July 2006

By: John Lagace, Director - Process Engineering at Commonwealth

  
 

“Get Your Scope Straight for Project Success”

What is “project scope”? Scope is everything a project encompasses. It is the what, who, where, when, how, and even why of a project. It is the complete story, explaining what will be done, who will do what, when it will be done and where everything will go. It explains what is known, what is unknown and what must be further defined. As busy plant personnel, you do not have time to write novels, so you need ways to minimize the time it takes for developing your scope. “Replace steam turbine with an electric motor” is a problem statement, not a scope, though some people may insist otherwise.

WHY IS A GOOD SCOPE IMPORTANT?

Many companies now demand a +/- 10% estimate before making the business decision to commit capital to a project. A +/-10% estimate requires significant engineering effort to produce the documentation required (see Table 1). The cost to prepare a true +/-10% estimate is a major commitment, requiring from 20% to 40% of total TIC engineering depending on the type of project (Note 1). If a project is cancelled after expending this much money, someone in the head office will notice.

Asking for +/-10% does not mean you received it. You probably have +/-30% or +/-20% estimates gussied up to look like more than they are.

A +/- 25% estimate can often be used for funding authorization if the scope is well thought out and management understands what that level of estimate means (Note 2). Usually, however, the mean value of any estimate becomes “The e$timate”. This is unfortunate because the upper and lower ranges bracket the expected real interval into which the final cost will fall. In general, estimating is more accurate than the scoping. Estimates are blown more frequently due to things left out of the original scope than by poor estimating. If your preliminary scope is accurate, the median value of a +/- 25% estimate and a +/- 10% estimate will be the same. Only the range will be different. The +/- 25% estimate can be adjusted via "contingency" so that the upper limits align.

Developing a good scope document is a major step in taking control of your small cap project costs, and can allow your company to become comfortable using a +/-25% estimate. A good scope document can allow badly conceived projects to be eliminated before much money is expended.

WHO CAN YOU TURN TO?

Understanding that many co-workers have scope input and a stake in your project is a major first step to developing a good scope. In order to get the best information possible for “what”, “where” etc., the first order of business is determining your key players. This is your “Project Scoping Team”. It should include the key stake holders and experts as follows:

•  Unit Representative - This is a knowledgeable person(s) in the operation of the unit(s) where the project will be located. If it will be a grass roots plant, this person is intimately knowledgeable of the process operation.

•  Marketing or Business Rep. – This person is more likely to be involved in large capital projects although they can be instrumental in setting goals on production, new products and quality for smaller projects.

•  Construction Rep. – It's not too early for this person to be involved . They will know if you require a large crane and for how long, a cost factor you will definitely want to know about early on. They think about things like underground piping, conduit, or contaminated soil as cost adders. The Construction Rep is a great advisor.

•  Instrumentation Designer - This is an expert in plant implementation, not theory. Has an analyzer project ever come in at less than 5 times the original estimate? Between fast loops, exhaust stream treatment, stream conditioning, and a separate heated and air conditioned building to house it, these “instruments” can break a budget. If you have vendor packaged equipment, the matrix of responsibility can get incomprehensible in defining local, DCS and vendor panel responsibilities.

•  Electrical needs can get complicated quickly too. He who gets stuck adding a 13KVA substation because they need one additional 1200 V motor and two 480 V motors pays the bill. Your I/E person will forewarn you so that appropriate cost factors are used to realistically estimate your instrument and electrical scope and cost.

•  Environmental or HS&E Rep. – Remember “permits”? This person needs to understand what you intend to do so that the right permits will be available to allow it to be done. Permit applications take time and money. In today's world, permits are in the scope. Be aware of applicable OSHA, EPA and local requirements.

•  Piping Designer - They will be able to realistically look at the current pipe racks and indicate whether they can handle a new project or if new steel will be needed. Not understanding this is a major cost risk. Projects always have more piping than first imagined. Don't forget insulation and tracing either. This is the person to help with this. What is a reasonable piping route to assume? Ask your piping designer.

•  Civil Designer – Many people think of concrete as cheap, so they leave Civil out of their early scoping activity. This is dead wrong, because Civil is much more than concrete. Is the soil stable enough for putting up towers? What underground obstructions need to be planned around? Are underground drawings up to date, or is probing required? Will contaminated soil require disposal?

• Utilities and Infrastructure Rep. – How many projects overrun because the Cooling Tower has no additional capacity and no one thought about it in time? The utilities expert will be able to make a knowledgeable assessment of utility requirements and existing capability so that your scope covers this critical area. Don't forget steam, air, water, nitrogen, cooling water, hot oil and power too.

These people need not sit around a table together. Developing scope takes time. It is a dialogue, with info leading to questions leading to more info and more questions. Each question, fielded by the right person, will help a clear picture of the project to develop.

KEEP TRACK OF ALL THE DETAIL

Your primary document at this point should be a marked up Plot Plan called a “Coordination Diagram”. It shows the latest scope in terms of colors to reflect equipment locations, whether new, modified, moved, demolished; major piping routing, electrical feeds, MCC locations, DCS locations, utility supply locations and rates. This one tool summarizes everything in a picture all can see and comment on. Use all the margin notes you need to make sense of it. Show locations where underground obstructions are not well known. Show and list whatever is important to you. Show structure levels using small sketches on the back side of it. Show possible lay down yards and crane access routes. You may need multiple copies due to competing options. Change information as often as needed. Later, this information will be transferred to other documents. That point will be addressed later in the article.

You are not trying to design your project at this time. You are deciding what is known and what is unknown; what is required by the project and what is outside of the project (not in the scope). As the project manager or sponsor; you are constantly writing down and documenting the scope to date; trying to ascertain what it is that you don't know that can bite you. Knowing what you do not know seems impossible, but it isn't, and it's very important.

