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ESD.36 System Project Management

Instructor(s)

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- Multi-Project Program Management

Prof. Olivier de Weck

Lecture 18


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-Outline

Program Management Definition, Distinction from Project Management

Example Program (BP Azerbaijan)

Project Portfolio Management Project Selection Process

Example Portfolio (PreQuip)

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-Concept Question 1

What is the largestnumber projects you

have worked on or managed at thesame time (in parallel)?

1

2

3

4

more than 4

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-Programs PMBOK Definition

Program. Aprogram is a group of projects managed in acoordinated way to obtain benefits not available frommanaging them individually.

Many programs also include elements of ongoing operations. For example:

The XYZ airplane programincludes both the project or projects todesign and develop the aircraft as well as the ongoing manufacturing and

support of that craft in the field.

Many electronics firms have program managerswho are responsible forboth individual product releases (projects) and the coordination of multiplereleases over time (an ongoing operation).

Programs may also involve a series of repetitive or cyclical

undertakings, for example: Utilities often speak of an annual construction program,a regular,

ongoing operation which involves many projects.

Many non-profit organizations have a fundraising program,an ongoingeffort to obtain financial support that often involves a series of discreteprojects such as a membership drive or an auction.

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Develop a product platform thatcan be scaledor stretchedinone or more dimensions tosatisfy a variety of market niches

Scale-based Product Families

Boeing 737 is divided into3 platforms:

Initial-model (100 and 200)

Classic (300, 400, and 500)

Next generation (600, 700,

800, and 900 models)

The Boeing 777 has alsobeen designed knowingthat it will be stretched

Aerospaceweb.org. All rights reserved. This content

is excluded from our Creative Commons license. For

more information, see http://ocw.mit.edu/fairuse.
http://ocw.mit.edu/fairusehttp://ocw.mit.edu/fairuse


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Airbus Aircraft Program

Airbus A3XX Family: common height, width, cockpit

The A330 cockpit is common to all other Airbus types

while Boeings 767-400 cockpit is common only withthe 757. This enabled the A330-200, a less efficientshrinkof a larger aircraft, to outsell Boeings 767-400ER, a more efficient stretchdesign of a smalleraircraft.


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Sample Program: BP ACG (Azerbaijan)

Capex: $9bn total / $6m / day90,000 te topsides90,000 te jackets1000 km offshore pipelines

80% of man-hours in Azerbaijan20% across another 10 countriesNew Workforce - 9000 Azeris

One of worlds largest terminals7 years of execute74 million man-hours total so farOver 3 million man-hours/month

Source: Adrian Luckins, BP

BP Caspian. All rights reserved. This content is excluded from our Creative

Commons license. For more information, see http://ocw.mit.edu/fairuse.
http://ocw.mit.edu/fairusehttp://ocw.mit.edu/fairuse


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ACG Reservoir Size


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0

200

400

600

800

1000

1200

2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

mbd

Phase 3

Phase 2

Phase 1

Chirag

ACG Full Field Development - Production


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Geographical Challenges

Baku

Jacket Pre-

Fab rication, Italy

Drill ing

Con struction (CA),

France

Engineering &

Procurement , UK

Drill ing Equipm ent,

Norway

Installation

Design,

Croat ia

Topsides F abricat ion, Jacke t

Fabricat ion, T erminal Con struction,

Engineering De sign, Azerbaijan

Living Qua rters

Fabricat ion, Swed en

Topsides Pre-

Fabricat ion, Duba i

Drill ing

Con struction (W A/

EA), Holland

C&W P/ terminal pre-

fabrication, Turkey

By Trailer

By Rail

By Sea

Transport routes:

Logistics

5000 Trailer trips

600 0 rai l trips

200 river boats

Baku

Jacket Pre-

Fab rication, Italy

Drill ing

Con struction (CA),

France

Engineering &

Procurement , UK


Norway

Installation

Design,

Croat ia




Living Qua rters


Topsides Pre-


Drill ing

Con struction (W A/

EA), Holland


fabrication, Turkey

By Trailer

By Rail

By Sea

Transport routes:

