Project Change Management

Basic Approach in Project Life Cycle Overviews,

Risk and Change Management

Dr. Iwan Ratman MSc PE

Vice President Project Management BPMIGAS

Jakarta, 20 December 2010

 Agenda

• Project Life Cycle Overview

– Initiating, Planning, Execution and Closing
– Project Stage Gate Process
• Project Risk Management
– Project Risk Management
– Cost Estimating, Planning & Scheduling
– Uncertainty & Contingency Planning
• Project Change Management
– Project Change Management
– Type of Changes
– Change Management Elements
• Conclusion

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Project Life Cycle Overview
 Definition

A project is a finite endeavor - having specific start

and completion dates - undertaken to meet
particular goals and objectives, usually to brings
about beneficial change or added value.

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 Project Life Cycle Overview

Conceptual Design Construction/

Feasibility Study Operation
Study Engineering EPCI

Time Distribution of Project Effort

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 Project Stages

Appraise Select Define Execute Operate

FEL-0 FEL-1 FEL-1 FEL-2 FEL-3 Execute Operate

Identify Appraise Select Optimize Define

Phase-1 Phase-2 Phase-3 Phase-4 Phase-5

Generate & Select
Identify & Assess Opportunity Develop Preferred Alternative Execute Operate & Evaluate
Alternative(s)

Comm &
Appraisal Design Pre-Project Basic Engineering EPSC Operations
StartUp

Pre-POD FEED Construction Operation

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 Key Criteria for Distinctive
Investment Performance

Choose the Right Project Develop the Deliver the Project Right
Project Right

APPRAISE SELECT DEFINE EXECUTE OPERATE

Operational
Excellence
Risked Portfolio Excellence in
Management Project Management

Conceptual FEED Construction Operation

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 BPMIGAS Business Process

Pengajuan usulan kegiatan

Pre-POD Pengajuan usulan AFE FEED Pengajuan usulan AFE Konstruksi

Evaluasi Teknis & Biaya Evaluasi Teknis & Biaya Evaluasi Teknis & Biaya
Pengadaan
Pengadaan FEED Kontrak Konstruksi
Tidak Tidak Tidak
Setuju? Setuju? Setuju?

Ya Ya Ya

Pelaksanaan Pre-POD Pelaksanaan FEED Pelaksanaan Konstruksi

Sub-Surface, Pemboran, Spesifikasi Teknis Detailed Eng, Fab’n, Instal’n,
Skenario Fas Prod, Off Taker, Gambar Teknis Sertifikasi, Konsultasi PLK
Tidak
Hukum, Keekonomian Estimasi Biaya Konstruksi
Deviasi Contracting Strategy
Ya Persetujuan
bisa
Evaluasi dan Persetujuan POD diterima? PLK

Start-Up and
Tidak Sesuai Commissioning
Ya
Tidak Ya dengan
Setuju? POD?
Placed Into Service

(AFE) Close Out AFE Close Out AFE Close Out

PenanggungJawab:

EKS/EPT/PPA JIAN/PPA MP PBO PMA

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 Business Process - Pre POD

KKKS BPMIGAS
JIAN

EKS/PPA PMA SDM

Awal Kegiatan Kick Off Meeting

EPT EKS PMA

MP OL PO
Identifikasi dan
In Progress
Seleksi Konsep PPA PMG HSPF

EKS PBO PMA

Akhir Kegiatan Sasaran Tercapai? PPA SDM PMG

Usulan POD

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 Business Process - FEED

KKKS BPMIGAS
MPM

Sesuai dengan EPT/PPA PMA SDM

Awal Kegiatan
persetujuan?

Tech Tepat Guna?

Surplus Material? OL PO PMG
Produk Lokal?
Optimum Design? EPT/PPA PMA JIAN
In Progress Strategi
Pengadaan
Lingkup Kerja
Tender
JIAN PBO PMA

Lingkup proyek OL PO PMG

telah terdefinisi
Akhir Kegiatan
dengan baik?
EPT/PPA SDM HSPF
Sesuai POD?

Usulan AFE EPCI

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 Business Process - EPCI

KKKS BPMIGAS
MPM
EPT/PPA PMA SDM
Sesuai dengan
Awal Kegiatan
persetujuan?

OL PO PMG

EPT/PPA PMA PBO

Biaya, Mutu &
Waktu? SDM HSPF JIAN
In Progress
Perijinan?
Sertifikasi?

JIAN PBO PMA

Sasaran OL PO PMG
Akhir Kegiatan Tercapai?
Persetujuan PIS EPT/PPA SDM HSPF

Operations

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Project Risk Management
 What is a Risk?

