SCM 4312Project Management

T/THU 1:00-2:30

Dzoho Washima

Fakunle Oluwasola

Olugbile Kehinde

Master Case Final Project ReportProject OverviewOpportunity Framing Elements

Over the past few years, it’s been worthy of note that oil reserves are depleting and

thus companies have to turn to more difficult sources such as offshore shallow water and deep

fields. This project is important to UOC because it currently has the capacity of processing both

light and heavy crudes. However, light crudes are refined in greater proportion than heavy

crudes. With the evolution of crude markets, the business driver is to take advantage of pricing

of heavy crude oil relative to light crude from the Middle East in a bid to increase heavy

capacity at the Houston refinery.

Overall Project Scope

This project is an overview of the challenges and the advantages of switching from light

crude oil to a mix of light and heavy crude oil, and how we can have a sustainable

competitive advantage. This would definitely require a major expansion.

The major units required in this project are as follows:

o Crude Oil Receiving System Modifications (piping, loading arm, additional pumping

capacity)

o One New Large Crude Tank in the tank farm

o New Pipeline from the New Crude Tank to the Crude Unit

o Two Crude Oil Pumps

o Crude Unit Modifications, including two new heat exchangers, existing exchanger

metallurgy upgrades, and three large pumps

o New Vacuum Distillation Unit including Flasher Column (~28 ft diameter), Vacuum

Heater, four product pumps, five heat exchangers and one Vacuum Jet Ejector

System.

o Delayed Coker modifications including exchanger train reconfiguration, Wet Gas

Compressor and Coker Fractionator modifications.

o Utility Upgrades including cooling water and electrical needs.

Opportunity Statement

We have the opportunity to increase crud oil capacity by taking advantage of low

transportation cost from Venezuela and gulf coast. This has also saved us time because of the

closer proximity. Another advantage we will have is working on an existing brown field

therefore saving us the cost of building a new plant.

Definition of success

The definition of success varies depending on the scope and different phases of the project.

“Success means profitability to a contractor and an acceptable deliverable to a customer”

(2) According to Business dictionary, the definition of success means achieving an objective

within a specified parameter. (1)

However The UOC’s definition of success requires completing the following goals:

o Meeting all the project requirements as stipulated in the project scope

o Compliance to safety and environmental standards as well as commissioning and

operations

o A 15% reduction in spending by 2015

o Meet the final

o Completion of the expansion by January 2017

o Using both internal and external resources effectively

o Utilization of UOC Engineering guides & Standards as well as UOC’s project

development best practices

o Utilization of existing technology

o Projected Budget Maintenance

Value drivers &Critical Success Factors

Value drivers are those things that can be added to a project in order to increase its value.

UOC’s value driver in this case is the better refining of heavy crude to substitute for the

depletion in lighter crudes.

Givens, Assumptions, Focus Decisions

Given

o Hydrogen supplied by two units operated by the hydrogen Manufacturer

o Additional steam supplied by two units operated by the hydrogen manufacturer

o Current capacity of 200 kbpd capable of processing a mix of light and heavy

crudes

o No change policy on FED procedures

o The Houston refinery produces 7% propane and butane, 58% gasoline, 28%

distillate, and 15% residue

o Director of projects led to a 25% reduction of staff

o Treating sulfur provided by another project

Assumptions

o Increase in light-heavy crude differential

o Lower transportation costs from Venezuela

o Existing equipment will be sufficient to meet project requirements

o Favorable pricing of heavy crude will start closing within the next 10 years

o Operational and maintenance costs will be

o Expansion will be completed as scheduled for January 2017

o Attaining a 15% reduction in cost

o Expansion will increase capacity to the desired 250 kbpd

Focus Decisions

o Decide on an option as soon as possible

o Assign engineering, operations, maintenance teams by mid October 2016

o Select the mode of transportation by May 2015

o Start Operations January 1 2015

Key Stakeholders

Stakeholders are the individual and employees that are affected by the outcome of the project

for example the project manager and the team. “Key stakeholders are a subset of stakeholders

who if their support were to be withdrawn would cause the projects to fail”{3} Key stakeholders

for the project would be the government, top management and the project manager

I. Project Manager- The project manager is the most instrumental person for the

successful completion of the project in a timely manner and on budget. In this

Houston refinery project that person is Jose Garcia.

II. Project Director- He oversees and monitors the progress of the project to make

sure resources are available to complete the project.

III. Manager at the Refinery- Manages the daily operations which will be greatly

affected by the increasing capacity.

