ESD.36 System Project Management
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Lecture 18
Multi-Project Program Management
Instructor(s)
Prof. Olivier de Weck
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Outline
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Program Management
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Definition, Distinction from Project Management
Example Program (BP Azerbaijan)
Project Portfolio Management
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Project Selection Process
Example Portfolio (PreQuip)
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Concept Question 1
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What is the largest number projects you
have worked on or managed at the
same time (in parallel)?
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Dec 1, 2009
1
2
3
4
more than 4
3
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Programs –
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PMBOK Definition
Program. A program is a group of projects managed in a
coordinated way to obtain benefits not available from
managing them individually.
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Many programs also include elements of ongoing operations. For example:
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The “XYZ airplane program” includes both the project or projects to
design and develop the aircraft as well as the ongoing manufacturing and
support of that craft in the field.
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Many electronics firms have “program managers” who are responsible for
both individual product releases (projects) and the coordination of multiple
releases over time (an ongoing operation).
Programs may also involve a series of repetitive or cyclical
undertakings, for example:
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Utilities often speak of an annual “construction program,” a regular,
ongoing operation which involves many projects.
Many non-profit organizations have a “fundraising program,” an ongoing
effort to obtain financial support that often involves a series of discrete
projects such as a membership drive or an auction.
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Scale-based Product Families
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• Develop a product platform that
can be “scaled” or “stretched” in
one or more dimensions to
satisfy a variety of market niches
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Boeing 737 is divided into
3 platforms:
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Initial-model (100 and 200)
Classic (300, 400, and 500)
Next generation (600, 700,
800, and 900 models)
• The Boeing 777 has also
been designed knowing
that it will be “stretched”
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is excluded from our Creative Commons license. For
more information, see http://ocw.mit.edu/fairuse.
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Airbus Aircraft Program
Airbus A3XX Family: common height, width, cockpit
The A330 cockpit is common to all other Airbus types
while Boeing’s 767-400 cockpit is common only with
the 757. This enabled the A330-200, a less efficient
“shrink” of a larger aircraft, to outsell Boeing’s 767400ER, a more efficient “stretch” design of a smaller
aircraft.
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Sample Program: BP ACG
(Azerbaijan)
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© BP Caspian. All rights reserved. This content is excluded from our Creative
Commons license. For more information, see http://ocw.mit.edu/fairuse.
Capex: $9bn total / $6m / day
90,000 te topsides
90,000 te jackets
1000 km offshore pipelines
One of world’s largest terminals
7 years of execute
74 million man-hours total so far
Over 3 million man-hours/month
80% of man-hours in Azerbaijan
20% across another 10 countries
New Workforce - 9000 Azeris
Source: Adrian Luckins, BP
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ACG Reservoir Size
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ACG Full Field Development - Production
1200
1000
mbd
800
Phase 3
Phase 2
600
400
Phase 1
200
Chirag
0
2002 2004 2006 2008 2010 2012
2014 2016 2018 2020 2022 2024
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Geographical Challenges
D rillin g E q u ip m e n t,
N o rw a y
T ra n sp o rt ro u te s:
B y T ra ile r
L iv in g Q u a rte rs
F a b rica tio n , S w e d e n
B y Rail
By Sea
E n g in e e rin g &
P ro cu re m e n t, U K
L o g ist ics
D rillin g
C o n stru ctio n (W A /
E A ), H o lla n d
