Front-End Loader

Using online information to gather competitor information

Mon, 08 Nov 2010 08:52:42 -0600

As the advisory committee member for the excellent and well received ChemInnovations 2010 conference in Houston in October, I was responsible for organizing the content for Session 1C: Cost Estimation and Project Justification. I have already discussed Thane Brown’s presentation in a separate article. Another great session was Felipe Taveres’ presentation on using online information for competitor information. In his talk titled “Transforming Publicly Available Information Into an Innovative Tool for Business Decisions”, Felipe discussed how his Brazilian firm, Intratec, provides process technology intelligence to its clients by researching information in patents, trade magazines, and research journals. In particular he mentioned Google Scholar and Google Patents as two of the online tools that his firm uses.

I mentioned some of the same sources in my article for Chemical Engineering - Using Web 2.0 Tools to Increase Your Productivity.

Don't jump to conclusions during early process design

Mon, 01 Nov 2010 11:06:01 -0500

As the advisory committee member for the excellent and well received ChemInnovations 2010 conference in Houston in October, I was responsible for organizing the content for Session 1C: Cost Estimation and Project Justification. One of the three excellent speakers at our session was Thane Brown (link to bio) whose talk was titled Economic Design: An Economic Optimization Methodology. It was an excellent a summary of his paper available online at che.com - Capital and Production Costs: Improving the Bottom Line.

Using the concept of technical function diagrams, Thane urged the audience to avoid the trap of selecting unit operations too early. He mentioned that, too often, process engineers start project development by pre-selecting unit operations based on their experience without really verifying if the selected unit operation is really the most cost effective choice. Thane provided examples of developing technical function diagrams can help process design engineers identify lower cost designs. You can read more about his method at the www.che.com link above.

What are some causes for low productivity?

Wed, 13 Oct 2010 22:34:13 -0500

My article discussing the five types of barriers to productivity based on an article by McKinsey consultants was just published today on the new ChEnected online community. ChEnected is a thriving online community of chemical engineers sponsored by AIChE. You will find engaging articles from a variety of experts.

Project management excellence and long-term company success

Tue, 25 May 2010 22:19:00 -0500

I recently came across a survey of senior executives in industrial manufacturing firms about the state of project management within their firms. The survey - Closing the gap: The link between project management excellence and long-term success - is available at the Economist Intelligence Unit web site. All of the firms represented in the survey consider project management a key competency but most admit that the performance on their projects can be better. The survey uses graphics and charts to summarize the responses. I am sharing some key excerpts from the survey below.

Following a structured project management method enables companies to predict and mitigate risks, better manage costs and deliver quality results that satisfy clients. In the most mature project management organisations, these project goals are directly linked to strategic business objectives, giving these organisations a powerful competitive advantage.

Yet few companies consistently meet their project goals or measure project success. This inconsistency stems largely from a failure to implement and follow well-defined project management practices, despite ongoing efforts to improve processes with the goal of delivering better, faster, cheaper results.

Aware of their shortcomings, companies are trying to do better, but they struggle to find the best ways to address the challenge.

Although many executives and project managers say that their organisations have strong project management strategies and that using those strategies provides them with a clear and measurable competitive advantage, most admit that they do not adhere to them consistently. Until that gap is closed, project success will continue to be a daunting task.

Training and recruiting are the top ways companies invest in improving their project management programmes.

To prove that a project was a success, it is necessary to measure more than timeliness and adherence to budget; companies should also measure outcomes against project goals, determine whether the project delivered bottom-line results and assess the satisfaction of clients and stakeholders with the project.

I found this survey well written and educational and recommend it highly.

How do you prioritize your project goals?

Mon, 03 May 2010 22:18:50 -0500

In a recent article on CIO.com, Jason Westland proposes five goals that a project manager should strive for:

Finish on time
Finish under budget
Meet requirements
Keep customers happy
Keep team members happy

In the process industry, there is also a sixth goal for projects - zero injuries.

How do you prioritize the goals on your projects to allocate resources and time properly? Do you agree with the order that Jason presented the goals? Should you demand overtime from your team members to ensure that the project finishes on time? On projects that I have led, the goals actually have been prioritized in the same order that Westland presents them. The safety goal is first followed by the five goals listed above. In most cases, team member happiness is a luxury to consider only after the first four goals have been addressed.

