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    MCP3 MCP3 Document Transcript

    • Project Management National Conference 2011 PMI India SYNCRONIZATION AND FOCUSED APPROACH –“KEY TO MANAGING COMPLEX PROJECT” Abhinav Materials Manager (Projects), Indian Oil Corporation Limited2|P a g e Application of Select Tools of Psychology for Effective Project Management
    • Project Management National Conference 2011 PMI India Contents 1.1 Abstract...........................................................................................................................4 1.2 Keywords........................................................................................................................5 1.3 Introduction ....................................................................................................................5 1.4 Pipelining .......................................................................................................................5 1.5 Buffering ........................................................................................................................5 1.6 Buffer Management.........................................................................................................6 1.7 Critical Analysis of Critical Chain .................................................................................8 1.8 THREE PRECEPTS OF CRITICAL CHAIN................................................................8 1.9 Conclusion ....................................................................................................................13 1.10 References ..................................................................................................................143|P a g e Application of Select Tools of Psychology for Effective Project Management
    • Project Management National Conference 2011 PMI India 1.1 Abstract Most of the capital intensive projects, especially in oil & gas, involving a large number of stakeholders, are affected by project overruns, due to lack of synchronization among the stakeholders and focused approach by the personnel managing the project. Unforeseen requirements are a regular feature in oil & gas projects where the project scope often undergoes repeated changes resulting in changes in engineering and related resources. The three major constraints in project execution are: uncertainties, limited resources, and project complexity. During execution, local priorities set in, which over shadows the original project plan. It is like nobody knowing after all whose baby the project is and playing of waiting games begins. A quick look at the delayed projects indicates ‘failure in resolving associated issues’ as the prime reason. Synchronized Execution and Focused approach are the critical success factors for managing such complex projects through: • Focusing on fewer tasks at a time instead of keeping people busy. • Re-align thinking to finish the project on time instead of finishing tasks on time. • Task prioritization rather than detailed schedules. Synchronization ensures availability of desired resources, inputs (approval, clarity in scope of work and specification) and timely decisions to mitigate uncertainty; while Focused approach will help in constantly looking for an opportunity to optimise the resources based on incremental benefits. A Synchronized Execution and Focused approach takes care of real time uncertainties and can be regarded as game changer where the best of planning and tracking mechanisms cannot guarantee project success rate.4|P a g e Application of Select Tools of Psychology for Effective Project Management
    • Project Management National Conference 2011 PMI India 1.2 Keywords Critical chain, Pipelining, Buffering, Buffer management 1.3 Introduction Most of the complex project especially in oil & gas sectors require detailed design and engineering at the initial stages of the project which under goes repeated changes, once the execution starts, due to mismatch in the designing layout and the actual, which sets the ball rolling for real time uncertainty and resource crunch. The other major problem with the large scale complex project is the weak matrix organisation which causes the local priorities set in and each functional department will fight for their cause instead of completing the project on time. Delay in timely decision to resolve the issues, consumes a large chunk of project time. When uncertainties sets in, it opens many fronts leading to managers losing control and taking more safety cushion in their approach, causing situation more worse. “Critical Chain” (CC) Methodology suggested by Dr Eli Goldratt to synchronize execution by way of Pipelining (limiting no. of work stations for better resource utilization), Buffering (Focus of project deadline rather on task by aggregating buffers available), Buffer management( Focus on task which consumes buffer faster) gives managers more thinking time and synchronization in execution. [1] 1.4 Pipelining Figure 1: The first rule of synchronization is to limit the number of projects in execution at any given time. [1] “Reprinted with permission from the Institute of Industrial Engineers, copyright 2011. IIE is located at 3577 Parkway Lane, Norcross, GA 30092.” 1.5 Buffering Figure 2: The second rule of synchronization is to replace “hidden” buffers with aggressive project plans and global buffers. [1] “Reprinted with permission from the Institute of Industrial Engineers, copyright 2011. IIE is located at 3577 Parkway Lane, Norcross, GA 30092.”5|P a g e Application of Select Tools of Psychology for Effective Project Management
