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Project Execution Risk Management for Addressing Constructability

Article  in  Hydrocarbon Processing · December 2008

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David A. Wood
DWA Energy Limited
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 Project Execution Risk Management for
Addressing Constructability

Use construction knowledge, experience and efficiency in a structured

and systematic way throughout the design and execution planning stages

David A. Wood
David Wood & Associates, Lincoln, UK
Greg Lamberson
International Construction Consulting, LLC, USA
Saeid Mokhatab
Tehran Raymand Consulting Engineers, Tehran, Iran

Accepted draft of article published in Hydrocarbon Processing,

December 2008, p.35 -42

The Construction Industry Institute (CII) defines constructability as "the optimum use
of construction knowledge and experience in planning, design, procurement, and
field operations to achieve overall project objectives." This emphasizes the
importance of putting construction knowledge to work early in the project
development and integrating that knowledge with the conceptual, design, and
procurement phases to allow for the most efficient, practical, and hence cost
efficient construction techniques to be used. CII claim that adopting a construction
focused methodology increase the chance of achieving:

 reduction in total project costs

 accelerated schedule to project completion
 enhanced plant maintainability, reliability and operability
 selection of safest and designs and construction methods

Some specific examples of constructability savings include:

 A Prudhoe Bay project reduced actual cost to $1.0 billion from the $1.7 billion
funded (41%), with major contributions in that cost saving from
constructability.

 A major Gulf Coast Refinery expansion aggressively pursued constructability

with designer and constructor and completed project 14 months early with a
23% ($253M) savings over the original estimate.

An Early Focus

Like the term “construction-driven”, constructability is not “construction calling the

shots”. It is a recognition that the construction phase of a project can constitute up
to 50% of the overall project costs, as shown for example in Figure 1 for a pipeline
construction project. The construction stage of any facilities project is where the
majority of project risks lie (schedule, cost, weather, impacts of new
technology/implementation, labor skills, community disputes etc.).

Figure 1. A pipeline construction project with total project costs dominate by

construction and materials items.

As such, much thought and effort should be expended early in the project so that the
most optimum construction methods, techniques, and materials are used or
specified. The criticality and benefits of early focus on constructability is highlighted
in Figure 2.

Figure 2. The maximum impact on the final project cost and schedule occurs in the
planning stages of the project. Once procurement and construction have begun it is
usually too late to have major impacts that can reduce cost and time expended.
Early stage constructability workshops for routine / repeat projects should include
personnel from all participating companies (i.e. operator, joint venture partners,
potential construction contractors, sub-contractors, service companies and
suppliers) with expertise in construction operations, safety, and appropriate
branches of petroleum facilities engineering. On larger, more complex, and novel
projects the range of skills involved in the workshops would be expanded to include
environmental, regulatory, quality, procurement, logistics, health, public relations,
legal and security.

The basic objectives of constructability are to identify, define and verify:

 guidelines for engineers, designers and planners to enhance the probability
of a cost efficient, buildable project;
 key engineering, design, and procurement deliverables that will have the
greatest bearing on the ability to construct the project and to identify where
early construction input is needed;
 construction related enhancements to engineering, design and planning
which will improve overall safety, quality, costs, and schedule;
 major execution challenges, uncertainties (risks and opportunities);
 project contracting strategy and plans for construction/installation
considering the specific execution challenges faced;
 plans for the transfer of constructability information to the next phase of the
project.

Regardless of the size of the project or the mix of the participants it is important to
have a structured approach which should be defined in the Constructability Program.

Constructability Program

A constructability program is an internal document outlining the company policy

regarding constructability, minimum criteria for, general resources roles &
responsibilities, and a feedback mechanism.

A constructability program should include at least the following:

 clearly defined and, where possible, quantified corporate objectives

 constructability organization chart defining roles & responsibilities
 constructability plans and implementation guidelines
 methodology for measurement and verification (benchmarking)
 procedures for capturing feedback and learning outcomes
 constructability tools: forms, agendas, checklists and workshops
 issue and change resolution methodologies
 milestones for constructability workshops

An overview of a typical constructability program timeline is shown in Figure 3.

Figure 3. Typical constructability program timeline.

Constructability Plan Reviews & Workshops

Reviews should take one or both of the following forms:

1. Designated resources assigned to the project team should review pre-

selected (as identified in the project Constructability Plan) engineering, design,
procurement, and planning deliverables at designated project milestones. The
findings and action items are documented and presented to the project
management team by the project constructability coordinator (this may be a stand
alone position on a major project or lead engineer on a small project).

2. One or more constructability plan review workshops could be held at defined

milestones. The workshop includes both project assigned resources and “cold eyes”
construction knowledge resources. The findings and follow up action items are
documented and presented to the project management team.

Effective workshops are built around checklists, which are not intended to be
comprehensive but to stimulate thinking of knowledgeable resources. Consequently
the effectiveness of the workshop relies on having the appropriate individuals
available and actively participating in an unconstrained environment.
Conceptual Constructability Review

A Conceptual Constructability Review (CCR) workshop is held prior to or in

conjunction with the conceptual selection process of a project and will transfer into
FEED. The workshop generally should include project assigned construction
knowledge resources, as well as persons knowledgeable about engineering, design
and planning strategy. At this point the personnel involved may or may not be
assigned to the project on a long-term basis.