• A Risk is anything that could happen that would

significantly affect the achievement of the Project
Objectives. (Cost, Schedule, Construction, Staffing,
Operability, etc.)
• Each Risk has a Likelihood of Occurrence and a
consequence or Impact to the Project if it does.
• A Risk can have a Positive (Opportunity) or
Negative (Threat) Impact on the Project
• When a Risk occurs, it becomes an Issue that must
be resolved so that the Project Objectives can be
met

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 Flow Diagrams

Project Risk Management Flow Diagrams

Apply
Avoidance or
Analyse Reduction
Identify Monitor &
Probability and
Risk / Changes Manage
Impact Define
Contingency
Plans

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 Cost Estimation

AACE Cost Estimate Classification

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 Accuracy and Contingency Ranges

Phase FEL-0 FEL-1 FEL-2 FEL-3

(AFF-GATE) (AFD-GATE) (AFE-GATE)
AACEI
Class 5 Class 4 Class 3 Class 2
Classification
-20% to
Accuracy -20% to +40% -15% to +25% -10% to +15%
+50%
%
Engineering 0% to 2% 1% to 5% 2% to 10% 15% to 30%
Complete
Contingency 20% to 40% 20% to 30% 15% to 30% 15% to 25%

At least 1 Viable Optimized

Basis Very Broad Complete FEL
Concept Concept

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 Level Probability vs Cost Estimate

Cost & Schedule Probability Curve (S-curve)

P90
Sample
P70

P50
Contingency
P50 – Determin. Estimate
P35

Deterministic A : Value P10

Estimate B : Value P50
(Including C : Value P90
P10 D : Deterministic Estimate
Allowance)
E : Deterministic By PM

A
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 Uncertainty & Contingency

100 Uncertainty results from variations in the scope of a project.

Contingency is allowance to cover unforseen costs or time within a defined scope.

90
ACCURACY LEVEL

-30% +100%
50

CONTINGENCY

10

P10 BASE P50 P90

COST EXPECTED
COST
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 Contingency Plan

CONTINGENCY
PLAN

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Project Change Management
 Change Management

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 Project Change Management

Must be evaluated within the context of the original

plan or activity.
– During the detailed design stage – the Basis of Design
is the reference point for scope change.
– Once procurement orders are placed and Authorized
for Construction Drawings are issued – the
procurement orders, awarded contracts, and AFC
documents are the reference points for scope change.
– The Project Manager may also impose a “design
freeze” which defines the reference point for scope
change.

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 Project Changes Management

Manage Project Changes with Risk Management.

Possible outcomes for each risk (Changes):

• Take action to avoid the risk, reduce its likelihood, or reduce
its impact,
• Make contingency plans and deal with the impact and
mitigate the risk should it occur,
• Agree that it is an acceptable business risk to take no action
and hope that the risk does not occur.

Do not wait for situations to come up before you address them

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 Scope Changes

Scope Changes can be mandatory or discretionary

SCOPE CHANGES

Mandatory Discretionary

Is it unsafe? Will it not All other changes to project

work? Is it illegal? premise or scope of work

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 Project Changes

• Scope Change is a deviation that results in noncompliance

with the project premises or is any change to the project
scope, execution methodology or schedule. Project scope
is normally defined at the time of AFE approval. This is not
intended to include cost changes due to Cost Trends. It is a
change that modifies the project scope of work or premise,
requiring proper authorization to provide additional
funding to the project.

• Cost and Schedule Trend is a deviation in the project plan

or design that does not result in noncompliance with the
project premises.

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 Trends

Trends are changes that do not alter the project premise

Examples:
• Market escalation – material or contract pricing, including
foreign exchange rates
• Productivity – field labor productivity, engineering
productivity, construction errors and rework
• Estimate variations – quantity and wage rate variations,
installation rate (not productivity) variations
• Design growth – omissions to drawings, design interferences,
additional design development in accordance with the BOD
• Back charges and / or rework
• Other – claims, legal, insurance, vendor errors, changes to the
project execution plan
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Conclusion
 Project Management Areas

Integration Scope Risk

PSCs PROJECTS
Time HR
Onshore Offshore

Cost Communication
Banyu Urip
Masela
Quality IDD
Procurement

Project Objectives
BPMIGAS External
Supervision, Party Audit
Monitoring and Flawless Startup
Approval

Achieved Production
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 Achieving Business Objectives

1) Develop a disciplined approach to project

management with emphasis on:
– Capital Efficiency
– Efficient Cycle Times

2) Appropriate application of the process would

improve credibility through:
– Predictable Outcomes
– Improved Operability

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 THANK YOU
Merci Beaucoup

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