Ba k u
• 5 0 0 0 Traile r t rip s
• 6 0 0 0 rail t rip s
D rillin g
C o n stru ctio n (C A ),
F ra n ce
• 2 0 0 rive r b o at s
Ja cke t P re F a b rica tio n , Ita ly
In sta lla tio n
D e sig n ,
C ro a tia
C & W P / te rm in a l pre fa b rica tio n , T u rke y
T o p sid e s P re F a b rica tio n , D u b a i
T o p sid e s F a b rica tio n , Ja cke t
F a b rica tio n , T e rm in a l C o n stru ctio n ,
E n g in e e rin g D e sig n , A ze rb a ija n
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Project Schedules
2001
1H
ACG Phase 1
BTC
2002
2H
1Q
2Q
3Q
2003
4Q
1H
2H
2004
2005
2006
ACG Phase 3
2008
1st Oil
Define
Execute
Operation
Select
Define
Execute
1st Oil
West Azeri
ACG Phase 2
2007
Select
Define
Appraise
Execute
Select
Define
Execute
1st Oil
East
Azeri
1st Oil
2009
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Production Line Strategy Development
C&WP
C
&W P
C&
E&P
CA
C
A jacket
jac k et
CA
CA
CA
CA
W
A
WA
EA
EA
KBR/
AIOC
topsides
top
s id es
top
s id es
topsides
top
s id es
topsides
C
&W P
C&WP
C&
jacket
jac
k et
WA
W
A jacket
jac k et
EA jacket
EA
jac k et
DUQ
topsides
top
s id es
topsides
PCWU
topsides
ATA Yard
Ter
m inal
Terminal
Ter
m inal
Terminal
Ter
m inal
Terminal
tr
trains
1&2
ains 1&
2
tr
ains 3&
trains
3&4
4
Shah
eniz
Shah DDeniz
Terminal
trains 5&6
Pip
elines :
Pipelines:
Pip
elines :
Pipelines:
Pip
elines :
Pipelines:
Pip
elines :
Pipelines:
30"
30"
28"
28"
Shah
DDeniz
eniz
Shah
30"
30"
30"
Objectives :
Learning Curve Benefits – Faster,
Cheaper
Elimination of Inefficiency
Continually Reduce Unit Costs
DUQ
jacket
PCWU
jacket
MCCI
Yard
BOS
Yard
Key :
ACG Phase 1
ACG Phase 2
AzTf
Pipelines:
ACG 3
ACG Phase 3
Shah Deniz
MCCI
Strategy :
Standardization
Contracting – Natural Choice at Right Price
Organisation – People Continuity
Right Pace for capital efficiency
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Project Challenges – ACG & Shah Deniz
Phase 2
Phase 1
CA-PDQ
Topsides
Detail 42 Mhrs Per Tonne
Design
CA- C&WP
Topsides
Detail 21 Mhrs Per Tonne
Design
Copied Building Block
Phase 3
Phase 4
WA-PDQ
EA-PDQ
DWG-DUQ
CB-PDQ
50% Copy
31 Mhrs Per Tonne
95% Copy (WA)
11 Mhrs Per Tonne
60% Copy (WA/EA)
28 Mhrs Per Tonne
30% Copy
30 Mhrs Per Tonne
DWG-PCWU
20% Copy (C&WP/WA)
19 Mhrs Per Tonne
Seed Building Block To Develop
New Design
Benefits realised through
standardisation: Engineering
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Engineering Benefits
Production Facilities
Engineering Costs
CA
(42)
40
30
Phase 3 (Manhours /
te
DWG: 29 contract
25 stretch
DUQ: 28
PCWU: 20
CA
(54)
WA
(31 )
DWG
(29)
CWP
(21)
20
EA
(11)
10
Phase 1
Phase 2
Phase 3
Direct Man-hours/te
Direct Man -hours/ te
50
Drilling Facilities Engineering Costs
(Eiffel/KCA)
WA
(30)
EA
(8)
Phase 1
Phase 2
DWG
(8)
Phase 3
Benefits realised through
standardisation: Fabrication
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Fabrication Benefits
Jacket Fabrication
Costs
Topsides Fabrication
Costs
$/te
units
$/te
units
$6181/te
$18042/te
100
-10%
$16122/te
100
-7%
$5751/te
-4%
-6%
$5521/te
$15228/te
Phase 1
Phase 2
Phase 3
Phase 1
Phase 2
Phase 3
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Concept Question 2
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In our organization we pursue mainly:
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Dec 1, 2009
Programs – sets of directly related projects
Portfolios – sets of indirectly related projects
Individual single projects
Not applicable
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Portfolio of Projects
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A portfolio of projects is a collection of
projects owned or managed by the same
organization that are only indirectly related
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Projects may not be directly related to each other, as
in a program, i.e. outputs from one don’t
necessarily feed into the other
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Usually no or only minimal commonality and standardization
Portfolio is chosen with diversity of projects, some of
them may be “negatively correlated”
Mix of large scale potentially less risky and small
risky projects that act as “pathfinders”
Project portfolio may not have a single manager
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Project Portfolio Planning
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Advanced
R&D Projects
Product Changes
New Core
Product
Next
Generation
Product
Addition to
Product Family
Add-ons and
Enhancements
Source:
(Wheelwright
& Clark, 1992)
Process Changes
Next
Single
Tuning
Generation Dept.
