CII BEST PRACTICES

FRONT END PLANNING AND ALIGNMENT

CREATING A FOUNDATION FOR PREDICTABLE &
EFFICIENT PROJECT DELIVERY

Mike Murray – EPCM Global

Friday 26th June 2015
About the speaker

Mike Murray is a Senior Consultant working with EPCM Global, an

Engineering, Project Management and Specialist Staffing
solutions provider, providing innovative management and
engineering consulting solutions for complex and high-risk
operations and project types.

Mike was previously contracted to Eskom where he developed

and managed the project life cycle model for new build capital
projects. During his time at Eskom, he introduced and established
the Construction Industry Institute (CII) Project Definition
Readiness Index (PDRI) and Alignment best practices. Mike has
worked with a number of management consultancies and various
large corporate clients in the project and operations disciplines.
AGENDA

1 Introduction – What is the CII – Best Practices – Research 08:15 – 08:20

2 Front End Planning – Project Management – Lifecycle 08:20 – 08:45

Break – Leg Stretch 08:45 – 09:00

3 Front End Planning – Approach and Research 09:00 – 09:10

4 Project Definition Readiness & Cost Estimate Accuracy 09:10 – 09:25

5 Reference Reading 09:25 – 09:30

6 Q&A, Networking and Event Close 09:30 – 10:00

1 Introduction – What is the CII – Best Practices – Research 08:15 – 08:20
CII will add value to all capital projects

The Construction Industry Institute (CII) is…..

• A learning organisation with a wealth of knowledge and information

• Based at The University of Texas at Austin, USA
• Consortium of more than 130 leading owner, engineering-contractor, and
supplier firms from both the public and private arenas
• Organisations have joined together to enhance the business effectiveness and
sustainability of the capital facility life cycle

The South African Chapter of the CII was launched in May 2015
and is based at the Graduate School of Technology
Management, University of Pretoria
CII Vision, Goal, Purpose

The purpose of CII is to:

Measurably improve the delivery of capital facilities.
By creating and implementing research-based knowledge that
measurably improves the effectiveness and sustainability of
capital facilities delivery.
It achieves this through its research-based, member-driven
creation of knowledge and CII Best Practices
By partnering of industry and academia to create forums for
identifying the most significant opportunities for industry
improvement.
CII – Four core processes

Research to define best

practices, breakthroughs, and
1 industry norms.
Management, organisation,
and assessment of the 600+ Knowledge
CII publications; oversight of Creation
Communities of Practice. Dissemination through
publications,
implementation guides,
educational materials,
workshops, and
Assessment of the 4 conferences.
impact of CII practices Knowledge
through
Management
benchmarking.
3 2
Knowledge Knowledge
Assessment Dissemination
CII Members develop best practices

As at 18th June 2015, the CII comprised 141 member

companies, of which:

70 Owner companies 71 Contractor companies

Examples:
• Abbott • Alstom Power Inc.
• ArcelorMittal • Bechtel Group, Inc.
• AstraZeneca • Bentley Systems Inc.
• Eskom Holdings SOC Ltd • Black & Veatch
• General Electric Company • Fluor Corporation
• The Procter & Gamble Company • POWER Engineers, Inc.
• Sasol Technology • SNC-Lavalin Inc.
• Shell • WorleyParsons
CII Best Practices are proven

A CII Best Practice is a process or method that, when executed

effectively, leads to enhanced project performance. CII Best
Practices have been proven through extensive industry use,
validation and peer reviewed research.

Best Practices
• Alignment • Materials Management
• Benchmarking & Metrics • Partnering
• Change Management • Planning for Startup
• Constructability • Project Risk Assessment
• Disputes Prevention & Resolution • Quality Management
• Front End Planning • Team Building
• Implementation of CII Research • Zero Accidents Techniques
• Lessons Learned
CII Research is university-based

The CII advantage in research is its ability to combine credible,

quantitative, university-based research with the expert
guidance from personnel at the CII member organisations.
Examples of Research Examples of Participating
Universities
• High Performance Work Teams • University of Colorado
• Successful Delivery of Mega- • University of Florida
projects • University of Kentucky
• Successful Delivery of Fast-track • Oregon State University
Projects
• University of Pennsylvania
• Measuring Project Complexity and
• The University of Texas
Its Impact
• Project Definition Rating Index Tool
for Infrastructure Projects
CII Value-Added Benefits

• Measurable improvement in capital project delivery

ü safety
ü cost
ü schedule
ü quality
ü change
• Predictable and sustainable capital project delivery
performance
ü reduced variability in project outcomes
• Improved capital facility life-cycle management
2 Front End Planning – Project Management – Lifecycle 08:20 – 08:45
Project failure – a growing challenge

