UNIVERSITI TEKNOLOGI MARA

SCHOOL OF CHEMICAL ENGINEERING

PETROLEUM PROJECT MANAGEMENT (CGE671)

CGE671: Petroleum Project Management

Mini Project Group: Group 7
Title: Design and Optimization in Natural Gas Pipeline

FULL NAME STUDENT ID CLASS GROUP

AHMAD MUQIT BIN AMRAD 2018801836 EH243 7B
MUHAMMAD HIDAYAT BIN MAZLAN 2018272898 EH243 7B
EMILIA ANAK STEVEN 2018226618 EH243 7B
SARAH ASYIQHIN BINTI ABDUL HALIM 2018276122 EH243 7B
NUR SHAHIRAH BINTI JOHANSAH 2018653474 EH243 7B

SUBMISSION DATE:
17 Feb 2022

PREPARED FOR:
ASSOC.PROF.IR. DR. NADIAHNOR MD YUSOP
Table of Contents
1. PROJECT CHARTER ................................................................................................................................ 1
2. PROJECT SELECTION .............................................................................................................................. 4
3. PROJECT PLANNING .............................................................................................................................. 8
3.1. WORK BREAKDOWN STRUCTURE (WBS) ...................................................................................... 8
3.2. RACI MATRIX ............................................................................................................................... 10
4. PROJECT EXECUTION........................................................................................................................... 12
4.1. ACTIVITY ON NODE (AON) .......................................................................................................... 13
4.2. GANTT CHART ............................................................................................................................. 14
4.3. PROJECT CONSTRAINTS .............................................................................................................. 16
4.3.1. Resources Constraint .......................................................................................................... 16
4.3.2. Time Constraint ................................................................................................................... 16
4.4. COST ESTIMATE ........................................................................................................................... 17
4.4.1. Cost Estimate WBS .............................................................................................................. 17
4.4.2. Estimation Report ............................................................................................................... 18
5. RISK MANAGEMENT PLAN .................................................................................................................. 19
6. PROJECT MONITORING & CONTROL ................................................................................................... 22
6.1. Cost Baseline ............................................................................................................................... 23
6.2. Earned Value Management (EVM) ............................................................................................. 24
6.2.1. Earned Value Analysis at 20% Completion ......................................................................... 27
6.2.2. Regarding Cost .................................................................................................................... 29
6.2.3. Regarding Schedule............................................................................................................. 30
6.2.4. Consequences ..................................................................................................................... 31
7. PROJECT AUDIT ................................................................................................................................... 32
7.1. AUDIT REPORT ............................................................................................................................ 32
8. PROJECT TERMINATION. ..................................................................................................................... 34
9. PROJECT POSTMORTEM ..................................................................................................................... 36
10. LESSON LEARNED ................................................................................................................................ 37
REFERENCE .................................................................................................................................................. 39
List of Figures
Figure 1: Work Breakdown Structure (WBS) ................................................................................................ 8
Figure 2: RACI Matrix .................................................................................................................................. 10
Figure 3: AON (Activity On Node) of the project ........................................................................................ 13
Figure 4: Gantt Chart of this project ........................................................................................................... 15
Figure 5: Project constraint by 30% ............................................................................................................ 16
Figure 6: Cost Estimation Work Breakdown Structure (WBS) .................................................................... 17
Figure 7: Cost Estimation Report ................................................................................................................ 18
Figure 8: Project Budget Components ........................................................................................................ 23
Figure 2: EVA regarding cost ....................................................................................................................... 29
Figure 10: EVA regarding schedule ............................................................................................................. 30
Figure 11: EVA consequences ..................................................................................................................... 31
Figure 12: Work Breakdown Structure (WBS) for termination procedure ................................................. 34

List of Tables
Table 1: Checklist Question on Project Selection Determination ................................................................. 5
Table 2: Risk event of this project. .............................................................................................................. 19
Table 3: Risk assessment of this project ..................................................................................................... 20
Table 4: Mitigation plan of this project....................................................................................................... 21
Table 5: Project Budget Component Values ............................................................................................... 24
Table 6: Earned Value Calculations Summary Table ................................................................................... 25
Table 7: EVM calculations at 20% completion ............................................................................................ 27
Table 8: Actual costs of project at 20% completion (9 weeks) ................................................................... 27
Table 9: Values of BAC, EV and AC used to plot EVA .................................................................................. 29
1. PROJECT CHARTER

Project Title

Design and Optimization in Natural Gas Pipeline

Project Overview

Natural gas pipelines are used for the transportation of natural gas produced from stationary
facilities gas wells or import/export facilities and deliver to other locations such as homes or
directly export facilities. In oil and gas industry, there are two types of pipelines used to transport
energy product. There are natural gas pipeline and crude oil pipeline. Natural gas pipeline is used
as subject matter in this project as it is prone to corrosion, pipe leakage, pipe blockage and leads
to environmental damage. This project aimed to design an ideal and long-lasting pipeline at
affordable prices.

Project Approach

The project required us to compare the pipelines elements and materials with previous case studies
of related topics to discover the best pipelines and elements required for a longer lasting pipeline.