As the manager or sponsor, you need to steer the team toward the non-obvious. Ask them to visualize the project and to predict the biggest unknowns. They will have some idea. Take their opinions seriously. Ask what can be done to eliminate them as unknowns, and list that under possible solutions.

What can be done if no underground drawings are available and extensive trenching, pilings or new underground lines are required? Add trenching and probing to the scope so that the money will be in the budget.

When we have considered all of the knowns and unknowns, we will have our scope and a decent basis for determining the required contingency as well. Contingency, encompassing the known unknowns, is scope too. The better the definition at the beginning, the less chance of missing something significant later. This way of defining scope is useful no matter the project size. A small project can be realistically scoped out in a day if the right people are involved. Larger projects take a good amount of time.

GETTING SPECIFIC

Scope development can be reduced to a thought provoking check list (see Table 2). Be careful and really think before checking off each item. You will have a list of questions and possible answers when you are done. The next step is reducing your Coordination Diagram to other more user friendly documents as follows:

•  Process Scope: A written description of the project explaining what will be done, the project basis, and expected result.
•  A Responsibility Matrix showing who does what. Try to show Plant, Engineering Contractor, Construction Contractor and Other Sub Contractors responsibilities.
•  An equipment list with approximate sizes and material of construction. Also whether new, used, moved or modified.
•  A Plot Plan showing locations of equipment, demo scope, utility supplies, MCCs, and DCS. (A neater version of your Coordination Diagram)
•  A Utility List showing new capacity required versus existing capacity broken down by users.
•  A Permit List.
•  Hand Marked P&IDs showing changes, tie-ins and demo/idle scope.

When all of these are considered, and the results are summarized, you have a scope to begin project evaluation. This work took you between a day and a month or so, and not full time.

TABLE 1
 
Documentation typically required for a +/- 10% Estimate:
• PFDs and Heat and Material Balance complete Issued for Design P&IDs  
• Issued for Design Utility P&IDs  
• Issued for Design Equipment Data Sheets  
• Equipment quotes from vendors  
• Issued for Design Plot Plans  
• Electrical and Instrument Equipment Sized and Quoted Issued for Design Demolition Scope  
     
NOTES:  
•  Discussing projects “in general” is a risky thing because, like dogs, no two are alike. These comments pertain to “small capital projects”, those done locally using mostly in-plant personnel. Projects above $25MM are definitely excluded.
•  The next article in this series will discuss what the various estimate levels really mean. Right now, it is imperative to understand that the lower and upper estimate levels represent approximately 3 standard deviations in a probability curve, and that focusing on the mean value is not realistic.
•  “Check Rate” means determining what the actual capacity of the equipment is at the conditions for your project. It is often much more than the name tag capacity or the design capacity.

 

TABLE 2 - THINGS TO THINK ABOUT
 
•  What is the company's strategic objective of this project? Most companies have a list of project types, whether Capacity, Regulatory, HS&E, New Business etc. Use quantitative statements defining production pounds added, quality % improvement, tons of HRVOC eliminated, additional lbs/hr of steam generated. This information will be used for initial economic evaluation of the project.
•  What standards and specifications must be followed? Take a minute to pull your pipe specs together, and any applicable company specifications. What fire sizing basis do you follow for your relief valves, NFPA or API?
•  Equipment Required – List and indicate if new, used, relocated or modified. This will be a guesstimate because no engineering has been done to check-rate (Note 3) your facility at this point. This list will later be used to develop a TIC estimate.
•  How much will each utility be increased or decreased by this project? In addition, where will the supply come from? Use for economic evaluation, even if it is only based on informed judgment.
•  Define the plot plan for this project. Does it require brown field, grass roots or revamp of an existing facility? Why? Consider using paper cut outs of the equipment to look at feasible plans. Mark up a copy of the unit plot plan using colors for new, used, relocated and modified equipment. (See Coordination Diagram description above). Show major pipe routings based on a first pass reasoned guesstimate.
•  Keep a list of unknowns in a table labeled “Contingency”.
•  Hand mark a set of P&IDs, or draw a Process Flow Diagram to show what you mean.
•  What is your project schedule? Is there a planned shut down or turnaround to meet? What key issues must be answered to know if this project will fit the timing? What is the cost of missing this window of opportunity? List windows of opportunity and apply reasoning to see if this project can be done in time to meet that shutdown. Are there long lead time equipment purchases driving the schedule? Schedule may be set by compliance dates. Identify the schedule driver and do not be arbitrary. Your business people may tell you the schedule required.
•  Will this project effect feed rates, feed quality, unit temperatures or pressures, throughput rates, byproduct streams? If you don't know, say so, but do not assume “no impact” unless that is the right answer. These are operating cost factors that either favor or detract from the project.
•  Assess how waste streams will be affected. What streams will increase and what ones will decrease? List all new waste streams. Permits, remember?
•  Will maintenance be affected at all? How? Ask the Maintenance Rep, don't make assumptions, and let them make them. Spare parts must be considered in the capital plan.
•  Demolition requirements should be explained. List what will be demolished and show it on the plot plan. Demolition of piping can require lead paint abatement or asbestos abatement for old asbestos insulation. Contaminated soil can require toxic soil abatement
•  What other units or plant areas are effected by this project? If you will need additional feed stock from a neighboring unit, and they don't have it, you won't get it. Alternatively, will your project impact a downstream unit in any way? Talk to neighboring units early on to save money and possible embarrassment later. This is important if the downstream unit is owned by another company.
•  Make a list of permits that may be affected by getting the right company people to look the project over and assist you. How long does it usually take to get the permits you require? Don't wait and create a land mine issue involving EH&S and Legal as well.
•  Will special training be required for operations, maintenance or other departments? Will additional operating personnel be required?