Introduction: true story (with pictures)

Greetings (and, by special request, a Hoo-ya’ to ya’ SoCal),

Many of you are here because I gave you this link while facilitating a VIP (Value Improving Process), and some of you may have gotten the link as part of my Project Manager mentoring program. I’m also getting a few hits via Google, however, so let me introduce myself… scott01

There are lots of Scott Smiths; this one is me.

At Exxon, Project Management teams are assisted by experts, referred to as NPQC (non-process quality control). While resident at a contractors offices in Milan, I had a fascinating NPQC for Instrumentation and Computerization, who flew in regularly from Amsterdam, named Albert

Albert had a great spiel for simplification, going something like this: The ultimate computer would only have a single button, and it would be labeled : “You Know What I Mean“.

I suspect that often the first screen to flash after pushing the button on such a machine might start with: “Let me tell you a story“.

So, let’s begin such a story…

Which story? I am going to select one from the 1980′s. Mainly because it is illustrative of a well executed, schedule-driven key phase of a mega-project, but also because I have lots of data, photos and even video. My follow-up assignment running the contractor’s home office activities (while the action was in the field) also gave lots of time to put together my close-out report: two bound volumes upon which I have received quite good feedback (Lou, especially: thanks!). While putting these pages together, I also reluctantly admire some youthful pluck – I was just seven years into “becoming a pro”, (see my post on that) optimistic beyond all reason, and I am somewhat charmed by the voice I hear in my reportage, which I have not tempered, below… My role was not Commanding Officer (Project Manager), but his very active XO, filling in as top dog for a few weeks, formally in charge of Schedule, Costs and Contract Administration throughout.

My temptation is to start with what, if this was a movie, would be called Plot Point I, on pages 25-27 of the script. Here, after some previous foreshadowing during the visit by iconic Exxon head-of-all-projects Manny Peralta, prepping for the following week’s visit of Saudi Royalty to our site, Manny expresses “interest” that a similar project in the same facility has hired Henry Kissinger to lobby top management and is offering $$ one million dollar per month unilateral incentive bonuses to meet schedule, while my incentive plan is monthly beers at the local pub. Manny sends out Exxon’s top scheduling expert and the top Fluor (our managing contractor) scheduling expert to perform a joint audit on my work. Conducted five months before the first of our five scheduled module-shipment dates, they report that at best I will be three months late – at $50,000 per day demurrage on the ships, plus hugely more in other disruptions – and at worst case six to nine months late! Fade to “bad day” music, as the sun sets over the module fabrication yard…….


Positive Note: this will be resolved in Plot Point II, pages 85-90, after I have convinced my management to stick with me, and Shipment 1, even though we waited an extra four days so the president of Korea could attend the shipping-out ceremony, goes on time, as do all of the other shipments, including the last shipment two weeks early. The time frames achieved compare favorably to Exxon internal “Effective Construction Span” data based on direct construction manhours (13 months actual vs. 18 predicted), and also compares well to the next best bidder for this module work, an experienced Japanese yard (a first-pass contractual six to nine month longer schedule, which might have been negotiated down to, say at best, a three month longer schedule than was achieved). But at what price? 9.1% below the control budget; 21.2% below the estimate at the time of contract award. The modules were insured for $125 million, as part of a roughly $500 million total project.

As I said, I was tempted to start at Plot Point 1. But if you will indulge me, I’ll start at the beginning (of course, feel free to jump down to page 6 to get to the meat, if you wish). By beginning, I am talking Michener-like, way beginning…

One Comment

  1. Justin Smith
    Posted August 28, 2007 at 4:21 am | Permalink

    I found the summary of this posting (page 8) very useful. It is clear that you have a lot of good insight into the oil industry. I would like to learn more about the political pressures -internal and governmental- your projects faced, and your recommendationed solution for overcoming/circumventing these obstacles.

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