Project Management Institute

Built to scale

2014 PMI Project of the Year WINNER

img

PHOTO COURTESY OF RIO TINTO ALCAN

A unified team kept an innovative aluminum smelter project alive during a recession—and then stayed on schedule despite a scope increase.

img

PHOTO BY LEANNE SCHERP

“The ultimate goal was to prove the AP60 technology and get access to our business opportunity in the world.”

—Michel Charron, RTA, Montreal, Quebec, Canada

Earth is a planet made of metal. Its mountains of stone contain all the makings of modern technology. From stents to siding, from airplanes to automobiles, so many signs of progress started out encased in rock.

Yet, while the planet's resources are limited, our appetite for advancement knows no bounds. To continue the march forward, metals manufacturers are always looking for opportunities to do more with less. That means developing broader applications for more abundant resources—and more efficient ways of extracting metal from stone.

That's why Rio Tinto Alcan (RTA) began investing in aluminum R&D. As one of the lightest, most abundant metals in the earth's crust, aluminum often offers an affordable alternative to heavier metals, such as iron-based steel.

When RTA, based in Montreal, Quebec, Canada, learned its research team had developed an aluminum smelting technology that promised to deliver 40 percent more product at lower costs—and with fewer emissions—than any smelter currently on the market, it knew this process would revolutionize the industry. It would push RTA to the head of the pack. But first it needed to prove the technology would work.

The opportunity to act appeared in 2007. An RTA smelting facility in Jonquière, Quebec, Canada, was reaching the end of its life and had to be replaced. Since a capital investment would need to be made, the company decided the time was right to roll out its AP60 smelting technology in the new plant. The AP60 Phase 1 project would provide a template for the company's future plant projects and showcase the technology to potential customers.

“The ultimate goal was to prove the AP60 technology and get access to our business opportunity in the world,” says Michel Charron, project director, RTA, a PMI Global Executive Council member.

To reach that goal, RTA needed help. The company turned to engineering and construction firm SNC-Lavalin, also based in Quebec, and consulting engineering firm Hatch, based in Mississauga, Ontario, Canada, to lead a joint engineering, procurement and construction venture dubbed SLH. The CA$1.3 billion project scope included construction of 38 smelting pots with an aluminum production capacity of 60,000 tonnes per year, a very large electrical substation and a gas treatment center.

img

From left, André Noël, Michel Charron and Marc O'Connor

PHOTO BY PIERRE PARADIS

“Before giving anyone a contract, we would meet them and explain the strategic goal we were pursuing. The hardest part was making sure they had the right attitude and would help build the culture we wanted for this project.”

—Michel Charron

Introducing the new technology as part of a project of this scale required careful planning. The team relied on detailed preliminary studies to develop every aspect of its project plan, including how it would transfer information from RTA's R&D lab in France to how it could most efficiently build the components, says André Noël, project manager, Hatch, Montreal, Quebec, Canada.

“Building a new technology, you need to understand it very well,” he says. “So we really took the time to define what had to be done.”

During its initial research, the team identified six aluminum smelter reference projects, analyzed the applicable lessons learned and incorporated those lessons into the AP60 project plan. The team even spoke to people who had worked on the reference projects to better understand risks and avoid setbacks.

img

PHOTO COURTESY OF RIO TINTO ALCAN

“If you don't understand it at the study phase, when you're designing the project, then you won't understand it later on,” Mr. Noel says.

The in-depth research paid off by bringing the project's pitfalls into focus. To avoid them, the team would have to cultivate a culture of shared values, establish strong labor relations and facilitate cross-functional communication.

img

PHOTO BY LEANNE SCHERP

“We moved all the people within an environment where there were no SNC-Lavalin, Hatch or Rio Tinto logos. It was the AP60 project. So we had one team, one alignment, one culture.”