Only 25% of large construction projects finish on time, within

budget – KPMG

“Every project owner wants predictability when it comes to

large projects, and this is clearly not happening,”
“relationships between the contractors, and the owners and
contractors, are mostly adversarial instead of collaborative,
with little trust between the parties

KPMG’s Global Construction Project Owner’s Survey 2015

Increased complexity – failure risk

The growing complexity of global megaprojects is increasingly

impacting on the ability of global engineering, procurement
and construction management groups to meet projects’
original deliverables, with a recent survey suggesting that the
bulk of these projects routinely fail to meet among the most
fundamental project

A recent poll by benchmark specialists Independent Project

Analysis (IPA), revealed that, of 300 global megaprojects with
budgets of over $1-billion, 65% failed to meet the objectives
established at final investment stage.
James Hughes, country head, Fluor Mozambique, Gas Africa conference, Sandton, June 2015
FEP – A proven solution to complexity

Process for developing sufficient strategic formation with

which owners can address risk and decide to commit resources
to maximize the chance for a successful project.
Construction Industry Institute CII . 1995 . “Pre-project planning handbook.”
Publication No. 39-2, Construction Industry Institute, Austin, Tex.

Front-End Loading (FEL) is the process by which a company

develops a detailed definition of the scope of a capital project.
It answers the fundamental questions about a project:
• Why? • How?
• What? • Who?
• When? • Where?
IPA – Independent Project Analysis, Inc.
 Front End Planning – Definition

Front-end planning in the project environment is defined as the

period up to the point of official endorsement (project sanction)
to proceed, when the appropriation for expenditure (AFE) for full
budget funding occurs, and contract ratification with a major
EPC/M contractor or multiple EPC contractors for project
execution takes place. It is the period prior to commencing the
detailed engineering, procurement, construction, and start-up /
commissioning (EPCC) phases of the project

FEP 1 FEP 2 FEP 3 FEP 4

Commissioning
Business Case

Start Up &
OPTION SELECTION PROJECT DEFINITION PROJECT
DEVELOP OPTIONS AND VIABILITY AND PLANNING PHASE IMPLEMENTATION PHASE
Front End Planning by another name

The project delivery planning carried out prior to actually

constructing the project deliverables goes by different names.
But they all demand the same thing – proper up-front planning.

• Front End Planning (FEP)

• Front End Loading (FEL)
• Front End Engineering Design (FEED)
• Conceptual Engineering
• Feasibility Analysis
• Pre -Project Planning
Project management and FEP / FEL

Following the PMBOK Guide® elements may be sufficient to

deliver projects properly in process and practice terms, but
probably is not enough to ensure that the project is successful.
To do the latter one needs to concentrate more on the
managing of the front-end…
2005, Peter Morris, PMI Global Congress Proceedings – Edinburgh, Scotland
Managing project work deliverables

Boundaries

Project
Management
Process
The process of managing the work of the project
Manage the project context

Managing the interface

Project
Work
Processes &
Deliverables
The work activities and deliverables of the project
• Define, install and implement an IT system, or
• Scope, design, construct and commission a production line

The supporting organisation and processes

Providing routine enabling processes, knowledge and expertise
Project life span phases

The process of managing the work of the project

The project life span governs project delivery

Pre-Project Post
Concept Definition Execution Finalisation
Planning Project

The work of the project

• Define, install and implement an IT system, or
• Scope, design, construct and commission a production line

The supporting organisation and processes

Providing routine enabling processes, knowledge and expertise
FEP / FEL and the project life span

Example of a project life span model

Front End Planning

Establish Select a
Identify Develop the Develop Detailed Execute the Handover the Close the Realise
the Single
Alternatives Alternatives Solution Solution Design Design Solution Project Benefits
Need Solution

Define and Develop each Produce the Formally The person

Develop the Transfer and
qualify the Identify Investigate component of deliverables close-out the or
Select the different handover the
need for the 3 or 4 the the project to a defined by project once organisatio
solution sub- project
project and alternative competitive sufficient level the project all n which
which has components deliverables to
the benefits s which advantages of detail to scope to deliverables motivated
the best of the the person or
to be could of each enable achieve the have been the project
competitive solution to organisation
achieved satisfy the potential integration and required completed evaluates
advantage fully define which motivated
from doing need alternative scope solution and handed the benefits
the solution. the project.
the project. finalisation. results. over. obtained.
FEP essential for project success
Break – Leg Stretch 08:45 – 09:00
3 Front End Planning – Approach and Research 09:00 – 09:10
Front End Planning – Managing risk
 Front End Planning – FEP

