Project Planning

First we need to say that we recognize that some organizations consider the part of a venture prior to actually starting design and the part of a venture after the last bolt is tightened to be outside the domain of the project and outside the domain of the project manager. We accept that the owner is the owner and has the right to make the definitions. In presenting our views on planning we defend "stepping out of the box" by pointing out:

  1. That someone is making the planning decisions even if the decision made is to follow chance.
  2. We have been fortunate enough to be involved in early venture work as well as startup and optimization. We would like to share the experience and hope you find it useful.

We think the object and use of planning is several fold:

  • One is to produce a comprehensive list of the work items to be done to get the first shipment to the customer.
  • The list can then be used to develop a "division of responsibility", a table of who does what.
  • The list items can be logically connected to make a network diagram defining the logical path to get this first shipment out the door.
  • Appropriate durations can be assigned to the items on the network diagram to establish the project duration and critical path.
  • Resources needs can be determined from the schedule as can cash flow needs.
  • The list can be shortened for management review and reporting.
And we think the project plan/schedule can be one of the most useful tools that a project manager can have to signal problem spots and potential delays.

General Guidelines

In this section we are going to describe the planning methods and tools we would use for a major industrial plant project. We are also going to provide some guidelines for project management that we hope you find useful. It takes a lot of words to describe proper planning and provide the reasoning behind the recommendations, maybe more than is comfortable for one reading. We that hope you find the information useful and that you'll come back to this page as often as you need to. Additional information in more detail is available from our project resource page.

Planning is key to organization and communication, and key to project success, that is, project completion that is on time and on budget. If the project manager builds a good plan, and insist that the project be executed as planned, the project manager will free to oversee the progress, to make decisions, and to handle any problems that occur.

  • For any project there can be many different plans. We don't have to have the one best plan but we do want to develop one of the top four or five possible plans to execute this project.
  • We don't want this to be just the Project Managers's plan. There is room in our thinking for everyone involved to make input and improvement.
  • If you are the project manager, use all the planning tools you need and go into detail as required, but detail for the sake of detail is not desired. Use your experience and discretion to decide how much detail to show on any particular set of tasks. Given the choice, however, we would always over plan to some degree. One reason is that we would rather throw a few pieces of planning paper away instead of letting chance make our project management decisions. Another reason is that no matter how many projects we have managed, we have not managed the particular project at hand. We want to do our best job.
  • Start the planning early and plan the overall venture, from the first business brain storming meeting through the first product delivery. The first plan the project manager makes will not contain a lot of detail, will be missing items, and much of what is on the first plan will probably be wrong particularly in businesses with which he is not familiar. If you are the project manager, don't let that stop you from making a first pass at a plan.
  • Seek input and accept input. When others are involved in planning, they will give feed back and hopefully take some ownership of the planning. Also, they will come to realize that the project is bigger than just their portion. This realization may change how they think about the job ahead and their portion of the job. But use some sensitivity and care:
    • Many departments within a business organization do little to no planning. Call the first plan something nonthreatening like the "Logic Chart" so the audience is not terrified.
    • If you are the project manager and you think, for example, that the early business planning will take seventeen meetings and four months to accomplish, you may be better off showing this as one four month line labeled Early Planning. Hopefully this will result in the business people taking ownership of the task and telling you what it takes to do this work.
    • Be prepared to explain the project implementation parts of the plan. If you, the project manager, have already discovered that the project is short on time and you are going to recommend that the company purchase long lead equipment items early (with cancellation charges identified), be prepared to discuss the tactic and risk, and make the point that time is already short.
    • After you receive input, make the second plan and distribute it for review and improvement. Repeat the plan-distribute-review-improve process as many times as needed during the formative phase of the venture keeping the focus on timely delivery of the first lot of product.
  • The object of planning is not to determine when something can be built. The business determines when something must be built. The object of planning is to determine what must be done to achieve that date and what will be the cost.

What we think is important to take away from this discussion is:

  • That although design-build is a necessary part of a major industrial project it is only one part, and maybe the easiest part.
  • That the owner, someone on the owner's staff, the project manager, the business team, or maybe an appointed exploratory committee must make a sincere effort to discover all the steps required and obstacles that will be encountered.
  • Using one of the commercially available project management software programs, the owner should prepare a mini-project for each process/challenge anticipated. This should be done by developing a network of tasks with appropriate time durations and precursors assigned and milestones designated.
  • A master plan should be made by importing the mini-projects. The mini-project milestones are then linked to produce one coherent project plan/schedule. The critical path should be identified. (The process at this point is very similar to the classical project management process.)

On the first pass it is common to have a schedule that is too long and a critical path that is too long. The following is the key difference between a public works project and an industrial project. In an industrial project:

  • Using this first pass schedule and the project management software, set the end date. The end date is the date required by the market and it must be achieved.
  • To shorten the critical path to an acceptable duration:
    • Determine which processes can be done concurrently or early. Estimate the added cost and risk of this maneuver.
    • Determine which processes if any can be simply skipped. Estimate the the risk to project success.
  • Repeat the exercise until all of the credible options have been explored.
  • Present and explain your finding to management. Present any key findings that may influence their decisions. Be prepared to answer the following:
    • Can the project be completed or not? What would stop the job?
    • What resources (people, early purchases, and so on) will it take?
    • What is the order of magnitude project cost?
    • What are the risks if one or more of the time shortening tactic are wrong?
    • What options do you think management should consider?

