Project Management at Fluor
Fluor saves $1.3 billion in System Dynamics-based project management.
#United States #Engineering #Fluor #Corporation
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.
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.
Recent Business cases
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 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...
Polio Eradication Name Polio Eradication Modelers Kimberly M. Thompson,and Radboud J. Duintjer Tebbens Client World Health Organization (WHO) Client Type NGO The Issue You Tackled Following successful eradication of smallpox and impressive progress in the elimination...
The first ISDC 2022 Workshop day will be held online on Tuesday July 12th, one week before the conference. To register for the conference, check out: https://systemdynamics.org/conference/
Dancing with Systems: Moves for Turbulent Times Seminar recording Learn more about the Seminar Series. Watch the recording below Download Presentation Recent Posts Upcoming Events Recent Business cases Join...
Systems Thinking for Pre-College Education Pre-College SIG Seminar Series consists of periodic online meetings on K-12 education to the Systems Thinking and System Dynamics communities. These virtual activities cover a wide range of topics on K-12 education from many...
Metacognition in Stock-flow Failure Considering the nature of problems in dynamic systems, the systems thinking literature introduces various failures and oversimplified strategies while solving perceived problems of a system and possible reasons for failures. It is...