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Interface Management in Mega Oil Refinery Projects

Dr. Mohammad Mehdi Mortaheb, Assistant Professor,Department of Civil Engineering,

Project Management Specialization, Sharif University of Technology

Mehrshad Rahimi, Department of Civil Engineering,Project Management Specialization, Sharif University of Technology

Shahab Zardynezhad, Department of Civil Engineering,Project Management Specialization, Sharif University of Technology/University of Calgary

IRAN

Keywords: NIOEC, Interface Management, Portfolio, Oil Refineries, Mega Projects.

1-Abstract

Aiming at a higher gasoline production level and in order to enhance gasoline self-sufficiency in the country, and export the environmental friendly by-products with higher added-value instead of raw crude oil, NIOEC1 decided to de-bottleneck and revamp the existing refineriesand construct several new oil refineries; in platform of several mega oil refinery projects.

Most of the mega oil refineries programs are managing in the form of multi-projectsenvironment with different Contractors which create several challenges which are fundamentallydifferent from a single project.

Recent mega oil-refineries projects in Iran have all experienced significant delay duringexecution phase which negatively impact the relation between time, cost, scope, quality, andresources. There are many reasons for these overruns, but based on some investigations and lessons-learned; one of the most important factors is poor interface management and coordination betweendifferent project parties during execution phase.

The objective of this paper is to create a comprehensive road map dealing with interfacemanagement subjects at the beginning of the project life cycle (i.e.: Front-End Loading), in order toproperly identify and mitigate the potential causes, and prevent any scope creep in the next projectphases.

1National Iranian Oil Engineering and Construction Company

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In this paper, the top ten most causes of interface problems and their respective impacts on execution ofthe mega oil-refineries projects will be identified by using a quantitative research method.

The result of the research is the generation of a dynamic interface management plan tobe used and implemented by Owners in order to effectively manage the common problems andissues related to interface management of mega oil-refineries projects of Iran. The generatedinterface management plan is a generic tool that can be easily customized in order to be usedfor any other mega oil, gas, and petrochemical projects.

2-Introduction

A megaproject (sometimes also called "major program") is an extremely large-scale investmentproject. Megaprojects are typically defined as costing more than US$1 billion and attracting a lot ofpublic attention because of substantial impacts on communities, environment, and budgets {1}.

Construction and management work of a mega project is normally divided into several packagesand each package comprises of several projects that are running parallel to each other. Each project isdesigned and constructed by a number of local and international companies and involves many vendorsand suppliers from different countries. Sometimes mega construction projects are called as programs.Management of programs is not only complex but also somehow difficult.

Mega oil refineries projects of Iran require an estimated Capital Expenditure (i.e.: CAPEX)more than 2-3 billion Euros. Limitations such as Embargo, Contractor s financial status, experiences,resources (e.g.: manpower, construction equipment, etc.), work load, and Owner s and Contractor s riskstrategies have caused mega oil refineries programs to be divided into smaller projects and beingundertaken in a multi-project environment. Turner and Speiser [1] contend that by far the greatestproportion of project activity takes place within portfolios, or programs. Payne [2] estimates that up to90% by value of all projects are carried out in a multi-project context of some sort.

Oil refineries projects involve many parties; for example Owner, Licensors, Basic Designer,Detail Designer, Construction Contractors, Sub-Contractors, Vendors that create different interfaceproblems such as ineffective communications, poor cooperation, hidden agenda, and lack of trust. Allthose problems cause delays, difficulty in resolving claims, cost overruns, litigations, and sometimescompromise project quality. All interface problems should be communicated and solved carefully andurgently by mutual cooperation, correct communication, and proper coordination between differentproject parties.

Interface management failures have occurred for years, but came to a harsh light with the ThreeMile Island nuclear incident in 1979 when it was found that people in key positions made assumptionswithout checking with one another, which ultimately led to the disaster. Investigations into other disastershave highlighted interface management failure as the root cause in the Piper Alpha, Exxon Valdez, andPhillips Pasadena accidents [3].

Some studies discussed the interface problems between project parties, including Designers andContractors [4], [5], Contractors and Sub-Contractors [6], [7], Owners and maintenance Contractors [8],as well as common interface problems among various construction parties [9].

Unfortunately, the importance of interface issues and the need of interface management andcoordination of the mega oil projects have not received proper attention in Iran from both Owner andBasic Designer at the front-end loading of the project cycle and at the early phase of the construction byConstruction Contractors/Sub-Contractors.


