Serving the Indonesian Energy Industry for more than 45 years

as an Integrated Engineering and EPC Company in Indonesia

beyond
traditional
construction
Construction Delivery

Digital Innovation in Construction

Construction Delivery

“The art of Leadership”

The “Science” of project management

You cannot
write enough
rules to manage
complexity… In
simple project,
following the
rules leads to a
good outcome.
In megaproject
this is not so.
Leadership is
required to
deliver

Source : McKinsey & Company

“Our Project Managers are not trained adequately. As an industry, we do
not have the processes in place to develop the skills that they need to
manage this type of project” TG Jayanth – Expert Capital Project & Infra.
4 mindsets and 8 practices that define the “art” of project leadership
Lead as a business, not as a project
Mindsets An ultra-large project is more akin to building a business than executing a
construction project, requiring CEO-level leadership and judgment to address
a broad range of organisational issues.

Take full ownership of outcomes

The project owner needs to maintain full accountability for delivery. They
must remain well informed throughout and be ready to step in to make tough
decisions in a timely manner.

Make your contractor successful

Owners and contractors work best as a business partnership with a mindset of “we
win together or lose together”. Productive contractor-owner relationships are
based on mutual trust and joint problem solving.

Trust your processes, but know that leadership is required

Processes alone will not resolve every challenge on an ultra-large project.
Leaders should trust and enforce the appropriate process, but recognise
their benefits and limitations.
 Define purpose, identity and culture
Effective project teams have a unique and shared identity, and create a
culture of mutual trust and collaboration. Project leaders should articulate
Practices purpose, role model behaviors, and nourish the desired culture.

SETUP Assemble the right team

Besides shared values, owner and contractor team members need to
have the appropriate blend of leadership qualities, cultural and local
awareness for the task ahead. This must complement the requisite
technical skills and experience.

Carefully allocate risk and align incentives

Successful owners thoughtfully delegate only those risks that the
contractor is better positioned to manage. Leaders should establish and
maintain relationships, not only contracts, to facilitate ongoing alignment
of incentives.

Work hard on relationships with stakeholders

Strong and transparent trust-based relationships with stakeholders
enable prevention and rapid resolution of problems. Invest in stakeholder
management as a core activity.
 Invest in your team
Delivering an ultra-large project requires continual investment in the
Practices effectiveness of the team. Leaders must think deeply about how to develop
and challenge their people throughout.
DELIVERY
Ensure timely decision making
Timely decision making depends on the delegation of decisions to the lowest
appropriate level. To achieve this, leaders must have confidence and trust in
their systems and people. Leaders are then free to resolve and anticipate
critical issues.

Adopt forward looking performance management

Effective project leaders use fact-based performance dialogues to strengthen
trusting relationships and instill accountability. This allows for early problem
resolution and opportunity identification.

Drive desired behaviors consistently

Effective project leaders inspire their teams—especially in challenging times.
They define, communicate, and role model expected attitudes and behaviours.
Leaders should take the time to connect with team members on a personal
level.
Construction Delivery

“The art of Leadership”

The “Science” of project management

 Source: "Productivity Tends in the United States" (1909 = 100)
Manufacturing Vs. C onstruction Labor Productivity
1909-1957
1909 = 100
400.00

350.00

300.00
Index of labor productivity

250.00

200.00

150.00

100.00

50.00

0.00

Construc tion (1909 = 100) Manufa c turing (1909 = 100)

Source : SPS
Labor Productivity : Manufacturing vs Construction (1964=100)

Productivity Data Source: P. Teicholz

Productivity in Indonesia remains low, though there has been some
improvement over the last decade
Sector productivity
growth lags behind that
of total economy
Sector productivity Sized to total country
growth exceeds that of construction investment
total economy in 2015 $ million

Declining leaders Outperformers

Construction labor 50
Productivity (2015) Belgium
2005 $ per hour 45
worked by persons United Kingdom
Netherlands
employed, not PPP 40 Spain
adjusted Denmark
Austria Israel
Canada
35 Japan
United States Sweden
France
30
Germany Australia
International
Italy
average = 25 25
Laggards Accelerators
20 Greece

15
Saudi Arabia South Korea Slovak Republic
Portugal Singapore
10 Turkey
Mexico Czech Republic Chile Russia
5 Hungary
Colombia Nigeria Argentina
Brazil Indonesia South Africa
Malaysia Thailand India Egypt China
0
-6.0 -1.5 -1.0 -0.5 0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 7.0
Construction Labor-productivity Growth
Annual growth in real gross value added per hour worked by persons employed, 1995-2015

SOURCE: OECD Stat; EU KLEMS; Asia KLEMS; World KLEMS; KSA CDSI; KSA MoL; WIOD Socieoeconomic accounts, GGDC-10; Oanda; IHS; ITF; GWI;
McKinsey Global Institute analysis
Evolution of Project Management
1910’s
Era-1 Productivity
SCIENTIFIC MANAGEMENT
How to get more out of workers?
• Bureaucracy Resulting from
Functions
• Batch Production /
Inventory & WIP Build-up
• Localized optimization
• Industrial action
Source : SPS
1960’s
Era-2 Predictability
PROJECT MANAGEMENT
How to predict project outcomes
through
measurement and compliance?
• Lack of transparency
• Limited accountability and
control
• Excessive use of resources
Cost and schedule overruns,
claims and unnecessary stress
2000’s
Era-3 Profitability
PROJECT AS PRODUCTION
Capabilities
SYSTEM
How to deliver business
objectives with
minimal use of resources?
• Effective control of resource
allocation
• Less Bureaucracy (indirect
cost)
• Reliable project outcome
• More collaboration/ less
stressful environment
 Contrasting Era 1 + Era 2 Conventional Project Management
with Era 3 Project as Production System

PROJECT MANAGEMENT

Cost,
Time
&
Cash
Scope & Quality Process Design Resource Use

PRODUCTION MANAGEMENT

Cost,
Time
&
Cash
Scope & Quality Process Design Capacity Inventory Variability

Source : Project Production Institute

Conventional View

Engineering

Fabrication

Delivery

Installation

Copyright © 2014 Strategic Project Solutions, Inc. All Rights Reserved.

