Communicate early and often: leaders discuss key lessons from large capital projects
As plants and crackers in the U.S. become ever larger and more expensive, project leaders can take early steps to reduce the risk of overruns, as Petrochemical Update has heard from three people with experience handling mega-projects.
Aamir Farid, Carol Warkoczewski and Ted “Bench” Williams have backgrounds in chemicals, architecture, and the military, respectively. Each identified generally the same core principles in ensuring projects meet budget and schedule: constant communication, early scope definition, and trust building.
Farid retired in July after 38 years with Shell, the last six as VP Manufacturing, during which he served as the decision executive on a $1 billion chemical-plant expansion in Louisiana, and a $650 million hydrocracker debottlenecking in Canada. His role on these two projects is evidence of a shift Shell made away from decentralization of project leadership and toward a hands-on approach in which project leaders were answerable to a decision review board.
“We would meet with the project teams, we would go to the project office. Once construction started, we would go on site every two months early on, and then as it got closer [to completion] I would show up every six weeks, every four weeks,” Farid said of his role. “It was that kind of hands-on activity that to us made a difference, so we were able to pull off billion-dollar projects pretty much on budget – where we had a history of just blowing it completely.”
Communication sounds like a simple word, but it must be constant and honest for it to be effective, according to Williams, a 27-year U.S. Navy veteran and now an advisor to petrochemical, refining, manufacturing and other companies as VP International of leadership consultancy Check-6. Meetings should be timely, regular and attended, he said, to ensure projects stay ahead of deviations as much as possible. The military calls this “battle rhythm”, Williams noted, and the civilian equivalent is “operational tempo.”
Farid explained that a crucial part of a leader’s role is conveying to their team that projects are first and foremost about business opportunity – and not about putting steel in the ground. Once the project is underway, the person in charge must constantly stay on top of things. He said, “There are just so many moving parts that if you just don’t stay really connected, you have a reasonable chance of losing control. And let’s face it, if you miss a billion-dollar project by 10% - that’s real money.”
Laying all the cards on the table
Setting “crystal clear expectations” from the beginning has helped Shell to meet targets, according to Farid. After the company shut down a couple of projects that did not make business sense, he said, “people then realized: oh this is serious. We have to actually deliver a viable, feasible schedule and budget or the decision board will shut it down completely.”
A leader is responsible for bringing all parties to the table at the beginning of design, the experts agreed. To Williams, this means aligning a team of people who may never have worked together previously behind a common mission. “Everybody has to understand what you’re doing, what the objectives are,” he said. “Disagreement is sometimes healthy, but you’ve got to get everybody with disagreement to come into a room, to discuss, to go over the project, and then get aligned and decide on the best path forward from there.”
Williams, who spent more than half of his military career as a naval aviator and then went on to become second-in-command and later captain of nuclear-powered aircraft carriers, noted that the military is not afforded the luxury of extra budget or extra time to complete large projects. Recalling his involvement in a six-month project to bring a nuclear-powered carrier out of a shipyard, he said “Having a very detailed and comprehensive plan yet continuing to communicate and observing and challenges, any project growth or scope creep” made sure the project stayed on track and the ship came out of the yard on time and on budget.
Another military principle that Check-6 teaches to industries such as petrochemicals where even the smallest deviation has serious consequences is “close control”. This should not be confused with micro-management, he said. “It’s simply enhanced visibility, enhanced situational awareness, where everybody’s involved in overseeing all processes and communicating to make sure that all aspects of the project are moving in the right direction.”
Establishing trust with and within the team
Warkoczewski, City Architect for the City of San Antonio and founder of the Institute for Leadership in Capital Projects, said a best practice commonly used in large capital projects is called “project partnering”. This involves bringing all parties to the table, preferably at the beginning of design. It includes: identifying the criteria for project success – mission, team values, and project goals; understanding the players’ roles and responsibilities; establishing lines of communications, especially for problem solving, identifying the expectations that each stakeholder group has of the other stakeholder group, as well as of themselves; and discussing potential or existing project issues.
Having team members who are effective communicators and who trust each other are the two most important criteria for any high-performing project team, Warkoczewski said.
“Effective communications can start or end a trusting relationship. Some people do not start with trusting the other project team members or stakeholders, because there are often unique interests that each party brings to the table. A team leader has to ensure that the common interests of all parties are made clear at the onset of the project. As the project progresses, issues and concerns will arise and conflicts will develop between the various parties or people,” she said.
“Reminders about the common interests – we all want to complete the project on time; companies should make a reasonable profit; the project will benefit the public, the companies, the shareholders, the industry, etc. – should happen on a regular basis, and not just when things are going south, but also when things are going well. Acknowledge successes.”
By Nadav Shemer