Over the last 5 years, Independent Project Analysis (IPA) has benchmarked close to 10 different manufacturing sites in Alberta, Canada. Small projects in this region definitely have their challenges (Alberta will be the focus of the first Capital Project Regional Publication in October 2012). Weather window constraints mean that a minor hiccup in the project schedule can push construction from one year to the next. Obtaining and retaining resources is a constant challenge. And camps, fly-in/fly-out, and other costs can represent up to two times the base labor wage rate.
Given these issues, sites in Alberta always have two questions for IPA: How can IPA benchmark these challenging projects? And more importantly, are any small projects in this region successful?
How Can IPA Benchmark Projects in Alberta?
To benchmark projects in any region, we normalize all project costs to United States Gulf Coast (USGC) dollars. First, we exclude any special costs for labor camps or fly-in/fly-out. Second, we carefully normalize for differences in labor wage rates and productivity. Projects in Alberta may pay around $120 per hour for construction labor versus closer to $70 per hour on the USGC. Normalization allows us to fairly compare small projects in Alberta with small projects in other regions.
Are Any Alberta Small Projects Successful?
Yes! IPA has seen good projects…as well as some poor projects. For example, we have benchmarked:
- A site that routinely gets its projects done according to plan and actually is an industry leader in terms of construction time. This site had Good Front-End Loading (FEL), checks construction readiness before entering the field, and had little team member turnover.
- A site at which projects and operations don’t get along, with miserable project outcomes. Project managers are based in a central engineering office, distant from the site. Site-based operations reps and construction managers provide little input to projects and late changes are common once projects enter the field. Projects suffer high cost overruns and schedule slip.
- Several sites with decent, but not great, work processes that produced decent, but not great, projects. For example, one site typically completed all basic engineering deliverables before authorization, but did limited schedule development. Teams tended to have input from all key functions, but the site had no owner project controls expertise. These gaps are typical for small projects, and so the site’s results were comparable with the global industry average for small projects.
As in other parts of the world, IPA has found that good planning and team development drive project success and can mitigate the challenges of developing projects in a difficult region.
As IPA’s Manager of Plant-Based Systems, Phyllis Kulkarni oversees all global small project benchmarking, turnaround benchmarking, and licensing of the FEL Toolbox software. Phyllis joined IPA as a Project Analyst in 2002 and has led numerous site benchmarkings, project evaluations, and onshore and offshore megaproject assessments. She is fluent in English, Spanish, and Portuguese. Phyllis can be reached at pkulkarni@ipaglobal.com