Literature Review Example on Mega Construction Projects

Projects in mining and construction, as well as oil and gas industries are truly mega. Spending in excess of over $2 billion in a period of five years on a single entity would definitely raise eyebrows. Despite the development of many projects with the application of numerous management techniques, for instance, Front-End Loading, most large entities fail to achieve the required threshold. The current study reviewed literatures on mega projects on the basis of scope, business benefits and schedule and the though the significance of Front End Loading at the Stage Gate phase in projects execution is increasingly recognized,  the technique is still underutilized in the literature. The available literature mainly focuses on hand-on guidelines and framework that are emphasized to improve the quality of the FEL development. Two most used guideline or what is referred to as FEL quality indicators have been put forward. The first framework is developed by CII referred to as PDRI while the second framework is from IPA referred to as FEL-index. The FEL-index encompasses applicable percentage of the VIPs employed, Team Development Index; and Project Control Index. It is also clear that literature on Team Development Index and Project Control Index as an approach to remove barriers in implementing front end loading as a stage gate is underrepresented.

Introduction and Background

The initial step in this chapter is to collect and analyze various literatures. The sources were acquired through database search. Table 1 presents both databases searched and the phrases that were employed in the search. The findings from the search were not unique. An attempt was made to access all databases that contain the desired sources. In some instance, a number of desired literatures could not be retrieved but this could not affect the overall literature search. Relevant articles and books were searched until new sources could not add new insight on the concept of FEL and the search was concluded.

Table 1: Table showing how references were searched in various data bases

SEARCH PHRASE SCIENCEDIRECT Scopus Web of Science /others

Front-end loading 5 17 21

independent project analysis" 1 11 15

project definition phase 3 17 32

Capital project management" 1 2 16

Front-end development 2 11 13

value improving practice 0 0 19

value improving process 1 0 18

The search expounded on the benefits of FEL. The FEL is in this paper defined as fronting significant attempts in the Front-End development of an enterprise with the aim achieving a successful execution. After having a glimpse on the front-end development of a project is, the question on overcoming barriers in implementing the front end loading need to be answered. The idea being fronted this far is illustrated in Figure 1.

Figure 1 showing the cost influence

The Influence Curve

The influence curve illustrates the best practices associated with the FEL See figure 2. It is generally agreed that the ability to influence costs at the end of project execution is greatest in the front-end period. The basic assumption postulated by the influence curve in the work of Gibson and Wang (2001) and Clerecuzio and Lammers (2003) is that as the degree of project definition increases, the extent of influence on the project results decreases. According to Clerecuzio and Lammers (2003), this assumption forms the principle of FEL. It is in this context that Lawrence, P. (2011) and Render (2016) points out that the more exhaustively a project is defined, the less likely it is to fail, for instance, cost and schedule overruns.

Figure 2: The Influence Curve for mega projects (Render, 2016)

Research by IPA as cited in the works of Merrow (2011) reveals that FEL is critical component that drives the project success. According to Merrow (2011) and Symonds (2011), project that are well defined tend to cost less, take less time to complete, and operate better.

Research employs various terms in referring to the FEL. As noted in the works of Back, Bell, and George (2008) Burns (2008), Casteneda (2011) including Cho, Gibson, Pappas, and Wang (2006), most of these references use different terminologies such as Pre-Project Planning (PPP), Front-End Planning (FEP), Front-End Loading (FEL), Front-End Development (FED), Front-End Engineering Design (FEED) and Front-End Decision Making (FEDM). Despite the assorted terms employed, the underlying concept is meant to achieve the same purpose. The terminologies employed are meant to imply the time and availability of resources that dictates how the activities will be implemented in the project (Merrow, 2011).

Project Management and Organizational Strategy

Front-End Planning as a Strategy to Successful Project

Strategically, IPA (2011) views the concept of FEL as an avenue upon which a company translate its technology and opportunities into capital project. On its part, the CII (2012) sees the concept of FEL as platform upon which a company can develop enough strategic information to define risks and decide how to allocate resources to maximize the chances of success. Costa Jr. (2010) agrees that experts need to divide the industrial activities into three main phases of FEL. According to Cost Jr. (2010) each phase prescribes set of deliverables products required to predict a successful project.

The CII provides guidelines referred to as Front-End Planning ToolKit. The toolkit contains various activities that each phase must pursue (Bendiksen, 2012). The project scope must be measured and this prompted the development of Project Definition Rating Index (PDRI). The PDRI is made up 70 scoping elements. The elements are meant to define complete definitions and allocate scores for minor and major deficiencies. The lower the score, the better the project is defined (Gibson, 2004).

