Return On Investment
The Cost of Advanced Work Packaging
Advanced Work Packaging (AWP) can bring a vast array of benefits to capital project execution, including improvements in safety, quality, schedule and predictability. But until something drastic changes in the way we all consider value, the cost aspect of AWP will always be the most critical.
A lot of times, when talking to organizations that are starting their AWP journey, cost can be a significant hurdle. That cost typically comes in several different elements:
Bringing construction personnel onto a project earlier in the lifecycle, which extends their overall duration on the project.
Training for project team personnel on AWP, its use on the project, and their role in making it a success.
Dedicated personnel, such as Workface Planners, who will create and manage the Installation Work Packages (IWPs) in the field.
AWP software, such as O3’s market-leading solution, which is used to support and standardize AWP implementation on a project or across an entire portfolio.
Many of these companies will immediately zero in on the cost associated with the Workface Planners, and will be put off by having additional indirect costs on the project. In order to address this concern, and to get an accurate picture of the true value of AWP for a project, it is necessary to understand both sides of the Return On Investment (ROI) calculation.
Firstly, it is important to acknowledge that there will be a cost, and to understand what that cost will be. Failure to properly budget the necessary resources, training and software for your AWP implementation will make it incredibly hard to effectively achieve. There is no point suggesting that AWP can be done on a shoestring, and then getting upset when the results aren’t what you expected.
Secondly, you need to estimate the benefit that AWP will bring to the project, which is calculated as a function of the improved performance and reduced execution hours of the direct craft labor on the project. It also considers the associated savings with indirects and scaffolding, that are usually estimated on a project as a factor of the direct hours.
So how is this Return On Investment calculated?
The Construction Industry Institute (CII) formed a subcommittee, led by O3’s Josh and Andrew, to create a Return On Investment tool. It can be accessed by all CII members, and is located here. This tool takes just a few key pieces of information about a project and applies industry-standard metrics to that information to determine the potential ROI of implementing AWP.
All of the data fields can then be adjusted by the user to reflect any known project values, so the tool is fully customizable.
Or, for a more detailed look at the costs and benefits of AWP implementation, O3 has a market-leading ROI tool that can be configured to any project to get a thorough assessment of the cost and savings. This tool also clearly identifies the specific areas of saving, as well as the difference between projects that are executed using AWP (without software), and projects that execute AWP by using O3’s best in class software. (If you are interested in using this tool, reach out to O3 and a member of our team can guide you through the process).
With both of these tools, the user can identify two other key parameters:
The level of AWP maturity of the organization or project team, to reflect the fact that the benefits associated with AWP will improve with AWP maturity.
The type of AWP being implemented, to show that the returns will be different when you are doing:
Just workface planning
Workface planning with elements of Engineering and Procurement sequencing
Full AWP across the project lifecycle
So if you are building a business case for the use of AWP, start by understanding your Return On Investment, and plot a course to AWP maturity. O3 can accelerate your journey with the most trusted and widely-used AWP software on the market, using embedded AWP best practices to get your implementation kick started, and get you on the path to benefit and success.