Risk management and schedule control on mega-projects

Capital Projects & Infrastructure

Schedule analytics and risk management

What is at risk
Construction projects are inherently risky. Managing this risk is essential and, like any other important management or oversight function, it is either done well or it is a wasted effort that can risk everything. What you cant always know is every unique risk you will face with any given project as the design complexities, geographical inuences, and stakeholder forces come into play. This can involve many parties, risks and challenges such as technology development, skills shortages, cost and time uncertainties, governance and accountability issues. These risk areas are in addition to increasing regulatory focus. Capital project owners have focused on improving governance structures in recent years; yet too many projects still fail to deliver on cost, schedule or quality commitments. The consequence of a failure can be public embarrassment and disappointed stakeholders as well as nancial; so getting an independent view on how to manage risks can be critical.

What you can do

Exposure to risk cannot be avoided, but it can be managed. Many companies that have been exposed to the consequences of risk were not fundamentally reckless. They simply had not taken effective measures to protect themselves, by implementing a proactive and comprehensive program that considers a companys culture, training, policies and controls. If you accept that risk management is a top success factor in construction, then you should prioritize the investment you make in independent project oversight. Also, consider that the risk you face is multi-dimensional and shifting, requiring an agile, multi-disciplinary management and oversight plan.

Assuring your project delivers on its promise

Establishing systematic controls and processes is made difcult by the nature of large scale and mega projects. Essentially they are hybrids in terms of nancing, procurement, delivery, management, operation and ownership. As a result, unique systems and controls are required for each project to enable management to deliver the promised short and long-term value to stakeholders. Effective monitoring and decision making on megaprojects requires institutional systems, governance and procedures that promote accountability and transparency at all stages of reporting and control. And, while accurate and timely information is essential to controlling risk, it cannot be achieved without open and transparent systems and oversight that esh out human factors such as optimism bias, systematic underestimation of costs and durations, and overestimation of benets and opportunities. Schedule analytics and risk management systems address these concerns and assist in assuring that projects deliver as promised.

Risk management and schedule control on mega-projects

Taking effective measures

To identify and manage risks PwC employs proven risk management, project management and dispute avoidance strategies during the project development, design and construction phases. These systematic processes assist in making informed decisions while breaking down boundaries between the owner, designer and contractor teams to proactively reduce the threat of delays and events which cause disruption, cost overruns and disputes. PwC combines our experience with analytic tools to provide clients comprehensive risk management services. The success or failure of a project depends on aligning a clients appetite for risk with their risk management and project governance policies and procedures. Traditionally, Engineering Procurement & Construction (EPC) project management staff have applied risk management instinctively, with risks remaining implicit and managed by judgment informed only by experience. Systematic risk management combined with analytic Critical Path Method (CPM) scheduling tools explicitly and formally identies risks and provides a management tool which supports objective fact-based decision making and informs ones instinctive judgment. We apply proven risk analysis techniques, employing appropriate quantitative modelling tools customized for each project and client. Our pragmatic, hands-on approach to risk management and the associated technology allows us to effectively communicate the potential outcome of projects, and their most inuential risks that need to be managed or eliminated at the earliest opportunity. When risks or delays are experienced, PwC performs root cause analysis. This analysis uncovers hidden risks inherent in procedures, processes, contract terms, or performance that often lead to cost and time impacts. Once identied, risk management plans are developed along with actions to remove or minimize any threats to a successful project. Additionally, risk and opportunity go handin-hand and systematic risk management often results in the identication of opportunities for adding value to a project. Typical risks in large-scale or mega projects include: Changes in project scope and requirements Achieving regulatory concerns Design delays, errors and omissions Inadequately dened roles and responsibilities Insufcient skilled labor Financial stability of subcontractors and suppliers Inadequate management experience Unstable relationships among project participants New technology or novel construction techniques Unfamiliarity with the local cultures or conditions
D (min) D (most) Duration D (max)

Given the unique requirements of large scale and mega projects, the benets of early formal risk management are many; a few more tangible benets are listed below: Selection of most appropriate contract form Establish optimum contingency strategy Establish most appropriate risk distribution Reduced premium for insured risks Reduced disputes Increased stakeholder awareness Increased certainty of successful projects

Prob. (%)