The primary resources required for a CCR are knowledgeable personnel and
documentation on the project specifics. The personnel, using a checklist will
perform a facilitated review or brainstorming session, which should identify:

 project deliverables
 items outside the scope of the project
 influences from other ongoing projects
 enhancements to safety, environment, community, quality, costs, and
schedule
 construction execution challenges associated with each concept.
 pros and cons of each identified project concept for final concept selection
 alternative contracting strategies

The “team” will review the findings and assign follow up action items and present
those to the project management team for incorporation into the Project Execution
Plan (PEP).

Detailed Design Reviews

Constructability at the detail design phase is similar to the CCR in structure with
more definition and detail available and more focus on selected concept(s). Project
assigned personnel should conduct the reviews complemented by “cold eyes”
personnel, as required.

Typically a minimum of 2 workshops are conducted at the kick off of detailed design
with a follow up when engineering is approximately 30% - 50% complete. Again, the
constructability plan should dictate the required number of workshops and the
timing. More complex and larger projects may have workshops at the kick off, 30%,
50%, and prior to issuing tender packages.

The checklist approach is recommended to provide a structured process for

incorporating construction and other discipline knowledge that should enhance
project safety, quality, schedule, cost, and risk management objectives.

A checklist to aid this review should consider in detail ten key facets of project
execution:
1. schedule
2. design factors – a) simplicity, b) standardization, and c) ease of construction
3. facilities layouts and arrangements
4. safety, environmental, security, community and regulatory
5. specifications
6. plans and logistics
7. cost estimates
8. construction execution issues
9. modularization
10. risk mitigation and opportunity exploitation

The checklist can then be used in a series of workshops and progressively updated.
Figure 4 illustrates the structure of the checklist used as an aid during the design
process.

Figure 4. Detailed design review checklist. Item 10 (risk management / mitigation) is

best handled and documented separately in a risk register.

The impacts of each issue should be rated, initially in a qualitative manner such as
High, Medium, and Low and should progressively be defined more quantitatively, for
example:
• High - More than USD $10MM and/or 2 month or more schedule impact
• Medium - Between USD $1MM – $10MM and/or 1-2 month schedule impact
• Low - Less than USD $1MM and/or less than a 1 month schedule impact

While the High and Medium issues receive the most attention, it is strongly
encouraged to utilize the entire constructability checklist for follow up throughout
the detail design phase. While singularly, these items are in the low impact range, in
aggregate, they can represent a significant savings to the project in the form of cost
and schedule.

The focus of the Constructability Review in this stage is to obtain upgrades and
verification during the engineering phase of the project. While many issues are
being worked and resolved, there are still a variety of unknowns regarding labor,
equipment, and subcontractor availability, as well as materials that are available in
the quantity and quality that are required to support the project execution.

Remote sites and especially those in developing countries have unique challenges in
the context of safety, security, community relations, cultural and religious
sensitivities, accommodation, language barriers, telecommunications, medical
support, catering, industrial hygiene, waste management, etc. Assumptions made
from the constructability perspective must be addressed and fleshed out completely
prior to moving into the tendering phase of the construction portion of the project.

Construction Phase

As construction kicks off, most of the significant constructability has already been
implemented into the construction plans. At this point, a constructability review
follow-up action register should be used to document actions and responsibilities
that have been gathered from the formal constructability reviews ongoing through
the design phases. The project constructability coordinator or his designate is
responsible for working with each manager or supervisor to ensure items are closed-
out and properly documented.

The project manager or his designate should be responsible for ensuring lessons are
captured from constructability reviews and forwarded to the corporate
constructability coordinator for dissemination to other projects. In this was the
constructability methodology facilitates an ongoing learning and improvement
process built into corporate project strategies.

Conclusions

Constructability, if properly defined, structured, and used should ensure that

construction knowledge and experience is used as early as possible in the planning
and design process to ensure design and implementation plan practicality and cost
effectiveness.
 Constructability is simply the utilization of construction knowledge, experience and
efficiency in a structured and systematic way throughout the design and execution
planning stages of a facilities project. Constructability issues touch on all aspects of
project execution, including safety, scheduling, detailed design, procurement,
material/equipment delivery, contracting, temporary facilities/infrastructure needs,
commissioning, and the project management team organization.

About the Authors

Dr. David Wood is the Principal Consultant of David Wood & Associates, UK,
specializing in the integration of technical, economic, risk and strategic information
to aid portfolio evaluation and management decisions. He has more than 25 years of
international oil and gas experience spanning technical and commercial operations,
contract evaluation and senior corporate management. Industry experience includes
Phillips Petroleum, Amoco and Canadian independents including 3 years in Colombia
and 4 years in Dubai. From 1993 to 1998 he was UK managing director for Lundin
and then Morrison Petroleum. He is based in Lincoln, UK and operates worldwide.
Please visit his web site www.dwasolutions.com or contact him by e-mail at
dw@dwasolutions.com

Greg Lamberson is the Principal Consultant of International Construction Consulting,

LLC, USA, with over 25 years experience in all phases of the business, project,
engineering, and construction management for upstream and midstream oil, gas,
products, and energy-related facilities, including pipelines. He has accomplished at
working within integrated environments with multi-discipline and multi-cultural
staffs to ISO, US, and various foreign standards, procedures, and specifications in a
variety of geopolitical climates.

Saeid Mokhatab is the process technology manager for Tehran Raymand Consulting
Engineers, Iran, as well as a technical advisor for a few companies and research
organizations in the upstream and downstream energy sectors on a domestic and
international basis. He has participated in several international gas-engineering
projects and published more than 100 technical papers and magazine articles.

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