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Effective Engineering Management in EPC Industry
- 1. Date: 06th July2013 Presented by Craig Muir
- 2. Agenda • Engineering inEPC Industry • Recognising the challenges we face • Engineering Management in EPC Industry • Engineering influence on Procurement • Engineering influence on Construction • Key Focus Areas • Success Factors
- 3. Engineering in EPCIndustry Bidding and proposals Bid Start Contract Award Commissioning Complete Performance test complete End of Liabilities feedback feedback Custody Hand Over Contract Realization Warranty Period Project Phases feedback Estimate vs. Execution status
- 4. Engineering in EPCIndustry Contract Types & Risks • EPC Lump sum price - Financial, Technical, Reputation, Schedule • EP Lump sum price - Same as above but relatively less w/o Construction • EPCM reimbursable with Targets - Technical & Reputation • Engineering services reimbursable - Technical & Reputation Client •Vendors •Subcontractors •Specialist Services •Technology/Licensors Proposal Commercial Technical Contractual •FEED verification •Design & Integrity •Commodity MTO •Technical risk •Constructability
- 5. Engineering Management inEPC Industry Project realisation Procurement Construction Commissioning Project controls QA/QC HSSE Project services Engineering
- 6. • Complete understandingon EPC approach and risks • Capital projects have become increasingly large and complex • Energy sector projects are undertaken in remote and difficult locations • Project demands are now leading to unrealistic budget and schedule – lack of definition and development at an early stage • Increased competition in the core regions • Effective project engineering management and inter-discipline engagement • Availability of resources - competence, capability, quality and quantity • Interface management (client, vendors, other contractors, site, etc) • Effectiveness of client engineering team / PMC – taking contractual position rather than looking into technical aspects and practicalities. • Management of change and client buy-in for the contractual variations Today’s typical challenges
- 7. • Revisions /additions to the original scope with no change in the project end date • Availability/volatility in commodity market price – driving engineering priorities • Quality of vendors and third-parties and availability of vendor information • Alignment of vendor engineering delivery schedules with project overall schedules • Effective construction input at the most effective stage of design • Making multi-office execution work, formalising scope splits and communication, relationships and priorities during design and delivery stages • On brownfield projects, enormous differences between „As-Is‟ condition and „As-Built‟ data • Plant safety/ local laws/ community issues / compliances Today’s typical challenges
- 8. Engineering in EPCIndustry Tender Effective tendering is considered to be the cornerstone of the EPC industry: • Conduct efficient level of engineering review to manage risk support definition and provide estimated cost clarity • Where required thorough FEED verification and endorsement to support the detailed estimate, and provide early start for all disciplines. • Understand, analyse technical, contractual and commercial requirements • Conduct qualitative and quantitative risk assessment • Support cost effective technically compliant „alternatives‟ improving bidding competitiveness. Avoid duplicating contingencies at various stages of development • Optimise engineering man-hour cost by maximizing the execution from lower cost work centeres • Preliminary execution plan allowing early start for critical activities • Ensure a high level of accuracy in pricing
- 9. Engineering in EPCIndustry Detailed Engineering Setting a plan with the end in mind is a must to ensure we deliver the most successful engineering service during the EPC • Install and embed a clear and concise engineering organisation for the project execution • FEED validation and design „firm-up‟ for the Detailed Engineering • Define the project TDR, and build the integrated Project Schedule taking into consideration the influences / coordination between the disciplines • Closely monitor productivity (man-hours spent Vs budgeted) and efficiency • Effective design (HAZID, HAZOP, SAFOP, ENVID, SIL...) and model reviews and appropriate follow-up / closing actions • Introduce new software technologies – i.e. SP3D (Smart Plant) • Follow-on engineering for site support
- 10. Influencing the ProjectStrategy – Engineering must enter the project with a focus and drive to deliver • Define and align Project objectives and targets • Risk (Early identification of Risks & Plans for mitigation) • HSSE (Safe execution saves Time and Money) • Quality (Do it right from the 1st time) • Introduce formal project integrity assurance into all stages of the project • Client satisfaction (Create Win-Win relation with the client) • Budget (Set budget, Control, Report & Improve) • Schedule (Plan, Identify Risk, Be Flexible & Responsive) – Track progress and maintain Contingency Plans to stay on Schedule • Management of interfaces (Early Recognition of problems means Early Solutions) Remember, deliver with the end in mind, Successful Construction and Commissioning are the aim of the engineering and procurement
