04/21/23

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Facilitating Economic Growth in CubaShared Visions for Cuba-US Relations ConferenceAustin, TexasJanuary 29-30, 2009

Manuel A. Garcia, P.E.Associate Director, CIICockrell School of EngineeringThe University of Texas at Austin

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• Potential Scenario• Construction Industry Institute• Facilitation Tools

Today’s Presentation

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• Potential Scenario– Improved Cuba-US Relations– Opportunity for economic growth– Tight financial markets– Higher financial bar to overcome– Opportunity for different capital project

execution methods

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What is CII?

•A consortium of leading owners, contractors &

suppliers, and academia working to improve the

constructed project and the capital investment process.

•A research unit of the Cockrell School of Engineering

at The University of Texas at Austin

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Construction Industry Institute- Owner Members

AbbottThe AES CorporationAir Products and ChemicalsAlcoaAmeren CorporationAmgen Inc.American Transmission Co.Anheuser-Busch- InbevAramco Services CompanyArcher Daniels Midland Co.BP America, Inc.Bristol-Myers Squibb Co.Cargill, Inc.ChevronCITGO Petroleum Corp.Codelco-ChileConocoPhillipsDFW International AirportThe Dow Chemical Co.DuPontEastman Chemical Company

Eli Lilly and CompanyExxonMobil CorporationGeneral Motors Corp.GlaxoSmithKlineHovensa L.L.C.Intel CorporationInternational PaperKaiser PermanenteKraft FoodsMarathon Oil CorporationNASANAVFACNOVA Chemicals Corp.Occidental Petroleum Corp.Ontario Power GenerationPetrobrasPraxair, Inc.The Procter & Gamble Co.Progress Energy, Inc.Rohm and Haas Company

Sasol TechnologyShell Oil CompanySmithsonian InstitutionSolutia Inc.Southern CompanySunoco, Inc.Tennessee Valley AuthorityTyson Foods, Inc.U.S. Architect of the CapitolU.S. Army Corps of

EngineersU.S. Dept. of

Commerce/NIST/BFRLU.S. Dept. of EnergyU.S. Dept. of Health &

Human ServicesU.S. Dept. of StateU.S. General Services

AdministrationU.S. SteelVale

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Construction Industry Institute- Contractor Members

Adolfson & Peterson Construction

Aker SolutionsAlstom Power Inc.AMEC, Inc.Atkins Faithful & GouldAutodesk, Inc.AZCO INC.Baker Concrete ConstructionBarton Malow CompanyBateman Engineering N.V.Bechtel Group, Inc.BIS Frucon Industrial Svcs. Black & VeatchBowen Engineering Corp.Burns & McDonnellCB&ICCC Group, Inc.CDI Engineering SolutionsCH2M HILLCSA Group

Day & Zimmermanndck Worldwide LLCDresser-Rand CompanyEmerson Process Mgt.Fluor CorporationFoster Wheeler USA Corp.Grinaker-LTA/E+PCGross Mechanical

ContractorsGS Engineering &

Construction Hargrove and Associates,

Inc.HatchHill International, Inc.Hilti CorporationJacobsJMJ Associates Inc.KBRKiewit Power ConstructionM. A. Mortenson CompanyMcDermott International, Inc.

MustangParsonsPathfinder LLCPegasus Global HoldingsPrimavera Systems, Inc.R. J. Mycka, Inc.S&B Engineers and

Constructors, Ltd.The Shaw Group Inc.Siemens Energy, Inc.SNC-Lavalin Inc.TechnipURS CorporationVictaulic CompanyWalbridgeThe Weitz Company, Inc.Worldwater & Solar

TechnologiesWorleyParsonsZachryZurich

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University of Alabama

Arizona State University

Auburn University

Bucknell University

Carnegie Mellon University

University of Cincinnati

Clemson University

University of Colorado-Boulder

Colorado State University

Columbia University

University of California-Berkeley

East Carolina University

University of Florida

Georgia Institute of Technology

University of Houston

University of Illinois

Iowa State University

University of Kansas

University of Kentucky

Lehigh University

University of Maryland

University of Michigan

Mississippi State University

Universities involved in CII Research 1983-2008University of New Mexico

North Carolina State University

North Dakota State University

Oklahoma State University

Oregon State University

The Pennsylvania State University

University of Pittsburgh

Purdue University

Polytechnic University

San Diego State University

San Jose State University

Stanford University

State University of New York-Albany

Vanderbilt University

Virginia Polytechnic Institute and State University

Texas A&M University

The University of Texas at AustinUniversity of Washington

University of Waterloo

University of Wisconsin-Madison

Worcester Polytechnic Institute

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CII Mission

• Enhance business effectiveness and sustainability of the capital facility life cycle