Logistics

5000 Trailer trips

600 0 rai l trips

200 river boats

Baku

Jacket Pre-

Fab rication, Italy

Drill ing

Con struction (CA),

France

Engineering &

Procurement , UK


Norway

Installation

Design,

Croat ia




Living Qua rters


Topsides Pre-


Drill ing

Con struction (W A/

EA), Holland


fabrication, Turkey

By Trailer

By Rail

By Sea

Transport routes:

Logistics

5000 Trailer trips

600 0 rai l trips

200 river boats

By Trailer

By Rail

By Sea

Transport routes:

By Trailer

By Rail

By Sea

Transport routes:

By Trailer

By Rail

By Sea

Transport routes:

By Trailer

By Rail

By Sea

Transport routes:

Logistics

5000 Trailer trips

600 0 rai l trips

200 river boats


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Project Schedules

2001 2002 2003

1H 2H 1Q 2Q 3Q 4Q 1H 2H 2004 2005 2006 2007 2008 2009

BTC

ACG Phase 1

ACG Phase 2

ACG Phase 3

Define

1stOil

Execute

Select1stOil

DefineAppraise Execute

Operation

Define ExecuteSelect

Select Define

1stOil

West Azeri

Execute

1stOil

East

Azeri


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Production Line Strategy Development

CA jacketC & W P

ja ck etW A jac ket EA jac ket

CA

topsides

W A

topsides

EA

topsides

C & W P

topsides

Terminal

t ra ins 1& 2

Terminal

t ra ins 3& 4

Pipel ines:

30 "

Pipel ines:

28 "

Pipel ines:

30 "

CA jacketC & W P

jac k etW A jack et EA jack et

CA

topsides

W A

topsides

EA

topsides

C & W P

topsides

Terminal

t ra ins 1& 2

Terminal

t ra ins 3& 4

Terminal

Shah Deniz

Pipel ines:

30 "

Pipel ines:

28 "

Pipel ines:

Shah Deniz

Pipel ines:

30 "

BOSYard

ATA Yard

CA jacketC&WP

jacket WA jacket EA jacketDUQ

jacket

PCWU

jacket

CA

topsides

WA

topsides

EA

topsides

DUQ

topsides

C&WP

topsides

PCWU

topsides

Terminaltrains 1&2

Terminaltrains 3&4

TerminalShah Deniz

Terminaltrains 5&6

Pipelines:

30"

Pipelines:

28"

Pipelines:

Shah Deniz

Pipelines:

30"

Pipelines:

ACG 3

ACG Phase 2

ACG Phase 1

ACG Phase 3

Shah Deniz

Key :

Objectives :Learning Curve Benefits Faster,CheaperElimination of InefficiencyContinually Reduce Unit Costs

Strategy :StandardizationContracting Natural Choice at Right PriceOrganisation People ContinuityRight Pace for capital efficiency

E&P

KBR/

AIOC

MCCIYard

AzTf

MCCI


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Copied Building Block Seed Building Block To Develop New Design

CA- C&WP

CA-PDQ WA-PDQ

DWG-PCWU

50% Copy 95% Copy (WA)31 Mhrs Per Tonne 11 Mhrs Per Tonne42 Mhrs Per Tonne

DWG-DUQ60% Copy (WA/EA)28 Mhrs Per Tonne

21 Mhrs Per Tonne 19 Mhrs Per Tonne

20% Copy (C&WP/WA)

EA-PDQTopsides

DetailDesign

TopsidesDetailDesign

Project Challenges ACG & Shah Deniz

CB-PDQ30% Copy

30 Mhrs Per Tonne

Phase 1 Phase 2 Phase 4Phase 3

B fit li d th h


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Benefits realised throughstandardisation: Engineering

Engineering Benefits

Drilling Facilities -Engineering Costs(Eiffel/KCA)

Phase 1 Phase 2 Phase 3

Dire

ctMan-hours/te

CA

(54)

WA

(30)

EA

(8)

DWG

(8)

Production FacilitiesEngineering Costs


DirectMan

-hours/

te

CA

(

42

)

WA(31)

EA

(11)

CWP(21)

DWG

(29)

Phase 3 (Manhours /te

DWG: 29 contract25 stretch

DUQ: 28PCWU: 20

10

20

30

40

50


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Benefits realised throughstandardisation: Fabrication