The challenge in being a great project manager is to plan and lead your project so that not only the top goals are met but that you do not have to ask your team members to perform heroics to meet them. Proper planning and ability to manage risks can help you meet all six goals.

A final note to consider about prioritizing project goals is that the order can shift depending on the what phase the project is in. Priorities can also and usually do shift in response to outside business, economic, or customer conditions.

Capital project costs to increase again this year?

Tue, 27 Apr 2010 09:11:47 -0500

Instead of a project management related topic today, I would like to discuss my observation of recent news articles about commodity pricing on the internet. Over the last few weeks, I have seen blog posts as well as news stories about significant pending increases in commodity prices this year. For example, the Wall Street Journal recently posted a quote from Lakshmi Mittal, the chief executive of the world’s largest steel producer, that steel prices will rise about 21% this year. While Mittal may be sharing the upper value of his expected (or desired) price increase range, I have read enough other similar posts and stories to believe that we will see some significant price increases in metal prices. Combined with an increase in engineering hiring, it is reasonable to expect capital project costs to increase later this year.

To avoid over-paying for your capital projects, I recommend restarting suspended projects. Front-end loading can take several months for large projects and now is the time to start the front-end loading instead of waiting until later this year. If you can get your critical equipment orders placed early while the prices are still low, your project can enjoy significant cost savings compared to waiting until later this year or next year to get started.

Too much front-end loading can kill you project!

Mon, 12 Apr 2010 21:53:22 -0500

The 2010 Rube Goldberg machine contests were recently held and you can watch the videos at RubeMachine.com. Rube Goldberg is best known for a series of popular cartoons he created depicting complex devices that perform simple tasks in indirect, convoluted ways. To celebrate his legacy, Rube Goldberg contests challenge teams to design similar machines. Rube was trying to satirize complexity with his cartoons.

Rube Goldberg’s over-complexity is not just limited to physical machines, it can also impact work processes. Is your conceptual design process a candidate for a Rube Goldberg contest for work processes? Are you conducting too much front-end loading on your projects? Are you sizing gaskets during front-end loading and using extensive checklists to determine the torque for every bolt? Is risk aversion to any cost uncertainty leading you beyond front-end loading into detail design before your project is actually authorized?

Adding the complexity of detail design to your front-end loading phase does not only lead to waste of limited resources on projects that get canceled, it limits how many project options you can explore. Most firms have a limited budget developing capital project options. By avoiding too much front-end loading, you can evaluate more projects. Our conceptual design tool, ConcepSys, is designed to address just the right level of detail during the feasibility stage and increase the number of project ideas you can evaluate.

Higher quality engineering via poka-yoke enabled software

Sun, 28 Mar 2010 18:12:50 -0500

I have recently been researching the Lean concept. Like Six Sigma, Lean is another practice from manufacturing that is being applied to non-manufacturing activities. One of the tools in the Lean toolkit is Poka-yoke. Poka-yoke is the Japanese term for mistake-proofing. An example of Poka-yoke is the inability to remove a key from a car with automatic transmission unless the transmission is in the parked position.

In engineering design, software tools can be enhanced with poka-yoke features to “mistake-proof” the engineering design. ConcepSys has several poka-yoke features to reduce the error and omission rate during feasibility engineering. For example, the seamless integration between the flow diagram, the 3D model, and the design reports means that any modification on the flow diagram is always reflected in other design documents. ConcepSys does not allow a piece of equipment to remain listed on the equipment list when it has been deleted from the flow diagram.

By implementing poka-yoke and other Lean principles in software, we can eliminate waste due to rework in engineering.

The Anti-Creativity Checklist

Mon, 22 Mar 2010 22:02:48 -0500

The Anti-Creativity Checklist:

Do you or people on your project teams exhibit these behaviors?

Are poor meetings costing you a fortune?

Mon, 15 Mar 2010 22:40:00 -0500

On a project team, as much as half of a person’s time may be spent in various meetings. Are all those meetings really necessary? Are the attendees in the meetings really required to be there? On a $100 million project, eliminating just three hours of meetings per week for the team members can save almost one million dollars if the average charge rate is $150 per hour!

Meetings are necessary and required for communication and coordination on projects. However, most meetings suffer from two problems - lack of desired outcome and too many attendees. The effectiveness of a meeting is inversely proportional to the number of attendees. Meetings with more than six attendees actually start to create confusion instead of clarity. Lack of agendas is often cited as a leading cause of poor meetings. I would take this a step further to claim that it is not necessarily the lack of agendas but the lack of clear objectives that makes meetings ineffective.

