Pre-Project Planning

1. Pre-Project Planning Lessons from the Construction Industry Institute Michael Davis, P. Eng, PMP Ontario Power Generation

2. Objectives • Demonstrate the importance of pre-project planning • Describe a pre-project planning process • Review some CII planning tools

3. Construction Industry Institute

4. The Construction Industry Institute • Unique organizational model • 90 to 100 corporate members • Owners and contractors • Conducts research into best practices for construction projects • Research done by academics under guidance of member project teams • Assists in moving the research into practice with implementation tools • All information is available in the public domain: www.construction-institute.org

5. What is a Best Practice? • A process or method that, when executed effectively, leads to superior project performance

6. Pre-Project Planning Alignment Constructability Design Effectiveness Materials Management Team Building Partnering Planning for Startup Quality Management Change Management Disputes Resolution Zero Accidents Techniques CII Validated Best Practices

7. Project Budget Factor vs. Practices Use Index Cost Category: Greater than $5MM N=73 N=74 N=71 N=75 By Practices Use Index Value of Best Practices:Project Cost Performance

8. Project Schedule Growth vs. Practices Use Index Cost Category: Greater than $5MM N=60 N=55 N=65 N=57 By Practices Use Index Value of best practices:Project Schedule Performance

9. “Best” Best Practices • Pre-project planning • Change control • Planning for startup

10. Impact of Best Practices

11. Pre-Project Planning

12. Pre-Project Planning • That part of the project planning process that takes place before the project is authorized to proceed • Sometimes called “front-end loading” • An Owner responsibility • Expect to spend 10-25% of engineering cost (up to 8% of total project cost) • Assign project manager and best staff • Have key stakeholders represented

13. Influence Expenditures Opportunity for Influence Low Influence Major Influence Rapidly Decreasing Influence Level of Influence Project Expenditures Scope Definition Conceptual Analysis and R&D Pre-Project Planning Basic Data and Scoping Project Authorization Production Engineering and Procurement Construction Engineering Complete Turnover and Start-up Project Life Cycle

14. Pre-Project Planning Provides a basis for: • Informed business decisions – “doing the right project” • Efficient project delivery – “doing the project right”

15. Business Case CII Pre-Project Planning Process Analyze Project Risks Analyze Technology Document Project Scope and Design Evaluate Define Project Site(s) Select Execution Team Approach Prepare Conceptual Draft Establish Scopes and Charter Project Control Estimates Guidelines Prepare Evaluate Make Pre-Project Compile Project Alternatives Planning Definition Decision Package Plan ORGANIZE DECIDE DEVELOP A SELECT PROJECT WHETHER TO FOR PROJECT DEFINITION PROCEED PRE-PROJECT ALTERNATIVE(S) PACKAGE WITH PROJECT PLANNING

16. Key Elements • Organize for pre-project planning • Create a team • Draft the charter for the planning phase • Plan the planning: tasks, deliverables, responsibilities, etc. • Select the alternative • Alternatives definition • Technology • Site/location • Conceptual scopes, estimates (-30 to +50%) • Evaluate the alternatives • Financial • High level risk analysis

17. Key Elements • Create project definition package • Project objectives and priorities • Scope and preliminary design • Risk analysis • Project delivery strategies • Project Execution Plan • Prepare the business case • Submit package to approval authority • Decide whether to proceed or not

18. Project Objectives • Establish project success criteria - define the target • Sets priorities consistent with business drivers • Basis for decision making • Refined as project progresses

19. Scope Definition - Estimating Accuracy Pre-Fund Authorization Post Fund Authorization Conceive Develop Execute +100% +5% +15% Expected Percent Variance Excluding Contingency Most Probable Cost -2.5% -10% -50% Order of Magnitude Definitive (Detailed) Release

20. Objectives & priorities Scope and deliverables Execution and delivery strategies Organization and responsibilities Cost estimate & budget Schedule & milestones Permitting Safety, quality, environment Procurement Communications Project controls Risk assessment and management Commissioning and start-up Closeout Elements of a Project Execution Plan

21. Sponsor’s Role • Verify correctness of objectives, priorities and scope • Review and concur with execution strategy • Verify assignment of roles & responsibilities • Concur with estimate and contingency • Concur with schedule milestones and completion date • Verify acceptability of project controls and change management process • Review and concur with risk management plan • Approve significant changes to the PEP

22. Planning Outcomes • Understanding of objectives & priorities • Optimum solution identified • Project scope defined - what’s in/out • Alignment of participants and stakeholders • Knowledge of risks • Credible estimate and schedule • Sound business case • Effective, achievable project plan

23. Pre-Project Planning Tools

24. PDRI • Project Definition Rating Index • Planning assessment tool developed by CII through extensive research • Evaluates how well the scope definition and pre-project planning has been carried out • Provides an early indication of the probability of project success • Validated - tested against actual project results • Proven effective on both small and large projects

25. PDRI • 70 elements are grouped into 3 categories: • Basis of decision/scope (50%) • Front-end definition/preliminary design (42%) • Execution approach (8%) • Each element is given a weighted score • The more completely an element has been addressed, the lower its score. (Similar to golf: lower is better) • Maximum score of 1000 • Score of <200 correlates with more successful projects

26. PDRI Score sheet

27. Project Alignment • Common, clearly understood set of project objectives is in place • All project team members working toward the same set of objectives

28. Alignment Tool • Developed from workshops, surveys, interviews • Involved more than 100 experienced individuals at all levels • 66 alignment issues analyzed for correlation with project success over 20 projects  10 key factors identified

29. Factors Affecting Alignment • Stakeholders are appropriately represented on the project team • Project leadership is defined, effective, and accountable • The priority between cost, schedule, and required project features is clear • Communication within the team and with stakeholders is open and effective • Team meetings are timely and productive

30. Factors Affecting Alignment • The team culture fosters trust, honesty, and shared values • The pre-project planning process includes sufficient funding, schedule, and scope to meet objectives • The reward and recognition system promotes meeting project objectives • Teamwork and team building programs are effective • Planning tools (e.g., checklists, simulations, and work flow diagrams) are effectively used

31. Alignment Thermometer

32. Questionnaire

33. Alignment Thermometer

34. Other CII Resources • Team Building • Partnering • Change Management • Project Delivery and Contracting Strategies • Zero Accident Techniques

35. Benefits of Pre-Project Planning • Fewer scope changes • Increased predictability of cost & schedule • Better definition of risks • Reduced probability of project failures • Improved operational performance • Better achievement of business goals

36. By the time a project is released, the conditions for its success or failure are essentially established.

37. Questions