March 2023PDECC—Parmar (Shure-Line Construction)

HP Tagline--PDECCOptimizing the construction process through lean project managementA. Parmar, MilliporeSigma, an affiliate of Merck KGaA, Darmstadt, Germany; and G. SHAHANI, Shure-Line Construction, Kenton, DelawareLean project management leans towards a business philosophy that brings value to the customer as opposed to conventional project management, which is focused on a product or project. In the conventional approach, the focus is on balancing cost, schedule and quality without compromising safety. By contrast, the key elements of lean project management are identifying and eliminating waste, improving quality, and minimizing defects and inventory. At its core, lean project management is directed at utilizing human resources to the fullest, optimize scheduling and focusing on the technical aspects such as avoiding the over-specification of equipment, instrumentation and piping. This article will describe the principles of lean project management, which is becoming increasingly critical in today’s business environment. Project development is becoming more challenging due to a very dynamic external environment. In the last 2 yr, COVID, inflation and supply chain issues have only exacerbated these trends—a recent article¹published in the June 2022 issue of Hydrocarbon Processing described the impact of inflation on construction and outlined some steps that can be taken to address this issue.Various tools and methodologies, including value engineering, value stream mapping and workflow management, will be discussed in this article.Quality in manufacturing and service. To refresh, Total Quality Management, Six Sigma and Lean were widely adopted in the 1980s to improve the quality of manufactured goods and services in the U.S.² This approach was based on gearing the entire organization’s focus on the product or service that is important to the customer, eliminating defects in the product or service by using statistics (Six Sigma) and applying quality control to minimize inventory. These techniques, work processes and tools have been widely adopted in the manufacturing and service industries to improve quality, reduce costs and drive customer satisfaction. In project development and execution, these concepts are equally important to deliver success. Projects are custom engineered, site specific and do not present opportunities for standardization on a large scale: typically common individual components like valves, instruments, heat exchangers and pumps can be standardized; however, the overall project cannot easily be standardized due to variations in customer needs, site conditions and local codes. Each project is unique in its scope. There is a large unmet need to deliver consistent results in accordance with the customer needs in a timely fashion. Typically, customers value one or more of the following attributes: high quality, low lifecycle cost, fast schedule, low environmental impact, project flexibility, quality communication and/or documentation. Safety is usually required by almost all customers. It is important to understand what is important to the customer and then design the project—including work processes, timing, cost sensitivity, engineering, design, equipment and construction—in a way that exceeds customer expectations.Lean and agile project management. The principles of lean production are clearly described in literature.³ These key principles include:

Specify value for the customer. Success may be defined as a combination of the following: high quality, low lifecycle cost, fast schedule, low environmental impact, project flexibility, communication and/or documentation. The key is to understand what the customer needs and then deliver that product or service. Low cost is not always the best choice. Some customers may value an accelerated schedule and are willing to pay extra so they can quickly generate revenue and profits upon accomplishment of the project.

Identify the value stream. It is critical to identify what each customer values. Some customers value low cost, while others may value a fast schedule or a higher quality and level of documentation. One size does not fit all. For example, 3D modeling—when used in the design phase—not only saves time and labor but provides the customer a good visual appreciation of the final project. To get an in-depth understanding of the value, it is important to engage all stakeholders, including the owner, engineers, subcontractors and equipment suppliers. Once the customer’s values are truly understood, it is important to sketch out the value stream in a map and communicate that with all stakeholders for review and agreement. Next, internal and external work processes must be identified to deliver the required value to the customer. It is essential to consider labor, equipment and materials factors.

Create value by eliminating waste. Any activity that does not add value is regarded as waste. Examples of waste include:

Defects: It is essential to start with high-quality components that meet or exceed specifications. This applies to purchased materials and equipment. Sub-standard materials are sometimes available at a lower cost; however, cheap materials compromise the quality of the end product and necessitate rework. It is essential to eliminate waste and defects while ensuring quality is not compromised. During the construction phase, a check by the client (or the client’s appointed inspector) on the qualifications of the labor utilized helps gain confidence. Frequent site visits, field reviews and quality checks are required to ensure there are no surprises during the startup phase. It is important to check and understand—especially at the initial phase of the project and as the project progresses—for any issues, concerns or showstoppers. As the project progress towards the final phase of construction, it tends to become more expensive and cause more delays. It is better to catch things as early as possible. Tracking a planned vs. actual S-curve (cost or labor hours vs. time)— when more time and resources are spent in the initial phase (e.g., design and engineering)—pays off with a smooth construction and startup (FIG. 1). Design and engineering are on paper and utilizing a 3D modeling program helps mitigate changes. For example, if enough head room to remove a gearbox agitator is not considered during the design phase, it becomes an expensive fix in the construction phase.