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In this paper, the top ten most important causes of interface problems ( and their respectiveimpacts on the projects) between parties, including Designers and Contractors, Contractors and Sub-Contractors, Owners/PMC and Designers/Contractors, as well as common interface problems amongvarious construction parties of the mega oil-refineries projects will be identified by using a quantitativeresearch method (This will be done by interviewing and distributing survey questionnaires and interviewsof about 70 senior and middle managers selected amongst Contractors, Consulting Engineers, PMC, andOwner sides as the researchers statistical society.

Finally, this study will develop a dynamic interface management plan based on analysis ofresponses for using project participants and implementation which has been requested by Owner toimprove and manage effectively the common problems and subjects related to interface management ofmega oil-refineries projects of Iran. This study addresses application of an effective interface managementplan in terms of an applicable project job specification for improvement and management of differentinterface issues among design and construction disciplines (i.e.: mechanical, instrumentation, civil,electrical, etc) of oil refineries mega projects. The generated interface management plan is generic since itcan be easily customized in order to use in any other mega oil, gas, and petrochemical projects.

3. Problem Statement

National Iranian Oil Engineering and Construction Company (NIOEC) plans to construct somenew oil refineries and upgrade most of the existing oil refineries, in terms of a portfolio of constructionmega projects, aiming at a higher production level of gasoline and other clean and environmental friendlyproducts, gasoline self-sufficiency, and exporting more valuable by-products instead of raw crude oil.However, recent mega oil-refineries construction projects in Iran which are executing in a multi-projectenvironment with multiple and many Contractors working in a single program have all experienced poorinterface management which led to schedule overruns and negatively impacted the balance between time,cost, scope, quality, and resources of the projects.

Construction of mega oil refineries programs within a multi-project environment aredistinguished by extraordinary involvement and entanglement of many Contractors and due to Owner spolicies in some cases, some projects are selected as lump sum and fast track nature. The multi-projectenvironment causes diversities between the projects in terms of contract type or pricing arrangementwhich made many difficulties for project parties, especially for the Owner.

Considering the above, an effective and dynamic interface management technique is essential tofind, identify, communicate, record, monitor, solve, and manage all interface issues between differentproject parties.

France [10] states that interface management is useful shorthand to describe how companies workwith each other in the design, manufacture, and construction of the project. Chen [11] presents a multi-perspective approach that systematically explores comprehensive cause factors for various interfaceissues.

According to some investigations done by writers in different ongoing mega oil refineriesprojects, there are much unclear interface information between different project parties, which createdmany problems for the project; since each Contractor usually executes his own work and do not payattention or share necessary information with others.

Since, there is no suitable and effective tool to help the Owner to manage interface problemsbetween different Contractors, therefore the primary objective of this study is to identify the main top ten


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causes of the interface problems and develops a dynamic interface management plan for using projectparticipants, accordingly.

4- Research Goal and Objectives

In mega oil refineries projects which are under execution by NIOEC; definition, identification,communication, recording, monitoring, controlling, and managing the different interface events andproblems is critical; shortening the construction phase of the project; even for a single day and preventingdelaying in start up and production of the oil refinery will save significant amounts to needed forimporting gasoline and gas oil to respond the local demand.

The main purpose for conducting this study is to develop a dynamic interface management planfor using project participants and implementation which has been requested by the Owner to improve andeffectively manage the common problems and issues related to interface management of mega oil-refineries projects of Iran.

The main objectives of this research include (1) identification, evaluation, and assessment of theinterface management problems of the different ongoing oil refineries mega projects; (2) classification ofthe main interface problems and the top ten causes of the interface management problems; (3) determinethe respective effects on project completion,(4) provision of applicable recommendations to the projectparties, and (5) developing a dynamic interface management plan for using project participants andimplementation which has been requested by the Owner to improve and effectively manage the commonproblems and issuess related to interface management of mega oil-refineries projects of Iran.

5-Research Methodology

For this research, the undertaken methodology is composed of the following steps: Step-1: An intensive literature review and background research related to the interface

management of the mega projects has been done. Step-2: Investigation and examination of the interview results of three empirical questionnaires

were developed and then they were distributed between seventy managers and professionalsamongst the Contractors, Consultant Engineers, PMC, and the Owner of an oil refinery megaprogram which had been divided into ten smaller projects and were undertaken in a multi-projectenvironment mainly because of required estimated Capital Expenditure (i.e.: CAPEX) , morethan 3.4 billion Euros, and due to some limitations such as Embargo, Contractor s financialabilities, experiences, resources (e.g.: manpower, construction equipment, etc.), work load, andOwner s and Contractor s risk strategies. The questionnaires examine the respondents opinionand attitude by using simple and open questions.In order to verify the completeness of the questionnaires to represent of the causes of the interface

management and their effects on the mega oil refinery projects, a small survey was conducted by a face toface interview with five senior managers and experts who had worked in the biggest gas refinery projectlocated in Assaluyeh port, south of Iran during 2004 to 2008.