Project Objectives

• To design and optimize high quality and long-lasting natural gas pipelines
• To supply natural gas pipelines at an affordable price
• To help reduce the costs of certain projects that required natural gas pipelines

Scope of Work (SOW)

• Site visit to identify the geographical of the project’s location

• Report on the site investigation
• Financial report
• Comparison of pipelines elements and materials
• Design of natural gas pipeline needed
• Technical interpretation of the design
• Final design and cost of the pipelines presented

1
 • Risk assessment

Major Deliverables

• Site visit to identify the geographical of the project's location

• Report on the site investigation
• Financial report
• Comparison of pipelines elements and materials
• Design of natural gas pipeline needed
• Technical interpretation of the design
• Final design and cost of the pipelines presented
• Risk assessment

Constraints

This project requires a large amount of time to research the elements and materials to design the
natural gas pipelines. In this case, we needed to produce the best design and optimization of the
natural gas pipelines that able to reduce the risks of corrosion, pipe leakage, pipe blockage and
environmental damage to satisfy our clients' needs. The finalized design of these pipelines should
also adhere to the API Pipeline Standard.

Risk and Feasibility

The risk is to conduct this project is the time constraint to research and design the pipelines as well
as the costs needed to complete the project. Workers needed time to conduct this project within
the period and finished it on time to avoid any unnecessary additional costs. Furthermore, this
project needed approval that the finalized design created adhered to the local API standardization
and meets the clients' expectations. The elements and materials of the pipelines may be changed
according to the clients’ requirements.
Project Team

1) Ahmad Muqit Bin Amrad (Project Manager)

2) Muhammad Hidayat Bin Mazlan (Safety and Project Engineer)
3) Sarah Asyiqhin Binti Abdul Halim (QA/QC Engineer and Draughtman)
4) Nur Shahirah Binti Johansah (Piping Engineer and Cost Controller)
5) Emilia Anak Steven (Procurement & Material Executive and Project Management)
2. PROJECT SELECTION
Our team suggested three project recommendations and we utilized a technique known as Checklist
to choose the best project out of the three. We use the checklist method to generate a list of challenges
to examine probable results and decide whether they should be accepted or not. The checklist questions and
potential answers for the three suggested projects have been determined for project selection. Based on the
questions we provided, we can see that one project which is known as Design and Optimization in Natural
Gas Pipeline has a bigger potential than the others to our team.

Project Suggestions:

1. Modelling and simulation of Sulphur formation and deposition in natural gas pipeline
2. A Review on Improving Sweep Efficiency in EOR at Microscopic Level
3. Design and Optimization of Natural Gas Pipeline

Checklist Questions:

1. What problem does the proposed title solve?

2. What is the effect of the problem?
3. What are the benefits gained from solving the problem?
4. What is the project objective?
5. How is the success of the project measured?
6. What is the duration of the project?
7. What is the technology/materials used in the project?
 Table 1: Checklist Question on Project Selection Determination

PROJECTS TITLE
Modelling and A Review on Design and
simulation of Improving Sweep Optimization of
CHECKLIST
sulphur formation Efficiency in EOR Natural Gas
QUESTIONS
and deposition in at Microscopic Pipelines
natural gas Level
pipeline
1. What problem does To minimize or To compare the Natural gas pipeline
the proposed title prevent the EOR method at is prone to
solve? formation and microscopic level corrosion, pipe
deposition of regarding sweep leakage, pipe
sulphur in natural efficiency blockage and also
gas pipeline. lead to
environmental
damage. This
project aimed to
design an ideal and
long-lasting
pipeline at
affordable price
2. What is the effect of Corrosion, pipe Low of sweep Corrosion, pipe
the problem? leakage and pipe efficiency. leakage, pipe
blockage blockage and
environmental
damage

3. What are the To predict the Get to know the To prevent

benefits gained from temperature, best EOR method corrosion, pipelines
solving the problem? pressure and damage and
 composition that can increase increase lifespan of
leading to sweep efficiency pipeline
deposition of
sulphur in natural
gas pipelines, and
to reduce/prevent
sulphur deposition
in natural gas
pipelines

4. What is the project To predict the To compare the

objective? temperature, sweep efficiency of ● To design and
pressure and each EOR method optimize high
composition at microscopic level quality and long-
leading to lasting natural gas
deposition of pipelines
sulphur in natural ● To supply natural
gas pipelines; to gas pipelines at an
model and simulate affordable price
the sulphur ● To help reduce
deposition the costs of certain
prediction; to projects that
reduce/prevent required natural gas
sulphur deposition pipelines.
in natural gas
pipelines and
modifications
recommendations
on pipelines
designs
5. How is the success Able to model and Able to compare Able to design and
of the project simulate sulphur the sweep optimize pipelines
measured? formation and efficiency of EOR from ideal and
deposition in method desired materials
natural gas and elements that
pipelines adhere to the API
standard within the
dateline of the
project.

6. What is the 14 weeks 14 weeks One year

duration of the
project?
7. What is the Aspen Hysys and Metals, metals and
technology/materials Phyton lining and non-
used in the project? metals, VCI, CCI
3. PROJECT PLANNING

3.1. WORK BREAKDOWN STRUCTURE (WBS)

Figure 1: Work Breakdown Structure (WBS)

Work Breakdown structure is a common productivity method by breaking down work into
smaller tasks so that work becomes more manageable and accessible. According to Project
Management Book of Knowledge (PMBOK), WBS is a deliverable-oriented hierarchical
breakdown of the work to be performed by the project team in order to achieve the project's
objectives and provide the necessary deliverables. Each WBS level indicates a more precise
description of the work required to finish the project.

