MILL MANAGERS REPORT

Employee-owned coated paper mill, based in Thunder Bay, Ont., fills gap in engineering resources to complete C$10 million in capital projects

BY MARK WILLIAMSON

Provincial Papers Eases Project Flood with Third-Party Management

The cyclical nature of the paper industry is well known. Periods of growth and prosperity are followed by periods of caution and belt-tightening. The engineering workload associated with capital projects can show a similar cycle. As a result, many mill engineering departments find it difficult to deal with these boom and bust project cycles, especially when their human resources are limited and there are many concurrent projects.

How does a mill effectively manage the schedules and costs of these projects while still keeping on top of the day-to-day engineering requirements required in a manufacturing operation? During these periods of high activity, projects must be completed on-time and within budget while keeping the mill running at top efficiency. Internal resources may be stretched to the limit.

LEAP IN CAPITAL EXPENDITURES. Provincial Papers Inc. in Thunder Bay, Ont., faced this management dilemma when the mill's proposed capital project budgets for 1995 and 1996 increased dramatically. The mill, which produces 166,000 tpy of coated fine papers, has been owned by the employees since 1993, and was recently acquired by Rolland Inc. In 1994, the business was thriving and the mill started to plan their capital spending.

Tim Knutson, senior manager for engineering and services at Provincial, describes the company's situation at that time: "With our existing engineering resources of four people, we felt that we could manage $1 million to $2 million in project spending, but we were looking at potential expenditures of $10 million to $20 million. We were concerned about how we could handle it." The mill's options were to either increase its own staff or acquire project management expertise from outside the company.

In addition to contracting engineering consultants for the design of the proposed projects, Provincial Papers enlisted a third party-RPA Consultants Ltd., a member of the RPA Group of Toronto-to look after the design management, cost control, procurement, and construction scheduling for each project under consideration. As an independent project management company, RPA specializes in the scheduling and cost control of capital projects on behalf of its clients. In the pulp and paper industry, RPA has previously completed several projects including effluent treatment plants, hydroelectric facilities, and a major thermomechanical pulp plant. Currently, RPA is managing a large state-of-the-art paper machine project.

As its first task, RPA managed the preparation of a detailed Project Definition Report for a major proposed capital project at Provincial. The scope of this study included a project description, cost estimate, schedule, and a project implementation plan.

Although the project was not approved by the company's board of directors, the careful analysis of project costing and scheduling proved to be a good model for evaluating how to invest money wisely. RPA was subsequently chosen as the managers for projects that were approved. The total budget approved for 1996 was approximately C$10 million.

The 1996 projects included the following:

A new repulping facility to increase recycled broke content.

A new primary clarifier and sludge dewatering system. The new clarifier would be in series with the existing primary clarifier.

In-plant sewer segregation work that would relieve low-solids effluent flow to the clarifiers.

A new fire protection system.

A new gauging and process control system for paper machine No. 8, which produces coated paper for offline supercalendering.

THIRD-PARTY WATCHDOG. Just what does an independent project manager do, and how does it fit into the project team? First of all, Provincial liked the concept of having a third party acting on its behalf, "to keep us all honest," according to Knutson.

He continues, "They are a watchdog to keep all parties on track, including the mill engineers, engineering consultants, suppliers, and contractors. They are specialized and dedicated to project management." To streamline the work schedule, the several projects at Provincial Papers were combined into a "program" of work, which allowed for certain economies of scale and sharing of resources.

As the overall project site coordinator, RPA's Ed Shallow was stationed at the mill for the duration of the projects, three of which had overlapping schedules. The project team consisted of mill engineers, the engineering design consultant for each project, and Shallow. RPA's Toronto home office provided support services for design management, procurement, cost control, scheduling, and comprehensive reporting. The project manager also looked after important items such as building permits and site safety. Each month, RPA produced a report summarizing the progress, completion schedule, and budget update for each of the concurrent projects.

Douglas Chisholm, Provincial's supervisor of engineering, reports that, "The project manager provided a sanity check on cost estimates and looked after managing the extra costs. By opening up negotiations with a variety of contractors, we were able to save money." Chisholm also notes that the independent project management concept was well accepted within the mill. He says that, "As a team member, the project manager became part of the mill fabric."

BUILDING COMPETENCE, KEEPING FOCUSED. With the assistance of an independent project manager, Knutson reports that the mill engineering group has been able to broaden its scope and build a core competence in managing several projects at once. Most importantly, he reports that even during the high activity periods, the mill engineering group was able to keep focused-avoiding the distracting influences of several projects-and to remember that they are there to support a manufacturing operation with day-to-day needs.

As of June 1997, RPA had fulfilled its commitment to complete all projects in this current cycle of high activity. All were on-time and on-budget. But, there is a legacy after the departure of the independent project manager.

John Brophy, vice president-manufacturing, reports that Provincial has added to the depth of its project engineering capabilities. "It was an excellent education for our people," he says. "It was money well spent."