This will be discussed further when we discuss the role of the project manager. At this point we only want to mention that at some point in the venture before the major project spending starts you have to stop planning and establish the project schedule. A logic time for this to occur is usually just after the preliminary engineering is done. At this point the major equipment should be known, the work required to do the detailed engineering can be estimated, and the construction work can be estimated. At this time the project manager will remove all project scheduling contingency and lock an early target schedule. From this point on, there will be no more changes to the schedule. Work items and deliveries are simply early, on time, or late.

Project Teams and Phases

Every project goes through phases. Projects and projects phases are unique to each particular project and business. In the table following we have shown an example of how personnel from the various business "departments" might be called on to support a major venture team and how the leadership of the venture team changes as the venture progresses.

Permits Funding &
Gear up
Construction Plant
Start up Prove out Operation &
Management X X Lead X X X X X
Marketing Lead X X
R&D Engineer X Lead X X X X X X
Pilot Plant X X X X X X X X
Process Engineer X X X X X X X Lead Lead Lead
Project Manager X Lead Lead Lead Lead Lead Lead X X
Land/Community Developer X X X X X
Project Controller X X X X X
Project Purchasing Agent X X X X
Project Accountant X X X X X X X X
A/E Firm X X X X X X
Construction Manager X X X X
Field Superintendents X X
Project Buyer X X
Project Expediter X X
Project Warehouseman X X
Operations Staff X X X X X
Operations Supervisors X X X X X
Maintenance Supervisors X X X X X
Safety Supervisors X X X X X
Operators X X X X X
Craftsmen X X X X X

Whether you plan to manage your project yourself, or you opt to have your project professionally managed, you may be able to use some of the following remarks to help understand and oversee the progress.

If we were managing your venture, we would approach managing the venture with teams.

  • The Market Development Team. Usually this team is selected by the owner and is based on the way the owner has found market development successful and influenced by whether this is an expansion of an existing line, a new line, or a new market for a product sold elsewhere. In reality, more often than not the project manager is not involved in this phase. We can only hope that this team recognize that it may need to consult "subject matter experts" for non-routine project work and non-routine land development. We've described some items to consider in the Chemical Engineering section and earlier in the Project Management section of this web site.
  • The Product Development Team. We have discussed this team and product development activities in our Chemical Engineering section of this site. As in the Market Development Team, in reality more often than not, the project manager is not included. This team will continue to be active during the project by supplying initial market quantities and supporting market development. In our experience personnel on this team can act as excellent technical advisors to the project during design, safety reviews, and initial manufacturing.
  • Site Selection Team. We encourage you to read our remarks on site development and encourage you to take a proactive approach to dealing with the authorities and the community.
  • The Project Team. The teams that we have used are usually comprised of a set of core personnel, the Project Manager, the Project Engineer (usually someone senior from the owner's technical staff), the Project Purchasing Agent, the Construction Manager, the Project Accountant, the Engineering Coordinator, and the Project Controller. We have provided articles describing these positions and encourage you to look them over. This team adds members as needed to manage the work during the following phases.
    • Preliminary Engineering. Enough engineering is done to establish an estimate for funding, a definition of the major equipment, A reasonable definition of the detailed engineering, and a reasonable detail of the construction. This is usually the time when the A/E is selected and the project management teams are defined.
    • Permit Engineering. Any work that needs to be done to satisfy a regulating agency or an environmental agency is assembled and filed.
    • Funding. A request for funding is made.
    • Detailed Engineering. During this phase, the A/E using input from the project engineer and others, develops the detailed design packages for construction contractors well as specifications for all equipment, all materials, and all construction activities.
    • Construction. This team comprised by an experienced Construction Manager, the Warehouseman, and Field Superintendents experienced in their construction specialty manage the work of the construction contractors to meet the required schedule and budget.
  • The Start-up Team Members of these teams are usually drawn from experienced operating forces and newly hired individuals. In the next section on converging paths we have described typical team activities.
    • Check-out. Usually in a mechanical construction contract, equipment commissioning (motors turn, equipment is lubricated, and so on) is a requirement. To take this a step beyond and to serve as training for both production and maintenance personnel we encourage simulating operation with water (or another suitable media) ensuring that pumps, heat exchangers, agitators, and control loops all perform as expected. Generally repairs or modifications can be done quickly and rather easily at this point. After any flammable material or hazardous chemical is introduced to a process. repairs and modification is much more time consuming and expensive.
    • Start-up. This begins the operation of the plant in earnest and is usually marked by the introduction of the raw materials and process aids
    • Prove-out. Although this can take a number of forms, the intent is to establish that individual items of equipment and individual unit operations perform as expected.
    • Operation and optimization. The completed project starts filling orders. The gradual process of optimizing the operation begins.

