Risk Management

Panorama Summer 2020

pathadmin — Wed, 23 Sep 2020 14:20:08 +0000

Panorama Summer 2020

As you may know, Project Management PANORAMA is Pathfinder's industry focused newsletter. We present the "Capital Project World as seen by Pathfinder, LLC" with regard to "trending" or "controversial" industry related topics.

In this issue you will find the following articles, Celebrating 45 Years and The Neighborhood Mentality - Aligning Owners , Contractors & Suppliers.

Also in this issue you can find information about Pathfinder's 2020 CII Orientation Series options.

Let's continue to strive for safe, efficient and successful projects!

pathadmin Wed, 09/23/2020 - 10:20

Available downloads

Panorama Summer 2020

Below Par US Capital Projects Provide Warning to Petchems Developers

pathadmin — Wed, 26 Aug 2015 17:34:33 +0000

Below Par US Capital Projects Provide Warning to Petchems Developers

pathadmin Wed, 08/26/2015 - 13:34

Posted by Petrochem Update:

Almost two thirds of the major capital projects in the United States do not meet their budgets and schedules, and most industry executives are not happy with the performance of their systems, according to Brett Schroeder, managing director of strategic consultancy Asset Performance Networks (API).

API services oil, chemical and energy companies in the Americas, Asia, Europe and the Middle East.Some 72% of more than 800 capital projects (over $25 million) in API’s database executed since 2002 have failed to satisfy all of their performance goals (+/10% of budget, +/- 10% of planned schedule and no major operability failures after start-up), Schroeder said during Petrochemical Update’s Engineering & Construction Conference on June 16.

One in four projects in the firm’s database grossly exceeded one or more of their success criteria metrics, meaning that they either overran their budget or schedule by 30% or had a major operability failure that prevented them from achieving steady operations, according to Schroeder.

“This record [shows] that there’s a lot of opportunity for improvement,” he said while drawing parallels with the current slate of North American petrochemical construction projects, many of which are scheduled to come on stream around 2018-2019.

A recent API survey of eight US refining megaprojects (over $1 billion) reconfigured in recent years to accommodate the increased crude capacity from Canada’s oil sands indicates that almost all of them suffered major problems, even though they had governance and assurance processes in place, including benchmarking and external reviews.

Six of the megaprojects built since 2006 had significant cash flow constraints and were delayed by more than a year. At least four experienced a regulatory delay. Many of the projects identified a lack of major project experience and used modular construction to overcome local labor constraints.

The average cost overrun on six of the projects for which there is publicly available data was more than 30%, while none achieved the mechanical and completion cost within 10% of the initially announced budget.

The US petrochemical industry is facing similar risks as it prepares to add some 10 mtpa of new ethylene capacity by decade’s end amid a heated downstream construction market, looming skilled craft labor shortages and increasingly complex projects involving multiple contractors and locations.

“The challenge for the [petrochemical industry] is to avoid [this performance record],” Schroeder said.

Controlling construction costs will be key to US petrochemical producers in the next five years, especially to companies that will be exporting much of their production and need to offer very competitive prices. Margins are occasionally very tight, and companies need to ensure construction costs remain under control if they are to recoup their capex investment.

Major pitfalls
“Increasingly, as we look at the project framework of what the root cause of success and failure is, organization capabilities come into the forefront,” Schroeder said.

“Companies are struggling to get the right level of skill, definitely around craft and labor, but also project engineering and project management talent. When the industry gets a surge in project work, it struggles to execute.”

According to Schroeder, traditional project governance and assurance processes are often misreporting the true state of front-end loading (FEL), or project definition, and instilling a false sense of confidence in decision makers, particularly about the quality estimate and schedule.

He said that checklist-driven approaches to front-end deliverables, the heavy focus on front-end at the expense of post-full-funds authorization activities, inexperience in managing big projects, lack of effective follow-through and mitigation plans to risk registers, misalignment among stakeholders and inaccurate estimates are among the most common pitfalls in capital projects.

The current crop of petrochemical projects on the US Gulf Coast are also facing many “non-traditional risks,” such as decreasing labor productivity and shortage of local skilled craft, according to Stephen Cabano, president of project management consulting and training firm Pathfinder LLC.

The latter issue, in particular, is forcing more and more companies to incorporate per diem rates in their budget estimates in addition to the more traditional hourly rates.