Uncontrollable events / force majeure

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Getting started
PwC has developed a methodology and a set of tools that help us move easily from risk assessment to controls to reporting and remediation. These principles can be tailored to any size of company or project and any size of exposure. Our experienced construction and controls specialists have advised numerous clients undertaking major projects with all aspects of the control environment. Using the risk management framework illustrated below, we separate the project into a number of elements. Organizational frameworkincluding the project organizational framework and structure, oversight, roles and responsibilities of key members of the project management team and skills gaps. Systems and technologythe tools used to support project control and management functions, relevant enterprise wide and corporate systems. Procurement and contract managementincluding contracting strategy, procurement methods for vendor contracts. Evaluate vendor and contract management practices and processes. Scope and change controlevaluate how changes to scope are managed, controlled and approved including the methods of costing change; analyze how the changes are monitored against budget. Financial managementincluding estimating, budgeting, forecasting, monitoring actual spend against budgets and payment application approval process. Schedule managementassess what control processes and procedures are in place to guarantee schedule accuracy and completeness, what methods are used for progress measurement, and how schedule issues are managed. Issue and risk managementincluding identication, analysis, mitigation planning and monitoring/control, as well as the tools utilized to administer and manage risk. Communication and reportingincluding internal and external communication tools, reports, status updates, project issue tracking and reporting methods. This element includes the quality of reports provided to the regulator.

Project life cycle

Planning Organization design & HR management Procurement & contract management Design Implementation Testing Staff reductions/ transfers Vendor selection contracting Change control process Contract compliance review Turn-over Operations staff planning Trouble-shoot & punch list User acceptance process Final payment/ retention release Schedule completion check list M&O Ongoing requirements/ skills review Vendor qualication/ selection Operations acceptance process M&O budget process Ongoing maintenance schedule

Project management plan and stafng External contracting options Denition of project elements and benets Capital budgeting and ratemaking approach Project schedule requirements Project purpose funding & approval Vendor qualication RFP process EPC contract evaluation Design project components (phase 1 transition plan) Cost & schedule forecast Baseline project schedule (WBS & predeployment schedule)

Project elements

Scope & change management Cost management Schedule management Business systems & technology Risk & issues management Communication, reporting & regulatory requirements

Cost control Detailed schedule management

Business needs Integration & executive oversight assessment & technology framework

Continuous improvement and reasonableness reviews Conrm issue resolution Project close-out performance Ongoing issue management process Financial reporting

Project risk & issue Risk & issue tracking & resolution management planning Project reporting requirements (project communication strategy) Project status and regulatory lings Project cost, schedule Project quality & budget variance performance

Risk management and schedule control on mega-projects

Schedule analytics
To achieve quality and transparent reporting, schedule analytics should be employed and balanced with hands-on experience. Quantitative schedule analysis is used in mega project management to evaluate the integrity, nature and compliance of the active schedules produced by the project team. Qualitative schedule analysis provides us, and our clients, insight into the contractors ability to comply with schedule provisions, accurately model the contractual scope, and transparently report intentions, critical tasks, interface dates and milestones. In short, it provides timely reporting of progress actually achieved. Over the counter software compares two schedules or updates and provides diagnostic and integrity reports based on changes made between them. PwC uses a proprietary tool to extract data from Primavera P3/P6 databases and organize into a manageable transparent reporting format. Results of the analysis provide an indication of: The underlying schedule design and integrity; The dynamic nature of the project and supporting schedules; a comparison of any individual schedule against the entire schedule catalogue; and A comparison of the schedule catalogue and trends against a number of relevant industry standard metrics. A quantitative analysis should not be considered in isolation and should form part of an overall schedule assessment that includes an evaluation of the general control environment, the nature of the schedules and the underlying processes and procedures. PwC analytics tracks parameters, such as duration variance, (see bottom left) as well as several other integrity and performance indicators: Constraint analysis Mandatory constraint analysis Free oat constraint analysis Open end analysis Criticality summary Float density analysis Duration variance When combined with our qualitative analysis, our schedule analytics provides our clients with the transparency and information needed to determine if the information provided is accurate, reliable and credible for the purposes of critical decision making. Duration variance
Description This chart illustrates the difference between Actual Durations and Original Durations for a number of schedules. Observations The curves generally illustrate lower actual durations than planned. This is a good indication that schedules are not overly aggressive and may be achievable. However, it may also indicate embedded activity contingency. Recommendation Duration variances should be monitored. The TFA2 and TFA8 schedules show high variability in original and actual durations and should be further investigated.