Stones in the paths

There have been major problems with major projects. Most of them can be roughly grouped as follows:

  • Hit the market window but the product did not sell.
  • The plant could not make the product.
  • A land issue stopped the job.
  • The project cost too much and took too long.

We can't solve all problems but we can offer the following general remarks.

  • Hit the market window but the product did not sell. We don't know anything about selling your product. But we do have an idea how chemical product are developed and have seen companies use opportunities during product development.

    New products or processes generally come from one of three sources, accidental discovery perhaps by a researcher, planned discovery by a team given the task of inventing the product, manufacture under license from another supplier. Regardless of source the product introduction usually involves four stages although how long it takes to mature each stage can vary greatly depending on the technology source and the business.

    • Laboratory. It must be proven that the product can be made repeatedly, and the product will pass a quality criteria repeatedly. (This step is not required if technology is licensed.)
    • Pilot plant. It must be shown that quality product can be made safely using an industrial method and enough product must be made to distribute trial lots for market testing. It may be possible, for a licensed product, that market testing be done using product made in the "mother" factory.
    • Low rate initial production. It may in some circumstances make sense to expand the pilot plant to serve an initial market while the main production facility is built. Again, for a licensed product it may be possible to serve the market from the license supplier during this period.
    • Full production. After erection, start-up and debugging, the market can be served from the new facility.
    • We will mention at this time that if product is to be made initially at one location (the mother factory) and later manufactured at another location, one will be required to "synchronize" quality testing to ensure that product locally produced and product from the original supplier are identical in every way. We have never experienced a smooth synchronization and recommend this task be accomplished sooner rather than later.

    The laboratory usually does not produce enough to test the market. Test marketing pilot production material or test marketing low rate initial production material should have discovered a market problem before the majority of the spending occurred.

  • The plant could not make the product.
    • This can happen when the business circumstances dictate that a facility be built before technology is developed.
    • This does happen when companies overestimate their own expertise and attempt to modernize a facility straight to full scale production based solely on designs.
    • The consequences of this are almost always unexcusable and dire. The market window is missed and the company must either take the full write off or spend more money and attempt to break into to market late.

  • Land and location Issues. This happens to a minor extent on almost every project. Sometimes the issue is so big the project is abandoned. some of the issues are:
    • Geological survey and analysis
    • Ownership
    • One would hope that a straight forward title search would take care of this issue. Sometimes industrial facilities are located well away from municipalities. We have seen cases where not every land transaction was recorded and this issue caused months of delay.

    • Archeological and Historical Survey Report
    • This may be a location required survey. Even if it is not required we recommend that at least a preliminary survey be done. If evidence of previous construction is unearthed during the project, the job will stop until it is determined if the previous construction is of archeological or historical value or not. In this case a survey on file can prevent a project delay.

    • Land Use
    • Some years ago development was not well controlled. For example, housing developers would build a subdivision, sell houses, and move on leaving a city or county with areas of under developed schools, roads, water supply, or sewerage. A lot of legislative work has been put into place to ensure that development is encouraged but controlled to a point that services can keep up growth. Some of the methods imposed by legislators are:

      • Comprehensive plan. A periodically renewed state-wide growth/zoning plan. Changes are possible but complex. If you need changes to this plan, we recommend you seek help from an attorney that works in this field.
      • State, county, and local building codes. These can contain restrictions on construction close to water, environmentally sensitive areas, parks, or designated area. These codes are on file and need to be reviewed (or skimmed at least) to see if restrictions exist that could affect your intended project timing or costs.
      • Concurrency plan. This is the overall plan the state, county, and local governments are following to fund and maintain adequate infrastructure.
      • The local construction permitting process
    • Access. Do you have enough?
      • Highway access
      • Rail Access
      • Domestic and International Air Access
  • Community Issues
    • Labor pool. Does the area have a local labor pool that can supply laborers, operators, craftsmen, and supervisors?
    • Education. Is there a technical training facility that can support the growth of the operators and craftsmen? Is there an institute of higher learning that can support the growth of the technical and business staff?
    • Community acceptance. Very early in the process a proactive plan needs to be developed to assure community acceptance of the project. The days of people accepting any industrial project because it meant jobs are long gone. A major concern today (right or wrong) is the effect of a project on local property value and the effect of a project on quality of life. There is also an element of interfering with development for the shear sport of interfering with development. It can be countered. We don't undertake community acceptance, but we have seen some very effective programs in action and some unexpected failures when the community was underestimated. Interested parties can e-mail us for a discussion of the topic.
  • Environmental Issues
    • CAAA Air Construction Permit and Air Operating Permit
    • NPDES Construction Permit and Operating Permit
    • Wetland Impact
    • Class 1 areas and Pristine Waterways
    • National Wildlife Areas, National Parks, State Parks, County Parks, and City Parks.
    • Sites possibly contaminated previously
    • Superfund Sites
    • Flora and fauna survey for protected species

Not every item mentioned applies to every project but a thorough review is needed to prevent any costly surprises. Please keep in mind that every industrial project is constrained by the need to be on time to market with the product at the forecast cost.