FEP And FEL: Essential For Successful Engineering Projects | Importance Of Engineering Project Delivery Methods | Accuracy Measured In Cost Estimation

1. What defines a successful engineering project? 

2. Why is undertaking Front End Planning (FEP) and / or Front End Loading (FEL) essential for achieving a successful project? 

3. Refer to the separate attachment to the assignment and to the table entitled ‘FTP essential for project success’, what activities / components of the work in the project would likely be undertaken 

Definition of a successful engineering project

A successful engineering project can be defined as the project, implemented and completed on budget, in terms of cost, within the pre-defined schedule, fulfilling all the specified requirements, in terms of quality and safety standards. Any engineering project that has specific scientific objects to achieve is not completed on budget, within the schedule or not fulfilling all its pre-defined requirements and standards, though is not called as an unsuccessful project, still cannot be called as a successful engineering project. According to Merrow, there are 22% of mega projects from oil and gas production sectors and 30% of mega projects in mining and mineral are only successful (Merrow, 2011).  

According to the poll conducted by IPA (Independent Project Analysis), benchmark specialist, has, revealed the report that about 65% of global megaprojects, having the budgets of over $1 billion, get failed, to meet the established objects, at the stage of final investment, among 300 global megaprojects.

Front end planning, essentially a key period that decides the viability and righteousness of the direction of the project. So, it precedes the actual commencement of the project, with detailed engineering and implementation of the project.

The entire success of the project lies in the project implementation phase, provided, the implementation in the execution phase is viable, in terms of meeting the objectives of the project. The viability of the execution, for successful engineering project, should be preceded by the three Front end planning phases called develop options, option selection and viability and project definition and project planning (Murray, 2015).

Front end loading process helps the project sponsor or company to explore to attain a detailed scope definition for the specific project. The deeper exploration of the scope of the capital project is usually done, by attempting to answer the fundamental questions, with why, what, how, when and where.

FEL, essentially, a key pre-project planning phase involves and helps to develop potential strategic information that support the owners to address possible risks and come to a final decision to proceed with the project, by committing resources, towards maximizing the success potential.

Both FEP and FEL are quite important for a successful engineering project, where FEP helps subjective exploration of the scope of the project and FEL involves objective exploration of the scope of the project, in terms of six honest serving men. Undertaking FEP and / or FEL becomes essential, especially for megaprojects, since the ability and possibility to make changes in the design of the product is high relatively and the cost needed for making these changes in the design is low relatively. Though the cost and time needed for FEP and / or FEL are considerable, these are minor, compared to the efforts and costs needed for alternatives, at later stages of the project. It becomes essential for the projects that have long lifecycle and highly capital intensive.

Front end planning and its importance

FEP and FEL are essential for successful engineering project, as the project gets commenced only, after the project is passed through the formal gates, the milestones, within the lifecycle of the project, before funding is received and proceed with execution.   

Business planning or front end planning, in which, both define need and identify alternatives are involved, client needs to actively participate to define the need for the project or specific object definition and then in identifying alternatives to develop all possible solutions (Murray, 2015).

Front end loading, in which concept and development phases are involved, client again has to involve very actively, since this is the heart of the solution. Each solution considered and developed should be ensured that it becomes potential to develop the product and do not result in any potential risks to the stakeholders in anyways. During the single solution selection, client has to accept the solution, narrowed down by the project management and ensure that it is the best among all the other, with the interest of the stakeholders. They just need to monitor during development of the solution.

Implementation stage, where the project execution is done, client involvement is needed, though passively, in terms of monitoring the process and performs controls if needs.

Close-out of the project, client though do not conduct this phase, every aspect here is completed only with the assurance of the client.

• Active participation during front end loading and implementation, where the concept is explore and developed, to make the final blueprint and finalise the solution. The potential and effectiveness of the project is entirely dependent upon the front end loading phase, in which the alternative solutions are developed, a single solution is extracted and final solution is narrowed down.
• During the implementation, engineering consultants are involved, however, it is passive, since they have to ensure that the blueprint is materialized.
• During close-out, involvement of the engineering consultants is needed, to perform corrections and finishing.

• The entire task of the construction contractors is basically, during the implementation phase, in which the project is executed.
• Contractors likely involve in this phase, for contracting and procurement of the raw material to perform the potential tasks of the project, manufacturing, execution and installation of the project.
• After the construction or product is made completely, the site or product is commissioned and transitioned and then handed over to the client.
• During close-out construction contractors just involve as passive participants. 

