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OMAN EPC PROEJCTS SUMMIT 2015 SUMMARY AND RECOMMENDATIONS "Oman EPC Projects Summit is extremely important, particularly now, when the world is faced with the challenge of low oil prices. Oman EPC has created the platform whereby operations and service providers can sit together to redefine their projects to ensure success within these new parameters. Cost control is key in order to deliver projects as close to schedule as possible". Mohammed Al Harthy, Former CEO, Oman Society of Petroleum Services (OPAL) and Chairman of Summit Day One Question asked to Leandro Cuberos, Corporate Functional Head of Project Services, PDO after delivering his presentation on: ‘Defining key success factors for achieving best practice project management’, What is the one thing that is important for EPC contractors to know when working with PDO? Reducing the risk on contractors through EP + C contracts and how they select their project teams is considered to be very important.
PANEL DISCUSSIONS SUMMIT DAY ONE
INTERACTIVE PANEL DISCUSSION: Improving the transition from FEED to EPC phase Defining which departments are essential or influential in the design stage from the client stage Evaluating the impact of awarding the FEED process to a consultant versus a contractor Examining the result of assigning a project management consultant (PMC) to interface with the
client and EPC Contractor Panellists: Madhu Pillai, Projects Director, Kentz Engineering and Vice President – International Regions, AACE International Haitham Mokhtar (CEng/CMarEng),, Senior Projects Engineer, ADMA-OPCO Dipl.-Ing. Juergen Freisewinkel, Head of International Automation Solutions, Actemium Moderated by: Mohamed Al-Harthy, Former CEO, Oman Society for Petroleum Services (OPAL) Key points: With the drop in oil prices, it is critical to streamline and evaluate unnecessary costs Need to calculate value per staff member with a balance of experience versus new talent.
Evaluate skill-sets and move round organisation where they can add most value. Data management is very important in order to provide the opportunity to interpret it and
achieve value and reliable decision-making. Successful projects rely on the right amount of resource being available in the right place, at the
right time. The scope of work must be clear and defined.
PANEL DISCUSSIONS SUMMIT DAY TWO
INTERACTIVE PANEL DISCUSSION: Reviewing the impact of offshore E&P projects on Oman’s economy, industry and environment What are key opportunities and challenges of developing offshore platforms? Could these projects impact the shipping industry and risk of terrorist threats? Will there be an impact on the environment and how can we minimise it?
What lessons can be learnt from regional NOCs and EPC Contractors? Panellists: Akachidike Kanu, Facilities & Production Senior Engineer, Repsol, Spain Haitham Mokhtar, C.Mar.Eng/C.Eng., Senior Projects Engineer, ADMA-OPCO Ibrahim Fahmy (CEng/CMarEng), Senior Marine and Safety Specialist, ZADCO Moderated by: Mohamed Al-Harthy, Former CEO, Oman Society for Petroleum Services (OPAL) Key points: Opportunities for local contractors – installation and ancillary services. Offshore requires EPIC
contracts, I = Installation. Monitoring and maintenance is a challenge, technology is required and at the moment is
dominated by international players but there are plenty of asset management opportunities coming up.
Oman has deeper offshore requirements which require steep and narrow platforms enabled through heavy and advanced equipment and experienced engineers.
Offshore is double the investment. Transporting materials 100km offshore is a logistical challenge and the resourcing must be
carefully planned. Safety standards are very different in relation to the environment, this can be the difference
between which engineers can work onshore and offshore. UAE has learnt that lifecycle of platforms and equipment should be extended from 25 years to
50+ otherwise the number of modifications required to extend the life-cycle is cost prohibitive and time consuming. This needs to be considered in the design phase.
NOCs need synergy to standardise regulations, approaches and best practices. INTERACTIVE PANEL DISCUSSION: Balancing the objectives of the EPC client and Contractor in order to successfully achieve the project goals Summary of Round Table discussions A - D Understanding client goals, needs and requirements to align the offering and manage
expectations Determining what would help EPC clients to manage project risks Discussing what helps an EPC Contractor deliver projects more effectively Evaluating the impact of penalities and incentives in relation to contractor performance Examining development of contractor performance management systems Re-establishing alignment of contractor and client requirements
Panellists: Sayee Raghunathan, Engineering Specialist, CSD, Saudi Aramco Patrick Brady, Head of QA/QC - Qurayyah IPP, Hajr Electricity Production Company Alex Haynes, Regional VP Business Development Middle East, Amec Foster Wheeler Tarun Joshi, Organisational Development Manager, OCTAL Petrochemicals Graham Taylor, Manager of Projects –EURMENA, WorleyParsons Moderated by: Mohamed Al-Harthy, Former CEO, Oman Society for Petroleum Services (OPAL) Key points: Risk should be put with the person who is best placed to manage that risk. Client and contractor must collaborate to resolve conflicts, compromise is key to negotiating a
settlement without involving the courts.
