The traditional approach to capital project planning and execution is to plan the work and then work the plan. Too often, plans are either overly optimistic or misaligned with how the work will actually be completed. In practice, the goal of planning should be pretty simple: keep the work crews productive.
Not having a strong “desk-to-dirt” connection can lead to major project disconnects, costing owners and contractors time and money. To more accurately predict how the project will perform, the plan needs to be representative of how the work will be executed.
This might seem intuitive, but projects have not always adopted this commonsense approach. Organizations are hungry for more predictable project execution, and that is why Advanced Work Packaging (AWP) techniques and technologies are moving to the forefront. This collaborative approach to capital projects puts owner organizations on a constraint-free path of construction. While not new, the concept of AWP is gaining momentum in the industry and delivering more predictable outcomes.
Troubling overruns
It’s no secret that large CAPEX projects have a poor reputation for meeting cost and schedule delivery expectations.
A McKinsey study of 48 troubled megaprojects concluded that poor execution was responsible for 73% of cost and time overruns. The study also revealed that costs and timelines are frequently underestimated from the start so projects can secure the investment and be approved. This is troubling, because it seems many projects will fall prey to overruns from the outset and poor execution is likely to be “planned in.”
While the data suggests the vast majority of projects will overrun, markets such as oil and gas are renewing their focus on cost and schedule efficiency. This objective is driving new project management techniques and supporting technology to address the root cause. AWP, for example, takes proven project management practices, applies them to construction and creates a more prescriptive approach for planning that leads to more predictable project outcomes.
Moving toward project certainty
The first step in creating a plan that can deliver project certainty is to ensure all parties operate against a common set of project objectives. Project certainty, regardless of the stage, relies on a solid foundation of communication and collaboration. The volume of knowledge, coordination and communication on which a project relies to get it through to completion is staggering. This complexity necessitates a framework for collaborative planning and execution that addresses the pitfalls associated with traditional construction project management.
AWP has become the industry’s response to these challenges. AWP principles really involve a commonsense implementation of proven project management practices. It uses a framework to combine pre-planning, planning, execution and turnover to develop an optimized path of construction.
One aspect of AWP is that it actually plans backwards. It starts with the date by which the company wants the project to be complete and then work its way, right-to-left instead of left-to-right, through the plan, ensuring that each step is supportive of completion in accordance with the project objective. It’s like reading the last page of the book so you know how it ends before you start the first chapter.
Another aspect of AWP drives at iteratively forward planning at the workface, where productivity, environmental, and situational realities pose as fluid constraints that require active management, planning and re-planning. Here, AWP pushes this planning away from traditional settings and moves it out to the field, providing literal proximity to reality, supporting the creation of more realistic and achievable plans for execution.
Working back from an agreed-on completion date, owners and contractors work collaboratively to determine the optimal path of construction. Instead of planners operating in a silo, the AWP approach involves collecting insights from, and setting expectations for, engineering, procurement, and construction teams to better leverage project data and knowledge available to create the plan. And it’s not just project/site-specific data that is useful, but also insight from other projects as well, creating a knowledge library of historic performance capable of informing the development of future plans.
By taking advantage of organizational history while employing AWP techniques, companies end up creating a more realistic, risk-adjusted plan and forecast. This can be broken down into smaller installation work packages and executed as daily work plans that are optimized for construction, engineering and the supply chain. This strong connection creates solid, stable alignment between the high-level plan and the work in the field.
Driving work sequence backwards from construction to engineering for the whole project life cycle can lead to a 10% reduction in installed costs, while labor productivity stands to improve by as much as 25%. Projects become far more predictable because the plan can identify constraints upfront, meaning that field execution teams can work unencumbered with a higher proportion of tasks being completed on time and on budget.
But it’s not all about cost and schedules; AWP also delivers safety and risk benefits. For example, bringing materials onsite requires substantial planning. Lacking the right resources or equipment to start the job might cause a dip in productivity but moving them around a complex and busy work site comes with its own risks. AWP identifies these constraints ahead of time to ensure work teams will always have the right materials for the job before it begins. This can help limit the amount of heavy equipment traffic mixing with foot traffic onsite and allows teams to move around more safely.
AWP adds another dimension to the owner-contractor relationship. A drive toward greater collaboration will see the owner facilitating cross-functional participation from engineering, procurement/fabrication and construction. The contractor will be able to provide a much greater level of influence on plan objectives earlier in the project life cycle at the point in time that project expectations are being established.
Contractors who choose to adopt AWP now will gain an edge in the market, as they will be able to demonstrate a stronger track record on project execution in terms of cost and schedule to their prospective customers. Equally, it can be attractive to contractors seeking to minimize profit erosion, as internal finances will also be more predictable. In industries such as oil and gas, project owners are already electing to make AWP implementation maturity a factor in evaluating contractor bid responses.
Adopting an AWP Approach
As with any new methodology, many organizations will face an adoption challenge. The role of a product champion cannot be understated. These champions take responsibility for the rollout and education of these practices across the project community.
The second challenge is more digital in nature. The most comprehensive view of any project stems from a complete connection from inception to operation. Capturing that process digitally offers an unrivaled opportunity for efficiency. But it’s fair to say many contractors and owners are not there yet. At a basic level, AWP can function with just a few components: model visualization, planning and scheduling, cost estimating, and documentation. Even if an organization is not that far along in its digital transformation, it can still look to adopt AWP as the framework for its planning approach.
At the heart of it, AWP is really about strengthening that owner/contractor connection by ensuring expectations are aligned between them and across functions (e.g., engineering, procurement and construction). That is the goal of AWP: to keep the team in the field productive by defining the best path of construction for the project and removing the constraints that could slow them down. This benefits owners and contractors in any project environment. Leveraging purpose-built technology to support this process will make the investment worthwhile, and act as a catalyst for realizing the benefits of an AWP approach to project planning and execution.
