Hydrocarbon Processing - October 2021 - 64

Engineering and Construction
work process modifications that could capture downstream order-of-magnitude
cost savings. This narrowly-focused materials
management practice can also cause work process gaps to occur
that can significantly impact downstream execution.
Materials management as an investment: The railroad
analogy. Just as freight delivered by a single train can supplant
hundreds of trucks at order-of-magnitude savings, a thoughtful,
structured and disciplined materials management execution effort
can optimize project execution and deliver the lowest TIC.
However, just as each major route of a railroad needs to meet
the specific needs of that route, and to be maintained and resourced
to keep the tracks operational, materials management
execution must be well thought out and structured relative to
the overall needs of the organization, as well as to the specific
needs of the project. Executing parties must also be disciplined
to recognize that increased upstream resources may be needed
to save on downstream costs. There must be an attitude recognizing
that each party works to optimize overall project efficiency.
EPC organizations that allow upstream lapses or gaps
to occur, only to remediate or close the gaps downstream with
cleanup resources, are no different than a railroad company that
waits for a train to derail to find issues with the track. While it
might be tempting to think that, once the plan is in place, it will
self-execute, projects need a lean materials management team
to see that execution proceeds as planned, and to look for the
inevitable and/or unforeseen materials-related twists and turns
in project execution that can impact execution.
Materials management as an attitude: A parallel to
safety. Several decades ago, construction teams employed
safety teams that amounted to " safety policemen, " reporting to
construction management. Construction managers and superintendents
often pushed the limits of safety to complete the job.
The safety engineers were left to police unsafe behavior, with
some safety concerns disregarded by construction management-as
safety was considered subservient to production. At
the turn of the century, however, there was an awakening within
the construction industry, and attitudes changed to recognize
that everyone was responsible for safety-not just the safety
organizations-and that safety superseded production. Due to
this attitude change, project safety organizations are lean (but
effective) teams, consisting of a safety manager (who reports
to project management) and resources to provide training. At
present, everyone polices safety on a project.
Organizations that recognize that materials management is
the sum of the phases and steps detailed in FIG. 1, and that also
recognize that the sub-disciplines within the EPC teams have a
responsibility to execute their respective steps to facilitate overall
project optimization-as opposed to optimizing their individual
steps (i.e., working separately in siloes)-will achieve the highest
level of efficiency and deliver the lowest TIC. As projects need to
employ a lean safety team, with a leader reporting directly to project
management, EPC contractors will achieve the highest levels
of efficiency when they recognize that materials management is
not just a subset of procurement but also a resource to project
management. In fact, if you remove " materials related " from the
term's definition previously provided, you will have defined project
management. Materials management is a specialized subset of
project management-it is focused on the wide and diverse set of
project activities that are touched by materials.
A lean materials management team: A resource, not
an empire. With even the most open-minded team of design
engineers, designers, procurement professionals, field engineers
and superintendents, asking each to understand all the interrelated
aspects of the materials management process is not reasonable.
Each project must have a lean materials management
team consisting of a materials manager (who reports directly
to the project manager), along with a small staff that is knowledgeable
of the work processes. This team will participate in the
ongoing project execution and will attend meetings focused on:
* Providing early identification of opportunities
to optimize and/or capture upstream materials-related
work process changes that will offer order-of-magnitude
downstream savings
* Monitoring materials management execution by
transactional parties in engineering, procurement
and construction to watch for minor materials-related
protocol deviations and communication gaps that
might negatively impact project productivity
* Preparing cross-functional project-specific
work process reports to management that identify
hidden work process issues.
For example, a well-developed materials management effort
FIG. 2. Parties that play a role in materials management.
64 OCTOBER 2021 | HydrocarbonProcessing.com
entails upstream protocols that support and align with downstream
protocols. Small changes in the design process (such as
providing or omitting data in the model) can enhance or starve
construction intelligence. Minor or subtle changes in the way
materials are identified can impact downstream system tools
with a disastrous effect. Meetings-such as purchase order
(PO) award kickoff meetings-with suppliers (generally led
by the procurement organization) must have someone present
to see that all aspects of the planned PO execution (specifically
aspects of supplier scheduling, delivery and shipment) facilitate
information flow to the project to facilitate construction planning.
The bottom line is that the optimal materials management
team is a resource with no transactional duties at all. This team
is there to ensure that each transactional party (FIG. 2) executes
their respective role to optimize project efficiency.
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