Project Change Management - Project Life Cycle

Project Change ManagementBasic Approach in Project Life Cycle Overviews, Risk and Change Management

Dr. Iwan Ratman MSc PEVice President Project Management BPMIGAS

Jakarta, 20 December 2010

2010 © BPMIGAS – All rights reserved

Agenda

• Project Life Cycle Overview– Initiating, Planning, Execution and Closing– Project Stage Gate Process

• Project Risk Management– Project Risk Management– Cost Estimating, Planning & Scheduling– Uncertainty & Contingency Planning

• Project Change Management – Project Change Management– Type of Changes– Change Management Elements

• Conclusion

Project Life Cycle Overview


Definition

A project is a finite endeavor - having specific start and completion dates - undertaken to meet particular goals and objectives, usually to brings about beneficial change or added value.

http://en.wikipedia.org/wiki/Project�


Project Life Cycle Overview

Time Distribution of Project Effort

Feasibility Study Conceptual Study

Design Engineering

Construction/EPCI Operation


Project Stages

Appraise Select Define Execute Operate

Execute OperateFEL-0 Identify

FEL-1 Appraise

FEL-1Select

FEL-2 Optimize

FEL-3 Define

Phase-1Identify & Assess Opportunity

Phase-2Generate & Select Alternative(s)

Phase-3Develop Preferred Alternative

Phase-4Execute

Phase-5Operate & Evaluate

Appraisal Design Pre-Project Basic Engineering EPSC Comm & StartUp

Operations

FEED Construction OperationPre-POD


Key Criteria for Distinctive Investment Performance

Operational Excellence

APPRAISE SELECT DEFINE EXECUTE OPERATE

Choose the Right Project Develop the Project Right Deliver the Project Right

Risked PortfolioManagement

Excellence in Project Management

FEED Construction OperationConceptual


BPMIGAS Business Process

Pengajuan usulan kegiatanPre-POD

Evaluasi dan Persetujuan POD

Pengajuan usulan AFE FEED

Evaluasi Teknis & Biaya

Pelaksanaan FEEDSpesifikasi TeknisGambar Teknis

Estimasi Biaya KonstruksiContracting Strategy

Pengajuan usulan AFE Konstruksi


KonstruksiPelaksanaan Detailed Eng, Fab’n, Instal’n,

Sertifikasi, Konsultasi PLK

AFE Close Out

Placed Into Service

AFE Close Out(AFE) Close Out

EKS/EPT/PPA MP PBOJIAN/PPA

PenanggungJawab:

Setuju?Tidak

Ya

Sub-Surface, Pemboran, Skenario Fas Prod, Off Taker,

Hukum, Keekonomian

Pelaksanaan Pre-POD

Setuju?Tidak Ya


Setuju? Tidak

Ya

Sesuai dengan POD?

Tidak Ya

Deviasi bisa

diterima?

Tidak

Ya

Setuju?Tidak

Ya

Pengadaan FEED

PMA

PengadaanKontrak Konstruksi

PersetujuanPLK

Start-Up andCommissioning


Business Process - Pre POD

KKKS BPMIGASJIAN

Awal Kegiatan Kick Off Meeting

Akhir Kegiatan Sasaran Tercapai?

EKS/PPA PMA SDM

Usulan POD

EPT EKS PMA

MP OL

PPA PMG HSPFIn Progress

Identifikasi danSeleksi Konsep

PBO PMAEKS

SDM PMG

PO

PPA


Business Process - FEED

KKKS BPMIGASMPM

Awal KegiatanSesuai denganpersetujuan?

In Progress

Tech Tepat Guna?Surplus Material?

Produk Lokal?Optimum Design?

StrategiPengadaan

Lingkup KerjaTender

Akhir Kegiatan

Lingkup proyektelah terdefinisi

dengan baik?Sesuai POD?

EPT/PPA PMA SDM

OL PO PMG

JIAN PBO PMA

OL PO PMG

Usulan AFE EPCI

EPT/PPA SDM HSPF

EPT/PPA PMA JIAN


Business Process - EPCI

KKKS BPMIGASMPM

Awal KegiatanSesuai denganpersetujuan?

In Progress

Biaya, Mutu & Waktu?

Perijinan?Sertifikasi?

Akhir Kegiatan

EPT/PPA PMA SDM

OL PO PMG

JIAN PBO PMA

OL PO PMGSasaranTercapai?

Persetujuan PIS

Operations

EPT/PPA SDM HSPF

EPT/PPA PMA PBO

SDM JIANHSPF

Project Risk Management


What is a Risk?

