1. IMPORTANCE OF PROJECT CONTROLS
- OIL & GAS PROJECTS
BY LACHIT DEKA
COST ESTIMATING AND PROJECT CONTROLS
FOR OIL & GAS INDUSTRY - CONFERENCE
HOLIDAY INN, LONDON
14TH & 15TH OCT, 2015

2. WHAT IS PROJECT
CONTROLS….??
PLUS
1. CHANGE MANAGEMENT
2. RISK MANAGEMENT
3. PROJECT CLOSE-OUT

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WHY PROJECT CONTROLS….??
DURATION AND COST
ARE IMPORTANT SUCCESS FACTORS IN ANY
PROJECT. PROJECT CONTROLS HELPS
STAKEHOLDERS TO UNDERSTAND PROJECT STATUS
AT ANY STAGE DURING PROJECT EXECUTION

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PROJECT CONTROLS SUPPORTS PROJECT
MANAGEMENT TEAM TO TAKE CRUCIAL
DECISIONS AT THE RIGHT TIME.
WHY PROJECT CONTROLS….??

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QUESTION:
WHAT IS THE DIFFERENCE
BETWEEN PROJECT
PLANNING AND
SCHEDULING….??

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PROJECT SCHEDULE
PROJECT SCHEDULE IS DEVELOPED TO
REFLECT THE STRATEGIES THAT ARE VITAL
FOR PROJECT SUCCESS.
IT COVERS THE ENTIRE SCOPE OF WORK IN
A VERY STRUCTURED WAY WITH INTER-
RELATIONS AMONG VARIOUS PROJECT
PHASES / ACTIVITIES.
A SCHEDULE WORKSHOP WITH KEY
STAKEHOLDERS IS MUST BEFORE
FINALIZING THE PROJECT SCHEDULE.

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PROJECT SCHEDULE

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PROJECT PERFORMANCE
PROJECT PERFORMANCE IS MEASURED BASED
ON ACTUAL PROGRESS OF ACTIVITIES AT
ANY POINT OF TIME.
FOR ALL PROJECT PHASES, THERE ARE
INTERMEDIATE PROGRESS GATE SYSTEMS
WHICH ARE AGREED INITIALLY AND ACTUAL
PROGRESS IS MEASURED ACCORDINGLY.
EARNED VALUE MANAGEMENT IS WIDELY USED
FOR MEASURING PROGRESS AND
ACCORDINGLY PROJECT PERFORMANCE IS
COMPARED AGAINST THE PLAN.

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PROGRESS CALCULATION BASIS
PROJECT PHASE PROGRESS MEASUREMENT
METHODOLOGY
ENGINEERING MAN-HOURS / INTERMEDIATE
PROGRESS GATES
PROCUREMENT
PROCUREMENT
SERVICES
MAN-HOURS / INTERMEDIATE
PROGRESS GATES
MANUFACTURING
& DELIVERY
COST / EQUIVALENT WEIGHTAGE /
INTERMEDIATE PROGRESS GATES
CONSTRUCTION QUANTITY / EQUIVALENT MAN-HOURS
/ INTERMEDIATE PROGRESS GATES
PRE-COMMISSIONING /
COMMISSIONING
SYSTEMS / SUB-SYSTEMS / QUANTITY
/ EQUIVALENT MAN-HOURS

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BUDGET X EARNED PROGRESS (% COMPLETE)
EARNED VALUE REPRESENTS THE
VALUE OF WORK PERFORMED AND IT
IS NOT AFFECTED BY THE ACTUAL
HOURS OR COSTS SPENT
EARNED VALUE

12. MAN-HOUR PERFORMANCE INDICATOR (MPI) =
EARNED VALUE (HOURS) / SPENT TO DATE (HOURS)
COST PERFORMANCE INDICATOR (CPI) =
EARNED VALUE (COST) / SPENT TO DATE (COST)
SCHEDULE PERFORMANCE INDICATOR (SPI) =
EARNED VALUE (%) / PLANNED VALUE (%)
Question:
IF > 1, GOOD OR
BAD…..??????
PERFORMANCE INDICATORS

