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Basic Project Management Principles

Basic Project Management Principles. Introductions and Expectations. Course Objectives. Increase your understanding of basic Project Management principles necessary to effectively plan and execute projects: definition of project scope of work

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Basic Project Management Principles

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  1. Basic Project Management Principles

  2. Introductions andExpectations

  3. Course Objectives Increase your understanding of basic Project Management principles necessary to effectively plan and execute projects: • definition of project scope of work • cost estimating principles, cost uncertainty and contingency • basic project economics • project schedule and resource loading • project controls including cost and scheduling control tools • basic contracting strategies

  4. What is a Project? From Webster’s Dictionary… • A planned undertaking From the Project Management Institute… • A project is a temporary endeavor undertaken to create a unique product or service A Project is different from Routine Operations

  5. Project Examples

  6. What is a Successful Project? Typical Considerations: • completed within budget • completed on or ahead of schedule • good safety record during construction • facilities are safe and operable • facilities meet the intended objectives • completed at the most competitive cost • completed within the shortest cycle time • uses optimum technology • Lowest full cycle cost (start-up, operate, maintain, and decommission)

  7. What is Project Management? The optimum application of knowledge, skills, tools and techniques to project activities to meet project objectives Accomplished through processes such as: • initiating • planning • executing • controlling • closing The work typically involves: • Management of competing demands for: scope, time, cost, risk and quality • Stakeholders with differing needs and expectations • Identified project requirements

  8. A Typical Project Execution Process A process that improves decision making and execution by fostering better planning, collaboration and communication

  9. Vision: The Right Project Implemented Well • Selecting the best opportunities through improved decision making process. • Improving outcomes by executing decisions with excellence

  10. Value Identification Value Realization Good Project Execution Good Project Definition A B VALUE Poor Project Execution C Poor Project Definition D Phase 3 Develop Preferred Alternative Phase 4 Execute Phase 5 Operate Phase 1 Opportunity Identified Phase 2 Generate & Select Alternatives Impact of Planning (Front End Loading) on Value Creation

  11. Principles of a PEP • Focus on key value drivers for the opportunity • Use of integrated multifunctional teams • Effective input, communication and alignment between teams, decision makers and stakeholders • Decision driven, not activity driven - do the work necessary to support the next decision • Consistent use of best practices and tools

  12. 3 Key Questions in any Project HOW DO WE GET THERE ? WHERE ARE WE NOW? WHERE DO WE WANT TO BE? Phase 1 Identify and Assess Opportunity Phase 5 Operate and Evaluate Phase 2 Select Alternative(s) Phase 4 Execute Phase 3 Develop Alternative(s) • Opportunity Statement • Boundary Conditions • Roadmap • Execution Plans • Definition of Success

  13. Phases of a Project Execution Process 1 2 5 3 4 IDENTIFY THE OPPORTUNITY GENERATE ALTERNATIVES DEVELOP PREFERREDALTERNATIVE EXECUTE DOCUMENTATION AND LESSONS • Develop Frame • Strategic • Alignment with Vision • Conduct Preliminary • Assessment • Develop Preliminary • Overall Plan • Plan For Phase 2 • Seek and Incorporate • Learnings Generate Alternatives Define Preliminary Scope for Each Alternative Develop Preliminary Implementation Plans Assess Preliminary Value Narrow and Select Alternatives Fully Define and Freeze Scope Develop Final Implementation Plans Make Final Investment Decision (commit funds) Execute Consistent with Implementation Plans Evaluate Performance Assess Effectiveness Identify New Opportunities Project Report Capture, Share, and Incorporate Learnings

  14. Elements of a PEP Project Execution Team Alignment Quality Decisions Balance of three key elements

  15. PHASE 1 Identify the Opportunity Stop, Hold, or Recycle Endorser (s)___________________________ Decision Executive _____________________ Decision Review Board_________________ Proceed with Development of Alternative(s) Approve Phase 2 Plan Framing Document, Forward Plan, Preliminary Assessment Project Manager/Team Leader ________________ Work Team________________________________ Focus Items Phase 1 • Develop Frame • Opportunity Statement • Scope definition • Vision of success • Success metrics • Stakeholders • Business Objectives • Decision Hierarchy • Key Uncertainties and risks • Value Measures • Develop Road map/ Preliminary Overall Plan • Project Management Practices & VIPs • Plan For Phase 2 Opportunity Identified Project Execution Planning Quality Decisions Team Alignment

  16. Phase 2 PHASE 2 Generate Alternatives • Generate Alternatives • Define Scope for Alternatives • Analyze Alternatives • Narrow and Select Alternatives • Project Management • Practices and VIPs • Plan for Phase 3 Stop, Hold, or Recycle Proceed with Generating Alternative(s) Approve Phase 2 Plan Endorser (s)________________ Decision Executive _________ Decision Review Board_____ Proceed with Development of Preferred Alternative(s) Approve Phase 3 Plan Recommend Alternative(s) Project Manager/Team Leader ____________ Work Team____________________________ Project Execution Planning Quality Decisions • Focus Items Team Alignment

