Keeping capital projects on time and on budget with AWP
August 17, 2021
Over the past decades, there have been many examples of major capital projects not living up to their expectations, exceeding both their allotted time and budget. Indeed, as can be concluded from a survey conducted by Accenture in 2015, 98% of these massive projects struggle to meet their projected budgets and schedules, while also underperforming on various other targets like safety. 64% of surveyed projects faced cost overruns, while 73% faced schedule delays.
One particularly well-known example of capital project overrun is the Channel Tunnel project. Not only was it completed a full year after its anticipated deadline—it also exceeded its budget by USD 21.1 billion. In other cases, like the Montreal Olympic Stadium, the project was completed on time, but only by paying a greater price for speed. In that case, the cost overrun came in at USD 3 billion, a whopping 1,990% increase over budget.
These are just two examples, of course. But the list is much longer. Long enough to give capital investment planners the impression that there is no win-win strategy. In many cases, project plans and budgets seem sensible and feasible at the outset, only for problems to reveal themselves either in the project’s early stages, or sprinkled throughout its duration. These delays often stem from a range of contributing factors, adding further complexity to the challenge of managing capital projects.
However, the fact that these challenges are common does not mean there are no proven methods to improve the way in which capital projects are managed and controlled. AWP (Advance Work Packaging) is an excellent example of an approach that can help planners and investors achieve superior outcomes. And while it does not guarantee success outright when it is used in isolation, when AWP is applied in lockstep with digitization, we have seen that it has an impressive rate of success and can deliver value reliably.
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For all its potential, AWP has yet to be widely embraced by project leads. Most capital projects are engineering-led. As such, they rely on the development and distribution of design and engineering information—a so-called ‘push’ process. These types of processes tend to focus on systems and tend to advance system engineered solutions.
AWP, on the other hand, requires an ‘Area Construction’ led process—or a so-called ‘pull’ process. This type of process is more in line with production engineering and a Lean approach to manufacturing.
To highlight the difference between the ‘classic’ approach and AWP, let us provide a practical example.
In a ‘push’-based project, materials are purchased and delivered in a flow that does not incorporate real-world needs. This results in extra storage requirements, not to mention more overall materials handling (i.e. all materials that are not directly needed also arrive on-site or in-shop). Meanwhile, the lack of coordination also results in greater resource standby time (i.e. both people and materials), given the inherent mismatch between what is needed and what is available.
In a ‘pull’-based project, the flow of materials, people and equipment is much more in line with reality. This results in in less standby time, decreasing the need for storage facilities while also reducing extra handling. In this instance, the word “flow” is much better suited to describe how AWP projects unfold.
Examining the business case for AWP, we can see that it is supported by research conducted by various industry bodies, including CII and COAA. For one, research indicates that 50% to 80% of megaprojects (>$1Bn) and over 30% of smaller projects were characterized as failures, in that they did not meet budget or schedule expectations. It is important to point out that these projects were all being developed and delivered using traditional engineering ‘push’ methods. Clearly, there is ample cause to consider the alternative that Advanced Work Packaging provides.
In short, AWP is a structured and disciplined process that is realized by breaking down capital projects into manageable chunks, essentially transforming the way these projects are planned and executed. Notably, the AWP process guides the breakdown of the project scope as well as the execution strategy all the way through the breakdown of the work structure, the area, the construction, and the field installation work packages, enabling it to support the execution of workface planning in the field.
In ‘classic’ projects, forward and backwards planning techniques are applied to set and validate start and end dates for the activities that need to take place. This also happens while using AWP—the real difference is in the details that follow. To give a personal example (having experienced this more than once), I might find that 80% of my materials and 80% of my isometric drawings hold “Approved for Construction” (AFC) status, while I can only fabricate 40% of my drawings due to missing materials.
Advanced Work Packaging succeeds by adopting an approach and thought process throughout the entire capital project that always keeps the final result in mind. To be able to realize this goal, AWP recognizes the importance of communication with all the associated project disciplines and puts core members in charge of the realization of the chosen strategies. Essentially, you start by looking at what is required in order to successfully construct and complete the project, then work backward from there to deliver those exact requirements.
Planning and executing a project in this manner may seem self-explanatory at first glance, but this approach does not come naturally. It takes discipline, and it requires changes to be made in the way the planning is structured throughout the design, engineering, and procurement phases, as well as other aspects of the project.
Moreover, the implementation of AWP relies greatly on stakeholder support. You must work to secure sufficient support throughout each stage of the project lifecycle to ensure its success. Operations, completions, and construction members must be placed at the heart of all planning, execution, and sequencing strategies, as this will enable them to effectively contribute to the completion of the project.
That said, these efforts provide clear benefits over traditional approaches. Advanced Work Packaging has been proven to reduce the total installed cost of projects by improvements in workface productivity, predictability, cost and schedule adherence, safety, quality, and visibility of information. In other words, AWP has proven to be an effective asset for managing capital projects and ensuring they are delivered on time and on budget.
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As mentioned earlier, there are many factors that can contribute to an undesirable outcome in capital projects or lead to outright failure. Our research and experience have allowed us to identify the five leading causes of failure, which we have listed here for your consideration.