A thorough and clear document keeping system is required in order to review and track decisions and actions required throughout project.
Penalties don’t motivate performance from the contractor, when scope definition is clear and concise, both parties must take a pragmatic approach and consider splitting the difference.
ICV and safety must be priorities and in order to ensure contractor wants to go above and beyond, must set minimum KPIs, stretch targets and financial rewards in order to align behavior with project/client goals.
Collaborative culture can be driven by the client from the start.
SUMMIT DAY ONE ROUND TABLES
ROUND TABLE: Establishing an in-house FEED office to align operational aspects of EPC projects Round Table Leader: Paul Bennington, Manager, PDO FEED Office, Petroleum Development Oman (PDO)
Risk: FEED variation – time! High set-up costs Relationship between contractor and company Not cost effective for small companies Consider scale of future portfolio of work Opportunity: Common platform for deliverables Controls costs Time saving Hire dedicated estimation staff
ROUND TABLE: Viewstar ICS integrated solution for automation - Value of integrated engineering through automation and SCADA Round Table Leader: Dipl.-Ing. Juergen Freisewinkel, Head of International Automation Solutions, Actemium
Full presentation can be reviewed on our website: www.omanepcprojects.com
Risks: Access in time Complexity of pipeline systems Availability Opportunities: Environmental issues Security Reliability Performance Efficiency, back-up Leak detection, leak localization Information in time Protect investment/assets Predictions, training Best practices: Network – pipeline Early involvement in design Continuous monitoring
ROUND TABLE: Managing EPC project execution risks during front-end engineering and design (FEED), construction and commissioning phases Round Table Leader: Haitham Mokhtar, Senior Projects Engineer, ADMA-OPCO RISK OPPORTUNITY BEST PRACTICE FEED Scope creep
Contractor licence to remain valid Schedule estimation Architect interface
Possible change with minimum cost Identify standards
Competitive FEED Constructability reviews FEED endorsement Extensive FEED Risk feasibility HSEIA
EPC Poor cost estimation Schedule estimation Local legislation changes Poor FEED Availability of historical accurate data Conflict with landlords and getting proper approval
Low oil prices EPC contractor is FEED contractor Operators to listen to contractor Involve operations
Updated vendor list LLI procured by company Laser scanning Q3D models
COMM Poor EPC quality Poor FEED Operational changes Non qualified team Sudden travelling requirements
Early involvement of Comms team
Pre start-up audit Commissioning pack management (system/sub system) Availability of GOOD commissioning specialist
GENERAL Utilise all available lessons learnt
Communication plan Interface management Updated vendor list Phase to phase communication MOC (Management of Change) Document control Early environment of operations team
ROUND TABLE: Improving the quality of front-end planning by utilising a Project Definition Rating Index (PDRI) as a risk management tool Round Table Leader: Madhu Pillai, Projects Director, Kentz Engineering and Vice President – International Regions, AACE International Design XXXXXX 0.5 Planning XXXXXX 0.75 Cost XX 0.25 Risk XXX 0.25 It was agreed that planning and then design are the most crucial components in delivering projects.
