INTRODUCTION
Project Scope
Main Pass Mine, an $850 million offshore complex for production of molten sulphur, crude oil and natural gas, commenced full operation during April 1992. The mine is located in 210-ft-deep waters of the Gulf of Mexico, south of the Louisiana coastline and about 20 miles east of the mouth of the Mississippi River. The structures, platforms and connecting bridges for the mine form the largest group of offshore facilities yet constructed as a single integrated project.
The project was a joint venture of Freeport-McMoRan Resource Partners (FRP), majority partner and operator of the mine, IMC Fertilizer, Inc., and Homestake Mining Company. The facilities include nine major platforms, five of which are interconnected by a system of nine towers and thirteen bridges, stretching more than a mile across the top of a subsea salt dome.
The sulphur lease covering Main Pass Block 299 was awarded to the joint venture partners by the Minerals Management Service (MMS) of the U.S. Department of the Interior on May 11, 1988. A 20-well exploratory drilling program, initiated on December 1, 1988, was completed March 20, 1989. In addition to sulphur, the 1,876-ft-av-erage-depth exploratory wells encountered a significant volume of oil and gas. Proven reserves of 67 million long tons of sulphur, 39.4 million barrels of oil and 7.2 billion cubic feet of gas were confirmed. Oil and gas were found in the limestone caprock and a sandstone formation that, along with the sulphur formation, sit on top of a large subsea salt dome.
The joint venture's lease specifically covered mining of sulphur and salt only, while the oil and gas belonged to the then-current oil and gas leaseholder, Chevron U.S.A. Inc. The joint venture partners recognized that there would be advantages to one company operating both the sulphur mine and the oil and gas production. Conduct of operations by one company would also minimize problems that may arise from the simultaneous development of two reserves in close proximity by different operators. Thus, the decision was made to purchase the oil and gas reserves from Chevron.
Development of the sulphur mine was given approval as a fast-track project by the joint venturers in early May 1989. The project team was organized and work began. The key project completion milestone was sulphur production by April 30, 1992. On June 5, 1990, FRP purchased from Chevron the oil and gas reserves associated with the sulphur ore body. Freeport McMoRan Oil & Gas (FMOG) was added to the project team and assigned responsibility to develop and operate the oil and gas facilities. No change in the overall project completion date was made as a result of this additional scope, which also placed oil and gas development on a fast-track schedule.
Benefits of the Project
Main Pass Mine is the largest sulphur reserve in North America currently being mined by the Frasch (or hot water) process. Its development will delay for a long period the requirement to import foreign sulphur or products made with sulphur. Annual production will meet nearly one-fifth of the total U.S. demand for sulphur over the next 30 years. In addition, the oil and gas reserves represent one of the largest Gulf of Mexico discoveries in recent years.
For many years, sulphur has been an essential element in societal development, with a wide range of applications including fibers, fertilizers, medicines, pulp and paper processing and chemical manufacturing. Sulphur consumption is one indicator of a nation's economic development level and standard of living.
Sulphur occurs in many forms in nature. As elemental sulphur, it is at times found in sedimentary and salt dome structures. Main Pass Mine was planned and constructed to utilize the Frasch method of mining sulphur.
Development of Main Pass Mine contributed significantly to the well-being of people and communities in southern Louisiana. A total of 21,000 jobs were created in support of the design and construction phases of the project, during a period of low activity in the Louisiana Gulf Coast offshore industry and a national economic recession. The creation of 350 permanent jobs for operation of the mine will have a significant long-term economic and social impact on the Gulf Coast area.
On a national level, the Main Pass Mine complex is the first to combine offshore production of hydrocarbons and minerals at a single federal lease site. The combined royalties will optimize federal income from the planned, orderly development of both resources.
Management and Engineering Achievements
The Main Pass project team consisted of personnel from Freeport Research & Engineering (FR&E), Freeport Sulphur Company (FSC), Freeport McMoRan Oil & Gas Company (FMOG) and Walk, Haydel &Associates, Inc. (WHA), each with a different area of responsibility. The project manager, who was an executive of the owner, was accountable for the overall project. A single project office for housing the team was not required due to the close proximity of the team member offices to the project manager and to the work sites.
Project team members FR&E, FSC and FMOG are related internally to the owner. WHA is an engineering, project and construction management firm with no corporate ties to the other team members or the owner.
Connection of bridge to platform in progress. All elements of the mine's facilities were designed to withstand “200 year” hurricanes, yet be flexible enough to accommodate a shifting and sinking seafloor.
In managing this diverse group of team members, the project manager focused on the establishment of objectives, team building, planning, baseline cost and schedule management, corporate management interface and reporting.
Although the project manager had overall financial authority for the project, individual team members were delegated financial authority with specific limits appropriate to their assigned responsibility. Team members were responsible for implementation of the project in a manner that would maintain integrity of the technical, cost and schedule baseline covering their assigned functional areas.
