Project Advisory

Owners, contractors, sureties, and their attorneys can experience challenges when addressing the many steps necessary to plan and deliver capital projects. Our project audits and assessments, led by experts with unique skill sets and years of industry experience, can also provide an early warning of potential future issues and risks that may impact project outcomes.  Our front end services include:

Project Framing

GlassRatner can assist organizations with a smart start on their capital projects, resulting in faster project delivery at a reduced capex.

Capital project stakeholders use the project framing process to ensure that the project gets a smart start and that it is planned and executed with the right goals in mind. Failure to do so often results in false starts and wasted effort. It is critical that projects achieve alignment on business objectives as well as project objectives among all stakeholders: engineering; business owner; operations; health, safety, and environment (HSE); maintenance; commercial; and others.

Without clear business and project objectives, a project’s probability of success may suffer. For large projects there are dozens of key stakeholders within an organization, who will make hundreds – if not thousands – of decisions throughout the project lifecycle. Lack of alignment is almost certain to lead to confusion and lack of focus.

What Is Project Framing?

GlassRatner’s project framing process employs a structured approach to help stakeholders align on the objectives and attributes of the project, and addresses critical issues such as the following:

• Business objectives, such as market entry timing, rate of return, future cost avoidance, HSE issues, production volumes, etc.
  • Which of these items has the highest priority?
• Project objectives, such as cost, schedule, safety, project changes, quality issues, customer satisfaction, etc.
  • Will cost or schedule drive the project?
• Cost, schedule, and uptime tradeoff
  • At times, not all these constraints can be met. Stakeholders should align on the priority of tradeoffs prior to project initiation, as this drives the decision-making process.
• What type of facility will the firm build?
  • Is the facility a standard construction or highly sophisticated and unique?
  • Stakeholders align on a facility attribute matrix listing the following: life of the project, turndown capacity, capacity robustness, sparing philosophy, control philosophy, ability to handle different feedstocks, incremental investment criteria, facility uptime, ability to meet product specifications, maintenance support equipment, etc.

GlassRatner’s approach to objectives is that they should be verifiable and definitive. This ensures that all stakeholders are accountable for the project outcome based on key metrics.

Project Audit

One of the most challenging decisions a capital-intensive organization can make is funding a project. Stakeholders need to determine whether the project is sufficiently defined for full funding, the proper upfront work has been done to provide an achievable cost and schedule, and the project and organizational risks are fully understood. These are just a few critical questions that must be answered for management to make an informed decision and, more importantly, be aware of the risk and how it impacts the organization.

Large or modest-sized capital projects may fail to meet their project objectives if they are not properly developed and managed. GlassRatner has a robust process for auditing projects prior to sanction and identifying the areas that need improvement. Our assessment is conducted by consultants who have years of experience and a deep understanding of critical project success factors. Our experts have also led projects, often in international locations.

The Project Audit Process

GlassRatner’s project audit is an independent, unbiased, proprietary assessment of project health that addresses 33 key components in five critical areas related to business, organization, and planning. In GlassRatner’s experience, these 33 components are predictors of project success and provide a no surprises view of the likelihood of a favorable outcome.

Project Execution

A substantial challenge that project teams face is developing a robust project execution plan (PEP) that all stakeholders buy into and that serves as the guiding document throughout the project lifecycle. A PEP is often required by lending institutions prior to release of funds and can be helpful for projects that have multiple partners.

GlassRatner’s experts can work with client stakeholders to assist them in developing a PEP. Along with a well-defined project scope, an important document prior to the final investment decision or project sanction is the project execution plan. In GlassRatner’s experience, most of the time spent prior to project sanction, especially during the front-end engineering design, is on scope definition. For a typical large capital project, it is not unusual to spend several millions of dollars during the FEED stage. These funds are spent almost entirely on developing scope documents such as piping and instrument diagrams (P&IDs), plot plans, equipment specifications and data sheets, and control system design.

But project scope, while important, only addresses the “what.” It does not address the who, where, when, and how, which is covered by the project execution plan. Project teams often fail to meet their metrics due to poor or inadequate project execution planning. The PEP provides a roadmap and detailed methods and guidance for how the project team will get from engineering drawings to an operational facility. PEPs typically vary from project to project, as each project has different objectives, scopes of work, contract requirements, execution plans, and cost and schedule drivers.

Project Execution Plan Development Methodology

GlassRatner’s methodology for developing project execution plans is illustrated below. As shown, each of these categories can be further divided into individual plan components. In general, GlassRatner’s approach is that each of the subsequent PEP sections builds on the previous ones.

