Levoxx’s capabilities and solutions assist to look beyond conventional project management. Levoxx’s Large Scale Project Approach (LLSPA) is deeply embedded in our working methodologies and comprises eight practices that drive a construction project’s success, deliver a project in time, on budget and at quality requirements.
Building mines, power plants, oil and gas fields and others do have one thing in common. They are classified as large scale, capital intense construction projects.
By executing these large-CAPEX construction projects project owners and EPC/EPCM contractors face increasing challenges, operations and financial risks. The difficulties result from changes in demographics, industrialization of emerging markets and derived increased demands for partially scarce and volatile raw materials and energy.
Large scale construction projects are VUCA projects.
Globally executed construction projects are becoming more complex, for example in terms of a project’s size and scope. Furthermore, due to larger numbers of participants in construction markets the analysis of competitor behaviors is affected by ambiguity. Advancements in technology adds uncertainty, for instance by means of offshore wind mill projects. Furthermore, steelmaking projects, for example, depend on (conventional) resources, making the project’s success subject to volatility in commodity pricing. As a result of these developments typical construction problems such as delays, cost overruns and quality issues may have far greater impacts on a large scale construction project’s success and the creation of value.
Levoxx’s Large Scale Project Approach (LLSPA)
An effective approach in order to successfully execute large construction projects
With the aforementioned changes and challenges in an intensified competitive environment it was and remains to be essential to effectively manage large-CAPEX projects in order to create value.
Our solutions, capabilities and industry approaches incorporate the aforementioned changes and resulting challenges. Thus, our specialists operate in line with our Levoxx’s Large Scale Project Approach (LLSPA).
Following our guiding principle “Your experts, our experts, one team and one aim” we team with your project management, contribute our experience and expertise and strictly operate incorporating LLSPA to strive for nothing less than to deliver a project on time, on budget and with required quality parameters.
Read further and learn more about our LLSPA principles.
Experience and supporting research has shown, that successful CAPEX-reduction methodologies and programs may reduce CAPEX by 10 to 25 percent.
Since a construction project’s success depends on capital expenditures (CAPEX) and budgeting it is essential to minimize capital expenditure requirements and to reduce risk. Our specialists’ approach entails a cost-focused culture. Our work methods contribute effective monitoring, for instance in order to undertake sensitivity analysis of potential methodologies such as distinct construction methods. By that our experts entirely understand a project’s cost drivers and strive to adapt, in other words, reduce CAPEX whenever possible.
- Cost focused culture
Identify potential savings and strive for long term value creation from the onset
In order to identify potential savings, our experts reflect on a project’s scope and technical details from the onset. In other words, from the earliest stages we make sure to fully understand cost components and drivers. Further we assess our client’s and our client’s client requirements and supply best practice experience.
- Learning effects
Identify and foster synergies through standardized processes
Our solutions strive for raising quality in standardized processes. By that we ensure to capture experience effects on component and project levels.
- Scale effects
Clean up before expansion: improve ROIC and generate growth sustainably
Our experts make sure to identify potential scale effects. In particular, combining resources and shaping efficiency can significantly reduce a project’s cost structure.
- Supply chain optimization
Following Kaizen, shape a project’s logistics to reduce waste
In order to reduce costs associated to standard logistics errors as a result of an inappropriate supply chain design our work methods strive for the highest parameters of efficiency and effectiveness from the earliest stages.
- Convoy effects
Striving for the generation of economies of scale and scope
Through experience we assess potential convey effects by means of simultaneous activities on one project in one location or on several simultaneous projects with diverse locations.
- Technology and location effects
Use experience to assess future developments in terms of macro and micro environmental influences
Our approach challenges a project’s future through impacts of future technology and location changes.
Design for Value Creation
As construction projects become increasingly complex a plant’s design must be aligned with a client’s needs. Therefore Levoxx Engineering primarily makes sure to understand our client’s requirements and how our client strategically sources long term value from operating a plant.
- Does the plant focus on keeping upfront capital requirements low?
- Does the plant focus on initial construction and operations maintenance?
- Does the plant rather prefer operations at maximum reliability and availability over initial cost structures?
The questions and decisions from above have a significant lever on all phases of a large scale construction project. For all three approaches, however, we develop technical designs aligned with our client’s value targets. Thereby we ensure to reduce associated costs for both, existing technology and new equipment.
Levoxx Engineering Solutions are guided by four fundamental principles:
- We Design for Value Creation
Our experts make sure to totally understand our clients value creation, quality and design criteria from the onset.
- We Design to Improve Efficiency
After the identification of engineering related cost drivers our professionals simplify these but maintain required performance and quality standards. From that, we define best practices and supply these to global projects.
