Talking AWP- Ep. 3: IWPs and Rules of Credit

Podcast Transcript: IWPs and Rules of Credit

Jeff Samis: Hey, Gregorio. How are you doing today?

Gregorio Labbozzetta: Very good. Thank you. And you?

Jeff Samis: I’m doing well, Ryan.

Ryan Bonnell: Hey.

Gregorio Labbozzetta: Hey, Ryan. How’s it going?

Ryan Bonnell: Very good.

Jeff Samis: We’re. We’re here to talk to Gregorio in the third installment of our podcast series. And Gregorio’s picked a very interesting topic, one that I’m not familiar with, to be honest. And it’s IWPs and Rules of Credit: Let’s make some clarity. So this all has to do with a rule of credit within AWP and how those are impacted.

Jeff Samis: All those impacted IWPs. I’ll stop talking because I really don’t know what I’m talking about here. And I’ll turn it over to the expert, Gregorio, who will let us know all about this topic. So go ahead, Gregorio. Enlighten us.

Gregorio Labbozzetta: Yeah. So let’s start maybe with a definition of models of credit, rules of credit. So I don’t know if credit is basically our weight that we assign to an activity, that it’s part of an aggregate that usually we call package, but could also be a drawing or could be anything that’s that we have to execute no. So a typical example maybe can be piping.

Gregorio Labbozzetta: So we have three, basic three or four basic rules of credit when we install type 20% Pipe Supports, 30% Pipe Erect, and then we have 30% Pipe Weld and this means to us that the activity of installing pipe supports take 20% of the effort or it is important to us 20%. So these are the rules of credit.

Gregorio Labbozzetta: Now, when the world of the rules of credit enters in contact with the world of workface planning, we might have some some conflicts and first conflict, that I see, it’s about strategy. So what is our workplace planning strategy? What do we want from our IWPs. So what we usually recommend is that our strategy should start from the concept that we want to be able to open installation work packages and close them in a reasonable amount of time and the reasonable amount of time. It’s five to six to seven days, maximum ten days. So what are all of the activities, all of the actions that we can implement in order to close packages and close them on time well, if if we think about it, how to close a package faster. You just the most simple thing that we can think about is put less put less material in the package.

Gregorio Labbozzetta: If you put less material, you close it faster. So how about putting into a package, a pipe support activity, a pipe erect activity, a pipe weld activity or even even more. We can talk about QC, we can talk about inline instruments. So the more we put into a package, the more it’s difficult to close the package. So there is a there is are a reasoning behind that, like a common sense that tells us that the less we put in a package, the easier it will be to close the package.

Gregorio Labbozzetta: And that we know that this is related to rules of credit. So our recommendation in project is that usually to design IWP’s has performance needs, try to look at how they are going to build the scope of work. But try as much as you can to avoid the rules of credit So try to separate activities that are that are being built in the most granular way until it becomes a problem when it works, it’s a problem.

Gregorio Labbozzetta: Don’t know that of course let me say, bottom line, putting everything into a package is not going to help you closing packages. So rules of credit to be used very wisely and it should be avoided whenever it is. It is possible.
Jeff Samis Interesting. So in that description that you just gave us, Gregorio used the term reasonable amount of time a few times. Who determines what’s reasonable and what’s not reasonable. I could see that being a bit of a bone of contention.

Gregorio Labbozzetta Yeah. So this is another great question of the industry. I always like to answer by by making a consideration. So me, as Gregorio, I don’t remember what I was doing at six weeks ago. Like if you asked me, “Gregorio, what were you doing six week ago?” I need to take my notes. I need to go back to my notes and, and recollect my my, you know, my history, my recent history to understand same if you ask me what I was doing last week, only I have an idea but I cannot tell you what I was doing on, on Tuesday of last week.

Gregorio Labbozzetta: It’s I know recollected. So the same happens for a foreman. So humans, they have a very good short term memory that that that work very well in the field. And typically these memory allow us to plan or track the history in a detailed way for one week ten days. So the reasonable amount of time is one week, ten days because this is what our brain allows us to to track in a detailed way.

Jeff Samis: And what about these rules of credit? Can they somehow trip up the foreman in some way or is this fairly user friendly for the foreman.

Gregorio Labbozzetta: For the foreman, it’s just usually a formality. And there are a lot of possibilities to play with the rules of credit because you know, understanding what is 30% done with pipe supports and 40% done, with erections. So the interpretation of these numbers can be can be different based on the person who is reading the number so and it also reduce the accountability because one that it’s very difficult to to keep people accountable with percentages.

Gregorio Labbozzetta: It’s much easier to keep people accountable by using a binary system. So our pipe is either done or not done.

Ryan Bonnell: But what again like if you’re just running one crew is rules of credit more usable or like what if you’re running multiple crews, like which one would you want to use?

Gregorio Labbozzetta: It’s even worse when it gets to multiple crews, there is even more possibilities to to make mistakes or to communicate numbers that are not reflecting a good picture like weights could say that we are 30% done with pipe supports but then managers they don’t have anything in hand to to to make the right decisions plus we could be 30% done but we could have a problem in package closure because let’s say remember that we are done only when the last bolt the last spool is installed.

Gregorio Labbozzetta: Yeah when the first one is installed so yeah for these reasons rules of credit should be avoided as much as possible. Activities in the field should be ruled by task based on what a crew is able to build in one week.

Jeff Samis: And this what so it sounds like these rules of credit are fairly tricky and could really, you know, cause some consternation on our projects. Are you suggesting that we get rid of rules of credit?

Gregorio Labbozzetta: Yeah, yeah. So my position is very strong, as you can say. As you can see. But yeah, I think we should get rid of them, use them only when we cannot do anything different yeah.

Jeff Samis: Then is there something that we would put in place for them or we would just get rid of them altogether?

Gregorio Labbozzetta: I would just get rid of them and have packages, including activities that are either done or not done. For example, for piping, I would do a package for pipe support and where every support is either done or not done or a package for pipe erection where every spool is either erected or not erected. Then we might have packages where a pipe supports, spools, and welds are grouped together because it makes most sense for the crew.

Gregorio Labbozzetta: So also in that case a spool, is either erected or not erected so we should not package by ISO for example, and then say 30% of this ISO is is done an ISO is either built or not built.

Ryan Bonnell: Right? So it’s going away from just get rid of weighted go to binary.

Gregorio Labbozzetta: Yeah definitely. Yeah.

Jeff Samis: I used to have a boss, Gregorio that used to tell me there is no try Jeff. If I ever said, yeah, we’ll try and do that, he’d say, there’s no try these either do or not do. So this is the same thing. It’s either installed or it’s not installed.

Gregorio Labbozzetta: Absolutely.

Jeff Samis: And no grey.

Gregorio Labbozzetta: Yeah. And you know, percentages are a very good solution for managers to look good. This is what they do. They make managers look good because they are basically a way to convey a message. And the message is we are not closing packages, but we are doing some work. But that’s not what we really need because what the project team needs is to close the project, and you can close the project only if you install the last spool, not the first one.

Jeff Samis: Well, thank you for joining us again, Gregorio. It was very informative. I certainly learned a lot. I finally, by the end of this conversation, I really kind of got to understand what you were meaning by that. And so, yeah, it was very interesting and I think it will be enlightening for other people that be watching this as well. So we thank you very much for your time and the knowledge that you passed on to us.

Ryan Bonnell: Thanks for just Talking AWP with us. If you want to learn more about AWP, please visit our website at insight-awp.com. That’s insight-awp.com. You can also follow us on LinkedIn, where we post the latest in AWP and its many facets.