Jacket FabricationCosts

100

$/teunits

-7%


-4%

$6181/te

$5751/te

$5521/te

Topsides FabricationCosts

100

$/teunits

-10%

-6%


$18042/te

$16122/te

$15228/te

Fabrication Benefits


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-Concept Question 2

In our organization we pursue mainly:

Programs

sets of directly related projects Portfolios sets of indirectly related projects

Individual single projects

Not applicable

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-Portfolio of Projects

A portfolio of projects is a collection ofprojects owned or managed by the sameorganization that are only indirectlyrelated

Projects may not be directly related to each other, as

in a program, i.e. outputs from one dontnecessarily feed into the other

Usually no or only minimal commonality and standardization

Portfolio is chosen with diversity of projects, some of

them may be negatively correlated Mix of large scale potentially less risky and small

risky projects that act as pathfinders

Project portfolio may not have a single manager

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-Project Portfolio Planning

Breakthrough

Projects

New CoreProcesses

NextGenerationProcess

SingleDept.Upgrade

TuningandIncremental

New Core

Product

NextGenerationProduct

Addition toProduct Family

Add-ons andEnhancements

Product Changes

Process Changes

PlatformProjects

Derivatives(Enhancements,Hybrids, and Cost

Reduced Versions)

AdvancedR&D Projects

1

2

3

4

5

Source:(Wheelwright& Clark, 1992)


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Aggregate Project PlanClassifications

Advanced R&D Projects Innovations and technology development that provides a precursor to

commercial development

Breakthrough Projects

Projects that involve significant change in the product and process establish a

new core product and process

Platform Projects

Projects provide a base for a product and process family that can beleveraged over several years

Derivative Projects

Cost-reduced versions of an existing product or platform or add-ons orenhancements to an existing production process

Allied Partnerships

Partnerships in any of these project areas to leverage development resourcesand activities

Source:(Wheelwright& Clark, 1992)


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R&D

Breakthroughprojects

R&D

Breakthrough

Platform

Derivative

Allied and PartnershipprojectsDerivative

projects

Platform projects

Project Planning at PreQuip Part 1

PreQuips Development Projects (30)

before the Aggregate Project Plan

Mass spectrometers

Liquid chromatographs

Gas chromatographs

Data processing and handling products

Adapted from: Wheelwright, S.C. and Clark, K. B.,1992,Creating Project Plans to Focus ProductDevelopment,Harvard Business Review, 70(2), pp. 70-82.


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R&D

R&D

Platform

Derivative

Allied and Partnershipprojects

Derivative

projects

Platform projects

Breakthrough

Aggregate Project Planning Part 2

PreQuips Development Projects (11)after the Aggregate Project Plan

Mass spectrometers

Liquid chromatographs

Gas chromatographs

Data processing and handling products

Breakthroughprojects

Adapted from: Wheelwright, S.C. and Clark, K. B.,1992,Creating Project Plans to Focus Product

Development,Harvard Business Review, 70(2), pp. 70-82.


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-Concept Question 3

What is the most challenging issue you haveencountered working in a multi-projectenvironment?

Conflicts due to financial resource contention

Inefficiency due to multi-tasking

Staffing dynamics (trying to get the Ateam)

Friction between program and project manager Enforcing standard work procedures

Ensuring commonality at the parts and module level

Other

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-Portfolio Management Issues

Risk Correlation across Portfolio Constraints on Shared Resources

Late and over-budget projects delay ramp-

up of downstream projects Shared resources (e.g. test facilities) can

also create bottlenecks

Staff working simultaneously on multipleprojects create inefficiencies and delays

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Typically dealt with via exogenous inputs tosingle-project models, or via portfolio models


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-Program Manager Challenges

Creating a visionfor the program as a whole Scheduling and prioritization of individual

projects in the program

Dealing with project interdependencies Resource contention, CAPEX phasing

Staffing, avoid firefighting

Ensuring learning and commonality across projects

Program Manager is a very different andmore strategic role than project manager

Typically requires more strategy and diplomacythan individual project management

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Discussion / Q&A

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MIT OpenCourseWarehttp://ocw.mit.edu

ESD.

Fall 2012

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