What are the needs of the business with respect to our project? How do we design our project to meet the needs of our business? Will our project finish on time? Will we go over budget and what is the true cost of the project? How will design changes be addressed while maintaining budgets, schedules and plans? What risks will installation and commissioning bring? Will the project meet our evolving needs and strategic goals in the future?
Every project needs to start with the answers to the above questions in mind. In fact, a successful project always has these questions answered before the detailed design work is started, without exception! Utilising a Front-end Engineering and Design (FEED) approach to your project, you will not only develop the answers to these questions, you will also get your team on-board, engaged and committed to the project's success from an early stage.
FEED is a project delivery method based on the concepts of Value Engineering (VE). It has been developed specifically to address the concerns of project stakeholders by providing a clearly defined scope early in the project's life cycle. This scope is developed by understanding the businesses expectations regarding cost, time and quality, minimising risk throughout the project life cycle.
Investment in FEED improves project outcomes…
Budget and scheduling concerns, changes in scope and potential risks are all valid concerns for any project stakeholder. Building for the future is also a prevalent concern for businesses in today’s fast-paced digital marketplace. In fact, a recent PwC report identified the top four factors that contribute to poor project performance as:
- Poor estimates/missed deadlines
- Lack of executive sponsorship
- Poorly defined goals/objectives
- Change(s) in scope mid-project
FEED is a pro-active approach to identifying and realising the value of a project through detailed scope and design development; executed during the early concept phase of a project where it’s impact and benefits to the project can be maximised.
Organisations who minimise their up-front engineering investments, either because they don’t see the value in FEED or because of time or cost restraints; can limit their ability to accurately define project scopes. This can result in missed opportunities and decisions based on incomplete information; all of which can combine to increase costs and risk for the project in the long term.
Figure 1: The Cost of Identifying and Implementing Value Within A Project Over Time
“Though value management has to be practiced throughout the project, its impact, and therefore the benefits, can be maximized in the early phases of the project.”
Source: Pillai, M. P. (2005). Value management in process control upgrade projects. Paper presented at PMI® Global Congress 2005—EMEA, Edinburgh, Scotland. Newtown Square, PA: Project Management Institute
FEED is not just about cost accuracy…
One of the key reasons’ organisations commit to a FEED methodology is improved cost accuracy. Bench marking studies have identified that initial feasibility and conceptual studies will generally provide a project cost accuracy of around +/- 30% to 40%, while a comprehensive FEED process as part of the concept phase can deliver a cost accuracy of +/- 10% depending on the industry.
However, FEED also plays a key role in generating successful project outcomes beyond cost accuracy. FEED deliverables include a detailed project scope, complete project budget, total cost of ownership, schedules, milestones, risk assessments and most importantly, stakeholder buy-in. All of these deliverables combine to help identify and reduce risk and uncertainty during the design and commissioning phases, creating lasting value throughout the operation/asset life cycle.
Specifically, a well-executed FEED process can be used to:
- Evaluate options that will improve on the return on investment (ROI)
- Prepare accurate cost estimates and schedules for scope definition and project funding
- Support internal funding approval processes
- Conduct hazardous operations reviews to improve safety outcomes
- Allow all levels of the business to have input and more importantly, agree on the project deliverables and expected outcomes
- Create a framework that can be referred to and checked against expected deliverables and progress milestones throughout the design and construction phase of the project.
The core advantages of investing in FEED …
A FEED process refines project scope, identifying and mitigating risk; resulting in greater project success during implementation and commissioning phases and beyond.
Through a well-defined and executed FEED phase, an organisation can realise:
- Lower lifecycle costs
- Reduced technical, schedule and cost risks
- Faster time to achieve plant/process start-up, commissioning and turnover
- Reduced EHS and compliance risks
- Improved risk identification and mitigation
Defining value in project outcomes…
Value in project delivery is not just about meeting budgets and timelines, nor is it simply a cost cutting exercise. Instead value engineering and FEED process is about developing a systematic approach to enhancing value in project outcomes. A well-managed FEED process will explore value by generating ideas to be developed and evaluated to enhance the overall project deliverables for both short and long-term strategic goals.
One of the simplest definitions of value could be “the lowest cost to reliably accomplish the functions, needs, desires and expectations of the customer”. At Foodability Co., we deliver optimise that value by providing scrutiny to the specific needs of each project and the needs of the business including stakeholders early in the project life cycle.
Successful delivery of the FEED process will ultimately rely on tested methodologies as well as key external factors such as stakeholder support and the technical experience of the partners involved. You can learn more about the keys to successful FEED project outcomes in our follow-up article - Been given the task of leading and managing a new project....Start Here
Director @ Foodability Co.
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