The Work Breakdown Structure (WBS) of Design and Optimization in Natural Gas
Pipeline shows the division of three (3) levels of work packages. Level 1 represents the element
that consists of sub-deliverables, Level 2 represents the main task, and Level 3 represents the sub-
task. According to Figure 1, Level 1 includes 5 phases which are initiation phases, planning phase,
execution phase, controlling phase and closing phase. As for the second level, here every main
task in each phase is to be done according to the schedule. Level 2 includes Project evaluation,
Project planning, Procurement, Quality assurance & Quality control (QA/QC), Project design,
Health, Safety and Environment (HSE) and Project completion.

Starting with the first sub-deliverable which is initiation phase. This phase consists of
project evaluation task and project selection as sub-task. This is a critical element at the beginning
of every project. The second sub-deliverable is the planning phase with the three main tasks sub-
category followed by its own respective activities. As for project planning, it focuses more on
monitoring our project’s schedule performance and time to detect early indications of possible
problems and resource conflicts. Next on procurement, we determine the selection of pipeline
materials and handling financing and budget. Lastly on QA/QC, we are inspecting quality
standards of pipe material to guarantee that the outcome satisfies the product's standardization and
quality requirements.

The following sub-deliverable is the execution phase with the main category project design
and sub-task includes researching and modelling piping material, design prototype and technical
interpretation of design. We aimed to produce final design of natural gas pipeline that satisfies the
client`s requirement and follow the API pipeline Standards. The fourth sub-deliverable involves
the controlling phase. It focuses solely on Health, Safety and Environment including activities
such as pipeline testing and risk assessment. Risk analysis needs to be done to examine the pipeline
design outcomes and overall project might change due to the impact of the risk. Once the risks
are identified and inspected, appropriate steps can be taken to mitigate them.

The last sub-deliverable in this project is in closing phase which is completion of the
project. The sub-task involved is presenting final design of pipeline, handover process and
provided final report. This phase indicates all work was accomplished in compliance with the
project's scope and plan. The entire project management procedure has been completed and all
stakeholders gave their final approval and sign-off.
 3.2. RACI MATRIX

Figure 2: RACI Matrix

RACI Matrix is a chart that represents the objectives of an activity and the actions that each
participant must take. To be specific, it is a brief spreadsheet that identifies all project stakeholders
and their level of participation in each activity, marked by the letters R, A, C, or I (Santos, 2021).
RACI is an abbreviation made up of the four most common responsibilities which are responsible,
accountable, consulted, and informed.

RACI can maintain open and clear communication with all parties involved (Watts,2021). It helps
organizations tell if someone is already overburdened with tasks or if they could take on more. In
addition, this system avoids misunderstandings and boosts productivity. If a task is done wrongly,
RACI will inform who was involved and responsible so that the Project Manager can have the
right discussion with the right person. As a result, everyone can save time.

Based on the RACI Matrix above, the role involved in this project were Project Manager,
Piping Engineer, QA/QC Engineer, Procurement & Material Executive, Safety Engineer, Project
Engineer, Cost Controller, Project Planner, Draughtman and Inspector. Indicators were assigned
to each role such as Responsible (R), Accountable (A), Consulted (C) and Informed (I).
 Most of the actions in this project are being consulted and informed to the project manager.
The indicator of Accountable was assigned at most one in each activity. For example, during the
procurement, all the activities need to be informed to the Project Manager and Safety Engineer.
Procurement and Material Executive is accountable toward selection of pipeline materials while
Cost Controller is accountable in financing and project budget. Both activities need to be consulted
with the Piping Engineer, QA/QC Engineer and Project Engineer.
4. PROJECT EXECUTION
The goal of project execution is to put the already-designed strategy into action. It entails carrying out all
the actions that were planned throughout the previous project cycle procedures. To meet the project's needs,
project activities are carried out in accordance with established plans, sequences, and processes. The goal
of project implementation or execution is to achieve the desired outcomes.

All the planned schedules, processes, and templates are employed at this stage. Unexpected and unexpected
occurrences and circumstances are normally anticipated and prepared for. However, unexpected events are
likely to occur throughout the project's implementation. The project manager and other key stakeholders
must act quickly to mitigate such events.

Project managers are responsible for ensuring that the project team completes the assigned tasks efficiently
and within the specified period for the project to be finished on time. It should be emphasized that staying
within the project's scope is a crucial part of the project's execution. As a result, this procedure should be
implemented immediately following the completion of project planning.

