Project Management Institute

Change management on a mega project

a case study

Project Director, Bahwan Engineering Co. LLC

Introduction

The Omani government is implementing its strategic objective of expanding and modernising aviation and transportation infrastructure in Oman. This includes the expansion and development of two international airports: one in the capital, Muscat, and one in Salalah, Oman's second major city. The development of both airports is intended to accommodate anticipated future growth in the tourism and business sectors.

The expansion and development of Muscat International Airport is the single largest infrastructure project undertaken in Oman's history. Following project completion, Muscat International Airport will be able to accommodate 12 million passengers per annum, with the possibility of expansion in subsequent stages to 24, 36 and 48 million passengers, respectively. It will have, among other things, state-of-the-art baggage handling and airport IT systems, an International Civil Aviation Organisation Code F-compliant runway which will be able to handle Airbus A380 aircraft, a four-star hotel, two office buildings and two multi-storey parking garages. Exhibit 1 details the project's entities and roles.

 

Exhibit 1 –The customer's team.

The Engineer was charged with the full suite of duties and responsibilities ordinarily associated with that role under a FIDIC-style contract including, among other things, design which it also performed in its capacity as ‘Concept Designer’. The expression ‘Concept Designer’ was not in fact defined in the contract, but in practice CLJV had prepared architectural and structural design and specifications that went significantly beyond the stage conventionally regarded as ‘concept design’. CLJV, the architect and concept designer for the Development of Muscat International Airport Project, and the engineer initially appointed under the contract, is a joint venture comprising of

(i) COWI A/S, an international consulting group, specialising in engineering, environmental science and economics, with headquarters in Lyngby, Denmark; and

(ii) Henning Larsen Architects, an international architecture firm based in Copenhagen, Denmark.

With effect from 1 January 2013, CLJV's role as the engineer was not renewed, and they were replaced by Hill International LLC Oman. Hill forms part of Hill International, a worldwide construction consulting firm with global headquarters in Marlton, New Jersey, United States.

ADPi, a subsidiary of Aéroports de Paris, was appointed by the Employer as its Project Management Consultant, or PMC.

Main Contract Packages

The design and construction of the DMIA Project was divided into the following main contract packages as displayed in Exhibit 2.

 

Exhibit 2 – DMIA project.

The new facilities were originally projected to be brought into operation in 2014.

The Consortium

Three Omani limited liability companies which together formed an unincorporated consortium, called BEB, were created for the purposes of undertaking the works under the Main Contract 3 (‘MC 3’) for the Passenger Terminal building and the Piers. These were:

(i) Bechtel & Co. LLC

(ii) ENKA & Co. LLC

(iii) Bahwan Engineering Company LLC

They were awarded a contract for the design, development, and construction of a new passenger terminal building (and other works). This new passenger terminal building is one important part of a wider project for the Development of Muscat International Airport (the DMIA Project), the biggest project of its type in Oman's history.

BEB was engaged by the Employer in February 2011 under a main contract package denominated Main Contract 3 (‘MC3’). The contract was awarded to BEB by letter dated 3 November 2010. The contract agreement was formally executed by the contractor and the employer on 23 February 2011. The original contract price was approximately OMR 706.3 million, which amounts to approximately US$ 1.8 billion.

BEB's scope of work (Exhibit 3) includes a new passenger terminal building featuring three piers at which aeroplanes will dock and where passengers will embark and disembark, and a series of other related buildings and facilities. The contract is for the design, development, and construction of the Passenger Terminal Building (PTB), the North, South and West Piers, the car-park and forecourt, traffic concourse and certain other areas.

The design ultimately set out in the employer's requirements was the product of years of development by the architect and engineer, CLJV, who had started on the base design in or around 2005. It was presented as being a well-developed and coordinated package that was to be detailed by the contractor through an interim design phase and then a detailed design phase, before the commencement of construction.

 

Exhibit 3 Major buildings under BEB's contract

DESIGN MANAGEMENT

BEB established a design management team in Muscat to manage the execution of interim and detailed design work. Scopes of work in discrete work packages were executed by engineering offices located in Istanbul, New Delhi, Muscat, Manila and third party sites supporting the design management team.

In accordance with the employer's requirements, the design work was performed for Main Contract 3 in three stages.

Stage 1 - Interim Design–Design Development

BEB's design team worked closely with the engineer's staff to provide design evolution information and resolution of design issues on a daily basis. The project engineers, who were deployed to the execution offices, quickly developed close peer-to-peer working relationships with the execution unit project staff, daily communicating the evolution of the work. Concurrently, early, informal, “over-the-shoulder” reviews were held between the Muscat Engineering Management office and the employer's reviewing engineer to facilitate and expedite formal approvals of advance packages. The preliminary designs produced by COWI-Larsen served as the basis of BEB's design. During the interim design phase, the engineering team confirmed and adjusted each of the respective engineering discipline designs to coordinate and align with the architectural design.

