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EPC Projects execution keys

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Keys to master the execution of today's large EPC Projects

Keys to master the execution of today's large EPC Projects

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  • Many thanks for these great works Baron
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  • Thanks for sharing, Hervé !
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  • Overall Contractor responsibility and mega project: Client leaves interface responsibility with Contractor On-Shore vs Off-Shore, different set-up On-shore: must set-up Temporary Site facilities and camp in remote location Vs Off-Shore: at a shipyard
  • Every facility is unique: necessary Engineering phase
  • Technical? The processes and technology are proven, no prototype. Quality: The project execution systems are well developed and standardized: vocabulary, methods and tools (planning, progress measurement, management of change, plant mechanical completion etc.) and fairly standard throughout the industry. Cost? Lump Sum Contract: qties + market conditions risks with CONTRACTOR. Precise specifications, list of approved vendors, market conditions. E 10, P 50, C 40. Schedule: Projects must now be completed in 36 months vs 45 months a few years ago Schedule risk is with CONTRACTOR: both liquidated damages and time related costs Size: Not a human size: Mega LNG Project 75,000 tons of equipment, 42,000 tons of steel (6 Eiffel towers!) Multiple and ever changing actors, e.g. Engineering home office+ low cost center Construction is sub-contracted The challenge is to keep control of the project Safety challenge Mega Projects 25,000 people at peak, 80 nationalities Various levels of education, supervision, time pressure Diffusion of safety culture : raise awareness, STOP card etc. Management leadership: leadership by example: safety walkthrough, safety talks, address of worker
  • Numerous and ever changing actors
  • Tightened schedule changed the execution from sequential to concurrent. The change from sequential to concurrent execution pushed the project to sharpen its execution, identify and focus on critical path, improve controls: suppliers, sub-contractor
  • Engineering/Procurement interface: Close coordination for anticipated orders and revision of quantities, including cancellation etc. Engineering/Construction Interface: Prioritization based on start-up and construction sequence Understanding of mutual needs Agreement on deliverables Frequent up-dates (work volumes and delivery schedule) communicated by Engineering to Construction for better planning: Integration of tools (IT)
  • Some Engineering needs to be done by suppliers, as equipment are rarely standard
  • Estimates must be done to meet the schedule The cost of engineering re-works can be significant: For the off-sites and utilities of a jumbo LNG Project (USD 4bln), erection costs (only i.e. excluding supply) of structural re-works was USD5mln, without the consequential time related cost (disruption)! The trade-off is over-design
  • An example of such integration is the issue, by Engineering, of schedule of standard pipe supports to allow mass pre-fabrication by Construction
  • The impact of a change will be exponential with time as the progress of engineering develops e.g. civil, piping, instrumentation etc It may also involve cancellation of orders, additional purchasing, stopping construction activities etc.
  • Only through detailed status, broken down by individual work item and work step completion, can one ascertain the exact progress of the work.
  • The cable pulling progress is good Glanding is behind Termination progress is good, as it shortly follows glanding

