National Academies Press: OpenBook

Proceedings of Government/Industry Forum: The Owner's Role in Project Management and Preproject Planning (2002)

Chapter: 7. CheveronTexaco Project Development and Execution Process

« Previous: 6. Weyerhaeuser Capital Management Process
Suggested Citation:"7. CheveronTexaco Project Development and Execution Process." National Research Council. 2002. Proceedings of Government/Industry Forum: The Owner's Role in Project Management and Preproject Planning. Washington, DC: The National Academies Press. doi: 10.17226/10343.
×

7
ChevronTexaco Project Development and Execution Process

Joe Gregory, Projects Coordinator ChevronTexaco Project Resources Company

ChevronTexaco has spent much time and resources developing what it believes is a world-class project system. The roots of the ChevronTexaco Project Development and Execution Process (CPDEP) go back to the 1980s, when the company had what it thought were good processes and good projects. It started looking at ways to determine if these projects were in fact leading projects. Chevron’s CEO at the time, after seeing the results of benchmarking, said it was a very dark day whenever the project we all felt was stellar turned out to be one that was very poor compared with industry averages.

Is everybody effectively utilizing the process within ChevronTexaco? The answer is no. Before Texaco joined Chevron, the company had many challenges, and one of those was just getting people to use the process, to believe in the process, and to see the value that the CPDEP process could bring to the company.

PROJECT RESOURCES COMPANY

In 1997 Chevron formed a group called Project Resources Company, which I am a member of. Within Project Resources, we have project professionals assigned to specific projects within strategic business units. Project Resources also has a shared services group made up of professionals who consult with project teams and business units to assist in meeting their objectives. Project Resources is the owner of the CPDEP process, entrusted to create and deploy tools and systems across the company.

Suggested Citation:"7. CheveronTexaco Project Development and Execution Process." National Research Council. 2002. Proceedings of Government/Industry Forum: The Owner's Role in Project Management and Preproject Planning. Washington, DC: The National Academies Press. doi: 10.17226/10343.
×

FIGURE 7-1 History of CPDEP/benchmarking.

BENCHMARKING

As mentioned previously, benchmarking is one way to look at your project management process to see how effectively you are performing. ChevronTexaco utilizes the services of Independent Project Analysis, Inc. (IPA) as a partner in benchmarking our projects (see Figure 7-1). IPA looks at how well we are doing at front-end loading, cost and schedule (before and post execution), and other key project attributes such as use of multifunctional teams.

BENCHMARK POSITIONS

IPA also reviews our projects for strengths and vulnerabilities and provides specific recommendations to improve project outcome. Utilization of IPA is just one of several processes instituted within the company to improve project performance.

The numbers in Figure 7-2 apply to Chevron, not Texaco. The downstream organization (Refining and Chemicals), which is a smaller group within Chevron than the upstream (Oil & Gas Exploration and Development) organization, took the CPDEP process and benchmarking to heart early on and improved its performance in cost and schedule.

In the upstream, where we spend significant portions of our corporate capital, we had both cost and schedule challenges to deal with. The upstream had very good schedule performance in 2000, but you can see from a cost perspective that we were not doing very well compared to the industry average.

Suggested Citation:"7. CheveronTexaco Project Development and Execution Process." National Research Council. 2002. Proceedings of Government/Industry Forum: The Owner's Role in Project Management and Preproject Planning. Washington, DC: The National Academies Press. doi: 10.17226/10343.
×

FIGURE 7-2 Benchmark position 1992 to 2000.

CPDEP BASICS

What are the principles of CPDEP? Basically there are five. There are value drivers; multifunctional teams; communication; being decision driven, not activity driven, especially early on; and consistent use of and sharing of best practices, tools, and lessons learned. Many times when you look at our lessons learned database within ChevronTexaco, you will see a recurring theme, or lesson learned. It is our intent within ChevronTexaco to continue developing a culture, not only to go out and seek those best practices and lessons learned, but to utilize them as well.

