Project management at Fluor

Client: Fluor

Authors/Consultants: Cooper K, Lee G (Cooper Associates)

Fluor is one of the world’s largest engineering and construction firms, with 2008 revenues over $20 billion. The US-based firm operates in every major business sector and geography. A large part of Fluor’s work is organized in the form of projects, which are typically market-driven with aggressive cost and schedule targets and evolving client needs. It is the tension among these different objectives that is often the underlying dynamic for generating changes on projects. In an initiative by Fluor’s Chairman, a comprehensive quantitative review examined all Fluor projects over several years. For many in the industry, there is a misperception that contractors improve their performance with more changes. This company-wide review was unequivocal in refuting that notion. There is a clear, unambiguous relation between the level of changes and the cost and schedule performance of projects: more changes bring ever-worsening performance on projects.

After Fluor had identified and quantified the business need for improving the practice of project change management, two external consultants first built and piloted and validated a project model to assess change impacts on several initial projects. In the four years since then, the model has been used in the “Change Impact Assessment” system to conduct thousands of analyses on over 100 client projects. Fluor projects analyzed with this model range in size from less than $10 million to more than $10 billion. The system rapidly tailors a model to simulate each engineering and construction project. Each model is then used to foresee future cost and schedule impacts of project changes, and most important, test ways to avoid the impacts.

Hundreds of project managers and planners have been trained in the ongoing internal use of the system. In addition to providing a better understanding of the project-wide effects of changes, the cost savings identified for Fluor and its clients exceed $1.3 billion.

More information on this case can be found via these papers (1, 2)

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