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A solution to handle large and complex construction projects: Interface Management

Most large, complex construction projects fail. In fact, “Nine out of ten mega-projects have cost overruns; overruns of up to 50% in real terms are common, more than 50% are not uncommon” (Flyvbjerg, 2014). In the oil and gas industry, 64% of projects are dealing with cost overruns, and 73% are facing delays in the schedule (Prieto, 2015). Independent Project Analysis, Inc. (IPA) reports 14 of the industry’s largest projects have experienced 46% cost growth over project sanction. Poor performance of these projects could be related to difficulty in managing multiple scope packages, and lack of effective communication and collaboration across multiple EPC contractors. What this adds up to, along with the emergence of new technologies, the continuing trend toward modularization and more outsourcing to multiple parties, and geographic and geopolitical influences from regions all over the world is increasing complexity and thus increasing risk of failure. Other industry sectors face this problem and have begun to address it with Interface Management.

Interface management has been widely used in the aerospace industry and high-tech manufacturing, where there are lots of modularized components. NASA has developed interface management procedures to identify, control, and verify interfaces to assure compatibility and achieving the highest time and cost performance.

In construction, informal interface management has always been a part of project management practices and project manager’s duties; however, it is now emerging as an independent discipline in the oil and gas, offshore, and infrastructure and rapid transit industries. Specifically, significant advancement in information and communication technologies in the past two decades, make it easier to adopt interface management processes by medium- and large-scale construction projects.

Major owners and EPCs such as Suncor, Saudi Aramco, and Fluor have developed formal interface management procedures to minimize the risks of their projects. They have established dedicated teams to implement interface management principles and practices, and in many cases, interface management has become part of the organizational best practices. These companies believe that interface management improves alignment between the project stakeholders and reduces project issues and conflicts by increasing the visibility and clarity of roles, responsibilities, and deliverables. It is a logical argument that any project that is highly complex — such as an urban light rail project or an offshore oil platform — could merit the application of interface management.

Despite the evident advantages, interface management adoption in the construction industry is sparse. One of the main reasons could be lack of documented evidence of the benefits of interface management systems. An interface management research team supported by the Construction Industry Institute (CII, 2014) addressed this question by studying over 45 mega-projects. According to their results, on average, large complex projects utilizing mature interface management systems experienced an average of only 4% cost growth, while similar projects without mature interface management system averaged 18% cost growth. This correlates to almost 5 times better cost performance related to formal interface management system implementation. Based on anecdotal evidence, the cost of interface management implementation (dedicated team, tools and software) for a $10 Billion dollar project is approximately 0.2% of total project value. Therefore, for a hypothetical project of $10B, the cost of implementing IM might be $20M, and the benefit could be over $1B.

As industry leaders realize the benefits of interface management, I foresee it being increasingly implemented in projects with different sizes. Even more benefits will be realized by integrating interface management with other project management processes such as risk management and change management. Project teams will have a higher level of oversight of the project deliverables and can make better and more informed decisions, all of which help improve project performance to gain a competitive edge.

 

Author:

Samin Shokri, Ph.D.

Construction Management, Interface and risk management

E-mail: samin.sh@gmail.com

LinkedIn: https://www.linkedin.com/in/samin-shokri-ph-d-438ab511

 

References:

Flyvbjerg, B. 2014. What you should know about megaprojects and why: An overview. Project Management Journal, 45(2), 6–19.

Prieto, B. (2015). Is it time to rethink project management theory?. PM World Journal. IV(III).

Vipavetz, K; Shull, T.A.; Infeld, S.; Price, J. (2016) Interface management for a NASA Flight Project Using Model-Based Systems Engineering (MBSE)