Integrating a Procurement Management Process into Critical Chain Project Management (CCPM): A Case-Study on Oil and Gas Projects, the Piping Process

Abstract

Engineering, Procurement, and Construction (EPC) of oil and gas megaprojects often experience cost overruns due to substantial schedule delays. One of the greatest causes of these overruns is the mismanagement of the project schedule, with the piping works (prefabrication and installation) occupying a majority of that schedule. As such, an effective methodology for scheduling, planning, and controlling of piping activities is essential for project success. To meet this need, this study used the Critical Chain Project Management (CCPM) to develop a piping construction delay prevention methodology, incorporating material procurement processes for EPC megaprojects. Recent studies indicate that the traditional scheduling method used on oil and gas mega projects has critical limitations regarding resource scarcity, calculation of activity duration, and dealing with uncertainties. To overcome these limitations, the Theory of Constraints-based CCPM was proposed and implemented to provide schedule buffers management. Nonexistent in literature, and of critical importance, is this paper’s focus on the resource buffer, representing material uncertainty and management. Furthermore, this paper presents a step-by-step process and flow chart for project, construction, and material managers to effectively manage a resource buffer through the CCPM process. This study extends the knowledge of traditional resource buffers in CCPM to improve material and procurement management, thus avoiding the shortage of piping materials and minimizing delays. The resultant process was validated by both deterministic and probabilistic schedule analysis through two case studies of a crude pump unit and propylene compressor installation at a Middle Eastern Refinery Plant Installation. The results show that the CCPM method effectively handles uncertainty, reducing the duration of piping works construction by about a 35% when compared to the traditional method. Furthermore, the results show that, in not considering material uncertainty (resource buffers), projects schedules have the potential for approximately a 5% schedule growth with the accompanying delay charges. The findings have far-reaching applications for both oil and gas and other sectors. This CCPM case-study exemplifies that the material management method represents an opportunity for industry to administrate pipeline installation projects more effectively, eliminate project duration extension, develop schedule-based risk mitigation measures pre-construction, and enable project teams to efficiently manage limited human and material resources.