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PERFORMANCE ANALYSIS

14. RISK MANAGEMENT
RISKS AND UNCERTAINTIES
RISK MANAGEMENT ON PROJECTS:
 RISK WORKSHOP
 IDENTIFY RISK EVENTS
 ASSIGN RISK INTENSITY / OCCURANCE
 RISK REGISTER
 MITIGATION PLAN
 INCLUDE APPLICABLE RISKS ON SCHEDULE
 CHECK PROBABILITY (DETERMINISTIC VALUE)
 CHECK DURATION SENSITIVITY (TORNADO CHART)
 ASSIGN MITIGATION MEASURES
 RUN RISK ANALYSIS ON MITIGATED SCHEDULE AND CHECK
DETERMINISTIC VALUE
 COMPARE DIFFERENCES
 IMPLEMENT ACTION PLAN

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SCHEDULE RISK ANALYSIS
Probability
Distribution Curve
Tornado Chart

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FORECASTING HELPS TO:
 IDENTIFY TRENDS (POSITIVE OR NEGATIVE)
 PREDICT THE FINAL COST OR DURATION OF THE
PROJECT
 DETERMINE ANY CORRECTIVE ACTIONS THAT NEED
TO BE TAKEN TO REVERSE ADVERSE TRENDS
FORECAST AT COMPLETION (FAC):
ACTUAL TO DATE
+
ESTIMATE TO COMPLETE (ETC)
PROJECT FORECASTING

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 THE PROCESS OR ACTIVITY ON CONTROLLING
COSTS ASSOCIATED WITH AN ACTIVITY, PROCESS,
OR COMPANY.
 COST CONTROL TYPICALLY INCLUDES (1)
INVESTIGATIVE PROCEDURES TO DETCT VARIANCE
OF ACTUAL COSTS FROM BUDGETED COSTS, (2)
DIAGNOSTIC PROCEDURES TO ASCERTAIN THE
CAUSE(S) OF VARIANCE, AND (3) CORRECTIVE
PROCEDURES TO EFFECT REALIGNMENT BETWEEN
ACTUAL AND BUDGETED COSTS.
 HOWEVER, FOR DIFFERENT TYPES OF
CONTRACTS, THE METHODOLOGIES VARY.
COST CONTROL

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MAIN REASONS FOR CHANGES IN PROJECTS
 CHANGES DUE TO DESIGN CHANGE
 CHANGES DUE TO CHANGE IN WORK SCOPE
 CHANGES DUE TO CONSTRUCTABILITY ISSUES
 CHANGES DUE TO CHANGES IN OPERATOR’S
STRATEGIES
A CHANGE MANAGEMENT PLAN IS PREPARED TO
IMPLEMENT AND MONITOR THE APPROVED
CHANGES. THE BASELINE
DURATION AND COST ARE REVISED
CONSIDERING THESE APPROVED CHANGES.
CHANGE MANAGEMENT

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 RIGHT PEOPLE ON THE RIGHT JOB
 CLEAR COMMUNICATION MECHANISM AMONG
PROJECT TEAM MEMBERS
 IDENTIFY CRITICAL ACTIVITIES
 IDENTIFY INTERFACES / IDENTIFY RISKS
 ON TIME DECISION MAKING
 SIMPLE AND EFFECTIVE REVIEW PROCESS
 RIGOROUS EXPEDITING EFFORTS
 EARLY FORECAST / RECOGNIZING POSSIBLE
DELAYS EARLY / PROACTIVE MEASURES
 EARLY CONSTRUCTABILITY WORKSHOPS
 GOOD PROJECT CONTROLS SYSTEMS
CRITICAL SUCCESS FACTORS

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SOME COMMON MYTHS – PLANNING

21. THANK YOU