The Main Pass Mine project Me cycle encompassed all phases and activities of a typical project, including conceptual studies, definition of scope, execution of the work and termination. The scope included turnover of operating facilities producing sulphur, oil and gas; and project closeout, including reconciliation of all vendor and contractor contractual issues and delivery of project files and records to the owner.
The project team organized and managed the project using proven principles of project management consistent with PMI's Project Management Body of Knowledge (PMBOK). Application of these principles in an organized and consistent manner resulted in accomplishment of this large, complex project within original schedule and cost constraints, and without technical compromise.
THE TECHNICAL ISSUES
The overall project planning effort and solution to the unique combination of design problems presented significant challenges to engineers and project managers. The development of a mine of this complexity is an offshore “first.” It allows for extraction of a large subsea sulphur deposit from a bridge-connected facility designed to withstand the significant effects of subsidence and hurricanes over a period of the 40-year design life with minimum anticipated corrective measures. Platforms and bridges, designed to accommodate the large subsidence movements, will not require removal from the field. Bridges were designed sufficiently long and with three-dimensional rotation capabilities to remain in place for the mine's life. Platform decks and appurtenances were designed to be elevated periodically to account for subsidence.
Coordination of the mine facilities layout to maximize both sulphur and hydrocarbon production was a complicated effort. The uncoordinated production of sulphur and hydrocarbons would have imposed unacceptable limitations on the total recovery of each product. The effect of seafloor subsidence, as the melted sulphur is removed, presented unique challenges for the engineers and geologists in determining the location as well as the design for both sulphur and hydrocarbon structures.
The project required participation and coordination of a diverse range of engineering groups and consultants. The technical team included geotechnical, civil, structural, mechanical, electrical, petroleum, chemical process and naval architecture disciplines and many consultant specialists. In all, more than 15 design and consulting firms were associated with the project.
Sulphur Mining Operations
The sulphur mine facilities include 15 of the 18 platforms located in water depths of 208 to 214 ft. Fourteen of the platforms are connected by 13 bridges. Three additional platforms support the oil and gas development. The platforms are steel space frames similar to typical Gulf of Mexico offshore structures, with large-diameter tubular piles driven several hundred feet into the seabed. The bridges are also tubular steel space frames. Nine of the 15 sulphur mine platforms serve primarily as bridge supports. The other platforms include the storage and loading, power plant, living quarters and warehouse, and the two production platforms. The stand-alone platform is the pressure control platform.
Once the sulphur is depleted in the initial mining regions, production platforms will be relocated to, and new ones installed in, other areas of the mine. Several of the bridge support platforms and bridges are also designed to be relocated.
Over the life of the mine there will be a total of nine production platform locations, The initial configuration provides for two production platforms located so that mining will begin at the top of the sulphur ore. Production platforms will be relocated as sulphur is depleted.
A projected 1,600 wells will be drilled during the mine life to depths of 1,800 to 2,000 ft. Prior to startup, a total of 30 sulphur wells were drilled from the two production platforms. As mining progresses, wells become depleted and replacement well drilling is conducted almost continuously throughout the life of the mine.
To produce sulphur by the Frasch method, seawater is treated and heated under pressure to 325°F (using a proprietary Freeport process), then injected through well piping into the sulphur. bearing formation. The hot seawater melts the sulphur, which is air-lifted to the surface where it is pumped through heated pipelines to tanks on the storage and loading platform. To maintain the planned daily sulphur production of 5,480 long tons, approximately 10,000,000 gallons of seawater per day is pumped into the subsea formation.
Steam is generated by gas-fired boilers and is used to feed steam turbine-driven pumps and generators, and to heat the seawater through heat exchangers. The produced electricity supports the needs of the mine, including all the requirements of the oil and gas operations. Low pressure steam in coils and jacketing on all sulphur piping and storage maintains produced sulphur in a molten state (245°F to 300°F).
The boilers consume an average of 22 million cubic feet of natural gas per day, part of which is provided from the oil and gas wells on the mine site. Through co-generation and special attention to energy conservation, a thermal efficiency in the range of 93 percent is maintained.
Placement of a platform on its pile supports. Derrick barges played a key role in meeting the Main Pass Mine's fast-track production schedule.
Under normal circumstances, sulphur is shipped from the mine daily via two 7,500-ton sulphur earner ships built during this project. Tanks on the storage and loading platform have capacity for approximately four days of production, to allow for weather delays in shipping.
Oil and Gas Operations
Oil and gas facilities include two production platforms where wells are drilled from jack-up drilling rigs, and the facilities platform where oil and gas is processed, sulphur is removed, and oil and gas is transferred to pipelines.
