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Introduction

There is general agreement throughout the industrial world that large complex projects have had a very rough time of it. In fact, megaprojects fail more than twice as often as their <$1 billion counterparts using the same criteria for failure.

Large cost overruns, major delays, poor operability and far too many safety incidents characterize well over half of the industrial projects of $1 billion or more around the world.

OR&A Ltd. has been following the work of IPA Inc. for the last two decades, from their early observations and reports dating back to the 1980s to the most recent publications in the IPA Newsletter.

No Surprises
The founder and President of IPA, Mr. Ed Merrow, is recognized as a Subject Matter Expert in the execution of large and complex megaprojects and his knowledge of capital projects is sought out by companies and professionals worldwide. His expertise in megaprojects is built on decades of research on the unique challenges of these complex investments.

The findings of IPA therefore come as no surprise to us at OR&A Ltd. because we have seen and experienced first hand, the behaviours and decisions described by IPA that lead to such outcomes.

The Problem
Most companies have an initiation request process, often referred to as a Project Initiation Request (PIR), which initially defines the start of a capital project with a basic scope and definition. However, the content and rigor involved in PIR development is often inconsistent, leading to a lack of key information.

The PIR is very important to decision makers because the information it contains forms the basis for assessing value, complexity and early cost or schedule commitments. This in turn also dictates the availability, reliability, maintainability and operability of the completed asset.

The adjacent graph, reproduced from a recent IPA Newsletter** serves to illustrate the problem perfectly. If the basic premise for starting a project is flawed, it is unlikely to be improved during the project.

If we accept the findings of IPA (and we do), it is no surprise then that many mega-projects have serious operational problems into their second year of operation.

The solution to this problem is to ensure the requirements of the Owner/Operator are addressed during the conceptual, design and construction processes to ensure the Operability and Maintainability (and therefore the commercial viability) of the asset is achieved.

Essentially, stakeholders in such projects cannot wait until a project is declared as complete and handover to the operations team is imminent, to discover that something has been omitted or overlooked which would subsequently prevent or restrict operation of the asset to the design intent.

Use OR&A from the beginning
Most projects begin with a Feasibility Study which generates the content of the PIR, and which should also include OR&A to ensure that the commercial viability of the asset can be achieved.

As IPA also identifies, the Industry needs to establish methods to track the performance of capital projects in real time, based on integrated knowledge of project performance towards the achievement of the intended outcome. This is where the OR&A Solution from OR&A Ltd. excels.

IPA says successful and consistent project outcomes can be achieved through integrated management and adequately informed decision making. Control of the capital project practices go a long way toward delivering more predictable and repeatable project outcomes.

Managing them using a web based, real-time assurance tool such as the OR&A Solution is clearly the way forward.

Typical PIR Content

As the studies conducted by IPA have shown, the content of many PIR documents are inadequate and is often not revised as the project progresses.

** Data and research findings reproduced by kind permission of IPA Inc. The full IPA newsletter article can be found by following the link below:

Ifunanya Onwumere, "Portfolio Management Instability Drives Less Predictable E&P Sustaining Capital Project Outcomes" IPA Newsletter, June 2018 (Volume 8, Issue 2).


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