fpso & flng asia 2016 - final
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“Knots Ahead of the Rest”
Real Lessons in FPSO Execution
Failures and Critical Factors for
Successful Delivery
Presenter: Gurin Hanspal
Venue: FPSO & FSRU Asia 2016,
Shanghai, People’s Republic of China
Introduction
Currently Senior General Manager –Major Project (BumiArmada Berhad)
• Over 35 Years on oil & gas industry
• Responsible for the execution strategy and delivery of first converted
• FPSO in UK North Sea. Record setting 18 Months from start to 1stOil!
• Successfully executed ($10 Billion) FPSO + Subsea FEED for Mega
Project (Chevron Rosebank) in record setting 12 months.
• Successfully turned-around Kraken FPSO project for UK North Sea.
• Expert in EPCi planning, execution & contract negotiation/formulation
• Wide ranging technical expertise –FPSOs, LNG Terminals, Platforms,
Subsea and Full Field Development.
• International experience –Europe, Americas, Middle East and Asia
• Read more about me: https://linkedin.com/in/gurin-h
2
Agenda
1. State of EPC Execution in Industry
2. Simple as EPC?
3. Why are so many FPSO Projects Late & Over Budget?
4. Understanding Project Lifecycle
5. Some Real Lessons in FPSO Execution Failures
6. Project Execution Success Factors
7. Effective Organization Example
8. Perceptions & Reality of EPC Modules
9. Schedule delays & consequences
10.Management of Change
11.Effective Communication
12.Summary & Close
13.Questions?
3
State of EPC Execution in Industry
Projects - Schedule Management
Most EPC projects over the last decade have experienced substantial
schedule delays
This is true not just for FPSOs but across the oil & gas industry.
This true of all projects - large and small
Projects - Budget Control
Most EPC projects over the last decade have been substantially over
budget
This is true not just for FPSOs but across the oil & gas industry.
True for all projects – large and small
Projects – Completion & Operation
Many projects have proved to be difficult to complete
Schedule & budget pressures result in poor quality control
Offshore installation & commission has substantially taken longer than
estimated
Operational performance in many cases not as planned.
This presentation looks at some of the key causes of FPSO
Execution Failures and success factors to resolve some of the
issues faced by the industry today,
4
Simple as EPC?
• The EPC process should be simple:
Engineer – Pre-FEED, FEED and Detail
Engineering.
Procure – Order equipment and materials
based on engineering.
Construct – Modules, Convert or New Build
Hull & Marine Systems, Lift modules,
Integrate, Commission, Install at site.
• But of course its not that simple!
5
Real Lessons in FPSO Execution Failures
• The E & P & C sequence is very complex & not understood.
• The schedule “sold” by the bid team is unrealistic – win project and then manage
the execution.
• The “Pre-FEED” executed for the bid usually executed for bid in a short time
frame – not sufficient to define project execution.
• Usually new team executes after award – new people with great new ideas –
many changes to the “as bid” project. More cost and delay!
• “Design Freeze” is not implemented effectively – change control becomes major
issue.
• Equipment and materials ordered ahead of fixing design – more changes on the
way!
• Equipment and materials are over specified or wrong – non-industry standards –
more delay & cost!
• Engineers cause major delays in vendor document approval – delayed deliveries!
• Vendor performance in recent years results in delays and quality issues.
• Engineers neglect to ask/get vendor information early – more change coming!
• Recent trend to award “EPC” modules to equipment suppliers generally fail due
to lack of experience by suppliers.
• General lack of experience in the industry
• Project organization changes over life of the project – serious impact on project
outcome.
6
Understanding Project Lifecycle
7
Understanding Project Lifecycle
• Biggest influence on project completion/delivery is at the
Front End Loading phases (Conceptual through FEED). These
phases are also the cheapest of the project lifecycle. Many
companies ignore the importance of this.
• The least influence on project completion/delivery is at back
end phases (Detail Design, Construction, Commissioning).
These phases are the most expensive. Most companies throw
money and resources but struggle to finish on time and
budget.
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Project Execution Success Factors - Made Simple
1. Safety and Quality not to be compromised
2. Have an effective organisation
3. Execute FEED to order critical long lead items early
4. Freeze design as soon as practicable
5. FIX vendor interfaces as soon a practicable – apply interface
management system
6. Procure equipment & materials from high quality suppliers –
manage vendors from day one!
7. Conduct a thorough qualification contractors for EPC modules. –
Have an effective management team in place from day one!
