2. Agenda
• Engineering in EPC 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 EPC Industry
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 EPC Industry
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 in EPC Industry
Project
realisation
Procurement
Construction
Commissioning
Project controls
QA/QC
HSSE
Project
services
Engineering
6. • Complete understanding on 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 EPC Industry
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 EPC Industry
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 Project Strategy –
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 in EPC 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 in EPC 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 in EPC 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
