“We are here to solve a problem, and that problem is cost and schedule overruns in today’s major capital projects.”
Ram Shenoy, PPI Technical Director
The third annual Project Production Institute Symposium was held on 30 November 2016 at the Julia Morgan Ballroom in San Francisco. Over one hundred representatives from industry and academia attended in order to address the crisis at hand: the fact that 98% of projects incur cost overruns and delays.
Executives from a wide variety of companies such as BHP Billiton, Chevron, Facebook, Google, Hess, Intel, Merck and Microsoft came together with researchers and academics from Stanford, UC Berkeley, UC Los Angeles, Texas A&M and Curtin University (AUS) to discuss how to resolve this crisis in the global construction and engineering industry through the application of Project Production Management (PPM).
The day commenced with Ram Shenoy providing an overview of PPI and its mission to increase industry awareness, knowledge and education, as well as its academic partnerships and outreach program. He announced that PPI will offer two new web-based tools to PPI members at no cost in the coming months: Process Mapper and Production Planner. The purpose of these tools is to promote a structured way of planning and controlling work and common language to quickly and simply create process production maps and production plans.
Opening remarks were made by Dave McKay, Vice President, Well Factory Execution at Hess Corporation, PPI Advisory Board Member, and the recipient of the 2015 PPI Technical Achievement Award. Dave highlighted the challenges that the Oil & Gas industry currently faces, which are in turn driving the imperative for Project Production Management (PPM) to improve productivity and capital efficiency. He also raised important questions that underscore the need for radical improvement in project delivery. Achieving project objectives requires managing the execution of work across a vast and complex project network through the full life cycle of field development. He made it clear, if project objectives are not being met, there is a powerful business imperative for the deployment of an effective PPM solution.
During lunch, H. Glenn Ballard of UC Berkeley was awarded the 2016 PPI Technical Achievement Award to recognize his contributions and thought leadership in Project Production Management over the past three decades. Dr. Ballard’s teaching focuses on improving project performance and his principle research interest is adapting lean production theory from manufacturing to construction management practices. His extensive background includes developing a model for lean delivery of capital facility projects, the Lean Project Delivery System, and he is also founding member of the International Group of Lean Construction.
Following the award presentation, Professor Dennis Hong of UCLA presented his keynote speech focused on the impact of robotics on project delivery. His lively presentation highlighted his research at the UCLA Robotics and Mechanisms Laboratory (RoMeLa), and featured the latest on robotics, sensors, and machine learning. It was a timely topic, given that everyone from the Department of Defense to Google are investing in robotics.
This year the 2016 Symposium was divided into two technical tracks. One explored PPM principles and its application through real-world case studies, while the other delved into select topics of ongoing research.
Track One: Exploring PPM
This track introduced and explained the core elements of Project Production Management and its application to project delivery. A discussion moderated by Ram Shenoy and Kerry Haley, PPI Advisory Board Member, detailed how the industry norm of poor project performance can be vastly improved when viewing projects as production systems. There is a significant gap between current project delivery approaches that were developed over the past century and what is needed for the highly complex and dynamic projects the industry is undertaking today. The science of Operations Management can address this gap in project delivery through the effective use of proven techniques for reducing detrimental variability and managing variability through the use of buffers (capacity, inventory and time). The session contrasted PPM with classical Project Management, which is concerned with reporting and forecasting progress to a baseline rather than improving work execution. Meanwhile, PPM focuses on modeling, optimizing and controlling the execution of work to improve project delivery.
In the afternoon, Wayne Crabtree of Chevron provided an industry case example from his own experience with Chevron’s Gorgon project in Australia, showcasing how production control is beneficial for major capital projects (MCPs). Daily production planning, clear commitments, and causes of task incompletion provide greater visibility of what work needs to be done, helping to achieve project milestones. Jennifer Weitzel of Microsoft discussed performance gains made possible by optimizing supply chains, using an example from her experience managing Tesco retail store construction in the UK to showcase ways to enhance margins and unlock potential value. Michelle Nehring from Hess Corporation discussed her experience leading implementation of PPM for onshore field development. For Hess, success has come from setting work in process (WIP) and buffer (capacity, inventory and time) targets based on demand, cycle time, and known variability, as well as independent daily planning that focuses on controlling work, resource optimization, and elimination of waste in the project production system. The session concluded with a panel discussion on how to effectively and sustainably implement PPM.
Track Two: Select Research Topics
By reviewing current and ongoing research, this track led to in-depth discussions on issues in managing work at the point of installation and optimizing supply chains in major capital projects. As Todd Zabelle, PPI Advisory Board Member pointed out, a key reason projects continue to suffer from cost and schedule overruns is the inability to manage work at the point of installation. Most think that the solution is to have a large inventory of materials and information available, but the data show that we might be chasing a problem that is not actually the problem. To address this problem, operations science provides the necessary principles, methods and tools for understanding and managing work at the point of installation. A variety of speakers across industry and academia explored this and other topics.
Alex Kunz of Strategic Project Solutions discussed how concepts and tools that are used in product development can be applied to the construction and engineering industry. Rico Ebetino, a former US Navy SEAL Officer, brought his tactical experience with Special Operations targeting methodology to the construction industry. His knowledge and understanding of mission planning highlighted the importance of being aware of and prepared for any and all variability in order to effectively manage it. Additionally, he shared his experience in engaging the team in operations design to allow individuals to make faster and better informed decisions when responding to variability.
Glenn Ballard of UC Berkeley explored the oft-asked question of why the manufacturing industry consistently performs better than the construction industry. Addressing and understanding the root cause of the inability to manage the execution of work is critical to achieving project objectives. Given a certain level of detailed planning is critical for success, Ballard reviewed levels of task breakdown, with techniques including virtual and physical prototyping and the use of first-run studies to optimize work execution. The session concluded with the further definition of a PPI research project on the topic.
The afternoon discussion topic included research on the organization of supply chains, procurement and associated activities in support of optimum project delivery. Moderator James Choo of PPI posed the question “if you owned the whole supply network, how would you want it to behave?” Ed Pound of Factory Physics challenged participants to draw the relationship between Work in Process (WIP) and Cycle Time (CT). Through this exercise, it became clear that having a fundamental understanding of the relationship between the two is key, as many believe that simply increasing WIP will make a project more efficient. However, the buildup of inventory can be just as detrimental. Phil Kaminsky of UC Berkeley presented data gathered from a current PPI Research Project and reviewed Supply Chain Management tools, techniques and approaches that can be adapted from other industries for Major Capital Project delivery. The session concluded with a discussion to frame the direction for new and future research in order to continue to bridge the gap between industry and academia.
The Symposium closed with a review of planned events for 2017 and the announcement that the 2017 Symposium will be held on 29 November 2017.