Project Management For Chemical Engineers 4j1x1c

PROJECT MANAGEMENT FOR CHEMICAL ENGINEERS B. Peachey1, R. Evitts2 and G. Hill2, 1

New Paradigm Engineering, Edmonton, AB, Canada. Department of Chemical Engineering, University of Saskatchewan, Saskatoon, SK, Canada.

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Abstract: In North America, chemical engineering undergraduate curricula do not usually contain compulsory courses dedicated to project management. Yet, early in their careers, chemical engineers are frequently assessed based on their abilities to completely solve an industrial plant problem. The complete solution involves much more than just technical calculations. Issues such as scheduling, scope, quality, safety and costs must always be addressed. In this article, the ingredients of three lecture hours of material dedicated to introducing chemical engineering students to the important area of project management are described. Keywords: project management; planning; costs; performance; quality; safety; contracts; risks.

INTRODUCTION

Correspondence to: Dr G. Hill, Department of Chemical Engineering, 57 Campus Drive, University of Saskatchewan, Saskatoon, SK, S7N 5A9, Canada. E-mail: [email protected]

DOI: 10.1205/ece06019 1749–7728/07/ $30.00 þ 0.00 Education for Chemical Engineers Trans IChemE, Part D, Volume 2, 2007 # 2007 Institution of Chemical Engineers

Chemical engineering curriculum contains large quantities of material that ensure students focus on learning the technical details of our profession. However, problems in industry always involve much more than just finding technical solutions. Industrial problem solving includes issues such as scoping the extent of the problem, establishing timelines, finding technical and suppliers, financial issues, safety and reporting. Handling all these issues efficiently is the domain of project management. The subject of project management is covered extensively in many books and texts (e.g., Dinsmore, 1993; Watson, 1997; Kerzner, 1998; Lewis, 1998; Melton, 2005). University courses dedicated to project management topics are not uncommon and are often available as elective courses in chemical engineering. However, in North America, due to the rules of accreditation and the very limited ability to incorporate new courses, very few chemical engineering programs include a single compulsory course dedicated to project management. In fact, in a survey of 28 Canadian and American Chemical Engineering Departments (all randomly selected from the AIChE Directory, Qin and Swinnea, 2006), only one had a compulsory project management course. Nevertheless, project management is part of every engineering task, and the understanding of project management principles is often left for new graduates to learn on-the-job. Many chemical engineers

begin their careers in remote field offices, established manufacturing facilities, or plant sites where there may be very little opportunity to learn project management skills from mentors, except through occasional with senior engineers in the head office. Therefore, most students will benefit from having some exposure to basic project management concepts to help them avoid unpleasant experiences in the early days of their careers. In the workplace there are two types of managers. Functional managers take care of a dedicated department and normally have direct authority over a budget and personnel. Project managers, on the other hand, fill temporary positions established to accomplish a specific task, the project. Project managers often have little authority, aside from what they are assigned in the direct project budget, and must rely on their personal powers of communication and persuasion to influence the of his or her management team (personnel seconded from company departments) to work diligently on the project goals. At the University of Saskatchewan, project management lectures have been included in the third year compulsory course, ChE 325: Introduction to Process Engineering. This course has a total of 37.5 h of lecture material that introduce students to a wide variety of skills needed in their final year, capstone design project. In ChE 325, the topic of project management is covered in one week of lectures (two, 1.5 h lecture slots) in which five Vol 2 14–19

PEACHEY et al. topics are discussed (A to E): Lecture 1: (A) introduction to the topic of project management and ensuring access to needed is available before accepting a project; (B) scoping, planning and getting approvals prior to starting physical work; Lecture 2: (C) contracting for engineering and construction activities; (D) project execution with regards to health, safety, environment, cost, quality and schedule; and (E) special features of small projects. Each of these topics is detailed in the paragraphs that follow.