For Success
Intensive Focus Here
Here

FEP 1 FEP 2 FEP 3 FEP 4

Start Up & Commissioning

DEVELOP OPTION PROJECT PROJECT
Client Business Case

OPTIONS SELECTION DEFINITION AND IMPLEMENTATION

AND VIABILITY PLANNING PHASE
PHASE

Conceptual Study Pre Feasibility Study Feasibility Study Execution

Statistically significant correlation

The analysis of the performance of the design phase in thirty one

fast track projects revealed a statistically significant correlation
between performance of the design phase and front end
planning, alignment, constructability, change management.
Reference : ‘Analysis of the Higher Order Partial Correlation between CII Best Practices and Performance of the Design Phase in Fast Track Industrial Projects’,
Abhijeet S. Deshpande, Ossama M. Salem, and Richard A. Miller, Journal of Construction Engineering and Management Vol. 138, No. 6, June 2012, pp. 716-724
Primary drivers of project failure

Cause of cost and schedule overruns…

1. Unrealistic or overly optimistic original cost to complete cost

estimate and schedules.
2. Incomplete scope definition or inadequate front-end loading
and poorly completed front-end deliverables including
milestone schedule slippage in front end.
3. Inappropriate project strategies for the project (mega oil
sands) environment.
4. Mismanagement of the construction phase.
‘Analysis of the front-end loading of Alberta mega oil sands projects. Auth: George Jergeas. Pub: Project Management Journal Volume 39, Issue 4, pages 95–104, December 2008
FEP direct impact on project success

• Pre-project planning data collected from 62 industrial

projects and 78 building projects, representing
approximately $5 billion in total construction cost.
• Pre-project planning was identified as having a direct impact
on the project success (cost and schedule performance).
• The research results prove better planning in the early stage
of the project life cycle have a positive impact on the final
project outcome.
‘A Study of Pre-project Planning and Project Success Using ANN And Regression Models. Yu-Ren Wang; G. Edward Gibson, Jr. The 25th International Symposium on
Automation and Robotics in Construction - June 26-29, 2008..
FEP impact on cost and schedule

‘The Relative Impacts Of Selected Practices On Project Cost And Schedule’, Sang-Hoonlee, Stephen R.Thomas and Richard L.Tucker, Construction Management
and Economics (June 2005) 23, 545–553.
Significant difference in performance

PDRI Score Difference

Performance
< 200 > 200

Building Cost 3% below budget 9% over budget 12 points

Projects Schedule 5% behind schedule 21% behind schedule 16 points
Change Orders 8% of budget 11% of budget 3 points
N = 25 N = 83

PDRI Score Difference

Performance
< 200 > 200

Industrial Cost 4% below budget 4% over budget 8 points

Projects Schedule 4% behind schedule 10% behind schedule 6 points
Change Orders 7% of budget 8% of budget 1 point
N = 75 N = 54

PDRI Score Difference

Performance
< 200 > 200

Infrastructure Cost 5% below budget 25% over budget 30 points

Projects Schedule 13% behind schedule 30% behind schedule 17 points
Change Orders 3% of budget 10% of budget 7 points
N = 12 N=9

‘CII Implementation Resource 268-2 – Infrastructure Projects; CII Implementation Resource 113-2 – Industrial Projects; CII Implementation Resource 113-2 – Building Projects.
Five critical drivers of success

1. Pre-project planning is a process that will “positively impact

capital project performance”.
2. Pre-project planning is a critical project process that must be
“performed consistently” on each project.
3. The project manager and project team must ensure it is
“performing the right project”.
4. The project manager and project team must ensure it is
developing the “right work product” during pre-project
planning.
5. The project manager and project team must choose the “right
approach to project design” and construction execution.
‘What Is Preproject Planning, Anyway?’, G.Edward Gibson Jr.; Yu-Ren Wang; Chung-Suk Cho; and Michael P.Pappas, Journal Of Management In Engineering© Asce / January 2006.
Using the PDRI improves performance

Results from usage of the PDRI's (Project Definition Readiness

Index) have indicated an increase in project budget predictability
of almost 20 percent on average versus authorisation estimate,
with similar results for schedule, change orders, and operability.
Included in these results are real cost savings of greater than 10
percent per project.