Special features of the oil and gas facilities include the design of wells and pipelines to allow for subsidence as sulphur is produced. All of the wells and facilities have been engineered for the harsh corrosive environment. Conventional and horizontal wells are to be drilled into the caprock to recover the oil and gas. Very few horizontal wells exist in the Gulf of Mexico. In addition, oil wells are equipped with variable-speed electric submersible pumps. Hydrogen sulphide (H2S) removal and recovery of sulphur from the oil and gas, on offshore platforms, is unique in the Gulf of Mexico.
DESIGN AND CONSTRUCTION
The structures and facilities were designed for an offshore life span of 40 years, considerably greater than the normal 20-year design basis for Gulf of Mexico oil and gas platforms. The design criteria included the wave and wind forces of a theoretical “200-year” storm. Probabilistic methods were utilized to combine the effects of subsidence and storms on the designs. The “ultimate condition” case that was utilized was a “l,000-year” storm.
Structural design was begun using assumptions based on historical geotechnical data. Simultaneously, extending engineering analyses, i.e., beyond previous practice, were undertaken to incorporate the extraordinary effects of the forecasted subsidence conditions. The design criteria were modified as the new data became available, and structural designs and materials specifications were successfully updated without experiencing undue delay to the overall fabrication and installation schedule.
Construction techniques were developed to allow the use and welding of 100 ksi steel piles in a marine environment. This unusually thick (up to 5 inches) steel was rolled into the 60- to 80-inch diameter piles used in some of the platforms. Use of this grade of steel is another innovation for offshore platforms.
Design weight limitations were controlled by the lifting capacity of available derrick barges. The power plant module was identified as the heaviest component to be lifted during construction. Two derrick barges were used to make this lift. At 5,400 tons, this two-derrick lift was the heaviest offshore lift ever undertaken in the Western Hemisphere. McDermott Inc. derrick barges 50 and 51, the two largest operating heavy lift barges in the Gulf of Mexico, were used for this activity.
Two self-propelled seagoing vessels of 7500-long-ton cargo capacity were designed and constructed to transport molten sulphur from storage tanks at the mine site to shore-based facilities. An innovative system was developed, combining swivel couplings and coordinated ship propulsion and positioning equipment, to allow safe and rapid sulphur loading through hoses in adverse weather conditions.
Designing for 65 Feet of Subsidence
Extraction of sulphur from the mine will cause significant seabed subsidence which will, in time, take the shape of a very large bowl. Using an analytical technique developed by Freeport Sulphur Company, mining engineers predicted vertical soil movements after the mine is exhausted in 40 years. Predicted horizontal movements at the seafloor for the same period were also established.
As structures sink due to subsidence, deck elevations and water level appurtenances (boat landings and barge bumpers) must be adjusted to maintain the required elevation. Vertical elevations are predicted to change as much as 65 ft. Over the life of the mine, horizontal soil movements and mudline slope changes will also cause platforms to move laterally and tilt. Adjacent decks will be laterally displaced by as much as 31 ft relative to each other, requiring extraordinary design considerations for the bridges and the facilities they carry.
Studies by the geotechnical consultant, Fugro-McClelland, showed that large differential lateral soil movements are likely between the piling of individual platforms. This soil movement will cause the piles of a platform to spread out (or in), causing significant lateral loading on piles. Relative vertical soil movements are also predicted along the length of the piles as a result of subsidence. This causes “up drag” or “down drag” forces on individual piles, and results in additional loading. Piles are embedded in alternating layers of sands and clays. As the soil moves during subsidence, these layers tend to slip relative to each other. The differential movements cause very high soil-induced loads at the slip planes. All of the above loadings vary in magnitude and direction with time as sulphur is extracted and the soils subside.
As a result, subsidence posed the most significant engineering challenge in design of the structures. Criteria were developed to combine the effects of subsidence and storm loads. To account for extreme effects of subsidence, new structural design methodology and corresponding computer programs were also developed.
Understanding the nature and extent of subsidence over the life of the mine was crucial to the design. While there were precedents for the behavior of structures in areas of high subsidence, including Freeport's existing Grand Isle Mine, the Main Pass Mine presented some extremely complicated problems for which there were no suitable models to follow. Therefore, to allow work to begin, assumptions were made about subsidence based upon currently available information. As parallel efforts proceeded, these assumptions were refined and new information developed, affecting the direction and progress of the work by the various team members.
First, it was known that vertical settlement caused by subsidence would require taller platforms to maintain clearance over hurricane waves. Second, it was assumed that subsidence would cause horizontal spreading forces on the piles, and that these motions were planar and downsloping toward the center of the subsidence bowl. The effects of planar, downsloping motions could be predicted in broad terms by a simple beam model. When a hypothetical two-dimensional beam with homogeneous linear-elastic material properties is bent, horizontal strains at the upper surface of the beam (i.e., the seafloor) are greatest at the crest and the trough. At the crest, the forces are exerted as tension or expansion in the horizontal direction; in the trough, the horizontal forces are compressive. To counteract these effects, the platforms could be oriented perpendicular to the subsidence contours, and the bottom framing could be open to allow additional flexibility. Also, it was apparent that compressive differential vertical strains could occur at the crest and extensive differential vertical strains could occur in the trough. With these assumptions, the project went forward on the basis of a “best judgment” at design criteria for subsidence.
