PROJECT CONTROL PROFESSIONAL September 2006 17

Imagine the scene. You have justbought an aged property and youare going to refurbish itcompletely. You know what you

want and you know how much youcan afford to spend in order to make ithappen. You also know that youcannot do it all yourself and you willneed support from several differentskills areas – all of whom will have towork together in a coordinated way.You will also need to procure asignificant amount of equipment andmaterials on the way.

Most importantly of all, you want tobe sure that, after the work iscompleted, you have achieved every-thing you aimed for, and you aresatisfied with the result.

How on earth are you going toensure that everyone involved knowswhat is required, when it has to becompleted, and how they all need towork together to complete it inaccordance with your requirements?

You are going to do this by preparinga ‘project execution plan’. The projectexecution plan (PEP) is the vehicle bywhich the project director or projectmanager communicates his or herrequirements to everyone who is goingto play a part in the successfulachievement of the project objectives.

Ideally, in the client/contractorrelationship, the client should preparehis own PEP, indicating to his ownteam such factors as the conceptbehind the project, the business casefor going ahead, an explanation of theprinciples of the project economics,and a description of the intendedmethod of contracting the work.

This article, however, is intended tosupport the contracting side of projectexecution and so we will address thePEP which the contractor’s projectmanagement should prepare, for theuse of his project team.

Why? when? by whom?Major projects are comprised of

highly complex mixtures of tasks to beexecuted, quality standards to be met,budgets to be managed, interfacesbetween functions to be controlled,risks to be assessed, equipment andmaterials to be acquired, designs to bedeveloped, contracts to be awarded,and so on…

The project director has to find away to communicate his intentions – atleast at such a level that his team hassufficient guidance to develop theirapproach to their own roles andresponsibilities.

The reason he should do this is torecognise that, from the point ofreceipt of an inquiry document(Invitation to bid – ‘ITB’), a number ofpeople in the organisation will beprogressively mobilised to prepare thebid. (See Figure 1.)

For example, Phase 1 is when theITB is introduced by the sales functionto senior management, who will makea ‘bid/no bid’ decision. This decisioncould be based on one or more of thefollowing considerations:

� Is the project within the field of expertise of the business?

� Is the range of competition too great, thus minimising probability of award?

� Is the work essential, in relation to the current order book?

� What is the level of risk? Is now thetime to decline to bid at all?

� What are the expected margins from that market – or that specific

client?

Should the decision be made to prepareand submit a bid, then Phase 2 is initiatedand the next part of the team is mobilised:

back to basics

Execution plan – what’s that?Tony Reid* presents the second of a series of ten articles on various project controls topics, whichaim to describe the vital requirement to implement sound project controls processes on majorprojects

Figure 1

18 PROJECT CONTROL PROFESSIONAL September 2006

� The Bid Manager, to develop thestructure of the bid, to define theschedule for its preparation, and toassign names to specific sections of thedocument to start preparing their input.� The Project Director/Manager,(who is sometimes also the BidManager) to address the technical partsof the bid, and to play the appropriaterole, along with the commercial/legalpeople, in developing the approach tothe required method of contracting. Heis also the person who should preparethe execution plan.� The Commercial/Legal Manager(s),to start the process of reviewing theproposed contract conditions, to assessrisk and to consider how to align hisown company objectives with those ofthe client.� The Document Control Manager,to take charge of ensuring that thecorrect parts of the ITB are distributedto those named by the bid managerwho have to make a contribution to thebid, and to ensure that all subsequentdocumentation generated during thebid period is managed and controlledefficiently.

The next step, Phase 3 of mobilisation,would normally include the followingfunction heads, who would thenmobilise the appropriate members oftheir disciplines to contribute to the bidrequirements:

� Estimating� Engineering� Procurement� Construction� Commissioning � Planning� Cost control� Document control� Health, Safety and the Environment � Quality management.

By this stage, a significant numberof staff are involved and starting towork to what is highly likely to be atight schedule to deliver the bid.