PROJECT ENTRY The project manager needs to be clear who the clients are (such as a direct supervisor, a senior manager in another department, an external company manager, a government agency official, and so on), what problem needs to be solved and why that problem needs to be solved now. Do the clients really understand and agree on what outcomes they are looking for, and can they communicate that unambiguously? Do they expect the problem to be investigated only with written and/or oral reports; or do they expect the problem to be physically solved? In addition, what assumptions have already been made about this problem and should those assumptions be examined? The project manager must ask many questions in order to feel comfortable that the problem is well defined and within his or her expertise. Answers to these questions will focus the work directly on the task to be solved, help prevent the project manager from straying in the wrong direction, and will help ensure that the clients are happy with the project results. In return, the client will usually be impressed that the project manager is interested in understanding the essence of the problem and determining how urgently the problem needs to be addressed. Details of constraints that must be met, how often the client requires on the progress of the work, and client information in order to discuss any problems that may develop during the work must be established. A key issue will be the resources that can be used to solve the problem and these should be decided before the project is accepted. Resources needed to solve most engineering tasks include: money and an to charge expenses, time to solve the problem, personnel both within and outside your organization, and authority to make decisions such as spending and contractor selection. At the project entry stage, the project manager must realize project tasks will always include: planning the work; communicating clearly and motivating those who will work with him or her to solve the problem; monitoring the timeline, quality and expenses of the project; ensuring health, safety and environment issues are clearly addressed; and responding quickly to solve deviations from the proposed work plan. There is never a time that problems will not occur during an engineering task and it is wise for the project manager to believe that Murphy was an optimist, whatever can go wrong will go wrong but more than once. The new project manager will have to learn to use several software tools that are commonly used to plan and control company projects. These tools may be company specific or general, such as Microsoft’sw Project software. Project can help in the planning of work schedules and monitoring of budgetary issues.

15 Project Entry Example

Problems at the project entry level often occur because the problem was not well understood by the client, consider the case where the project manager was asked to solve a problem of unsafe volumes of gas venting from a water tank in a gas plant. The assumption of the client was that a vapour recovery system would be needed to collect and recycle the venting gas. The project was initially scoped and budgeted on that basis. The project manager, however, did some quick calculations and a site visit, which showed that, based on physical properties and flows, the vented volumes were much higher than what should have been expected. A check showed the root cause of the problem was a rock in the seat of a water level control valve on an upstream separator. The project was cancelled, and maintenance was carried out on the valve. A much smaller vapour recovery system was eventually installed many years later for odour control on the tank.

SCOPING, PLANNING AND APPROVALS In the next phase of the engineering project, the project manager begins by itemizing in writing all the information gathered in the Project Entry phase in order to confirm the true scope of the work. This is followed by the preparation of preliminary plans, and finally approval of the plans by the client. No work should commence until the plans are approved. In the previous Project Entry phase, the manager was evaluating the substance of the project, while this phase becomes one of more critically defining the project by preliminary planning and design. The more detail that is developed in this planning and deg stage, the more likely the project will run smoothly and reach a successful conclusion. After accepting the project, an initial task for the project manager in this phase is gathering data. Most projects involve a physical structure to be modified or built, and an important task for the project manager is to determine soil properties, the geology of the area and ecological issues that may affect the work. Since these are typically technical tasks that are beyond the expertise of chemical engineers, it is important that assistance is available either within the company or in the form of external consultants. Thus, the project manager must assemble a project management team with participants that have a variety of skills to assist in completing project tasks. The project manager must realize that due to his or her limited expertise and usually even more limited time, he or she cannot possibly complete engineering projects on their own. So it is important that access to personnel and equipment needed to successfully complete the design task is readily available. However, it is equally important that the project team be no larger than it has to be, to meet the scope of the project, no more than five or six people under the direct supervision of the project manager. Each team member will have clear responsibilities and resources allocated to them to complete their objectives. Team will be expected to manage those responsibilities with little interference from the project manager, unless their tasks are not getting completed. To help organize the team, a useful tool is the task responsibility matrix. This two dimensional table places the team as the titles of the columns and the tasks to be performed

