Properly Prepare for Project Slowdown

An effective plan maximizes value retained and enhances restart efforts.

By Nat D. Schatz, Pathfinder, LLC

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4. Long-term hold — the delay will last six to 12 months or longer until adverse economic trends abate, for instance, once current market volatility calms down.
5. Cancelled — unfavorable long-term economic trends probably won't be reversed, e.g., a shrinking market or a company decision to exit a business area.
A PSRP obviously only applies for projects in categories two to four.

Initiating the Plan
Most organizations miss opportunities for capturing the full value of work done before the slowdown. To gain this value, it's essential to develop a PSRP before reduction or demobilization of the project team (see Figure 1).

The PSRP should be initiated as soon as the slowdown is announced and should be fully in place when the project team is partially or fully disbanded. The PSRP then becomes the basis for establishing an updated` PEP when the project is reauthorized and the team begins to remobilize.

The reasons for this timing are obvious. The team needs to strategize what it wants easily retrievable when the project gets reauthorized. If management wishes to retain some key team members, how will this be achieved? Can they be assigned or loaned to smaller projects until needed? Will purchased materials and equipment be maintained, shared or sold to other projects?

Once the decision to place a project on hold or into recycle is made clear, it's important to establish objectives for the near term and, in some cases, to define signposts for its restart. The cost and schedule effects of the slowdown must be clearly understood and expectations defined. Clearly document these expectations and signposts in an updated PEP and communicate them to the project team and key stakeholders. The updated PEP also must address issues of destaffing and restaffing the project.

The PSRP may cover opportunities for improving project performance after the restart. This is especially true if the project was placed on hold during a preauthorization phase like the preliminary engineering (Pre-FEED) or basic engineering (FEED). The project may benefit from marketplace changes such as:

• lower pricing of equipment and raw materials;
• faster delivery of long-lead items;
• more attractive construction contracting terms and conditions; and
• better construction labor rates or work rules.

Easing Restart
As economic conditions improve, projects put on hold will begin to regain life. An updated PEP will be one of the first project-management deliverables required, preceded only by the revised business case and facility business/project objectives. If planned well, the PSRP will form the basis for the PEP. Indeed, the PSRP's content is intentionally designed to retain some, if not most, of the work effort involved in developing the original PEP. The PSRP will have defined the level of completeness of the original project documentation, desired resources to efficiently restart planning and execution efforts, cost incurred to date, and expectations for the level of effort required to complete the project.
If business climate changes affect the project's scope, the PEP obviously must reflect these changes. However, the PSRP still will be useful in communicating what was previously accomplished and what remains to be completed.
Upon restart, it's highly advisable to hold a kickoff meeting bringing together the project team, stakeholders, key contractors and suppliers. This meeting should:
• review the PSRP and updated PEP;
• achieve alignment of project goals and objectives;
• examine work performed previously and ascertain its applicability given current business objectives;
• consider revisions in project execution objectives (cost, schedule, contracting strategy, etc.); and
• discuss and finalize the restaffing plan.

A Case History
A diverse multinational chemical company was executing a major (about-$200-million) capacity expansion project for a U.S. Gulf Coast site. The firm hired an engineering contractor and a construction manager, completed basic engineering (FEL-3), and approved advanced funding to start the engineering/procurement/construction phase of the project by soliciting and conditioning bids for key long-lead equipment.

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