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5-1-Questionnaire Design

The main goal of this research is to investigate, identify, elaborate, communicate record,categorize, and prioritize causes of interface problems and developing an effective tool for better interfacemanagement and coordination of the oil refineries mega projects. To achieve this goal, three differentquestionnaires were used for gathering the research data . In the first questionnaire, the industryprofessionals were asked the following simple questions:

1) What are the main interface problems and respective causes of the Iranian oil refineries megaprojects? Please list based on their importance.

2) What are their impacts (effects) on project completion?

3) What do you suggest to manage interface problems of the Iranian oil refineries mega projectslisted in question one, in an effective manner?

The second questionnaire included the list of recognized causes of interface problems of the megaoil refinery projects. These causes were categorized into seven different groups based on factors ofinterface problems of the mega oil refinery projects: factors related to (1) Owner, (2) Project, (3)Contractor, (4) Consultant, (5) Engineering, (6) Procurement, and (7) External Issues.

The purpose of the second questionnaire was to determine frequency of occurrence, severity ofthe each cause on project delay, and importance of the identified causes on project interface problems. Foreach cause/factor, three questions were asked as follow:

1. What is the Frequency of Occurrence for this cause?2. What is the Severity of this cause on project delay?3. What is the Importance of this cause on project interface problem?

All of them were categorized on a four-point scale. Frequency of occurrence is categorized as follow:always, often, sometimes, and rarely (on 4 to 1 point scale). Similarly, degree of severity and importancewere categorized as follows: extreme, great, moderate, and little (on 4 to 1 point scale).

6-Literature Review

6-1- Mega Projects, Communication, and Delays

Communication refers to the information exchange between entities and according toPMBOK1(1) Guide (Project Management Institute (PMI), 2004). Communication Management is thetimely and appropriate generation, collection, distribution, storage, retrieval, and ultimate disposition ofproject information.

A research [12] shows the major causes of delay in construction projects. The factors related tocommunication and coordination is considered as critical causes of delay and totally are about 13% of allthe causes. Based on another research [13], inadequate communication is considered to be the third mostcritical reason of low productivity and consequently extensive delays and idle time. Dawood, Akinsola,

1 ‐ Project Management Body of Knowledge


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and Hobbs [14] noted, Two-thirds of the construction problems were caused by inadequate coordinationand inefficient means of communication of project information and data. It is clear that integration of thedesign and construction processes alone cannot improve productivity and performance without animproved communication and efficient means of exchanging information .

6-2-Definition of the Interfaces

There are many definitions for interfaces, for example Lin [15], Pe [16], and Wu [17] believe thatinterfaces exist within the occasion, processes, systems, elements, and equipments, while Wang [18], Ye[19], and Ku [20] define the interface as a dimension between two firms or organizations that canmutually influence each other.

With regard to the oil refinery projects, interfaces would be appeared between differentContractors, Owner and Contractors, Engineering team and Contractors, Contractors and Sub-Contractors, Contractors and Manufacturers, and within different disciplines such as electrical,mechanical, civil, instrumentation, process, etc.

The use of the interface concept in the context of project management followed the developmentof the system approach, which defined organizations as systems of mutually dependent variables [21].Thus, projects are made of sub-projects whose interfaces are necessary to determine if integration can beachieved (2).

6-3- Classification of the Interfaces

Interfaces arise from division of the work into parts executed by different people or organizations(3). Interfaces can be "internal", if the work conducted is done with one organization, or "external", ifdifferent organizations collaborate [22]. Other researchers [21]; (3); [22] explained that interfaces can beclassified as follow:

Time interfaces that are triggers conditioning the transition from a certain kind of activityto another,

Geographical interfaces that separate on-site and off-site work, Technical interfaces that set the limits of a system's sub-components, Organizational interfaces that keep human groups or persons apart.

Morris (2) proposed two main interface types: static interfaces and dynamic interfaces. Stuckenbtuck (3)proposed three main interfaces: personal interfaces, organizational interfaces, and system interfaces.