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CII History

• Established as a recommendation from The Business Roundtable CICE Project to address:– construction research

– fragmentation of the industry

• Founded in 1983 by 28 companies;Now 116 members

• First to bring research to the engineering-construction world

• First industry-government-academic research collaboration for the constructed project

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• CII Practices (Facilitation Tools)– Widely researched and applied– Identified through proven research methodology– Yielding positive results– Supported by ready to use manuals

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Results

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Value of CII Best Practices(CII Owners)

Note: Average Budget 53 Million, submitted after 2002 (n=152)

Bet

ter

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Value of CII Best Practices(CII Owners)

Note: Average Planned Duration 135 weeks, submitted after 2002 (n=152)

Bet

ter

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DART (1989-2007)

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1,646 projects

Worth > $76 Billion

Large & Small Projects Combined

719(44%) 927

(56%)

OwnersContractors

CII Database

312 (19%)

1,334(81%)

International

Domestic

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Alignment

• Projects participants working in harmony to develop and meet a uniformly defined and understood set of project objectives.

Initial Application

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Elements of Alignment

Business Planning

Pre-Project PlanningProject Execution

Facility Operation

Business

Executive

Project

Functional

Project Life Cycle AlignmentCross-Organizational Alignment

Top-to-Bottom Alignment

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Alignment Index vs. Performance Analysis (from recent Research Team 213 data)

Performance Less than Median Greater than Median

Cost 3.3% over budget 6.5% below budget

Med. = 7.81

(N=30) (N=34)

Schedule 24.5% behind

schedule8.4% behind

schedule

(N=33) (N=35)

Change orders 8.2% of budget 7.6% of budget

(N=26) (N=27)

Alignment Index Score*

*Alignment During Pre Project Planning

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Partnering• Project specific partnering

– Project objectives focused; short term.

• Strategic alliances– Enterprise objectives focused; long term

Optimum Application

Partnering StrategyFor

ABC Partners

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Partnering Process Model

Owner’s Internal

Alignment

Phase 1 Phase 2 Phase 3 Phase 4 Phase 5

Work Process

Alignment

Partnering Relationship

Alignment

Project Alignment

Partner Selection

• Identify Business Drivers

• Evaluate Partnering

• Prepare and Align

• Select Optimum Partner

• Align Objectives

• Develop Measures

• Develop Reward System

• Develop “Win / Win”Objectives

• Reward Accomplish -ment of Objectives

• Establish Intraproject Goals

• Establish Processes to Support Measures

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Benchmarking Partnering vs. Traditional Construction

Category Result Area Results

Cost Total Project Cost (TPC)

Construction Administration

Marketing

Engineering

Value Engineering

Claims (% of TPC)

Profitability

10% reduction

24% reduction

50% reduction

$10 per hour reduction

337% increase

87% reduction

25% increase

Schedule Overall Project

Schedule Changes

Schedule Compliance

20% reduction

48% reduction

Increased from 85% to 100%

Safety Hours without lost time accidents

Lost work days

Number of doctor cases

Safety rating

3 million vs.

48,000 industry standard

4 vs. 6.8 industry standard

74% reduction

5% of national average

Quality Rework

Change orders

Direct work rate

50% reduction

80% reduction

42% increase

Claims Number of claims

Projects with claims

83% reduction

68% reduction

Other Job satisfaction 30% improvement

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Front End PlanningFront end planning is also known as:• Front end loading• Pre project planning• Feasibility analysis

Initial Application

• Conceptual planning• Programming/schematic design• Early project planning

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0 FeasibilityFeasibility 1 ConceptConcept 2 Design and Design and

Construction Construction

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Front End Planning Process

Initiate Phase

Generate Options

Filter Options

PDRI 1

Feasibility Report

Initiate Phase

Preliminary Design/Eng.