The project execution phase's goals are to:

• Ensure that activities are carried out in accordance with the management plan.
• Create deliverables utilizing the project plan, analyze procedures and plans involved to provide the
total output.
• Assemble the team involved, advance, and manage it throughout the project's lifespan.
• Ensure that the project team is well-managed so that their output is maximized, and all issues are
resolved quickly.
• Ensure that communication lines are not blocked, allowing information to be received and replied
to on time.
• Ensure that excellent project execution is carried out to ensure that quality is achieved.
 4.1. ACTIVITY ON NODE (AON)
Activity-on-node is a project management phrase that refers to a precedence diagramming approach in
which schedule activities are represented by boxes. These numerous boxes or "nodes" relate to arrows from
beginning to finish to illustrate a logical evolution of the schedule activities' interdependence. Each node is
labelled with a letter or number that corresponds to a project activity.

Figure 3: AON (Activity On Node) of the project

In this project, Critical Path Method (CPM) approach is same as AON, where it only estimated the duration
of the project. CPM is a deterministic tool because it can be used to control the time and at the same time
allows an explicit estimate of the project. The necessity of proper project management scheduling assures
the project's eventual success. In this project has 19 tasks that need to be complete using code as A until R
to represent each task. The critical pathway activity based on figure 3 is the box diagrams with red arrow
from start until finish of the project. As for this project is start with task A-C-E-H-J-K-N-Q-R. Critical
pathway is used to show important tasks that need to be complete within the schedule time to prevent other
problems.

Each task has its notations such as Earliest start (ES) at which an activity can start and assuming all
predecessors have been completed, Earliest finish time (EF) where earliest time which an activity can be
finished. Other than that, latest start time (LS) is a latest time at which an activity starts to not delay the
completion time of entire project and Latest finish Time (LF) is latest time by which an activity must finish
as not delay the completion time of entire project.

4.2. GANTT CHART

Gantt chart is a type of bar chart that illustrates a project schedule. Gantt chart is a net step after Critical
Path Methos is completed and it is a common technique that has been used by companies to represent phases
and activities of a project work breakdown structure.

In this project, a Gantt chart is created by Microsoft project by inserting all data of tasks and
changing the task mode to auto scheduled. We can add duration and scheduled start and finish date of each
task. Then, create another column for predecessors to link each activity, especially the critical tasks to see
the completion date of entire project.
Figure 4: Gantt Chart of this project
 4.3. PROJECT CONSTRAINTS
In project management, a constraint is any restriction that determines a project's constraints; for example,
the scope is the upper limit of what the project is anticipated to achieve.

4.3.1. Resources Constraint

Resource constraints in project management are exactly what they sound like: limitations on the resources
available to a project. The input you will need to finish a project is known as project management resources.
People, equipment, time, and money are some of them, but they are not the only ones. A project with limited
resources is the rule rather than the exception. Because a project is a short-term undertaking, time is a
limited resource. It has a budget; thus, funds are limited.

In this project, resources have been constrained for 15% from 123 peoples to 106.

4.3.2. Time Constraint

The term "time constraint" refers to the constraints placed on a project's start and finish dates. If you take
no more work than you can handle every week in this circumstance, your time and resource limits will
always be in balance.

30% time constrained have done in this project that resulted from 77 weeks (about 1 and a half years) to 54
weeks (about 1 year).

Figure 5: Project constraint by 30%

 4.4. COST ESTIMATE
4.4.1. Cost Estimate WBS

Figure 6: Cost Estimation Work Breakdown Structure (WBS)

Based on figure 6, the project evaluation phase does not have any estimate cost but under the project
planning phase which is organization and administration was estimated around 528 USD. Other than that,
total cost estimated for Procurement phase was 528 USD for financing and project budget and $ 3.32 M/km
as for evaluation and selection of pipelines materials. Then, for QA/QC phase has higher total of cost
estimated which is around 239K USD for three activities compare to project design that only estimated to
158.22 K USD for five activities under it, which are research and modelling of natural gas pipelines
elements and properties, design prototype, technical interpretation of design, optimization of pipeline and
inspection. For HSE phase only estimated 99K USD for pipeline testing and 38K USD for risk management.
Finally, the last phase which is project completion cost was estimated 12.4 K USD for final design and final
report.
 4.4.2. Estimation Report

Figure 7: Cost Estimation Report

To conclude the estimation report, based on figure 7, total cost estimates for initiation phase is 3520 USD
and planning phase is 3581196 USD. Other phases such as Execution and Controlling have been estimated
to be around 171420 USD and 142280 USD. Finally for closing phase total up for estimation cost is 22080
USD. Overall total cost estimate after added up total basic cost, contractor markup 20%, total cost estimate
and contingency 25% is 5880744.00 USD.
5. RISK MANAGEMENT PLAN
A risk management plan is necessary for project planning because it identifies potential harm or hazard
that could impede the project's progress. Constructing a risk matrix is a more effective way of detecting
potential hazards. A risk matrix is a matrix that is used in risk assessment to determine the amount of risk
by comparing the probability or likelihood category to the severity category of the result.

Table 2: Risk event of this project.