50%

40% Percentage of activities

30%

20%

10%

0% -40
TFA2 TFA3 TFA7

-30
TFA8 TFA12

-20

-10

10

20

30

40

Days between original duration and actual duration

Notes

This analysis is performed on activities (Task Dependent), with an Actual Duration greater than 0 and with a Completed activity status.

Often projects require re-baselining. Too often contractors attempt to use re-baselining as a technique for sequestering oat, or preventing comparison of actual performance against original baseline, or intended performance. Criticality summary provides visibility as to which areas of a project, program have oat. Float is an integral part of critical path method scheduling and project management, and is a relative, quantiable value which can and should be treated as a resource, like money. Time is a nite resource, which can be used to:

identify slippage that is occurring to an activity or sequence of activities; identify critical paths, sub-critical paths or concurrent critical paths; allow re-sequencing of activities to mitigate preexisting delay; identify areas where acceleration will most efciently benet the project; and allow re-sequencing of activities to reduce or avoid disruption due to discontinuity of work, adverse weather or seasonal conditions.

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Constraint analysis allows our team to identify manipulation of the schedule and systematic optimism bias that are preventing true critical paths to emerge and be managed by the project team. Float can easily be

manipulated to enhance a contractors ability to gain an extension of time for completion through the use of various oat suppression techniques, for example: Preferential logic;

Excessive lead/lags; Excessive use of date constraints; Zero total or free oat constraints; and Extended activity durations.

Altering activity durations or historic as-built start/nish dates is the simplest method of oat sequestering. It is also the simplest to detect, but requires diligent adherence to schedule management and review procedures.

The PwC difference

We believe PwC is the best professional services provider available to provide independent advisory services on large scale and mega projects. Our Capital Projects & Infrastructure (CP&I) professionals provide services related to the full value chain of acquiring, nancing, investing in, planning, designing, procuring, constructing/implementing, commissioning, operating and maintaining complex medium to large scale greeneld or browneld capital assets, programs or portfolios. We bring our clients: Independent and objective insight; A strong foundation of knowledge of best practices for mega project governance structure and control environments; Bench strength that allows us to provide continuity of our core professional team; An outstanding team of experienced resources comprised of engineers, nuclear engineers, accountants, project management professionals, IT experts and other professionals who specialize in providing advisory services to regulated utilities; Extensive experience in the process and utility industry; Direct experience working with public utilities and private companies as an independent advisor on major capital projects subject to reasonableness review, oversight and governance legislation; Specic, deep regulatory experience supporting utility clients on rate cases and regulatory proceedings related to nuclear plant construction and other major capital projects, including providing fact and expert witness testimony before public utility commissions; A strong, positive reputation among utility executives and public utility commissions for providing objective, innovative and reliable advice regarding capital projects, ratemaking and utility operations; An extensive network of external technical specialists that we can employ, internally, with specialized technical skills if and when needed; and An unwavering commitment to our clients to plan and manage our work at the highest level of professional standards with a consistent focus on cost control, timely product delivery and overall efciency. Additionally, using experience and lessons learned from our extensive claims, dispute avoidance and resolution services, (i.e., knowledge of how things go wrong), we apply proven strategies and systematic processes to identify and monitor risks to the project, and specically to the Schedule.

PwC can address a wide scope of project risks as needed through our global network of CP&I professionals.
Program governance, fraud, and ethics Project management and project controls Risk management, security and safety Managing cost and schedule Technology design and implementation Public-private partnerships Country-specic risk Impact of government stimulus funds Regulatory requirements Environmentally safe construction

Risk management and schedule control on mega-projects

Serving a variety of stakeholders

To bring value, your advisors must have an extensive and full range of experience across risk areas, disciplines, industries and geographies as well as the perspective born from working for many types of project stakeholders. This multi-dimensional concept is at the heart of the PwC difference. For our clients, this means PwCs perspective and experience will extend beyond the members we assign to your immediate engagement team to include not only construction advisors, but also a wide variety of seasoned industry specialists with expertise in all types of capital projects. Below are some examples of construction advisory and risk management services we have provided to government entities, owners, developers and contractors: Assessments of project risks from concept development through project close-out; Compliance audits and forensic accounting at interim and close-out milestones; Cost variance analyses, schedule reviews, and change order analyses; Claims management, analysis, and resolution (including early assessments of led claims to determine information requirements and options for risk mitigation); Comprehensive assessments of project management control tools and procedures, with an emphasis on accountability, transparency and audit trail; Project accounting and controls for jobs in progress; Assessments of document and data management procedures and protocols including integration with project collaboration systems and other applications to address contract performance (e.g., cost, schedule and labor/equipment productivity); Developing uniform global policy protocol for project management and document/data control procedures; Strategic consulting for commercial negotiations or other forms of alternate dispute resolution; and Litigation support and expert testimony.