Per diem rates are currently the most volatile aspect of worker compensation in industrial construction projects on the US Gulf Coast, especially for experienced craft labor, which is in short supply and seeing wage escalations.

Wage rates for welders, for example, were up 7% in 2014 in the Greater Baton Rouge in Louisiana.

At the same time, the current per diem utilization in the area is holding stable around 40%, while per diem rates range from $65 to $100, for an average of about $72, according to Robert Clark, project director, US Mega Projects at Sasol.

Lessons learned early
Petrochemical owners are starting to apply different strategies to identify risks and apply lessons learned in the early phases of construction projects amid a resource-constrained project environment.

TPC Group, a Houston-based provider of C4-based products and services, is “doing a paradigm shift to take the lessons learned and bring them forward into the FEL 2 and FEL 3 and to the FEED stage” and produce detailed whitepapers, Nathan Heimeyer, staff project manager TPC Group, said during Petrochemical Update’s conference.

TPC Group is also developing a new searchable live database, which has metadata with lessons learned from the FEL 2 and FEL 3 phases for all its projects, to mitigate construction and operation risks.

The key to taking a lessons learned approach, according to Nigel Carling, project director at Chevron Phillips Chemical, is to collect and coordinate feedback from both the project execution teams and the long-term operations teams soon after a start-up is commissioned.

To mitigate risks, Chevron has also begun convening project managers, operations leads, chief engineers and business units very early on in the project’s life to define the frame and scope of each project. Previously, operations and business development teams stepped in at a much later stage, which increased the risk of late changes and overruns.

Moreover, to maintain communication among multiple contractors and vendors at major projects, Chevron now requires all companies in the value chain, regardless of where they are located, to strictly follow the exact same standards and execution processes, which are defined centrally as early as FEL 2 and FEL 3, Carling said.

To get the full whitepaper Manage Risk Between the Owner & Contractor on New Petrochemical Projects go to... http://1.pet-chem.com/LP=1326

Mitigate Risk & Enhance The Cost, Schedule, And Early Operational Objectives Of Your Refining Capital Projects

pathadmin — Mon, 27 Jul 2015 18:01:02 +0000

Mitigate Risk & Enhance The Cost, Schedule, And Early Operational Objectives Of Your Refining Capital Projects

pathadmin Mon, 07/27/2015 - 14:01

Steve Cabano, Pathfinder's President, is set to moderate another interesting panel for the Refining Capital Projects Conference & Exhibition in Houston, TX on November 16-17, 2015.

For more information and to register..

http://www.petchem-update.com/refining-projects/

LEADING PETROCHEMICAL COMPANIES IDENTIFY RISK FOR SUCCESSFUL FRONT END PLANNING

pathadmin — Wed, 01 Jul 2015 13:42:55 +0000

LEADING PETROCHEMICAL COMPANIES IDENTIFY RISK FOR SUCCESSFUL FRONT END PLANNING

pathadmin Wed, 07/01/2015 - 09:42

Pathfinder's President, Steve Cabano, moderated a panel at the Petrochemical Engineering & Construction Conference 2015 in New Orleans, LA on June 16th. The panel members touched on the following topics which sparked good discussions with the audience.

Thoroughly evaluate project risks early on as to avoid harmful impact to future project timelines, and overall project costs
With a nationwide ‘gap in knowledge and experience’ in brainstorming for FEL 1 and FEL 2 stages, hear what these companies are doing to manage and identify project risk, resource need and contracting strategy in today’s market place
Expert insight into the ‘unknown’ project risks facing petrochemical projects in today’s market place; how to identify these risks, what they mean for your project objectives and how to mitigate their overall impact

Panel Members included:
Nathan Heimeyer, Staff Project Manager, TPC Group
Scott Gordon, Project Assurance Manager, Lyondellbasell
Nigel Carling, Project Director, Chevron Phillips Chemical

Addressing Construction Challenges to Petrochemical Projects in the US Gulf Coast -- Webinar for Industry Professionals

pathadmin — Mon, 23 Mar 2015 15:19:38 +0000

Addressing Construction Challenges to Petrochemical Projects in the US Gulf Coast -- Webinar for Industry Professionals

pathadmin Mon, 03/23/2015 - 11:19

Join industry leaders at Dow Chemical, Jacobs Engineering, Pathfinder and NCCER, Wednesday April 1st (1pm CDT) for the webinar "Addressing Construction Challenges to Petrochemical Projects in the US Gulf Coast."