• A Risk is anything that could happen that would significantly affect the achievement of the Project Objectives. (Cost, Schedule, Construction, Staffing, Operability, etc.)

• Each Risk has a Likelihood of Occurrence and a consequence or Impact to the Project if it does.

• A Risk can have a Positive (Opportunity) or Negative (Threat) Impact on the Project

• When a Risk occurs, it becomes an Issue that must be resolved so that the Project Objectives can be met


Flow Diagrams

Project Risk Management Flow Diagrams

IdentifyRisk / Changes

Analyse Probability and

Impact

ApplyAvoidance or

Reduction

DefineContingency

Plans

Monitor &Manage


Cost Estimation

AACE Cost Estimate Classification


Accuracy and Contingency Ranges

Phase FEL-0 FEL-1(AFF-GATE)

FEL-2(AFD-GATE)

FEL-3(AFE-GATE)

AACEI Classification

Class 5 Class 4 Class 3 Class 2

Accuracy -20% to +50% -20% to +40% -15% to +25% -10% to +15%

% Engineering Complete

0% to 2% 1% to 5% 2% to 10% 15% to 30%

Contingency 20% to 40% 20% to 30% 15% to 30% 15% to 25%

Basis Very Broad At least 1 Viable Concept

Optimized Concept Complete FEL


Level Probability vs Cost Estimate

Cost & Schedule Probability Curve (S-curve)

A D B CE

P90

P70

P50

P35

P10

A : Value P10B : Value P50C : Value P90D : Deterministic EstimateE : Deterministic By PM

DeterministicEstimate

(IncludingAllowance)

ContingencyP50 – Determin. Estimate

COST

P

Sample


Uncertainty & Contingency

100

90

50

10

ACCURACY LEVEL

CONTINGENCY

P10 BASE

COST

P50 P90

COST

-30% +100%

EXPECTED

Uncertainty results from variations in the scope of a project.Contingency is allowance to cover unforseen costs or time within a defined scope.


Contingency Plan

CONTINGENCY PLAN

Project Change Management


Change Management


Project Change Management

Must be evaluated within the context of the original plan or activity.

– During the detailed design stage – the Basis of Design is the reference point for scope change.

– Once procurement orders are placed and Authorized for Construction Drawings are issued – the procurement orders, awarded contracts, and AFC documents are the reference points for scope change.

– The Project Manager may also impose a “design freeze” which defines the reference point for scope change.


Project Changes Management

Manage Project Changes with Risk Management.

Possible outcomes for each risk (Changes):• Take action to avoid the risk, reduce its likelihood, or reduce

its impact, • Make contingency plans and deal with the impact and

mitigate the risk should it occur, • Agree that it is an acceptable business risk to take no action

and hope that the risk does not occur.

Do not wait for situations to come up before you address them


Scope Changes

SCOPE CHANGES

Is it unsafe? Will it not work? Is it illegal?

Mandatory Discretionary

All other changes to project premise or scope of work

Scope Changes can be mandatory or discretionary


Project Changes

• Scope Change is a deviation that results in noncompliance with the project premises or is any change to the project scope, execution methodology or schedule. Project scope is normally defined at the time of AFE approval. This is not intended to include cost changes due to Cost Trends. It is a change that modifies the project scope of work or premise, requiring proper authorization to provide additional funding to the project.

• Cost and Schedule Trend is a deviation in the project plan or design that does not result in noncompliance with the project premises.


Trends

Trends are changes that do not alter the project premiseExamples:• Market escalation – material or contract pricing, including

foreign exchange rates• Productivity – field labor productivity, engineering

productivity, construction errors and rework• Estimate variations – quantity and wage rate variations,

installation rate (not productivity) variations• Design growth – omissions to drawings, design interferences,

additional design development in accordance with the BOD• Back charges and / or rework• Other – claims, legal, insurance, vendor errors, changes to the

project execution plan

Conclusion


Project Management Areas

Onshore Offshore

Integration Scope Risk

Time

Cost

Quality Procurement

Communication

HR

Project Objectives

Flawless Startup

Achieved Production

BPMIGAS Supervision,

Monitoring and Approval

External Party Audit

PSCs PROJECTS

Banyu UripMasela

IDD


Achieving Business Objectives

1) Develop a disciplined approach to project management with emphasis on:

– Capital Efficiency– Efficient Cycle Times

2) Appropriate application of the process would improve credibility through:

– Predictable Outcomes– Improved Operability

THANK YOUMerci Beaucoup

Terima Kasih

Project Change Management - Project Life Cycle

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