- We scale and transfer our solutions, if possible
Our solutions are uniquely elaborated and customized. Partially, however, components and processes may be standardized and modularized. By that, we improve our processes’ efficiency and reduce associated costs as benefit for our clients.
- Our Experts Strive to Explore
We explore in both technical and global patterns. That said, our organization sources knowledge from the changing global environment and technology shifts permanently. We apply this knowledge to problem solving. Thereby, we realize cost and quality targets that improve our performance.
Stringent Risk Management
Based on our experience, we are aware of the fact that projects involving large CAPEX entail equally high risks. With higher complexity comes higher potential for failure and ultimately, those are the lucky ones who invested in proper risk management beforehand. At Levoxx, we lever our rigorous risk management by focusing on the three essential tiers.
- Tier 1: Strategic positioning
Following our “five dimensions of project management”-approach, we define key performance indicators (kpi’s), which collectively aim at aligning the project targets with our client companies’ acceptable level of exposure to risk in relation to expected outcomes, acceptable perpetual CAPEX levels and other such measurements.
- Tier 2: Portfolio evaluation
Be it mid-project with different suppliers or perpetually alongside our own process, our experts are trained to proficiently and constantly assess a project’s risk versus value contribution for our clients and those to be. We provide assessments and guidance ranging from exiting value-destroying projects to addressing unfavorable factors and continuing with the project.
- Tier 3: Project control
Regardless of who is ultimately in charge of the project, our experts are able to produce risk registers at any stage. These entail naming the risks, sorting them by severity and likelihood, determining mitigation opportunities and establishing an appropriate reporting system that reacts on predefined signals to ascertain proactive intervention.
Excellence in procurement management
The crucial nature of procurement is often underestimated in large CAPEX projects. The wrongfulness of this approach is reflected by the simple fact that critical parts not being delivered in time or in the right amount and quality can ultimately block and delay an entire project. At Levoxx, our approach is to integrate procurement strategies early on in the planning process where we rely on our profound experience-based knowledge to help our clients target costs per procurement category. Throughout the build and run phases we then provide assistance and guidance in the following seven areas:
- Supplier management
We perpetually assess and classify current and potential suppliers and lever our experience and network to improve the quality of key suppliers, deepen relationships with top performers, and consolidate supplier bases.
Our experts establish steadily improved internal purchasing clusters across projects and locations in order to identify bundling options that can be awarded to the best suppliers. By this means, we can master agreements to capture scale for our client.
- Global sourcing
Our clients operate in international environments. This opens up opportunities for sourcing from low-cost countries to capture major cost savings. Our thorough ex-ante quality-cost targeting, supplier development and collaboration networks help mitigate possible downturns in terms of inferior technologies or a lack of after-sale services. Also, our global sourcing strategies are closely linked to thorough communication design and component standards in order to achieve the level of scale that makes it cost effective.
- Demand management
We constantly communicate with our key stakeholders and thus can flexibly adjust procurement quality to the project’s real requirements, and understand changes in category demand to more effectively negotiate with suppliers.
- Process excellence
Regardless of the stage in which our experts are called on site, we strive to optimize costs over the entire life cycle of a project, not only in terms of product prices but also total cost of ownership. This effect is self-evidently increased with the earliness of our involvement.
Due to our macro scale view, we help cluster and standardize processes, thus facilitating shared commercial standard specification and maximizing the sharing of items among projects and products.
- Make or Buy Decisions
Still in the spirit of cost optimization our experts evaluate and assist product or service externalization. Aside from mere cost reduction potential we include crucial aspects such as our client’s current position and future goals, taking into account future demand volumes that could lead to scale or learning effects in our estimates.
Excellence in contract management
Power equilibriums in project contracting largely depend on cyclical developments. In times of high demand, EPC/EPCM bargaining powers predominate. On the other hand, project owners gain traction with decreasing demand, resulting in lower prices and higher responsibility on the side of EPC/EPCMs. This struggle for bargaining power frequently results in poor performance on both sides and thus creates deadweight loss. At Levoxx, our approach follows our persuasion that, especially in an increasingly connected world, an aligned strategy and a focus on long-term relationships lead to win-win situations that outlast single project scopes. We therefore partner with our clients in clarifying specifics of the project and the external conditions of the market before contract negotiations. Our process therefor is subdivided in the following three steps:
- Determine project scope and value drivers
As mentioned before, our experts first set up a series of key performance indicators such as required execution speed, production targets, available resources, risk factors etc. early on in the project which, aggregated, reflect the project scope.
