Project Management Institute

Balancing quality versus productivity

myth or doable?

Nabil K. Al-Dabal, Manager, Saudi Aramco

Abstract

In its commitment to be the world’s main energy supplier, and to meet ever increasing demand, Saudi Aramco’s quest to improve the Capital Program Performance has been intensive, continuous, and a direct result of the company’s desire to bring production facilities online in the shortest timeframe.

To address the current challenges in program execution—including severe resource constraints and longer procurement lead times for material and equipment—Saudi Aramco has developed and implemented several innovative procurement and contracting strategies, as well as integrated quality programs.

In this paper, however, we will review the quality tools used within the life of a project, and present the Quality Management Information System (QMIS) that was developed and implemented to support project execution.

The implementation of QMIS on the $4.2 billion Hawiyah NGL Recovery Program (HNRP) resulted in substantially reduced rework and improved quality, increased productivity, and a schedule performance better than the current industry benchmark for similar projects.

Introduction

In response to the rise in the world’s energy demand, Saudi Aramco has launched the largest expansion program in its history, encompassing crude oil production, gas, refining, and petrochemical projects.

The level of expenditures in the next five years includes project investments worth approximately $51 billion, and another $50 billion for domestic downstream join-venture projects.

The ambitious expansion program includes simultaneous execution of five mega-programs in various developmental stages.

This program poses significant challenges, especially in the availability of skilled resources, given today’s tight labor market; longer delivery time for commodities; prices of goods that continue to fluctuate; and competition for experienced engineering firms and construction contractors.

To appreciate the complexity of managing the quality together with productivity and cost targets for such mega-programs, let us look at a high-level presentation of a project, as shown in Exhibit 1.

Building Blocks of the Saudi Aramco Project System

Exhibit 1 – Building Blocks of the Saudi Aramco Project System

Let us start with the customer, or the proponent of a capital program. His needs are simply a facility with no defects, delivered on time and within the given budget. His intent is transferred to specifications that trigger the necessary processes so that, if they are efficient, we get the actual desired results (specifications). The customer perception is based on the results and whether it meets the intent.

From the perspective of the project manager, the focus is placed on the processes or systems that need to be in place to enssure the desired results. Thus, designing, operating, and monitoring such processes is the key to delivering the results. As we do so, we need to proactively think of disturbance factors, such as project location and the control factors.

The work of engineering and project management is to identify control factors that can be used and set to overcome the impact of disturbance factors. These factors, if set and specified correctly, would yield a process that is capable of delivering the desired results.

In addition to cost and scheduling techniques, we must also devise appropriate tools to ensure and maintain quality through the right measures. One way to mitigate the constraints is through the development of a quality management system that would eliminate or reduce rework. The improved construction productivity will result in reduced overall construction duration and provide an optimized schedule.

In this paper, we will review the quality tools used within the life of a project, and present a monitoring tool, the Quality Management Information System (QMIS), and show through actual project data that you can out-perform the industry benchmark in cost and schedule while improving quality.

Project Life Cycle and Application of Quality Initiatives

Exhibit 2 presents a typical life development cycle for a Saudi Aramco project and the quality initiatives to support project planning, execution, and start-up phases.

Project Life Cycle Application of Quality Initiatives

Exhibit 2 – Project Life Cycle Application of Quality Initiatives

While we will briefly review the deliverables of each phase, we will focus on quality support processes or initiatives for the EPC project phase.

The initial phase is project screening. During this phase the need for the project is evaluated, along with the definition of customer requirements.

The Design Basis Scoping Paper (DBSP) provides a summary of the facilities to be built and the project schedule. During this phase, the quality requirements are usually set.

The Project Proposal Phase, or what is commonly known in the industry as Front End Engineering Development (FEED) phase, provides conceptual design of the facility, major equipment and materials specification, and master schedule.

The EPC phase is the most detailed in terms of engineering, procurement, and construction. The majority of the quality tools presented in Exhibit 2 are supporting this phase. After this phase the project will be transferred to operations.

Quality Initiatives

A project quality manager from the inspection department is identified to work as an integral part of the project management team. This individual interfaces with the team on all inspection matters from the date assigned through project completion and ensures that project quality requirements are met. In addition, roles and responsibilities for project stakeholders are established.

Major quality effort is given to developing Schedule “Q,” an integral part of the EPC contract. This schedule establishes the quality system foundation for capital projects. Schedule Q goes beyond ISO 9001:2000 quality requirements to Saudi Aramco-specific quality requirements. During the EPC phase, key performance measures, such as the Project Quality Index (PQI), are established to reflect the level of quality within our projects.

