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Achieving Excellence in Delivering Mega Oil Sands

Projects

APEGGA Annual ConferenceApril 26 and 27, 2007

Calgary

Facilitated byDr. George Jergeas PEng.

Professor of Project ManagementUniversity of Calgary, Alberta

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Managing Mega Projects Successfully

■ The theme of this year’s conference: “Achieving Excellence in Delivering Mega Oil Sands Projects” is intended to cover a significant range of current topics and issues.

■ The expert speakers with experience of exceptionally large and diverse projects may not provide answers to all problems but they should help to put things into perspective.

● Different and maybe conflicting messages■ We encourage it■ No right and wrong answers

■ Cover a variety of situations and issues and reveal how they have been tackled.

■ Opportunity for attendees to be involved in discussion and open debate of the key project issues that many companies are facing in today’s changing world.

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Agenda: April 26

■ 8:30 – 9:00: George Jergeas● Opening remarks and mega project challenges

■ 9:00 – 10:00: Ramzi Fawaz● The booming mega project environment

■ 10:00 - 10:15: Break■ 10:15 – 11:15: Roger Mapp

● Lessons to be learned■ 11:15 – 11:45: Managing the Fast Tracked Projects: A review of ECI report■ 11:45 – 1:00: Lunch

■ 1:00 – 2:00: Steve Revay● Typical pitfalls in delivering mega projects

■ 2:00 – 3:00: Nick Lavingia● How to create a world-class PM organization?● Gated process

■ 3:00 – 3:15: Break■ 3:15 – 4:30 Nick Lavingia

● Value Improving Practices

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Agenda: April 27■ 8:30 – 9:30: Jose Herrero

● Reliable AFEs Key Drivers on Mega Projects■ 9:30 - 9:45: Break■ 9:45 – 10:45: Nick Lavingia

● Total cost management – cost estimating

■ 10:45 – 11:45: Bob McTague● Prioritizing Engineering Phase

■ 11:45 – 1:00: Lunch

■ 1:00 – 2:00: Bob McTague● Improving Engineering Productivity

■ 2:00 – 3:00: Jeph Virtue● COAA Workface Planning Model

■ 3:00 – 3:15: Break■ 3:15 – 4:30: Jose Herrero, Ramzi Fawaz, Bob McTague, Nick Lavingia

Jeph Virtue● Panel discussion: Front-end planning and engineering, AFE, detailed

engineering, construction, commissioning and start-up.

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Overall Objectives

■ Analysis of our current practice● Not to blame anybody● Lessons to be learned

■ More questions than answers

■ Momentum for further discussions

■ Provide some initial recommendations

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Ground Rules

■Participation is key ●Ask and challenge the speakers

■Return promptly from breaks

■Cell phones/Blackberry off during sessions

■Enjoy the two days and do not think about work!!

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Audience Expectations

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Mega Projects Challenges

Dr. George Jergeas PEng.

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PHASE 2SELECT fromAlternatives

Determine Project Feasibility andAlignment withBusiness Strategy

Project Phases

PHASE 1IDENTIFY & Assess

Opportunities

Finalize Project Scope, Cost and Schedule and Get the Project Funded

Select thePreferred Project Development Option

Evaluate Asset to Ensure Performance to Specifications and Maximum Return to the Shareholders

PHASE 3DEVELOP Preferred

Alternative

PHASE 4EXECUTE

(Detail EPC)

PHASE 5OPERATE &

Evaluate

Produce an Operating Asset Consistent with Scope, Cost and Schedule

1 2 3 4 5

AFE

-DBM- Application

-FEED/BDS-Long-Leads

- Reg. Approval- AFE

- Detailed Design- Procurement

- Fabrication-Construction

-Commissioning

-Start-Up - Perf’m Testing- De-bottleneck

-Feasibility

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Project Phases

DBM

Feasibility

Regulatory Approval

AFE

Screening

FEED

Pre-AFE

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Mega-Projects

■ Cost > $1 billion?

■ Significant interfaces / complexity?

■ Most significant issues & risks must be managed at a level above the project team

■ Fast tracked

■ Many players with different interests and motives

The challenge is PREDICTABILITY!

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Mega Project Challenges

■ No major problems re quality, health and safety, regulatory and environmental

■ Projects running in excess of design capacity■ Making huge profits ■ No unskilled or unprofessional conduct by

APEGGA member or permit holder■ Significant cost/schedule overruns

●Many reasons

■ Blame unfairly placed on workers

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Mega Project Challenges

■ Small vs. Mega project●Overrun on small projects are not

recognized●50% overrun on $100K●50% overrun on $4 billion

■ 20 - 100% range equates to hundred of millions of dollars, in supplemental funding and foregoing many months of productive operational activity

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Mega Project Challenges

■Define and schedule work for 10,000 people every day

■Organize, order, store and retrieve 80,000,000 material items

■Manage worker turnover that can reach 300% annually

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Mega Project Challenges

■ On $2.5 Billion project

■ Engineering effort● 3.5 million workhours at a cost $100/hr● 40 - 50,000 design drawings● 10 - 20,000 vendor and shop drawings

■ Construction effort● 15 million construction hours● Labour force of 10,000 workers with a turnover of

30,000 people● Supported by 500 - 800 staff personnel

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Mega Project Challenges

■ Field labour approx. 5000 workhours per million dollars of capital ie. 10 - 15 million workhours at $85 to $100 per hour.

■ If labour production is not carefully managed this could easily double as it has done historically.

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Mega Project Challenges

■ The task of managing a craft mix of 10,000 workers working in pairs doing at least two different activities per day results in a never ending 100,000 individual jobs in a 10 day shift

■ Each job requires a combination of the correct, materials, location, access, tools, equipment, scaffold, safety, quality, rigging, consumables, welding, x-ray and many other inputs to allow the worker to get his job done.

■ This task belong to management which to date has not been able to plan, organize or execute

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