Independent and multi-dimensional advisors

PwCs approach to managing risk is focused on assisting clients to establish cost effective management of their projects, improving their nancial performance and avoiding or settling contract disputes. Seasoned professionals with hands-on experience bring to each engagement the practical knowledge gained as contractors, engineers, planners, accountants, estimators, subject matter experts and project managers.

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Advice to plan, manage and deliver large scale individual projects for the Engineering, Procurement and Construction sectors
Program design Project structuring & nancing including: Specication Risk analysis Contract structuring Financial structuring Procurement strategy Advising on debt/equity, restructuring and tax advice Independent and ongoing evaluation of risk, project governance and control structure Monitor and assess project risk and controls structure on a periodic basis Evaluate risk management processes Perform ongoing metrics evaluation and trend analysis focusing on project completion Provide observations to senior management regarding the strengths and weaknesses of the project governance as compared to best industry practices Identify control gaps and assist in development of recovery plans Serve in an ongoing advisory role to senior project management to identify issues, trends, and potential mitigating actions Provide periodic reports to document observations and mitigating actions taken by the project management team Contract administration support Review control structure to monitor and evaluate data supplied by vendors for completeness, accuracy, and compliance with contract terms Provide outside expertise to support dispute identication and resolution process Provide specic contract audit support Research industry operating experience and provide subject matter expertise Regulatory support Review and advise on monthly status and semi-annual construction monitoring lings (consistency, completeness) Periodic review of coowner reporting for consistency and accuracy Evaluation of decision support criteria available for regulatory review Review control processes to ensure adequate information is gathered to support required audit trail and validation Provide support on discovery requests from regulatory agencies Provide expert witness testimony in regulatory proceedings Project execution support Provide subject matter expertise to monitor and advise in the area of vendor quality oversight such as prototype testing, acceptance criteria, documentation requirements, etc. Provide subject matter expertise to monitor and assess the schedule performance of the project Monitor and evaluate the logistics plan for the project Contract reviews Regulatory support Internal Audit support/ advice Asset management and benet realization Disputes and investigations

PwCs CP&I practitioners have a broad base of experience in domestic and international capital projects including:
Airports Power plants Pipelines Processing plants Manufacturing facilities Transportation projects Medical facilities Mining (exploration and production) IT system development and implementation Oil reneries and off-shore platforms Dams Ofce and retail buildings Sewage and water treatment plants Electric transmission and distribution Reneries Sport complexes Correctional facilities

Risk management and schedule control on mega-projects

Meet the team

Daryl Walcroft
Daryl Walcroft is a Principal in PwCs Capital Projects & Infrastructure practice and is based in San Francisco, California. He is a civil engineer with over 18 years program management, controls development, program governance, dispute analysis and general construction experience on a variety of major capital projects. He has extensive experience dealing with major construction and engineering projects including rail systems, airports, power stations, oil reneries, buildings, bridges, pipelines, roads, and stadia. He has advised clients in the environmental, construction, energy and utilities sectors with the design and implementation of project and program control systems. He has experience working around the world and providing clients with the benet of his knowledge of program management and governance best practices.

Stephen Lechner is a Principal in PwCs Capital Projects & Infrastructure practice and is based in San Francisco, California. He is experienced in providing cost and schedule analysis, project management consulting, economic and cost accounting analyses and general consulting for clients in design, construction, environmental, energy, manufacturing and other commercial industries. Steve has been retained as an expert on cost, schedule, performance and regulatory issues related to major capital projects and other programs in the US, Canada, Hong Kong, Mainland China, Australia and the Philippines.

Stephen Lechner

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Mark Rauckhorst

Mark Rauckhorst is a Managing Director in PwCs Capital Projects & Infrastructure practice in Atlanta, Georgia. He is a nuclear engineer with over 28 years of engineering, program management, controls development, and utility construction experience on a variety of major capital projects. Mark has advised clients and led the implementation of Project Management Organizations focused in the environmental, construction, energy and utilities sectors. These programs included the design and implementation of fully integrated project and program control systems.