‘Development of the Project Definition Rating Index (PDRI) For Infrastructure Projects Auth: Evan Bingham. Thesis Presented in Partial Fulfillment of the Requirements
for the Degree Master of Science - ARIZONA STATE UNIVERSITY December 2010
4 Project Definition Readiness & Cost Estimate Accuracy 09:10 – 09:25
Project definition readiness index

The goal of the Project Definition Readiness Index (PDRI) is to

determine how well the project scope of work has been
defined, and therefore the schedule and cost estimate, and
how well equipped and prepared the project is to commence
with either detail design or construction.
Toolset to assess project readiness

There are 4 different PDRI tools relevant to different project types

CII PDRI Tools Examples of projects showing which tool they would use
Industrial PDRI • Bottling plant • Pharmaceutical process plant • Server farm

Infrastructure PDRI • Railway line • Highway / Toll road • Water pipeline

Building PDRI • Office building • Server farm

STAR PDRI • Renovation, refurbishment of process plant

Each tool is used to assess the project against 3 broad scope definition sections

PDRI

Basis for Project Decision Basis of Design Execution Approach

How well defined is the How comprehensively have all How well have the
justification and supporting the design parameters and requirements of the owner’s
information for the project. And specifications been defined to execution been identified and
how well have the options and ensure the scope of the project defined, to ensure the project
alternatives been determined and is fully understood and defined. can be implemented and
evaluated, to ensure alignment delivered effectively.
with the business’s objectives
Example of CII PDRI
PDRI sections cover all aspects

CII Project Definition Rating Index, Industrial Projects, CII Implementation Resource 113-2, version 3.2
 Readiness assessed across 70*elements

The completeness of the project scope definition is reviewed to a quantifiable level of detail

PDRI Tool PDRA Assessment – Challenge – Gaps – Score Element Definition

Example
Is this the right project and have all
Section 1 alternatives been considered and
Basis of Project assessed including alternative
Decision technologies and the most optimal
solution identified.
Identified
Gaps / Risks
Category A There is a well documented strategy
which clearly defines the need and and Impact
Project Strategy purpose for the project. and
Actions

Element A1 The Need and Purpose includes

sufficient data on the improvement
Need & Purpose to capacity and analysis of the
Documentation profitability or benefits.

Challenge Questions Has there been an analysis of the

profitability or benefits of undertaking
Profitability and Benefit the selected project option? What Consensus
Analysis methodology was employed? Who
reviewed and approved it?
Score

Substantiating There is a structured method used

Information for determining the profitability or
benefits analysis and this has been
Documented Evidence completed, reviewed and signed-off.

* The number of ‘Elements’ ranges between 64 and 70 dependent on the PDRI tool employed,.
 Each element assessed by the team

The emphasis is on identifying and evaluating the impact of the risks and the mitigation actions

The high scoring

Elements which
require attention are
clearly identified

Identified
Gaps / Risks
and Impacts The gaps and
and Actions associated risks and
Thabo mitigation actions are
Mashegoane described.

Piet
Steinkamp
The next actions to
close the gaps are
Dumisa
Moeketsi assigned to named
individuals responsible
Linda Sithole
for correcting them.

Linda Sithole

Linda Sithole
Linda Sithole
Linda Sithole
Linda Sithole
Gaps and associated risks identified

1 2 3 4

How to interpret the Summary Report Sheet

1 PDRI Score
The PDRI score is the sum of the scores for each Element [scored between 1 – 5 ],
for (a) the Section and (b) the Category.

2 Min Score
This is the minimum attainable score for the sum of all the Elements within the
applicable Section and Category. This is the eventual score the project team should
be aiming for.

3 Max Score
This is the maximum weighted score attributable to the applicable Section and
Category.

4 Def (%)
5
The Definition percentage is the level of completeness of the respective Section and
Category based on the score for the current PDRI assessment.

5 Top Elements
These are the top 10 Elements having the highest weightings in the PDRI. These are
the Elements which should be focussed on first in terms of level of completeness of
the definition .
FEP critical for definition completeness
FEP critical for cost accuracy

AACE International Recommended Practice No. 18R-97: Cost Estimate Classification System – As Applied in Engineering, Procurement, and Construction for the
Process Industries. AACE® International – The Association for the Advancement of Cost Engineering
FEP – Cost and activities

The front end planning effort is typically identified with two to

five percent of the project Total Installed Cost (TIC), depending
on the type and complexity of the project
Typical activities and products of front end planning may
include the following:
• Options analysis • Space planning
• Life-cycle cost analysis • Site layout
• Cost and schedule estimates • Project execution approach
• Site investigation and selection • Project control plan
• Environmental analysis • Contracting strategy
• Process design basis
• Initial engineering design
Project management must drive FEP

If we position project management as an execution-only

discipline, we will be seen as just that and cut-off from the
really important parts of the project: those where value can
most be created: the front-end.

