can be provided with the information necessary to take intelligent and correct action.

Point-of-action control needs man­agement surveillance and overall management controls; however, the development of esprit de corps, the

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ACerS, ASLE Topics will cover all wear and erosion

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willingness of individuals to work and if necessary, sacrifice for the success of their group, is by far the most effective and powerful means of program management.

References 1. John W. Hackney. "Control and Management of Capital Projects", John Wiley & Sons, 1966. 2. Dick Sharad, "Project Management for the 80's," Project Management Institute, Drexel Hill, Pennsyl­vania, 1982.

ABOUT THE AUTHORS

Lyn E. Wiele, Project Manager, Apersey Construction Co., Seven Freelon Street, P.O. Box 77923, San Francisco, Califor­nia 94107.

Mr. Wiele holds a BS in civil engineer­

ing and in mechanical engineering from Heald Institute of Technology, San Fran­cisco, California. He is a registered civil and mechanical engineer in California and professional engineer in Pennsylvania, Prior to joining Apersey Construction in 1983, he spent over 30 years with Raymond Kai­ser Engineers in project management, engineering, and construction for minerals, metals, transportation, and government projects. He is also an associate conSUlt­ant with Management and Technology Re­sources International, Oakland, California,

Martin E. Messner, Chief Metallurgical En­gineer, Minerals Divi­sion of Raymond Kai­ser Engineers Inc., P.O. Box 23210, Oak­land, California 94623.

Mr. Messner re­ceived BS and MS degrees in metallurgi­cal engineering from Montana Tech and an MS in engineering from Purdue University. His proMssional work has dealt principally with development and engineer­ing activity in ore beneficiation and extrac­tive metallurgy related to copper, nickel, cobalt, molybdenum, uranium, and the pre­cious and platinum group metals. He is a member of The Metallurgical SOCiety of AI ME.

resistance. Submit 200-word abstracts by March

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Thirtieth Annual Pacific Northwest Metals and Minerals Conference

April 30-May 2, 1984 Portland, Oregon

Sponsors: AIME, A WS, ASM, NACE, and AIChE

(Continued on page 65)

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