and
Process
Upgrade Incremental
New Core
Processes
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Breakthrough
Projects
Platform 3
Projects
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Derivatives
(Enhancements,
Hybrids, and Cost
Reduced Versions)
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Aggregate Project Plan
Classifications
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Advanced R&D Projects
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Projects provide a base for a product and process family that can be
leveraged over several years
Derivative Projects
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Projects that involve significant change in the product and process establish a
new core product and process
Platform Projects
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Innovations and technology development that provides a precursor to
commercial development
Breakthrough Projects
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Source:
(Wheelwright
& Clark, 1992)
Cost-reduced versions of an existing product or platform or add-ons or
enhancements to an existing production process
Allied Partnerships
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Partnerships in any of these project areas to leverage development resources
and activities
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Project Planning at PreQuip – Part 1
R&D
• PreQuip’s Development Projects (30)
before the Aggregate Project Plan
Breakthrough
projects
Mass spectrometers
Liquid chromatographs
Gas chromatographs
Platform projects
Derivative
projects
Data processing and handling products
R&D
Allied and Partnership
projects
Breakthrough
Platform
Adapted from: Wheelwright, S.C. and Clark, K. B.,
1992,” Creating Project Plans to Focus Product
Development,” Harvard Business Review, 70(2), pp. 7082.
Derivative
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Aggregate Project Planning – Part 2
R&D
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PreQuip’s Development Projects (11)
after the Aggregate Project Plan
Breakthrough
projects
Mass spectrometers
Liquid chromatographs
Gas chromatographs
Platform projects
Data processing and handling products
R&D
Derivative
projects
Allied and Partnership
projects
Breakthrough
Platform
Adapted from: Wheelwright, S.C. and Clark, K. B.,
1992,” Creating Project Plans to Focus Product
Development,” Harvard Business Review, 70(2), pp. 7082.
Derivative
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Concept Question 3
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What is the most challenging issue you have
encountered working in a multi-project
environment?
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Conflicts due to financial resource contention
Inefficiency due to multi-tasking
Staffing dynamics (trying to get the “A” team)
Friction between program and project manager
Enforcing standard work procedures
Ensuring commonality at the parts and module level
Other
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Portfolio Management Issues
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Risk Correlation across Portfolio
Constraints on Shared Resources
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Late and over-budget projects delay rampup of downstream projects
Shared resources (e.g. test facilities) can
also create bottlenecks
Staff working simultaneously on multiple
projects create inefficiencies and delays
Typically dealt with via exogenous inputs to
single-project models, or via portfolio models
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Program Manager Challenges
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Creating a vision for the program as a whole
Scheduling and prioritization of individual
projects in the program
Dealing with project interdependencies
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Program Manager is a very different and
more strategic role than project manager
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Dec 1, 2009
Resource contention, CAPEX phasing
Staffing, avoid firefighting
Ensuring learning and commonality across projects
Typically requires more strategy and diplomacy
than individual project management
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Discussion / Q&A
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ESD. 6\VWHP3URMHFW0DQDJHPHQW
Fall 2012
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