It is simply good sense, then, toprovide them with guidance on howthe business (in the shape of the projectdirector) wants to execute the work sothat they may all base their contri-butions on the same premise – that isall ‘singing from the same song-sheet’.

Of course, the benefits of describingthe plan for the project go far beyond

the bid stage. It is worth rememberingthat, whatever goes in the bid will,following award, become a contractualcommitment – and so it is worth theeffort to get it right.

When should it be prepared then? Asthe above shows, there is an optimumpoint at which enough information isavailable to a small community toallow a fair understanding of theproject, but beyond which so manyothers are mobilised that a failure toinform would cause confusion.

The point at which the executionplan is released should be at thebeginning of phase 3, preferable at afull bid team kick-off meeting, wherethe project director can present hisplan and explain the rationale toeveryone involved.

What does the execution plancontain?In order to understand what should becovered in an execution plan, it may beworth considering the kinds ofquestions which arise from the teamwhen a major bid effort is launched.(See Figure 2.)

Estimating� What class of estimate is required –

budget or definitive?� How is the project to be awarded –

lump sum /fixed price, or reimbursable or cost plus, etc?

� Where is equipment and material tobe sourced – locally to site? WithinEuropean Union? Worldwide?

� Is there an equipment list? � Where are all the available

drawings?� Is there a prescribed work

breakdown structure (WBS) or cost breakdown structure (CBS)?

� Does the client expect a particular breakdown or structure of the estimate?

� Are we required to use the client code of accounts, or our own?

� Does the bid schedule allow adequate time for estimate reviews and estimate risk analysis?

Commercial� How can we align our objectives

with those of the client, in order to optimize our chances of winning, and establishing a rapport with the client?

� Do we understand the client

business case, and what can we do to support him in realizing it?

� How do we avoid conflict?

Health, Safety and the Environment � Which safety legislation is

relevant?� Is the client making any particular

HSE demands which are unusual tous?

� Does the client have any legal requirement to observe local HSE regulations?

� When can we describe the project safety strategy to the team?

� Are we going to impose our normalstandards on the site, and to what extent can we enforce them?

� Are there any specific, local, environmental issues?

� To what extent do we need to address the environment local to thesite?

Engineering� What is the status of design?� Is there an equipment list? � Is there any specialized, long-

delivery equipment?� How much of the equipment is

designed by the suppliers?� Where are all the available

drawings?� What are our expected

deliverables?� Is the concept agreed?� Whose process licence is involved?� What, if any, are the safety issues to

be addressed in the design?� Do we have to do any design during

the bid period for the estimate?

Procurement� What is the procurement strategy –

local or worldwide?� Are there any markets ruled out by

the client for political reasons?� Is there a client-preferred supplier

listing? � Is there an equipment list? � Is there any specialized, long-

delivery equipment?� What type of contract will we have?� How much involvement does the

client want/need in the purchasing cycle?

Construction� What is the exact location of the

site?� Which safety regulations are

PROJECT CONTROL PROFESSIONAL September 2006 19

applicable?� Can we use international

subcontractors or is there a prescribed local labour content?

� What are the assignment conditionswe can offer staff?

� What is the nature of any heavy lifts?

� Do we have to provide and managea construction camp?

Commissioning� Is commissioning within our scope? � Which safety regulations are

applicable?� What is the client’s involvement?� Do we have to train the client

operators?� At what stage does the client want

to start operator training?

Planning� What is the expected award date

and what is the target completion date?

� Is there a prescribed work

breakdown structure (WBS) or can we develop our own?

� Is there a prescribed cost breakdown structure (CBS) within which we must work?

� To what extent are we going to engage the planning and the cost control?

� What are the procurement and subcontract strategies?

� Is there an equipment list? � Where are all the available

drawings?� What are the client reporting

requirements?� How is the project to be awarded –

lump sum/fixed price, or reimbursable or cost plus, etc?

� How is the estimate being structured and what is the cost breakdown structure (CBS)?

Cost control� Is there a prescribed work

breakdown structure (WBS)?� Is there a prescribed cost

breakdown structure (CBS) within which we must work?

� To what extent are we going to engage the planning and the cost control?