ROUND TABLE: Exploring the impact of international quality standards on the outcomes of EPC projects Round Table Leader: Patrick Brady, Head of QA/QC - Qurayyah Independent Power Plant (IPP), Hajr Electricity Production Company
RISK OPPORTUNITY BEST PRACTICE PROFIT Not complying with
quarterly plan Time schedule Inadequate knowledge when developing docs Non specific Lack of knowledge of the system
Standardising operations Identifying waste Simplification of methods of work Systemised work practices Tailor procedures to specific projects Thinking for themselves
Pre-audits and continuation KPIs Line of defense Follow procedures Ensure procedure fits purpose – validate pro Combine with HSE Report to highest level
Observations Improve the company’s performance Identification of problems at early stage
REPUTATION Integrity Deep water horizon Only as good as your last job Quality’s remembered long after price’s forgotten Increased re-work Reduces business
Regular audits and system in place Rules and responsibilities Repeat business Increase in enquiries
Benchmarking Other industries
STATUS V-V QA taken as a means in itself as opposed to a means to an end Lack of understanding of the costs of trade off
Robust QA Certification to ISO 9000
ROUND TABLE: Evaluating the feasibility of various client contracting strategies for the EPC Contractor in Oman Round Table Leader: Alex Haynes, Regional Vice President Business Development Middle East, Amec Foster Wheeler CLEAR OWNERSHIP
ALLOCATION OF RISK
ALL CONTRACTOR ALL CLIENT
LSTK EPCM E&P RR Benefits:
Confirmed price Defined Schedule Can take advantage of low price
Easier to mould the contract to incentivize quality, safety and ICV Possibility to Convert to
You can control Quality & Safety Work with the contractor in a Partnership
Can control Quality, safety and ICV Needs to work as a true partnership – so
Contractors better at EPC – let the specialists do this type of work. Let clients focus on what they are good at. Clear Ownership You need a PMC
LSTK once the project risks and execution are more defined Ability to order LLI’s early to assist schedule. Bulks can be Lump Sum. You may need a PMC
Can drive meaningful ICV Ability to order LLI’s early to assist schedule. Shortens the tender process Defined tender packages for the Construction scope – can drive down costs Time/Schedule delays Cost? E&P contractor can convert to an IPMT.
involves more client effort Can cap man hours to avoid over-engineering if needed Able to drive innovation for a project Contractor can roll into IPMT role in the later stages Short tender process
Issues and resulting behaviours: Long tender process Drives the contractor to Variations or Claims Cutting corners on Safety or Quality Does not lend itself to meaningful ICV Short term solutions can cause issues for Ops and Maint for future years. No control over quality of resources
Long tender process You are still open to claims from subcontractors.
Need a strong interface team between client and contractors Client management increases – need a large owners team Silver plated engineering risk Control of Change can be difficult in the early stages You are still open to claims from subcontractors. No clear ownership
Risk of Increased man hours Risk of Cost increases Can lead to Gold plated engineering Schedule risks Needs a strong and mature client team Who owns the project and responsibility? RR mindset in the contractor.
ROUND TABLE: CLIENT PERSPECTIVE: Responsibilities of client, project managers and contractors to avoid disputes and claims in EPC projects Round Table Leader: Tarun Joshi, Organisational Development Manager, OCTAL Petrochemicals
Full presentation can be reviewed on our website: www.omanepcprojects.com
Key points: Remedy Collaboration Contract – use as a management tool Records Partnership Periodic review Improve capabilities of contracts Trust It was agreed that the ‘client’ is the most responsible for avoiding disputes, as opposed to EPC contractor, project manager, FEED consultant etc. The contract was considered to be the biggest issue for client, as opposed to internal problem, delays, vendor rating, design, quantity, specification etc.
ROUND TABLE: Understanding how to deliver efficient project cost estimations to minimise risk and deliver accurate cost expectations Round Table Leader: Graham Taylor, Manager of Projects – Europe, Middle East & North Africa (EURMENA), WorleyParsons
Key points: Accuracy of information Schedule – have Incentives for cost savings Gain share structure
OFFSHORE PLATFORMS FOCUS DAY Phase 1: Evaluating EPC project risks during the front-end engineering and design (FEED) phase
• Considering the implications for delivering complex logistics and environmental requirements • Evaluating technical issues and estimating a rough investment cost • Avoiding significant changes during EPC phase by reflecting the objectives of the client and any
project-specific requirements within the FEED package Session facilitated by: Akachidike Kanu, Facilities & Production Senior Engineer, Repsol, Spain Phase 2: Ensuring best practice project management across the transition from the FEED to construction phase
• Managing the FEED endorsement to detailed design transition • Planning the procurement strategy in order to minimise delays within the installation phase • Conducting a thorough risk assessment to mitigate potential hazards • Preparing for the commissioning phase and handover to Operations
Session facilitated by: Haitham Mokhtar C.Mar.Eng/ C.Eng., Senior Projects Engineer, ADMA-OPCO Phase 3: Determining effective construction methodologies for the installation phase
• Understanding the vessel type options and requirements for heavy lift equipment • Mapping the procurement and supply chain path • Developing the sequence procedures to minimise project delays and cost overruns
Session facilitated by: Ibrahim Fahmy, Senior Marine and Safety Specialist, ZADCO
Link to online video resource: https://www.youtube.com/watch?v=fuAPbA8JIMs