"The only means to influence the duration of an EPC Project is the early placement of the purchase orders for Equipment" - Herve Baron, author of "Oil & Gas Engineering Guide"
Posted on 17-09-2018 by GBC
Herve Baron will participate in the conference and co-moderate with Frank-Peter Ritsche the working breakfast on 4th October. The Breakfast will be dedicated to a very simple, but yet important question – How can project owners of today get things right before the basic design?
2 weeks before the Downstream Project Management we asked Herve Baron about his opinion about challenges specific to the Downstream industry. Herve is the author of “Oil & Gas Engineering Guide” published by Technip Editions in 2015 and Tendering Director in Prosernat.
Even though each Project seems to be unique, it is stunning to find out that they all have the same critical path: Purchase Orders of Equipment and Piping.
The following law can be observed on Oil & Gas Projects:
This above law is easily understood when considering the
- Piping construction takes a lot of time due to the large quantities and numerous tasks involved: pre-fabrication, erection, fit-up, welding, post-weld heat treatment, non-destructive examination, supports, test, painting, reinstatement, insulation, cleaning.
- Piping construction only starts once the Plant design is nearly completed.
- Plant design effectively starts once Equipment have been ordered and information on Equipment is received from Vendors. Indeed, the Plant design consists of the integration of Equipment into the overall facility. Without information on Equipment (dimensions, utilities required, positions of supports and nozzles, etc.) such integration cannot be done.
Two additional observations have been made on a large population of Projects:
- The duration of Engineering activities of Projects with similar number of Engineering manhours tend to be the same. It increases with the number of manhours.
- The duration of Piping construction of Projects with the similar tonnage of Piping tend to be the same. It increases with the number of manhours.
The above observations, which means that increasing the number of resources does not allow to reduce the duration, can be explained by the fact that an increased number of people involved is less easy to co-ordinate, results in additional interfaces, delays in communication and lower productivity.
Combining the above observations, one comes to the conclusion that the only means to influence the duration of an EPC Project is the early placement of the purchase orders for Equipment.
This rule is very often ignored by both contractors and owners. I have seen numerous jobs where Equipment orders were very much delayed and both client and contractor continued to think the project would be delivered on time. In all cases the project completion suffered the exact same delay as that of the Equipment orders, which proved the above rule to be right.
Every member of an EPC Project execution team should bear the above rule continuously in mind in the early stages of the Project.
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