Focus Areas In Epc Projects In Oil & Gas Industry -Project Management In Practice
Mr A M Joshi,Project Manager, L & T Hydrocarbon Engineering Ltd
Dr Hariharan Subramanyan, Faculty, Larsen & Toubro Institute of Project Management

With the low oil prices adding fuel to the Global economic crisis, the competition in the EPC industry is intense with negative impact on the profit margins. The market complexities are compounded with increasing stakeholder's expectations from EPC companies. It is therefore important that project managers understand the thrust areas in EPC projects of oil and gas industry and identify key success parameters. This article suggests a few measures that project managers can adopt & practice for successful delivery of EPC projects.

EPC Project Management in Oil & Gas industry covers Engineering (such as Basic engineering & multi-disciplinary detailed engineering), Procurement, and Construction, Commissioning, performance testing and Start-up. These projects also involve high degree of complex automations and support services to facilitate sustainable and reliable plant operations once commissioned. As many projects are carried out in remote locations under challenging socio -politicaleconomic environments, it is important that the best project management practices are identified, chosen, adopted and effectively implemented.

Project Management - "First Time Right"
It is a fact that today's demanding customers not only expect timely completion of the Project, meeting the highest technical, quality and safety standards, but also expect that the project must achieve flawless Start-up as well as ramp up the commissioned unit to its operating capacity in the shortest possible duration.

In modern times Project Management in Practice focuses beyond providing EPC project delivery approach with an Integrated EPC Plan. Addressing the challenges faced during execution EPC projects in Oil & Gas industry can set a possible path to successful project completion. Few common challenges faced can be Safety ,Flawless start-up, Risk mitigation ,Preservation of Critical equipment's, Stores management , Front availability, Ensuring availability of critical equipment's, team coordination and inadequate EPC coordination & Alignment . Allocating Trained and Skilled manpower is also found to drive many of these challenges in EPC projects in Oil & Gas industry

The overall performance of few projects that were executed by various contractors in the past, were analysed for a select parameters and the finding discussed in the following Section followed by a case study of successful shutdown project.

Many a times, the failures can be attributed to poor engagement of all stakeholders of the project. It is therefore absolutely necessary for an increased and involved engagement of each stake holder at all levels right from the project initiation phase till handing over. This is referred in this article as "first time right approach". Interestingly, Out of seven projects that were selected only in three projects the criteria of "first time right approach" was satisfied showing 43% of the cases actually meet the success requirement.

From the statistics it is seen that there is an increasing awareness of implementing safety throughout the project life cycle.70% of the projects had good safety record while 30% had scope for improvement.

Like safety Human factor and trained and skilled manpower is an equally important for project success. Although there is a scope for improvement several socio - economic factors dominate and govern this complex resource allocation.

Aligning with the moving trend and technologies, investing in latest tools for efficient and effective project management is an initiative which is driven more by the company culture than the project team. However the Project team can proactively allocate a budget to invest in the latest tools and software's and show case its effectiveness in project success.

Achieving a Flawless start-up is a dream of every customer which the EPC contractor is expected to fulfil. It is up to the contractor to take initiatives and various steps to move toward a common goal, right from project inception by efficiently and effectively using the Project management techniques.

Table 1 on the next page shows the matrix of a few select success criteria Vs their implementation in each project.

Project integration refers to identify, define, combine, unify and coordinate with other processes and project management activities with the process group for managing the stake holder's expectation and project delivery with a better understanding of the scope, risk and constraints associated with the project. This can also help the project team to effectively conduct Value Engineering, Constructability review, Project Safety Analysis and get the Risk Profile that represents the actual project scenario.

Within L & T Hydrocarbon Engineering, the concept of Integrated Planning has been successfully implemented to execute five complex and large Oil and Gas projects for Domestic and International clients. The minimum value of the project was above 100 Million USD and a shor test delivery amongst the projects was of 24 months.

Case Study Project - Annual Plant Shutdown
The case under discussion is Implementation of 2 Shutdowns at a project site in western India. Although the job involved around 45 to 50,000 man -hours spread over 11 days, extensive use of project management techniques could help to efficiently complete each of the two shutdown project.

The job involved multiple and critical activities during the plant Annual Shutdown scheduled in peak summer months. The team had only 182 days to plan and execute the shutdown work, with several long lead supplies.

With no precedence of executing such critical activities in a very short duration, there was absolute need for meticulous integrated planning.

The team started with the preparation of Project charter as part of integrated project management plan. Generally project teams use the Charter in understanding the high level deliverables, justify the project, authorize the project manager to initiate the project, to list assumptions and to identify risks. Only in few cases it is found that the teams make an effort to identify stakeholders and list success criteria in the charter. This is attributed to limited time available project teams and in most cases the teams focus more on execution to avoid failures and in the process run the risk of missing success criteria!

The team in the case project understood the risk of having a poor project charter and therefore team focused and spent quality time on understanding the customer expectations and clearly identifying those factors that would be considered crucial success criteria for the project. With all the initial assessment done the Initial Estimated Shutdown duration was over 20 Days but the charter outcome reduced it to maximum of 11 -12 days.

Figure 1 below shows the a few parts attended during the shutdown.

The project team also realized that extensive engagement of all the stakeholders was the key to make an integrated Plan and roll out a reasonable and realistic schedule. The schedules were created from work packages that were derived using a work breakdown structure.While making the WBS and work package, factoring constructability was given highest priority and allocating additional resources during engineering phase to incorporate features for minimising construction durations.

