EPC Strategies for a Successful Project Execution

Abstract

Abstract The essential requirements for sanctioning Energy Sector projects have always been conceptual planning, Front-End Engineering Design (FEED) and feasibility studies. Traditional EPC projects start with a planning phase, a design phase, a construction phase, a testing phase, and a turnover to the user phase followed by project closeout. Such projects are usually delivered through water fall management approach. Large EPC projects have more elaborate models with multiple stage gates and bid phases, but the commonality is the sequential nature, with user input happening primarily in the planning and or design phase. During construction phase again there is a sequential work plan with defined project schedule defining activities with regards to trade or geographic areas. Large construction projects are usually implemented through multiple sub-contractors under a general contractor, with a separate designer and a separate owner, and in some cases separate end users (tenants), with complex contracting methodology (ies) in place. As the era of "easy hydrocarbons" is approaching its end, mega-projects are becoming a norm in petroleum sector despite high CAPEX and having long lead times for reaching commercial operations. This is so because unconventional oil and gas like shale gas, Oil sands, FLNG, Ultra-deep water reservoirs require implemetation of state-of-the-art technologies and resource in lesser known project site conditions. FID for such project has traditionally been based on conceptual planning, Front-End Engineering Design (FEED) and feasibility studies. These preliminary steps also help in defining a rigid process (Stage Gate Process "SGP") to follow during subsequent project progress related to EPC activities. SGP outlines activities to be completed in every stage of the project and progress into subsequent stage is authorized only with the approval of a committee / individual called "Gatekeeper". This study discusses application of SGP, having shared Gatekeeper from project stakeholders, together with Agile project management methods, SCRUM to be specific, for developing successful strategies for project EPC phase. As oil and gas industry is moving to megaprojects with innovative reserves recovery ideas, the sector is experiencing increased utility of Agile project-management methods. The entire innovation process has great potential in reducing project development time frame and increasing the success rate of Greenfield or Brownfield projects. This study outlines how Agile method, such as Scrum, can be used as a structured innovative methodology with milestones and decision points (similar to Stage-Gate), and benefits for project stakeholders. This study is carried out as follows: One (01) Green Field project is selected for investigation related to successful EPC management through possible use of Scrum (Agile Methodology)One (01) IT Project is selected for investigations related to successful implementation of Agile management during planning, development and delivery phase.Responsibilities of Project Owner as well as Project Director (Single Point Accountable individual) will be identified for successful implementation of Agile methodology.The study will investigate the availability of know-how and actual utilization of combination of SGP and Srum (Agile methodology) by Project Director / Owner during project execution.The study will identify and quantify the risks involved and benefits achieved in using combination of SGP and Scrum project management strategy. This study indicates that Project Owner as well as Project Director are responsible to identify which component of the EPC project is to be handled through waterfall management and which component is to be managed through Agile. The paper provided two case studies of the use of agile tools and methodologies for IT related projects (which are true candidate for Agile) and EPC project which is different from software or information technology. The very beneficial results and outcomes from the case studies provided proven examples of the success of the application. It is recommended that not all of the principles of agile fit into every EPC project management requirement and need to be evaluated for use for each project and additionally management should make investments in non-core training for their personnel. Mega projects in oil and gas sector are prone to change in requirements during EPC stage. As such Agile project-management method i.e. SCRUM can be used in the innovation process and has a great potential to reduce development time and increase the success rate of new projects. The article briefly outlines how an Agile method, such as Scrum, can be used within a structured innovation process with milestones and decision points, such as Stage-Gate. For mega projects in oil and gas sector a combination of waterfall and scrum methods can be used for managing components of the project.