Hydrocarbon Processing - January 2021 - 12

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a solid design basis as soon as possible, so the next project can
enable work in parallel during detailed engineering.
It is well understood that, if the client wants a better solution for a function in the plant (e.g., less energy consumption), one must allow for more resources for innovation, and
those engineers can iterate more over an extended period to
explore alternatives.
Two variables can be adjusted in volume and time. If one is
to create improvements that cross different disciplines, such as
controls and mechanical works, then alignment between these
two disciplines must be set, as well. This can be accomplished
by assigning the engineers in the same time frame. This is a
third variable.
Approximately seven more variables can be systematically
mapped onto the demand. By addressing these variables at
each project, one will create a smoother functioning of the
process and reduce the probability of project failures by more
than 50%. Project failures cut 2% of sales. This mapping will
reduce that by more than 50%.
Early warning and early correction. Another potential
area to improve project performance is to have an early warning system in place, such that corrections can be instantly made.
Several EPC firms have introduced a strict risk-assessment system before bids can take place, which reduces the risk of losses
on projects. Others more closely monitor project costs. Unfortunately, during the first weeks and months of a project, costs
are not the best tell-tales for later problems.
For that matter, there are other engineering process indicators that will give solid early warnings, while pointing at steps
to handle those situations. For example, within the " mapping
process onto demand, " the early assignment of senior personnel is essential to hammer out all basics before detailed engineering commences. If those senior staff members do not fully
participate in the project, this constitutes an early warning. The
correction is to prescribe early reviews for topics related to the
progress of senior personnel.
Another example is an innovative project. One measure is
to gauge if a healthy iteration takes place in the disciplines that
are working on aspects that need innovation. Usually, the disciplines process, mechanical and controls are key players-thus,
one measures the iteration in those areas. If the expected level
is not at par, then the correction is to prescribe reviews. One
can also order alternative designs, and possibly assign junior
engineers to enable more iteration to catch up.
The third example for " mapping process onto demand " is
the demand for quality. It was mentioned that this could require more alignment between controls and mechanical. If
monitoring indicates a lack of alignment, then the correction
would be to add more supervision and to reschedule so the engineers would work in the same time frame. The quality results
can then be supervised.
The more personnel that monitor early assessments and
warning signs, the less possibility of failures occurring and additional hours being spent to complete the task. The estimated
savings on overall sales are expected to be between 0.7% and
1.3% of sales.
Monetize new products. The EPC firm prepares data that

have a value outside the EPC firm's delivery of documents.

12 JANUARY 2021 | HydrocarbonProcessing.com

The 3D model's main products to be delivered to fabricators
are the piping isometrics and drawings for steel. If fabrication
is computer numerical control (CNC), the fabricator assigns
the job to CNC machines and prepares the NC program-at
a cost of up to 15%. With adjustments, the 3D model can produce CNC code for a machine, instead of issuing isometrics,
which can save up to 2% on LNG projects. On a $1-B project, that represents $10 MM-$20 MM. To monetize this, one
must agree upon the delivery of NC code.
Other areas in OGCP projects exist where contractors benefit from receiving outputs that are easily retrieved from the 3D
model. Onsite tank fabrication and sequencing, positioning of
parts for assembly, and many civil tasks can use laser-guided
positioning, which can be derived from the 3D model. Tasks
such as checking quality and progress can benefit, as well. In
LSCSM projects, the structural parts to be CNC machined for
a building are probably fewer in number. However, there are
clusters that benefit from it. Within life sciences projects, the
3D interior model can provide input to CNC production of lab
furniture, paneling and ducting. The CNC production reduces
the lead time, which supports flexibility. These services are to
be monetized and translated into 0.5% profit.
Path to increased profit. The market characteristics that define the focus for the EPC firm and the demands for each of the
projects have been reviewed. For EPC firms, it is mostly the cost
of engineering, although other areas can be innovation (power)
or flexibility (life sciences). These market aspects drive adjustments for the hypothetical EPC-2020 case.
A suggestion is a reduced corporate level where the core tasks
are capital and strategy. Coming from an integrated corporate
model, this dissolves an elaborate management structure that
does not fit current market conditions. It reduces corporate costs
to 1.25% of sales. Equal offices of 1,000 employees provide a size
for adequate staffing and a focus on a product/market segment.
Three steps to improve project performance and reduce failures are improving the division of labor, mapping process onto
the demand of each project, and incorporating early warning
and early correction systems. Improving the division of labor
leads to several savings: 1%-2% of overall sales. Improving the
mapping of several variables onto the project scope guarantees
the functional performance and keeps projects in line without
using contingencies. It can add 1% or more to profit. OGCP
and LSCSM projects have a failure rate that now reduces the
company profit by 2%. A root cause for failure is an optimistic
lump-sum bid, another by acknowledgment of issues when it is
too late to correct. Finally, new products (resulting from 3D and
other applications) increase income and profit by 0.5%.
The reduction of corporate costs (1%), adjustments in division of labor (1%-2%), the mapping onto the project demand
(1%), reduction of failures (1%) and sales of new high-margin
products (0.5%) result in pushing up profits on sales from 2%
to an aspired 6%.
MAURITS VAN WAGENBERG has extensive experience in tracking the health
of engineering organizations and of the engineering execution of complex
plants. He has worked more than 30 yr in the field of improving engineering
performance and on project risk analysis. He has performed comparative analysis
among organizations and developed ways to fine-tune engineering execution
toward specific project needs. He has a PhD in industrial organization and is
president of IBASC, an engineering management and research firm.

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Hydrocarbon Processing - January 2021

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