“The Case for Front End Loading (FEL) and Constructability Reviews” Professional Paper Delivered to the Greater New Orleans Chapter, Project Management Institute Professional Development Day 15 October 2004 by Milton H. Jones, PMP (PMCC, Inc.) Abstract: The stakes for the Project Manager have never been higher. Many still doubt the efficacy of the tools and processes espoused by the rapidly-growing membership of the world’s largest and fastest-growing project management professional organization and seek to tarnish its accomplishments by imputing that the profession is simply one of a long line of professional fads that is overly-burdened and preoccupied with descriptive phrases, jargon and/or ”buzz words”. Yet some highly-effective tools for accomplishing solid improvements in Total Investment Cost (TIC) and Return On Investment (ROI), which are the basic business-related reasons for performing projects in the first place, are not consistently known and/or employed by many project managers nor by the management or stakeholders that they represent. This paper will attempt to tie the concepts of Front End Loading and Constructability Reviews into the Project Management Institute’s PMBOK-oriented processes in order to provide the Project Manager with justification, rationale and some quantifiable metrics for selling improved project management processes that start at the “front end” (Concept and Development stages), where so much opportunity to achieve cost-effective results is often squandered. Front End Loading: In July of 2002, an article appeared in the trade magazine “Hydrocarbon Engineering” that asserted the following: • • • • • As much as 80% of costs are committed during the Conceptual (“Initiation” & “Definition”) phase(s) of a project, Poor management of the design phase affects every stage of the project lifecycle, 80% of design changes are caused by a lack of data or the wrong data, Design Engineers spend between 30% and 50% of their time looking for their “stuff!”, and Systems that generate and manage data that are not integrated result in duplication and inconsistency.
An even more disheartening set of statistics appeared in 1998 (Standish Group’s Chaos research on Information technology Projects): • • • 24% of the monitored projects were rated as “Failures”, 49% were rated as “Challenged” while only 27% were rated as “Successful”.
At about the same time that these dismal statistics appeared, the Independent Project Analysis group, which benchmarks projects, both large and small, largely in the petrochemical and utility areas, was collecting and reporting for its 2002 report to membership some very compelling statistical evidence that showed that Front End Loading (FEL) contributed significantly to (1) lower total investment costs, (2) faster project cycle times and (3) enhancements in system/installation operability, all of which resulted in enhanced safety and a larger Internal Rate of Return (IRR). And let us not forget that (almost) every project is undertaken to make the same product: Money!
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IPA breaks down their version of FEL into three categories of components, illustrated in the following Table:
Site Factors Equipment layout Soils data Environmental requirements Health & Safety requirements
Engineering Definition Engineering Tasks • Detailed scope • Feedstock/product properties • Process Flow Diagrams (PFDs) • Process & Instrumentation Diagrams (P&IDs) • One-line Electrical diagrams • Cost estimate Participation/buy-in of: • Operations • Maintenance • Business
Project Execution Plan Plans • Commissioning • Startup • Operation • Manpower • Quality Assurance
Contracting Strategy • Who • How Team participants & roles Integrated schedule • Critical path items • Identification of shutdowns for tie-ins • Overtime requirements
Table I – Components of Front End Loading (IPA- 2002) IPA also cited other process enhancements as...