Chemical Engineering June 2021 - 40

Preparedness for project risk
Preparation is key to helping minimize
project risks as the industry
continues to adapt to this everchanging
landscape. The pandemic
highlighted some weaknesses in the
marketplace that can now be addressed
in cases where similar circumstances
develop in the future.
For example, there are some steps
that owners can take early on during
the planning of a project that allows
for a more proactive execution.
These include the following items:
* Performing risk assessments on
future projects to include likelihood
of an epidemic or pandemic
* Understanding local permitting
timeframes
* Close collaboration between the
engineering fi rm and module
supplier to identify bottlenecks
early in the planning phase of the
project
* Identifying site workforce availability
to minimize bringing
workers from outside the local
geographic area
* Soil testing and subsequent
foundation preparation and construction
*
Identifying potential lay-down
areas if required
* Securing supply chain early in
the project to minimize impact of
a heated market premium
Old problems; more challenges
CPI companies have overcome many
obstacles in the last few decades,
such as the financial crisis of 2008,
and the global recession of 2014.
Many could say that the problems
faced during the pandemic were
simply old problems in a new global
landscape, but the numbers tell a
different story. This single event is still
causing unique challenges in the industry.
According to Industrial Information
Resources (Sugar Land, Tex.;
www.industrialinfo.com), the pandemic
has directly impacted more
than 7,000 projects globally worth
$556 billion. Specific actions were
announced throughout the industry.
For example, Fluor Corp., one of the
largest EPC players in the industry,
announced its exit from competitive
EPC lump-sum bidding in 2020 on
its full-year 2019 press release. Key
reasons driving this decision were
the increased project risk, the transactional
marketplace, and ultimately,
the market uncertainty driven by the
COVID-19 pandemic.
And although many of the challenges
are common in the industry,
such as extension of project schedules,
lower levels of project productivity,
CAPEX budget cuts and so on,
the reality is that these current challenges
" feel " different. It is the first
time in over 100 years that the industry
is fighting with a new and possibly
fatal pathogen on such a widespread
basis. EPC activities will continue to
be impacted, but companies will
continue to adjust. Perhaps the best
lesson is better preparation.
The positive news is that owners
can take steps early on during the
planning of a project that allows for
a more proactive execution. Preparation
is key to help minimize project
risks as the industry continues to
adapt to this ever-changing landscape.
The pandemic highlighted
some weaknesses in the marketplace
that can now be addressed in
case similar circumstances develop
in the future.
As mentioned earlier, there are
some key steps that owners can take
early on during the planning phase of
a project. These steps range from
performing risk assessments on future
projects to include the likelihood
of an epidemic or pandemic, to securing
the supply chain early to minimize
the impact of a heated market
premium. Also, understanding local
permitting timeframes highlight the
importance of strong contractor relationships.
Taken together, these
steps allow for a more proactive and
risk-mitigated project execution.
The path forward
The reality is that nobody can predict
when the pandemic will be over, if it
will be the last one our industry will
face or what the new steady state
will be five years or even ten years
from now. What is clear is that the
industry needs a project-execution
model that enables projects to continue
to be delivered successfully
CHEMICAL ENGINEERING WWW.CHEMENGONLINE.COM
JUNE 2021
and safely in challenging environments.
Modular construction can
help level the playing field due to its
adaptive nature.
Modular assembly shops also
continue to mitigate the impact of
the pandemic. Executing a project
in this fashion allows for continuous
operation at the owner's facility with
minimum interruption, which is possible
while maintaining the proper
health and safety measures.
Ultimately, modularization can
serve as a potential risk-mitigation approach
as the industry adapts to what
will be the new normal. While it would
be simplistic to say that modularization
is the silver bullet to the COVID19
pandemic's ongoing challenges to
the delivery of projects, modular construction,
together with other projectrisk-mitigation
measures, can and
has played a significant role in enabling
projects to continue safely and
effectively. It should be considered as
a viable alternative, both in the current
situation and into the future.
The pandemic highlighted weaknesses
in the marketplace that can
now be addressed in anticipation of
similar circumstances in the future,
which in light of history and public
health research, will very likely occur. n
Edited by Scott Jenkins
Authors
Mauricio Villegas is the manager
of business development at
Koch Modular Process Systems
LLC (45 Eisenhower Drive, Suite
350, Paramus, NJ 07652; Phone:
832-859-0416; Email: mauricio.
villegas@kochmodular.com).
Villegas
has more than 25 years of
experience in the engineering and
construction industry,
delivering
projects across industries ranging from small brownfield
projects to greenfield mega-projects. Prior to joining
Koch Modular, he held various management roles at
WorleyParsons, Technip, IHI E&C and Arcadis. Villegas
earned a B.S. in business administration and management
from Northeastern University.
Chris Loftus is a project manager
at Koch Modular Process Systems
LLC (same address as above;
Phone:
201-739-8697; Email:
chris.loftus@kochmodular.com)
and has over 25 years of experience
in the chemical process industries.
Prior to joining KMPS, he
held positions as engineering manager
at Genecor, a DuPont biotechnology
subsidiary, and field service and product management
for Veeco, in the semiconductor industry. Loftus
holds a B.S.Ch.E. from Clarkson University.
39
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Chemical Engineering June 2021

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