Waiting: Scheduling materials and equipment delivery on a just-in-time basis reduces inventory and improves cash flow by minimizing spoilage and storage costs. However, this principle may have to be relaxed in the post-COVID environment due to stretched supply chains. Ideally, routine communication on equipment delivery times, along with updating the schedule in real-time helps.

Talent underutilization: If scheduling is not done efficiently, expensive human resources are underutilized and deployed to low-grade tasks. For example, it is expensive to have a trained engineer doing the work of an expeditor or draftsman.

Excess processing: If a specification requires a tolerance of +/- 0.01 in., there is no value in exceeding that specification by an order of magnitude. It is important to focus on the big picture and not focus excessively on a small part. That does not bring value. However, quality requirements and specifications should be followed.

Motion: Every site visit should be carefully planned. Labor should have the right materials and tools to carry out the required task efficiently. Extra trips to the job site should be avoided—they are a waste of time and money. This can be planned and navigated cautiously, especially if a team of skilled workers are deployed in multiple projects to maximize labor utilization.

Transport: Unnecessary movement of equipment and materials to a job site or warehouse is expensive and can result in damage to the components. Therefore, this has become an important consideration in lean philosophy, as well.

There are countless other examples of waste in a large complex project. Once the mindset of lean is established and culture set with the entire team and stakeholders, the internal work processes will minimize waste.Parmar-Fig-01KEY ELEMENTSThe following are key elements for a successful project.Value from a customer’s point of view. Depending on its complexity, a project’s magnitude of scope and the intended value creation for the company over time undergoes an initial financial modeling and review to ensure it delivers a return on investment (ROI). This is one of the most important factors that generates value for the company. However, once a project is financially approved, various indicators such as actual vs. committed spend, and cost and time tracking, among others, come into play. They should be monitored and controlled throughout the full course of the project. The controlling function should include time, cost, risk and change management. Usually, some contingencies are factored in to allow for unknowns and uncertainties. Unjustified overspending is always undesirable. Overspending exponentially increases the time it takes in for a project to reach an ROI. It is essential to proactively ensure a project is executed in a cost-conscious manner, including internal resources and the resulting spending. Cost consciousness is a mindset. The following are key considerations throughout any project’s lifecycle:

Utilization of human resources in a project’s lifecycle. A project spans various phases, such as initiation, planning, design, engineering, procurement, construction and startup/commissioning. Depending on the size of the project, numerous avenues can ensure that the right number of resources are allocated. The size of the project team should be considered, especially with the expectation that team members contribute value during meetings and onsite. A longer decision-making process results in more frequent meetings and wasted time. The same goes for meetings with external parties, which often have associated costs, as well. These costs are mostly built into their proposal. The clearer the scope in the early stages of the project, the less the waste in clarification meetings with various parties. This requires qualified and experienced project team members. Design and scope clarity are important. Any ambiguity in this part of the project will result in additional contractor contingencies, which will fall on the client. Executing activity-based tasks should be effective and efficient. An adequate and effective project organization is required. The roles and sizes of organizations vary for each project. Typically, project coordinators, project managers, project controllers, construction managers, and startup and commissioning engineers all play key roles. Supporting departments such as environmental, health and safety (EHS) and purchasing should also contribute by adding value rather than introducing more bureaucracy.

Technical aspects such as the specification of equipment, instrumentation, piping and systems. A cautious approach should be taken during the design and engineering phases of the project. At times, specifications may be out of date, and they should be updated to the latest standards to avoid any later surprises. Depending on the project methodology—such as turnkey, design and build, or design, bid and build—it is important to ensure the controlling functions are engrained into the project cycle. The reliability, energy savings, energy recovery and sustainability aspects of equipment and other hardware used in the project should be considered. The selection of materials is also important. Not only does each project have a lifecycle, but the facility will operate for decades after commissioning; therefore, due diligence is required to optimize the lifecycle of the facility so it remains valuable. Unless an efficient controlling and review system is in place, it is easy to overdesign a facility without realizing the cost impact until the end of the project. The selection of equipment during the bidding process is also important. At times, prices are inflated due to the supply and demand gap, which remains volatile.