From the table outline, what is meant by the following terms: 

Accuracy measured as estimate accuracy in cost estimation of the project, is a measure, determining how close the estimation can predict operation’s or project’s actual expenditure. It is only estimation and it is usually set as range, in terms of percentage of overall budget. However, the actual percent is known only after the completion of the project. In any case, if the prject is ended with varied conditions or scope, estimation accuracy cannot be assessed fairly, by an unadjusted computation. So, estimate accuracy predictions can accompany the estimate. It is expressed in terms of lower or higher range, with reference to the point estimate with the probability expected that the cost incurred actually, will be within the range. Usually, accuracy range of -5/+10% can be definitive estimate, with  over 90% confidence that the total or final incurred value would be within this range. 

Gate is present at the final or bottom row of the table, as it is considered and attempted to pass through after the end of each process. The objective of the gates is to ensure that the project is moved to further phases, only after certain conditions and pre-defined conditions are satisfied and fulfilled. Usually, these gates are conditioned with the business goals, along with the feasibility conditions, attempted to pass through at the end of the front end loading phase of the project.

Front end loading and its importance

So, every project has to pass through this gate, before moving further to the following phases, to ensure that the expected criteria is met by the present phase. 

Cost expenditure specified at the bottom of the table indicates the cost expenditure incurred for each of the related phase of the project.

In this context, for the front end planning phase, the cost expenditure to perform the related activities can be 0.5% for ‘Define need’ and 1 to 2% for ‘Identify Alternatives’ (BLS, 2012).

The cost expenditure for each stage in each phase of the project can be analyzed that the cost expenditure is less during the initial stages of the project and more for the later phases of the project. And it is analyzed that the cost expenditure is cumulative, going forward to the following stages and phases of the project. Maximum cost expenditure is found to be during the FEL 4 and execution phases, during implementation of the project. Though cost expenditure for the initial phases of the project is low, these phases play vital role in controlling the cost expenditure, unnecessarily, for reworks and design changes, at the later stages and phases of the project.

So, it starts with 0% cost expenditure, before the project is considered and reaches to 100%, by the completion of the project.  

Engineering project delivery methods or contracting approaches vary in terms of sharing the responsibilities and accountabilities of various phases and stages involved in the projects, especially, when the projects are considered to be megaprojects (CMAA, 2012).

Design-build method is one of the important project delivery systems, implemented and used in the construction industries, especially. In this method, delivery of the project is done by a single entity called design build contractor or design builder, who perform both the design services and construction services. The traditional approach, master builder, followed for the construction projects is changed, from allocation to the designer and contractor as two different contractors, it combines both the responsibilities and assigns to a single contractor.

The design-build contractor is usually a regular and general contractor. Some of the firms for design-build employ both design and construction professionals.

When FEP essential for project success table is considered, the contractor involves to perform the following project processes.

Develop alternatives, from FEL 1 concept phase

select single solution, from FEL 2 in concept phase

develop solution, from FEL 3, in concept phase

Accuracy measured in cost estimation

Finalize the solution, from FEL 4, in execution phase, during implementation

Implementation during execution phase

Commission, transition and handover, during execution phase

Design-Bid-Build or D/B/B is also called as design tender method. In this project delivery method, the owner of the project contracts with different entities, for both the key phases, called design and construction. Usually, the design bid build method is considered as a traditional project delivery method.

The D/B/B method consists of three sequential phases mainly.

Design phase – During the design phase, an architect is retained by the owner for designing and producing the bid documents that consist of technical specifications and construction drawings, over which different general contractors construct the project after turning the bids. Owners hire architects to work on behalf of them to identify the needs of the owners, develop a document program in written and produce a schematic and conceptual design for the construction. The schematic design will further then developed, by hiring other design professionals, such as MEP (Mechanical, Electrical and Plumbing) engineers, civil engineer, structural engineer, fire protection engineer and landscape architect, and convert into technical specifications from the construction drawing.

Bidding is conducted openly, in which qualified bidders can involve and participate.

After awarding construction project to the contractor, the bid document will not be altered.

When FEP essential for project success table is considered, the contractor involves performing the following project processes.