    • Project Management National Conference 2011 PMI India 1.6 Buffer Management Figure 3: The third rule of synchronization is to prioritize tasks and look for early warning signs by monitoring buffer consumption. [1] “Reprinted with permission from the Institute of Industrial Engineers, copyright 2011. IIE is located at 3577 Parkway Lane, Norcross, GA 30092.” Major Areas of Concern in Complex project The following are the Major Areas wherein indecision occurs as evident from recently finished projects which gives headache to Managers and ultimately led to delays :- 1. Technical Area: • Scope change; • Engineering and design change. • Material requirement planning 2. Financial Area • Improper estimation • Statutory Risks 3. Organizational Area: • Too many decision makers / conflicts • Contractors failure • Suppliers failure • External Pressure The factor scope change has been identified as the most vulnerable for the project as it has high probability of occurrence as well as high severity. If there is a change in scope of any of the work packages, there will be6|P a g e Application of Select Tools of Psychology for Effective Project Management
    • Project Management National Conference 2011 PMI India considerable implications on design, planning and implementation program. These will cause considerable time and cost overrun in project. Implementation methodology, fund risk, improper estimate and materials risk are rated as medium with respect to probability of their occurrence as well as severity The factors like land acquisition, technology selection, engineering and design change, contractors capability, vendors capability and abnormal calamity are also rated as medium probability but with less severity, as adequate planning for the project under study prompts the executives to perceive these factors as less vulnerable. However, project will experience major time and cost overrun, if any of the above factors occur during project implementation. [2] Most of the capital intensive, Oil and Gas projects, got delayed due to multiple changes in scope, design & engineering. This is mostly attributed to insufficient research / ground work done in execution related issues by OWNER / Project Management Consultant (PMC) during detailed planning which leading to improper estimation of job / scope, work packages not well defined and Improper Scheduling. This causes heartburn at the execution time with fronts not available to contractors, rerouting of the process line and more Material Take off (MTO). This will finally results into resources not being available or idling of contractors resources. The situation gets more compounded with delay in getting change orders approval from top management (too many decision makers) which requires elaborate explanation and justification as a safeguard against any future audits/investigation. A quick look at the delayed projects indicates ‘failure in resolving associated issues of local priorities during execution’ as the prime reason for project overruns. The issues may be diversion of resources allocated for a specific work, delay in issuance of work-permits etc. At ground zero, indecision galore as managers afraid of being targeted try to build in more time lag for their activities and play waiting games by blaming others for their misfortunes instead of synchronizing and focusing on completing the task in proactive manner. This ultimately has a cascading effect on the project timeline. Critical analysis of Synchronization and Focused approach Synchronized execution and Focused approach based on “Critical Chain” (CC) concept helped in increasing the rate of project execution by at least 20-30%. Critical Chain based on Theory of constraints (TOC), focuses on the constraint that blocks achieving the goal of company. Synchronization challenge is to get the resources, decision, corrective actions available at right time at right place throughout the project life cycle to avoid Project overruns. It is easier said than done in a complex project. [3]7|P a g e Application of Select Tools of Psychology for Effective Project Management