Label Risk Event

A Equipment or material doesn’t meet or fulfil the objective
B Sudden change in request from the stakeholder, customer or others
C Purchase risk or delay in delivery of equipment and material
D Insufficient of financial or funding
E Insufficient of resources
F Fail to check the error and make action
G Progress doesn’t follow the schedule
H Reliability risk
I Design risk
J Quality and performance risk
K Safety risk
L Controlling risk
M Procurement risk
N Communication risk
 Table 3: Risk assessment of this project

Severity 1 2 3 4 5
Occurrence/ Not Minor Moderate Critical Catastrophic
Likelihood significant

1 Improbable

2 Distant G E A,F
3 Infrequent N I,M B,D
4 Probable C H,K
5 Frequent L

We used a 5x5 grid in this project since the results we acquire have a greater range of severity and
incidence. Not significant, minor, moderate, critical, and catastrophic are the probability ranges for risk
severity, with 1 being the lowest and 5 being the highest. Meanwhile, the likelihood of the risk ranges
from 1 to 5, with the lowest being improbable, distant, infrequent, probable, and frequent.

After determining the level of risk, the following stage is to determine what measures should be taken to
effectively prevent or control the harm from occurring. A set of risk mitigation techniques must be
developed by the team. Every risk that a company accepts or transmits must be accompanied by answers
to potential concerns.
 Table 4: Mitigation plan of this project.

Risk Event Contingency Plan Who is Responsible?

Equipment or material doesn’t Find the potential source of Project engineer
meet or fulfil the objective failure and do a regular
maintenance for the system
Sudden change in request from Make agreement between any Project engineer
the stakeholder, customer or parties involve avoiding last
others minute changes
Purchase risk or delay in Hire or find other delivery that Technical manager
delivery of equipment and can cope with the estimate time
material arrival request by project
Insufficient of financial or Propose some sponsorship from Finance manager
funding company to support project.
Insufficient of resources Hire labours from several Technical manager
contractors.
Fail to check the error and make Revise project manual and take Project engineer
action action to overcome the risk
Progress doesn’t follow the Revise current plan project and Project engineer
schedule track the task need to be done
Reliability risk Conduct a meeting between Safety engineer
safety and maintenance team
Design risk Redesign Designer
Quality and performance risk Select the workers with QA and QC
experienced
Safety risk Make sure the workers follow Safety engineer
the SOP of emergency
Controlling risk Approach underperformer with QC
honesty and empathy
Procurement risk Restructure or add resources Manager
Communication risk Assign leader for each task that Manager
can help the worker to
communicate.
6. PROJECT MONITORING & CONTROL
Project monitoring comprises of data collection, analysis of data and current progress
reports. Collected data are determined by metrics that will be used to control the project. Examples
of typical key data collected are the resource usage and rates, actual duration of activities and
actual costs which are then will be compared against the planned times, resources and budgets.
Project monitoring mainly focused on the cost and schedule concerns.

Data collected are then analysed. Electronic means of collecting data has significantly
improved the assembly, analysis and dissemination of data. With the presence of numerous new
software, more tools and programs can be utilized to analyse the collected data and presenting it
to easily monitor the project, identification of problems and plan updating.

Lastly, project progress reports are typically designed and communicated in written or oral
form. Common format for progress report consists of progress since last report, current status of
project regarding the schedule, cost and scope, cumulative trends, problems and issues encountered
since last report as well as corrective action planned to counter those problems.

Project control is defined as the process of comparing actual performance against plan for
deviations identification, possible alternatives evaluation and appropriate corrective actions to be
taken. Project control is crucial for measuring and evaluating the performance of the project. There
are several project controls steps to be taken such as setting baseline plan, measuring progress and
performance, comparing the plan against actual values and lastly to take action. Performance
metrics such as earned value analysis (EVA) and performance indices for this project will be
discussed more in the following sections.
 6.1. Cost Baseline
The cost baseline is defined as the approved version of the time-phased project budget. This will
exclude any management reserves. Cost baseline can only be changed through formal change
control procedures and used as a basis for comparison to actual results. It is the results of
summation of the approved budgets for the different schedule activities. Figure below illustrates
the project budget components and cost baseline for this project.

Figure 8: Project Budget Components

From Fig.1, the activity cost estimates for the project are added with 10% contingency
reserves to make up for the work package cost estimates. Then, the work package cost estimates
with 10% contingency reserves estimated added together will make up for the control accounts.
The summation of the control accounts makes up the cost baseline. Summation of cost baseline
with 10% management reserves will then make up the overall project budget. Table below shows
the summarised values of the project budget components for the project used to obtain Fig.1.
 Table 5: Project Budget Component Values

Project Budget Component Total amount (USD)

Project Budget 5,315,859
Cost Baseline (+ management reserve 10%) 5,315,859
Control Accounts 4,832,599
Work Package Cost Estimate (+ contigency 4,832,599
reserve 10%)
Activity cost (+ activity contigency reserves 4,393,272
10%)

6.2. Earned Value Management (EVM)

Earned value management (EVM) is a methodology used to evaluate project performance and
progress, which consists of a combination of scope, schedule, and resource. This method is
commonly used for the performance measurement of projects. EVM principles can be applied to
all projects in any industry. EVM monitors and develops three key aspects for each work package
and control account which are the planned value (PV), earned value (EV) and actual cost (AC).
Variances from approved baseline such as schedule variance (SV), cost variance (CV), schedule
performance index (SPI) and cost performance index (CPI) are also monitored. Table below shows
the earned value calculations summary table.
 Table 6: Earned Value Calculations Summary Table