CPDEP seems pretty easy. It is classical gap analysis. We are looking at where we are today. We want to know where we want to be, and we are going to ask a very simple question: How are we going to get there?

Our focus in Phase 1 is clearly framing the goal (see Figure 7-3 for the five phases). We look for key boundary conditions, those that are from a corporate financial perspective, a project perspective, or other key stakeholders’ perspectives. This latter view is valuable when we are working in international environments or with joint venture partners. As far as definition of success, we really want to know not only where we want to go, but also what success looks like when we get there. Phase 1 also includes an effort to build a customized project

Suggested Citation:"7. CheveronTexaco Project Development and Execution Process." National Research Council. 2002. Proceedings of Government/Industry Forum: The Owner's Role in Project Management and Preproject Planning. Washington, DC: The National Academies Press. doi: 10.17226/10343.
×

FIGURE 7-3 Objectives and key activities of the phases.

Suggested Citation:"7. CheveronTexaco Project Development and Execution Process." National Research Council. 2002. Proceedings of Government/Industry Forum: The Owner's Role in Project Management and Preproject Planning. Washington, DC: The National Academies Press. doi: 10.17226/10343.
×

roadmap and project execution plans to help us achieve our goals more effectively.

During Phase 2, we focus on alternatives. The second phase is very critical. By bringing multifunctional teams together, we are able to look at many alternatives that will in fact grow value for the company.

In Phase 3 we take the selected alternative into front-end engineering to develop the scope and contracting plan prior to Phase 4, execution. Execution is definitely the fun phase for most. Phase 4 is where we see all of our efforts materialize. During Phases 3 and 4 we plan for an effective turnover with our operations, CPDEP Phase 5.

In summary, the first few phases of CPDEP are described as the value identification phases, the most critical of all phases to ensure maximum value for ChevronTexaco.

CORPORATE APPROPRIATION PROCESS

Our corporate appropriation process continues to evolve, especially with the addition of Texaco to the Chevron group. Projects over $25 million must be reviewed by our executive committee, typically at the end of Phase 3. Key processes within the capital approval process include use of decision review boards, peer reviews, and project execution planning.

Decision Review Boards

Decision review boards (DRBs) are made up of key decision makers and include key representatives from within the SBU and generally at least one person from a different business unit. DRBs bring into our culture accountability. Not only is the project team accountable for project results, but the DRB representatives are also accountable for the investment outcome. DRBs are responsible for ensuring that the amount of work completed in that particular CPDEP phase is sufficient to move forward into the next project phase. DRBs are accountable for bringing in lessons learned and best practices, as well as challenging the project where appropriate to drive performance. DRBs are led by a decision executive who communicates business strategy to the project team; verifies that project drivers are aligned with business strategy; and endorses, recycles, or kills project team recommendations.

At a minimum, project teams will hold a DRB meeting at the end of each phase. That does not, however, mean DRBs are only engaged at the end of each phase. One phase may last 1 year or 2 years or even longer, and it is expected that DRBs will be engaged throughout the process, meeting on a regular basis with the project team as warranted. Project team and DRB communication is critical to ensure alignment and improved project performance.

Suggested Citation:"7. CheveronTexaco Project Development and Execution Process." National Research Council. 2002. Proceedings of Government/Industry Forum: The Owner's Role in Project Management and Preproject Planning. Washington, DC: The National Academies Press. doi: 10.17226/10343.
×

Peer Reviews

A peer review is a process whereby subject matter experts perform a review of a project’s underlying assumptions, decision logic, alternatives, and forward plans to validate and constructively challenge information in the decision support package (DSP). A peer review team will consist of 6 to 10 subject matter experts, usually from within the corporation. Peer reviews focus on the following key areas: commercial; decision quality; organizational structure of the project team; health, environment, and safety; project execution; and technical. Peer review members look to challenge the project team, to make sure they have done an appropriate amount of work to characterize not only the project but the plan for its success.