  17. Phase 3 PHASE 3 Develop Preferred Alternative Fully Define and Freeze Scope Detailed Design Develop Final Implementation Plans Final Cost Estimate and Investment Decision Project Management Practices and VIPs Other Focus Items Stop, Hold, or Recycle Endorser (s)_____________________________ Decision Executive ______________________ Decision Review Board____________________ Proceed with Execution Approve Funding and Phase 4 Plan Accept Plan? Fully Defined Scope Execution Plans Funding Request Project Manager/Team Leader ______________ Work Team______________________________ Focus Items Project Execution Team Alignment Quality Decisions

  18. Project Execution Team Alignment Quality Decision Phase 4 PHASE 4 Execute Consistently Execute Implementation Plans Project Management Practices and VIPs Other Focus Items Stop, Hold, or Recycle Endorser (s)_______________________ Decision Executive ________________ Decision Review Bo_______________ Proceed with Operations Approve Operating Plan Operable Assets Project Manager/Team Leader __________ Work Team__________________________ Focus Items

  19. Phase 5 PHASE 5 Operate and Evaluate Monitor and Evaluate Performance Assess Effectiveness Identify New Opportunities Project Report and Lessons To Phase 1 New Opportunities Endorser (s)____________________ Decision Executive _____________ Decision Review Bo____________ Pursue New Opportunities Operations Metrics New Opportunities Project Manager/Team Leader _________ Work Team_________________________ Focus Items Project Execution Team Alignment Quality Decisions

  20. Phase 1 (in more detail) - Opportunity Framing • Develop a consensus Opportunity Statement • Develop and agree on the Boundary Conditions • Identify the Key Stakeholders • Develop a Definition of Success

  21. Opportunity Framing • A Framing Document should answer these questions: • Opportunity Statement… • What are we going to do? • Why are we doing this? • Success Statement… • How will we know if we are successful?

  22. Boundary Conditions Boundary conditions limit or define the scope and may come from… • Assumptions made • Decisions already made • Givens

  23. Framing Tool • On the frame • Out of Scope • In scope

  24. Stakeholders A Stakeholder is anyone who is impacted by or has influence on your opportunity. • Examples: • Management  Governments • Customers  Regulators • Work Team  Financiers • Contractors  Suppliers • Non-governmental Organizations • Stakeholder Identification typically done with Framing Document • Stakeholder Analysis initially done in Phase 1, updated throughout project.

  25. StakeholderAnalysisTemplate Power/ Influence: 1 = No power/ influence over project outcomes 2 = Some influence over project outcomes 3 = Moderate influence over project outcomes 4 = Major influence over project outcomes 5 = Without support from this stakeholder, the project is doomed to fail Current Support/ Favorability: 1 = Negative, actively working against 2 = Moderately negative, passive resistance 3 = Neutral 4 = Moderately positive, passive support 5 = Active supporter

  26. A Definition of Success Includes: • Vision of Success • A common vision upon which all team members may focus • “At the end of the day, we will know we are successful if ……” • Success Factors • Actions necessary to ensure the vision is met • “We will achieve success by doing ……” • Success Metrics • Measurements to know when success is (or is not) achieved. • “We will measure success by ……”

  27. DQ Spider Diagram Meaningful Information Clear Values & Tradeoffs • What do we know? • What don’t we know? • What are the most critical variables? • How reliable is the information? • What are the uncertainties? • Is the information unbiased? • Is it based on facts & experience? • Did we weigh the importance of each value & tradeoff? • Are our values, tradeoffs and weighting consistent with our partners? • Do they change long vs. short-term? Creative, Doable Alternatives Logically Correct Reasoning 100% 50% 0% • Did we factor in uncertainty of the information? • Would our answer change given more time or resources? • Potential Tools: Decision Tree, Sensitivity Analysis, Probability Curves, Tornado Diagram • How much time was spent brainstorming? • Who was involved? • What are the options or choices? • Are they real alternatives? • Do they fit the frame? Appropriate Frame Commitment to Action • What decision are we trying to make? • What’s inside and outside the scope? • What are the assumptions or givens? • Potential Tools: Decision Hierarchy, Influence Diagram, Force Field, Strategy Table, SWOT, Framing Document • Are we ready to make the decision and take action? • Do we have the resources & authority? • Have all key stakeholders bought in? • What are potential barriers to implementing now?

  28. Project Economics Projects EV Economics Portfolio Economics based on 6 Onshore projects: • Onshore Asset Gas Management (Phase 3) • Olero Creek Rebuild (Received funding 2006) • Dibi Early Production System (Project Complete) • Escravos to Abiteye 16 “Pipeline (Phase 3) • Dibi Drilling (To begin 2010) • Dibi Rebuild (Phase 2) Sensitivity Analysis • Flaring scenarios 1 and 2 will provide an uplift in NPV of $64MM. • Due to the low GORs in the onshore, the NPV is not very sensitive to the flare penalties evaluated.

  29. Project Spend Forecast

  30. Olero Creek Costs Waterfall Months

  31. Exercise : Opportunity Framing • Prepare an opportunity statement • Define the boundary conditions • Identify Key Stakeholders • Prepare a Definition of Success • Visions of success • Success factors • Success metrics For your Project:

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