Through development and issuance of service coordination drawings by MEP Services – interdisciplinary engineering clashes were resolved at the preliminary engineering level. Clash identification, resolution, and verification were done by the use of 3D modeling tools.

Stage 2 - Detailed Design

The detailed design phase was to include completion of the specifications, and detailed drawings necessary to obtain the engineer's final design approvals, support obtaining statutory approvals, and produce “Issued for Construction” and fabrication drawings necessary for the construction to carry out the works.

Stage 3 - Final Design—“Issued for Construction Documents”

The final design, approved by the engineer is issued for construction. Only documentation approved by the engineer in Stage 2 and modified by revision to “Issued for Construction” status is used for construction of the works.

The Design Teams

The BEB project management put in place design teams spread across various international locations to work on design packages and monitored these as defined below:

The Muscat Design Management Team: The Muscat design management team was responsible for primary interface and point of contact with the engineer and other main contractors. The overall design engineering budget and schedule was controlled by this team. This required major coordination of construction, procurement, and project controls (estimating and planning) departments with engineering execution teams. It ensured that project procedures were followed for development, maintenance, and training activities. The team practiced design quality management and ensured compliance of BEB engineering services and work products with the BEB engineering quality system, as implemented through BEB engineering project procedures. All the design was done meeting the requirements for safe and efficient construction, operation, and maintenance processes.

Architectural and Civil Design: The BEB Istanbul design execution team was responsible for support of the New Delhi and Muscat execution teams. They developed civil and architectural engineering designs, drawings, specifications, and calculations supporting the early “fast-tracked” underground work packages. All activities were carried out with interdisciplinary coordination of civil and architectural disciplines with structure and building services. The team was responsible for development of detailed engineering of civil and architectural works for all work packages.

Structural Building Design: The BEB Structure–New Delhi Execution Team was responsible for support of the Istanbul and Muscat execution teams. They worked on development of structural engineering supporting early advance underground work packages. It ensured that there was interdisciplinary coordination of structural disciplines with civil, architecture, and building services. Detailed engineering of structural works for all subsequent work packages was developed.

Building Services design: The BEB Building Services–Muscat and Manila Execution Team were responsible for support of the Istanbul and New Delhi execution teams. Management and control of all building services drawings and documents was carried out by them. They ensured that all progress and design meetings were attended. An interface manager was responsible for managing all interface information and coordination. The team from the Manila office was located in Muscat to coordinate all exchange of information/data between the Muscat Design Team and Manila production office. Interdisciplinary coordination of building services disciplines with architecture and civil and structural disciplines was adhered to. Detailed engineering of building services work, including SCADA (Supervisory Control and Data Acquisition) and BMS (Building Management Systems), for all subsequent work packages was developed.

Design Intent Architect: The Design Intent Architect supported the Istanbul and Muscat offices during interim and detailed design. The Design Intent Architect interprets the drawings produced by BEB to confirm to the design intent as illustrated in the architectural drawings. The Design Intent Architect also liaises with the Engineer in communicating the interim and detailed design.

CHANGE MANAGEMENT

The change management program provides a mechanism to capture all cost and schedule deviations to the project from inception through startup and turnover. The consortium pursues a “Pending Items” program whereby every proposed/ perceived change is documented into a pending item list. The project management reviews this list periodically and identifies those pending items that are prospective claims. These claims are processed through the prime contracts division and submitted to the engineer for their review and determination. Those changes that are internal and may not be the result of the employer's changed requirements are documented and may be used for formulating the “lessons learnt” on the project.

Introduction of Stakeholder Changes – the case study

When the Contractor was three months into the project, it received a Request for Proposal, which identified multiple stakeholder changes to be carried out by the contractor. The engineer, after a further two months of discussion, gave an engineer's instruction to the contractor. This was called Engineer's Instruction # 01 (EI # 01).

In relation to design, the Contractor's obligation was to develop the detailed design of the works in accordance with the design intent of the employer's requirements, which were described as “firm requirements.” The design contained in the employer's requirements was the product of several years of development by the engineer. It was a well-developed and coordinated package to be validated and detailed by the contractor through an interim design phase and a detailed design phase. The contractor had commenced this process following receipt of the letter of award of the contract on 3 November 2010, well before the date of commencement of the contract on 23 February 2011.

