Competent leadership and adherence to a realistic project execution plan using consistent communication with all project contributors will help ensure success.
Norb Roobaert, Alliance Wood Group Engineering
Contracting engineering services for a topsides facilities project can be a challenge because it is difficult for the owner/operating company to measure the topsides engineering’s value. For some companies, the approach is to use minimal engineering and fix any resulting problems in the field. This may work for simple projects, but it usually fails for offshore topsides projects of any complexity. Other companies engineer to an extreme, which can waste millions of dollars and months of time scrutinizing all project aspects without compensating benefit. This article attempts to find the best solution for companies in their project execution and their use of engineering on complex offshore topsides facilities.
Typically, the results that define project success can be traced simply to safety and rate of return (ROR) on capital investment, calculated from project cash flow, which depends on schedule, capital cost, operability, maintainability and uptime. If those two key requirements meet the project goals, much of the battle has been won.
The factors that determine cash flow and safety are the “vital signs” of a project. These activities must be handled correctly, or the results can cost lives, risk injury, jeopardize the company’s financial position and reputation, undermine the economics of the project and ruin careers. We will explore how the operator/engineering partnership can best be used to improve these project vital signs.
THE OPERATOR’S ROLE
Operators have primary control over project results. They set the plan, assign personnel, decide which contractors to hire, make the most important decisions and control costs. Most operators will benefit from determining the most effective way to utilize engineering to improve cash flow and safety.
The operator decides the role engineering plays in the project and has overall responsibility for the results, but engineering is perhaps the most critical component of the topsides facilities. For the project’s success, it is critical that the operator consider the following:
A good overall plan. A good plan for the project is necessary and should begin pre-discovery. Seismic surveys can be used not only for lease value but to plan exploration, appraisal and development wells. The company should understand the reservoir in both its static and dynamic states in order to effectively plan the topsides facilities. That planning should begin once appraisal drilling has provided sufficient information to set the design basis for fluid properties, production rates and the need for enhanced recovery including electric submersible pumps (ESPs), gas lift or waterflood. Starting topsides engineering too early usually results in rework, while starting too late causes lost time that cannot be made up.
Detailed project execution plan (PEP). The PEP is required for delivering a return on investment that meets management’s expectations. This detailed plan must be developed before the concept stage commences. It is a living document that will be continually revised as the project progresses and as more information becomes available. Contract engineering can provide enormous value in helping develop the PEP, but decisions and direction must come from the operator. A good project timeline template is a key ingredient to the PEP.
Personnel. Competent, experienced operator personnel are needed to plan and manage engineering and the project as a whole. The number is not as important as the experience and competence of the leadership team. Operator personnel should not be doing the work but rather directing it. For example, one of the most successful deepwater projects in the Gulf of Mexico had only two individuals managing the topsides engineering: a lead engineer and a procurement lead.
Open communication. Operator lead engineers must see that information required to progress the design is available and decisions are made in a timely manner. Topsides leads bring in other operator leads and experts working on other phases of the project to coordinate parallel activities. The topsides, hull, mooring, drilling, reservoir information, fabrication and installation activities cannot function effectively in individual silos. These work centers must be coordinated, and the leaders of these activities must be continually informed of the overall plan as the project progresses. One way to accomplish this is for company management to host project meetings at least quarterly for all the contractors’ management and leads to review safety and cash flow components for all phases of the project.
Teamwork. Operator project management should organize a steering team of operator and contractor management and leads for topsides engineering in order for these project partners to get to know and trust one another, and to better understand the status of the vital signs components.
SETTING PRIORITIES
Safety should be the No. 1 priority of any project. Any accident causing serious injury or death, or the loss of significant investment, should be avoided at all costs.
Within the components that most determine cash flow and, thus, project ROR are schedule, capital cost (capex), operating cost (opex) and uptime. The company should analyze ROR sensitivity to these parameters and set priorities accordingly.
For an example project, if a 25% ROR is expected if all goes as planned, the ROR’s sensitivity to each parameter can be estimated as follows:
• A six-month delay in production lowers ROR to 15%.
• A 5% increase in opex lowers ROR to 12%.
• A reduction in uptime from 95% to 90% lowers ROR to 10%.
• A 25% increase in capex lowers ROR to 23%.
Clearly, for this example, ROR is most sensitive to schedule, opex and uptime, and less sensitive to capex. This is normally the case, but the ROR sensitivity to these parameters should be calculated for each project using its own set of unique data. The operator must know the ROR sensitivity to these parameters and make these the drivers for all project partners. Engineers that understand these drivers are in a better position to help the operator meet its project goals.
