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Case Study One-Chapter 7:Capital engineering project

Elsevier Ltd
DOI: 10.1016/b978-0-7506-8515-3.00007-6
  • Design
  • Engineering


Publisher Summary The capital engineering project involves multiple sites across several countries with many contracting parties, each of whom had different views on how the project should be delivered. The project was proposed to significantly increase capacity for manufacturing the finished product and to diversify the capacity across a number of production locations. A technical strategy was created to ensure consistency across sites, and a contingency fund was maintained above-site. This fund was created to provide a contingency to compensate for the likely error in the initial cost estimate; to remove problems if sites attempted to change the technical specifications and use alternatives to the agreed standard; and to provide the program management with funds to smooth the “bumps” in any of the individual projects. The overall project delivery was a success, with all the site expansions being delivered well within the original budget. The use of an above-site contingency fund to smooth the issues with site technical preferences undoubtedly helps minimize the potential for conflict within the project. This study reveals that contract strategy impacts not only money, but the basis of the design phase as well. It also reveals that new technology can cause a mismatch between requirements and expectations. Delivery control mechanisms need to be customized for a project and linked to the specific hazards identified for that project.

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