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(preferably in chronological order) as titles of the rows. Each team member is placed in charge of separate tasks, but it is realized that the team will not have all the expertise to carry out all components of each task. In those cases, outside will be flagged, such as consultants or operations staff. Regular team meetings are needed to share progress reports. However, the team is not a democratic committee and if the project manager is convinced that bottlenecks are occurring, he or she may have to make personnel and resource changes to ensure the project is completed efficiently and in a timely manner. Problems may have been identified during the initial planning stage, for instance if a structure is needed to be built on or near government parks or historical sites, delays will occur in order to obtain permission to proceed with the work. The project manager will need to study the regulatory issues that will govern the project, the social climate at the location of the work, and the availability of goods and services that will likely be needed to do the work. Many steps of the Project Manager’s work will likely fall under industrial, legal or professional regulations or guidelines. For instance, in the Province of Saskatchewan, the Engineering and Geoscience Professional Act addresses issues such as contracts and bids for major engineering projects. If the project is large and located far from a populated area containing skilled labour, a temporary labour force may be needed, so that camps and travel issues must be considered. Using historical information for similar projects and information gathered on local issues, estimates of how fast various stages of the project can be completed must be made. In developing the Project Technical Plan, the management team can make good use of Failure Mode Effects Analysis, FMEA, when estimating where to allocate scarce resources. In brief, FMEA requires the team to assign numbers to each of three risk factors: probability of risk actually happening, severity of the risk and finally ability of the team to detect whether the risk will occur. The product of these three numbers is called the risk probability number (RPN). Resources are applied in proportion to the value of RPN, the higher the RPN, the more resources are applied to that risk factor. Examples of common project risk factors include bad weather, loss of personnel and technology failure. The Project Execution plan is the key planning document of this stage. It itemizes responsibilities of each team member, engineering tasks, government and other stakeholders, the work to be done, who will do the work, where work is to be done, schedule of the work stages, approvals and permits to be obtained, contracting strategy, labor requirements, estimated costs, material procurement, construction, health/safety/environment and commissioning/ start-up procedures. Stakeholders outside the company, including government organizations, must be considered at all stages. Regular communications with these partners will help to prevent nasty surprises when some of their concerns are not incorporated into the work. Unions should also be considered as stakeholders and commitments to these organizations by your company must be upheld. Most projects will require various sizes of work forces at different stages of the project, but it may be possible to rearrange work stages to maintain a fairly even contingent of labour at the site at most times. It is clear that to be successful as a project manager, the engineer needs good communication and motivation skills.

He or she will take ultimate responsibility for the success or failure of the project and will be the key individual at all stages of the work. Planning, coordination, decisionmaking, delegating, documenting and time/cost control are all tasks or skills that will be imperative to the success of the project manager’s work. The of the project management team may change over time, with the importance of individual inputs changing as the project continues. For instance, process engineers will design the system to begin with, have less or no influence during actual construction, but will likely return during commissioning and start-up activities.

PROCUREMENT AND CONTRACTING Once planning and approval are completed, a project comes to life with the acquisition of workers, materials and equipment needed to do the work. The project manager needs to be aware of the proper procurement procedures used in the company. Are local or national/international suppliers used? Are open bids necessary or can targeted businesses be approached? If bidding is used, ensure all interested parties are dealt with fairly and ensure team avoid such things as gifts and meals that may be construed as putting bias on decisions. Details such as who buys materials are important. The contractors with specialized knowledge in each work stage are often the most qualified to make purchasing decisions on bulk items and consumables, but these decisions should still lie within your company’s policies of using local or other suppliers and handling bids in a fair manner. Regardless of the purchaser, of the project management team must stay on top of materials ordering, since it is important that materials arrive just-in-time for their incorporation into construction. Since lead time is inevitable, the orders must be placed at the right moments in time, and some storage must be made available at the construction site for materials that arrive early. On the other hand, severe penalties must be stipulated to suppliers who fail to deliver critical path equipment items on time, since this can have drastic effects on the project schedule. Ownership of materials is also an important issue. For instance, when does ownership change from supplier, to contractor, and then to your company? If damage occurs, ownership is a critical issue when deciding who accepts the loss. What about ordering spare units or the possibility of using surplus equipment that is already available within your company’s inventory? The selection of contractors follows the same rules as materials procurement. Should local or other companies be sought out? Is bidding to be used and should it be directed towards select companies? What is the procedure and timeline for receiving proposals and making the selection? Be sure fair procedures are used and the bidders are aware of all the procedures. The preparation and contents of each contract should be as detailed as the whole project plan. Detailed work and timelines of each contract must be clearly specified. The obligations of both parties must be listed, as well as the istration of the work. Clauses should be included that cover how problems or discrepancies are to be addressed. For most engineering tasks, payments must be made as progress is made, since the financial burden of large engineering or construction contract work is usually