- Identify external market factors
In this second step, market-specific contract types are determined in order to identify the single best option for the scope and purpose of the project. Also, our experts lever our deeply intertwined network in order to list and qualify available resources in terms of contract partners, suppliers and their competitors.
- Define performance clusters and staffing
The final step requires our specialists to design packages that are to be outsourced and providing linked key actors to these packages in accordance with the predetermined project scope and value factors.
By thoroughly assisting our clients in these three steps we secure total project value optimization and maximum CAPEX amortization for every stakeholder involved.
Access to Scare and Local Resources
While on the lookout for value-increasing projects, the majority of our clients operate on a global level. Thorough knowledge concerning local resource availability (e.g. human capital, natural resources, infrastructure, critical equipment etc.) can be the tipping point between success and failure due to its impact on total project expenses. While assisting our global clients in this concern, Levoxx draws upon an extensive intertwined network of key actors and suppliers from projects all over the world. Based on clearly defined project scopes and targets, our experts develop an action plan that aims at determining key needs and providing crucial resources on a sustainable basis in the aforementioned areas.
- Human capital
Human capital represents a large challenge in areas with high project concentration. Our experienced and targeted recruiting department follows systematic and proved recruiting methods based on prior workforce need determination in order to provide key staff to support our core team for every stage of the process.
- Natural resources
Equally important in global large CAPEX projects are scarce natural resources that might be abundant in other areas such as water. Our team is trained at performing thorough supply planning and local investigations in cooperation with local stakeholders in order to help set the right targets and kpis for certain areas based on the specific resource scarcity. This, in turn, serves as input for overall project design and thus ensures frictionless processes and prevents the project from unexpectedly running out of crucial resources.
- Infrastructure, commodities and equipment
Large CAPEX projects can entail missing infrastructure and thus complicate commodities and equipment supply. Levering our global project experience, our Levoxx solutions portfolio encompasses local infrastructure-, supply network- and substitute access planning, including shortage scenario planning.
Excellence in construction
One of the key parts in large CAPEX projects is construction. However, equally as there are similarities between projects, each project still has unique characteristics. As a result, large CAPEX projects oftentimes lack lean process management which could reduce waste, errors and value eliminating activities. In order for our clients to achieve a leaner construction sequence, the Levoxx approach includes a three-step-trimming-plan aiming at optimizing speed, material flow and quality.
Our experts divide and subdivide every section and subsection of the construction planning process until it is small enough to be reassessed rapidly. These sections are then included in a schedule plan with the aim to avoid idle times and bottlenecks. In a second step, planned resources are attributed to each subsection and checked with all external partners in workshops aiming at further optimizing the workflow by integrating them early in the planning phase.
- Material flow
This step aims at ensuring that all required resources are delivered in the right quality, quantity and time. Therefore, our staff first classifies material needed after their specific lead time and delivery method. In a second step, specific ordering schedules are attributed. Based on this information, an availability monitoring system is established and updated daily in order to be able to foresee possible bottlenecks early on. During the execution, this system is then needed for stock management purposes.
Based on the scheduling and stock management established in the earlier steps, the aim of this final step is to develop a zero-defect approach. In this context, Levoxx supports clients in establishing optimal gate processes in which control mechanisms are strategically distributed in the form of milestones. Subsequently, KPIs are developed in order to determine on-time or delayed delivery, quality levels, and compliance with contract terms. Finally, quality controls at the intersection of work unit are set up and updated in order to detect defects as soon as possible and correct them.
Excellence in project management
The complexity and scale of large CAPEX projects make strong and proactive project management unalienable. Failures are frequent due to the fact that leaders may not completely understand complex projects, or they may lack the preparation and determination necessary to effectively oversee their development. Some companies approach projects as a series of individual initiatives executed independently, without the required upfront coordination and planning. At Levoxx, we are aware of the importance of thorough project planning and constant supervision. Therefore, we provide our clients with our dedicated team of project management experts who form a project management office (PMO). As such, they cover a project’s three key management parts:
- Project governance
Our team supports our client in defining the structure of the project’s governance, detailing the roles of the steering, executive sponsors and individual business units.
- Process design
We help our clients define crucial elements including human resource requirements, key metrics and reporting systems.
- Execution control
Our team is profoundly trained at constant vigilance and at identifying alert signals. They act as the main hub for any upcoming issues and keep a constant communication base. As such, they supervise single teams, help build consensus among teams and prepare status reports for our client’s executive decision making.
We are committed to offering efficient effectiveness, permanently.
Our client services comprise an extraordinary composition of deep industry and functional expertise. We partner with global construction projects. Our services aim to deliver optimal planning, frictionless execution, transformation and peak performance operations.