We also deploy a supplier strategy to ensure availability and timely flow of quality materials through the Regulated Vendor List (RVL). A part of normal Saudi Aramco practices is the quality awareness campaign for all projects partners, including our suppliers and contractors. This campaign is intended to clarify and educate ourselves and our partners of quality requirements and tools. One major quality and business improvement tool used is Lean Six-Sigma, focusing on improving our consistency of services, efficiencies, and cutting waste and defects.

A lean study revealed a redesign of the inspection process workflow that simplified the process, as depicted in Exhibit 3.

Inspection Workflow

Exhibit 3 – Inspection Workflow

For simplicity, imagine the same process is done three times within three different organizations, as it was before the study.

In addition, the study introduced Saudi Aramco Typical Test Plans (SATIP) and Checklists (SAIC) to reduce inspection rework and improve consistency of activities’ evaluation accuracy.

  • SATIP – This plan is a list of the various required inspection and testing activities and their phases’ sequence for a specific work item. The SATIP structures the inspection plan among all Saudi Aramco contractors and reduces the review time of individual contractor’s test plans.
  • SAIC – This checklist is a list of visual inspection checkpoints based on Saudi Aramco and international standards. These checklists define the requirements for each construction activity that needs to be checked by both contractors’ quality control personnel and Saudi Aramco inspectors, eliminating any subjectivity. The checklist also helps the contractor to correctly perform construction activities from the start and avoid any rework and/or rejections.

The system that carries out the defined inspection workflow, together with SATIP and SAIC, as well as monitoring the results of inspection for real-time decisions, is also developed and evolves into a web-based Quality Management Information System (QMIS).

QMIS is user-friendly, detail-oriented, interactive, data-driven program used on Saudi Aramco projects by contractors and Saudi Aramco to record and proactively manage inspection activities, facilitates the effective use of Tests and Inspection Plans (TIPs) and checklists, and consequently, enhances quality.

The benefits of this system are:

  • It reduces functional inspection layers and enhances project communication through remote and multi-user access, and hence the main benefit is the elimination of waiting time, since inspection activities by all parties occur at one time, as illustrated in Exhibit 3.
  • It provides electronic data collection to ease gap analysis and process improvement.
  • It facilitates introduction of lessons learned throughout project execution.
  • It provides data for monthly performance metrics.
  • It provides data security (protected archiving).

QMIS was initially tested and implemented on the world-class $4.2 billion Hawiyah NGL Recovery Program (HNRP). Through its implementation, HNRP was able to achieve a shorter schedule, lower cost, higher quality, and better on-the-job training for Saudi Aramco employees, as well as contractors and suppliers.

Hawiyah NGL Recovery Program Results

As a result of all the quality planning throughout the project life cycle and through the implementation of QMIS during construction, HNRP’s quality improved substantially, as confirmed by two key quality indicators—the Request for Inspection (RFI) Acceptance Rate and the Project Quality Index, as shown in Exhibits 4 and 5.

RFI Acceptance Rate

Exhibit 4 – RFI Acceptance Rate

Overall PQI (2007-2008)

Exhibit 5 – Overall PQI (2007-2008)

With respect to schedule, QMIS has contributed significantly to the HNRP project schedule, as shown in Exhibit 6.

HNRP Schedule Performance

Exhibit 6 – HNRP Schedule Performance

The current industry average duration for an NGL Plant the size of Hawiyah is about 63 months from start of FEED to Mechanical Completion, including an average of nine months of delays.

The initial Mechanical Completion for the Hawiyah NGL Plant was achieved in only 53 months, with the last train completed seven month later. This is a remarkable performance in today’s tight labor and commodity market. Needless to say, the effective QMIS played an extremely positive role in achieving excellent results in program execution.

In addition, the program was completed 10% below budget.

Conclusion

Balancing quality and productivity is doable when we allocate time for planning and approach the balancing effort from a system view that provides an early overall look at disturbances and constraints, together with available controls to cope with them. In the Hawiyah mega-program, we were able to improve quality while improving productivity and schedule performance.

Hawiyah NGL and the associated project components will have a process capacity of 4 billion standard cubic feet of natural gas and 310,000 barrels of natural gas liquids per day.

The tools that delivered this project’s performance results are adopted across all projects for continuous improvement.

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.

© 2008 Mohommad Hammad, Manager Saudi Aramco : Nabil Al-Dabal, Manager, Saudi Aramco
Originally published as a part of 2008 PMI Global Congress Proceedings — Denver, Colorado, USA

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