Concurrently, the structures design team began to combine and coordinate new data from analyses conducted by other team members. Large horizontal soil movements in mudslides and their effects on piles had been analyzed by McDermott, Inc. since 1971. However, the subsidence problem in this project required major modification of the previous structure-pile-soil interaction analyses.
The subsidence effects introduced loads not previously encountered in offshore platform design. Also, there were no acceptable industry procedures or MMS regulations to combine subsidence loads with more conventional storm, gravity and operational loads. The combination of these loads, coupled with the high cost and long project life, required a level of assurance in the structural design far exceeding that normally required.
To supplement design team efforts, the services of Civil Engineering Professor Robert Bea, of the University of California at Berkeley, were acquired. Reliability analysis techniques employed by Professor Bea offered the best technology for developing probability based design criteria covering the combination of expected loads and conditions.
As concurrent criteria development work continued, Fugro-McClelland expanded the complexity of the analysis to a two-dimensional non-linear finite element model, which considered the soil properties and variability of the sediment layers across the top of the dome. It was determined that subsidence was not just bidirectional but that a third (out-of-plane) direction had to be included in structural design. In some locations, particularly along the slopes of the subsidence bowl, out-of-plane strains were typically less than 10 percent of in-plane strains. In other locations, however, out-of-plane strains were almost as large as in-plane strains, and were a major consideration for the structural designers.
Site Layout and Planning
Layout studies performed in the earliest stages of the project led to the selection of the overall mine structures plan, identified the most promising platform and bridge configurations, optimized bridge lengths and number of bridge supports, identified workable platform foundations capable of resisting soil subsidence, and provided preliminary construction plans and costs. These early studies included input on constructability from the structures construction contractor. Installation tolerances of platforms and bridges were studied and design guidelines established. The feasibility of loading out and Ming the various mine components offshore was established at this time.
The optimization study of bridge length versus number of bridge supports determined that bridges approximately 500 ft long would be optimal. For operational convenience, actual bridge lengths vary from 236 ft to 600 ft. The storage and loading, power plant and quarters platforms, as well as oil and gas facilities platforms, were located at the fringe of the sulphur deposit to limit the effect of soil movements on these critical structures.
Between the initial and the future production platform locations, a total of nine production platform locations will be used. The initial production platforms are located at the highest elevation of the sulphur deposit to prevent drainage of sulphur into previously mined areas.
The two production platforms are closely spaced to allow the initial sulphur wells to be near enough to concentrate the heat pattern. Up to 188 sulphur wells will be drilled from each production platform.
Concurrent development of oil and gas reserves along with the sulphur reserves required multiple pipelines between the various platforms not connected by bridges. This resulted in significant challenges for the pipeline designer due to the predicted subsidence of the seafloor and the relative congestion of the area. This was in addition to those challenges normally encountered in the design of pipelines for installation in water depths exceeding 200 ft. A triple concentric heated and insulated pipeline was pulled through a pipeline installed between the sulphur storage and loading and facilities platforms to transport liquid sulphur extracted from the produced oil and gas.
Environmental and Safety Considerations
To develop one of the largest Frasch process sulphur reserves in North America in an environmentally responsible manner required the concerted efforts of Freeport staff, numerous consultants and the federal, state and local government agencies charged with maintaining environmental quality. The process included obtaining approvals and permits from the MMS, U.S. Environmental Protection Agency, U.S. Army Corps of Engineers, U.S. Coast Guard, Louisiana Coastal Management Division and the Mississippi Bureau of Marine Resources.
A comprehensive Environmental Assessment (EA) performed by the MMS in 1987 provided a detailed examination of the Frasch sulphur mining industry as it relates to an outer continental shelf setting such as Main Pass Mine. This EA stated that such mining, using current environmental control technologies, would have no significant impact on the surrounding environment. Additionally, MMS performed a site-specific EA for the Main Pass Mine and issued a “Finding of No Significant Impact” based on that assessment.
Employees of Freeport and all contractors worked approximately 8 million labor-hours fabricating and installing the structures and facilities, and in initiating operation of the Main Pass Mine. From the date of project conception, planning for safety and minimizing the risk of injury was a major goal. The project participants cooperated closely in an outstanding safety effort that resulted in the low incident rate of less than two accidents per 200,000 labor-hours of work.