IV. Mexican and Venezuelan Economies- as a result of the increase in heavy crude

procured from them

Project Goals

i. Finish on schedule

ii. Meet the specifications

iii. Adhere to Health Safety and Environmental stipulations through progression of

project

iv. Achieve design rates and specifications quickly and sustainablyv. Cost Effectiveness

Contracting and Procurement (See images Below)

o On appendix A, we gave the job to specialized contractors. We want the best quality regardless of the cost. We chose Quality as our number one priority. We went with contactors whose quality was either excellent or good. We also cannot overlook health and safety because we want quality. The contractors we chose also have either excellent or good as their performance for Health and safety.

o On appendix B, we gave the job to contractors who are cost effective. We also sourced more of smaller contractors just so that we would be one of their few clients. We also did not neglect the health and safety; their performances are also either good or excellent. Choosing a small contractors organization makes it easier for the project management team in charge of outsourcing supervisions to supervise them.

o After much discussion, assessment and planning, we decided to pick Appendix A which is quality. We specifically chose specialized contractors who also have a lot of experience. Quality always comes before cost in our company because in the long run, it would pay off. We would not have to do any unscheduled maintenance due to low quality materials.

Appendix A

Appendix B

Project Organization Structure

Project Organization:

1. Pure Structure

Individual Roles and Responsibilities in Pure Organization Structure:

Project Manager:o Ensure the delivery of major projects o Manage all spend value projects over $100MMo Provide team leadership and overall cooperation for the success of the projecto Ensuring the project is successfully initiated and implemented correctly o Act as an intermediary between the team and project director

Project Manager A:o Manages the tasks of the Manufacturing manager, the VP of Contracts and

Procurement, the VP of Marketing and the VP of Financeo Confirm that operational assets are properly developed and acquired on scheduleo Manufacturing Manager role:

Understand the goals of UOC and translate goals to a vision of how operations will help achieve them

Ensure operational tasks are completed in a timely and efficient manner Continuously monitor performance and quality control and report to the Project

Manager Perform other duties as assigned by the Project Manager

o Contracting and Procurement role: Reviews and makes necessary modifications to bid proposals and ensures

documents are accurately prepared following the right procedures Ensures that all activities follow HSE regulations

o VP Marketing role: Develop annual marketing objectives and other tasks in support of the

organizationo VP Finance:

Provide insight into company finances and ensure accounting principles are followed

Project Manager B:

VP R&DVP HSEConstruction

ManagerEngineering

Manager

Project Manager B

VP FinanceVP MarketingVP Contracts & Procurement

Manufacturing(Operations)

Manager

Project Manager A

Project Manager

Jose Garcia

o Manages the tasks of the engineering manager, the operations manager, and both the VP’s of HSE and R&D

o Confirm that all required assets are acquired according to the schedule Crude Oil Receiving System Modifications including piping, loading arm,

additional pumping capacity One New Large Crude Tank New Pipeline from the New Crude Tanks to the Crude Unit Two Crude Oil Pumps Crude Unit Modifications including two new heat exchangers, existing

exchanger metallurgy upgrades, and three large pumps New Vacuum Distillation Unit including Flasher Column, Vacuum Heater, four

product pump, five heat exchangers, and one Vacuum Jet Ejector System Delayed Coker modifications including exchanger train reconfiguration, Wet Gas

Compressor, and Coker Fractionator modifications Utility Upgrades including cooling water and electrical needs

2. Matrix Organization

Project Manager

Jose Garcia

Project Manager Manufacturing Marketing Finance R&D Human

Resources

PM1 3

1

0PM3

PM2

1 1/2

4

1/2

1/2

1/4

3 1/2

1 1/2

4 1/2

1/4

1

Individual Roles and Responsibilities in Matrix Organization Structure

Project Manager: o The Project manager is tasked with the responsibility of ensuring that the project is

planned properly and executed according to the schedule, and also completed on time and as expected. The Project Manager acts as the primary facilitator and oversees the successful implementation of the project and managers the team members within the project and ensure they have the necessary resources and knowledge needed for the project. The Project Manager is also responsible for:

o Acquiring the necessary resources for the project, o Handling any obstacles or issues that may arise during the execution of the project o Showing leadership capabilities and deciding on necessary project modificationso Handles negations and decides on the appropriate resolutions for conflicting ideals

PM 1,2,3: Each subgroup Project Manager is assigned with proper implementation and the acquiring and development of each asset necessary for the project

o PM1: Crude Oil Receiving System Modifications including piping, loading arm,

additional pumping capacity One New Large Crude Tank New Pipeline from the New Crude Tanks to the Crude Unit

o PM2: Two Crude Oil Pumps Crude Unit Modifications including two new heat exchangers, existing

exchanger metallurgy upgrades, and three large pumpso PM3:

New Vacuum Distillation Unit including Flasher Column, Vacuum Heater, four product pump, five heat exchangers, and one Vacuum Jet Ejector System

Delayed Coker modifications including exchanger train reconfiguration, Wet Gas Compressor, and Coker Fractionator modifications

Utility Upgrades including cooling water and electrical needs

Cost Estimationo Cost Estimates

i. Tank Cost Estimate(See image 1 below)ii. Pump Cost Estimate(See image 2 below)

Risk Register ( see table below)

REFERENCES1.) Businessdictionary.com2.) Project Management 2.0 By Harold R. Kerzner3.) mosaicprojects.wordpress.com/2009/01/19/key-stakeholders4.) University Oil Company Houston Refinery Expansion On the Texas Gulf coast