Waiting, transportation and inventory. During the construction phase, timing is critical. Waiting for materials to arrive onsite will cause idling labor crews. In addition, improperly planning for labor resources will cause delays even when materials are available. It is also important to keep track of construction materials and supplies so that they do not run low. These tend to be items such as welding consumables, gaskets and specified hardware such as studs, nuts and bolts. Bulk purchases with some contingencies can be beneficial.

Value engineering. Value engineering should be engrained in most aspects of project development. This helps projects consistently achieve low cycle costs without sacrificing quality and safety. A few examples of value engineering include finding more economical alternative materials, optimizing piping routes and energy optimization pathways incorporated in the design, such as in terms of energy recovery, and more efficient and sustainable equipment for operations.

Value stream mapping. A value stream map should be created for project management steps. This ensures the process stays lean and adds value. The project management process influences the delivery of the project, as well as its cost and timeliness. A lean project management ensures all components add value from the initiation stage through completion.

Kanban workflow management. Kanban is a lean tool that helps visualize project management work steps. When this methodology is deployed in project management, it helps improve activity-based workflows and efficiency, as well as aids in identifying and reducing waste. A Kanban board is used along with various tools such as cards and sticky notes. Not every project may require Kanban, and the approach should be reviewed by the project manager.

Pull system. The concept of pull vs. push comes from lean manufacturing, where each process step is broken down into discreet steps and then a pull or push is applied to get the best efficiency gains. Push is a traditional way where all the activities and communication are pushed to the next stage. An efficient push without friction depends on how seamless the processes are. In pull assignments, the reverse happens. It may not be possible or difficult to deploy a pull assignment in a project’s lifecycle, but it may be possible within intermediate steps at various stages of a project, depending on the project’s complexity. Pull assignments are a communication concept. The pull workflow system enables a project team member to pull in a task when they are ready and when old tasks are completed. This prevents the team from feeling overloaded with a tasks list when pushed. For example, during the construction phase of a complex piping system, a pipefitter pulls information (e.g., isometric drawings) from a pull scheduler or a project coordinator for the job and the required materials from a material coordinator that are needed ahead of accomplishing the current task. A series of such activities reduces stress/friction in the workflow and the overall project lifecycle. Communication and teamwork. An effective communication channel is required for successful project management. Periodic meetings and decisions made during those meetings should be recorded for future reference. A common platform or infrastructure related to document management should be deployed where all such information is easily accessible. This could be transmittals to different parties, and requests for proposals and drawings, among others. Continuous improvement and lessons learned. There is always something new to learn from each project. Many companies conduct an end-of-project evaluation to understand what could have been done differently to achieve better results. The project manager should conduct a critique exercise, which includes brainstorming on issues faced during the project’s execution and documenting learnings. For example, could leaner project management during a phase in the project save time and money? These learnings should be recorded for future projects. A mindset of continuous improvement should be instilled in every project team member. This will ultimately lead to documenting best practices in project management. In addition, it would be wise to include other parties such as contractors, vendors and suppliers involved in the project. The key elements of continuous improvement include:

Effective resource utilization

Value engineering (strive to do things correctly the first time)

Define values in performance metrics

Plan/do/check/act on sub-activities

Adopt principles of Lean Six Sigma

Use the pull system when possible

Keep it simple; always keep the customer in mind

Keep a library of lessons learned during all project phases and document at the project’s completion. This document should be available to all the project managers for consideration in future projects.

Tools for lean project management. Several tools have been developed for Lean and Six Sigma. Many of these tools and techniques were conceived and developed for manufacturing and business processes, and can be applied to project management and construction (FIG. 2). The two primary ones are the Deming Cycle and Lean Six Sigma. Parmar-Fig-02 Deming Cycle. The Deming Cycle is a model of continuous quality improvement that consists of a logical sequence of four key phases: plan, do, check and act (PDCA). This is a cyclical process that can be applied for several different projects. However, this approach takes time to implement and may be unsuitable for emergency situations. Lean Six Sigma. Lean Six Sigma is a lean management tool to identify problems in workflow. This tool comprises steps like the Deming Cycle, but it also has useful methods of analysis, including the following:

Define the project scope and plan goals

Determine how success will be measured in the project

Explore new ways to improve the project’s process

Develop a fool-proof project plan

Implement the project plan.