Pavitt and Gibb [23] proposed three main interface types: physical interfaces, contractualinterfaces, and organizational interfaces. Physical interfaces are the actual physical connections betweentwo or more building elements or components. Contractual interfaces are the groupings of work elementsinto distinct work packages to suit the availability of the design information. Organizational interfaces arethe interactions between various participants in a construction project.


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6-4- Interfaces Management

Based on the definition and classification of the interfaces, there are many interfaces betweenproject parties of any kind of construction projects. Thus, the concept of interface management becomesimportant. Interface management is the systematic control of communication supporting a processoperation [22]. Interface management has been proven to address project complexity and allows for adynamic and well-coordinated construction project system [11]. The critical relationship betweeninterface management and project success is developed so constantly in literature (2), (3), Lock, (4),Patrick, (5), Delmon, (6), [23].

Ku [20] proposed five different perspectives in order to analyze interface management, namely,"contract interface", "technology interface", "monitor interface", "execution integration interface", and"the interacting behavior in the interface".

Based on a review of the literature and a pilot study of interviews among various constructionparties, Yu-Cheng Lin [24] proposed interface management procedure includes interface finding,interface identifying, interface communicating, interface recording, and interface closing. Each phase isbriefly outlined in the following table:

Table-1: Proposed Interface Management Procedure [24]DescriptionPhase

Interface finding is the checking for new or existing interface events relatedto projects.

Interface Finding

Interface identifying ensures that the identified interfaces are consistent withall relational participants.

Interface Identifying

Interface communicating is the process of requesting, responding to andtracing processes among relational participants.

Interface Communicating

Interface recording is all information recording processes related to theidentified interface event.

Interface Recording

Interface closing is the final closing action when the interface event isreconfirmed without further identification or tracing.

Interface Closing

Chua [25] proposed to use the work breakdown structure (WBS) concept to improve workinterface management. Interface management is an information-intensive task in which available anduseful information is extremely useful to related participants [24].

Interface management is defined as "the management of common boundaries between people,systems, equipment, or concepts" [26]. In the civil engineering field, Wideman[27] provides two similardefinitions for interface management: (1) " The management of communication, coordination, andresponsibility across a common boundary between two organizations, phases, or physical entities whichare independent"; and (2) "managing the problems that often occur among people, departments, anddisciplines rather than within the project team itself."

This paper uses the definition of interface management within oil refineries mega projects as: Themanagement boarders and boundaries between different project players, including designers andContractors, Contractors and sub-Contractors, Owners and Licensors, Owners and designers, Owners andContractors as well as common interface problems among various construction parties to enhancemanagement of the resources, costs, schedules, safety, risks, contracts, and systems in order to created adynamic, organized, and active environment during project execution of oil refineries mega projects.


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7- Research Findings and Analysis of Responses7-1- Respondents Characteristics

A face to face interviewing of the five senior managers and professionals (who worked in biggestgas refinery project located in Assaluyeh port south of Iran during project execution during 2004 to 2008)has been taken.

Totally seventy questionnaires were distributed between Contractors, Consultant Engineers,PMC, and Owner of an oil refinery mega program which is divided into ten smaller projects and wereundertaken in a multi-project environment. The characteristics of the respondents are summarized in thefollowing table:

Table-2: Characteristics of the RespondentsOwner Contractors Consultants/PMC

Distributed Questionnaires 15 40 15Grade - 1,2 1,2

Experience (Company)-Years Over 50 Between 15-30 Between 10-20Participated Consultants-Years 10-35 10-30 10-30

Past Experience in Mega Projects Yes Somehow SomehowOrganization Public-Private Joint Project Private Private

Note: Simple random sampling was used to select each company representative from a list.

7-2- Interface Problems

With reference to the gathered information by questionnaire No.1 and interview with industrialprofessionals, the interface problems on project based on different viewpoints of Owners, Contractors,and Consultants/PMC were identified, as follow:

Unclear Tie-In Points (Coordinates/ Locations)Missed Tie-In Points (Coordinates/ Locations)Poor Communication between Project PartiesUnclear or Un-defined(or poor defined) Responsibilities/Scope of each parties at Tie-InPoints in: Engineering Procurement (Material Supply) Construction Test Inspection

Lack of Management/Coordination ProcedureUnclear or no definition for internal and external interfacesUndefined external supplier

7-3- Causes of Interface ProblemsWith reference to the gathered information by questionnaire No.1 and interview with industrial

professionals, causes of interface problems based on different viewpoints of Owners, Contractors, andConsultants/PMC were collected, clarified, analyzed, tabulated, grouped, and categorized into the sevengroups as shown in Table-3. Then, in the next stage for each cause/factor three questions were asked asfollow by using another questionnaire (Questionnaire No.2):

1. What is the frequency of occurrence for this cause?2. What is the severity of this cause on project delay?3. What is the importance of this cause on the project interface problem?


