Project Management - PD Flashcards
How do the definitions of the terms ‘strategy’ and ‘plan’ differ?
Strategy - A description in broad, non-specific terms, of how project goals and objectives will be realised; the framework for lower-level plans
(General)
Plan - A description of what has to be done to implement a strategy successfully, including specific activities, timing and resources (i.e. who does what, when and where)
(Specific)
What are the typical stages to a project?
Stage gate process
- Create
- Assess
- Select
- Define
- Execute
What occurs in the different stages of a project?
- Create
• Confirm the project goal(s)
• Frame the project
• Develop a realistic (unoptimized) project delivery strategy
• Develop a business case that is sufficiently attractive to gain funding - Assess
•List the project ‘givens’ and challenge them
• Define the strategic approach to focus areas that must be addressed early;
• Access data for a basis of design
• Gather contractor market intelligence to confirm the project’s do-ability
• Analyse potential show-stoppers
• Confirm the business case is still attractive - Select
• Select the optimum project solution from initially a long list, and then a short list of options
• Develop cost and schedule estimates for each short-listed option and analyse the economics (business case) for each
• Develop a suitable operations and maintenance philosophy
• Freeze the basis of design
• Summarize this in a concept selection report
• Hold a contracting strategy workshop - Define
• Develop the design of the selected option to a level suitable for tendering to execution contractors
• Tender the work and select an execution contractor(s)
• Apply for and receive the necessary permits and consents
• Prepare detailed cost estimates
• Confirm the business case based on a detailed cost estimate is suitable for sanction - Execute
• Execute the work to deliver an operational system
• Achieve final acceptance and transfer of accountability from project to operations - Operate
What are the main parts of a project stage workflow?
Understand Plan Do Consolidate Plan Decide
What is front end loading?
It is the process for conceptual development of projects.
Front-end loading includes robust planning and design early in a project’s lifecycle (i.e., the front end of a project), at a time when the ability to influence changes in design is relatively high and the cost to make those changes is relatively low.
(Aka pre-project planning (PPP), front-end engineering design (FEED), feasibility analysis, conceptual planning, programming/schematic design and early project planning)
What’s the role of the Project Controls department in a project team?
Project Controls encompass the people, processes and tools used to estimate, plan, manage and mitigate cost and schedule issues and any risk events that may impact a project, and to provide progress reports and forecasts for use by management.
Disciplines include: • Cost estimation • Planning (and scheduling) • Cost engineering • Performance management (incl. earned value management) • (Risk management) • (Value management) • (ICT Management incl. document control)
Why do we need a cost estimate?
So we can run economics to prove that we’ll meet economic thresholds and provide the initial case for the project, and to provide the case for continuing with, and then approving the project
To provide a baseline against which we can measure our performance
What information should we include in the ‘Basis of Cost Estimate’ for a project?
The ‘Basis of Cost Estimate’ should address:
- The purpose of the estimate
- A description of the project and its context (project scope, market details, location etc.)
- The project schedule
- The scope of the estimate (what is and what is not included in the estimate)
- The assumptions, data sources, estimating methodology and rationale
What are the (3) types of cost estimate?
Parametric
Deterministic
Probabilistic
What are parametric cost estimates?
Parametric estimating compares cost and schedule data associated with the current project with those of historical data from similar past projects in terms of the overall cost and schedule and of the individual elements within the scope
It clearly requires some knowledge of the current project in terms of its basis of design
What are deterministic cost estimates?
The term “deterministic” implies that the cost contingency is determined as a single point estimate, typically as a percentage of the base cost estimate. Deterministic techniques assume that no uncertainty exists.
First principles assessment of cost based on project
quantification of scope (MTOs) multiplied by labour norms
Traditionally only undertaken by contractors post-FEED
What are probabilistic cost estimates?
An estimate using a range of numbers with associated probabilities of occurrence for each of the components or, at least, for each of the components that have substantive certainty.
A probabilistic cost estimate is generally a requirement for project sanction at the end of Define (although also often required to be used at the end of Select).
What does estimate accuracy show?
Accuracy (the shape of the probability curve) is primarily driven by:
• The nature of the project (its uniqueness and complexity)
• The quality of reference cost estimating data (certainty associated with the factors used to adjust for market
conditions, project location, environmental considerations etc.)
Estimate accuracy is traditionally represented as a +/- range around a point estimate with a stated confidence level that the actual outcome will fall within this range.
What is the base cost estimate?
The Base Cost Estimate is the deterministic cost estimate including costs for defined scope, normal estimating allowances and growth allowances, but excludes contingency and any future
inflation or escalation.
It reflects the contracting and procurement strategy, the overall project strategy and the resource-loaded project schedule.
