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Perspectives

Improving EPC Power Project Work in Asia

Improving EPC Power Project Work in Asia

For any owner, developer or financier of major power infrastructure projects, better early planning leads to greater cost, schedule and execution certainty. This has been proven in multiple case studies of recent EPC (engineering, procurement and construction) projects in Southeast Asia.  

“One of the best means to realize the benefits of this early planning is through implementing a robust ‘constructability’ program long before the first turning of the sod at site,” said Mitesh Patel, Managing Director of Black & Veatch’s management consulting business in Southeast Asia, India and the Middle East. “This holistic planning is the original foundation of any project.” 

Constructability is a term that refers to a proven technique that can be applied in the proposal, engineering, and procurement stage, as well as throughout the construction process, Patel said. It includes all aspects of a major infrastructure project, and it incorporates safety into every phase of that planning. 

“Safety is specifically an area that requires significant improvement in Asia,” Patel said. 

Such initial preparation starts by establishing an authentic and pervasive safety culture. 
 
“Safety performance not only affects people’s well-being, but safety incidents also negatively impact productivity, cost, schedule and reputation,” said Greg Bahora, Operations Director, Construction & Procurement for Black & Veatch in Asia Pacific. He said that safety is strongly emphasized because it is the right thing to do, and everyone wants everyone else to go home safely each night. 

“But from purely a financial point of view, a construction accident can also greatly impact productivity, cost, schedule and on-time performance at a job site,” Bahora said.  In addition to lost time experienced as part of safety ‘stand-downs’ and potentially lengthy investigations by authorities, there is a very real morale issue that can’t be overlooked. “Restarting site work post a safety stand-down requires getting hundreds of workers re-engaged in the project as well.”

Four Flag Posts For a Better Safety Record

Every construction company has some sort of safety program, but their implementation varies greatly across the Asia region. It is important that a deeper examination is given to such programs by owners, developers and financiers. Attention must be paid to key safety statistics, such as recordable injuries or lost time workday rate. More advanced measurements could include how many safety observations are performed in a week or a month. Here are four cultural flag posts that help companies post industry-leading safety statistics: 

Leadership takes the attitude that the more near misses reported, the better safety across the globe can be achieved, since construction practices are implemented consistently, regardless of geolocation. 

Most recordable injuries are usually the result of poor, at-risk behaviors, yet traditional emphasis has focused mostly on working conditions.

All the PowerPoints, brochures and safety logos in the world won’t do any good if the program is not executed across the entire company, and acted upon from the highest senior management cascading down throughout an entire organization because they truly care.

It is important that every employee on the construction site takes ownership and responsibility for safety and is appropriately empowered to act before an unsafe condition is created. This can only happen if there is culture of ‘no blame’ and ‘zero tolerance.’

Black & Veatch’s safety program, called “Zero Injuries Today,” focuses on a mindset of what can be achieved today, rather than emphasizing goals of zero injuries over a span of a year or more. 

“It is important to have an achievable, realistic goal,” Bahora said. “That goal has to be something that people can easily understand, but more importantly, achieve. When you present safety concepts in those terms, such as ‘Can we work accident-free today?’ people can relate to that, and are more apt to be successful.”

Progressive owners and developers use safety as a barometer to help analyze how successful the project is going to be before it begins. Typically, when projects in Asia are safe and they have minimal impacts, minimal injuries, minimal unplanned events, then the outcomes as far as quality, schedule and safety are directly related, according to Suqing Wang, Director of Power Generation Services, Northeast Asia, Black & Veatch. 

“Projects that struggle with safety typically have a problem with quality, schedule or budget, or all three,” Wang noted.

Planning Shortfalls in Asia

More than US$4 trillion is required in investment in Asian energy infrastructure this decade alone, according to recent media reports. Sustained infrastructure investment for many years has encouraged the emergence and growth of large contractors from a number of major Asian nations. 

With a wealth of power projects to be developed, many inexperienced contractors and equipment suppliers have looked beyond their own borders to grow their businesses, said Jim Schnieders, Managing Director of Black & Veatch’s EPC power business in Asia. 

“The emergence of these less experienced players – willing to take on more risk and at a lower cost to win the work – has contributed to a highly competitive landscape for bidding power projects in Asia, one that is dominated by price,” Schnieders said.

He said the result has seen EPC power plant proposals being prepared without adequate details and under increasing cost and time pressures. That only serves to heighten the risk of scope and schedule interface gaps. It also largely bypasses the first valuable opportunity to implement pre-construction best practices.

“The result is that projects are immediately put under undue risk,” Schnieders said.

This market scenario has also encouraged many EPC bidders to evaluate the market price first, place their bid, and then figure out how to best construct and deliver the project. 

“This practice promotes a mindset of minimizing costs to avoid a loss. It can lead to cutting corners with less field supervision, less robust safety programs, riskier construction practices, and often a less collaborative delivery environment,” Bahora said.  This scenario is compounded further by a new breed of lower-value equipment suppliers whose equipment quality and execution performance can be substantially lower than acceptable norms.

Benefits of Constructible Techniques

Constructability allows projects to return a more predictable construction timeline, Schnieders noted. Implemented properly, constructability can be applied during the financing, design, erection and commissioning of the project in order to reduce errors, delays and cost overruns. 

“It also builds efficiencies which can lead to cost and schedule savings,” Schnieders said. 

In the absence of a structured constructability program, many complex projects revert to traditional approaches to project delivery that typically include planning, engineering design, construction, procurement and commissioning in weakly interconnected silos. 
 
“With the rapid development of Asian cities together with the high price of land, a robust constructability program can help overcome challenges presented by limited space,” said Mark McDermott, Project Director, Black & Veatch. He cited one example from the award-winning Glow Phase 5 project, a 382-megawatt (MW) combined cycle cogeneration plant built for Glow Energy Public Company Limited (Glow) near Rayong, Thailand. It was built on a plot of land approximately 100 meters by 100 meters in the middle of an existing – and operating – plant. This created many complications for the design and construction teams.

McDermott said one of the most powerful examples of constructible design – that is, design planned with construction as the “end-in-mind” — from Glow Phase 5 involved a schedule conflict between the erection of the electrical building and the heat recovery steam generators (HRSG). The optimal location for the crane required to lift the HRSG modules was the initial location of the  electrical building. Due to a schedule conflict discovered early in the constructability process, as the electrical building construction would need to commence long before the HRSG crane work was completed,  the design was changed to support  construction needs. The solution was to build a more compact multi-story electrical  building, relocated between the gas and steam turbines, while also relocating other equipment previously planned for that HRSG crane area.

“Successful projects are often resourced with a Constructability Manager, who is the “go-to" person that Project Discipline Engineers (PDEs) should contact for construction-related advice during design,” Bahora said. He said the same approach that is used for the design team can also be applied to procurement and all relevant suppliers.

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