    • Project Management National Conference 2011 PMI India 1.7 Critical Analysis of Critical Chain The Analysis of three precepts of critical chain will highlight its usefulness and also its limitations in addressing the synchronization challenge. 1.8 THREE PRECEPTS OF CRITICAL CHAIN • PIPELINING: To Limit the number of work-streams in execution to reduce high work-in-progress (WIP) to concentrate resources on fewer streams of work at a time. [3] Resources multitask more if there are more work-streams and effective utilization of resources without any proper control will be difficult; conversely if the work streams are fewer resources can be channelized in a focused way. This will partially meet the objective of synchronization challenge to get the resources some time but not always. The actual challenge lies in how you limit the work streams. Prioritization of tasks should be based on schedule of work planned, resources available and critical activity in the path. Contractors are given a time frame to complete their jobs and fronts to be made available to them. Contractors also sub-contract for manpower, equipment (crane), materials from suppliers, requires drawing approval from PMC/ Owner to keep them going. Project review meeting revealed that major issue during execution at site is the front availability. As a Project manager, the major challenge becomes how you sequence the activities of contractors so that they do not have any lean period or resource crunch rather limiting work– streams. Pipelining precepts will work for oil and gas complex project effectively only with the focused approach, wherein the managers will be constantly looking for an opportunity to optimise the resources based on incremental benefits. • BUFFERING: Discard local schedules and measurements, and use aggregate buffers to protect against uncertainties. Instead of finishing tasks on time, focus on finishing the project on time. The final project deadline is the only deadline that really matters. [3] This is useful when work-break down structure is well crafted and activities slack are well thought and everything is going as per plan. The precedence–successor relationship followed in a focused way. Managers know that a task can be performed early (early start) and focusing on its early completion of non-critical8|P a g e Application of Select Tools of Psychology for Effective Project Management
    • Project Management National Conference 2011 PMI India activities is necessary to meet the schedule date. Buffering uses “late start” and feeding buffers provide an explicitly sized buffer to protect the overall project schedule from late completion of the feeding paths; this maximizes the advantage to the project, ensuring project schedule protection. The idea here is to focus on aggregate buffer and focus on project deadline. Delhi Metro Rail Corporation (DMRC) project [5], [6] is an example of such approach. Remember there are critical activities with no buffer (Slack). Any delay / risk inherent on these activities will lead to the project overruns. So without planning / crashing for critical path activities, the Synchronization challenge objective will be defeated. Continuous Focused tracking of the critical activities is the way out. Known-Unknowns and Unknown-Unknowns are the order of the day in a complex project which consumes contingency and management reserves beyond the magnitude specified for the project. Qualified and Quantified key risk Indicators for the critical activities and its early warning signals to be monitored closely for possible risk mitigating strategies. Any activity which is not envisaged critical might turn out to be critical during the final stage of project if not finished in time. • BUFFER MANAGEMENT: Instead of creating plans, focus on task prioritization –use the rate of project buffer consumption to measure execution, and give highest priority to tasks that are consuming buffer at the fastest rate. Buffer-based priorities not only are synchronized, but they also cause project status to be reliable, giving managers actionable information they can use to focus resources on the tasks that are causing the biggest delays in project completion. [3]. Ensuring availability of Critical resources and their Management through optimized allocation to facilitate scheduling of prioritized tasks are considered key performance indicators of a successful project management. This process measures drive actions that move the project toward the goal. Buffer index which is the ratio of % of work completed and % buffer consumed will help to focus on critical activities and resources can be diverted to these activities. Scheduling Issues in CC [4]: - One of the most controversial issues in CC is the buffer calculation. The project buffer is conventionally set at one half of the length of the critical chain and the activity estimates have 50% safety margins which results in a shorter baseline schedule and an organized approach to protecting the schedule against uncertainty. Another problem is that CC is not stable during execution. While the CC includes resource and precedence dependencies into account, the feeding buffers which are supposed to protect the CC, are based only on network topology9|P a g e Application of Select Tools of Psychology for Effective Project Management