Ensuring team buy in while creating work packages and assigning responsibility to team members helped in controlling the project as well . The meticulously worked out time and resource allocation had a bottom up approach bringing in great sense of ownership amongst each stake holder and sense of fulfillment at the end of the shutdown. By preparing a L5 level micro schedule Resources allocation on hourly basis could be achieved. During execution, working 24x7 progress monitoring was done every 3 hours in a 12 hour shift to take corrective actions driving timely completion.

Extensive planning of shutdown also involved preparation of job cards containing detailed information on time, manpower, equipment, consumables, location of the job, etc. for each activity with the work packs.

Presence of customer's team at engineering centre helped speed up approval and review process and shorten deliveries. Engineering was driven based on front Generation than progress. Modularisation, skidding , pre cast structures, foundations were a few possibilities for reduced construction time at the same time allow flexibility for any site modification or changes. Identifying work packages owners could bring in sense of ownership, accountability, better monitoring & control and timely completion. Identifying Cross functional dependencies called for additional dedicated resources, but the results compensated the efforts. These were some of the good practices adopted in the project.

Performing a detailed Risk Reviews helped to mitigate all possible eventualities as there was very little scope for corrective action in case of any major event. In the present case ,two identified events as with very low probability of occurrence, actually occurred which in reality would have created catastrophic impact. The exercise resulted in mitigation of all possible risks that could be envisaged. Having recognised and value the importance of safety, allocating budget and resources for strict implementation of safety norms at every project stage, within the office and residential premises was never a constraint . There was focus on continuous on-site safety training program supported by initiatives and incentives to sensitise project personnel for safe execution.In the given case despite taking special efforts to take precaution at every stage, there was a near miss incident during wee hours of a night shift. The investigation pointed to lower lux level in that area. The motto of ZERO Lost time Incident can be aimed at only by bringing in safety awareness among every level and intensive training of key personnel at specialised institutes like L & T Safety Innovation School. Actually the budget for implementing Job and Human safety was very small as compared to the loss in case of an event .

Human factor played an equally important and crucial role in execution of shutdowns where 24x7 working with intense and demanding activities is mandatory. Extending facilities even to workmen in line with International standards and practices was on top of the agenda and another major contributor to successful project.

In the case discussed the Risk Review, Job Safety Analysis, Method statement approach for Execution phase pre and during shutdown helped in successful execution of the shutdown project with in the Shutdown window . This is an example of how successfully shut-down project can be implemented by an effective combination of empowered Project Management Team, collaborative Client and efficient use of Project management techniques led to timely completion of the projects.

With ever increasing size and complexity of EPC projects worldwide, efficient use of Project management techniques has no substitute. As Project Management is a vast subject by itself and we have tried to capture few success criterions which can be explored, adapted, refined, customised and implemented as it may suit.

A robust and realistic schedule factoring risk, safety and quality and contractual requirements can give a larger picture for the project manager. Customer's engagement at engineering centre is crucial as is a detailed constructability study for exploring options to reduce construction time with improved flexibility.

Safety :
  1. Project leaders can recognise and value the impor tance of safety, at every project stage, offices and residential premises to allocate sufficient budget.
  2. Minimum Lost time Incident be aimed at by bringing in continuous awareness amongst the projec t team on the Safet y policies and procedures applicable to the project and ongoing On-site safety training program to ALL.
  3. Improved ratio of Safety supervisors to workmen (1: 30 to 1:50) is a metric that needs to be adopted and implemented across all EPC projects.
  4. Training of key personnel at specialised safety training centres such as L & T Safety Innovation School is recommended.
Project Controls:
  1. Factoring constructability of each work package can be given high priority while creating WBS and work package.
  2. Adopting Front loading approach to engage all stake holders, allocating more engineering resources to minimise construction durations.
  3. Schedule can be made Robust and realistic by factoring Risk, Safety, Quality, contractual requirements for each work package.
  4. Project manager can have a larger picture of the project by Identifying Cross functional dependencies requiring additional dedicated resources.
  1. As engineering controls the fate of the Project, value engineering can lay a strong foundations.
  2. Active participation of Customer team at engineering centre can speed up approvals process and shorter deliveries.
  3. Participation of client's operation team during every 3D model review, can bring in points on operational safety to move towards 'First time right' and "Flaw less start-up".
  4. Given a situation, driving Engineering to create work fronts for Critical activities /equipment's may be a more preferred option over an overall engineering progress.
Risk Profiling:
  1. Proactively and continuously Risk profiling each Work Package throughout the project life cycle is recommended.
  2. Integrating risk with other Project management function highlight impact of other factors on the project.
  3. Mitigating risks in the initial project phase can influence project scope,quality, and time and cost positively.
  4. Risk profiling and mitigation for shutdown jobs is highly recommended.
  1. Inputs of a detailed constructability study in the initial project phase can optimise plant layout as well as help explore the possibility of Modularisation, precast structures/foundations, heavy lifts etc.
  2. Pre-fabricated/modularised concept has multiple benefits in reduced construction time and flexibility, for changes as well as reduced project delivery times.
Conclusion EPC Project Management in Oil & Gas industry demands the best project management Practices and this ar ticle is an attempt to present the common challenges faced in most the projects and an approach to tackle them through a case study approach. The study has resulted in the some insight which can be possible actions for Project managers,