Hear from these top project executives:

Jeff Patterson, NAA/LAA Engineering Center Leader, The Dow Chemical Co.
Manuel Junco, Vice President Houston Operations, Jacobs Engineering
Don Whyte, President, NCCER
Steve Cabano, President, Pathfinder

On answers to these pressing issues:

How their project execution strategies are changing with the marketplace?
How have contracting strategies changed in the new marketplace?
How many skilled workers are lacking to get these projects off the ground, and what can contractors do right now to overcome this?

We look forward to you joining us April 1st for this webinar!

Pathfinder's Panorama Winter 2015 Newsletter in Now Available

pathadmin — Tue, 03 Mar 2015 17:19:23 +0000

Pathfinder's Panorama Winter 2015 Newsletter in Now Available

pathadmin Tue, 03/03/2015 - 12:19

In this issue we discuss Strategic Planning - A Combination of Need & Capability - Part 5 and Executing Oil/Gas Projects when Oil Prices Drop to 50/bbl. Also in this issue you can find information about Pathfinder's 2015 CII Project Management Training Series schedule.

Below you will find a link to the Winter 2015 PANORAMA Newsletter. You can also visit Pathfinder's new website to sign up to access all archived Panoramas.

We hope you enjoy this issue and as always, if you have any comments or would like to voice your views on the industry, please contact us directly.

Let's continue to strive for safe, efficient and successful projects!

Best regards.

Stephen L. Cabano
President & COO

"Follow" Pathfinder, LLC on LinkedIn to see news about Pathfinder, where we will be presenting and details on training. Please visit us.

Pathfinder LinkedIn

Top 6 Risks Facing Petrochemical Projects

pathadmin — Wed, 25 Feb 2015 16:04:01 +0000

Top 6 Risks Facing Petrochemical Projects

pathadmin Wed, 02/25/2015 - 11:04

Petrochemical Update caught up with Sr. Project Experts at; Ineos, Jacobs Engineering, Linde, Deloitte & Pathfinder – to get their views of the challenges facing planned petrochemical facilities in the USA right now. With planned capital investment surpassing $100 billion for new petrochemical projects in the USA, it’s no wonder that many projects are facing time delays and cost overruns, due to high demand for ‘materials’ and ‘workforce’ on increasingly complex projects. Get your free copy here. https://lnkd.in/dPxACXy

Pathfinder presenting "The Owner's Role in Project Execution" at POWERGEN - November 13, 2013

cmcintyre — Wed, 13 Nov 2013 15:08:39 +0000

Pathfinder presenting "The Owner's Role in Project Execution" at POWERGEN - November 13, 2013

cmcintyre Wed, 11/13/2013 - 10:08

During the presentation today, Steve Cuneo will discuss the following...

In today’s active power industry project environment, we are driven to rely on our engineering and construction contractors more than ever. Our contractor community is ‘resource-stretched’ due to extensive capital project activity in the power market as well as the unprecedented growth in other process-related industries in North America. Owners today must provide clear guidance as well as appropriate levels of oversight and due diligence, to assure projects are delivered on time and within budget.

A number of innovative contracting methodologies can aid in this important and necessary owner oversight role. These include owner self-managed, contractor engineer/procure/construct, incentive contracts, and hybrids. Compensation methodologies are also a consideration such as lump sum, reimbursable cost, unit cost, etc. This paper will identify proven methods to ensure owner’s project success along with telltale signs that can indicate performance problems.

Proven project management techniques such as project execution planning, independent project reviews, cost/schedule risk assessments and contract strategy workshops will be discussed. The level of effort to implement these techniques, along with the proven benefits, will be considered. The session will allow the opportunity for participants to question panel members and raise real life project issues.

To receive a copy of this paper/presentation please email us.

Winter 2013

cmcintyre — Tue, 15 Jan 2013 05:00:00 +0000

Winter 2013

Dealing with Cost and Schedule Uncertainty and Trend vs. Change

cmcintyre Tue, 01/15/2013 - 00:00

Available downloads

Panorama Winter 2013

"What Will Make the Difference Next Time?" was presented at the PMI-SAC Conference in November 2012

cmcintyre — Thu, 01 Nov 2012 04:00:00 +0000

"What Will Make the Difference Next Time?" was presented at the PMI-SAC Conference in November 2012

cmcintyre Thu, 11/01/2012 - 00:00

To receive a copy of this paper/presentation please email us.