It must represent the project lifecycle in its entirety (through to decommissioning), so includes CAPEX (facilities and infrastructure costs), DRILLEX (cost of wells, drilling and completions), OWNEX (owner’s costs) and DEMEX (decommissioning costs).
What is the master cost estimate?
The Master Cost Estimate is the Base Cost Estimate plus contingency and any future inflation, escalation or commercial adjustment required to represent the final out-turn capital cost of the project.
Contingency is included in the Master Cost Estimate to provide for the quantified risks at the agreed confidence level. It is not an allowance for scope changes.
What is the contingency for sanction cost estimate?
Contingency is the difference between the base cost estimate and the cost determined by probabilistic analysis.
For the cost estimate used to sanction the project, the contingency assumed is the difference between the Base Cost Estimate and the cost determined by probabilistic analysis at the confidence level specified by the company (e.g. P50 or P70).
What does planning entail?
Breaking down work into packages
Identifying dependencies between work packages
Identifying resources required
Allocating available resources
Estimating required time and cost
What does WBS stand for?
Work breakdown structure
What is a work breakdown structure?
WBS
A work breakdown structure (WBS) is used to break down the total work scope into manageable sections.
Each section is then further broken down into sub-deliverables and these sub-deliverables are again broken down still further to a level where a task can be assigned to a specific individual (or group of individuals).
These ‘work packages’ together represent all the activities and resources required to complete the project; each work package is assigned an appropriate number of man-hours and an associated cost.
The WBS is therefore a ‘map’ of all the activities and resources required to complete the project.
Why use a WBS (work breakdown structure)?
Allocating time and resources and the associated costs to specific sections of the WBS facilitates the development of a project schedule and budget.
As the project is executed, individual sections of the WBS can be tracked to identify their schedule performance and to identify issues and problem areas in the project organization.
How is a schedule developed?
- Define the project scope
- Break the scope down into activities
- Group the activities into ‘packages’ until an appropriate level for control purposes is reached (Work Breakdown Structure – WBS)
- Apply logic between activities to reflect dependencies, e.g. activity ‘b’ cannot start until activity ‘a’ is complete
- Assign durations and resources to activities
- Identify logical end points (such as milestones or deliverables)
What does the critical path method do?
It is used to determine the longest path of planned activities to logical end points (or to the end of the project), and the earliest and latest that each activity can start and finish without making the project longer.
This process determines which activities are “critical” (i.e., on the longest path) and those which have “total float” (i.e., can be delayed without making the project longer)
A critical path is the sequence of activities in a schedule which add up to the longest overall duration, regardless if that longest duration has float or not
This determines the shortest time possible to complete the project.
What are the (4) types of schedule?
Overall project schedule - The overarching high-level schedule for the entire project, used in the Project Strategy Document
Stage schedule - The schedule for the work undertaken by the PMT (project management team) for a specific stage (e.g. Define Stage Schedule)
Integrated schedule - A schedule incorporating the company’s stage schedule and the contractors’ execution schedules
CRSA schedule - Cost and schedule risk analysis schedule (used in probabilistic analysis)
What does FID stand for?
Final Investment Decision
What does contingency mean?
A future event or circumstance which is possible but cannot be predicted with certainty.
What does PMT stand for?
Project management team
What is the role of a cost engineer in a project?
- Establishing budgets and developing AFEs (approval for expenditure) (Funding)
- Budget Management
- Managing Contingency Drawdowns
- Cost Forecasting
- Providing input into Change Control
- Cost Reporting
What are the tasks of a cost engineer regarding funding and establishing budgets?
The Cost Engineer:
- Provides input towards establishing the Work Breakdown Structure (WBS)
- Establishes the budget for each WBS element
- Develops the overall budget (sum of budgets for WBS elements plus contingency)
- Prepares AFE submissions
What are the tasks of a cost engineer regarding budget management?
The Cost Engineer:
- Establishes the Cost Breakdown Structure (CBS) and coding
- Sets budgets and time-phases them based on the schedule
- Monitors:
- Commitments
- Cashflow (invoice payments and receipts)
- Cost and value of work done – planned, actual and forecast
• Produces monthly cash calls identifying anticipated
disbursements (the amount of money to be paid out both internally and externally)
What is a cost breakdown structure (CBS) for?
A Cost Breakdown Structure:
Allocates costs to elements of work at the lowest level of the WBS (work breakdown structure).
Provides a breakdown of the costs, including all works or services done by subcontractors.
It is used (on an on-going basis) to compare the actual costs with the budget and hence assist with cost control.
What does AFE stand for?
Approval For Expenditure
What is a drawdown?
A drawdown refers to how much an investment or trading account is down from the peak before it recovers back to the peak.
What does AC stand for?
What is it?