Tony Caletka is a Managing Director in PwCs New York Metro Capital Projects & Infrastructure practice. He has 23 years of experience providing program, project, and construction management advice to clients on large capital projects as well as expert witness and conict resolution services to the legal industry as a subject matter expert on construction related issues. He is a certied construction manager (CCM), professor at NYU-Poly School of Civil Engineering, is an experienced arbitrator, author, recognized international expert in CPM scheduling and project controls and has worked on large scale infrastructure and mega-projects, including hydro-power, nuclear, rail, stadia, ports and tunnels. He has experience working throughout the US, Europe and the Middle-East, providing clients with the benet of his knowledge of, program management, project controls, project governance best practices and dispute avoidance and resolution.

Tony Caletka

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Examples of our experience

Project experience The strongest demonstration of our abilities is to provide examples of work performed for other clients and other projects that are similar in scope, approach, and deliverables. We have provided internal audit and capital projects advisory services to several utility clients and other industry clients with similar with similar issues. Provided below are examples of our credentials, presented in terms of the specic work performed for other clients.

Major US utility Capital project risk management and regulatory support

A major US utility is currently involved in a US $2.2 billion capital program involving the deployment of advanced gas and electric meters throughout its service territory in California. This project involves the procurement and installation of several million gas and electric meters throughout California and the design, development and implementation of various IT systems and associated network infrastructure to support the new metering equipment. The project is scheduled to be implemented over a 5 to 6 year time period. PwC is acting as the independent advisor on this major capital program. This effort involves: Consulting services in relation to establishing a project management ofce (PMO) for the capital project; Advising client on project management organization development, integration with outsourcing vendors and suppliers; Development of project control tools and procedures, integrated schedule development and general project risk management; Periodic testing of project management control tools and procedures, providing observations and recommendations following each test period; Advising client on specic risk elements of the project related to cost, schedule, scope and quality as it progresses through its project life cycle; Advising client of potential risk mitigation efforts and control tool and procedure enhancements to manage project risks; Reporting to senior client executives regarding project controls, risks and risk mitigation efforts; Advising client on communications with regulators monitoring the project; and Advising client on potential enhancements to multiple business processes affected by the new technology deployed as part of the project. PwC also provided written and oral testimony before the California Public Utilities Commission on two occasions addressing the nature and reasonableness of various risk management techniques put in place by PG&E for managing the cost and schedule of the project.

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Major US utility Construction oversight development

PwC evaluated the control environment supporting a multi-billion dollar portfolio of construction projects. This evaluation included the review and assessment of the project management organization, controls and systems on a number of ue gas desulphurization projects. PwC developed a series of reports detailing areas of potential risk in relation to the control and governance organizations and worked with the client to mitigate these risks. In addition, PwC advised the client on the development of a governance and oversight organization, development of an enterprise risk management system and supported internal audit with the development of a construction audit plan. Specically, PwC provided a thorough evaluation of Amerens construction and project control environment including: Review of cost management processes and procedures Review of organizational framework Evaluation of major projects estimating contingency management Supported Internal Audit as subject matter experts with respect to major capital projects

Major LNG facility constructor Evaluation of global LNG facility construction program
PwC provided continuous external project assessment services to a major LNG facility constructor in relation to its LNG construction program. To date PwC has completed project assessments on projects in China, United Kingdom, Peru and Angola. The project assessments have involved comprehensive assessment of the project control tools implemented on projects related to cost, time and change control to identify areas of risk and advised on opportunities for performance improvement.

Condential Southeastern US public utility Capital project risk management and regulatory support
PwC has been acting as an independent advisor to a utility client to assist them with establishing, monitoring and testing the project controls for multiple power plant construction projects (including two new nuclear units and a steam generator replacement project at an operating nuclear plant). This included advising them regarding the creation of a framework within which to manage the projects strategic elements and associated risks. Our work also involved helping establish an organizational framework and procedural structure and approach for categorizing the strategic elements, establishing processes for documenting risks, creating mitigation plans, and conducting risk assessments. PwC also advised the Utility in its evaluation of bidders and its estimating approach for one of its nuclear projects and performed a comprehensive evaluation of the commercial terms and conditions of an EPC contract for a major power plant repowering project. On these matters, PwC continues to act as an independent advisor to the utility, providing periodic audits, evaluating contractor and regulatory reporting, advising senior utility executives regarding commercial and regulatory risks, and performing periodic testing of project control tools and procedures in place for the various capital projects.