Project teams often must address multiple questions when developing a robust PEP, including the following:

• Who develops the PEP?
• What content goes into each section of the PEP?
• What is the framework used to develop the content?
• How much detail should go into the plan?

GlassRatner’s experts can assist clients in answering these and other questions and thereby help develop a meaningful PEP that is useful to project stakeholders. Our approach for developing each of the individual sections described above is shown below at a very high level. Using this approach ensures that the critical components of each area are covered. These factors, along with GlassRatner’s experience and judgement and project-specific requirements, are key in developing PEPs that are appropriate for a given project. Because there is no one-size-fits-all approach, each project is evaluated based on its unique requirements.

Based on GlassRatner’s experience, the biggest challenge in developing a PEP is aligning everyone on the plan and ensuring that it is used throughout the project lifecycle. GlassRatner’s methodology, briefly outlined above, has been used successfully in the past on a variety of complex capital projects.

Components of the PEP as well as writing them, resulting in a developed strategy with stakeholder alignment to ensure plan utilization.

Cost Risk Assessment

A significant challenge facing all entities that invest in or execute capital projects is what the project will cost, which clearly impacts the decision to invest in the opportunity in the first place. Every project contains an amount of uncertainty, such as equipment cost, labor cost, labor productivity, engineering quality, etc., that can affect its level of risk. Project stakeholders intuitively understand that there is a range of potential cost outcomes based on the risk profile of the project. Quantifying this range of outcomes and their probability can support the decision-making process and also determine the cost risk that the entity is assuming.

GlassRatner’s cost risk assessment provides a risk-adjusted view of the cost for a project inclusive of various factors that might affect the outcome, including those that might be outside the project team’s control. Our expert team relies on years of experience on similar projects to provide a thorough, independent analysis of each project component. As independent consultants, we are not anchored to the development of the deterministic cost estimate; if the risk assessor is too close to the cost estimate development, he or she may rationalize control of the risk and reduce the real range of outcomes. Unrealistic optimism of the risk magnitude is a common error that stakeholders make when estimating the ultimate project cost.

Our independent experts possess deep project experience that enables them to understand the drivers for project and senior management stakeholders as well as financers and investors. Our results therefore have the credibility needed to support the findings and provide the basis for clients to take action as required.

GlassRatner’s model uses diagnostics that, based on our experience, are root causes of project overruns. The results from GlassRatner’s assessment illustrate not only the expected cost range of the project, but also the major risk areas as well as the steps that can be taken to mitigate those risks.

The Risk Assessment Process

GlassRatner’s cost risk process is performed in concert with our client stakeholders. Through interviewing key personnel and reviewing project documents, we first identify important risks and opportunities. Based on these interviews, we develop an initial range of cost estimate components, which we refer to as a risk frame. We then work with the project team via an alignment workshop to reach a consensus regarding the cost risk issues. This process ensures that vital risks are fully addressed, including sensitive organizational issues, contractor performance, procurement issues, project team staffing, and workforce productivity, to name a few.

Construction Readiness Assessment

In GlassRatner’s experience, projects may fail to meet their schedule and cost metrics if the contractor moves into the field before the project and its organizational components are sufficiently mature. Much has been written about the required upfront planning, prior to the final investment decision, to support project success, and there are several tools available to assess the robustness of upfront planning. Regardless of the amount of pre-final investment decision planning, projects may fail during the construction or execution stage, where the bulk of the funds are typically spent, in part because the project is not ready to move into the construction phase.

GlassRatner’s construction readiness assessment can be used on an active project to support the decision to initiate construction. It can also be used as a forensic tool to assess whether the project moved into the field with sufficient project planning.

The largest project cost component is generally field or construction labor. This is also the area where the project team typically has the least control and is subject to substantial risk as the contractor tries to integrate engineering, equipment, bulk materials, and field labor, which can result in poor field construction or labor productivity. For a large project with thousands of activities and hundreds or several thousands of field staff, ensuring labor efficiency can be overwhelming if the project is not ready to move into the field.

Successfully integrating all of these issues is a challenging task, and it is important that the contractor not move into the field before the engineering is sufficiently complete and all of the components are in place to support a successful project.

Assessing Construction Readiness

GlassRatner’s team of experts uses the Construction Industry Institute (CII) Construction Readiness Assessment (CRA) tool, in conjunction with our decades of industry experience, to determine if the project is ready to move into the field. This tool uses a total of 228 factors within 15 categories, as shown below, to ascertain the key factors that differentiate Construction Ready from Construction Not Ready projects.