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Project Oriented Organizational Excellence, How can process improvement increase the performance and effectiveness of an EPC Contractor to achieve sustained success?
Contents:
Value, Originality and Practical Implications. 17
Chapter 2: Literature Review.. 19
The Engineering, Procurement and Construction industry (EPC Industry) 19
Processes in an Engineering, Procurement and Construction (EPC) Organization. 20
Objectives of Process Improvement in Engineering, Procurement and Construction (EPC) Organization 23
Advantages and Disadvantages of an Engineering, Procurement and Construction (EPC) Contract 24
Engineering, Procurement and Construction (EPC) Industry and a Global Outlook. 29
Engineering, Procurement and Construction (EPC) Industry and Saudi Arabia. 30
The Saudi Arabian Engineering, Procurement and Construction Sector 31
Chapter 3: Data and Methods. 35
Research Philosophy and Approach. 35
Internal Audit Participation. 36
Reliability, Validity and Generalizability. 38
Chapter 4: Analysis and Results. 41
Role that the department plays. 42
Role Played in the Department 43
The need for improvement in the work process. 44
Process improvement that are needed to be made. 44
Departmental Key Performance Indicators. 45
The importance and need of the implementation of OPM3 in the organization. 45
Main Processes of the organization. 47
Future Planning of the Organization. 47
Possibility of OPM3 implementation in the organization. 48
Key Performance Indicators. 48
Chapter 5: Discussions and Conclusions. 53
Summary of findings and discussion of results. 53
Key Performance Indicators. 53
Benefits of Implementation THROUGH OPM3. 55
Future research directions and limitations. 57
Future research directions. 58
Appendix A: MBA Research Proposal 64
Appendix B: Interview Guide. 65
Appendix C: Questions for focus group Discussions. 67
Appendix D: Summary of Interview Transcripts. 68
Appendix e: Summary of Focus Group Discussions’ Transcripts. 72
List of Figures
Figure 1 Engineering, Procurement and Construction (EPC) model 21
Figure 2 Qualitative categories to be quantified. 41
Figure 3Implementation process for OPM3. 52
Table 1List of Coding Values. 42
Table 3Need for improvement in the work process. 44
Acknowledgements
I would like to thank my professor, Mr. / Ms. XYZ for providing me with the opportunity to apply the theoretical foundations of this course work which he/she has so profoundly developed over the course of this degree. His/ Her continuous guidance and support has always allowed me to bring out the best from within me. His/ Her constant candid feedback on the framing of the information and generosity in terms of providing information from disparate sources has been instrumental in bringing out the true greatness of this research report.
This research report would also not have been possible without the extensive aid and guidance provided to me by the employees and management at ABC Company; whose help concerning all pertinent information enabled me to develop a detailed research.
Lastly, I would like to extend my gratitude towards my family and friends for always being there for me, supporting me and putting up with me at all times.
Executive Summary
This paper discusses and provides alternative ways to improve current processes and KPIs of a Japanese EPC-Contractor currently located in KSA, and apply a maturity model (OPM3) to assess, monitor and increase its business performance and productivity for sustained success. This research will add a treasured contribution to this budding body of research by uncovering these gaps.
The review of literature pertinent to this research has opened up many horizons of empirical research that are likely to cater to the research questions of this paper. Firstly, Project Oriented Organizational Excellence there has been little or no efforts made to define the Key Performance Indicators (KPIs) of an EPC company especially in the Saudi Arabia. Secondly, Project Oriented Organizational Excellence the review of the relevant literature while has defined the processes involved in an EPC company, it has failed to deliver information regarding which of these processes are more important, thus, allowing the research to conduct a study on this arena.
Thirdly, the literature review was limited to the advantages of OPM3 and did not show how its application can be beneficial. This has thus opened up a horizon in order to research for the purpose of this paper. This showed that a gap is identifiable in the present research as there are few efforts made to prompt an understanding of the Key Performance Indicators (KPIs) for measuring and controlling performance of an EPC Contractor executing large projects, Project Oriented Organizational Excellence the processes in an EPC company that are more important and how the application of OPM3 can be beneficial.
The data for this research was collected internally from the same organization and its parent company as required. This internal assessment of the processes was conducted on all major EPC stages within divisions and on-going projects. This had included focused group discussion including top management, quality assurance team, capability enhancement team, and project management team. The methods used in collecting qualitative data from the internal organization were through internal audit participation, Project Oriented Organizational Excellence interviews and focus group discussions.
