HERVE

BARON

Today’s Projects:
Challenges & Key
factors of success

Hervé Baron
Nov 29th, 2010
HERVE Today’s Projects:
BARON
The main challenges and the Key factors of
success

Overall Contractor responsibility: EPC (Engineering, Procurement,

Construction)
Mega Projects: > USD 1bln
Multiple locations & actors: Low cost centers, Construction sub-contracted
Schedule: Drastically tightened
HERVE Today’s Projects:
BARON
The main challenges and the Key factors of
success

Overall Contractor responsibility and mega project: Client leaves interface

responsibility with Contractor
On-Shore vs Off-Shore, different set-up:
On-shore: must set-up Temporary Site facilities and camp in remote
location vs Off-Shore: at a shipyard
HERVE
BARON
Project execution synoptic

Design Procurement Manufacturing Shipping

Construction & Inspection &

Installation Hand-over
erection tests
HERVE
BARON
What are the main challenges ?

• Technical ?

• Cost ?

• Quality ?

• Schedule ?

• Size ?

• Safety
HERVE
BARON
What are the main challenges ?

Technical?
The processes and technology are proven, no prototype.

Quality:
The project execution systems are well developed and standardized: vocabulary,
methods and tools (planning, progress measurement, management of change, plant
mechanical completion etc.) and fairly standard throughout the industry.
Cost?

Lump Sum Contract: quantities increase & market conditions risks with
CONTRACTOR. Precise specifications, list of approved vendors make the Contract
well nailed down for Company.

Schedule:

Large projects must now be completed in 36 months vs 45 months a few years ago.
Schedule risk is with CONTRACTOR: both liquidated damages and time related
costs
HERVE
BARON
What are the main challenges ?

Size:

Not human! Mega LNG Project 75,000 tons of equipment, 42,000 tons of steel (6
Eiffel towers!)

Multiple and ever changing actors, e.g. Engineering home office+ low cost centers

Construction is sub-contracted

The challenge is to keep control of the project

Safety challenge

Mega Projects
25,000 people at peak, 80 nationalities
Various levels of education, supervision, time pressure

Diffusion of safety culture: raise awareness, STOP card etc.

Management leadership: leadership by example: safety walkthrough, safety talks…
HERVE
BARON The Key factors of success?

Schedule:
=> adapt to concurrent rather than sequential execution
• Get the design input early… but get it right!
• Avoid changes and re-works
• Integrate the E, P and C work processes

Size:
=> Develop and implement precise controls
• Know your actual progress!
• Control your suppliers and sub-contractors
HERVE
BARON The Past: sequential execution

ENGINEERING Drawings

Bill of
materials

PROCUREMENT

CONSTRUCTION
HERVE
BARON Today: concurrent execution

ENGINEERING PROCUREMENT CONSTRUCTION

ENGINEERING

PROCUREMENT

CONSTRUCTION
HERVE
BARON Today: concurrent execution

ENGINEERING PROCUREMENT CONSTRUCTION

ENGINEERING

PROCUREMENT

CONSTRUCTION
Tightened schedule changed the execution from sequential to concurrent.
This drove the project to sharpen controls over its execution: identify and focus on critical path,
pro-actively manage interfaces etc.
HERVE
BARON Today: concurrent execution

ENGINEERING

Bill of Bill of
Materials 1 Materials 2 Drawings 1 Drawings 2

PROCUREMENT
CONSTRUCTION

Derived challenges:
• Get the design input early
• Avoid changes and re-works
• Integrate the E, P and C work processes
HERVE
BARON Today: concurrent execution

ENGINEERING

Bill of Bill of
Materials 1 Materials 2 Drawings 1 Drawings 2

PROCUREMENT
CONSTRUCTION

Engineering/Procurement interface:
Close coordination for anticipated orders and revision of quantities, including cancellation etc.
Engineering/Construction Interface:
Prioritization based on start-up and construction sequence
Understanding of mutual needs, agreement on deliverables
Regular up-dates (work volumes and delivery schedule) by Engineering to Construction
Integration of tools (IT)
HERVE
BARON Getting the design input early

Engineering is the integrator of the Plant equipment, and is highly dependent

on vendor data

Process Equipment
simulations list & duty

Equipment
inquiry &
Cooler
selection

Vendor Vendor data

Engineering & drawings

Foundation
drawings
HERVE
BARON But get it right!
Engineering must be right first time, which requires experience, good
coordination between disciplines and anticipation

Safety valves
duty

Number, Safety valves

size inquiry and Safety valves
estimates purchase sizing & drawings

Safety valves
location & piping
routing
Piping calcs &
supports
Supports Steel structure
& loads estimates design and
drawings

Purchase steel
Fabrication
Shipping Structure
at Site
HERVE
BARON Learn more, much more on Engineering

A unique synthesis for the

busy Project professional

 270 pages
 300 illustrations
HERVE
BARON Learn more, much more on Engineering

Table of Contents
 HERVE
BARON Learn more, much more on Engineering

Order direct on the publisher website:

http://www.editionstechnip.com/en/catalogue-
detail/1111/oil-gas-engineering-guide-the.html
HERVE
BARON Integrate the work processes

The Construction Sub-contractor is paid a

fixed amount for a ton of steel installed
It is uncertain about the actual delivery
schedule of drawings and materials, wants
to avoid stand-by

Engineering to up-date the Construction

sub-contractor with work volumes and
delivery schedules for Construction sub-
contractor to plan and mobilize efficiently
HERVE
BARON Integrate the work processes

Develop Engineering /
Construction synergies

• Constructability reviews
• Pre-fabrication
• Engineering schedule to
match Construction
priorities/sequences
• Engineering deliverables
tailored to construction
execution needs
HERVE
BARON Avoid changes

Sources of changes:
• Inherited/Open technical issues
• Design development & Reviews
• Client’s new requirements
• 3rd party at interface

Avoidable/
Unavoidable ?

Resist avoidable changes – Contractual management

Impact of changes is exponential with time: implement early!
• Interface management,
• System to identify all impacts and track implementation of changes
HERVE
BARON Know your Project’s progress

The principles:
• Draw the list of work items, total = 100%
• Actual progress = Σ individual progress over all work items

The challenge:
• The list of work items keeps changing – difficulty to keep track
• The total work volume (100%) keeps changing
• Increase by up to 30-50% are common

The keys:
• Overall progress from detailed breakdown by individual work item/steps
• Monitoring from up-to-date list of work items
HERVE
BARON Set-up an accurate progress measure

The overall picture is accurate…

If :
• its derives from progress of
elementary work items,
• It reflects the true work volume,
i.e., is based on up-dated list of
work items,

Only through detailed status, broken down by individual work item

and work step completion can one ascertain the exact progress of the work.
HERVE
BARON How are the electrical works doing?

How to monitor construction progress, the case of Electrical cables for a FPSO:
254 km of Electrical cablesto pull, gland, terminate. What is the progress?
HERVE
BARON How are the electrical works doing?

Individual item (cable) and work step (pull/gland/terminate) status

Σ
HERVE
BARON
Control your suppliers and sub-contractors

“ You get what you inspect, not

what you expect “

• Know your supplier work

process/steps
• Implement tight follow-
up/expediting
• Access you supplier's systems
 HERVE
BARON Know what drives the overall duration

For the explanation, please go to:

”The Oil & Gas Engineering Guide”, 2nd Edition”, Herve Baron, Editions Technip, Mars 2015
http://www.editionstechnip.com/en/catalogue-detail/1111/oil-gas-engineering-guide-the.html
HERVE
BARON Know what drives the overall duration
HERVE
BARON Go for more!

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