Preliminary Des./Eng. Reviews

PDRI 2i

Finalize Scope Definition

Cost & Schedule Control Estimates

PDRI 3

Project Definition Package

Initiate Phase

Analyze Alternatives

Conceptual Scope and Estimates

Evaluate and Select Best Alternatives

Concept Phase Report

PDRI 2

DetailedDetailedScopeScope

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Recent CII Pre-Project Planning Benefit Data from Research Team 213

• Sample of 609 projects, $37 billion

• Results of good front end planning:

Cost: 10 percent less

Schedule: 7 percent shorter delivery

Changes: 5 percent fewer

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Definition of Constructability

The optimum use of construction knowledge and experience in planning, design, procurement, and field operations in order to achieve project objectives

Initial Application

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The Constructability Process:

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Benefits of Constructability

• Avg. 4.3% reduction in project costs.• Avg. 7.5% reduction in project schedule.

• Potential to improve:• Security, safety, & environmental impact.• Project quality.• Operability, functionality, and reliability.• Project team relationships.• Rework and rescheduling on the project.

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Definition of Materials Management

Integrated process for planning & controlling all necessary efforts to – Specify– Procure– Deliver materials & equipment to the job

site.

Initial Application

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Benefits of Materials Management

Average % Improvement

Reduced bulk supplies 40Improved supplier performance 24Cash flow savings 23Reduced site storage and handling 21Improved craft labor productivity 16Improved project schedule 16Reduced management personnel 15Reduced risk 5

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Planning for Startup• Planning for the transitional phase between plant

construction completion & commercial operations, including:– Systems turnover.– Check-out of systems.– Commissioning of systems. – Introduction of feedstocks. – Performance testing.

Initial Application

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Benefits of Planning for Startup

• Provides common objectives & plan for:– System turnover, checkout, commissioning & filling.

– Performance testing.

– Business unit & plant operations.

– Owner project management.

• Involves key front-end stakeholders before design is fixed.– Project Management, Engineering, Construction

– Plus Startup Manager, Plant Operations & Maintenance.

• Increased focus on:– Cost elements of startup.

– Estimate accuracy.

– Meeting commercial operations date.

• Timely & thorough identification of problems & issues during planning phase…before startup activities.

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CII Best Practices

Project Planning Phase

• Partnering

• Alignment of Project Objectives

• Pre-Project Planning

• Team Building

Design Phase

• Constructability

• Materials Management

Construction/Startup Phase

• Planning for Start-Up

• Zero Accidents Techniques

Project Life Cycle

• Benchmarking

• Change Management & Scope Control

• Disputes Resolution

• Implementation of CII Research

• Lessons Learned

• Quality Management

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Other CII Practices (CII Best Practice Candidates)

Project Planning Phase• Attract and Maintain Skilled Workers• Automated Identification• Effective Use of Global Engineering Workforce

• Environmental Remediation Management• Equitable Risk Allocation• International Project Risk Assessment• Leader Selection• Modularization/Preassembly• Organizational Work Structure• Project Delivery and Contract Strategies• Project Security• Project Teams• Technology Implementation• Value Management• Work Process Simulation

Design/ Construction/ Startup Phases• Craft Productivity Practices• Design for Maintainability• Design for Safety• Engineering Productivity Measurement• Piping Design

Project Life• Cost & Schedule Control• Employee Incentives• Fully Integrated and Automated Project Processes (FIAPP)

• Lessons Learned• Management of Education & Training• Managing Workers’ Compensation • Project Health Assessment• Small Projects Execution

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Value of Best PracticesTheoretical Relationship

High

0.4

0.3

0.2

0.1

0

-0.1

-0.24th Quartile 2nd Quartile 1st Quartile

Practice Use

Perf

orm

an

ce

BetterBetter

3rd Quartile

Low

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Construction Industry InstituteConstruction Industry Institute

www.construction-institute.org

Thank you for your attention!Thank you for your attention!

Manuel A. GarciaAssociate Director

Construction Industry Institute3925 W. Braker Lane (R4500)

Austin, TX 78759-5316(512) 232 1966

manuel.garcia@engr.utexas.edu