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Note  This article describes a Project template. You can download this template by clicking the link in the See Also list in this article.

The technical process of transforming a business opportunity into a facility that can be constructed is often described as the engineering phase of a project. The activities required to produce an engineering design are arranged and linked (linking: In a project, establishing a dependency between tasks. Linking tasks defines a dependency between their start and finish dates. In OLE, establishing a connection between programs so that data in one document is updated when it changes in another.) in a standard way.

The objective of this template is to identify the normal activities required for an effective engineering project and link them into a typical schedule (schedule: The timing and sequence of tasks within a project. A schedule consists mainly of tasks, task dependencies, durations, constraints, and time-oriented project information.) format. You can use this schedule strictly as a training tool, or modify it and use it as the basis for an initial project schedule.

Template design

The general engineering template represents the steps and relationships necessary to scope, evaluate and design a $5 to 25 million capital cost project. A typical project is centered on a manufacturing process. The template assumes that the process technology is fairly well defined (that is, completed through the pilot plant and demonstration stages). Environmental and other applicable permits are handled in parallel with the design activities and may require a separate schedule.

Template organization

The engineering project schedule is organized into three phases: conceptual, definition, and design. A construction phase is also included to make it easier to develop an overall project schedule. Each engineering phase contains typical activities with their normal dependency links. These activities are described in a general manner and will require editing to reflect a particular project planning situation.

The purpose and activity logic for each phase is described later in this summary. In addition, the key activities are hyperlinked (hyperlink: A portion of text, distinguished by a color, that contains a link to another file or a location within a file. When you click the hyperlink, a Web browser will search for and display the document that is associated with the hyperlink.) to a definition table. The individual activities also contain notes describing normal deliverables and typical resource classification assignments. These notes and assignments are included to guide you and are not meant to be prescriptive.

Conceptual phase

The conceptual phase of a project is used to explore the economic viability of the proposed venture. The engineering work performed during this stage is generally at a macro level of detail. Conceptual engineering identifies the scope required to achieve a business objective. This scope definition forms the basis for forecasting the capital and operating costs required to support the venture. Financial returns are generally estimated from this data.

The conceptual phase is the most cost-effective opportunity during the life of a project for a business entity to make strategic decisions. Typical engineering costs for this phase of a project are 1/2 to 1-1/2% of the eventual installed capital cost. Several alternates may be considered at this time, with the best financial return option moving into the definition phase.

The capital cost range of accuracy is generally held to a +/- — 40 to 50%. Alternates should be compared at similar levels of estimate accuracy. This range of accuracy helps facilitate a comparable evaluation and minimizes engineering costs.

Many projects will not proceed beyond the conceptual phase. Therefore, the engineering team is generally kept small and limited to those who are familiar with the required process technology and manufacturing operations. Project procedures are kept to the minimum necessary to control the process.

Definition phase

Typically, a project that passes the business evaluation hurdles of the conceptual phase moves into the definition phase. The objective of definition is to develop a more refined project plan for evaluation before full financial commitment to the venture. The project scope is developed in greater detail, permitting more precise capital cost estimates. A reasonable capital cost estimate range of accuracy target is +/- — 20 to 30%.

The project team size increases during the definition phase. It is usually centered on the conceptual team for study continuity. Typical effort costs for this phase are in the range of 1 to 3 % of the total installed capital cost.

In addition to the improved scope definition, issues such as project risks, process and design quality, and facility staffing, training and start-up are considered. Project planning and control procedures are emphasized, especially those that will continue to be used during the design phase.

At the conclusion of the definition phase, the business should have a fairly definitive project scope description and capital estimate so that the expected financial rate of return can be reviewed. The resulting project financials should be validated against comparably accurate market and cost-of-manufacturing data. The results of this review process can either result in the project proceeding to full funding authorization or recycling back to the beginning of either the conceptual or definition phase for additional option development.

Design phase

This phase of the project template focuses primarily on the development of a detailed engineering package that will provide the basis for the construction of the defined facilities. Many other activities need to run in parallel with this work package to ensure that the facility will start up and operate efficiently. These activities include selecting a construction contracting style, awarding the construction contract, providing for staffing and training, and managing the start-up requirements. None of these activities is included in detail in this template.

The design phase of a project is the most costly. Typical costs are about 5 to 15% of the total installed capital cost. The low end of the cost range is normally associated with new or "green field" facilities. The higher end of the range is associated with renovation or expansions of existing facilities. In addition to the costs for the engineering effort, project equipment purchasing occurs during this phase. Normally about 10% of the large capital equipment costs are required to secure engineered equipment drawings from the various suppliers participating in the project.

Design quality, earned performance, and schedule compliance are particularly important during this phase. Progress tracking tools should be used to highlight areas that require management focus or specific problem solving attention.