In our last newsletter, we described two distinct approaches to improve the value cost/benefit of rig inspections. In that newsletter, we discussed a value-based approach that focused on KPIs and operational integrity. In this newsletter, we’ll look at the second approach, which is a focus on more traditional cost control.
The majority of rig inspection costs are a function of day rate and project schedule. Of these two factors, the day rate is set at the start of the project and remains constant for the duration. In contrast to the unvarying day rate, the project schedule can be highly variable, and as a result have a significant impact (positive or negative) on project costs. For example, concessions from the supply chain on day rates have already provided some cost savings to the industry, but that savings could easily be wiped out if we lose control of the schedule. A one day overrun on a ten-day project plan schedule immediately wipes out the savings of a 10% reduction in day rate.
Variation in project schedules are a result of variations in planned vs. actual work schedules. Overruns are most often the direct result of several factors including:
- insufficient planning and preparation before beginning the work,
- insufficient real time tracking of project progress and delays, and
- unexpected work scope changes once the project has started.
Minimizing or eliminating these variations requires establishing and maintaining control over both planning and execution of project schedules. All too often, an inspection is treated as a string of activities rather than an integrated project, and effective control is never established, let alone maintained. Establishing and maintaining control is accomplished with effective project management practices. These practices include several critical artifacts and activities including:
- Establishing and maintaining a project quality plan
The project quality plan contains a project delivery risk assessment and mitigation plan that is completed prior to the start of each project and requires review and signoff by the inspection team, the operator, and the drilling contractor.
- Establishing and maintaining a project execution plan
Overall project execution is managed with project execution plan, which is owned by the inspection team project lead or manager. The project execution plan ensures all project expectations are defined, understood, and met. It contains tools for project definition, preparation, staffing, execution, change management and meeting management. It ensures that all project stakeholders are prepared for the scope, impact, and deliverables of the work plan the inspection team will execute.
A key activity and milestone in preparing and executing the project execution plan is a project execution plan workshop, in which the rig contractor, operator, and inspection team review and sign off on the project execution plan. This workshop ensures alignment between the primary stakeholders and eliminates the most common sources of project variation and uncertainty.
- Maintaining real time project progress tracking and reporting
The execution of the project plan, and progress against that plan can be most effectively defined, tracked and managed on a daily basis using a well-established project management and tracking method known as “project earned value”. In a nutshell, project earned value is an approach by which you monitor the project plan, actual work, and work completed value to see if a project is on track. Earned value shows how much of the budget and time should have been spent, given the amount of work done so far.
A good earned value tracking tool provides detailed reports and trend charts in real time showing for both the overall project and each project phase activity:
- Schedule status – on/ahead/behind
- Schedule trends – steady/accelerating/decelerating
- Budget status – on/above/below
- Budget trend – steady/increasing/decreasing
Regular status update meetings to review the project earned value tracking reports and evaluate and make real time decisions as to the impact of any events that would negatively impact the agreed upon project conditions are key activities. These meetings are attended by the inspection team lead, and all operator and contractor stakeholders.
Minimizing and eliminating variations in inspection project execution provides a significant positive impact on project costs and impact. Establishing and maintaining a project quality plan, a project execution plan, real time project tracking and status reporting are the key elements of accomplishing that goal.
Athens Group Services rig uptake services project management and execution methods result from our vast experience inspecting, verifying, and testing a broad cross-section of complex integrated systems. Our inspection project management methods are rooted in the fundamental principles of integrated systems engineering, inspection, and test, and are designed to reduce the uncertainty around project costs and deliverables. Contact us to discover how our methods can ensure you establish and maintain control over your inspection projects necessary to reduce cost and impact on operations.
To see the latest Athens Group Services developments, please follow us on Linkedin and Twitter.
Using KPI-based inspections to establish operational performance assurance