The best cure for poor meetings is to reduce the number of meetings. Consider putting a limit on how many hours can your team member spend in a meeting per week. I would recommend starting with a limit of five hours. Meeting organizers should justify their meetings to attendees. For meetings that are justified, make them more effective by applying the following practices. You will save precious dollars!

Identify a clear objective and share it with the attendees at the start of every meeting.
Ask the attendees to confirm or, in some cases, define the meeting agenda that they think will help achieve the desired objective.
Limit meeting attendance to six participants. For topics requiring participation by more than six people, consider holding shorter meetings with limited attendees first and then using spokespersons from the smaller groups to achieve the meeting goals.

How to Improve the Usefulness of Project Status Reports?

Mon, 08 Mar 2010 17:31:47 -0600

Most project managers are required to write status reports on periodic basis about their projects for upper management. The objective for these reports is to communicate the project progress as well as issues. Generally, the project status reports are too long and written poorly. As a result, the recipients ignore the reports which in turn makes them seen as useless task by the writers.

So how can you break this time wasting charade of project reporting? The most common problem with project reports is their length. Instead of focusing on the important items, the reports become long lists of every significant or non-significant event in the project. Get a copy of the last project you wrote and set a personal target to have your next one be only half as long.

Read this article about the dead bull to get tips on organizing your project status report. In particular, the reverse order of detail recommended by the author is an excellent way to keep the reader interested in your report. The punch line format recommended by the author should be used in all your future project reports. Following the tips in the article will not only reduce the time you spend writing your projects reports, the readers will also actually read them!

How to stop wasting time and money due to recycle in conceptual design?

Tue, 02 Mar 2010 23:44:28 -0600

Have you heard of or been involved with a project where the initial scope passed the required gate reviews and management endorsements only to be latery recycled back to an earlier stage? Unfortunately, it happens more often than we would like on process industry plants.

During early blue sky estimating, the costs of projects are often underestimated and the project clears the initial reviews easily. However, the definitive design required for full funding normally results in a significantly higher cost estimate. In some cases, the gap between the definitive estimate (AFE) and the business expectations is so large that the project design is recycled back to an earlier step.

I would like to propose that such recycle cases are a result of too much enthusiasm and optimism on part of a naive project team. Project teams have a high level of energy and optimism at project kickoff. Even teams challenged with aggressive goals are very optimistic and exhibit a “can-do” attitude right after project kickoff. This initial euphoria leads to “let’s get this going” mentality that causes reality myopia. The project team ignores or delays defining critical risks and scope to show progress against the sponsor goals. As the initial euphoria fades, the problems that were ignored still remain and may become even more critical. Often, reviews by independent outsiders (by Independent Project Analysis for example) lead to acknowledgement of the previously ignored scope and risks. To address the problems, the teams have little choice but to return to an earlier step in the conceptual design stage.

So how do you prevent this as a project leader? Dampening your team’s initial euphoria does not seem like a good idea. Instead you need to be aware of this trap and mitigate it. Consider conducting an “out of project” experience. Just like an “out of body” experience, imagine yourself as an independent outsider (even an auditor) reviewing your team’s work. Critically review the project scope and ask the tough questions. Recognizing the enthusiasm trap and countering it by taking the outsider perspective can reduce the waste due to recycle.

Eliminating Unnecessary Design Documents

Wed, 24 Feb 2010 18:19:54 -0600

Do you think that some of the design drawings and documents generated during early project design are unnecessary? I recently had an email exchange about ConcepSys with a project manager from an engineering firm. He mentioned that his firm has eliminated some of the design deliverables in their projects that ConcepSys produces. His remark made me very curious since the driving force behind ConcepSys is saving time and money during feasibility studies. While waiting for more details from him, I looked at the typical feasibility (FEL-2) documents to check if any of them can indeed be eliminated or deferred until later stages of the design process without impacting the quality of the project cost estimate.

Flow diagrams - needed to understand process sequence and layout

Equipment lists - needed to review design data about the equipment

Instrument and line lists - needed to review design data

Equipment data sheets - needed to review design data on equipment. These could be eliminated during feasibility stage since only a few preliminary design parameters are completed on the data sheets for equipment during feasibility stage design. These preliminary design parameters are usually duplicated on the equipment list.