8. Make timely decisions
9. Have a realistic schedule.
10. Manage operations & maintenance input to EPC process.
11. Manage client expectations
12. Management of Change (MOC)
13. Effective communication
14. Respond to changing situations
15. Focus on end goal – delivery
16. Have a stable project organization
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Example – Ineffective Org Chart
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Example – Ineffective Org Chart - Detail
11
QA/QC
Managing Doc
Control??
QA/QC
Managing Reg
Compliance??
Effective Organisation Example - Delivery
Focussed
ENGINEERING &
PROCUREMENT TEAM
TOPSIDES
VESSEL
MOORING
CONSTRUCTION &
COMMISSIONING TEAM
TOPSIDES
VESSEL
MOORING
INTEGRATION
PROJECT
OVERSIGHT TEAM
HSE
QUALITY
CONTRACTS
PROJECT CONTROL
COST CONTROL
CRITICAL PROJECT
SUPPORT TEAM
REGULATORY COMPLIANCE
INTERFACE MANAGEMENT
CHANGE MANAGEMENT
RISK MANAGEMENT
PROJECT
MANAGER
OPERATIONS READINESS
TEAM
OPERATIONS INPUT TO PROJECT
SUPPORT COMMISSIONING
HIRE OPS & MAINT TEAM
Perceptions of EPC Modules
Owners view at bid stage
Get a fixed price “plug & play” module
Offload risk
Hands off /little monitoring – since EPC!
Supplier’s view at bid stage
Large, high value module
Contractor track record into complex/high end
module EPC
Contractor prestige
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Reality of EPC Modules
Suppliers Reality
Core experience is build & supply equipment/packages/skids.
Generally no recent experience of large complex modules.
Familiarity with large module EPC process (PMT, Engineering
Management, Procurement & Construction Management) are not
generally core competences.
Core competences are generally “hired in” – not a team
Results - poor execution of each EPC phase.
Bottom line – Late delivery & High costs ….LOSSES
Owners Reality
Start - Owner take hands off view at start – EPC module after all!
Finish - Expending substantial effort to manage completion and
delivery – budget overruns
Result – Late delivery & not as cheap as originally thought!
14
Schedule delays & consequences - Sold vs Real
Example
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Contract Milestone Schedule
M33 M34 M35 M36M28 M29 M30 M31 M32M23 M24 M25 M26 M27
M21 M22M16 M17 M18 M19 M20M11 M12 M13 M14 M15M6 M7 M8 M9 M10M1 M2 M3 M4 M5
Year 3
Year 3 Year 4 Year 5
M21M13 M20M14 M15 M16 M17 M18 M19 M22M1 M9
Year 1 Year 2M10 M11 M12M2 M3 M4 M8M5 M6 M7
M23 M24 M25 M26 M27 M28 M29 M30 M31 M32 M33 M34 M35 M36 M37 M38 M39 M40
M37 M38 M39 M40
Revised Schedule
Original Schedule
Revised Schedule
Original Schedule
Contract Effective
Contract Effective / Contract Award
Mooring Award
EPCIC LOIA
Contract AwardVessel Arrival @
Yard, ready for R&LE
Vessel Arrival @ Yard, ready for R&LE
Mooring Award
Mooring installation
FPSO Sailaway from Deepwater Anchorage FPSO Arrival Site
FPSO Ready to Start Up
FPSO Ready for 1st Oil
FPSO Sailaway from Deepwater Anchorage
FPSO Arrival Offshore Site FPSO Ready to Start Up
FPSO Ready for 1st Oil
2nd Dry Dock
Flare Tower
1st Dry Dock
1st Dry Dock 2nd Dry Dock
Flare Tower
M01
M03
M02
M04
M05
M01
M02
M03
M04
M05
Schedule delays & consequences
• Example shows 9 months delay in 1st Oil
• Other recent projects have experienced even
longer delays – 18 months to 2 years.
• Consequences are bad for both operators and
FPSO owners – Higher costs and delays
directly impact revenue & profit.
16
Management of Change – Easy MoC
Change is inevitable on any project so must be dealt with.
MoC process can be complex or simple.
Bottom line - simple works & complex doesn’t!
Keep it simple MoC rules:
– Allowed Changes
• Equipment, system or procedure is unsafe
• Equipment, system or procedure does not work
• Change in applicable rules, regulations, standards, etc.
– Disallowed Changes
• Function or operational improvement/optimisation
• Cost savings on equipment or systems
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Summary & Close
Executing a FPSO EPC project is not easy.
• It takes investment in front end loading along with:
• Experience
• Effective organization
• Managed engineering
• Good planning
• Effective MoC
• Excellent communication
Most importantly great teams deliver
projects!
18
Questions?
19
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