Name Lexicon Definition Equation Results Interpretation

Planned The authorized budget assigned to PV =
Value (PV) scheduled work. BAC*Planned
completed (%)
Earned The measure of work performed EV = BAC*Actual
Value (EV) expressed in terms of the budget completed (%)
authorized for that work
Actual Cost The realized cost incurred for the
(AC) work performed on an activity
during a specific time period
Budget at The sum of all budgets established
Completion for the work to be performed
(BAC)
Cost The amount of budget deficit or CV = EV – AC Positive = Under
Variance surplus at a given point in time, planned cost
(CV) expressed as the difference Neutral = On planned
between the earned value and the cost
actual cost. Negative = Over
planned cost
Schedule The amount by which the project is SV = EV – PV Positive = Ahead of
Variance ahead or behind the planned Schedule
(SV) delivery date, at a given point in Neutral = On schedule
time, expressed as the difference Negative = Behind
between the earned value and the Schedule
planned value.
Cost A measure of the cost efficiency of CPI = EV/AC Greater than 1.0 =
Performance budgeted resources expressed as Under planned cost
Index (CPI) the ratio of earned value to actual Exactly 1.0 = On
cost planned cost
 Less than 1.0 = Over
planned cost
Schedule A measure of schedule efficiency SPI = EV/PV Greater than 1.0 =
Performance expressed as the ratio of earned Ahead of schedule
index (SPI) value to planned value Exactly 1.0 = On
schedule
Less than 1.0 = Behind
schedule
Estimate At The expected total cost of EAC = BAC/CPI
Completion completing all work expressed as EAC = AC + BAC
(EAC) the sum of the actual cost to date – EV
and the estimate to complete. EAC = AC +
Bottom-up ETC
EAC = AC +
[(BAC – EV)/ (CPI
x SPI)]
Estimate to The expected cost to finish all the ETC = EAC – AC
Complete remaining project work.
(ETC)
To A measure of the cost performance TCPI = (BAC – Greater than 1.0 =
Complete that must be achieved with the EV)/(BAC – AC) Harder to complete
Performance remaining resources in order to Exactly 1.0 = Same to
Index meet a specified management goal, TCPI = (BAC – complete
(TCPI) expressed as the ratio of the cost to EV)/(EAC – AC) Less than 1.0 = Easier
finish the outstanding work to the to complete
budget available.
 6.2.1. Earned Value Analysis at 20% Completion
Table below shows the values of EVM calculations at 20% completion of the project. At 20%
completion of the total weeks for completion, which is 45 weeks, the project is at week 9. The
planned completion is set at 20% however the project completion is actually at 18%.

Table 7: EVM calculations at 20% completion

Item Values ($)

Budget at Completion (BAC) 5,315,859.00
Actual completed (18%) 0.18
Planned completed (20%) 0.20
Earn Value (EV) 956,854.62
Planned Value (PV) 1,063,171.80
Actual Cost (AC) 1,673,728.00
Cost Variance (CV) -716,873.38
Schedule Variance (SV) -106,317.18
Cost Performance Index (CPI) 0.57
Schedule Performance Index (SPI) 0.90
Estimate Cost at Completion (EAC) 9,298,488.89
Estimate to Complete (ETC) 7,624,760.89
Time Completion Performance Index 0.57

Table 8: Actual costs of project at 20% completion (9 weeks)

ID Description Duration ES EF LS LF Completion Cost ($) Cost@20%

(weeks) (%) completion ($)
A Project 2 0 2 0 2 100 3,520 3,520
Selection
B Project 3 0 3 1 4 100 2,640 2,640
Schedule and
Timeline
 C Project 5 2 7 2 7 100 2,640 2,640
Monitoring
D Organization 2 3 5 4 6 100 4,048 4,048
and
Administration
E Evaluation and 4 7 11 7 11 50 3,321,760 1,660,880.00
Selection of
Pipeline
Material
Total 1,673,728.00

Table 8 above show the actual costs for the project at 20% completion, which is at week 9.
Until week 8, there are a total of 4 activities that are 100% completed. However, at week 9, the
activity is only completed 50% since it needed a total of 4 weeks to finish but at 20% completion,
the activity just undergone 2 weeks’ worth of completion out of the intended 4 weeks. Hence, the
cost of the activity E is reduced to half at $ 1,660,880. The total actual costs for all five activities
for nine weeks are $ 1,673,728.
 Table 9: Values of BAC, EV and AC used to plot EVA

Weeks BAC ($) EV ($) AC ($)

0 0 0 0
9 1,063,171.80 956,854.62 1,673,728.00
45 5,315,859.00 0 9,298,488.89

6.2.2. Regarding Cost

Figure 9: EVA regarding cost

1800000.00 CV=EV-AC
1600000.00

1400000.00

1200000.00
Cost (USD)

1000000.00
BC
800000.00
EV
600000.00 AC

400000.00

200000.00

0.00
0 2 4 6 8 10
Weeks

At 20% completion, the cost project is at the actual cost, but it was supposed to be at EV.
Cost variance (CV) is shown in the figure above in which CV=EV-AC. This results in a negative
value of $ -716,873.38. For value of CV< 0, this indicates that the project is overbudget and have
spent ($ 956,854.62/ $1,673,728.00) x 100% = 57% more budget than anticipated. 58% refers to
the cost performance index (CPI) of the project.
 6.2.3. Regarding Schedule