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PEACHEY et al. too much for contractors to bear, so payment scheduling and appropriate measurable milestones must be included. When assessing the bids, important issues to consider include the experience of the contractors, the cost, and whether the bidders have fully grasped the scope of the work to be done. When a contract is to be awarded, four different types are possible: (1) Lump Sum—is similar to purchasing a car, the price is firm and based on the detailed specifications; the contractor is responsible for delivering within that budget, unless the client makes changes from the scope; (2) Cost-Plus-Fee—is where the client pays all direct costs for the project, as verified by invoices, and covers the contractors profit by adding a percentage fee; (3) Unit Price—might be used to contract for insulation, where there is a fixed price per unit of length of pipe sizes and insulation thicknesses; and (4) Time Rate—which might be used to supply equipment such as cranes, where an hourly or daily rate is charged for use or availability of a specialized piece of equipment. It is important that the project management team has regular and direct access to the contract work so that progress can be monitored. If changes need to be made, direct access can help the team decide if they are really necessary and if so, to help decide on what kind of changes are best suited to meet the work objectives, and the impacts of the change on cost, schedule, quality, and safety for the project. The team member in charge of each contract stage must also that the contractor is paying bills, since if not, the owner may be held liable for unpaid expenses. There has to be strict control measures placed on each contractor, and any changes in project scope, so that cost overruns do not occur. The value of the work should be already known to the project team from their expertise with similar projects and/or documentation on typical costs for such equipment and installations. The timeliness of the work should be measured by strict metrics that were specified in the written contract, and if deviations occur, the team member in charge should develop strategies to help the contractor get back on track. The cost and time factors for each contract need to be frequently documented and information provided to stakeholders so that all parties are aware of the status of the work. Most projects, and component work tasks, follow a typical ‘S’ curve in of percent completion, with slow starts, steady intermediate progress, and followed by slow final completion.

Project Contracting Example A major challenge in project management is anticipating any issues which may arise during a project, so that the response to the issue can be addressed in contract and procurement documents. One issue that often comes up is where there are multiple contractors working on different components of a project, and friction or extra costs occur where the work of one contractor impacts the work of others. Normally the problem is that one contractor takes longer to complete their assigned tasks, preventing other contractors from starting, so there are usually incentives or penalties included in contracts to prevent this. However, this is not always the problem. In one case a pipeline contractor, with a lump sum contract, unexpectedly built up their workforce and accelerated their work in advance of the planned schedule, to allow them to move on to another

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project. There were no contract to prevent this, in fact there was a bonus for completing the work by a specified date, but the rapid completion resulted in delays to other contractors on the site due to higher than expected activity, and also an increase in the cost when pipeline routing had to be modified to accommodate the earlier than expected installations. In later contracts this problem was avoided by providing a bonus for contractors exactly meeting the contracted schedule, with penalties if they were too early, or too late.

QUALITY ASSURANCE This item is the main focus of the project manager. It includes ensuring that all aspects of the project meet expected performance standards, meet all safety criteria, comply with all government regulations and the project work is performed in a balanced, cost effective manner. Performance measures include ensuring equipment meets all the technical specifications developed in the design stage and set out in detail in the contracts issued to the contractors. To meet this goal, appropriate manpower with appropriate skill sets must be available to work directly with the project manager. During the design work, issues to be reviewed include schedule, costs, specifications, drawings, safety, maintainability, operability and reliability. During construction the quality assurance personnel check the credentials of vendors and contractors, review the materials handling and control procedures, record and construction changes and ensure all contractor work is completed to the company’s satisfaction, before payments are made. Finally, before operations begin, the quality assurance personnel ensure units have been tested, operating and maintenance manuals are readily available, safety and emergency systems are in place and working and finally that appropriately trained operating personnel are on hand.

HEALTH, SAFETY AND ENVIRONMENT (HSE) The project manager must make sure that these issues are stipulated in all contracts and that appropriate safety equipment and emergency response services are on hand at all times during construction and start-up. Each contractor must accept responsibility for HSE compliance during their phase of work. Procedures for HSE and reporting requirements must be followed and appropriate penalties must be in place for violations of these issues. Safety personnel must be on hand to check procedures, materials, alarms and equipment as well as to respond to emergencies such as fires or spills during all stages of construction and operation. Government regulations must be followed and these always stipulate that safety meetings be held at regular intervals so that managers and personnel can freely input any safety concerns about work that is being undertaken.

PRE-COMMISSIONING AND START-UP Before contractors are paid and released from their obligations, it is imperative that after each work stage equipment is tested (pressure testing, vibration testing, control systems working, alarm testing, and so on) to ensure it works to expected performance levels. Each contractor must leave

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the site in a pristine state so that following work units are not impeded in meeting their scheduled activities. When all construction work is completed, all materials and supplies including spare parts must be on hand and itemized before start-up is commenced. Operators must have been fully trained and oriented to the work site layout. Safe work permits and final instrument monitoring checks must be on hand and carried out by skilled personnel, probably brought in from similar operating sites. The system should be purged, and then the documented start-up procedures can be carefully followed to bring the new project on-line.

WRAP-UP The project management team should meet one last time to provide design , vendor and contractor assessments and overall project . This report will be a vital piece of information to project management teams in the future, or if any new problems show up after project completion.