PROJECT EXECUTION PLANNING

Project execution planning (PEP) is one tool we use within ChevronTexaco to try to bring all of the project components together for communication to our stakeholders. We look to answer the “who, what, why, when, where, and how,” in order to cultivate a team environment with a focus on achieving results. Project execution planning is an evolutionary process that lives within each of the CPDEP phases.

I would like to leave you with a few thoughts on success planning and ChevronTexaco’s multiphase project management process. At the very beginning we look for a vision of success. Success planning within the CPDEP process is focused on looking at critical activities that need to be completed in that particular phase before moving on to the next phase. There are success factors critical to every project, and we try not to get ahead of ourselves and do more work earlier than we really need to accomplish a particular phase of the project. Success metrics are something that we take very seriously within ChevronTexaco. We look at both leading and lagging metrics, and we try to establish them very early on with our decision makers.

ChevronTexaco is all about selecting the right projects and executing them well. We want to be able to do more with our resources as an energy company than our competitors. We also want to execute our projects safer, faster, and less expensively than our competitors. Only through benchmarking our results and benchmarking our processes have we been able to see some light at the end of the tunnel.

We are pretty proud of our investment results. However, I want to mention that we have projects within our database with less than stellar performance. In reviewing the project results, we found these poorly performing projects did a poor job in front-end loading. If we had at least achieved industry average in those projects, we would have saved over 7 percent in cost, and that doesn’t take into account the schedule problems that we endured. Just take 7 or 10 percent of

Suggested Citation:"7. CheveronTexaco Project Development and Execution Process." National Research Council. 2002. Proceedings of Government/Industry Forum: The Owner's Role in Project Management and Preproject Planning. Washington, DC: The National Academies Press. doi: 10.17226/10343.
×

a $5 billion capital budget a year: $500 million would go a long way to provide the resources to fund additional projects for ChevronTexaco. We are serious about improving our performance in cost, schedule, reliability, operability, and safety.

TAKEAWAYS THAT I WOULD LIKE TO LEAVE WITH YOU

  • Safety demands attention and ownership. If you delegate safety to the contractor, you are doing yourself, as well as your contractors and all those employed, a disservice.

  • Focus on decision making and executing.

  • Benchmarking can be used as both a leading and a lagging indicator.

  • Adoption of good project management processes was an option within Chevron for many years. It wasn’t until our CEO said we shall use the CPDEP process as our project management tool within Chevron that our company rallied around the effort. CPDEP is about selecting the right opportunity and executing that opportunity with excellence.

Joe Gregory is projects coordinator with ChevronTexaco Project Resources Company. He has more than 19 years of experience with project engineering and construction management in the offshore petroleum industry. He holds a B.S. in civil engineering from Texas A&M University. He began his career in New Orleans as a facilities engineer. He transferred overseas in 1987 to work with the company’s southern Africa strategic business unit (SBU) on a variety of new field developments. His current position covers the Nigeria-mid Africa SBU, the China SBU, and the Power and Gasification SBU.