    • Project Management National Conference 2011 PMI India (Precedence relationships). This may be a problem as delay sets in with a cascading effect that delays the start of a critical chain activity. Behavioural Issues in CC [4]: - The planning tactics of CC assume that behaviours can be modified and addresses two specific behaviour that increase lead times. They are the students syndrome, meaning that humans with time buffers start their tasks later and waste safety margins, and Parkinson’s law, meaning that humans tend not to finish their tasks ahead of time even though they have chance to do so. It is contented that student syndrome and Parkinson’s Law tend to make milestone “self-fulfilling prophecies”. This causes late start of activities resulting in higher risk of delays and loss of time advantages, because early finish dates are not reported. Synchronization and Focused Approach Success Despite of some limitations; Synchronization and Focused Approach will remain the key and critical success factor for managing complex projects. This can be substantiated by the recently concluded Indian Oil Corporation Ltd (IOCL) -Panipat Refinery Additional Expansion Revamp Project (PRAEP) to augment the capacity of Panipat Refinery from the existing 12 to 15 MMTPA, regarded as the fast track project, got delayed midway due to more shutdown days (Critical for Project Viability as longer shutdown will lead to huge production loss) envisaged during detailed engineering as compared to initial engineering, is a perfect example of how the Synchronized execution and Focused approach brought the project back on track. The site execution including shut down was very complex due to the fact that the execution required working with utmost safety as the revamp was being done with the existing running units and any delay in hooking up the new units during shut down would lead to huge production loss. The revamp project execution involved two stages with revised configuration to keep the initial envisaged shutdown days. • Pre shutdown: For enabling jobs like piping hook ups and pipe rack structural jobs. • Shutdown: For completion of the entire project. The PRAEP project had applied the idea behind the three percepts of critical chain to a certain extent by prioritizing the tasks related to revamp of existing mother units CDU (Crude distillation Unit) / VDU (Vacuum Distillation unit) as the10|P a g e Application of Select Tools of Psychology for Effective Project Management
    • Project Management National Conference 2011 PMI India shutdown was planned for these units in comparison to other units involved in this project. Based on the final project deadline the resources were channelized to expedite the following critical activities in CDU/VDU:- • Underground & Aboveground piping drawings. • Welding and Radiography of Piping. • Extension of original pipe-rack by one more tier to lay pipelines so that welding work continued during running of mother units. The project was in conventional mode with EIL as the PMC. The complete synchronization and focused approach of the Project team, PMC and Suppliers helped the completion of procurement well within time, which was around 80- 85% of project cost. Project team and PMC ensured timely approval of drawings, resolving issues and constraints across the board with suppliers, timely payments of bills ensuring smooth cash flows to suppliers which ultimately helped the suppliers owning the project to ensure timely delivery of materials. The successful site execution of the project only happened due to the full involvement of the Project team, contractors, PMC and other stakeholders with no major hiccups in front availability. Focused approach based on incremental benefits help the front line managers to strategise, innovate, and optimize resources. The major activity involved in the complex PRAEP Revamp Project was huge quantum of welding load (measured in terms of Inch-Dia for piping). Based on Strategic, innovative and cost benefit analysis 90% load of shutdown was shifted to pre-shutdown. Piping Circuits were reviewed with core group/ Process and clearances were obtained to allow welding in running plant with due safety precautions to reduce Shut Down welding quantum. This enabled the shut down within the stipulated time frame avoided the production loss. [7] The idea here is to explain that this project required best of planning and tracking mechanisms due its complexity but its success could be guaranteed only by the synchronized and focused approach of various stake holders. One of the success factors of this project is attributable to the retention of most of the members of project team who were earlier involved in the successful commissioning of similar project at Panipat Refinery. A deep insight into the some of the delayed projects in oil and gas sector indicates that one of the main reasons for lack of synchronization and focused approach at later stage of project is how company organizes its project initially.11|P a g e Application of Select Tools of Psychology for Effective Project Management