MANAGEMENT ORGANIZATION AND APPROACH
The initial project scope excluded development of oil and gas reserves. Therefore, project team organization, planning, work breakdown, cost and schedule baseline, and contracting strategy were directed toward the development of sulphur reserves only. The decision was made to utilize various internal as well as external resources to staff the project team. This provided the opportunity for FR&E and FSC staff to focus on the technical and operational aspects of the work while the external resources of WHA staff provided the planning, scheduling, cost, quality assurance and administrative support to the team.
Because a development plan, cost estimate and schedule were not yet defined, the May 1989 approval to proceed with the work was conditioned on preparation of a feasibility study before full commitment to proceed would be given. This study was to result in definition of scope, schedule and cost to develop the mine. The feasibility study, including a detailed cost estimate, was completed and delivered to the partners for review and approval on September 1, 1989. Prior authorization to continue with design and planning during the feasibility study review period provided the project team with opportunities to focus on activities, and decision making that would eliminate as many schedule constraints as possible. This productive use of time was significant in supporting the fast-track approach and in meeting early schedule goals.
The project was authorized to proceed in full on December 1, 1989. Major schedule milestones of 28 months from this start date until “water in ground” and 29 months for sulphur production were established at that time. The significance of “water in ground” is that sulphur cannot be produced using the Frasch process until it is first melted by the heat transferred from hot water pumped into the sulphur formation. The project completion date and shipment of first molten sulphur was set at one month later.
When oil and gas development was added to the scope, the decision was made to create a new branch of the project team composed of FMOG personnel supported by a separate dedicated group of WHA personnel. Again, the FMOG staff focused on the technical aspects of the work and WHA provided support in the same areas noted above.
Although sulphur development and oil and gas development branches of the project team retained a degree of autonomy, significant interface and coordination was required between team members. This was most important in the areas where shared contractor resources were used in both developments.
Work Breakdown Structure
A six-level work breakdown structure was developed to provide for management of sulphur development cost and schedule. This WBS provided for summary to the platform or major component level and extended to the level of detail required to integrate with the corporate accounting needs of FRP. Intermediate WBS levels provided detail for control of cost and schedule as defined by project team member responsibility and authority assignments as well as contracting strategy. The WBS provided for approximately 1,600 cost accounts. When the project scope was revised to incorporate oil and gas development, a new WBS, incorporating FMOG accounting and specific platform and component breakdown, was developed to provide management information required to control cost and schedule.
Contract and Procurement Management
Many different contracting and procurement methods were used to obtain the services and materials necessary to complete this project in a timely and cost-effective manner.
Because of the fast-track nature of the project, most design and construction contractors were selected without competitive bidding. Selection criteria took into account contractor's performance on previous projects for the owners, their available resources and their willingness to negotiate mutually beneficial terms and conditions for performing the work. All of the design contractors are based in the New Orleans area and the primary construction contractors' facilities are located within 1.5 hours drive from New Orleans. This contracting strategy supported the management decision to maximize the utilization of local companies, greatly enhanced communication, and provided economies in cost of project management.
Until formal contracts were finalized the design contractors and some construction contractors were authorized to proceed with work under temporary agreements. Although some risk was involved, this approach resulted in significant savings in time and cost. The careful selection of contractors, and the contractors' response to staffing and managing their assigned work enhanced the project team's ability to maintain schedule and cost baseline. The cooperative relationship between the project team and contractors was, at least in part, a result of including contractor staff in the evaluation of alternatives and in the decision-making process as it related to that contractor. This established partial contractor ownership in the decisions that affected schedule and cost, contributing significantly to the success of the project.
To maintain the fast-track schedule and to provide for construction to begin before design completion, most construction contracts were based on compensation at prenegotiated rates. Labor rates were fixed for the contract duration. Unit rates for work were fixed based on defined scope, and provisions were made for additional unit rates to be negotiated as designs were completed. No delay in the work resulted from this approach and mutually acceptable rates were negotiated for all work not defined in the original contracts.
The requirement to perform design concurrently with construction also necessitated procurement of equipment and some materials prior to completion of design. Schedule constraints made it necessary to place orders for large quantities of steel and other materials to ensure their availability as soon as approved-for-construction drawings were released. Criteria established for procurement of materials and equipment were designed to provide contractors with maximum flexibility and control in meeting schedule constraints while assuring cost-effective results. The project team reviewed various approaches, with contractor input, and evaluated the cost/benefit to several combinations of direct owner and contractor procurement.
Facilities design contractors were assigned the responsibility of procuring equipment and related process valves, electrical and instrumentation specialty items. Design contractors acted as agents for the owner and the owner paid all invoices directly to vendors. Design contractors were compensated at hourly rates for time applied. The project team reviewed and approved procurement prior to issue of purchase orders to ensure technical and cost baseline compliance. Such reviews were conducted at the design location and caused no delay in the procurement process. A manual was prepared to define contractor and project team responsibility, authority and detailed procedures. WHA, which had no approval authority, provided overall management and quality assurance of the procurement program.
