U of C Examines Oil and Gas Project
Budget Overruns


Two University of Calgary civil engineering PhD candidates have been researching ways to increase efficiencies in oil and gas construction projects. Their conclusions are outlined in the study Detailed Execution Planning for Large Oil and Gas Construction Projects.

The two-word answer to the overrun problem, say Jim Lozon, P.Eng., and Lloyd Rankin, is better planning. But with big construction projects, that may not be as simple as it seems.

Currently $55.8 billion worth of large oil and gas construction projects are scheduled or underway in Alberta. Recently, large projects have experienced cost overruns and schedule delays. Reasons include insufficient initial budget, poor scheduling, scope creep, technological issues, poor controls, lack of detailed execution planning and more.

While no single solution addresses all issues, the researchers — who both specialize in project management — are now working on a study that focuses on the impact of execution planning. The industry practice is to develop construction work packages based on areas that could include up to 20 per cent of a total project.

More comprehensive planning, however, will increase the likelihood that projects will come in on
budget and on schedule.

“One of the key features of this study is large-scale centralized coordinated planning,” says Mr. Rankin. “We believe that with the proper detailed planning, we can increase labour efficiency on construction sites by about 25 per cent.”

Mr. Lozon adds, “We're talking about having all of the right equipment, the right amount of labour and the right working conditions — all at the right time.”

For years industry practice has been to have project foremen take care of time management and planning. This was acceptable because past projects have been so much smaller than some of the major ones today.

With the increasing scope come increased time and equipment management issues. This is where Mr. Lozon and Mr. Rankin hope to help.

A model has been developed to assist in implementing detailed execution planning for large oil and gas construction projects. It will be released to members of the Construction Owners Association of Alberta in May.