Enabling new technology projects (part 3)
Herve Baron
Engineering expert, Author of "The Oil & Gas Engineering Guide" (Editions Technip)
This is the continuation to?
Do we devote enough time to optimise the plot plan (Equipment layout)? The Equipment location determines to a large extent the length of pipes which has a significant cost impact. The Equipment shall be positioned to minimise interconnecting piping lengths, especially exotic material/high pressure/large lines. The manual (Bausbacher and Hunt’s Process plant and piping design) recommends doing this by means of studying different alternatives and drawing, for each one, a line diagram to quantify the piping lengths.
How often did you see this done?
How often do we ask Vendors to come up with cost reduction ideas? How often do we ask them to challenge the requirements of our specification?
Don’t we often err beyond the functional specification, i.e., too far in the technical description? In such a way, we deprive ourselves of the creativity of vendors to find cost effective solutions we would never have thought of.
Should we not employ as many minds as possible to find cost effective solutions? If so, why don’t we stick to a functional specification, i.e., a duty spec, as much as possible and let the vendors come up with technical solutions to fulfil this duty?
How often do we identify and qualify new suppliers and add to the Vendors list? Don’t we always resort to the same lot?
I believe the cost conscious approach will only work if instilled in each and everyone of the Project team.
The new approach is required from all Project functions, not just Engineering which sets the technical requirements but, among others, Procurement/sub-contracting. How best to package/de-package, for instance, strongly impacts the cost. Finding the best packaging strategy, e.g., leaving the Civil (or all Site) works outside the package, allows to increase the number of bidders, etc.
For all Project functions to be cost conscious, leadership from the PM is key.
The obstacles to overcome?
The legacy: Engineering contractors employed in developing new technologies projects are more often than not the ones employed in Oil & Gas projects. They are used to being in the delivery mode, not the creative think out of the box mode.
They are used to Oil & Gas standards. These are onerous. Oil & Gas plants were designed to be super reliable, as the throughput was so valuable. Production should not be interrupted at virtually all costs. Super reliable equipment (to the API standards), with spare ones on top, were used.
Applying these standards to new technologies projects is a death sentence..
However, do Engineering contractors have other standards at their disposal?
There is a bit of homework here, don’t you think?
Besides the standards, the technical definition relies on Client specifications. Again dead easy for Oil & Gas projects: you just need to apply the Client specifications, Shell DEP, TOTAL GS, etc.. No need to challenge anything.
This does not encourage the thought process of setting the just right technical requirements in a cost conscious way.
Here also homework is required.
One effective way to mitigate the two issues mentioned above, the standards and specifications, is to employ an Engineering contractor that does not come from Oil & gas but has another background, such as agro plants.
For a biofuel plant for instance, employ a contractor involved in sugar plants. Indeed the biofuel plant is very similar to the sugar plant, the difference being that the sugar is further fermented into alcohol.
However, how many such contractors are available, in particular of a suitable size to do an EPC/EPCM, and how to identify them?
Article to be continued...
Please share your thoughts/experience.
transferring from conventional plant to the new technology plant and equipment is always a challenge for me . how much should we sacrifice the less critical parts of them
Project Delivery Specialist
6 个月Cost conscious, leadership from the PM- Excellent points . The maturity and mental frame of PM in supporting Teams to navigate cautiously to better understand the nuances , inter dependencies bringing the technology to mix of systems, processes, workflows with people will be key. Now on the Vendor piece Sandy Vasser has been providing some great perspectives . https://www.dhirubhai.net/pulse/prove-you-best-supplier-every-project-sandy-vasser/
Discipline Manager Electricity and Instrumentation E&I at Group-IPS Planning electric power distribution systems of industrial facilities
6 个月Really interesting article that relates what we often experience as EPCM contractor and especially on the engineering side of it. Sometimes defining too much brings indeed additional costs because we are going out of cost effective solutions available at the moment on the market.
Excellent article. You have raised vital points that align with the challenges we face in the oil and gas industry. As a Commercial professional I know firsthand that optimizing the plot plan in any oil & gas project is crucial for cost-efficiency. Prioritizing equipment layout to minimize piping lengths, especially for high-cost materials, delivers significant financial benefits. Yet, this step is often underemphasized. I fully agree that involving vendors early, challenging specifications, and encouraging them to propose cost-saving innovations should be standard practice. Seen great success by measures like bringing in third party consultant(s) and incentivising FEED Engineer/Vendor/contractors for value engineering exercise often leads to more cost-effective solutions.?