The issue of EI # 01 on 20 July 2011 fundamentally changed this design relationship across every design discipline. There were wholesale revisions to the design intent shown in the Employer's Requirements. The process of the engineer preparing the wording of a narrative to define the intent of the changes took almost three months. The revisions were issued in architectural plans only, leaving the contractor to attempt to work out the changes across all other disciplines for itself. Furthermore, the contractor was now required to coordinate the design almost from scratch. Its design role therefore changed from design developer/detailer to original designer. The design intent was in a more primitive state in July 2011 than it had been on the date of the contract five months before.

The far-reaching impact of the change is readily apparent from an analysis of progress before and after the issue of EI # 1.

Before EI # 1 was issued, the contractor delivered the critical interim structural design for the PTB substructure in line with the date indicated in the Baseline Programme (4 June 2011) following four months of coordinated design work. Almost all of this design had been approved by the engineer before 20 July 2011. At that stage, not a single day of critical delay had occurred to the completion of the project.

After EI # 1, the Contractor was required to start a significant portion of the design all over again. The engineering changes stemmed from the wholesale revision of architectural arrangements across the PTB, all Piers, and the Traffic Concourse, including:

(a) widespread changes to room functionality, size, and locations – over 200 rooms were either removed, added, relocated, resized or changed in function. The layout of the PTB and Piers was dramatically changed;

(b) the removal, addition or relocation of 39 structural columns and the introduction of new steel trusses to support the roof overhead;

(c) the addition of six new lifts and associated lift shafts, plus the deletion and the reorientation or extension of 14 other lifts and lift shafts;

(d) the addition, deletion or reorientation of 25 escalators;

(e) the addition of around 100 new “wet areas” (toilets and pantries);

(f) 11 bridge houses were subjected to change; and

(g) the addition of two new baggage belts for the baggage handling system together with the deletion of a number of columns adjacent to the BHS equipment and an increase in the size of the walls to the BHS chutes to compensate for the column removal.

In turn, those revisions impacted on all the detailed MEP elements, their coordination with the architectural arrangements and thence the critical structural work. The Contractor was required to review or revise almost 600 Room Data Sheets to reflect the changes across the disciplines. The structural work was also directly impacted by changes in loading and by the essential need to modify the fundamental grid of the support structure in a number of areas.

These changes were introduced at a critical time: the implications were dramatic.

The changes required to the critical structural design were both local and global. The architectural changes listed above affected the fundamental support system of columns and beams, which were already heavily loaded (for example via escalators). Changing the location of major masses and the location of the main lateral load resisting systems has a direct effect on the lateral seismic resistance, which is one of the critical load cases to be addressed.

It was therefore necessary for the structural models and calculations first submitted as part of the Interim Design process to be recommenced, since it was now essential to derive a new vertical load carrying system down to foundation level and to re-assess the ability of the modified arrangement to resist lateral forces and cope with associated displacements. Only once those calculations were resubmitted and approved could the Contractor proceed with his Detailed Design work. In effect, the interim structural design had to be re-run.

That redesign work was in progress when on 20 September 2011 the Engineer, following notification by the baggage handling system (BHS) contractor, instructed the contractor to revise the structural loads associated with the BHS systems. This was seven months after the commencement date and 10 months after the Contractor had begun work on the substructure structural design. The BHS system is always at the heart of any airport terminal project. The areas of the PTB affected by the loading changes were already the key work areas, and were now on the critical path of the project. Further redesign was necessary and structural calculations had to be recommenced once again. On 22 October 2011 those calculations were completed. Only then could detailed structural design for the critical zones of the PTB substructure properly commence. The contractor did everything within its power to mitigate the impact of these very late changes from the employer. It started work on the EI # 1 design in June 2011 before it was formally instructed. It agreed to submit the structural detailed design in separate phases and zones, to assist the engineer's review process. Works were started on site when drawings became available, in order to pour concrete where it was possible to do so. On each occasion, the contractor was entitled to insist on following the sequence set out in its baseline program, but did not, following repeated requests from the Engineer.

However, despite its best efforts, significant delay to the project was inevitable. The Contractor warned the Engineer on 17 July 2011 that the instruction of EI # 1 would cause significant delay and additional cost. Three days later, the Engineer formally issued the instruction on behalf of the Employer, in full knowledge of the Contractor's time and cost estimates. The Engineer then came under a positive obligation to proceed to determine adjustments to the contract price as a result of the variation process.