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North American gas company contract reviews Contract cost effectiveness review
A large integrated oil & gas company was seeing substantial cost increases and margin pressure due to resource constraints and greater service and construction company market power. In addition, costs associated with construction projects, new gas discoveries and more technically challenging extraction requirements were increasing. This company was also concerned that its existing cost management and control strategies were no longer sufcient to combat the external cost pressures and trends within the sector. No common framework to manage contractor costs resulted in inconsistencies and a lack of role clarity and accountability. Our team performed a Contract Effectiveness Review for key suppliers to assess contract performance and identify overcharges, off-contract/non-compliant spend, abuses by contractors due to vague contract language, and other non-compliance issue. Key components of the Contract Effectiveness Review included: contract compliance analysis; contract spend analysis; invoice analysis; contract user interviews; contract management assessment; and procurement to pay controls review. The contract compliance analysis identied $12 million one-time cost recovery opportunities to be pursued with contractor and suppliers. An additional $17 million cost avoidance recurring opportunity was identied for capture by improving the companys contract management processes and controls within the companys procure to pay cycle. Non-nancial benets included: immediate cost control stabilization; improved understanding of contracts and third-party value; clarity of contractual cost drivers; transparent contract management information to simplify decision-making process; and better resource allocation accountability.

Major capital project Schedule controls evaluation

PwC was engaged by a client in Las Vegas to perform an external assessment of the PMO effectiveness in relation to its $10Bn+ global capital program. The rst phase of the PwC PMO assessment addressed PMO procedures and processes on a $7Bn project in Las Vegas including: schedule controls, contract compliance, schedule design and development, schedule reporting and schedule management. PwC gathered information through interviewing key personnel related to scheduling and general project control operations, attendance at schedule meetings and review of project documentation used to monitor, control and report. PwC conducted interviews with personnel from each of the relevant organizations involved with this major capital project. Following the detailed PMO assessment PwC was able to provide key performance improvement advice to this client to improve the chance of project success. This development project is one of the largest capital projects currently under construction in the United States in terms of dollar value.

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Government Program and project management support

PwC is currently providing project management services to a condential client involved in a USD2.3bn project. PwC is providing a team of experienced program and project management professionals with deep expertise in facilities planning and construction, risk and portfolio management and performance management. In this instance, our approach to project management involves the continuous improvement of processes, governance, people, and tools/technology. The project is being led by project management professionals who use proven methodologies and Global Best Practices. Specically, PwC is: Assisting the client meet its objectives by offering disciplined and comprehensive portfolio and program management support; Designing and implementing the appropriate project management methodologies and tools; Developing and managing a master schedule; Developing a quality control system and culture that leads to both immediate results and instills on-going process improvement; and Developing a comprehensive risk management approach to minimize the impact of risks.

Major oil company Development of program controls framework for $8 billion oil project
PwC is currently providing capital project advisory services to a Major Downstream Oil and Gas client who is undertaking a multi-billion dollar project to increase its production capacity. The project is high prole and a similar such undertaking has not occurred in North America in the past 30 years. PwC was retained to provide subject matter expertise on project management control tools and procedures for large-scale capital projects. Specically, PwC is assisting this client with the following initiatives: Assisting in the establishment of adequate governance, risk and compliance oversight functions Developing a Governance Framework to support the proper use of a Project Management methodology Advising client on program management standards and controls; Integrate existing client processes with common practices found in similar large scale capital projects; Periodic review of program / project scope, cost, and schedule controls and provide observations and recommendations; Develop Program Decision Board to assist in the evaluation of moving from one stage of the project to another; Develop program management metrics and Key Performance Indicators; Develop program reporting requirements for client management and executive teams; Review tender evaluation processes and provide recommendations for Procurement and Contracts work stream; and Develop document management plan and system. An example of our detailed work efforts on this engagement involves the development and management of the Project governance framework. The framework includes a system of processes and tools created to ensure a proper project management methodology is used. It leverages the current stage gate approach used by the client to track and record progress towards the completion of the entry and exit criteria for each phase of the project.

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Representative Project Experience Below are additional examples of our direct experience supporting our clients in a variety of engagements. Further client experience can be provided upon request.