—Marc O'Connor, SNC-Lavalin, Montreal, Quebec, Canada

CULTIVATING COLLABORATION

With more than 100 equipment suppliers and 50 installation contractors working on-site at the same time, the project team knew it needed to tackle integration and communication issues up front. Its preliminary studies showed that people had to understand the project's strategic goals if the team wanted them to identify problems before they wreaked havoc on the schedule and the budget.

“Before giving anyone a contract, we would meet them and explain the strategic goal we were pursuing,” Mr. Charron says. “The hardest part was making sure they had the right attitude and would help build the culture we wanted for this project.”

From the outset, the team encouraged open communication and a collaborative working environment. “We moved all the people within an environment where there were no SNC-Lavalin, Hatch or Rio Tinto logos. It was the AP60 project. So we had one team, one alignment, one culture,” says Marc O'Connor, vice president of projects, North America mining and metallurgy, SNC-Lavalin.

The project leaders outlined clear roles and responsibilities and looked for opportunities to improve the flow of information among teams.

“Everybody has a little bit of the answer,” Mr. Charron says. “You need to have the whole team working together to achieve something. So we made sure that they could have a good understanding of what others were doing.”

One way the project team facilitated open communication was by co-locating the technology and engineering teams that needed to work together to scale the technology up to the industrial level. This allowed the teams to better understand each other's requirements and constraints, Mr. Charron says.

“R&D people are good at telling you how they want it, but the engineering team is good at making sure we can construct and deliver it on time and on budget,” he says.

To create an environment where everyone was dedicated to delivering a successful project, the team worked to cultivate a culture where people weren't always pointing fingers at the other guy.

“With a blame culture, people will try to delay facing the problem. If you have a no-blame culture, it allows people to raise the issue as soon as something happens,” Mr. O'Connor says. “And if you put the real problem onto the table, proper action will be taken.”

For instance, if a design flaw was identified, the engineering team would immediately raise a red flag so the team could quickly make the necessary adjustments. This allowed the team to avoid surprises during the construction process—and improved the quality of the end product.

“At the end of the day, the success of the project depends on the success of everybody, and the success of everybody depends on the success of the project,” says Mr. Noël. “This is the kind of idea we tried to clearly communicate.”

The team's unity and commitment to the project helped it survive the global economic downturn, which coincided with the project's planning phase in 2009. Both RTA and SLH recognized that personnel changes could seriously impair the schedule and quality of work by disrupting the project's continuity. So when Mr. Charron learned the project would have to reduce spending for an extended period of time, the team instead found ways to reduce the project's overall cost and improve its business case.

PROCEED WITH CAUTION

The CA$280 million in potential cost reductions the team identified kept the AP60 project off the chopping block. When it proceeded to the execution phase in December 2010, it was more important than ever to avoid cost overruns caused by mishaps and delays.

img

PHOTO BY LEANNE SCHERP

“At the end of the day, the success of the project depends on the success of everybody, and the success of everybody depends on the success of the project.”

—André Noël, Hatch, Montreal, Quebec, Canada

The CA$1.3 billion project scope included construction of 38 smelting pots with an aluminum production capacity of 60,000 tonnes per year, a very large electrical substation and a gas treatment center

The CA$1.3 billion project scope included construction of 38 smelting pots with an aluminum production capacity of 60,000 tonnes per year, a very large electrical substation and a gas treatment center.

PHOTO COURTESY OF RIO TINTO ALCAN

Next-Generation Smelter

January 2007: Project identification process begins.

May 2009: RTA decreases its short-term investment in the project due to the economic crisis.

December 2010: The project team receives full notice to proceed.

July 2011: RTA requests a CA$75 million increase in scope.

November 2011: The scope increase is formally introduced.

December 2012: The project team hands the plant over to the operations team.

December 2013: Plant commissioning is completed.

At this point, the project team leveraged another lesson learned during preliminary studies: Keep workers safe and satisfied. On several reference projects, conflicts with labor unions and lost time caused by injuries had caused significant delays.

The project's timing posed an additional hurdle, as construction was underway while an unpopular labor reform law was being implemented across Quebec. To stay on good terms with unions, the team employed a full-time labor relations expert early in the project and established a steering committee designed to respond quickly to labor-related concerns.