Transcript

  • 1. HERVEBARONToday’s Projects:Challenges & Keyfactors of successHervé BaronNov 29th, 2010
  • 2. HERVEBARONToday’s Projects:The main challenges and the Key factors ofsuccessOverall Contractor responsibility: EPC (Engineering, Procurement,Construction)Mega Projects: > USD 1blnMultiple locations & actors: Low cost centers, Construction sub-contractedSchedule: Drastically tightened
  • 3. HERVEBARONToday’s Projects:The main challenges and the Key factors ofsuccessOverall Contractor responsibility and mega project: Client leaves interfaceresponsibility with ContractorOn-Shore vs Off-Shore, different set-up:On-shore: must set-up Temporary Site facilities and camp in remotelocation vs Off-Shore: at a shipyard
  • 4. HERVEBARONDesign Procurement Manufacturing ShippingInstallationConstruction &erectionInspection &testsHand-overProject execution synoptic
  • 5. HERVEBARON• Technical ?What are the main challenges ?• Cost ?• Quality ?• Schedule ?• Safety• Size ?
  • 6. HERVEBARONTechnical?The processes and technology are proven, no prototype.Quality:The project execution systems are well developed and standardized: vocabulary,methods and tools (planning, progress measurement, management of change, plantmechanical completion etc.) and fairly standard throughout the industry.Cost?Lump Sum Contract: quantities increase & market conditions risks withCONTRACTOR. Precise specifications, list of approved vendors make the Contractwell nailed down for Company.Schedule:Large projects must now be completed in 36 months vs 45 months a few years ago.Schedule risk is with CONTRACTOR: both liquidated damages and time relatedcostsWhat are the main challenges ?
  • 7. HERVEBARONSize:Not human! Mega LNG Project 75,000 tons of equipment, 42,000 tons of steel (6Eiffel towers!)Multiple and ever changing actors, e.g. Engineering home office+ low cost centersConstruction is sub-contractedThe challenge is to keep control of the projectSafety challengeMega Projects25,000 people at peak, 80 nationalitiesVarious levels of education, supervision, time pressureDiffusion of safety culture: raise awareness, STOP card etc.Management leadership: leadership by example: safety walkthrough, safety talks…What are the main challenges ?
  • 8. HERVEBARON The Key factors of success?Schedule:=> adapt to concurrent rather than sequential execution• Get the design input early… but get it right!• Avoid changes and re-works• Integrate the E, P and C work processesSize:=> Develop and implement precise controls• Know your actual progress!• Control your suppliers and sub-contractors
  • 9. HERVEBARONENGINEERINGPROCUREMENTCONSTRUCTIONBill ofmaterialsDrawingsThe Past: sequential execution
  • 10. HERVEBARONENGINEERINGPROCUREMENTCONSTRUCTIONENGINEERING PROCUREMENT CONSTRUCTIONToday: concurrent execution
  • 11. HERVEBARONENGINEERINGPROCUREMENTCONSTRUCTIONENGINEERING PROCUREMENT CONSTRUCTIONTightened schedule changed the execution from sequential to concurrent.This drove the project to sharpen controls over its execution: identify and focus on critical path,pro-actively manage interfaces etc.Today: concurrent execution
  • 12. HERVEBARONBill ofMaterials 1Bill ofMaterials 2ENGINEERINGPROCUREMENTCONSTRUCTIONDrawings 1 Drawings 2Today: concurrent executionDerived challenges:• Get the design input early• Avoid changes and re-works• Integrate the E, P and C work processes
  • 13. HERVEBARONBill ofMaterials 1Bill ofMaterials 2ENGINEERINGPROCUREMENTCONSTRUCTIONDrawings 1 Drawings 2Today: concurrent executionEngineering/Procurement interface:Close coordination for anticipated orders and revision of quantities, including cancellation etc.Engineering/Construction Interface:Prioritization based on start-up and construction sequenceUnderstanding of mutual needs, agreement on deliverablesRegular up-dates (work volumes and delivery schedule) by Engineering to ConstructionIntegration of tools (IT)
  • 14. HERVEBARONProcesssimulationsEquipmentinquiry &selectionFoundationdrawingsEquipmentlist & dutyVendorEngineeringVendor data& drawingsCoolerCoolerEngineering is the integrator of the Plant equipment, and is highly dependenton vendor dataGetting the design input early
  • 15. HERVEBARONSafety valvesdutySafety valvesinquiry andpurchaseSafety valvessizing & drawingsSafety valveslocation & pipingroutingPiping calcs &supportsSteel structuredesign anddrawingsPurchase steelFabricationShipping Structureat SiteNumber,sizeestimatesSupports& loads estimatesEngineering must be right first time, which requires experience, goodcoordination between disciplines and anticipationBut get it right!
  • 16. HERVEBARONFor more information and…to get on top of Engineering in hours, not years!A unique synthesis andreference manual200 pages, 250illustrationsTo browse the book:http://goo.gl/dfDrSTo order with a 30%discount:http://goo.gl/J3TkE
  • 17. HERVEBARON Integrate the work processesEngineering to up-date the Constructionsub-contractor with work volumes anddelivery schedules for Construction sub-contractor to plan and mobilize efficientlyThe Construction Sub-contractor is paid afixed amount for a ton of steel installedIt is uncertain about the actual deliveryschedule of drawings and materials, wantsto avoid stand-by
  • 18. HERVEBARON Integrate the work processes• Constructability reviews• Pre-fabrication• Engineering schedule tomatch Constructionpriorities/sequences• Engineering deliverablestailored to constructionexecution needsDevelop Engineering /Construction synergies
  • 19. HERVEBARON Avoid changesSources of changes:• Inherited/Open technical issues• Design development & Reviews• Client’s new requirements• 3rd party at interfaceResist avoidable changes – Contractual managementImpact of changes is exponential with time: implement early!• Interface management,• System to identify all impacts and track implementation of changesAvoidable/Unavoidable ?
  • 20. HERVEBARON Know your Project’s progressThe principles:• Draw the list of work items, total = 100%• Actual progress = Σ individual progress over all work itemsThe challenge:• The list of work items keeps changing – difficulty to keep track• The total work volume (100%) keeps changing• Increase by up to 30-50% are commonThe keys:• Overall progress from detailed breakdown by individual work item/steps• Monitoring from up-to-date list of work items
  • 21. HERVEBARON Set-up an accurate progress measureThe overall picture is accurate…If :• its derives from progress ofelementary work items,• It reflects the true work volume,i.e., is based on up-dated list ofwork items,Only through detailed status, broken down by individual work itemand work step completion can one ascertain the exact progress of the work.
  • 22. HERVEBARON How are the electrical works doing?How to monitor construction progress, the case of Electrical cables for a FPSO:254 km of Electrical cablesto pull, gland, terminate. What is the progress?
  • 23. HERVEBARONIndividual item (cable) and work step (pull/gland/terminate) statusΣHow are the electrical works doing?
  • 24. HERVEBARON“ You get what you inspect, notwhat you expect “• Know your supplier workprocess/steps• Implement tight follow-up/expediting• Access you suppliers systemsControl your suppliers and sub-contractors
  • 25. HERVEBARON Know what drives the overall durationFor the explanation, please go to: http://www.toblog.fr/fr/baron/date/201010/blog.html
  • 26. HERVEBARONhttp://www.toblog.fr/en/baron.htmlYou enjoyed this presentation?Share my experience on other topics:EngineeringContract ManagementProject ControlAttend my classroom trainingList and schedule of coming sessions at:Go for more!