Company
Multi-state electric and gas supplier

Project type

Description

Summary
PwC evaluated the policy, procedures and control environment supporting a multi-billion dollar portfolio of construction projects for this large US utility company. PwC developed a series of reports detailing areas of potential risk in relation to these areas and in addition, PwC advised the client on the development of a governance and oversight organization, development of an enterprise risk management system and supported internal audit with the development of construction audit plans. PwC provided continuous external project assessment services to this company in relation to its construction operations. These assessments involved comprehensive evaluation of the controls in order to identify areas of risk and opportunities for performance improvement. PwC also evaluated their global project management functions including Global Project Controls assessing the functions effectiveness and providing recommendations for performance improvement. The Global Engineering review included assessing performance and effectiveness of global engineering capabilities related to large scale Engineering Procurement and Construction programs. Policies, processes and procedures associated with engineering management were assessed. PwC presented recommendations to enhance and/ or standardize process and procedures to help engender consistently high performance across all global engineering ofces. For this $2.3bn construction project, PwC provided a team of experienced program and project management professionals with deep expertise in facilities planning and construction, risk and portfolio management and performance management. Specically, PwC: Offered disciplined and comprehensive portfolio and program management support; Designed and implemented the appropriate project management methodologies and tools; Developed and managed a master schedule; Developed a quality control system and culture that led to both immediate results and instilled on-going process improvement; Developed a comprehensive risk management approach to minimize the impact of risks.

Energy/Utilities Review and assess potential process, procedural, controls and organizational risks

A company Engineering & specializing in Construction the ngineering and construction of large steel structures

Project assessment and recommendations to enhance and/or standardize processes and procedures

Government agency

Government

Project management

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Company
A major US utility company

Project type

Description

Summary
A major US utility was nalizing its plans to construct new plants costing several billion dollars. Working in a highly regulated environment, the client recognized the importance of a strong control environment to manage the project. The client requested a governance readiness review to determine whether its systems and controls could support a project of this magnitude and complexity. The PwC team delivered a comprehensive picture of the projects risks and controls throughout different stages of the projects lifecycle. We also worked with the client to set up the control environment, which involved leveraging data management specialists to develop a system to track the project estimate to complete. We helped our client build a risk and issue management system, develop a master schedule of all project work, and establish a reporting framework for communicating the status of key project metrics to management and regulators.

Energy/Utilities Governance readiness review

A biotech real estate developer

Real estate investment trusts

Project management

The client's rapid growth had led to a lack of consistency in how it managed development real estate projects. Based on PwC's review and recommended solutions, the client is now benetting from additional efciencies due to increased visibility and improved information ow throughout the company. Regional ofces are better aligned under a cohesive, consistent project management governance framework, and new reporting metrics give executives real-time insight into their operations. As a result the company has improved control of projects and is better equipped to foster further growth under a new, more structured approach to project management. PwC worked with this utility company during the initial stages of a major engineering and construction project, to repower a gas red power station. PwC helped the company address and craft the project delivery model and assisted in drafting the details of contract requirements and setting the proper expectations and terms. PwC also assisted this client with two other major capital engineering and construction projects from a project management and governance perspective which included providing detailed recommendations for performance improvement in the areas of organization, people, policy and procedures and systems. Further, PwC assisted with the strategy and development of standardized approaches to the execution of large scale engineering and construction projects at the portfolio level.

An integrated Energy/Utilities Project delivery model, energy company contract requirements and construction management

A major oil company

Energy/Utilities Capital project advisory PwC provided capital project advisory services to a major downservices stream oil and gas client who is undertaking a multi-billion dollar project to increase its production capacity. The project is high prole and a similar such undertaking has not occurred in North America in the past 30 years. PwC was retained to provide subject matter expertise on project management control tools and procedures for large-scale capital projects.

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PwC contacts
Daryl Walcroft San Francisco, CA +1 (415) 498-6512 daryl.walcroft@us.pwc.com Steve Lechner San Francisco, CA +1 (415) 498-6596 stephen.p.lechner@us.pwc.com Mark Rauckhorst Atlanta, GA +1 (678) 419-2087 mark.rauckhorst@us.pwc.com Tony Caletka New York, NY +1 (646) 471-5405 anthony.caletka@us.pwc.com

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www.pwc.com/us/capitalprojects
2011 PwC. All rights reserved. PricewaterhouseCoopers refers to PricewaterhouseCoopers LLP, a Delaware limited liability partnership, or, as the context requires, the PricewaterhouseCoopers global network or other member rms of the network, each of which is a separate legal entity. This document is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. AT-11-0237