Keith Ackley of Jacobs Engineering gave attendees at the recent Downstream Conference & Exhibition in Galveston a painful gut check concerning industrial megaprojects.
The vice president and general manager in Jacobs’ Houston office noted that according to McKinsey & Co., a New York management consulting firm, 77% of megaprojects worldwide are more than 40% late. “That’s a jaw-dropping statistic,” he said. “Not only are they late, but 98% are over budget, and over by a lot.”
Typically, megaprojects are large-scale, complex ventures that cost more than $1 billion and take several years to develop and build.
An entire tract at the two-day conference was devoted to analyzing various solutions to the problems facing megaprojects—in planning, execution and turnover. The event was attended by 1,500 capital project, turnaround and maintenance professionals. Here are some takeaways.
There needs to be an emphasis on a “smarter” man-hour rather than a cheaper man-hour, Ackley says. As such, teams should be more tactical in their work processes, whether in design or construction. Analyzing supplier performance is equally important. Along the way, ask the following questions: How fast does a particular supplier deliver? Do they meet promised costs? Do they deliver on time? Do they deliver the right quality?
ADDRESS WORKFORCE ISSUES
Ackley (above) says owners and contractors should tackle glaring gaps in their office and field workforces. “We need to acknowledge that our workforce today is more transient than it was in the past,” he says. “How does that impact our ability to train? Do we need to start thinking about the industry training these workers as opposed to individual companies? That is an issue that is difficult for us to address as an individual company.” Diversity is also important. “I think it’s an improvement that we’ve seen from 10 years ago, but there’s a long way to go in this industry in terms of capturing the best and brightest.”
FULLY UTILIZE TECHNOLOGY & DIGITALIZATION
The process of incorporating lessons learned on megaprojects should be automated and specific. “We are overwhelmed with information,” Ackley says. “The trick is, how do we get that information disseminated to our teams so that they can use it in an effective manner? Jacobs is spending a ton of money and energy in this initiative. We think that is fertile ground for us to grow and be smarter about how we serve our customers.” Using all available tools to analyze data and provide insight is critical. “We have terabytes of data out there,” he adds. “Next-level thinking involves analyzing that data and providing insight into the best decision given the situation.” Unfortunately, the construction industry is still in the Stone Age as far as technology goes. “We’ve got to change the equation, train our people on how to use it, and provide them with fully digested information so that they can use it efficiently.”
UTILIZE MODULARIZATION & STANDARDIZATION
Modularization is becoming a global issue, since much of it is performed overseas. As such, contractors should closely examine standards and specifications. Ackley: “An interesting concept we’re seeing in the LNG market is building bigger to get the economies of scale versus ‘economies of replication.’ Should we build smaller in multiple trains? I think there’s differing opinions there, but I think there’s fertile ground for that, building reliability through repeatability.”
IMPLEMENT TRANSFORMATIVE CHANGE
Decie Autin (above), vice president of project management and execution at ExxonMobil in Baton Rouge, suggests that companies need transformative change across all sectors to be successful on large capital projects. She outlines a four-step process:
“We must make innovation part of our day-to-day culture. Innovation is foundational to a technology company such as ExxonMobil. It’s innovation that offers us the best potential to disrupt the way we work, creating long-term value in the process.” Unfortunately, companies in the industrial space have made little progress in the realm of technology, particularly with respect to automation and digital technology.
Excel in execution. “We have to demand exceptional project execution,” Autin says. “We need every team to be the ‘A Team.’ We’ve got to do that by making training, experiences and resources available.”
Transform leadership. The workplace of the future will require a culture of empowerment, and management styles will need to evolve as a result. “We must provide transformational leadership. We have to encourage others to look ahead and to seek breakthroughs, rather than always relying on the status quo.”
Eliminate silos. Owners should develop and nurture a one-team collaborative approach to megaprojects. Eliminate silos within organizations.
CREATE A DEFINITIVE LESSONS-LEARNED PROCESS
Carlos Camera (above), senior advisor major capital projects at Chevron in Houston, says the value from lessons learned in megaprojects could easily be lost if they are not properly vetted and disseminated. As such, owners should fully utilize the tools and systems available in the organization to define, process and remember lessons learned—and get upper management involved in the process. Communication should be precise at both the project and organizational level. “Avoid being vague,” he adds. “Document the lessons learned, define an action and save it. You want to make sure you have an impact.” As such, it’s important to develop a realistic communication and sharing plan. At a minimum, lessons-learned communication should identify the result, positive or negative; the impact (i.e., time, cost, quality etc.); and action going forward.