SPECIFIC KEYS TO SUCCESS
By adhering to the project’s “vital signs,” both the operator and its contracted engineers can develop specific objectives and strategies in many areas to maximize successes and minimize failures.
Safety. Accident prevention should be emphasized rather than accident reporting. The engineering company can prepare the documentation and conduct the safety program with the direction of the operator safety officer.
The operator should conduct at least three hazard reviews—two in design (hazard identification, or Hazid) and one in operations (hazard and operability, or Hazop)—before approved-for-construction drawings are issued. The reviews should involve competent engineering personnel familiar with the design as well as other engineering personnel unfamiliar with the design. An experienced facilitator, usually a specialized outside consultant, should be used for these hazard reviews. Most importantly, the operator must follow up on these safety reviews to ensure that the recommended and approved changes are actually incorporated into the design.
Project management. Effective project management begins with robust front-end planning; projects incorporating such planning have the fewest problems during execution.
The key to staying on schedule begins with a PEP and a realistic, detailed schedule. A good plan can accomplish on-time project completion and profitable results. A Gulf of Mexico deepwater facility produced first oil within 25 months following sanction and paid out during the first year of production.
Effective procurement. It is important to first develop a procurement strategy and follow it up with efficient procurement processes. The procurement strategy should be developed during the conceptual design phase of the project and integrated with the risk management program, and should become part of the project execution plan.
Creating efficient procurement processes requires avoiding software malfunctions, excessive approval procedures and miscommunication with engineering concerning requirements. Fabrication can be accelerated by identifying and ordering long-delivery equipment early, expediting (including vendor data) and coordinating deliveries.
Schedule. The key to staying on schedule begins with a PEP and a realistic detailed schedule that includes all of the tasks required to complete the project in the correct sequence, with adequate time allocated for each task. Actual project milestones for a deepwater facility in the Gulf of Mexico reflect the importance of the PEP for maintaining a schedule that leads to a favorable ROR:
• Month 0: Discovery
• Month 14: Project sanction
• Month 33: Load-out
• Month 34: Offshore installation
• Month 36: Offshore hookup
• Month 39: First oil
• Month 44: Nameplate production
• Month 50: Total project payout.
Instituting a realistic schedule requires input from experienced personnel in project management, project engineering, planning, construction, installation and logistics as well as all engineering disciplines including process, mechanical, structural, electrical, instrumentation and systems.
Project execution plan. To be effective, the PEP must minimally include the project organization, the risk of each phase to overall project goals, the names and job responsibilities of participants, and a well-defined contracting strategy.
Many partners contribute to the success of a project. Their tasks, the sequence of tasks and how they interface with the operator’s and engineering’s roles must be understood by all partners. This effort initially takes time but pays big dividends.
The organization inside the design office should include, on the operator side, the operator topsides project manager and other operator personnel as needed (including safety, procurement, operations and discipline personnel). On the engineering company side, the design office should include the project manager, safety engineer, contracts lead, procurement manager and staff, project controls and staff, project engineer or engineering manager, lead discipline engineers and designers, and constructability support personnel.
A realistic capex budget must be part of the PEP and include an understanding of what controls the budget, such as scope of work, specifications and market conditions at the time of purchase; a solid conceptual design by qualified engineers; and a quality engineering package for fabrication and installation. With regard to the latter, bidding must be prepared so that engineering work is not performed out of sequence, and a detailed plan should be submitted prior to project sanction, with the risk of each significant task to the overall project schedule thoroughly evaluated.
Poor layout, poor equipment selection, incorrect material selection and inadequate redundancy all lead to high opex, and should be avoided.
SUCCESS THROUGH TEAMWORK
The operator holds the keys to a successful topsides facilities project. It prioritizes the vital signs—namely, safety and return on investment. Competent leadership and the adherence to a realistic plan using consistent communication with all project contributors will help assure project success. 
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THE AUTHORS
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Norb Roobaert is the Chairman of Alliance Wood Group Engineering. He founded Alliance in May 1993 and served as its president until October 2009. Mr. Roobaert has more than 40 years in engineering and project management in the oil and gas industry. He spent 15 years with Conoco as a Process Engineer, Process Engineering Manager and Project Manager. He holds degrees in chemical engineering and chemistry from the University of Michigan.
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