Construction contractors provided all other materials required to complete the work using their own individual methods and procedures for procurement. Basis for compensation was by lump-sum, unit-rate, or cost-plus methods. Lump sum and unit rates included all contingencies required to cover contractor construction methods and procedures. For unit rate materials, contractors were required to provide detail quantity take-offs to support payment claims. All such quantities were verified by WHA and discrepancies resolved. The procurement of cost-plus materials was by competitive bidding, and contractors were required to provide WHA with access to all records and files for verification of quantity requirements and procurement activities. All contractor discounts and volume price advantages, based on contractor agreements with vendors, accrued to the owner.
This procurement strategy was successful due to the development of trust and cooperation between contractors and team members.
Management of Scope
At the onset of the project, it was recognized that a comprehensive scope management system was required to address the unique characteristics of the project, including the fast-track schedule, evolving scope and the contracting methodology. Technical, cost and schedule baselines were established and a change request system was implemented. The technical baseline was defined in the design manuals prepared to explain criteria to follow, including sulphur production rates and design standards. The project budget was established based on definitive cost estimates and was integrated with the project schedule to the lowest level defining the baseline for cost and schedule.
The system provided for review and approval before the change was implemented. Review and approval was by the management level to which financial authority was delegated. All purchase orders required a budget verification process whereby the proposed purchase amount was compared to the budget amount for items to be purchased. All deviations over budget required management approval in the manner stated above.
Cost Management
Development of Main Pass Mine required the execution and management of 20 major contracts and at least as many minor contracts, the issue of over 3,000 purchase orders and expenditure of more than 8,000,000 construction labor-hours. To accomplish these activities with the accelerated performance demands of the aggressive schedule in a cost-effective manner was a significant challenge for the project team. A cost management system was developed to measure, analyze and report performance as compared to the established cost baseline.
The feasibility study included detail cost estimates for project approval and establishment of cost baseline. The methodology for updating cost estimates, as work progressed and scope was further defined, included the verification of contractor estimates and forecasting based on cost and schedule performance.
Structures fabrication and marine installation were performed by one contractor. All of this work was performed at unit rates for materials and fabrication and all-inclusive hourly rates for marine equipment used in transportation and installation of all platforms. This contractor also fabricated a majority of the facilities located on the structures for a single all-inclusive fixed hourly rate that included all cost of labor, equipment, tools, consumable and contractor overheads and profit. Work by other contractors was performed on a similar basis or by agreed-upon lump sums. Most rates and all lump sums were negotiated before start of work.
Uponreleaseofapproved-for-construction drawings for individual components or platforms, contractors prepared estimates based on their quantity assessments and already agreed-upon rates. The project team audited contractor estimating systems for accuracy and consistency, and prepared random detail verification of quantities. Discrepancies were reviewed with the contractor and resolved. The resultant cost was compared to the baseline and variances were handled under the change request system discussed above.
Freeport-McMoRan Inc.
By analysis of these current construction estimates, actual cost of direct purchase orders and other ongoing costs, trends were defined. A cost trend estimate was maintained and provided the information necessary for project management to take appropriate action if warranted. This process was computerized, which supported analysis and adjustment to the trend estimate on a timely basis.
Cost forecasting was supported by analysis of the cost trend estimate as well as by measuring performance through the integrated cost and scheduling system. The system provided for rapid analysis of those activities paid for on a time-applied basis. The system was updated monthly by input of verified progress and actual cost based on approved contractor invoices as well as accrued cost of direct purchased equipment. Estimates to complete and estimates at completion were provided by the system along with various charts, curves and tables used for analysis and reporting.
Expenditures of over $30 million per month average over the project life required the development of an asset management system that accurately forecasted cash requirements. Analysis of cost forecast and the terms of incomplete contracts and purchase orders were used as the basis for forecasting cash requirements.
Baseline budgets excluded contingency at the cost account level. The change request system provided an evaluation of the requirement for additional funding to the appropriate management. Authority to allocate contingency funds was assigned on a limited basis to senior managers. This authority was limited to the use of contingency funds for in-scope work only. Contingency could only be used after a thorough review process, including an overall project impact analysis. As work components were completed, unused contingency was moved to a special project contingency fund which was controlled by the project manager.
The risk assessment system identified items subject to increase or decrease in cost because of various factors related to design, fabrication, or marine transport and installation. The system included validation of risk issues and also provided an overview of their interactive nature. The fast-track nature of the project supported the need for monthly risk assessment, as it quantified risk in a consistent manner. This allowed management to prioritize their focus, and identify the management approach required to minimize risk.
The assessment was not directed toward the use of contingency to cover risk. It provided for analysis to determine the cost exposure for current and future activities required to complete the project. The system proved effective in its projections and as an active management tool.