Project as Production System

E F D I

Per each system/subsystem

Copyright © 2014 Strategic Project Solutions, Inc. All Rights Reserved.

Project as Production System

E F D I

Per each system/subsystem

Copyright © 2014 Strategic Project Solutions, Inc. All Rights Reserved.

 Inventory (finished Inventory (finished
drawings / specs) to goods) to decouple Inventory and or time
decouple engineering fabrication from site buffer to decouple
from fabrication installation enabling operations between
enabling optimization optimization of raw Inventory to optimize trades or crews
of technical resources – materials and capacity use of capacity onsite" enabling optimization
may also be required use including of capacity onsite"
by outside stakeholders" transportation"

Engineer" Fabricate" Deliver" Install"

Engineer" Fabricate" Deliver" Install"

Confidential and Copyright © 2012 Strategic Project Solutions, Inc. All Rights Reserved."
Copyright © 2014 Strategic Project Solutions, Inc. All Rights Reserved.
 4.0 LPD CONCEPTUAL FRAMEWORK
SUPPLY FLOW PROCESS!

Piles!

Engineering! Fabrication! Delivery! Installation!

Concrete!

Engineering! Fabrication! Delivery! Installation!

Structural Steel!

Engineering! Fabrication! Delivery! Installation!

Piping!

Engineering! Fabrication! Delivery! Installation!

HPS Reactors!

Engineering! Fabrication! Delivery! Installation!

Process! Flow! Inventory!

DOCUMENT TITLE: DOCUMENT NUMBE

LPD FEASIBILITY STUDY – SHELL US GTL

SHEET TITLE: REVISION / DAT

Copyright 2012 Strategic Project Solutions, Inc. All Rights Reserved! 4.0 LPD CONCEPTUAL FRAMEWORK 20 MARCH 201

Copyright © 2014 Strategic Project Solutions, Inc. All Rights Reserved.

 Business / Project
Objectives

Production System Production System

Design Control
Performance
Improvement

Copyright © 2014 Strategic Project Solutions, Inc. All Rights Reserved.

Production System Control

Business Processes

Rules/Policies

Measurements

Copyright © 2014 Strategic Project Solutions, Inc. All Rights Reserved.

 Business Objectives &
Targets

Production System Status Milestone Schedule

Production Scheduling

Commitment Planning Execute Work

Continuous Improvement

Copyright © 2014 Strategic Project Solutions, Inc. All Rights Reserved.

Construction Delivery

Digital Innovation in Construction

Construction – the least digitized sector of all Relatively low
digitization
Relatively high
digitization

Digital leaders within relatively undigitized sectors

McKinsey Global Institute industry digitization index; 2015 or latest available data
Assets Usage Labor
Overall Digital Business Digital Digital Digitiza-
digitiza- Digital asset Trans- Intera- proces- Market spending capital tion of
Sector tion1 spending stock actions ctions ses making on workers deepening work
ICT2
Media
Professional services
Finance and insurance
Wholesale trade
Advanced manufacturing
Oil and gas
Utilities
Chemicals and pharmaceuticals
Basic goods manufacturing
Mining
Real estate
Transportation and warehousing
Education
Retail trade
Entertainment and recreation
Personal and local services
Government
Healthcare
Hospitality
Construction
Agriculture and hunting
1 Based on a set of metrics to assess digitization of assets (8 metrics), usage (11 metrics), and labor (8 metrics).
2 Information and communications technology.
SOURCE: AppBrain; Bluewolf; Computer Economics; eMarketer; Gartner; IDC Research; LiveChat; US Bureau of Economic Analysis; US Bureau of
Labor Statistics; US Census Bureau; McKinsey Global Institute analysis
Technology is now available to improve every NOT EXHAUSTIVE

aspect of a construction project Connectivity and sensing Process digitization

Robotics and automation Advanced analytics

Advanced analytics
Advanced analytics optimizes facility run settings to maximize Capital portfolio management
profitability/ Predictive maintenance minimizes down time Digital procurement
Specialized software, and advanced
Digitized analytics, optimize capital investment and supply chain
commissioning and portfolio management Advanced analytics,
and handover LiDAR as built digital market place,
verification automated AVL, GPS
Construction completion,
commissioning and Frequent LiDAR drone tracking, RFID
handover are completed scans capture precise
quantities and identify as Virtual reality
electronically
built errors Operations staff review facilities and
3D printing identify hazards during design

3D printing removes construction delays Automated design

due to missing parts, reduces freight costs,
Designs are produced within days
and simplifies supply chain and
for complex facilities, enabling rapid
warehousing Field Office
Autonomous vehicles & option comparison and assessment
automated construction
AV’s transport personnel, equipment and 5D BIM and beyond
materials across site.
Robots complete activities productively Team 5D BIM is used to unify the
3D model with schedule and
budget, ultimately adding
additional dimensions to
Project Production Control support operations
Drive lean construction through
digital software platform

Customer co-creation Digital performance management

Design tools are crowd sourced and Project leadership and site managers
employ agile methodologies during assess performance, anticipate issues,
design development and develop action plans

Source : McKinsey & Company

Katerra…Build your dream home
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