Walter A. Salmon - Practical Risk Management for EPC / Design-Build Projects

A great deal of the loss experienced on EPC Projects is caused by the need to redo work, and much of that reworking is caused by the lack of integrated working between the various Discipline Engineers within the Project's Engineering Team (such as Electrical Engineers, Mechanical Engineers, Civil Engineers, etc.). This can often lead to such problems as:

1 delays in the Engineering work due to the need to redo drawings, plus associated extra costs,

2 purchasing of wrong materials, goods, and equipment,

3 late ordering of the correct materials, goods, and equipment,

4 taking down and disposal of wrongly installed components (and, sometimes, demolition of work already completed), and

5 consequent loss of time on the Project's Critical Path.

All too often, this situation arises because there is no effective way for information (documents, drawings, and data) sharing between the various Engineering Disciplines, each operating with different specialised systems that do not readily ‘talk’ to each other. 9 This is supported in the statement contained in the document titled ‘An Introduction to ISO 15926’: ‘Any who have worked in an engineering environment will know that there is more than one CAD application in common use, and that on a large project all business partners do not always use the same one’. 10 This lack of system integration inevitably leads to Engineering delays that then impact horribly on both Procurement and Construction activities. As the need to reduce costs and improve efficiency in the construction industry increases, it will become increasingly important for Engineering Departments to sharpen up and ensure that lack of inter-disciplinary dialogue and communication does not contribute to the occurrence of unnecessary rework.

This will inevitably require a Contractor to invest in a good quality enterprise-wide Electronic Document Management System (EDMS) that is capable of allowing documents and drawings to be shared between all Departments in real time, so that every Project participant can be well-informed at all times. However, this can prove to be a problem for those many Contractors who do not have their own internal Engineering design capability and, instead, sublet the Engineering design work to third parties. The resultant communication gap does not allow the Contractor to obtain enough real-time knowledge at any point to have confidence about the timely delivery of the Engineering outputs. Under such circumstances, it is not surprising to find that the Engineering mistakes are very often not discovered until as late as the commissioning stage, when the problem becomes an embarrassment, as well as being more costly and time consuming to rectify.

If the Engineering Department does not conduct the Technical Bid Evaluations (TBEs) in a timely manner, then there is a risk that the deadline for the placement of a critical Purchase Order may be missed. It would be best if the Procurement Department's personnel continually followed up on the status of all TBEs but, since most Contractors nowadays operate with minimal staffing, it is very possible that the non-arrival of an important TBE will not be spotted until it has become a highly critical issue. The Engineering Department's staff will also be under pressure to complete the engineering design work and, sometimes, the TBEs are seen as a distraction to the design activities. In addition to that, not all Engineers understand the necessity for adherence to agreed activity time-frames and, therefore, constantly need to be chased in order to get their outputs delivered on time.

A dedicated full-time Procurement Team may not have been set up quickly enough because the intended members of that Department are either busy on other Projects or have not yet been brought into the Contractor's company. This can happen on an EPC Project simply because the Procurement Department will not be required to be at full capacity until such time as a suitable number of Materials Requisitions (MRs) have been completed by the Engineering Department. This means that the staffing for the Procurement Department tends to arrive almost on a drip-feed basis until the full complement has been achieved. Consequently, even though the date will have been set for when the MR for the earliest of the critical Long-Lead Items (LLIs) is to be made available, the appropriate person may not be around in the Procurement Department in time to sound the alarm bell about the probable lateness of that MR. This may then become a major problem that is difficult to overcome. However, simple questioning of the Engineering Department's Work Package Engineer by the Procurement Department's Buyer would usually very easily establish whether or not the required MR will materialise on time.

I have experienced the above embarrassing situation occurring a number of times, and it was almost always impossible to make up the lost time for the LLIs involved. It was not the direct fault of the Procurement Department, since the delays/snags had occurred in the Engineering Department. However, the fact that the person next in line (the Buyer) was not around to chase for the completed engineering information meant that the Engineering Department's problem was allowed to drag on unresolved for too long. Nowadays, even if no EDMS has been set up for more direct communication purposes, a standard emailing alert system (such as Microsoft Outlook) can be utilised to issue reminder notices to check that essential activities are being progressed as required. This simple technique could prove of great benefit to the Procurement Manager before the full Procurement Team is in place on a full-time basis. However, I have yet to see even such simple, readily-available technology being utilised adequately. Ironically though, I have seen somebody who failed to use Outlook to remind them of an important work deadline employ it to remind them to leave work early so as to be on time for a doctor's appointment.

If the Construction Department does not complete the Red-Line Drawings in an orderly or timely fashion, then there is a very real risk that the commissioning activities will not be allowed to commence on time due to the lateness of the As-Built Drawings that the Engineering Department is required to produce. This problem is exacerbated in the situation where the Field Engineering work (particularly incorporation of the contents of the Red-Line Drawings) is not done on the Site but, instead, is conducted at the Contractor's Home Office. This problem is made even worse if that Home Office is in an overseas location compared to the location of the Site.

Another area of Project working that is all too often overlooked or not accorded enough attention is building an integrated implementation team that is working to the same objectives. I have observed that if the people on the tools can see that the Project Management Team members are concerned with the welfare and well-being of all staff when working in difficult overseas situations, then it can generate a good team spirit. I am not advocating that management personnel should jump into the trenches to help out with urgent cable pulling if the labour force is understaffed. However, I once saw that done to very good effect, and it demonstrated to a lot of the management staff (including me) the benefit of breaking down the traditional barriers that often still exist today between management staff and the manual workforce. I am referring more to the need to make the lives of the workers more tolerable in tough environments where they are far from their families and loved ones.