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Table-3: List of Identified Sources of Interface Problems based on Industrial Professionals Opinion and Idea

No Cause/Source of Interface Problem Category01 Change Order Issued by Owner Owner02 Owner Late Design Approval Owner03 Poor Owner s Communication and Coordination with Other Parties Owner04 Poor and Slow Owner s Decision Making Process Owner05 Work Suspension by Owner Owner06 Incomplete and Unclear Scope Definition Owner07 Lack of Key Deliverables such as Internal and External Interface List, and Interface

Management Plan in FEED PackageOwner

08 Joint-Ownership Structure (Governmental-Private Structure) Owner09 Delay in Owner Material Supply Owner10 Owner Late in Progress Payment to Contractor Owner11 Owner Late Decision for Breaking the Program into the Smaller Projects Owner12 Owner Late Decision for Hiring Qualified Project Management Consultant Owner13 Selected Contract Type (EPC, EP Only, Construction Only…) Project14 Lack of Effective Liquated Damage Project15 Type of Selected Tendering Policy(Lowest Price Bidder) Project16 Poorly Written Contract Project17 Lack of Project Sponsor s Supervision Project18 Delay in Project Completion Project19 Cultural Differences (Self-Interest Perspective, Bias, etc.) between Parties Project20 Discrepancies or Mistakes in Engineering Deliverables (Basic or Detail) Engineering21 Late Issuance of Engineering Key Deliverables Engineering22 Insufficient and Unclear Detail in Engineering Deliverables(Basic or Detail) Engineering23 Lack of Experience in Engineering Team Engineering24 Low Quality of the Prepared FEED Package by Basic Designer Engineering25 Complexity in Design due to Nature of the Mega Projects Engineering26 Contractors Poor Planning and Scheduling Contractors27 Poor Contractor s Communication and Coordination with Other Parties Contractors28 Low Accuracy in Project Cost Estimation Contractors29 Contractor Late Mobilization during any Project Phase Contractors30 Delay due to Sub-Contractors Work Performance Contractors31 Lack of Experience in Contractor s/ Sub-Contractors Technical Team Contractors32 Contractor s/ Sub-Contractors Key Manpower Turnover Contractors33 Contractor s/Sub-Contractors Unfamiliarity and Lack of Previous Experience with Oil

Refineries Mega ProjectsContractors

34 Contractor s/Sub-Contractors Unfamiliarity and Lack of Previous Experience with Owner sNeeds

Contractors

35 Contractor s Unfamiliarity and Lack of Previous Experience with Local Law and Regulations Contractors36 Re-Work due to Construction Mistakes by Contractors/Sub-Contractors Contractors37 Consultant Late Mobilization during any Project Phase Consultant38 Lack of Experience in Consultant s Technical Team Consultant39 Consultant s Key Manpower Turnover Consultant40 Consultant Unfamiliarity and Lack of Previous Experience with Oil Refineries Mega Projects Consultant41 Consultant Unfamiliarity and Lack of Previous Experience with Owner s Needs Consultant42 Consultant Unfamiliarity and Lack of Previous Experience with Local Law and Regulations Consultant43 Poor Consultant s Communication and Coordination with Other Parties Consultant44 Delay in Evaluating and/or Approving Change Order Requested by Owner Consultant45 Delay in Approving Key Engineering Deliverables Consultant46 Poor and Slow Consultant s Decision Making Process Consultant


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Table-2 (Continued): List of Identified Sources of Interface Problems based on Industrial ProfessionalsOpinion and IdeaNo Cause/Source of Interface Problem Category47 Joint-Venture Structure of the Consultant due to Size of Program Consultant48 Conflict between Consultant and Design Team Consultant49 Material Shortage due to Worldwide Work Load Procurement50 Delay in Material Procurement Procurement51 Delay in Procurement due to Material Variety and Selection Procurement52 Lack of an Effective Information System for Material Tracing Procurement53 Bureaucracy and Complicated Material Procurement Process Procurement54 Changes in Type, Specification, Quantity of the Material Procurement55 Delay and Late Shipment of the Material Procurement56 Damage of the Procured Material Procurement57 Unclear Responsibility of Scope of Supply for Material Procurement58 Shortage and Unqualified of Labor/Workforce External59 Impacts of Sub-Surface Condition (i.e.: Soil, Water level, etc.) External60 Accident during Construction External61 Change of Governmental Regulations and Laws External62 Weather Conditions at Construction Site External63 Delay in Obtaining Permit External64 Price Escalation of Material and Labor External65 Embargo/ US Sanction External