    • Project Management National Conference 2011 PMI India An analogy between delayed projects in oil and gas sector and successful DMRC project [5], [6] gives a fair idea of such distinction in organizing a project. Figure 4: Different Approaches in Organization of project Lessons learnt for Enabling Synchronization and Focused approach • Project Organization: - For any high value and complex project, it should be formalized as pure project organization and as a separate entity . • Selection of Project Manager: - A full time dedicated with proven track record Project Manager should be chosen, if required from outside the organization with no chopping and changing. • Selection of Project Team: - Create Heavy Weight Team with personnel who are having past project experience, conflict resolver, team builder. • Sacrosanct Targets: - Complex Projects should fix up the realistic targets instead of benchmarked targets of similar projects. • Autonomy for Decision making and Conflict Management will help in resolving the issues and taking risks in the larger interest of project. • Change of Corporate culture: - “We mean business” attitude is required. • Detailed Engineering taking care of execution constraint will avoid repeated engineering changes • Clarity in scope of work and specification will reduce the rework. • Micro level planning for execution is required to ward-off unknown risks. • Quality Man Power and Vendor Availability: - For remote located projects, development of Ancillary industries and training schools should be part of pre project activities. • Contractors as partners: - Timely payment to contractors and considering contractors as partners with risk sharing. • Boundary Management: - Boundary management with all the stake holders to ward-off any future problems.12|P a g e Application of Select Tools of Psychology for Effective Project Management
    • Project Management National Conference 2011 PMI India • Lean organization: - Done away with TOP heavy structure in projects. • Time is money:- “Time saved is money saved” • Reward and recognition to personnel. • Development of core competency in executing projects Above all Top leadership commitment is must for the success of complex project and how you manage synchronization of “soft part” of the project. 1.9 Conclusion The failure of various projects affected by overruns like Common Wealth Games 2010 and success of project like Delhi Metro only highlights the fact that Synchronized and Focused execution is the way forward against the traditional way of doing the project which involves wastage of time due to waiting game syndrome. Lack of accountability, Governance and risk mitigating strategies as evident from the fiasco of Common Wealth Games 2010 brings the two invaluable facets of project management, Project Governance and Project risk management, at the fore front. The role of project governance is to provide a decision making framework that is logical, robust and repeatable to govern an Organizations capital investments while the role of risk management helps the professionals to recognize the benefits of formally documenting, objectively analyzing and transparently managing risk. Organizations are now grooming frontline managers (a kind of bottom up approach) to get them well versed with tools and techniques of project management. “Synchronization and Focused approach is like icing on the cake for the project success”. Synchronized and Focused approach helps in conflict resolution among stakeholders by focusing on the bigger issue of completing the project in time as a well-knit unit instead of competing with each other. A Synchronized and Focused approach is indeed a game changer for managing complex projects and ensures timely payback.13|P a g e Application of Select Tools of Psychology for Effective Project Management
    • Project Management National Conference 2011 PMI India 1.10 References 1. Gupta, Sanjeev, “Synchronized execution for speedy projects”, Industrial Management, Jan2010, Vol. 52 Issue 1, p14-18, 5p, 1 Color Photograph, 3 Diagrams, 1 Chart; (AN 47732463) 2. Dey Kumar, Prasanta, “Decision support system for risk management”, Management Decision. London: 2001. Vol. 39, Iss. 8; pg. 634, 16 pgs 3. Gupta, Sanjeev, “More Success In Managing Pipeline projects”, PIPELINE AND GAS JOURNAL –HOUSTON , AUGUST 2010 VOL 237 NO. 8 4. Lechler, Thomas G.; Ronen, Boaz; Stohr, Edward A, “Critical Chain: A New Project Management Paradigm or Old Wine in New Bottles?”, Engineering Management Journal, Dec2005, Vol. 17 Issue 4, p45-58, 14p; (AN 19794883) 5. Ramachandran, Ramesh, “On the fast track”, published in Spectrum magazine of The Tribune of June 2, 2005. http://www.tribuneindia.com/2005/20050102/spectrum/main1.htm 6. “The Delhi Metro Project: Effective Project Management in the Indian Public Sector”: a Case study of IBS Centre for Management Research (ICMR), 2006, 21p; Case code :PROM0052006 http://www.icmrindia.org/casestudies/catalogue/Project %20Management/PROM005.htm 7. Inputs from Project team of IOCL-PRAEP project (Author was also a part of the project team)14|P a g e Application of Select Tools of Psychology for Effective Project Management