Generic selectors
Exact matches only
Search in title
Search in content
Post Type Selectors
Search in posts
Search in pages

Go Home

Project Management at Fluor

Project Management at Fluor

by | Nov 5, 2020

Fluor saves $1.3 billion in System Dynamics-based project management.

#United States #Engineering #Fluor #Corporation

CLIENT: FLUOR

Fluor is one of the world’s largest engineering and construction firms, with 2008 revenues over $20 billion. The US-based firm operates in every major business sector and geography.

CHALLENGE: CHANGES DON’T IMPROVE PROJECTS, QUITE THE OPPOSITE

A large part of Fluor’s work is organized in the form of projects, which are typically market-driven with aggressive cost and schedule targets and evolving client needs. It is the tension among these different objectives that is often the underlying dynamic for generating changes on projects. In an initiative by Fluor’s Chairman, a comprehensive quantitative review examined all Fluor projects over several years. For many in the industry, there is a misperception that contractors improve their performance with more changes. This company-wide review was unequivocal in refuting that notion. There is a clear, unambiguous relation between the level of changes and the cost and schedule performance of projects: more changes bring ever-worsening performance on projects.

ACTION: FLEXIBLE SYSTEM DYNAMICS MODEL TO PROJECT COST OF CHANGES

After Fluor had identified and quantified the business need for improving the practice of project change management, two external consultants first built and piloted and validated a project model to assess change impacts on several initial projects. In the four years since then, the model has been used in the “Change Impact Assessment” system to conduct thousands of analyses on over 100 client projects. Fluor projects analyzed with this model range in size from less than million to more than billion.

The system rapidly tailors a model to simulate each engineering and construction project. Each model is then used to foresee future cost and schedule impacts of project changes, and most important, test ways to avoid the impacts.

We developed a project model based on our prior modeling work with Fluor, and built a system around it, with defined practices to rapidly and automatically tailor the model to a specific project. We set up an interface to allow dozens of trained company users to test proactively project-wide impacts of proposed design or scope changes.

We conducted worldwide training of executives and managers and analysts, ensuring the focus was on foreseeing and mitigating future change impacts. The system was applied to hundreds of Fluor projects.

RESULTS: COST REDUCTION OF $1.3 BILLION

A cultural change occurred in the company, focused on proactive mitigating efforts that reduce change impacts on the projects.As a result, many disputes were avoided (some had cost tens of millions of dollars), and cost impacts were reduced by proactive actions identified in the analyses, amounting to over $1.3 billion savings to Fluor and their clients.

LEARN MORE

System Dynamics modelers: Kenneth Cooper and Gregory Lee

AWARDS & PUBLICATIONS

Award: In 2009, the Society awarded its System Dynamics Applications Award to Kenneth Cooper and Gregory Lee for their work Managing the Dynamics of Projects and Changes at Fluor. See conference slides and citation.

Article: Managing the Dynamics of Projects and Changes at Fluor

 

Recent Business cases

General Motors OnStar

Name The General Motors OnStar Project Modelers Vince Barabba, Chet Huber, Fred Cooke, Nick Pudar, Jim Smith, Mark Paich Client General Motors Client Type Corporation The Official Website onstar.com is the official website in which you can become a member, get...

Pharmaceutical Product Branding Strategies

Pharmaceutical Product Branding Strategies Name Pharmaceutical Product Branding Strategies — Simulating Patient Flow and Portfolio Dynamics Modelers Mark Paich, Corey Peck, Jason Valant Contact Jason Valant or Corey Peck Client Numerous Pharmaceutical Companies Client...

Upcoming Events

Recent Posts

Using System Dynamics to Teach and Learn about COVID-19

Using System Dynamics to Teach and Learn about COVID-19 This Webinar is free due to the generous contribution of the University at Albany and California State University, Chico A distinguished team of panelists demonstrated how we can all think globally and act...

Economics SIG News: Summer 2022

Economics SIG News: Summer 2022 Summer 2022 Events Tyrone Keynes on “The Impact on National Accounts from NPI’s: Economic Pandemic Model” May 12th, 2022 Noon – 1PM (New York) Demonstrating the effects on the national and regional accounts of...

New Horizons of Systems Science

New Horizons of Systems Science This Seminar was sponsored by the International Council on Systems Engineering (INCOSE). Systems theory is developing to include new perspectives with a focus on integrated and inclusive transdisciplinary system approaches. This panel...

Join us

System Dynamics Admins
System Dynamics Admins