We need to be voicing a view of programme and project

management which provides a holistic approach to managing
projects, and programs, from their earliest stages to their last
in order to deliver business benefit.

2005, Peter Morris, PMI Global Congress Proceedings – Edinburgh, Scotland

FEP – Critical rules for success

• Develop and consistently apply a defined front end planning process

• Ensure adequate scope definition before moving forward with design
• Use front end planning tools
• Define existing conditions thoroughly
• Select the correct contracting strategy early
• Align the project team, including key stakeholders
• Build the project team, including owner stakeholders and consultants
• Include involvement from both owners and contractors
• Staff critical project scoping and design areas with capable and
experienced personnel
• Identify and understand risks of new project types, technologies or
locations
• Address labour force skill and availability
CII Best Practices Guide: Improving Project Performance, Implementation Resource 166-3, version 4.0, December 2012
FEP usage owners spend 8% less

Value of Best Practices Survey completed in 2010; owners with high front
end planning usage on average spend 8% less than those with low usage

Impact of Front end Planning on Cost Growth – Owners

BMM 2010-4, CII Value of Best Practice Report, pg 28

If airline pilots use checklists…

The segmented checklist enhances ability to manage the cockpit and

comply with standard operating procedures. Many a pilot has avoided
embarrassment, not to mention a possible accident, because he or she
used the written checklist properly.

….Then why do programme and project managers not do the same to

improve project performance?
Proven methods such as front end planning and tools such as the project
definition readiness index provide this capability
 5 Reference Reading 09:25 – 09:30

1. Managing the Front-End: how project managers shape business strategy and manage project definition, 2005,
Peter Morris Originally published as a part of 2005 PMI Global Congress Proceedings – Edinburgh, Scotland

2. Front End Planning In The Modern Construction Industry By Roberta Patrice Bosfield, ARIZONA STATE
UNIVERSITY May 2012

3. Development of the Project Definition Rating Index (PDRI) For Infrastructure Projects by Evan Bingham.
ARIZONA STATE UNIVERSITY December 2010

4. A risk-management approach to a successful infrastructure project, McKinsey Working Papers on Risk, Number
52, November 2013

5. Critical Activities in the Front-End Planning Process Ryan George1; Lansford C. Bell, F.ASCE2; and W. Edward
Back, M.ASCE3. JOURNAL OF MANAGEMENT IN ENGINEERING © ASCE / APRIL 2008

6. Prioritising Project Scope Definition Elements in Public Building Projects, Fageha, M.K & Aibinu, A.A. 2014,
‘Prioritising Project Scope Definition Elements in Public Building Projects’, Australasian Journal of Construction
Economics and Building, 14(3), 18-33.

7. CII South Africa Launch. CII’s Impact on Capital Projects, May 21, 2015 University of Pretoria Stephen P. Mulva,
Ph.D. Associate Director, CII
6 Q&A, Networking and Event Close 09:30 – 10:00
About EPCM Global
EPCM Global is a management consulting services firm for public and private sector clients. We provide specialist
solutions and competitive insights within our three core offerings:
• Consulting solutions for business, project and engineering management
• Business architecture – review the integration of your business strategy, systems architecture, sustainability principles and operations.
• Business process development and re-engineering – develop, re-engineer and standardise processes for sustainability.
• Plant lifecycle and performance improvement – develop processes and tools to address shortcomings within your company’s asset lifecycle
management.
• Operational optimisation – develop and implement operational improvement solutions.
• Project readiness assessments – facilitate project definition readiness.
• Project lifecycle methodology – assess, develop and standardise project lifecycle models.
• PMO establishment – Establish the strategy, architect, structure, organise and establish programme and/or project management office

• Project delivery solutions

• Full Engineering, Procurement and Construction Management (EPCM) capability assistance.
• Specialised assistance in project development, project execution and project integration.
• Our project management services include Greenfield projects, Brownfield (refurbishment and replacement) projects and project recovery.

• Specialist staffing solutions

• Recruitment of skilled staff on a permanent, contractual or temporary basis with training and technical, specialised support from EPCM
Global.
• Service focussed on the Project Management, Engineering Management, Procurement and Construction Management industries.

Telephone: +27 12 660 9944

Fax: +27 86 631 2661
Cell phone: +27 84 339 8683 or +27 82 454 3028

Address: EPCM Global Engineering (Pty) Ltd

Units 17 & 18
400 Roan Crescent
Corporate Park North
Email: [email protected] Midrand, 1685
Web: www.epcm.co.za Gauteng