Most Common Challenges for EPC Companies

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Most Common Challenges for EPC Companies

Engineering, procurement and construction (EPC) is an important practice of contracting agreement in the construction business. Preliminary investigation has revealed that the most common internal process challenges in the EPC space include the lack of communication for information sharing and cross-office collaboration, the need to streamline workflows, technology misalignment, and/or issues with front-end engineering and design (FEED). After exhaustive research, we have identified some case studies where these challenges have been successfully overcome.

Lack Of Communication For Information Sharing And Cross-Office Collaboration:

  • According to greater than half of "AspenTech’s Concurrent Process Engineering survey, February 2018" respondents, "information sharing across offices needed to be improved".
  • A number of stakeholders in this industry, like architects, engineers, and foremen are extensively scattered when compared to other industries.
  • Prompt communication is key.
  • For instance, an apparently minor change to a materials order, could essentially boost timelines or costs if made with a great delay.
  • This has driven many construction-technology start-ups to concentrate on "tools that promote digital collaboration—the online exchange of information—throughout all E&C project phases".
  • To cite an example, "Fieldwire’s construction management software is a fully featured blueprint management solution, so people in the field can view, edit, and share drawings".
  • This construction application makes it simple to utilize the latest information and drawings and also to "view plans on iPhone, iPad, or Android".
  • The development and availability of many advanced technological software for contract management, performance management and document management has made the overall process simpler and easier.
  • "Back-office integration, involving functions such as accounting, finance, and human resources, can help companies to access and exploit valuable project data on finances, costs, and schedules".
  • For instance, the construction management software BuildSmart "integrates Costing, Project accounting and Enterprise accounting for real-time analysis & effective construction management".
  • Use of such software makes the storage, access, modification and communication of information faster and easier in this industry.
  • The EPC industry is unsettled by forces within and outside its space which has triggered many futuristic firms to take actions to implement process and technology enhancements that have primarily altered the method of their operation.
  • The new approach is one which is "model-based and data-centric, simultaneous and collaborative".
  • Vista Projects, an EPC firm has been making efforts to make this new mode of operation a reality.

Case Study 1: Vista Projects

  • Vista projects is in the fourth stage of a long-term initiative to enhance its project execution.
  • "In the current phase, the EPC firm is working to create a robust data model across the engineering disciplines, following a previous phase in which the company established digital project hubs for storing all project information and integrated its design authoring tools".
  • Consequently, the EPC company will be handling workflow optimization.
  • These actions have supported the company to reduce cycle times and enhance communication with its customers.
  • The digital execution architecture at Vista Projects has three significant parts, namely
1. "single source of data" utilized across all parties and disciplines participating in engineering and design;
2. "a technical data hub or portal;"
  • Various disciplines of the project function in parallel.
  • True collaboration occurs when the diverse disciplines work together.
  • "The traditional model involves data distributed across multiple systems, with each system having its own unique data format, across multiple teams and locations".
  • These different data sources are impediments to "information flowing between project participants, resulting in a reliance on spreadsheets as a data gathering or analysis tool".
  • "Compiling data and entering it into spreadsheets takes time, leads to mistakes, and is not an effective way to understand how a project is performing".
  • The traditional execution model can result in cost and schedule overflows.
  • Using digital execution architecture, however, can reduce the project timeline and decrease the cost of engineering work when compared to the traditional system followed in the EPC firms.
  • Data accuracy is improved in the digital architecture when compared to the isolated and paper-based systems which results in decrease in project costs.
  • Workforce hours are decreased resulting in shorter engineering timelines.

The Need To Streamline Workflows:

  • Traditionally, the workforce in the EPC industry is geographically scattered and, as information needs to be shared between the various stakeholders, workflows need to be streamlined as has been discussed above.
  • When innovative initiatives need to be taken, the workflows need to be streamlined as well.
  • The EPC firm Fluor has made this a reality.

