IBC 2015: Many Site-Based Project Systems Are Struggling to Improve
In March 2015, IPA hosted the 25th annual meeting of the Industry Benchmarking Consortium (IBC 2015). Forty of the leading companies in the process industries attended to share metrics and Best Practices, and to learn about IPA’s latest research. As usual, one full day of the conference was dedicated to small, site-based projects. Below is a summary of the key takeaways from the site-based IBC 2015 session.
Most Improved Site-Based System
IPA is pleased to announce that Samarco was recognized at IBC 2015 as the Most Improved Site-Based System. This designation is awarded to the system that achieved the most significant improvement in project performance since its previous benchmarking.
Following an initial baseline benchmarking several years ago, Samarco (a Brazil-based company owned 50/50 by mining giants BHP Billiton and Vale) developed a project management organization (PMO) to extend Best Practices, training, and expertise to small projects across its facilities. As a result, its performance improved across a number of quantitative measures. The head of Samarco’s PMO, Carlos Cenachi, gave a presentation at the conference about this “turning point” and subsequent improvement journey. His presentation covered the key drivers of improvement, including sponsorship from management, training, and use of appropriate Key Performance Indicators. Congratulations to Samarco for its outstanding achievement!
Declines in Project Practices and Outcomes
Unfortunately, many other systems are struggling to improve. In fact, many of the systems that IPA has benchmarked multiple times over the past decade actually declined in their most recent benchmarkings, suffering a dip both in practices (such as use of project controls and completion of basic engineering) and outcomes (such as cost effectiveness and cost predictability). Each site-based system has a unique set of issues, but the general theme can be summed as: chaos.
Over the past few years, we’ve seen a higher number of sites with dramatic changes, including change in ownership, change in contractor, change in contractor location (e.g., moving from onsite to offsite), wholesale turnover in site leadership, and more. What this turbulence has revealed is that even top performing systems can be quite fragile. Use of Best Practices is sometimes very much driven by specific leaders within the organization—and when those people move on, things can deteriorate quite rapidly. The key conclusion is that the value proposition for the site project organization must continually be refreshed and shared. Any time significant turnover occurs, the site must revisit the fundamentals to ensure alignment on the use of Best Practices and solid gatekeeping. A robust framework for measuring and reporting Key Performance Indicators such as the Front-End Loading (FEL) Index and cost deviation can help ensure that new contractors and new owner staff adhere to the same set of expectations.
To address this situation and assist sites in rapidly turning things around, IPA offers a number of smaller, tailored services to address specific improvement needs. Some recent examples of work we have completed with sites include:
- A one-day in-house training session to orient site leadership to gatekeeping Best Practices, and what key deliverables to look for when making investment decisions
- Special studies/reviews to compare new project cost estimates against norms for similar industry projects, to help companies set more competitive estimates at authorization
- Participation in several internal FEL reviews, to offer a cold-eye perspective on whether the site is accurately assessing its level of definition on current small projects, and to identify gaps that should be closed before authorization
Thank you to the companies who participated in IBC 2015. We look forward to seeing you and new companies at next year’s IBC. For more information on the conference or IPA services, visit IPA’s Consortia Membership page.