Re-Engineering the EPC Process

Reengineering as defined by Hammer and Champy includes a fundamental rethinking and radical redesign of a process to achieve dramatic improvements in performance. Under dramatic consequences, owners and contractors accomplish projects whose short schedules, tight budgets or technical complexity require adoption of extraordinary approaches to design and construction. We have labeled these projects, “crisis” or “exceptional” projects.

Crisis projects and their attendant requirement for unusual project execution strategies, arise for many reasons. Sometimes industrial accidents or acts of God cause damage to crucial manufacturing capacity. In other cases, changes in the economy or international markets cause us to speed a product to market. Often, these crisis projects are completed in record time, with superior quality or within a very low budget. It also is common on crisis project for strategies that are designed to (say) reduce schedule, to have collateral beneficial impacts on the project’s cost or quality. The fundamental question behind this research is:

This project investigated whether the techniques and methods used for special “crisis projects” could be adapted to permanently reengineer the existing EPC process. Fundamentally, this project is about adjusting the EPC paradigm to incorporate the ingenious, resourceful and innovative approaches that we use on crisis projects to challenge the current approach to EPC projects.

Construction Industry Need

The Construction Industry faces the same competitive pressures and global marketplace issues that have spawned the recent spate of re-engineering in other industries. Increasing competition is forcing the industry to become more efficient and innovative. Owners, E/C contractors, subcontractors and material suppliers will benefit from a successfully reengineered EPC process.

Anticipated Value Added

This research identifies opportunities to improve the efficiency and effectiveness of the Construction Industry. Implementation of the results has the potential to reduce construction schedules, reduce project costs, diminish errors, and dramatically change the nature of the EPC process.

Objectives

The purpose of this research was to redesign and rethink the existing EPC process to:

1. Take advantage of existing methods used by owners and contractors in crisis situations.
2. Evaluate these methods by incorporating them in existing models of the EPC process.

The specific objectives of this research include:

1. To identify ”crisis” approaches that can be effectively applied to the EPC process.
2. To cooperate with RT 125, Information Management, to validate their EPC model.

Approach

This project consisted of a series of 30 case studies of “crisis” projects. The goal of the case study analysis was to identify extraordinary approaches that are used by owner and contractor firms that achieved extraordinary results. Specifically, the case studies:

• Identify the exceptional techniques or methods used on “crisis” projects
• Assess whether the intended special project goals were achieved (shorter schedule, reduced rework, enhanced market penetration, etc.)
• Identify extraordinary good consequences of the techniques used (lower cost, better owner relationships, etc.)
• Identify unexpected “bad” consequences of the technique used (lower quality, more owner risk, increase disputes, etc.)
• Identify the principles of reengineering and how they should/can be applied to the EPC process

Analysis of the case study data indicates that re-engineering processes produces significant reduction in originally projected project duration and cost. These reductions were achieved with no negative effects on safety and quality. Schedule reductions ranged from 12% to 85%. For example, one crisis project was completed in only 15% of the time (2 months) that a non-crisis project would require (13 months)! The cost impact associated with the schedule reduction generally ranged from -40% to 52%. More significantly, 50% of all case studies demonstrated a DECREASE in cost with an associated DECREASE in schedule.

Project safety performance included analysis of first aid cases, OSHA recordable incidents, and lost time accidents. The available data indicate that safety was not compromised on the case study projects. In fact, safety awareness during crisis project management is heightened to the extent that safety performance was generally excellent.

Owners associated with the case studies provided information on project quality. Quality data was collected for ease of startup, initial downtime, capacity, and maintainability. Quality on crisis projects was not compromised.

Although this research report does not provide a re-engineered EPC Process it does provide compelling evidence that fundamental changes can occur with dramatic results and delivers guidance for organizational re-engineering efforts.

Investigating crisis projects, our mission was to identify and investigate work process changes and their impact on cost and schedule, determine their sustainability, and offer guidance to organizations for implementing process level re-engineering efforts.

Our results illustrate that changing work processes and providing appropriate cultural environments can result in up to significant schedule reduction with no additional costs.

RT124 is excited to offer valuable information to motivate and assist you in re-designing your work processes.