7-3-1-Frequency of Interfaces Problems Causes:

The top ten frequent sources of interface problems according to Owner s, Consultant s, andContractor s opinion are gathered. From Owner point of view, the most frequent causes of interfaceproblems were mainly related to the Contractors and Sub-Contractors. Owners believed that lack ofexperience in Contractor s/ Sub-Contractors technical team, Contractors poor planning and scheduling,Contractor s/Sub-Contractors unfamiliarity and lack of previous experience in oil refineries megaprojects are the three highest frequents of interface problems causes. However, Contractors/Sub-Contractors indicated that the most frequent causes of interface problems related to the Owner s poormanagement during Front-End Loading Phase which are Owner late decision for dividing the programinto the smaller projects, and lack of key deliverables such as Internal and External interface list, andInterface Management Plan within FEED Package. Also, Contractors believed that Owner late design

approval was the third highest frequents of interface problems causes. It was found that Owner s ProjectManagement Consultant had the same idea as Contractors regarding the first two highest frequents ofinterface problems causes. However, Consultant believed that awarding the project to the lowest bidder sfinancial proposal was the third highest frequent of interface problems causes. It is worth mentioning thatmost of the Owner s representatives believed that Owner s late decision for dividing the program into thesmaller projects at the end of Front-End Loading Phase, and lack of key deliverables such as Internaland External interface list, and Interface Management Plan within FEED package have significantrole on creation of the project interface events.


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7-3-2-Severity of Interfaces Problems Causes:

The top ten sever sources of interface problems according to Owner s, Consultant s, andContractor s opinion are found. Owner believed that the most sever causes of interface problems wererelated to the Contractors. Owners believed that key manpower turnover, and lack of Contractor sprevious experiences were the two main sever sources. Owner reminded that Owner s late decision fordividing the program into the smaller projects at the end of Front-End Loading Phase , and lack of keydeliverables such as Internal and External interface list, and Interface Management Plan withinFEED package were sever sources on creation of the project interface issues. However, again bothContractors/Sub-Contractors and Consultants underlined that the most two sever causes of projectinterface problems were Owner s late decision for dividing the program into the smaller projects, lack ofkey deliverables such as Internal and External interface list, and Interface Management Plan withinFEED package. They indicated that poor and slow Owner s decision making process was another seversources of project interface problems.

7-3-3-Importance of Interfaces Problems Causes:

The top ten important causes of interface problems according to Owner s, Consultant s, andContractor s opinion are identified. There were some causes that were common between different partiesand some causes were common between two parties. It is worth to mention that lack of key deliverablessuch as Internal and External interface list, and Interface Management Plan within FEED Packagewere common causes between all parties as key sources on creation of the project interface issues.

7-4-The Top Ten Interfaces Problems Causes:

The top ten causes of project interface problems based on all industry professionals opinions andideas which were collected, clarified, analyzed, tabulated, grouped, categorized, and prioritized in termsof the number of times quoted by respondents as follow:

Owner s Late Decision for Dividing the Program into the Smaller ProjectsLack of Key Deliverables such as Internal and External Interface List, and InterfaceManagement Plan within FEED PackageOwner s Late Decision for Hiring Qualified Project Management ConsultantChange Order Issued by OwnerIncomplete and Unclear Scope DefinitionPoor and Slow Owner s Decision Making ProcessOwner s Late in Progress Payment to ContractorPoor Contractor s Communication and Coordination with Other PartiesContractors Poor Planning and SchedulingConsultant s Delay in Approving Key Engineering Deliverables

As it is clearly mentioned, lack of an Interface Management Plan , and Internal andExternal Interface List as a key deliverable of the Front-End-Loading Phase were introduced as the

main cause of interface problems of the studied oil refinery mega project.


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Industry professionals made many valuable recommendations for better management of theinterface problems of the oil refinery mega projects which were used for developing the InterfaceManagement Plan and were reflected in the recommendation part of this article, as well.