� How are we going to manage the transition from the estimate to the control budgets?

� Who are the nominated budget holders?

� What are the cost reporting formatsand requirements to satisfy the client?

� What is the strategy for cost trending and forecasting?

Document control� Do we have to use the client

document numbering system or canwe use our own – or is it both?

� Can we use our own document management systems and processes?

� Is there a need to engage with the client asset register?

� What is the extent of client

Figure 2

20 PROJECT CONTROL PROFESSIONAL September 2006

involvement in the comment/review/approval cycle?

� Does the client have a prescribed document distribution matrix for their own organisation?

Quality management� Can we apply our own quality

management system to the project, or is the client insisting that we usehis system (which could have majorcost implications)?

� Do we have to make any major changes to our QMS for this project, or only the normal level of customization?

It can be seen from the above that thereare several common areas ofinformation which are of interest todifferent disciplines. It is easy tounderstand, therefore, that if noinformation is provided to them, eachwill make assumptions which may notbe compatible with each other, andwhich would lead to inconsistencies inthe response to the bid.

It is sensible, therefore, for theproject director to take the lead andinform his team on the key topicswhich make a difference between aconsistent and an inconsistent or,worse still, non-compliant, bid.It is also sensible to realize that aninconsistent bid document may stilllead to a winning tender but may laterresult in complex and expensive issueswhen practices and strategies acrossthe project team start to diverge,because assumptions were made in theabsence of clear direction.

How often should it be updated?Every project is subject to change, andchange even occurs during the bidpreparation period. It is obviouslyimportant that changes should becommunicated to the team, and theexecution plan should be the preferredmedium to achieve this.

The frequency cannot be defined butthe potential reasons for re-issuing theplan certainly can. These are asfollows:

� to communicate any change to the bid specification from the client

� to explain any internal changes of approach to the bid (for example – achange from the decision to procureonly in the European Union to

procuring worldwide)� to address any legal or commercial

issues which may require a strategyamendment which will affect the team’s action plan

� to communicate any change to the delivery date of the bid or, indeed, of the project itself.

To whom should it be madeavailable?The execution plan should quitesimply be available to everyone on theproject. The word ‘available’ is used inthe context that it is preferable that itbe issued to discipline heads so theycan make it available to their staff – bymeans of personal presentation andexplanation of its content andrationale.

One way or another, however,EVERYONE on the project teamshould know about its content.

To which other project tools doesit relate?The execution plan does not stand inisolation on a project. It should be thefocal point of reference for guidancefor many other project managementtools. These are described below.

Health, safety and the environmentare of paramount importance to thepeople involved and to the reputationof the business. The protection of theenvironment is EVERYONE’Sconcern and all related issues must beaddressed carefully. The executionplan should make a clear and formalstatement of project intent on all HSEmatters.

Project programme: the planningengineer is one of the most important‘users’. It is his job to translate thedefined scope of work into theintegrated plan (for engineering,procurement, construction andcommissioning) for the whole team touse to organize their work. He needs toknow the scope, the materialquantities, the details of the equipmentto be installed, where it is all to beprocured (he has to build in allowancesfor designing, approvals, purchasing,manufacturing, deliveries, shipping,customs clearances, etc. (some or all ofwhich may be relevant).

He also has to ensure that he hasplanned for all the cost elements

covered in the estimate, and has astrategy for engaging with the costcontrol process throughout theexecution of the project. The thirdarticle will address the planningfunction in some detail.

Subcontract plan: the contractsfunction uses the information in theexecution plan to develop the approachto subcontracting – local contractorsonly, or international, or jointventures? They must decide which isthe most appropriate form of contractto be used, start considering possiblepre-qualification and tenderingprocesses, and how risk is to bemanaged.

Engineering will take guidance on thestandards and specifications to beused, the extent of the list ofdeliverables, the unique and totalnumbers of equipment involved, anylong delivery or particularly complexequipment involved, and whether anyfurther work has to be done on processor specification development.

