Jim Thompson

Email Jim at jim.thompson@ipulpmedia.com

Rushing off into a new capital project of any size is a mistake. If you are the lead engineer, your first thing you need is an understanding of the project, an understanding that is bought into by your customer, mill production.

How do you get this cooperative understanding of the project? You write what is called a "design basis." I have been writing these for over fifty years. They are vital to a successful project.

A design basis fully describes the objectives of the project at hand. Round one it may contain no engineering calculations. Those can come a bit later.

Since you are writing this for your customer, typically production, it may contain production quantities, qualities, target energy usage, target downtime (if an existing operation) and other such numbers. It may state if the design is to meet clean design standards or other such parameters.

In "Draft 0" it will not include a budget.

It is important to understand what your customer wants before start to put an estimated cost on it.

Why?

As soon as a number is floated it will be spread throughout the company and that will be "THE NUMBER." Early numbers are always low. Avoid preparing one until the design basis is thoroughly defined and thoroughly vetted by all parties involved.

You may go through as many as five iterations before you are ready to do an estimate. Don't let production blow you off, either. I don't know how many times in my early years I would get an OK from the department head, do an estimate, and then have production come back a week or two later and want to add more things because "Jill did not get a chance to come to the meeting."

Drag your feet until you are satisfied everyone really has their input in.

Some wise old production folks will even try to play games with you. They may have already promised the big boss a certain budget, so they will manipulate you to get you to give them the number they want and then come back later with some more items they want you to stuff in the project. Be aware and resist this game. It is your career that is on the line.

Be safe and we will talk next week.

For a Deeper Dive, go here.

Mastering Project Initiation: The Design Basis Approach

Study Guide

This study guide is designed to help you thoroughly understand the critical role of a "design basis" in successful capital projects, as outlined by Jim Thompson. We will explore its purpose, content, iterative nature, and the pitfalls to avoid during its development.

I. Core Concept: The Design Basis

Definition: A foundational document that fully describes the objectives of a capital project.

Primary Purpose: To achieve a cooperative and shared understanding of the project between the lead engineer and the customer (typically production).

Initial Focus: Clearly defining what the customer wants, not how much it will cost.

II. Key Characteristics & Content

Audience: Primarily the customer (e.g., mill production).

Content in "Round 0" or "Draft 0":Project objectives.

Production quantities.

Quality standards.

Target energy usage.

Target downtime (for existing operations).

Clean design standards or other relevant parameters.

Exclusions in "Draft 0":Engineering calculations (these come later).

Budget or estimated cost (crucially excluded at this stage).

Iterative Process: Expect multiple iterations (potentially five or more) to ensure all inputs are gathered and thoroughly vetted.

III. The Importance of Delaying the Budget

Why wait? Providing an early number before the design basis is complete and agreed upon is highly problematic.

The "Number" Phenomenon: Once a budget figure is floated, it becomes "THE NUMBER" throughout the company, regardless of its preliminary nature.

Risk of Early Numbers: Early estimates are almost always low, leading to budget overruns and dissatisfaction later.

Order of Operations: Understand what the customer wants before attempting to estimate how much it will cost.

IV. Navigating Stakeholder Engagement & Pitfalls

Ensuring Comprehensive Input: "Drag your feet": Resist pressure to finalize too quickly.

"Jill did not get a chance to come to the meeting": Actively ensure all relevant parties have provided their input, even if it means delaying the process.

Recognizing and Resisting Manipulative Tactics: "Play games": Be aware that some production personnel may try to influence you to produce a desired (often lower) budget number.

"Manipulate you to get them the number they want": Watch out for attempts to subtly guide you to a pre-determined budget, with the intention of adding items later.

"Your career that is on the line": Understand the personal and professional risks of succumbing to these pressures.

"Resist this game": Stand firm on the principle of a thoroughly defined design basis before any cost estimation.

V. The Outcome of a Well-Executed Design Basis

A successful project, built on a clear, agreed-upon understanding of its objectives.

Minimization of scope creep and unexpected additions.

More accurate and reliable budget estimates when they are finally developed.

Stronger professional standing for the lead engineer.

Quiz: Project Initiation Fundamentals

Instructions: Answer each question in 2-3 sentences.

1. What is the primary purpose of writing a "design basis" at the beginning of a capital project?
2. Who is the typical "customer" for whom a lead engineer writes a design basis?
3. List three types of information that should be included in "Draft 0" of a design basis.
4. According to the source, what crucial piece of information should not be included in "Draft 0" of a design basis?
5. Why is it problematic to float an estimated cost too early in the project initiation process?
6. Explain what Jim Thompson means by "THE NUMBER" and why it's a concern.
7. What advice does Thompson give to engineers regarding ensuring all relevant parties have provided input?
8. Describe one tactic that "wise old production folks" might use to manipulate an engineer.
9. Why does Thompson emphasize that resisting manipulation from production personnel is important for an engineer's career?
10. How many iterations might an engineer expect to go through when developing a design basis?