The team also faced a significant health and safety challenge. In Quebec, the construction industry's annual average lost time injury frequency rate (LTIFR) between 2003 and 2009 was 23.5. That means that for every 100 workers in Quebec, nearly 24 workers lost time because of an injury. The project team was emphatic: It had to do better.

“The biggest challenge was changing the culture,” Mr. Noël says. “You need to get people to stop tolerating dangerous situations.”

The team members focused on the human element when communicating the need for raising safety standards. They asked workers to look out for themselves—and their friends—by taking a moment to review the risks each time they started a new activity. This helped workers identify potential accidents.

img

PHOTO COURTESY OF RIO TINTO ALCAN

“Often, it's a very simple thing. It's just taking five minutes,” Mr. Noël says. “We changed the idea that because it was done a certain way for the last 50 years, you have to work that way.”

By putting safety top of mind, the project team was able to achieve a LTIFR of .27, which means only one worker per hundred was injured every four years on the project. This safety record—a 99 percent reduction of the construction industry average—didn't just set a new standard for RTA projects. It left a mark throughout Quebec.

“The greatest thing about the AP60 project was the health and safety record,” Mr. O'Connor says. “It's been a game changer for the construction industry and the province.”

STRETCHING THE SCOPE

The project's strong health and safety performance helped fortify the team's relationship with unions and keep the initiative on track—even when the sponsor asked to increase the scope halfway through the execution phase.

RTA requested the CA$75 million scope change in July 2011, when the company didn't want to miss out on rapid growth in the aluminum industry. Rather than lose valuable production time during an expansion project at a later date, RTA wanted to roll the increase into phase one.

Mr. Charron asked the team to honestly assess the project plan to see if the increase was feasible. The request was coming during the most complex phase of execution; an increased scope could put the project at risk.

“If the team had said, ‘No, that's not a good deal. We will jeopardize the whole project,’ I would have said okay, we're not going to do it,” he says. “But they said, ‘We can do it—but this is what we're going to need.’”

In November 2011, the team added one month to the schedule and revised the project plan, leveraging as much base work as possible to minimize delays and cost overruns. Again, the engineering, procurement and construction teams relied on close collaboration to optimize the workflow. Speaking the shared language of project management helped facilitate communication across disciplines, Mr. Noël says.

“PMI standards are essential for project success because they provide a common framework for how to do projects,” he says. “What's good about A Guide to the Project Management Body of Knowledge (PMBOK® Guide) is, it's a language that is shared by people from very different perspectives.”

By working together to leverage lessons learned from the initial scope, the team improved its performance by up to 40 percent for some activities. A monthly critical path analysis was one way the team was able to beat its goal, Mr. Noël says.

“We did detailed scheduling of critical components,” he says. “We did things like expediting procurement items. We measured performance. This helped us understand where we were drifting.”

Monitoring progress carefully and taking corrective action quickly also allowed the project team to control costs. At one point, forecasts predicted the final cost would come in slightly over budget. But at completion, the project was well within Rio Tinto's budget allocation.

The work paid off. The team made up the additional month it had added to the schedule and handed the project over to the operations team in December 2012—the original project delivery date.

Along with proving the viability of RTA's proprietary technology at full production scale, the project provided lessons learned during the plant's construction that can be leveraged during later installations. And the RTA project community is better for it, Mr. Charron says.

“We're ready for any future phase,” he says. “And we're ready to sell our technology in the market. So that's pretty good news for the corporation.” PM

“The greatest thing about the AP60 project was the health and safety record. It's been a game changer for the construction industry and the province.”

—Marc O'Connor

LIGHTS, CAMERA, ACTION!

Check out behind-the-scenes videos of this year's PMI Project of the Year finalists on PMI's YouTube channel.

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.

PM NETWORK NOVEMBER 2014 WWW.PMI.ORG
NOVEMBER 2014 PM NETWORK

Advertisement

Advertisement

Related Content

Advertisement