Том 1

Проблемы развития внешнеэкономических связей и привлечения иностранных инвестиций: региональный аспект, 2010PROJECT MANAGEMENT- EAST VS WESTTannyan Neil Jeffrey, Masters of Applied Science, Professional Engineer of Ontario, Project Manager, Hatch (Canada) ⋅IntroductionThe purpose of this paper is to explain Project Development Processes in the East (CIS countries) vs the West. Each method will be explained, and differencesnoted along with advantages and disadvantages. Some case studies and examples will be reviewed. The advantages of using a Professional ProjectManagement Company will also be reviewed.Eastern SchemeIt should be noted that the process described below is based on the writers current experience and that of their company, working specifically with theUkrainian Steel Industry, and is not necessarily representative of other industries within the Ukraine. The writer’s company has conducted several detailedaudits of failed projects for financing companies over the past 5 years in the Ukraine and Russia.The project development process currently used is based on the process that was used in the former Soviet Union, with a heavy focus on the formerly stateowned Design Institutes. The Design Institutes provided approvals for projects, along with the engineering and project capital cost estimates. The institutes stillexist as privately owned companies; however in many cases they have not updated their engineering techniques and procedures to match world standardpractices. This will be explained in further detail. The design institutes merely prepare documentation, but are not involved in actual project implementation.The Eastern process is shown in Figure 1. The process begins with a concept or idea from the plant. They have a very general cost of the equipment or process,approximately +/-50%. The design institute then prepares at TEO- Technical and Economic Report which is issued to the plant (but is still property of thedesign institute).The TEO includes a capital cost estimate that is accurate to approximately +/- 20%. The cost estimate is developed based on the historic published nationalbook of costs for facilities and materials of similar equipment that was installed as long as 30 years ago. An inflation factor is used to estimate the value attoday’s costs. However there are no actual quotations used in these cost estimates, and based on the type of technology, and in particular the material costs forthe equipment, the old prices are very inaccurate. The main equipment supplier has not been selected at the TEO stage, of which typically about 40-50% of thecosts will be attributed to, leaving this as a major weak point.In addition, the construction costs are also estimate using factors provided by the state, and do not take into account best construction practices (for examplequick setting concrete, plasma torches, etc). The labor, equipment, raw material and construction company costs are all estimates. In addition, the estimates alsolack several key factors as was found during a detailed examination, these include but are not limited to spare parts, first fills of oils/greases, commissioningand training costs, shipping costs, technology integration, etc.It should be noted that the TEO does not provide a detailed construction schedule and there is very little basic engineering that has been performed at this stage.The TEOs also include a staffing estimate, but it has been found that these are 2-3 times higher than in Western operations. In addition, key items such as thelife of the equipment are missing.The TEO is used by the plants as the basis for the Final Investment Decision (FID). However, at this stage there is no detailed schedule, little basic engineeringand no detailed implementation plan. However the project budget was approved by Management based on this documentation. Therefore, there is very highrisk that the budget will increase and the project will not be completed on time.After FID, the Design Institute then prepares a stage called detailed design, with an estimate budget of +/-10%. However, during investigations it was foundthis number is closer to +/- 20%. The overall project plan is not updated with this new cost. The detailed design is used to obtain the construction and operatingpermits from UKRINVESTEXPERTIZA. It should be noted that the company has audited projects where no approval documentation can be found, yet theconstruction was completed.Figure 1- Eastern Project Development SchematicFollowing the approval stage, the detailed construction and engineering drawings are completed. A general contractor is selected for the construction. Howeverthe contracts with the contractors are not usually “LUMP SUM” as in the west, but are based on labor rates and hours worked. Thus there is no real incentivefor the contractor to work quickly and efficiency. Many contracts in the West include a BONUS for early completion and are based on a LUMP SUM / fixedcost.In addition, in many cases there is no project manager or Project Management Company responsible for the coordination and overall success of the project.Example a failed project using the Eastern SchemeListed below is the summary of a major project reviewed by the writers company.© Tannyan Neil Jeffrey, 201054