- 11. Engineering Management inEPC Industry Influencing project execution Engineering Ownership, accountability and integrated delivery are Key • Clarity on the level of scope definition and quality of ITT/FEED documents • Driving successful Multi location execution of through effective project engineering – introducing robust collaboration, communication and KPI‟s • Visible integrated engineering delivery schedule • Introduction of a formal management of change process – capturing all changes • Early Control on Project „Commodities‟ (Concrete, Steel, Piping) setting benchmarks – drive a cost culture through all phases of the project • Engineering Design Reviews and Safety Reviews, adherence to safe practices as per Codes and Standard • Formal model reviews / walk-though with client and construction participation • Constructability Reviews / Sequence Planning / Commissioning and start up input / Early Operations & Maintenance input & Continuity / Clash Check / Quality Assurance • Available at site for construction review / visualization
- 12. Engineering Management inEPC Industry Influencing procurement • A systematic “Technical evaluation assessment” would lead to an effective vendor selection (qualified Vendors and schedule adherence) • Review and timely approval of vendor drawings • Full Vendor compliance with project specifications, SOW, datasheets... • On-schedule model and early approved layouts should be converted into accurate MTO‟s should be based on latest model and layouts • Capture Engineering changes, if any, before manufacturing starts • A cost effective design would result a successful equipment and material delivery to site • Continuous interface with Vendor during procurement stage and Inspection visits to vendor works • Final Acceptance Test (FAT) of major equipment and package units • Targeting and supporting local suppliers would improve supplier‟s capability • Influencing / growing in country value Early engagement and responsiveness is key in driving successful procurement
- 13. Engineering management inEPC industry Engineering Influence on Site delivery Subcontract • Assist Project team in Subcontractor assessment • Provide package engineering management support • Through field engineering develop the local subcontractor capability Construction • Ensure engineering ownership through from design and make key people available at site for construction review / visualization • Align Engineering work with construction priorities • Focus on managing change and supporting engineering integrity. • Minimizing Construction reworks by limiting engineering revisions („HOLD‟ register) which would impact construction activities. • Interface with key vendors when on site Commissioning • Provide field commissioning support • Address site changes and close out drawings, layouts, diagrams… • Interface with Client and key Vendors during final commissioning phase
- 14. Engineering Key FocusAreas •Effective project engineering management – create ownership and accountability at the correct levels and phases of the project • Through improved definition, develop and comply with a robust integrated plan • Improvement in competency of resources – technical depth, Create Ownership & Accountability • Structure a right mix of people to tackle EPC challenges • Responsive & rapid decision making with quality of delivery • Focused communication and good interface skills capable of handling interface management (external and internal) • Proactive, open and transparent attitude, in addition to strong willingness to confront issues • Formal Management of Change and a culture that is Completion Driven approach to Planning A Effective utilisation of people, systems and processes – enables engineering to deliver projects safely, on time and within budget
- 15. Engineering delivery -Success Factors • Positive feedback and engagement client • Recognise the value and reward collaboration workshare • Holistic rather than “silo” behavior from start to end of an EPC project • Consistent monitoring on work being completed during Engineering, Procurement, Construction, and Commissioning phases • Open communication: share problems early - do not try to hide mistakes • Responsiveness & operational management of change • Plan for contingencies for all the key areas • Effective interdisciplinary co-ordination and interfacing • Understand relationships with third parties: liability vs overall risk • Engineering group has a hunger to learn & improve Working as a ‘ONE’ Team (only ‘WE’ is the word) is the key to building a successful, and High-Performance Group