7-5-Impacts of Interface Problems Causes:

With reference to the gathered information by questionnaire No.1 and interview with industrialprofessionals, the impact of the causes of interface problems on project based on different viewpoints ofOwners, Contractors, and Consultants/PMC were collected, clarified, analyzed, and prioritized, as follow:

1. Time overrun in terms of delay,2. Cost overrun,3. Quality impacts,4. Disputes between different project parties,5. Arbitration,6. Suspension of the Work or Contract Termination (rarely),7. Litigation (rarely).

However, the empirical relationship between causes and effects of the interface problems needs to beinvestigated in future studies to confirm the result of the gathered information by questionnaire.

8- Similar Research Findings for Interface Issues

Chen [11] investigated causes of interface issues from six interrelated perspective includingpeople/participants, methods/processes, resources, documentation, project management, and environment,which were shown in the form of C&E diagram invented by Kaoru Ishikawa in 1968 . It is a graphicaltool that helps to identify, sort, and display potential or real root causes (factors) of a specific effect,problem, or condition.

9-Recommendation9-1-General Recommendations

According to the results of the research, interviews, and distributing questionnaires to manyprofessionals who have extensive experiences in project management of the oil, gas and petrochemicalindustries in Iran and based on the lessons-learned from a comprehensive study of several articles insimilar projects as mentioned in the literature review, the following items can be recommended to allparties in order to improve the performance of the interface management of the oil refineries megaprojects:

1) As it has been shown in Figure-1, the interface management process including interface finding,identification, communicating, recording, and closing shall be done during Front-End loadingphase of each project. The key deliverable at the end of this phase will be an InterfaceManagement Plan , and Internal and External interface list. (Figure-2)

2) A detail Interface Management Plan (Procedure) for Oil Refinery was prepared by writersbased on results of this research. Writers provided an effective Interface Management Plan foroil refinery in terms of an applicable project job specification for improvement and managementof different interface issues among design and construction disciplines (i.e.: mechanical,


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instrumentation, civil, electrical, etc) of oil refineries mega projects. The generated interfacecoordination plan is a dynamic procedure since it can be easily customized in order to use to anyother mega oil, gas, and petrochemical project.

3) Owner should give special attention to the following issues:Decision for dividing the program into the smaller projects should be done by the end ofFront-End Loading phase with full assistance and supervision of the basic engineering

designer,Key deliverables such as Internal and External interface list, and InterfaceManagement Plan to be prepared by basic engineering designer as key documents ofFEED Package for each program,On time design approval and progress payment to Contractor, minimizing major changeorders to the contract requirements and work suspension which interfere the work, andtrying to completely and clearly define the scope of work and supply of each partiesespecially at the tie-in points, adequate quality of the FEED package by basic designer,proper expedition for issuance of engineering key deliverables, and inserting sufficientand clear detail into the engineering deliverables.Owner should use proper tools for evaluation and selection of the Contractors and not justrelying on the Contractor s lowest financial proposals, also past experiences, technicalexpertise, sufficient resources(e.g.: manpower) and financial backup should beconsidered as key parameters for evaluation and selection of the Contractors.And finally, Owner should be able to make decisions immediately to solve any problemrelated to the interface events that arise during the project execution.

4) Contractors should consider the following factors:Clear understanding and familiarity of Owner s needs and local law and regulations, Sub-Contractors evaluation and selection, early planning, scheduling, and monitoring for theinterface issues with other parties,Upgrading and curing communication and coordination with other project parties,reducing key manpower turnover, searching and applying lessons- learned of others, andexpediting mobilization process.

5) Consultant should look upon the following points:Reducing conflict with design team and other Contractors, create mechanism to solveproject interface problems and disputes, expediting reviewing and approving the keyengineering deliverables, and try to be flexible with considering time, cost, and qualitytogether, expediting the design activities related to the interface issues,Plan for weekly, bi-weekly, and monthly coordination meeting regarding project interfaceissues, Clear understanding and familiarity of Owner s needs and local law andregulations,Generate a suitable computerized spreadsheet data base for interface issues of differentContractors, and monitor and update the data base, accordingly, also consultant mustmonitor the execution work closely and do necessary supervision and inspection atappropriate time,Do the risk study regarding interface risks especially those related to external issues andstrategic ones and give the advice on proper time to Owner.

6) Engineering party should concentrate to the following items:Minimizing discrepancies or mistakes in engineering deliverables,on time issuance of the key engineering deliverables, expediting the design activitiesrelated to the interface issues,Reducing conflict with other project parties, and to consider maximum constructability indesign by using 3D computerized modeling software.