Actual cost
AC (also know as Actual Cost of Work Performed or Value of Work Done) is the value of goods and services progressed, regardless of whether or not they have been paid for or received.
The primary purpose of determining AC is to get an accurate and comprehensive as possible estimate of cost for a project at a point in time.
What is cost forecasting?
Forecasting in accounting refers to the process of using current and historic cost data to predict future costs.
- The forecast is the Actual Cost (AC) plus the estimate to complete (ETC)
- The forecast is based on input from work package (WBS element) owners and incorporates trends
- Variance analysis explains deviations between forecasts and agreed budgets
What must a project cost engineer do?
- Provide timely cost management data, including:
- Budgets, changes, forecasts, trends, commitments and costs
- Periodic (in-month) and cumulative to-date information
- Highlight and explain variances
• Include cost phasing over time (S-curves, line and bar charts)
allowing systemic issues to be identified
• Maintain and provide up-to-date registers, including commitment logs, invoice logs, change logs, trend logs, contingency drawdown logs
What is a risk?
How
A risk is an uncertain event that may affect a project’s objectives.
Risks may affect the project objectives negatively (threats) or positively (opportunities).
They are defined by considering the root cause, risk, and effect.
How do we describe a risk?
In terms of:
Cause: “As a result of…..”
Risk: “This uncertain event may happen”
Effect: “Which would result in (HSE, cost,
schedule, reputation)”
What is a risk response action plan?
A risk response action plan describes the actions used to mitigate the root cause of a threat (or to enhance an opportunity).
How is a risk score calculated? (regarding risk assessments)
Risk score = likelihood score * highest impact score
What are the risk register headings?
- Risk number
- Cause
- Risk
- Effect
- Risk score
- Risk response action plan (with action owners and
timings)
Why do risk management?
- It creates opportunities to improve (or at least preserve) the value of a project.
- It protects the project team (and particularly the project manager), by keeping the alligators at bay.
- It provides important information for those conducting probabilistic cost and schedule analyses.
What is value management?
The systematic processes followed to review different aspects of a project to ensure that the project is
configured to achieve its goals and objectives in an optimal way.
Activities include: • Framing workshops (Assess and Select stages) • Peer Assists • Peer Reviews • Value Improving Process workshops • Lessons workshops (review and capture)
What is involved in project framing?
• Scope
What’s in scope and out of scope?
• ‘Givens’
Facts, assumptions, decisions already made (justification for the ‘given’, implications of changing the ‘given’)
• Strategic Approaches / Strategic Decisions
The focus areas that must be addressed early in the project because of the significant influence that they have on the overall approach to the project, including any show-stoppers
• Tactical Approaches
Areas of secondary importance, supporting decisions or items that can be addressed later
What are project goals and project objectives?
Project goals: a list if things we want to achieve with the project - around which the project strategies and plans can be developed.
Project objectives: A list of S.M.A.R.T milestones on the way to achieving the project goals, the achievement of which will be a measure of project success.
What does S.M.A.R.T stand for?
Specific (simple, sensible, significant).
Measurable (meaningful, motivating).
Achievable (agreed, attainable).
Relevant (reasonable, realistic and resourced, results-based).
Time bound (time-based, time limited, time/cost limited, timely, time-sensitive).
What are peer assists?
Activities where experienced or external professionals with appropriate expertise provide knowledge or insights that improve, challenge, and verify work in progress.
What is a peer review?
The use of expert discipline resources independent of the project to verify that a finished piece of work meets its agreed specification or will fulfil its intended purpose, thereby helping the project team to understand and improve the quality of its work.
What are value improving processes?
VIPs are formal reviews and analytical processes that have been shown to improve the chances of a successful project outcome.
What are lessons review and lessons capture workshops?
Lessons Review Workshops - formalised Peer Assists used to enhance the value of a project’s strategies and plans. The ‘expert’ (i.e. the one who had the experience) may or may not be present in person.
Lessons Capture Workshops - formalised Peer Assists for future projects. Representatives of the future project team are likely not to be present.
What information should you provide to a contractor prior to starting a project?
- A scope of work
- A specification and/or functional specification
- A basis of design
- A list of codes and standards to be applied
- An operations and maintenance philosophy (and possibly other design philosophies)
What is the scope of work, SOW?
A Contract Scope of Work (SOW) describes the work to be performed under the contract.
The SOW must be defined clearly to avoid any ambiguity, and should list any milestones, reports, deliverables, and end products that are expected to be provided by the performing party.
The SOW should also contain a time-line for all deliverables.
What is a functional specification?
A ‘specification’ is a detailed description of the design and materials used to make a product. A specification tends to be precise and, where appropriate, quantitative.
A ‘functional specification’ describes the critical requirements and features of a product (i.e. what you want the product to do, how you want it to perform and/or what you want it to look like).
