Wednesday, February 8, 2012

Identify, Define and Communicate Client Needs and Expectations

“Identify, Define and Communicate Client Needs and Expectations”

Ali Barahmani 2011


An understanding of the internal and external risks in project management is necessary as part of the project plan. Generally speaking, internal risks are easier to identify and manage while external risks are more elusive and less controllable. Dealing with clients, who are providing the fund to define and execute the projects, can be critical and in most cases problematic. When it comes to engineering in oil and gas industry in Alberta, the same problems can affect the project in different capacities. Identifying these needs and defining the scope can be critical in receiving the approval and getting the AFE. This paper is treating this issue as an external issue to the project team since the project team has no control over the clients’ needs identification process and would suggest an approach to solve the problem in the most professional and effective manner with low cost implications. Also, industry input to the process is considered as well as academic studies to support the case.


In today’s competitive word, “quality” may simply be defined as customer satisfaction. Failing to correctly meet customer’s requirements, expectations and needs has contributed to the United States lack of competitiveness in the global economy. This is likely also true in most of the industrialized nations. (Hartman, 2001)

One of the key success factors in meeting the quality and reaching client satisfaction is to understand and identify client’s needs. In the relationship between the oil and gas companies as the “Clients” and the EPC Companies as the service providers, defining the need and identifying the success factors is an important task. In an ideal world, these needs should be defined and identified in a formal document or deliverable. In our projects and in this paper the formal document is the “Statement of Requirements” which will be called “SOR” in this paper from now on for ease of use.

Since the PM in the EPC Company has no control over the identification process and issuing the SOR, any delay or miss-identification in this process will have a negative effect in project execution in the EPC Company.

According to Nicholson and Sieli in their PMI presentation, many companies were still plagued with the following problems in the course of their projects’ execution:

- Improvements do not occur from project to project.

- Projects still function in a reactive environment.

- Roles and responsibilities are poorly defined that cut across functional or organizational boundaries.

- Successful improvements in one project do not ripple to the other projects.

This is likely to be true today as well. In most EPC environments in Alberta above problems remains to be true today and can be more specified for the projects being executed in oil and gas industry in Alberta including the “Well Tie-In projects”, “Compressor Station Construction Projects” and “Pipeline” projects.

Traditional project management tends to focus on the defined project objectives and not on defining the “unwritten set of customers’ needs and expectations which ultimately translates to project success. (Hartman, Ashrafi; 2001)

Realizing the importance of customer satisfaction, now more and more organizations are focusing on “identifying and satisfying clients’ needs and expectations”. As will be described in detail, in most projects the author is involved in, the “S.O.R.” or the “Statement of Requirements” is the official request that should be initiated from Client to the EPC Company.

In this paper, I describe “hard” issues of defining clients’ needs and the items that should be included in a complete SOR. Also, the external issues that are preventing us, as an EPC company, to address clients’ expectation and in some cases are causing delays and imposing extra costs to the project as a result of determining clients’ requirements later than it is needed.

The External Issue

According to appendix 1:”Conventional Small Project Flow Chart”, receiving the SOR is the first step in initiating the project. The SOR is very important in terms of informing the EPC Company what exactly needs to be done and the scope of the project in general. Also, it is important that scope be defined in the early stages of the project so that engineering company can design the job and allocate the man hours based on the needs of the client and prepare applications to necessary regulatory licence requirements and get the approvals in time.

The issue is that the clients are usually late or unwilling to approve the SOR in early stages. As mentioned earlier since the PM in the EPC Company has no control over the identification process and issuing the SOR, any delay or miss-identification in this process will have a negative effect in project execution in the EPC Company.

The client’s intention is to transfer the risk to the EPC Company. Also, the client wants to prevent the engineering change notes that might be issued by the EPC but by not issuing the SOR in early stages a lot of problems and costs are imposed for changes if the job is designed bases on some “assumptions” and “un-approved facts”.

• Mitigation Strategies

Project cost for a typical single well tie-in project for Wild River area is around a million dollar while this cost can easily be escalated to over millions of dollars in Ojay area. Factors like the regulatory costs, line pipe length and equipment registered in other provinces can be a big portion of this difference. Also, the client team acting in these two areas has different tastes in selecting the tools and equipments. Moreover, the clients responsiveness and communication effectiveness are very different which in some cases makes it difficult to reach an agreement.

Therefore, a standard process to define the scope and identify the needs may solve a big part of the problem. Steps below are suggested to mitigate the risk of receiving or understanding the clients’ needs later when it is not doable to save significantly.

The first step would be performing a site visit of the area and study similar projects in case they are available. In this stage we need to identify all requirements to obtain approvals from regulatory bodies. For example, using boil-off tanks are prohibited in Wild River area while there are some other areas that use of this particular equipment is permitted. ERCB and OGC, two regulatory organizations in Alberta and British Columbia may have different requirement in similar cases based on the location and other consideration.