Answer Key

1. The primary purpose of writing a "design basis" is to achieve a cooperative and shared understanding of the project objectives between the lead engineer and the customer, ensuring alignment before significant work begins.
2. The typical "customer" for whom a lead engineer writes a design basis is the production department or mill production, as they will be the primary users and beneficiaries of the new capital project.
3. Three types of information to include in "Draft 0" are production quantities, quality standards, and target energy usage. Other valid answers include target downtime, clean design standards, or project objectives.
4. The crucial piece of information that should not be included in "Draft 0" of a design basis is the project budget or an estimated cost. This is intentionally delayed preventing premature commitment to an inaccurate figure.
5. It is problematic to float an estimated cost too early because early numbers are almost always low and quickly become "THE NUMBER" in the company's collective consciousness. This can lead to budget overruns and scope creep later on.
6. "THE NUMBER" refers to an early, often low, estimated cost that, once circulated, becomes the fixed expectation for the project's budget. This is a concern because it can hinder accurate financial planning and lead to difficult conversations when the actual costs are determined.
7. Thompson advises engineers to "drag your feet" and resist pressure to finalize the design basis too quickly, ensuring that all relevant parties, like "Jill," have had the opportunity to provide their essential input.
8. One tactic "wise old production folks" might use is to manipulate the engineer into giving them a specific, often lower, budget number they've already promised to their boss, with the intention of adding more items later.
9. Thompson emphasizes that resisting manipulation is important for an engineer's career because succumbing to pressure can lead to project failures, budget overruns, and a damaged professional reputation when the project ultimately exceeds expectations.
10. An engineer might expect to go through as many as five or more iterations when developing a design basis before it is thoroughly defined and vetted by all involved parties.

Essay Questions

1. Discuss the fundamental differences between a "design basis" and a project budget. Explain why Jim Thompson strongly advocates for developing the former before even considering the latter, detailing the potential negative consequences of reversing this order.
2. Analyze the role of communication and stakeholder management in the successful development of a design basis. Referencing Thompson's advice, discuss strategies for ensuring comprehensive input and for mitigating the risks associated with incomplete participation or manipulative tactics.
3. Thompson emphasizes the iterative nature of the design basis development, suggesting "as many as five iterations." Explain the value of this iterative process, how it contributes to project success, and what specific elements might evolve or be refined through multiple rounds of review.
4. Consider the ethical responsibilities of a lead engineer during the project initiation phase. Based on Thompson's warnings about "games" and the pressure to provide early numbers, discuss how an engineer can uphold professional integrity and protect their career while navigating complex stakeholder demands.
5. "An understanding that is bought into by your customer, mill production." Elaborate on what "bought into" signifies in this context. Discuss the long-term benefits of achieving this level of customer buy-in through a well-crafted design basis, contrasting it with a scenario where such buy-in is absent.

Glossary of Key Terms

Capital Project: A long-term investment project involving the construction or acquisition of new assets, significant upgrades, or expansions to existing facilities.

Design Basis: A foundational document that comprehensively describes the objectives, requirements, and key parameters of a capital project, developed before detailed engineering or cost estimation.

Customer (in this context): The end-user or beneficiary of the capital project, typically the production department or "mill production," who will operate and utilize the new or upgraded facility.

Draft 0: The very initial version of the design basis, outlining core objectives and parameters without including engineering calculations or budget estimates.

Iterations: Repeated cycles of drafting, reviewing, and refining a document or plan, allowing for feedback and adjustments until a final version is agreed upon.

"THE NUMBER": A term used to describe an early, often low, estimated project cost that, once communicated, becomes the company's fixed expectation for the budget, regardless of its preliminary nature.

Scope Creep: The tendency for project requirements to increase and expand beyond their initial boundaries, often resulting in delays and budget overruns.

Vetted: Thoroughly examined and approved by relevant parties, ensuring accuracy, completeness, and agreement.

Lead Engineer: The primary engineer responsible for overseeing and directing the technical aspects of a project, often taking the lead in project initiation and design.

Production Quantities/Qualities: Specific targets related to the volume of output and the standards of quality expected from the new or upgraded facility.

Target Energy Usage: The desired level of energy consumption for the project, often a key parameter for efficiency and sustainability.

Target Downtime: For existing operations, the acceptable amount of time the system or facility can be out of service for maintenance or upgrades.

Clean Design Standards: Specific environmental or regulatory standards that the project design must adhere to.

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