Implementation during execution phase

Commission, transition and handover, during execution phase

EPCM or Engineering, Procurement and Construction Management is a varied project delivery method, compared to the regular design-build and design-bid-build methods. This is a special contracting arrangement form, usually, implemented for certain industries, like mining, energy industries, infrastructure, energy and resources industries. The contractor is selected by the client, for providing the related management series to perform the phases and tasks related to the project, on behalf of the owner.

When FEP essential for project success table is considered, the contractor involves performing the following project processes, but instead of complete involvement, the involvement is in coordinating all the works, related to the design, procurement and construction.

Develop alternatives, from FEL 1 concept phase

select single solution, from FEL 2 in concept phase

develop solution, from FEL 3, in concept phase

Finalize the solution, from FEL 4, in execution phase, during implementation

Implementation during execution phase

Commission, transition and handover, during execution phase

Merrow EW on page 253 of his book (see reference below) states that:

Gates in engineering project

‘We tend to exaggerate the importance of the contracting approach to project success or failure. No contracting approach guarantees success, most contracting approaches can succeed. Contracting is a second-order concern’. 

The statement made by Merrow, about the share of success of the project, by the contractor can be agreed, with the understanding and analysis that the contractor cannot be completely accountable for either success or failure of the project, since the contractor may or may not own the project, unlike the owner, who possesses complete ownership of the project. 

Success of the project is defined as the successful completion of the project, achieving the objective of the project, within the budget, scope and schedule, along with the important aspect of meeting the specified quality standards and requirements and safety. According to Merrow, the success of the private megaprojects is from one third to one quarter and the success rate is only 22% for oil and gas production megaprojects and 30% for the mineral and mining megaprojects. These statistics shows major fall of the project success rate.

According to the statistical evidence, it is evident that the megaprojects or large projects do not attain the pre-defined objectives or goals, set by the sponsor or owner of the project. The projects that have been successful are minor and stands at very less percentage. The reasons for the failure of these mega projects are no different from the failure factors of the smaller projects. The major difference in successful and unsuccessful project lies majorly in the work during the initial stages of the project, which should be occurred naturally, but did not occur practically. This deviation and hurry to commence the project as well as to hurry to finish the project, within the schedule is majorly done, rather than focusing over the scope of the project.

Contracting approach is an important aspect of the project delivery system for a project. No matter which contract approach is applied and implemented for the project,  involvement of the contractor and contract is evident, and the contractor becomes a significant stakeholder, to complete the project. Eventually, the contractor becomes a stakeholder in the success or failure of the project, though the proportion of the share of work is varied from one method to another method.

Every megaproject, especially, construction megaprojects are dealt with the owners and contractors, as the two major and primary stakeholders, who define the success or failure of the project. Here, the owners of the project have the accountability for the project and the contractors have the responsibility to complete the tasks assigned to them (Murdoch, 2011).

Cost expenditure in project phases

Participation of the contractors, though they have greater experience, expertise and knowledge in the respective industry, they have the limitations, especially, in decision making.

Though major and lion part of the project tasks are performed by the contractor, the overall tasks are materialized and realized from the schematic diagram or the blueprint, developed usually by the owner, or architect hired by the owner.

The contractor may have the limitations, in terms of knowledge, skill or experience, or it may be the first project for the contractor, though the contractor gives the best to complete the tasks.

Once the owner is committed to the contractor, there is little that can be done by the owner, to make any changes in the design or any kind of changes during the implementation of the project. The condition becomes the ‘horse has bolted’ after the contract is committed. Then the owner could not control and retrieve or change the deficient factors related to the project and cost of the project, since major part, 75 to 85% of the project cost is in the construction.

Finally, as per the suggestions and analysis of the experts in the project management industry, FEL plays a vital role and stands as a success defining factor, in the entire process and phases of the project. Eventually, the success is defined by the efficiency and effectiveness of the FEL and it should be performed only by the owner and usually, contractor has a little role, unless it is completely assigned to the contractor.

So, front end tasks are success factors, making it a significant and vital factor that decides the success or failure of the project.

Construction is, undoubtedly a massive task for anyone and so the contractor and the trauma of performing these tedious and huge tasks make them easily bypass and overlook the pitfalls or drawbacks of the conceptual design.

Conclusion

With the overall major participation and lion share of the tasks of the project, contractor definitely plays a vital role in the success or failure of the project. However, the contract approach or contractor is not solely responsible or accountable for the entire success of the project, since their roles are confined to implement the conceptual design and materialize finally. Owner at any point of lifetime of the project, is accountable, for both the success and failure of the project. 

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