As will be described in the work process section, the flowchart can be easily used and be treated as a live document in the entire course of the project.

There is no significant cost for implementing these processes other than holding some meetings to describe or talk about this process in the monthly and kick-off meetings.

• Use of Tools

• Studies and Site Visits

Site Visits are necessary to determine the needs and define requirements clearly. Obtaining data needed for the preparation of a capital cost estimate is another main objective of these visits. Not all the required information will be able to be obtained so discretion is necessary in deciding what is considered important or whether additional items need to be included for consideration. For a typical Class 2 or 3 estimates a one or two day visit for small jobs might be sufficient.

• AccuMap

AccuMap® provides desktop access to numerous up-to-date databases, including subsurface land, well, pressure, production, pipelines, core, reserves, seismic and logs for the Western Canadian Sedimentary Basin and Frontier areas. [5]

Use of this tool will provide useful information about pipelines in place and available tie-in locations. Also, line numbers and licence numbers will be available via this tool which will indicate the ownership of the pipeline or the company who is operating on the lease.

All these information can be critical in defining the clients’ needs.

A snapshot of the tool interface is shown in Appendix 2.


Aspen HYSYS is a process modeling tool for conceptual design, optimization, business planning, asset management, and performance monitoring for oil & gas production, gas processing, petroleum refining, and air separation industries. [6]

Use of HYSYS enables us to understand the options and find out whether or not we can offer specific equipments for a specific project. It is very important to use this tool to make sound suggestions and to choose suitable equipment either from surplus or to purchase. These suggestions can then be reflected in the SOR.

• PM Database

PM Database is the single source of gathering information about project budget and final forecast in each stage of the projects. To make the client fully aware of their needs and make sound suggestions in defining the SOR we need to understand the financial situation of the project and all other projects at least in the area. Using this tool not only we can see the status of other projects but also we can enter data for our project and provide a better picture of the status of the activities.

• MS Excel

In defining clients’ needs, an accurate cost estimate can play a vital role. MS Excel is used to do a detail cost estimate. Class III Cost Estimates (±25% accuracy) are provided to clients to enable them make decisions on what is needed. It is very important to do the estimates based on the most recent and real data from recent projects to create a better basis for decisions. A sample copy of a Class III Cost Estimate is provided in Appendix 4.

Industry Best Practices

There are two main different approaches in the oil and gas industry in Alberta to define the scope and identify technical needs in projects. Each approach has its own pros and cons which is described below:

Some big players in the industry would like to define the scope and identify the needs before they announce it to the EPC Company. In this approach the client prefers to use standard sets of drawings and process to simplify things and prevent complications. This method is usually cheaper but has some cons to it. Using this method the client won’t be able to use the latest technology every time and there is no guaranty that the tools, equipment and personnel are up to date according to the leading technology in the industry. Each change needs to be flagged and announced and reflected in the predefined standard sets of drawings. Therefore, even though this method is cheaper and the Engineering Company is less involved, the client has less flexibility towards industry changes and may not be able to change directions in company’s economical policy e.g. changing from oil to gas or visa versa. Also, last minute changes will not be accommodated easily in this approach and may cause more cost to implement a change in the scope of work.

In another approach, the client engages the Engineering Company or the EPC in the investigation process and helps the client identify the needs and define the scope. This approach is usually more expensive and needs a lot of technical expertise to accommodate changes. The parties should have a mutual understanding and a strong relationship based on trust. Changes can be accepted easier and all possible technologies and options can be explored before coming to a final decision. Designs are more optimized and modified for the specific project situation. The biggest cons for this approach are the cost and the process not being standardized.

According to the information provided above, the ideal situation would be to decrease the cost for the second approach by standardizing it to take advantage of the flexibility and being technically more confident. In order to do that I am suggesting standardizing the SOR creation process and engaging the engineering company from the early stages in all projects.

• Costs and effort in delivering the mitigation

By applying the mitigation plan and getting the help from engineering company to define the needs we are accepting to invest on the process by paying to the engineering company. This may look that we are imposing some extra cost but the intention is to save money in the long term. Creating the standardized process will make it possible to determine similar projects faster and more effectively. In this way we maybe able to prevent designing for similar jobs over and over again. By saving money in preventing the design for similar jobs we are able to provide cheaper service and at the same time be confident in the technical advantage of the services and design for each project. Also, this will ensure the identification of the needs and providing a sound SOR agreed by the client and Engineering Company at the early stages of the project. Moreover, there will be less change announced since there is a technical reason behind each and every decision and this may also save time and money for the projects.

Work Process

As it is shown in Project Flow Chart and Work Flow, the work process has many different aspects to follow and many milestones to meet. For a typical project it is highly recommended for the Project Management in the EPC Company to identify the clients’ needs and expectations as early in the projects as possible. In that, there are a number of recommendations which may ease the identification process and provide a better ground to reach an agreement.