SMALL IN-PLANT PROJECTS In some ways these types of projects are more difficult to handle than large projects, since they are often taken for granted by company management, and therefore less resources are provided to the project manager to successfully complete the project. And yet, the outcome may be disastrous unless the project manager ensures equal care and similar due process is followed in completing small projects as for major design projects. Thus it turns out that the project manager spends much more of his or her time on the detailed steps of small projects than on large projects, and the engineering component of the project may be as much as 25% of the final cost (versus 10% on a greenfield project) as many peripheral systems will have to be checked to ensure they can handle incremental loads. Also, dangers exist, since the existing working plant contains hazards that all workers must be aware of when they come to complete their phases of the work. Operators must be informed on a daily basis of project work that is starting or on-going in their areas, is needed from them regarding possible safety problems and any ‘hot work’ must be supervised by experienced operations personnel.

Small Project Example Most industrial operations have now implemented change management procedures to ensure that any changes made in an operating facility are adequately reviewed for potential consequences before they are implemented. Sometimes even a seemingly simple request can potentially lead to major disasters. A plant engineer received a maintenance request to add some additional block valves to allow on-line maintenance of two parallel, 100% spare, process vessels. The spare allowed longer process run times between shutdowns, but a full plant shutdown was required at some point if both units went down, so the change was meant to increase plant availability. The plant engineer designed the piping to make the change. However, during the change management review it was pointed out that this 1950s vintage plant was designed on the basis of annual plant shutdowns, and pressure relief protection was only provided to

the inlet and outlet of the plant, not on individual process vessels or systems, and valves in the process were limited to those required to redirect flow. Adding block valves, as requested by maintenance, would have created the potential for a high pressure situation in the process with no pressure relief protection. Adding relief capability to the whole plant would not have been economic compared to existing losses due to flaring. The change was not implemented.

SUMMARY Professional project management is the key to the safety, quality, cost and schedules of all engineering tasks. Make sure that when you accept these tasks you are clear on what is to be done and are comfortable that the resources needed to accomplish the work will be made available to you. The key to success will be your initial and thorough design plan and your ability to gather a qualified project management team, while maintaining a high motivation level in these throughout the project lifespan. You must stay on top of things by monitoring the progress and costs of each stage; and be prepared to take action to correct deviations as each stage of the project progresses.

EVALUATION AND IMPLEMENTATION The lectures described above have been presented for the past three years in our course. Students are assessed on their ability to comprehend the material through a 15 min, 10 question quiz at the end of the last lecture and through final examination questions. Following the quiz, students are also provided an opportunity to give written on the quality of the presentations and usefulness of the material. On a scale of 1 to 10, with 10 being the highest score, the lecture rating is 9.4 (well above the overall Department course average of 8.3). In their next academic term, students are provided the opportunity to implement project management activities through their final year, capstone design project (as part of our course ChE 422: Process Engineering and Design II). The majority of the capstone projects involve solving industrial design problems, while a few projects involve scaling up new research processes developed in the College. Each design project is solved by a design team made up of three students. The projects have three phases: I. Project Definition and Alternative Selection, II. PFD/PID Development and Process Modelling, and III. Economics and Safety. For each phase, a different group member acts as the project manager and is required to implement the strategies identified in the process management lectures. While acting as project manager, the quality of the work done s for the majority of that student’s mark in the course. Although no quantitative data is available, it is very clear that the majority of students are enthusiastic about their project management roles and take this responsibility seriously. It is the professor’s opinions that this has led to improvements in the quality of the final year design projects.

REFERENCES Dinsmore, P.C. (ed.), 1993, The AMA Handbook of Project Management (American Management Association, New York, USA).

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PEACHEY et al. Kerzner, H., 1998, Project Management: A Systems Approach to Planning, Scheduling, and Controlling (Van Nostrand Reinhold, New York, USA). Lewis, J.P., 1998, Mastering Project Management (Mc-Graw Hill, New York, USA). Melton, T., 2005, Project Management Toolkit: ing Success at Every Stage (IChemE, Rugby, UK). Qin, S.J. and Swinnea, J.S. (eds), 2006, Chemical Engineering Faculty Directory (John Wiley & Sons Inc., Hoboken, NJ, USA). Watson, C.S., 1997, Managing Projects for Personal Success (International Thomson Business Press, London, UK).

19 ACKNOWLEDGEMENTS

The Department of Chemical Engineering at the University of Saskatchewan is grateful for the ongoing financial assistance of Dow Chemical Canada. Those funds the continual improvement of our undergraduate courses.

The manuscript was received 4 August 2006 and accepted for publication after revision 10 December 2006.

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