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EPCM Projects: A blueprint for success

Author Markku S. Lehtinen
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The EPCM* model is commonly used in new industrial investments and plant expansion and modernisation projects. In the EPCM model, the consultant takes care of planning the implementation of the investment project, procurement, construction and safety supervision, all on behalf of the customer. The customer, nevertheless, takes care of procuring and external contracts are drawn up between the customer and suppliers. Key success factors in such projects include thorough planning and forecasting, transparent communications and keeping the customer involved throughout the entire project.

* EPCM = Engineering, Procurement & Construction Management

In its purest form, EPCM entails only project management activities; management of the whole investment project, design management, procurement management, construction site management, as well as commissioning and acceptance management. The model does not specify which parties provide the practical design and implementation services. In industrial investments, the process defines implementation and the building takes shape around it.

Diagram-1_EPCM

Diagram 1: EPCM concept covers all subareas.

The crucial role of project management  

Project management is the most important activity throughout an EPCM project. It also acts as the interface to the project, the customer and other stakeholders. The core responsibility of project management is the management of risks, timetable, costs, quality, scope, resources and information. This entails planning, supervising and instructing staff to achieve the joint goals created at the outset with the customer.

A key component of successful project management is the ability to forecast and plan for different scenarios throughout the project, as well as risk management in all phases. Good monitoring methods and control procedures related to corrective actions are extremely important. Even if agreement was reached at the start of the project on common procedures and the project atmosphere was good, the management of project interfaces cannot be forgotten.

One should keep in mind that project work is a commercial activity for both parties. Further key elements include successful timetable and cost management, communication that is sufficiently comprehensive, transparent and timely, as well as the appointment of professional and experienced persons.

Diagram-2_EPCM

Diagram 2: Project Management guides the successful implementation of the project.

Solutions defined and costs fixed in design phase 

Design management is another key task, because solutions chosen during the design phase make up the bulk of the investment cost. Design is usually divided into three phases: conceptual design, basic design and detail design. During conceptual design, the customer’s goals are transformed into concrete technical designs. Several alternative solutions are commonly drawn up at this time.

The most important technical solutions are selected at this phase, which defines the costs that arise and the required timetable to a large degree. In basic design, the solutions are specified in more detail prior to the final investment decision. The detail design required for actual implementation often continues in support of construction and installation.

The ability to create designs of the required level for each phase by drawing on sound expertise and experience is a very important factor in the design phase. In the basic and detail design phases, the professional coordination of design work is essential. The design is done systematically with the auditing and locking/freezing of design sub-phases or technical solutions. Change management is of great significance for scheduling and costs.

BIM modelling (Building Information Model) has become a fixture in coordinating the designs of different parties, change management and in ensuring the quality of projects. The later changes are made, the greater is the risk that the budget and timetable will be exceeded. Modifications also always increase the possibility of errors, e.g. when the effects of changes have not been communicated to all parties early enough.

Procurement has a significant effect on cost level

Procurement management should be conducted from the very start of the investment all the way up to the point, where the procured materials have been accepted for the functions they were acquired. Successful procurement has a significant effect on the total cost of the project and on whether savings or additional costs are incurred.

An overall procurement strategy and plan should be drawn up at the start of the project, to which more detail can be added as the project progresses. The procurement plan describes e.g. the procurement process timetable, amount and type, (customer’s preferred) suppliers, supplier locations, suppliers’ financial status, contractual terms, level of delivery supervision and maintenance services etc.

The procurement and purchasing process is conducted according to the drawn-up specifications. This ensures that one does not have to consider whether everything necessary was done after the fact. Procurements define the project costs and, therefore, sufficient understanding of and expertise in procurement contracting and delivery supervision are of critical importance.

The customer plays an important role in procurement, as it accepts procurements and conducts them in accordance with the consultant’s guidelines. In this model, procurement contracts are concluded between the customer and supplier/contractor. The consultant nevertheless guides, supervises and checks the delivery of the procured devices and services. The cooperation between these three parties is a key success factor in the project.

Plant meeting

On site – putting plans into practice safely

The site management team is responsible for the practical implementation of the project, thereby realising the planned and fixed costs. In the construction phase, the number of external suppliers increases dramatically, which brings more complexity and adds to the need for coordination.

Both construction work and the installation of process-related devices and systems are conducted simultaneously at the site. Site managers and installation supervisors are responsible for ensuring that these activities are conducted seamlessly with consideration for safety and with an eye on achieving an error-free result.

Preparatory work for construction and installation is already done during the design process. For this reason, a safety coordinator, damp management coordinator, and construction supervisor should be involved in the design process insofar construction is concerned, and an HSE supervisor with regards the process.

Construction site operations require thorough planning, strict control and supervision, as well as clear roles and responsibilities. These factors contribute to creating a good operational culture and coordination of different elements.

Occupational safety is the most important factors to consider at construction sites. In order to ensure safety and achieving the goal of zero accidents, all participants have to commit to common safety instructions and follow them to the letter. The site safety coordinator draws up procedures and instructions to ensure safety.

Commissioning and acceptance of the plant complete the project

Commissioning and acceptance management is concerned with ensuring the termination of the entire project, by inspecting and testing the plant in phases, thereby verifying that the result meets the agreed scope and technical level. Successful commissioning is heavily reliant on the quality of earlier design and procurement and thorough prior commissioning planning. Ensuring safety before operational testing is also of critical importance.

During acceptance, the completed plant is handed over to the customer as agreed for commercial use. The customer can then do the final acceptance of the delivery.

EPCM-extra-image

There are no risk-free projects, but…

The management of risks and safety is becoming increasingly important in all operations. Risk management is, therefore, also a factor that needs to be managed carefully in EPCM projects.

Risk management should be conducted as the project progresses from the very start of concept design. The risk register is updated and made more detailed throughout the different project phases. It should be monitored all the way up to acceptance. Risks should be identified and plans and specifications drawn up to mitigate these risks, so that any remaining risks are at an acceptable level. Risk management also provides tools for safety management.

Conclusion

An EPCM project consists of many different parts, each of which needs to be completed successfully to ensure a successful project. This is equally important in both small and large EPCM projects. The EPCM consultant assisting the client ensures that the customer receives the desired result at the budgeted price and within the agreed timetable. The customer trusts in the consultant’s ability to manage even large projects. The consultant needs to be worthy of this trust.

If one wants to be successful in EPCM projects, it is crucial to listen to the customer and to come up with common goals. The customer should also be kept involved in decision making throughout the project to ensure that it progresses satisfactorily for both parties from start to finish.

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Markku S. Lehtinen

Markku S. Lehtinen has 20 years’ experience of working in consulting and engineering. His experience covers the energy and process segments, quality issues and a wide range of general management roles. Markku joined Elomatic in 1998. He currently holds the position of Vice President, Consulting & Engineering, Process & Energy.

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