Suggested Citation:"7. CheveronTexaco Project Development and Execution Process." National Research Council. 2002. Proceedings of Government/Industry Forum: The Owner's Role in Project Management and Preproject Planning. Washington, DC: The National Academies Press. doi: 10.17226/10343.
×
Page 28
Suggested Citation:"7. CheveronTexaco Project Development and Execution Process." National Research Council. 2002. Proceedings of Government/Industry Forum: The Owner's Role in Project Management and Preproject Planning. Washington, DC: The National Academies Press. doi: 10.17226/10343.
×
Page 29
Suggested Citation:"7. CheveronTexaco Project Development and Execution Process." National Research Council. 2002. Proceedings of Government/Industry Forum: The Owner's Role in Project Management and Preproject Planning. Washington, DC: The National Academies Press. doi: 10.17226/10343.
×
Page 30
Suggested Citation:"7. CheveronTexaco Project Development and Execution Process." National Research Council. 2002. Proceedings of Government/Industry Forum: The Owner's Role in Project Management and Preproject Planning. Washington, DC: The National Academies Press. doi: 10.17226/10343.
×
Page 31
Suggested Citation:"7. CheveronTexaco Project Development and Execution Process." National Research Council. 2002. Proceedings of Government/Industry Forum: The Owner's Role in Project Management and Preproject Planning. Washington, DC: The National Academies Press. doi: 10.17226/10343.
×
Page 32
Suggested Citation:"7. CheveronTexaco Project Development and Execution Process." National Research Council. 2002. Proceedings of Government/Industry Forum: The Owner's Role in Project Management and Preproject Planning. Washington, DC: The National Academies Press. doi: 10.17226/10343.
×
Page 33
Suggested Citation:"7. CheveronTexaco Project Development and Execution Process." National Research Council. 2002. Proceedings of Government/Industry Forum: The Owner's Role in Project Management and Preproject Planning. Washington, DC: The National Academies Press. doi: 10.17226/10343.
×
Page 34
Next: 8. Question-and-Answer Session »
Proceedings of Government/Industry Forum: The Owner's Role in Project Management and Preproject Planning Get This Book
×
Buy Paperback | $21.00 Buy Ebook | $16.99
MyNAP members save 10% online.
Login or Register to save!
Download Free PDF

Recurrent problems with project performance in the U.S. Department of Energy (DOE) in the 1990s raised questions in Congress about the practices and processes used by the department to manage projects. The 105th Committee of Conference on Energy and Water Resources directed DOE to investigate establishing a project review process. Many of the findings and recommendations in this series of reports identified the need for improved planning in the early project stages (front-end planning) to get the project off to the right start, and the continuous monitoring of projects by senior management to make sure the project stays on course. These reports also stressed the need for DOE to act as an owner, not a contractor, and to train its personnel to function not as traditional project managers but as knowledgeable owner's representatives in dealing with projects and contractors.

The NRC Committee for Oversight and Assessment of Department of Energy Project Management determined that it would be helpful for DOE to sponsor a forum in which representatives from DOE and from leading corporations with large, successful construction programs would discuss how the owner's role is conducted in government and in industry. In so doing, the committee does not claim that all industrial firms are better at project management than the DOE. Far from it-the case studies represented at this forum were selected specifically because these firms were perceived by the committee to be exemplars of the very best practices in project management. Nor is it implied that reaching this level is easy; the industry speakers themselves show that excellence in project management is difficult to achieve and perhaps even more difficult to maintain. Nevertheless, they have been successful in doing so, through constant attention by senior management.

  1. ×

    Welcome to OpenBook!

    You're looking at OpenBook, NAP.edu's online reading room since 1999. Based on feedback from you, our users, we've made some improvements that make it easier than ever to read thousands of publications on our website.

    Do you want to take a quick tour of the OpenBook's features?

    No Thanks Take a Tour »
  2. ×

    Show this book's table of contents, where you can jump to any chapter by name.

    « Back Next »
  3. ×

    ...or use these buttons to go back to the previous chapter or skip to the next one.

    « Back Next »
  4. ×

    Jump up to the previous page or down to the next one. Also, you can type in a page number and press Enter to go directly to that page in the book.

    « Back Next »
  5. ×

    Switch between the Original Pages, where you can read the report as it appeared in print, and Text Pages for the web version, where you can highlight and search the text.

    « Back Next »
  6. ×

    To search the entire text of this book, type in your search term here and press Enter.

    « Back Next »
  7. ×

    Share a link to this book page on your preferred social network or via email.

    « Back Next »
  8. ×

    View our suggested citation for this chapter.

    « Back Next »
  9. ×

    Ready to take your reading offline? Click here to buy this book in print or download it as a free PDF, if available.

    « Back Next »
Stay Connected!