Time Management
During the feasibility study period, the project team developed design and construction plans and schedules for evaluation and analysis with the focus on optimizing schedule without sacrificing cost. The result was a proposed 29-month design and construction schedule for sulphur development. The project plan called for start of construction as soon as sufficient design was completed to the degree that would allow uninterrupted construction. Design, fabrication, marine construction and drilling were planned as concurrent activities.
By the time approval to proceed with the project was received, sufficient key contractors had been selected and preliminary negotiations were completed to the point where work started immediately. An overall project schedule was complete and approved, which enabled the priorities and milestones for design and construction to be set.
Planning and Scheduling— A Cooperative Effort With Contractor
Because of the contracting strategy used for development of Main Pass Mine, a relatively high degree of detail was required for the management-level project schedule. Critical path method scheduling techniques were used to clearly define activities and their interrelation. ships to five levels of the WBS. Approximately 1,600 activities, networked and cost-loaded, made up the management-level project schedule.
The design and construction contractors were required to prepare detailed schedules for the work assigned to each of them. These schedules incorporated the lowest level of the project schedule as the contractor reporting level, and several lower levels of detail required to satisfy contractor management and project needs.
The project team prepared and managed detailed schedules for the sulphur operations activities such as drilling, boat and helicopter requirements. In addition, the project team prepared and managed the detailed hookup, test and startup schedule for control of all activities after marine installation of major components. This critical work was performed by various hourly-rate contractors and company operations personnel. Project team personnel also directly supervised this work.
Cost and schedule were integrated at the lowest project level in the WHA mainframe cost and schedule system using a modified IBM Application System program. The hookup, test and startup schedule was done on a PC system using Primavera and hourly planning, which was operated offshore at the work site during the final three months' critical time period. Design and construction contractors used various systems, including Artemis and Timeline, which supported their individual needs. Cooperation and teamwork on the part of contractors and the project team contributed to the success of the scheduling effort without the need to impose one system on all participants.
During preparation of the feasibility study, the design and fabrication of the power plant module was determined to be the critical path for the project. The addition of oil and gas development had no impact on this issue. Major milestones of design, fabrication and installation of the control platform, sulphur production platforms and the two oil and gas drilling platforms were set to allow sufficient time to complete drilling wells in time to start production by the 29th month. Thirty sulphur wells, 14 pressure control wells and 19 oil and gas wells were scheduled to be drilled and completed as part of the project.
Walk, Haydel & Associates
Design contractors developed schedules and set priorities to meet the project milestones. When oil and gas development was added, the design and construction of required platforms was assigned to the same contractor who was designing and constructing the sulphur platforms. That contractor had sufficient resources in design, fabrication and construction to handle this additional work with minimal impact on the work already in progress. Some construction rescheduling of noncritical sulphur development structures was required to accommodate the three added oil and gas structures.
The marine transportation and installation schedules were the most challenging to develop and manage. Risk of significant cost escalation due to delays was ever-present. The 267 planned workdays for major heavy-lift derrick barges during all seasons of the year required careful planning and coordination with design and fabrication contractors. The two derrick barges used for this work were also committed to scheduled work on other projects. Lost time due to weather conditions that restrict derrick barge operations was included in all plans and schedules. Therefore, fabrication strategy was developed to have a backlog of complete components ready for installation, which provided the contingency needed to ensure that components were available for installation without delay to marine equipment.
Resource Management
The fast-track nature of the project and the contracting strategy that provided for a majority of the work to be performed at unit rates or hourly rates required that the project team take an active role in management of contractor resources. The project team reviewed contractors' resource-loaded schedules and staffing plans, and monitored actual staffing to ensure that no potential for delay due to lack of staffing would occur. Marine transportation and installation schedules were resource-loaded to provide detailed requirements for tugs, transport barges and derrick barges, which are scarce and expensive resources. Regular meetings were held with contractors, during which resource planning and management was addressed. Open, frank discussions between contractors and team members produced desired results as no schedule milestones were missed due to lack of needed resources.
Quality Management
During the planning phase of the project, the team recognized the need to establish methods for assuring quality of the design work as well as for materials and construction workmanship. A technical assurance (TA) system was developed to handle the design quality issue, and a combination of vendor surveillance and quality assurance of construction contractor workmanship was implemented.
The fast-track nature of the work coupled with the assignment of design responsibility to several contractors working at different locations provided the impetus for a comprehensive TA program. Uncoordinated design or errors in design could significantly impact subsequent designs by the same contractor or by others and could limit future design alternatives. In addition, a design error discovered after start of construction could be costly to remedy.
WHA was assigned the task of developing and implementing the TA procedures and actions necessary to address the stated concerns. This decision was supported by the fact that WHA would already have an established working relationship with design contractors through its other assigned project management functions; and, that WHA had the required experienced senior engineers available to staff the TA function.
