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HERVE BARON Today’s Projects: Challenges & Key factors of success Hervé Baron Nov 29th, 2010

EPC Projects execution keys

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

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Page 1: EPC Projects execution keys

HERVE

BARON

Today’s Projects:

Challenges & Key factors of success

Hervé Baron

Nov 29th, 2010

Page 2: EPC Projects execution keys

HERVE

BARON

Today’s Projects:

The main challenges and the Key factors of success

Overall Contractor responsibility: EPC (Engineering, Procurement, Construction)Mega Projects: > USD 1blnMultiple locations & actors: Low cost centers, Construction sub-contractedSchedule: Drastically tightened

Page 3: EPC Projects execution keys

HERVE

BARON

Today’s Projects:

The main challenges and the Key factors of success

Overall Contractor responsibility and mega project: Client leaves interface responsibility with ContractorOn-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

Page 4: EPC Projects execution keys

HERVE

BARON

Design Procurement Manufacturing Shipping

InstallationConstruction &

erectionInspection &

testsHand-over

Project execution synoptic

Page 5: EPC Projects execution keys

HERVE

BARON

• Technical ?

What are the main challenges ?

• Cost ?

• Quality ?

• Schedule ?

• Safety

• Size ?

Page 6: EPC Projects execution keys

HERVE

BARON

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: quantities increase & market conditions risks with CONTRACTOR. Precise specifications, list of approved vendors make the Contract well 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 related costs

What are the main challenges ?

Page 7: EPC Projects execution keys

HERVE

BARON

Size:

Not human! 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 centers

Construction is sub-contracted

The challenge is to keep control of the project

Safety challenge

Mega Projects25,000 people at peak, 80 nationalitiesVarious levels of education, supervision, time pressure

Diffusion of safety culture: raise awareness, STOP card etc.Management leadership: leadership by example: safety walkthrough, safety talks…

What are the main challenges ?

Page 8: EPC Projects execution keys

HERVE

BARON 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 processes

Size:=> Develop and implement precise controls• Know your actual progress!• Control your suppliers and sub-contractors

Page 9: EPC Projects execution keys

HERVE

BARON

ENGINEERING

PROCUREMENT

CONSTRUCTION

Bill of materials

Drawings

The Past: sequential execution

Page 10: EPC Projects execution keys

HERVE

BARON

ENGINEERING

PROCUREMENT

CONSTRUCTION

ENGINEERING PROCUREMENT CONSTRUCTION

Today: concurrent execution

Page 11: EPC Projects execution keys

HERVE

BARON

ENGINEERING

PROCUREMENT

CONSTRUCTION

ENGINEERING PROCUREMENT CONSTRUCTION

Tightened 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

Page 12: EPC Projects execution keys

HERVE

BARON

Bill of Materials 1

Bill of Materials 2

ENGINEERING

PROCUREMENT

CONSTRUCTION

Drawings 1 Drawings 2

Today: concurrent execution

Derived challenges:• Get the design input early• Avoid changes and re-works• Integrate the E, P and C work processes

Page 13: EPC Projects execution keys

HERVE

BARON

Bill of Materials 1

Bill of Materials 2

ENGINEERING

PROCUREMENT

CONSTRUCTION

Drawings 1 Drawings 2

Today: concurrent execution

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 deliverablesRegular up-dates (work volumes and delivery schedule) by Engineering to Construction

Integration of tools (IT)

Page 14: EPC Projects execution keys

HERVE

BARON

Process simulations

Equipment inquiry & selection

Foundation drawings

Equipment list & duty

Vendor Engineering

Vendor data & drawings

CoolerCooler

Engineering is the integrator of the Plant equipmen t, and is highly dependent on vendor data

Getting the design input early

Page 15: EPC Projects execution keys

HERVE

BARON

Safety valves duty

Safety valves inquiry and purchase

Safety valves sizing & drawings

Safety valves location & piping

routingPiping calcs &

supports

Steel structure design and

drawings

Purchase steelFabrication

Shipping Structure at Site

Number, sizeestimates

Supports& loads estimates

Engineering must be right first time, which require s experience, good coordination between disciplines and anticipation

But get it right!

Page 16: EPC Projects execution keys

HERVE

BARON

For more information and…to get on top of Engineering in hours, not years!

A unique synthesis and reference manual

200 pages, 250 illustrations

To browse the book:http://goo.gl/dfDrS

To order with a 30% discount:http://goo.gl/J3TkE

Page 17: EPC Projects execution keys

HERVE

BARON Integrate the work processes

Engineering to up-date the Construction sub-contractor with work volumes and delivery schedules for Construction sub-contractor to plan and mobilize efficiently

The Construction Sub-contractor is paid a fixed amount for a ton of steel installedIt is uncertain about the actual delivery schedule of drawings and materials, wants to avoid stand-by

Page 18: EPC Projects execution keys

HERVE

BARON Integrate the work processes

• Constructability reviews• Pre-fabrication• Engineering schedule to match Construction priorities/sequences• Engineering deliverables tailored to construction execution needs

Develop Engineering / Construction synergies

Page 19: EPC Projects execution keys

HERVE

BARON Avoid changes

Sources of changes:• Inherited/Open technical issues• Design development & Reviews• Client’s new requirements• 3rd party at interface

Resist avoidable changes – Contractual managementImpact of changes is exponential with time: implement early!• Interface management,• System to identify all impacts and track implementation of changes

Avoidable/ Unavoidable ?

Page 20: EPC Projects execution keys

HERVE

BARON Know your Project’s progress

The principles:• Draw the list of work items, total = 100%• Actual progress = Σ individual progress over all work items

The 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 common

The keys:• Overall progress from detailed breakdown by individual work item/steps• Monitoring from up-to-date list of work items

Page 21: EPC Projects execution keys

HERVE

BARON Set-up an accurate progress measure

The overall picture is accurate…

If :

• its derives from progress of elementary work items,

• It reflects the true work volume, i.e., is based on up-dated list of work items,

Only through detailed status, broken down by individual work itemand work step completion can one ascertain the exact progress of the work.

Page 22: EPC Projects execution keys

HERVE

BARON 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?

Page 23: EPC Projects execution keys

HERVE

BARON

Individual item (cable) and work step (pull/gland/terminate) status

Σ

How are the electrical works doing?

Page 24: EPC Projects execution keys

HERVE

BARON

“ You get what you inspect, not what you expect “

• Know your supplier work process/steps• Implement tight follow-up/expediting• Access you supplier's systems

Control your suppliers and sub-contractors

Page 25: EPC Projects execution keys

HERVE

BARON Know what drives the overall duration

For the explanation, please go to: http://www.toblog.fr/fr/baron/date/201010/blog.html

Page 26: EPC Projects execution keys

HERVE

BARON

http://www.toblog.fr/en/baron.html

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