These techniques have a similar logical framework; the success of these techniques is predicated by the fact that you get what you measure. Additional tools include flowcharts, run charts, Pareto charts, check sheets, cause-and-effect diagrams, opportunity flow diagrams and process control charts. Keep a critical balance here, and not overdo visuals that bring uncertain value.Takeaways. Lean project management has become increasingly critical in today’s business environment. The COVID pandemic, inflation and supply chain issues require project management to adapt to the current business environment. Lean project management can be used to make project managers more dynamic, efficient and flexible. The key is to bring value to the customer by eliminating waste, improving quality, and minimizing defects and inventory. As projects progress, from initiation, planning, planning, procurement, construction and so on, making avoidable changes adds to the time and cost; hence, the initial phase of a project is supercritical. At its core, lean project management is a mindset, and the culture should be cultivated and maintained whether it is in the initial design phase or during construction. It is also directed at utilizing human resources to the fullest and avoiding over-specification of equipment and construction materials. Various tools and methodologies (e.g., value engineering, value stream mapping, workflow management) have been developed to implement lean project management. Lean project management adds value to the customer and helps engineering and construction companies become successful. HPLITERATURE CITED

Rentschler, C., A. Parmar and G. Shahani, “Inflation and supply chain issues in construction,” Hydrocarbon Processing, June 2022.

Parmar, A., A. Lloyd and G. Shahani, “A recipe for quality,” Hydrocarbon Engineering, December 2020.

Womack, J. P. and D. T. Jones, Lean Thinking: Banish Waste and Create Wealth in Your Corporation, Simon & Schuster, New York, New York, 2003.

First Author Rule LineASHIM PARMAR is the Head of Project Engineering at MilliporeSigma, an affiliate of Merck KGaA, Darmstadt, Germany. He has 28 yr of experience in project management, operations and maintenance, reliability and greenfield startups. His primary responsibility is leading projects from the conceptual phase to successful completion. Parmar is focused on continuous improvement and passionate about the Internet of Things, machine-learning and automation with a value-added approach. He previously worked for Eastman Chemicals, International Flavors and Fragrances, Symrise Asia Pacific, Novartis and Pfizer Pharmaceuticals.GOUTAM SHAHANI is a Sales and Marketing Consultant at Shure-Line Construction. He also teaches business and mathematics at area colleges. Shahani has 40 yr of experience in industrial marketing, business development and asset management at companies such as Air Products, Linde and Shure-Line Construction. Shahani earned BS and MS degrees in chemical engineering, as well as an MBA.CoverAd—MerichemContentsAd—ShellMastheadAd—ARTEditorial CommentAd—Honeywell UOPInnovationsAd—RotoflowViewpoint—Hooper (Siemens Energy)Ad—AxensSF Opening pageSpecial Focus—Delgado (Saudi Aramco)Ad—S&BSpecial Focus—Lee (Shin-Chuang Technology Co. Ltd.)Ad—ElliottSpecial Focus— Xia (SINOPEC)Ad—AumaProcess Optimization—Lewis (Worley Comprimo)Ad—FTCHeat Transfer—Acharya (Air Products and Chemicals Inc.)Ad—RembeEnvironment and Safety—Falzone (Eni)Ad—AFPM Annual Meeting 2023Environment and Safety—Bahubali (Wood India Engineering)Ad—GastechCarbon Capture-CO2 Mitigation—Demonte (Emerson)Ad—Carbon Intel Forum 2023VPT—Dominic (ADNOC Refining)Ad—IRPC 2023VPT—Merriam (Curtiss-Wright)Ad—ChemE Show 2023Maintenance and Reliability—Kittur (Saudi Aramco) (H2T0223)Ad—IPC 2023PDECC—Parmar (Shure-Line Construction)Ad—GEI MappingSales OfficeAd—1/2 V H2Tech CircAd—HP Circ (Back Cover)