The FEL model as put forward by IPA has its own level of standardization that prescribes minimum standards needed at each phase. To quantify the degree of project definition and measures of performance, the IPA recommends one of the successful indices of the FEL index. The IPA as noted in the works of Couchman, Gillespie, and Steffen (2008) commissioned by PricewaterhouseCoopers, contain three sets of FEL-index, location factors, definition of engineering, and Project Execution Plan (PEP). The FEL index is allocated score ranging from 1 to 10 with the lowest score being the greatest degree of maturity of the project. To this end, the literature highlights the significance of the FEL methods which is not only for dissemination of new concepts but it organizes and systemizes existing ones by promoting synergy between them. The method is also outlined in the Project Management Body of Knowledge (PMBOK). More importantly, there are additional standard practices, for instance, Earned Value, Value Improving, and quality management tools.

In summary as noted in the works of several scholars (Matta and Ashkenas, 2003; Pricewaterhous Coopers, 2005; Oliveira, Maicon and Henrique Rozenfeld 2010; Merrow, 2011; Render, 2016) in the field of engineering, FEL index has been provided to avert any barriers during implementation process. The FEL index provides measures upon which level of definition for particular project are operated. Most researches refer (Liviu Ilies, 2010 Merrow, 2011; and KPMG, 2013) to this as best practices and serves as a target at authorization. The FEL index at authorization is said to be the strongest predictor of project performance. Researches across the continuum (Gibson, Hoover, Fish, Herrington, Albrecht and Talib, 2008) agree that project outcomes positively correlate with the best practice at the authorization see figure 3.

Figure 3: FEL drives project cost predictability (Merrow, 2011)

In figure 3, FEL comes out as a critical component that drives cost predictability. The cost deviation can be estimated from 0% to +5% on average only where the FEL index is at the best category. The dark part of the figure represent +/- 1 standard deviation. The same is also true for driving predictability in mega projects. For instance, the best category of schedule slippage FEL index ranges from 0%-5% see figure 4.

Figure 4 FEL drives project schedule predictability (Merrow, 2011)

The level of operation is also regarded by many researchers as a barrier if not followed as required (Liviu Ilies, 2010 Merrow, 2011. As such, the FEL index is said to play a fundamental role in reducing operational problems in the megaprojects. Researchers such as Gibson and Hamilton (1994); Merrow (2011) are of the opinion that the better the FEL, the few the operational problems.

Figure 5: Proper FEL minimises major operability problems (Merrow, 2011)

Front-End Loading as Project Delivery System

The Influence of FEL on the Value of a Project

In the works of Merrow (2011), on industrial projects, the author looks on the reasons why numerous mega projects fail to deliver and provide recommendations to reduce extensive capital outlays. Merrow (2011) lists various reasons why mega projects fail and they include among others cost overruns and slips in schedule. Other reasons provided by the author include outdated technology and production problems. Merrow (2011) recommends the need to have in place an assessment and then shape the opportunity into viable entity. To achieve the required threshold, the shaping according to Merrow (2011) takes place parallel to both the FEL-1 and FEL-2 phases. This ensures that no changes are brought on board once the project enters into the final engineering. The FEL-1, FEL-2, and FEL-3 (see figure 6) are parts of the Front End Loading stage gated model in which the FEL- is devoted in initiating business case and sorting out the basic feasibility of capital investment. On its part, FEL-2 provides the scope of development and the selection process. The FEL-3 provides engineers with a detailed design to execute the project (Merrow, 2011). To this end, barriers in implementing the front end loading are due to mismanagement in between the different gated phases.

Figure 6: Project delivery system (Bastianelli, 2012)

The Stage-Gated Project Management Process

The Stage-Gated is critical process in the FEL phase. Literature identified in the search (Turner, 1999; Horton, 2002; McGee et al., 2000, Che, Seosamh, Suzanne, (2015) SaminCarl,T. Haas, Sang (2016) advocate the stage-gated project management process with a number of phases within the FEL of a project.

Many scholars are in agreement of having various phases within the FEL.

Figure 7: The project management process as recommended by IPA (Burroughs, 2007).

Figure 8: basic FEL diagram in the early phases of project management as recommended by Merrow (2011)

Figure 9: Front End Loading Phases Deliverables (Bastianelli, 2012)

Shlopak, Emblemsvag & Oterhals (2014) findings, after a thorough literature review established that most sources point to a direct correlation between the quality of the FEL and the overall success of the project. Typically, the project will not be much better than its FEL. Shlopak et al, (2014) referred to statistical methods from large database of project to find out whether there is a correlation between quality of FEL and project success. The approach was pursued in terms of cost predictability, cost effectiveness, schedule predictability and schedule effectiveness.

Gibson and Hamilton (1994) study in the construction industry, agrees on the existence of positive, quantifiable correlation between effort directed to...