In an earlier report, Professors Iris Tommelein and Glenn Ballard of the University of California, Berkeley, analyzed the underlying principles of the construction practice of Advanced Work Packaging (AWP) and provided a critique to its standard design, making a number of predictions. Fundamental in their critique is the operations policies and parameters that dictate the final behavior of a project production system when AWP is applied. They predicted undesirable consequences to the performance of project production systems including, but not limited to, inventory growth, longer cycle times, lower labor utilization and higher costs.
Using an Operations Science framework, this paper reviews a capital project example that implemented AWP and uses this project experience to validate each of the predictions previously made by Professors Tommelein and Ballard. This paper also introduces the technical approach that the owner operator adopted to address the project performance gaps created by AWP, which included the application of CONWIP control protocols for more effective control of supply of materials and permanent equipment to the point of installation.
There is abundant published literature (Tideman, Tuinstra, & Campbell, 2014) (Ernst & Young, 2014) (Changali, Mohammed, & van Niewland, 2015) (Barbosa, et al., 2017), proclaiming that project cost and schedule overruns in the energy and industrial sectors have reached crisis levels. These cost and schedule overruns are impacting shareholder value and the ability for owner operators, including energy and industrial companies, to deliver and maintain their assets (Tideman, Tuinstra, & Campbell, 2014) based on business objectives.
How work is chunked into packages for the purpose of execution is not a new or innovative practice in the engineering and construction industry. But in recent years, these practices have evolved into established methodologies such as Workface Planning (WFP) and then Advanced Work Packaging (O’Brien, Leite, Hamdi, & Ponticelli, 2016), gaining much interest among owner operators and Engineering-Procurement-Construction (EPC) firms. Industry organizations such as the Construction Industry Institute (CII) and the Construction Owners Association of Alberta (COAA) have invested in better defining and documenting these practices, resulting in the publication of a series of reports, such as the latest CII’s Report 272-12 Advanced Work Packaging: From Project Definition Through Site Execution.
Based on the interest of industry practitioners and through PPI-sponsored Research, Professors I. Tommelein and G. Ballard reported (Tommelein & Ballard, A Critique of Advanced Work Packaging, 2015), including a subsequent paper (Tommelein & Ballard, “Advancing” Advanced Work Packaging, 2016), that WFP and AWP as currently defined in the industry, will result in a project production system that is “under” specified. They proceed to identify several areas where system design choices remain to be made, indicating ways to optimize execution of work packages, and in so doing, support better control of project cost and duration including increasing predictability. In (Tommelein & Ballard, A Critique of Advanced Work Packaging, 2015), they proceed to formulate a number of predictions on the negative outcomes from the implementation of AWP resulting from the incomplete specifications in the project production system.
In this paper, we describe the unintended consequences of implementing AWP / WFP in the ability of project teams to effectively synchronize project supply flows, validating the predictions made in (Tommelein & Ballard, A Critique of Advanced Work Packaging, 2015). After describing the production system resulting from the implementation of Construction Work Packages (CWP) and Installation Work Packages (IWP), we analyze the implications of its policies and parameters for supply flows, particularly the build-up in inventory of materials and permanent equipment arising from variability in both demand and supply and the ability of logistics systems and their capacity to cope with variability. Using Operations Science principles, we outline an alternative design of a section of the overall project production system to better synchronize supply with demand, leading to unlock and capture value such as shorter cycle time, reduced inventory, greater reliability.
After the authors make the case that WFP and AWP comprise an under-specified project production system, we must review the summary of their predictions (Tommelein & Ballard, A Critique of Advanced Work Packaging, 2015) as a list of unintended consequences resulting from inadequate polices and parameters. The cited authors summarized their findings in four predictions as follows:
An owner operator invests several billion US dollars in an industrial, processing facility. Due to its magnitude, the project can be classified as a classic megaproject. Procured through conventional means, different materials, parts, equipment (e.g., vessels) and modules from various suppliers are delivered to the construction site resulting in large volumes of inventory residing on site until demanded by the construction teams for installation. To better illustrate this, Figure 1 shows examples of what physically manifested on site, different types of parts and materials that are stored in inventory, while Figure 2 provides a high-level representation of the part of the overall project production system that is the focus of this paper, meaning onsite supply to the point of installation.
Figure 1: Examples of inventory at site
Figure 2: The Production System under consideration for this paper – Onsite Supply
As the project team implemented AWP / WFP, materials were then kitted according to specific IWPs and placed on trailers for transportation to the point of installation as illustrated in Figure 3. This is another representation of onsite inventories, but in this case, the difference is that inventory is combined with capacity (e.g., trailers), not to mention the use of space, as well as the fact that trailers are destined to a specific area becoming an engineered-to-order (ETO) supply process (not interchangeable between areas or IWPs).
Figure 3: Trailers used for transportation of inventory and materials to the point of installation
Despite significant investment in capacity (labor, trailers, staging areas, etc.), the installation and associated onsite supply flows (from staging areas to the point of installation) experienced severe problems resulting in lack of synchronization between onsite supply and demand. The version of the installers was “we cannot get what we need, when we need it”. On the other side, the version of those in charge of onsite supply was “installers don’t know how to plan – they change their minds too often and don’t take what they ordered”.