Figure 10: EVA regarding schedule

SV in
1800000.00 dollars
The project is here
1600000.00

1400000.00

1200000.00
Cost (USD)

1000000.00
BC
800000.00
EV
600000.00 AC
This is where the
400000.00 project should
have been
200000.00
SV in weeks
0.00
0 2 4 6 8 10
Weeks

At 20% completion, the project schedule is at week 9, but it was supposed to be at week 8.
Schedule variance (SV) is shown in the figure above in which SV in dollars=EV-BC. This results
in a negative value of $ -106,317.18. For value of SV< 0, this indicates that the project are behind
the schedule and have only performed ($ 956,854.62/ $ 1,063,171.80) x 100% = 90% of the work
planned. 90% refers to the schedule performance index (CPI) of the project.
 6.2.4. Consequences

Figure 11: EVA consequences

10000000.00
EAC
9000000.00

8000000.00
Cost
7000000.00
overrun
Cost (USD)

6000000.00
BAC
5000000.00 BAC

4000000.00 EV
AC
3000000.00

2000000.00
AC
1000000.00 BC
EV
0.00
0 10 20 30 40 50
Weeks

By extending the actual cost into the future, the project can obtain the end results if the
performance of the project is not modified. If the project continues at this rate, the project will
need BAC/CPI = $ 9,298,488.89 (EAC) and 45weeks/0.9 = 50 weeks (schedule estimate at
completion). If it is intended to finish the project on budget, need to work at (BAC-BC)/(BAC-
AC) x 100% = 113.7% of the originally planned performance. If the project to finish on time, the
project needs to work at (19-3)/ (19-5) = 114.3% of originally planned performance. 19-3 refers to
the actual remaining work in the project while 19-5 refers to the planned remaining work.
7. PROJECT AUDIT

7.1. AUDIT REPORT

Auditor: SARAH ASYIQHIN BINTI ABDUL HALIM

Audit Team: MUHAMMAD HIDAYAT BIN MAZLAN

Date of Audit: 15/02/2022

Project Audited: DFESIGN AND OPTIMIZATION IN NATURAL GAS PIPELINE

Project Manager: AHMAD MUQIR BIN AMRAD

INTRODUCTION

The main purpose of this project is to design and optimize high quality and long-lasting natural
gas pipeline by offering at an affordable and economical price range. This is done to help reduce
the costs of projects that require natural gas pipelines usage especially as gas pipelines are prone
to deterioration such as corrosion, wear and fatigue when entering the later years of production.
This project is Research and Development based which mean to find the best material to enhance
design and optimization of pipeline and the project life cycle is 44 weeks or 10 months.

CURRENT STATUS

The project is now in its week 10 of operation where the task of research and modelling of natural
gas pipelines elements and properties. Due to occurrence of pandemic, the operation cannot be
executed causing the project to still be on the task of quality assurance of pipeline selection.
Therefore, the project is behind the schedule.

FUTURE PROJECT STATUS

Based on the Earned Value Management from the Finance department, the CPI and SPI are both
0.9 and in positive variance indicating the project is a bit behind the schedule and overbudget.
CRITICAL MANAGEMENT ISSUE

Pandemic that occurred causing certain major deliverables such as site visit and material delivery
to be delayed than actual time. Therefore, the project needs to maximize it operation as soon as
material arrived and once all workers have completed their vaccination and back to work. Capacity
of workers at workplace need to be plan accordingly.

RISK ANALYSIS AND RISK MANAGEMENT

Until this phase in the project, there have been no severe issues that might lead to project failure
or catastrophe. There was a little issue that may have been avoided with improved worker
communication.

FINAL COMMENTS

The project is still acceptable at this point, with only a slight error leading the project to be
overbudgeted. The project's flow is still good, and it is expected to be successful and meet the goal.
8. PROJECT TERMINATION.
Project termination does not necessarily imply that a project has failed or been abandoned prematurely;
rather, it is a circumstance in which a project is nearing completion. It is a procedure that ensures that the
project's management, financial records, and documentation are all approved. Project termination is usually
managed via a procedure that requires management to monitor every activity that has been completed in
order to ensure that the criteria and objectives for each work have been met in full.

Figure 12: Work Breakdown Structure (WBS) for termination procedure

The way the evaluations and considerations took place based on the forms of termination determines the
success of the project termination. The primary factors in this scenario are good project execution and
proper termination. The termination method chosen for this project is extinction, which signifies that the
project has been completed effectively and that the resources and funds are in balance.

According to the diagram above, every process must go through a termination step in order to be properly
identified as complete. It's also required for the paperwork to be included in the project's final report. For
this project, there are four sections that need to be covered in the termination process which are project
organization, financial, administration, and site (test prototype).

The performance evaluation and close review stages are incorporated in the project organization process.
The next step in the performance review process is to keep track of the project's progress to ensure that it
stays on track. Finally, the close review necessitates project management precisely determining the
completion of each project activity prior to its conclusion.
Second, there is a financial audit, which includes both technical and financial audits, as well as a report. An
auditor, engineer, or other professional must conduct a technical and financial audit to analyze deficiencies
or opportunities for improvement in the process, system, and documentation. The technical audit examines
the technical aspects of the project, whereas the financial audit examines the project's financial statements.
After that, the project management team must provide a report to explain the current project's conclusion
and ensure that any consequences from this project will not affect future initiatives.