The baseline program was a tight program that could only be achieved if the Employer's requirements remained frozen. Instead, they were fundamentally changed. The necessary redesign work, including all necessary architectural, structural and services implications of the changes, and the re-coordination necessary between the different design disciplines, continued to cause delay and disruption to the progress of the substructure design work. The piecemeal release of design information to the site teams significantly continued to affect progress because the Contractor was continuing to work inefficiently and out of sequence. The original concrete sequence reflected in the baseline program was no longer viable and was now redundant. Only once the Contractor was able to achieve an alternative efficient sequence of works that it was possible to calculate the true impact of the inefficient and out of sequence working, and to determine whether its mitigation attempts had any accelerative impact on the critical design delays.

Following the submission of the interim structural design of the substructure on time, prior to EI # 1, the submission of the critical detailed design of the substructure was substantially completed in significantly less time than originally planned (approximately five months).

The contractor therefore remained entitled to and claimed an interim award of an extension of the time for completion. Subsequently this has increased by virtue of other changes and events which give rise to Extension of Time (EOT) entitlement. However the final award of EOT is not yet settled.

Integrated Change Control

A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Fifth Edition describes the Perform Integrated Change Control process as being conducted,

from project inception through completion and is the ultimate responsibility of the project manager. The project management plan, the project scope statement, and other deliverables are maintained by carefully and continuously

managing changes, either by rejecting changes or by approving changes, thereby ensuring that only approved changes are incorporated into a revised baseline.

Changes may be requested by any stakeholder involved with the project. Although changes may be initiated verbally, they should be recorded in written form and entered into the change management and/or configuration management system. Change requests are subject to process specified in the change control and configuration control systems. Those change request processes may require information on estimated time impacts and estimated cost impacts.

Every documented change request needs to be either approved or rejected by a responsible individual, usually the project sponsor or the project manager. The responsible individual will be identified in the project management plan or by organizational procedures. When required, the Perform Integrated Change Control process includes a change control board (CCB), which is a formally chartered group responsible for reviewing, evaluating, approving, delaying or rejecting changes to the project, and for recording and communicating such decisions. Approved change requests can require new or revised cost estimates, activity sequences, schedule dates, resource requirements, and analysis of risk response alternatives. These changes can require adjustments to the project management plan and other project documents. The applied level of change control is dependent upon the application area, complexity of the specific project, contract requirements, and the context and environment in which the project is performed. Customer or sponsor approval may be required for certain change requests after CCB approval, unless they are part of CCB. (p.96)

The contractor had an effective change management process which followed the integrated change control process as described in the PMBOK® Guide – Fifth Edition (referred above). The contract had provisions for addressing changes and a process to redress in the event of a dispute.

Rachel Thompson (Mind Tools), an experienced change management consultant says, “Stakeholder management is critical to the success of every project in every organization I have ever worked with. By engaging the right people in the right way in your project, you can make a big difference to its success…and to your career.” Stakeholder analysis gives the necessary information to plan and manage communication with stakeholders. Stakeholder management is the process of identifying your key stakeholders and winning their support. Greater emphasis needs to be given on this aspect of project management for managing changes successfully. This is also exemplified with the release of PMBOK® Guide – Fifth Edition, wherein a new Knowledge Area called project stakeholder management has been added. This truly emphasises the importance of this concept. The main knowledge area impacted is communications. Identify stakeholders’ moves from communication to the new project management knowledge area—Project Stakeholder Management.

Any change introduced within an organization needs to be effectively managed on both the “technical side” and the “people side.” A technical side focus ensures that the change is developed, designed, and delivered effectively. The discipline of project management provides the structure, processes, and tools to make this happen. A people side focus ensures that the change is embraced, adopted, and utilized by the employees who have to do their jobs differently as a result of the project. The discipline of change management provides the structure, processes, and tools to make this happen.

Project management and change management both aim to increase the likelihood that projects or initiatives deliver the intended results and outcomes. While each discipline can function independently, the most effective approach is to integrate change management and project management to create a unified approach to implementing change on the technical front and people side front.

FIDIC Conditions of Contract for Plant and Design-Build (Yellow Book). (1999). Geneva, Switzerland: FIDIC Project Management Institute. (2013). A guide to project management body of knowledge (PMBOK® guide) – Fifth edition. Newtown Square, PA: Author.

Integrating change management and project management. (n.d.). Retrieved from http://www.change-management.com/tutorial-integrating-cm-pm.htm

Stakeholder Management - Planning Stakeholder Communication. (n.d.). Retrieved from http://www.mindtools.com/pages/article/newPPM_08.htm

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI or any listed author.

© 2014, Suresh Nayar
Originally published as a part of the 2014 PMI Global Congress Proceedings – Dubai, UAE

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