Construction plan: the success ofconstruction depends on everythingwhich precedes it, and so theadherence of others to the executionplan has a major impact on the wayconstruction progresses. Meeting theprogramme, making the progress andassigning the correct resources at theright time, are all key factors whichemanate from the threads of theexecution plan.

Quality management: from thedescription in the execution plan ofwhat is to be done, the QualityManagement system develops theapproach to how the quality of theoutcome will meet the requirements ofthe client.

Commissioning plan: this has to takeaccount of the point in the constructionphase when the plant is ready for pre-commissioning and then commi-ssioning (which comes from theprogramme – see above) and what arethe requirements about operator andtraining manuals – and when they haveto be ready to train local operating staff.

Cost control: the structure of thebudgets, which are derived from the

PROJECT CONTROL PROFESSIONAL September 2006 21

estimate, may be linked to a client-required cost breakdown structure, toallow the client to engage project costswith his own financial control system.Also, the control of costs may bedelegated to named project budgetholders and these must be identifiedand involved in the definition of theproject cost control procedures.

The execution plan should providevaluable information on all of this.

Progress measurement: the measure-ment of progress of engineering,procurement and construction has tobe considered carefully, and theobjectives and requirements of theclient and the contract, as defined inthe execution plan, must be recognizedin ensuring that the needs of theproject are met. The measurement ofthe planned progress and the costs ofachieving it, together combine to formone of the most important aspects ofproject control – the integration of costand time.

Reporting: the client usually has clearrequirements about reporting, so thathe can align the progress and currentcosts of the project with his ownbusiness reporting structure. It is vitalto define these in the execution plan sothat the whole project team aligns withthe same objectives.

Legal and commercial: it is the taskof the legal and commercial functionto protect the business interests of thecontractor but also to align with thoseof the client. The execution planshould provide sufficient informationabout the project for them to be able tocarry out their work effectively.

Take-away messagesFinally, here are some key messages

which provide a basis for taking theexecution plan seriously, and for usingit as a significant tool for achievingbetter levels of benefits to the business.

� Be clear about what an executionplan isThe project execution plan (PEP) is thevehicle by which the project director orproject manager communicates hisrequirements to everyone who is goingto play a part in the successfulachievement of the project objectives.

� Understand why and when shouldit be prepared, and by whomIt is prepared in order to communicatethe project intentions – to allow theteam sufficient guidance to developtheir approach to their own roles andresponsibilities. It should be preparedwhen the ‘core’ team understandsenough about the project to setstrategy but before too many of theteam are mobilised and doing theirown thing, and must be prepared bythe project manager.

� Understand what it containsIt contains sufficient informationabout how the project director wants torun the project to allow each of theteam disciplines to develop their ownapproach within a defined structure.The objective is to facilitate thedevelopment of an integrated detailedplan which supports the overallstrategy.

� Update it as requiredIt should be updated whenever asignificant change takes place whichmay have an impact on any of theparticipating disciplines, and whichmay affect the way the project is beingexecuted, perhaps introducing furtherrisk to its successful completion.

� Ensure that the right people haveit, and that they know whyIt should be issued to all the disciplineleaders involved in the project, andthey should then share its contentswith EVERY member of their ownteams. It is essential that ALLparticipants are working to the sameset of rules, and the execution plandefines these rules.

What next?The next article will address planning.It will consider why planning is sofundamental to the control of a projectin order to allow a focus on the keyactivities, and why planning of theproject activities must be engaged withthe control of their costs. It will alsodiscuss the need for full integrationacross the project, the development ofthe manpower plan, and therequirement to measure progress.

* Eur Ing C.R.A. (Tony) Reid, BSc, CEng, MIET, FACostE, MIODTony Reid is a chartered (electrical)engineer, and a Fellow and Past Presidentof the Association of Cost Engineers. Hestarted his career in electricity supply, incommissioning, operations and main-tenance.

He has nearly 30 years’ experience inproject controls, initially in electricitysupply, then in international oil and gascontracting, and more recently in a projectmanagement consultancy until he retiredfrom full-time employment earlier this year.

He now operates as an independentproject controls consultant, and can becontacted at email: crareid@aol.com.