Project acceptance or project agreement, notify/pay contractors and suppliers, and close project are the next
administrative actions on the list. The project manager must be satisfied with the present output of each
task before accepting the project. The invoices from the contractors and suppliers must then be obtained by
project management and presented to the customer, who is the oil refinery firm. Following that, the project
manager must ensure that the contractors and suppliers have been paid. Finally, at the end of each activity,
documentation must be completed.

Finally, there's the site which the test of prototype. This section contains nearby facilities, as well as
equipment and materials that may be hired or purchased. After each activity is completed, all current
facilities must be closed for new facilities to be set up. Following that, all rented equipment is returned to
its owner once the job is completed.
9. PROJECT POSTMORTEM
A project postmortem meeting is a meeting conducted after the end of a project. The major purpose
is to reflect on how the project went and identify what may be altered in the future to make the
process more efficient.

PROJECT DESCRIPTION

Natural gas pipelines are utilized as subject matter in this project because they are prone to
corrosion, pipe leakage, and pipe obstruction, all of which cause environmental damage. The goal
of this project was to create an optimal and long-lasting pipeline at a reasonable cost. The project
required to compare pipeline parts and materials to past case studies on relevant issues in order to
determine the best pipelines and elements needed for a longer-lasting pipeline.

THE GOOD

Project was successfully planned by completing the design of the pipeline and optimize the
function of the design pipeline which fulfil the objective of this project.

THE BAD

This project is way behind schedule due to factors affecting such as the occurrence of pandemic,
limited material resources causing the operation to be interrupted and stop for a period as during
pandemic, the country was under lockdown. Moreover, with these factors causing the project
behind the schedule.
10. LESSON LEARNED
There are some lessons learnt from the project Design and Optimization in Natural Gas
Pipeline. During normal duration, the project may be delayed based on the Schedule Performance
Index (SPI) value of 0.9. A SPI lower than one indicates that our project behind schedule and work
completed are far from being finished. The project may run late due to insufficient resources or
late material obtained, especially during the execution phase. Lack of materials and insufficient
equipment gave a challenging time in designing the prototype of natural gas pipeline.

The project was delayed causing the deadline to be extended. When the delay occurs, it
may result that the unpredicted cost exceeds the budgeted cost due to a miscalculation of the actual
cost. Furthermore, if a delay occurs, more time is required for the workers to complete the task
resulting in more cost to be spent on the labor workforce. A rise in the cost of materials also
occurred due to the extension of the deadline. Besides that, cost overruns may occur because of
modifications in designs and changes in the kind of material and specification during pipeline
construction to adhere to the API Pipeline Standard. An action required to reduce rework and
minimize mistakes during construction. An effective scheduling plan can improve project
performance as well as reducing the project delay. This involves knowledge of the activities,
learning the interconnections between the activities, and the period of the activities. A successful
project schedule needs accurate assessment of resource needs, workforce and task durations.

In addition, our project has a problem with cost estimation. A Cost Index Performance
(CPI) of 0.9 or below shows that the project is over planned cost. A cost overrun is the total of
unexpected expenditures that exceed initial budget predictions, which may be cause by
underestimating the actual cost during budgeting. Cost overrun is a genuine problem that may
occur especially in the construction sector, as it can threaten the project`s scheduling time and lead
to the unnecessary expenses in project. Cost overrun and project delayed are very connected as
projects may delays due limited funding causing limited resources and funds for construction may
be changes to other projects funding. There are a variety of approaches and tools that project teams
may use to plan, control, and monitor the budget. One of them are crucial meeting in estimate cost
accurately as well as helping team members identify project goals and procedures. Proper
communication with all stakeholders involved contributes to preventing cost overruns during the
construction phase.
 Communication skills are crucial to have since it allows individuals to communicate
successfully with one another. In opposition, poor communication skills can lead to
misunderstandings with others, which can contribute to increased stress, particularly in the
workplace. The lack of communication in project management is caused by inadequate of clear
communication techniques and tools. The pandemic Covid-19 which restricts face-to-face
conversations and social interaction also contributes to poor communication management. This is
shown by the problem encountered by our project, where it was one of the problems between
workers that happened during the execution phase, resulting in a delay and cost overruns.

In addition, the problem also occurs because of lack communication between project
management and stakeholders. To guarantee that all parties agree on each baseline, project
managers and stakeholders must participate in the discussion process at each phase. This can
reduce the likelihood of massive failures in the late phases of projects, where it can prevent extra
funding for the project or delaying the project's final submission. To achieve greater
communication between all parties involved, several ways can be implemented such as creating
communication channels, setting proper meeting plans, and running programs to encourage team
communications.
REFERENCE
Larson, E. W., & Gray, C. F. (2011). Project Management: The Managerial Process, 5th edition,
McGraw-Hill/Irwin.

Project Management Institute (2013). A Guide to the Project Management Body of Knowledge
(PMBOK Guide) 5th Edition. Project Management Institute, Inc.