Due to the fast-track nature of the project, the TA function could not be performed effectively using the usual methods whereby completed design packages are subjected to a multi-discipline design review and written review comments are produced for resolution between the designers and the reviewers. Such an approach would require more calendar time than was available in the schedule for design reviews and would require even more time for corrections to design packages after the reviews were completed. Innovative techniques had to be developed to provide for TA input as the design was developed.
The result was the adoption of an approach to TA that assigned experienced senior engineers in each design discipline to provide TA of all design work. These engineers were provided with office space and equipment as required at each of the design contractors' locations. They divided their time between the offices of each firm involved in the project.
TA personnel participated in all internal design meetings held by the design contractors and routinely visited with design personnel of their respective disciplines to review the work in progress. Comments and suggestions relative to the design were provided as design decisions were being made. As design documents (drawings, specifications, studies, calculations, etc.) were completed by the designers, copies were reviewed by the assigned TA engineer to ensure compliance with the previously agreed-upon design approach or criteria. Comments were provided directly to the appropriate design personnel; however, direct supervision of design personnel was by the design contractor.
TA personnel drafted and maintained a design criteria manual that established the technical baseline and documented the agreed-upon criteria for each part of the project. Copies of the manual were issued to all design contractors and provided the basis for their designs. The manual was frequently updated to provide greater detail as the design proceeded, to incorporate all changes and to further define criteria.
As the design of each major component of the project approached the 50 percent level, a design review meeting was held between design contractors, TA personnel, project team technical managers and other appropriate personnel. At this review, each design contractor gave a presentation of their design for the project component being reviewed. Any potential problems were identified and actions were assigned for resolution of the problems. A meeting record and action item list were prepared and distributed to all concerned parties by TA personnel for tracking and expediting the resolution of open items.
As an additional benefit to the project, the TA engineers verified the status of design reported by design contractors. TA personnel monitored contractor assignment and management of design resources and, if required, recommended corrective measures to maintain quality and productivity.
Contractors were assigned responsibility for quality control of their furnished materials and workmanship. The project team provided quality assurance (QA) personnel to verify contractor performance in accordance with specifications, codes and standards. QA personnel also prepared all necessary applications required to be submitted to government agencies for final permits to install structures.
The approach to QA was one of active participation with the contractor's supervisors and quality control personnel. QA personnel were assigned full time to all locations where work was performed. The QA responsibility extended to acceptance or rejection of work by direct communication with the contractor's supervisor. The selection of QA personnel with proven experience and good communication skills was a key factor in ensuring quality performance by contractors.
The project team did not allow the development of adversarial relationships with contractors. Weekly meetings between team members, QA personnel, and contractor's production and quality personnel provided the opportunity to resolve any open quality issues and to focus on team-building and goal-setting.
Communication Management
Communications were directed to internal as well as external audiences. Internal audiences include the owner, all team members, contractors and vendors involved in the project. All other audiences were considered external. Internal communications were the responsibility of the project manager and the project team. External communications were handled only by the owner.
Internal communications were conducted via meetings, formal and informal correspondence, manuals, reports, drawings, specifications, and other appropriate means. Procedures were developed for managing communications to and from the project team. A central filing system was implemented to contain originals of all incoming and copies of all outgoing correspondence and documents. A system of standard distribution for incoming and outgoing correspondence ensured that all interested parties received a copy. Daily, weekly and monthly meetings, reports and correspondence between contractors and the project team were used to convey information and requests. A formal monthly report was the primary means of communicating status of the project to the owner. This report was presented and reviewed in a monthly meeting between the project manager, senior project team members and the owner, including partner representatives.
External communications included press and electronic media releases, and correspondence with governmental and regulatory agencies, which were handled by the owner.
CONCLUSIONS
The successful execution of the Main Pass project can be attributed to the organization, management and leadership skills of the project team with active support by the owner and joint venture partners. By forming a partnership between the project team, design firms, contractors and suppliers early in the planning process, the technical, schedule and cost baselines were managed on a cooperative basis. The project was a technical success and was completed on schedule and within budget. ❑
Waker H. Parr, P.E. is a senior project manager for Walk, Haydel & Associates, Inc., a New Orleans-based firm that provides consulting engineering, project management and construction management to both private and government clients. He has been with Walk, Haydel since 1981, and was responsible for planning, scheduling, construction contracts administration and related support services as a member of the Main Pass Mine project team. Before assignment to the Main Pass Mine project team, he held various management positions, both departmental and project-oriented. Prior to joining Walk, Haydel, he served for 20 years as project manager for a major international marine contractor and in other corporate management and engineering positions for that same contractor on both domestic and foreign assignments. He holds a B.S. in mechanical engineering from Tulane University and a professional engineering license in Louisiana. He is an active PMI member.