Case Study 2: Fluor:

  • EPC firms need to develop relevant competencies in-house and build a database of proof on the applicability and advantages of advanced building materials (ABMs) to be able to offer clients with "a convincing quantitative case for using ABMs".
  • Consequently, contractors need to "institutionalize the knowledge transfer to local project teams, so the decision-makers at a project level have all the relevant up-to-date information and can thereby optimize their decisions on materials".
  • Fluor has created "an internal team of experts on concrete to advise the client at an early planning stage, to develop a foundation of data based on experience and to create a convincing business case for greater use of innovations (such as 50%-faster-curing concrete) in the market".
  • Fluor has thus streamlined its workflow process to incorporate innovation into its EPC practices.
  • Fluor has also been able to achieve reduced capital expenditure of 20% to 40% due to their introduction of modular concepts from offshore construction to onshore projects such as chemical plants.
  • Fluor has also been able to reduce its direct scaffolding costs by starting the planning phase of projects the early pre-engineering phase.

Technology Misalignment:

  • When an EPC company pilots a new software tool or uses too many software tools, large-scale adoption becomes a challenge.
  • In other cases, the novel technology initiatives fail to produce the anticipated results in terms of the key performance metrics.
  • Some reasons for this failure are inadequate commitment of EPC companies towards digital initiatives, challenges with "company-wide rollout" and "lack of compatibility with legacy systems".
  • An EPC firm, Bechtel has overcome these challenges successfully.

Case Study 3: Bechtel

  • Bechtel set up a "firmwide process for testing new technologies, integrating new solutions into work flows, and generating more innovative ideas."
  • The technique to innovation at Bechtel is "to learn safe, learn fast".
  • They adopt "a six-step internal process to test assumptions, integrate solutions in the business, and ensure a steady stream of diverse ideas"
  • The six steps are:
1. "Ideate"
2." Evaluate"
4." Pilot"
  • Through this technique, they were able to achieve 30% schedule enhancement and 20% decrease in cost in their results.

Issues with front-end engineering and design (FEED):

  • For issues with front-end engineering and design (FEED), the EPC firm can acquire the services of a firm offering FEED services like Kellogg, Brown & Root (KBR).

Case Study: Kellogg, Brown & Root (KBR):

  • Kellogg, Brown & Root (KBR), partners with "government and industry clients to provide purposeful and comprehensive solutions with an emphasis on efficiency and safety".
  • KBR offers front-end engineering design (FEED) services for projects worldwide regardless of size and complexity, onshore and off.
  • KBR is an expert at providing the optimum level of detail for a FEED to allow the successful delivery of projects.
  • KBR has been involved in FEED services for the 1,800 MTPD natural gas–fed ammonia plant project for its client Moron, Venezuela. KBR used it proprietary ammonia technology, KAAP™ (KBR Advanced Ammonia Process) to successfully complete the project.
  • The company has also recorded numerous successful projects using their FEED services.
Sources
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Quotes
  • "According to these industry survey respondents, the top reasons for needing to improve processes include: Too many silos The need to streamline workflows Constant changes during FEED Too many different software packages Technology misalignment."
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  • "Bechtel established a firmwide process for testing new technologies, integrating new solutions into work flows, and generating more innovative ideas."
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  • "Fieldwire’s construction management software is a fully featured blueprint management solution, so people in the field can view, edit, and share drawings."
  • "Our construction app makes it easy for everyone to use the latest information and drawings."
Quotes
  • "We follow a six-step internal process to test assumptions, integrate solutions in the business, and ensure a steady stream of diverse ideas."
Quotes
  • "Fluor has built up an internal team of experts on concrete to advise the client at an early planning stage, to develop a foundation of data "
Quotes
  • "Compared with the traditional model, digital execution architecture has the ability to shorten the project timeline and reduce the cost of engineering work."
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  • "Using a digital execution architecture for developing capital projects and operating capital assets is a way of overcoming the problems with isolated information systems and paper-based work processes."
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  • "At KBR, we partner with government and industry clients to provide purposeful and comprehensive solutions with an emphasis on efficiency and safety."
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  • "“KBR knows the optimum level of detail required for a FEED to allow successful project delivery.”"
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  • "1,800 MTPD natural gas–fed ammonia plant"
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  • "BuildSmart integrates Costing, Project accounting and Enterprise accounting for real-time analysis & effective construction management."