Designing and providing a template to define the scope: A sample format for SOR is provided to the EPC Company. The complete template is not included in this paper for confidentiality reasons but a snapshot of that can be found in Appendix 3. A lot of valuable questions are asked in the template which can be answered by both companies. It is important to engage the development team and the Operations in the investigation process so that everybody is aware of the decisions being taken in the early stages. Also, a gas analysis representative, a survey and a draft of the plot plan is a part of the suggested SOR template.

By use of the different tools described earlier in this paper we may provide technical support and evidence of each and every decision made in the SOR. For example, if it is decided to drill two wells and tie in to an existing line, we can easily go to Accumap and do a research on the available pipelines and the pipeline diameter and maximum operating pressure to support the decision and address it in the SOR. A HYSYS modeling will prove the feasibility and technically sound decision. The cost estimates can be provided based on these decisions and be checked with the PM Database to get the AFE and all other approvals.

Also, according to the flow chart in Appendix 1, regulatory department can easily start the appropriate application using the data provided in the agreed SOR and IFA package designed based on the agreements. No need to mention that all changes can be accommodated via an ECN (Engineering Change Note) and managed in agreement with the client.

Industry Input to the Process to the Practices and the Academic Support

After studying the industry best practices and we need to look into the findings and recommendation from academic perspective to provide finer conclusion. In this section I describe some of the best findings in the academic side to support the case. Lewis Ireland has discussed the role of a project manager in managing the customer’s expectations and requirements and relates it to the success of the project. Identifying a number of internal and external customers and clients, Ireland emphasizes that determining the interests and expectations of each customer in the project will establish a rational basis for fostering a cooperative environment for managing those expectations. Meeting those expectations or resolving differences between customers’ expectations will facilitate the continued progress of the project’s work toward building a quality product or service.

Alan Mendelssohn considers quality as an all-encompassing concept critical to project success. He describes four principles of quality management:

- Customer Satisfaction

- Plan-Do-Check-and-Act cycle

- Management by fact

- Respect for people

According to Mendelssohn the quality revolution is now focusing on process improvement in order to achieve client satisfaction. Rather than telling the customer what product or service the client needs, it is now necessary to find out what the customer wants and then concentrate on how that can be provided.

Two key factors learned n developing quality management systems are:

- Know your clients and their requirements or expectations

- Know your products and/or services

(Hartman 2001)

According to the above findings, we can now go back to the case study and dig a little more to see the areas applicable to the client’s needs in oil and gas projects in IMPROVE business unit. Creating a check list that is reflecting above requirements and also provides accurate input to the process provided in appendix 1 can help in this regard. A sample format as tried and suggested for tie-in projects can be found in appendix 2.

This spread sheet can be filled in early enough so the client can have enough time to provide the input and then make all changes that may occur afterwards. The biggest advantage of providing this format and asking the client to fill out (or in some cases fill for the client and send to them and ask for feedback) is to make the team, including the client and the engineering group, to think ahead of time and come up with all the needs and possible inventions.

Please see attachment 5 for Worley Parson’s feedback and input to the process.

Summary and Conclusions

In today’s competitive environment no organization can survive without systematically satisfying the needs and expectations of clients. That is why there is a shift in management policy of the more forward-looking and progressive organizations from a product to a customer focus. I have presented a simple approach designed to identify and communicate effectively clients’ requirements at the early definition phase of the projects. Examples of how to apply this process to real life oil and gas projects has also been presented. The process has been suggested to a leading engineering company in Alberta. The initial feedback have been highly positive and is promising a more clear understanding of clients’ needs and expectations by the EPC Company. I hope the application of the proposed methodology will greatly enhance the effectiveness of the project team both internally and externally during the implementation phase of the projects.


I would like to thank all the key personnel from WorleyParsons’ Talisman PRIME alliance who helped me gather relevant and valuable information in my study and gave their precious time to answer my questions and provided their expert opinion on the process. My special thanks go to the Project Delivery Manager, Mr. Greg Coady (PMP), who made it possible to get in touch with several project managers and use projects’ information when possible. Also, I would like to thank WorleyParsons’ Project Managers Ms. Shannon Graham (PENG) and Ms. Pamela Danyluk (PENG) for their unfailing attention to details and their kind attention during the whole process.


1. Hartman, F.T., Herrero, J.C., Ashrafi R.A. (2001); “How to Identify and Communicate Customer Needs and Expectations”; PMI’s 26th Annual Symposium, New Orleans.

2. Barkely, Bruce T. And Saylor, James H. (1994); “Customer Driven Project Management”, McGraw-Hill Inc., New York.

3. Cod, Kent A. (1998) “Project Work Plan Development”, PMI Seminar 1 Webinar, pp. 7-12.

4. WorleyParsons work processes and “Knowledge Base” web site.

5. HIS Website:

6. Aspen website:

7. WorleyParosns “Share Point”: not accessible to public.

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