Layout drawings - needed for operability, maintenance, and constructability input

So, I could only identify the equipment data sheets as candidates for elimination.

What are your thoughts on this topic? Should I be more aggressive in finding documents to eliminate from the typical feasibility package?

Seven Laws of Project Management

Mon, 15 Feb 2010 23:48:00 -0600

Seven Laws of Project Management:

In his blog post, Matthew E. May lists seven law of project management. Of the seven laws, I find two particularly relevant to my own observations of project management in the process industry.

A major project is never completed on time, within budget, or with the original team, and it never does exactly what it was supposed to.

If you have too few people on a project, they can’t solve the problems. If you have too many, they create more problems than they can solve.

A lot of time and energy has been spent coming up with ideas, practices, tools, methods, etc. to counter these laws of project management but I am not sure we have seen much success. Perhaps it’s like trying to violate the law of thermodynamics by inventing a perpetual motion machine. That being said, we should still look to improve project management. Just because we can not change these laws, we can still minimize their impact on us.

Is fixed priced FEED a good idea?

Sun, 07 Feb 2010 16:53:05 -0600

I just came across an announcement by the Austin offices of the law firm Andrews Kurth about their fixed price startup package. Since law firms usually operate on the reimbursable contract, I am wondering if this is the beginning of a new trend.

Within the process industry, FEED contracts are also usually on a reimbursable basis. I have been told that the reimbursable arrangement is necessary due to the uncertainty of the project scope and the multiple revisions and optimization in design by owners that can not be estimated in advance by contractors.

However, I would propose that a maverick contractor firm can shake up the landscape by offering a FEED contract using a fixed fee per piece of major equipment in the project scope. Such a contract would have to list the deliverables as well as their content and detail for each type of major equipment. There would also probably be a limit on the number of hours spent per piece of equipment. I think such a pricing model will be embraced enthusiastically by owners.

Take immediate action to fix problems when improving capital project work processes

Sun, 31 Jan 2010 19:54:10 -0600

A recent Harvard Business School study of process improvements at hospitals indicates that managers are better served by taking immediate actions to resolve problems identified by workers rather then waiting for gathering data for delayed action. While the study was focused on hospitals and the summary is somewhat obtuse, the concept of meaningful action in response to raised concerns applies to capital project work processes. If the project team members are raising concerns about a particular obstacle or inefficiency in the process, managers should take action rather than pay lip service.

The Elusive Right Path to Offshoring Engineering

Mon, 25 Jan 2010 12:53:38 -0600

The Elusive Right Path to Offshoring Engineering:

This Strategy+Business article discusses the choice of using offshore (emerging market) engineers. Early 2000s saw a “me-too” use of engineers in locations such as India and Eastern Europe for process industry projects. Anecdotal evidence suggests that the trend has stabilized and may even have reversed. The article lists the following five steps to increasing the chances of success when using offshore engineering resources.

1. Choosing the Right Project

2. Identifying the Appropriate Business Model

3. Teaming Up with the Right Vendors

4. Creating Iron-Clad Performance Metrics

5. Establishing a Strong Governance Structure

Decision dice steal the show!

Sun, 04 Oct 2009 17:32:00 -0500

The ConcepSys decision dice were a big hit at the AIChE regional technology conference in Galveston, TX. Almost everyone at the show wanted one!

While discussing the pros and cons of using a dice to approve projects, we generated a lot of interest in ConcepSys. Quite a few process and project engineers involved in front-end loading of projects were thrilled to see a demo of how our software can save time and eliminate non-value tasks during FEL-2.

We are sorting through the contacts made at the show and will be sending out trial invitations soon!

You could win a netbook computer by trying ConcepSys!

Fri, 25 Sep 2009 11:39:00 -0500

ConcepSys Solutions is a sponsor for the 2009 AIChE Gulf Coast Process Technology Conference. The firm will also be exhibiting at booth 31. We are excited about our first conference sponsorship. This conference will be our official product launch for ConcepSys after extensive testing and feedback from early reviewers in the industry.

We will be also be launching our netbook giveaway at the conference. During the month of October, we are offering one month free trials of ConcepSys. Trial users who provide us feedback on ConcepSys will be entered into a drawing to win a net book computer in November.