We will focus on the impact of poor preparation and low Hands on Tool Time in this article and show how an AWP approach can contribute to resolving these factors.
Plans that are made without a clear objective or end result in mind are a recipe for failure. It may seem obvious, but it is important to paint a clear picture of what you’re going to do and how you will achieve it. Without a well-laid plan, you are likely going to run into problems down the line.
Furthermore, it is imperative you open a dialogue with stakeholders to clarify expectations regarding project cost, timing, quality, and safety, establishing which tasks are required when, as well as how they will be executed to meet expectations.
The outcomes of the traditional, non-AWP approach are clear in this regard: many (if not most) capital project struggle to deliver on the promises and expectations that define their outset.
Taking an AWP-based approach, however, the project always starts with the end result in mind—which is not always construction. AWP also takes operations and maintenance into account, as well as how the asset is going to run and how it will be maintained. Working backwards from a clear picture of the outcome, this form of project optimization requires a different approach in how construction, procurement, and engineering work, both as separate areas and in conjunction with each other.
In addition, the creation and planning of Construction Work Packages (CWP) should happen much earlier—and might even be more detailed than what the project team is used to. Remember that a CWP is only released when it is completed and that there are no constraints linked to it. As things change, even the best preparations will not prevent problems from occurring. It is therefore imperative that the changes are shared with all parties as and when they happen and that the impact of these changes is immediately visible to all the parties involved.
To successfully apply AWP, it is highly recommended to use a single platform that combines all the required data and documents and supports the principles underlying the method. This unified platform will provide all the necessary controls, insights and information to all parties involved – and when the relevant KPIs and insights are made available, efficiency will rise while overall costs are reduced.
A large contributor to project delays is caused by a low hands-on tool time. Low HoTT is caused when construction teams spend large portions of their time waiting for the right materials, documents, equipment, work permits, or access, instead of spending that time working on project tasks.
Naturally, when considering the HoTT, we need to take into account that people need to move around, move to and from the place of a task, don their personal protective equipment, eat and have bathroom breaks, and so on. As such, it is impossible to achieve 100% on-tool time, but a maximum of 55-65% should be a realistic HoTT goal in most cases.
To be able to achieve this percentage, good communication and organization are pivotal. This means that the hands-on tool time needs to be scheduled effectively. It goes beyond taking break time into account—you need to gauge whether crews have access to the documentation, materials and equipment necessary to do their work effectively, and plan accordingly. It is important to realize that missing installation documentation, lack of materials, or the unavailability of a crane, for example, will lead to project delays and potentially cause you to lose credibility with your clients.
With Advanced Work Packaging, the on-tool time is increased by detecting constraints that keep people from achieving their efficiency potential. Additionally, AWP focuses on what teams actually need, with the aim to provide the right tools and resources to the right people at the right time.
Here again, this approach can be enhanced by implementing a platform to collect, combine, and interpret all relevant project data, as such a platform will contribute the early insights and warnings you will need to support preventative action that increase HoTT.
The AWP approach is a highly effective mechanism to address the leading causes of capital project failure. This is borne out both in research and in our experience with capital projects. But it is worth noting that there are other benefits as well.
For one, the AWP approach creates visibility on all relevant KPIs and schedules—both onsite and remotely. In effect, this improves the project’s safety and productivity while also increasing visibility for all essential tasks throughout the entire project lifecycle.
Another advantage of using Advanced Work Packaging is that it provides faster insights into actions. This allows you to effortlessly move from a reporting approach to a prescriptive approach. Moreover, it creates connections with other public data sources to further enhance the insights at your disposal.
Thirdly, AWP produces an onsite connectivity infrastructure that supports various IoT solutions, including over-the-shoulder support technologies, COVID track-and-trace, social distancing, and location tagging of people and equipment to further improve productivity and mustering in emergencies. It also provides a rich source of data that can be used to run analytics, improve safety initiatives, and identify inefficiencies.
And finally, Advanced Work Packaging ensures that the insights from working on previous projects are automatically integrated into your next project by applying AI and machine learning technologies. This is a major benefit, as it ensures that issues encountered in the past will be flagged long before they become a problem in the future.
At Accenture, we provide our clients in the capital projects industry with the solutions they need to achieve their business outcomes efficiently. Implementing Advanced Work Packaging is one of our most promising offerings in this regard, as it holds the potential to substantially ameliorate cost overrun and help deliver projects on schedule.
Our teams help clients to set up, pilot, and scale the implementation of AWP within their organization while also supporting the requisite IT infrastructure. In addition, we provide clients with our Capital Project Command Center. This allows them to take all currently siloed solutions and data streams and combine them into a single solution, and can be implemented either as a service or in the customer’s own environment.
In addition, we support clients by screening and selecting software solutions, based on the specific needs and their organization’s existing digital ecosystem. We have extensive experience with all major solution providers and can help overcome any challenges you might face when it comes to selecting, optimizing, and integrating your IT portfolio.
As capital projects increase in complexity, the risk of overrun is on the rise. Delivering these projects on budget and on time is a daunting task and managing them effectively in the 21st century requires deep changes—both in the way you work and the solutions you rely on. It requires a bold journey from the now to the New, with a partner who can help you every step of the way.
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