1. Overruns in Offshore Projects: Toward
Productivity and Performance Improvement
Professor Peter ED Love 6th February 2012
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2. Offshore projects
Between 1993-2003 (Merrow, 2003)
1 in 8 major offshore projects with a CAPEX ranging from
US$1 million to US$3 billion a financial disaster
Exceed cost and/or schedule by 40% or producing less
than 50% of production capacity
2010 (Det Norske Veritas, DNV)
On average experience a cost overrun of 35%, and 7
months behind schedule
Why?
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3. Recurrent factors contributing to
cost overruns include:
Poor scope definition ≈US$3.8b US$5.2b
Optimistic scheduling of design,
engineering and construction
Placing of orders before
engineering is complete
Implementation of new
technology without qualification
Poor interface management
Fabrication yards having to build
competence and resources
during the project
Hibernia Platform – construction costs alone
increased by US$870 million
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4. Forms of waste in offshore projects
Changes, errors, omissions → rework
Estimates of rework costs found to
range from 10 to 50% of CAPEX
Lower rework in new build FPSOs
Design errors materialize during
operation
Non-value
Downtime:
Inspection of ballast, cargo tanks, and propeller shafts,
adding which involves the mobilization of inspection teams.
activities
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5. Preliminary observations
Common design errors found during maintenance and
inspection of FPSOs include:
• Bow –inadequate structural design and consideration
of environmental loadings
• Breakdown of coating systems – poor selection and
application
• Tank – inadequate construction techniques
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6. Generic dynamics of rework
Relationship contracting
Project scope
• Negative impact of
workflow
• Production pressure
Production
FPSO interface with
subsea/topside/vessel/pipeline
The „+‟, and „-‟, respectively, classifies positive and negative consequences of an increase of
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7. Design errors: Sleipner A failure
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Loss resulted in 2 year delay, loss of
structure and revenue US$780m
8. • Eliminate wasteful practices • Optimize resources
• Streamline production flow • Improve efficiency
Lean construction
“Way to design production systems to minimize waste
(materials, time, and effort) to generate maximum value”
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9. Re-think project delivery
• Remove lowest cost – go for
value
• Eliminate competitive
tendering
• Introduce performance
measurement into contracts
• Integrated project teams
• Improve workflow
predictability ( eliminate buffers/wasted capacity)
Source: Lean Construction Institute
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10. BIM: From 3D → nD modelling
A methodology to manage the essential design and project data
in digital format throughout the an assets life cycle
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12. Dynamic planning: real-time
RFID Sensors and tracking
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