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7) Adding a position called Interface Manager with enough lead engineers for each discipline for theproject organization chart of each project party is highly recommended to be considered for each programof the portfolio. Interface Manager should be reported directly to the projectmanager.


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9-2-Recommendation for Future Studies

The followings can be recommended for future studies:Evaluation of the effectiveness of the generated Interface Management Plan (Procedure)for Oil Refinery , by implementing it in some real oil refinery mega projects.Similar study can be conducted in other oil refineries mega projects to find moreproblems, impacts, causes and/or re-confirm the research findings of this study.More detail study can be done to evaluate the effect of a specific cause of interfaceproblems on a specific project.By increasing the number of interlocutors, a more detail analysis can be conducted bycalculating Frequency Index , Severity Index , and Importance Index by the formulagiven in the Sadi A.Assaf s and Sadiq Al-Hejji s article [29].The cause factors can also be analyzed based on research needs either by factor analysisand multiple regression which were performed by Rong-Yau Huang [30] or C&Ediagram methods which were performed by Qian Chen [31].

10-Conclusion

In this research, interface problems, the main causes and their impacts (effects) on projectcompletion of the Iranian ongoing oil refineries mega projects were investigated. Totally, 70questionnaires distributed between Contractors, Consulting Engineers, PMC, and the Owner of an oilrefinery mega project which was divided into ten smaller projects and was undertaken in a multi-projectenvironment. Based on the gathered information, the interface problems were identified, and 65 causes ofthose interface problems were collected, clarified, analyzed, tabulated, grouped, and categorized into theseven main groups as (1) Owner, (2) Project, (3) Engineering, (4) Contractor, (5) Consultant, (6)Procurement, and (7) External Issues.

The top ten most interface problem causes were identified as: (1) Owner late decision for dividingthe program into the smaller projects, (2) lack of key deliverables such as Internal and Externalinterface list, and Interface Management Plan (Procedure) within FEED package, (3) Owner latedecision for hiring qualified project management consultant, (4) change order issued by Owner, (5)incomplete and unclear scope definition, (6) poor and slow Owner s decision making process, (7) Ownerlate in progress payment to contractor, (8) poor Contractor s communication and coordination with otherparties, (9) Contractors poor planning and scheduling, and (10) Consultant s delay in reviewing andapproving key engineering deliverables.

Also, the main effects of interface problems were identified as: (1) time overrun in terms of delay,(2) cost overrun, (3) quality impacts, (4) disputes, (5) arbitration, (6) litigation (rarely), and (7)termination (rarely).

In the next stage of the research for each cause/factor, three questions were asked by usinganother questionnaire to determine frequency of occurrence, severity on project delay, and importance ofeach cause. However, the empirical relationship between causes and effects of the interface problemsneed to be investigated in future studies to confirm the result of gathered information by questionnaire.

Finally, applicable, proven, effective, possible, and logical suggestions considering indigenousculture and situations to reduce and solve common interface problems associated with oil refinery megaprojects more provided in terms of general recommendations for four main project parties as (1) theOwner, (2) Contractors, (3) Consultants, and (4) Engineering Companies and in addition due to Owner srequest. An effective and applicable Interface Management Plan (Procedure) was prepared for OilRefinery Mega Projects in terms of an applicable project job specification for helping the practitioners


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(The Owner, Contractors, Engineering Parties, and Consultants) to improve and manage differentinterface issues among design and construction disciplines (i.e.: mechanical, instrumentation, civil,electrical, etc) of oil refineries mega projects effectively and immensely. The generated interfacemanagement plan is a generic and applied procedure, since it can be easily customized in order to use toany other mega oil, gas, and petrochemical project.

This research can help and facilitate academicians to conduct similar research and studiesanywhere around the world to identify causes and effects of interface problems in construction of themega projects, as well.

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12- Acknowledgements

We are heartily thankful to our Professor, Dr. George F. Jergeas, professor of project management in theSchulich School of Engineering at the University of Calgary, for his guidance, encouragement, andmotivation during two main courses enabled us to develop this paper.

The authors also very grateful to all people who support us for this research project provided by allinterviewees, NIORDC, NIOEC,POGC, Ghods Niroo, Rahab Consultant Co., NDEC, NPC, NIORDC,and MAPNA companies who are famous governmental and private Iranian companies.

Finally, the authors are also very grateful to their family, for their keen, committed, and warmencouragement during the preparation of this article.


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