The research concludes that an EPC company in Saudi Arabia is likely to greatly benefit from the OPM3 model if it plans its implementation process effectively. The research findings adhere this is so because OPM3 is important when it comes to Project Management.
Key to Abbreviations
EPC Engineering, Procurement and Construction
OPM Organizational Project Management
OPM 3 Organizational Project Management Maturity Model
KPI Key Performance Indicator
Chapter 1: Introduction
Saudi Arabia is considered as the world’s biggest producer of oil and its economy is also diversifying and expanding at a fast pace. In view of the increase in expenditures and falling oil prices as announced in the budget of 2015 by the Saudi government, it is expected that the budget deficit is likely to be met comfortably by the net foreign reserves held by the Kingdom of Saudi Arabia. Apart from the contribution of oil sector, non-oil sector has also been contributing to the GDP of the economy effectively. Typically the procurement contracts that happen in Saudi Arabia are general agreements where the client has a design planned, engineering, procurement and construction agreements. Usually procurement agreements in Saudi Arabia dwell on the following entities like the contractor and the client. The trends in the construction and local project market indicate a growth in this market in Saudi Arabia. The construction industry of Saudi Arabia registered a total annual growth rate of 10.06% during the period of 2009-2013. The growth and the development in the tourism sector along with the investments in the infrastructure and the residential market is expected to increase the expansion of this industry in Saudi Arabia for the forecasted period of 2014-2018 (Medium, 2015).
Huge allocations towards developing and upgrading the infrastructure have also been considered in the recent budget. According to developmental programs, huge developmental projects have been considered in the budget which will likely begin by the year 2020, having a worth of around $3 trillion. There are short term objectives too that are covered in the recent budget of 2015-2016, in order to fascinate foreign and private investments; special efforts are being made to captivate foreign and private investors in the Engineering Procurement sector. For this the Saudi government has eased the regulations with respect to international contractors and investors in the stock market and EPC sector. Such investments will bolster short term growth in the economy of Saudi Arabia (SABC, 2014).
The EPC sector accounts for 5-6% of total GDP of Saudi Arabia. Despite the fact that the oil prices has been falling, shrinking their revenues in the fiscal year 2015-2016, government has still announced an expansionary policy which is consistent with the objectives of previous budgets and plans. Due to increasing expenditures and squeezing revenues, a slower pace has been observed in the execution and completion of the projects due to which implementation of new projects has also been delayed. Considering such a scenario, where projects are being delayed this paper aims to address the issue by suggesting an overall process improvement in fulfilling EPC contracts by advising new models for implementation. The execution process has been designed by the development of the effective strategies that are needed for the effective implementation of the development process. The models of safety include elements such as involvement of the experts in the development of the safety procedures along with the complete analysis of the risk involved in the development and construction projects. Identification of the probability and the severity of the risk also need to be highlighted.
Justification and purpose
The sole purpose of the research is to focus the different points that are related to the construction and the infrastructure development projects in Saudi Arabia. The study of these factors will be helpful in the development of the measures that are related to the effective development of the construction and the engineering projects. First organizations need to understand their current performance and models that are used to improve their ratings on a wide scale. There are many different models used to ascertain their performance such as CMMI, Six Sigma, ITIL, Organizational Project Management Maturity Model Knowledge Foundation (OPM3), LEAN etc. (Clark, 2007). These models shall be better understood in the space of Project Management Maturity. To improve the performance of an organization, a lot of initiatives are in place that can be undertaken to achieve organizational excellence and implementing a change through OPM is one of the most desired initiatives.
Or in other words, improvement in the ability of an organization to deliver projects in the most efficient and effective manner is the most anticipated practice (Bourne, 2006). The implementation of these frameworks has helped the organizations to outperform their peers within an industry. Such a success ratio has also shown that organizations that made use of organizational excellence frameworks were set to achieve higher success ratios as compared to their competitors. Not only performance improves over a short term period but it mainly focuses on improving performance over a longer term (Boulter, 2005).
This paper discusses and provides substitute ways to advance current processes and KPIs of a Japanese EPC-Contractor currently located in KSA, and apply a maturity model (OPM3) to assess, monitor and increase its business performance and productivity for constant success. The main query of the research is how process improvement can increase the performance and effectiveness of the EPC Contractor to achieve sustained success…
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