The combined effect of this situation was schedule delays (e.g., site teams did not get what they wanted it) and additional costs (e.g., higher than expected logistics costs and cost of schedule delays), not to mention the exposure to loss of revenue by the owner operator because of the delays in the project coming online. Safety risk levels and quality standards were also compromised because of the increased and constant handling of inventory (e.g., offload, sort, tag, load, transport, offload, move to the point of installation).
We should start by asking ourselves: what was the project team (construction and onsite supply teams) doing that caused these outcomes?To answer this question, it is important that we analyze the situation described herein from a production perspective including what policies were implemented. To achieve this, we must start by visualizing the production system including how transformation, stocks and flow of work occur. Figure 4 shows a Process Flow Diagram that provides a more detailed representation of the production system illustrated in Figure 2. It shows the sequence of main activities as materials and information flow from the makeup of CWPs to the assembly, storage and transportation of IWPs to the workface and their respective execution.
Figure 4: Production System covering CWPs and IWPs
Based on this Process Flow Diagram as well as other information gathered during this analysis, the following can be stated about the design of this production system:
Figure 5: Project Controls Driving Deliveries to the Point of Installation (Current State Design)
Given the above description of how the production system was designed including policies and parameters, Operations Science allows us to deduce consequences of the system choices shown in Figure 5, which in fact will begin validating the predictions of Tommelein and Ballard. Based on this, the following conclusions can be made:
In fact, and due to variability in the system, this number was even greater reaching to about thousand trailers at one point. The transfer batch (the size of the FMR) was large and set the cycle time to 21 days, and within that time window, demand was highly variable so not all trailers that were moved to the point of installation were used when requested. This resulted in a decision by management to increase the number of trailers (more capacity and more WIP). It is important to highlight that because site work was exposed to high levels of variability, it meant that construction teams needed other IWPs immediately that were not yet on trailers, creating changes in demand. But because supply was set for 21 days of cycle time, the system was not flexible enough to account for this, contributing to delays in the schedule as well as low capacity utilization (people waiting for materials). This validates the third and fourth predictions.
In summary, order batches were too large which contributed to longer than needed cycle times. Variability in demand was high which led to excessive WIP. Excessive WIP caused extra costs (e.g., more trailers and the required capacity to maintain those in use) and the subsequent schedule overruns. This combination of factors conspired to yield the delays and cost overruns we have described fulfilling all four predictions made by Professors Tommelein and Ballard in their report (Tommelein & Ballard, A Critique of Advanced Work Packaging, 2015).
The previous analysis has exposed four important characteristics of the production system: 1) highly variable demand, 2) excessive WIP levels, 3) large size of order batch and 4) long cycle times. From a production perspective, and to achieve better performance, the proposed Project Production Management (PPM) strategy consisted of the following elements:
Figure 6 illustrates the proposed adjustments to the production system based on Operations Science. For the above-mentioned strategy to instill the desired behavior in the production system, new policies needed to be defined and made operational. Examples of these policies included, but are not limited to:
Figure 6: Proposed Production System Adjustments
Although all the above elements of the strategy are critical to achieve better performance, the reduction of cycle time is key to this strategy. A shorter cycle time enables reduction of WIP and the capacity required to maintain the WIP. In this case, fulfilling demand within five days was doable according to the chart presented in Figure 7, however, teams did not trust the behavior of the old system and initially resisted to a 16-day cycle time reduction (from 21 to 5 days). Because of this, gradual adjustments were made to cycle time starting with a reduction of 11 days to set cycle time to 10 days. Compared with 21 days from request of an IWP to delivery to point of installation, even a cycle time of 10 days had direct implications for the amount of WIP in the system. For instance, required average Throughput being 20 trailers per day and the cycle time 10 days, WIP will be reduce from 421 trailers to 200 trailers (=20×10) and with 5 days to 100 trailer – less than 25% of the WIP in the original system.
Figure 7: Five Day Cycle Time to Pull a Production Package
We described an actual case example that supports and validates the predictions of Professors Tommelein and Ballard in their critique of WFP and AWP (Tommelein & Ballard, A Critique of Advanced Work Packaging, 2015) (Tommelein & Ballard, “Advancing” Advanced Work Packaging, 2016). Operations Science provides a very robust technical framework to analyze and identify opportunities to improve production system performance including how to control WIP, reduce variability and cycle time, even in cases like the one presented herein that addressed onsite supply to the point of installation.
Through the case example, this paper illustrates several fundamental Operations Science principles of Era 3 project delivery thinking compared with classical Era 1 and 2 thinking (Shenoy & Zabelle, 2016). It also validates the fact that AWP / WFP uses a strategy of placing large inventory buffers of materials and information to shield installation craft, but ignores managing predecessor WIP, capacity and variability. Although the impact of variability can be buffered through a combination of capacity, time and inventory, the larger the buffers, the higher the costs.
As illustrated in this case, real constraints on capacity (e.g., limited number of trailers and space) and time lead inevitably to negative implications on WIP and that means cycle times will be longer. Through the proposed design of the production system, variability can be further mitigated (but not eliminated) as well as WIP better controlled as to reduce cycle time. Finally, it is imperative to move from controls (as in project controls) as the means to trigger supply to more effective means of control and optimization as is the application of a CONWIP control protocol.
This paper was presented at the 2019 Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC). It has also been published by the Society of Petroleum Engineers SPE-197763-MS
