MAMMOET WORLD Issue 14 | 201522

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Modular construction has been a feature of new plant construction for heavy industry for over

thirty years. However, while many projects are now realizing the productivity and labor benefits of

offsite fabrication there is yet to be a widespread revolution in the way modularization is

incorporated into plant design and construction projects.

Mammoet World spoke to two experts on how modularization might take the next step towards

unlocking major efficiency gains for heavy industry: Koen Vermeltfoort and Fred Haney.

Both Fred and Koen believe that the move from a concept of offsite fabrication to an integrated

organizational approach to modular construction will take time and culture change. But

modularization could make previously unaffordable projects a feasible opportunity through a

combination of cross functional roles and a more disciplined approach to standardization.

MODULARIZATION COULD FURTHER BOOST PRODUCTIVITY IF THE INDUSTRY COMMITS TO STANDARDIZATION

What is driving the move towardsmodularization?The fluctuation in the price of oil and the risingcost curve for oil production has led to criticalreviews of capital projects. Capital savings areneeded for projects to be feasible, which is wheremodular design can help. However, many‘modular’ projects simply take a bespoke plantdesign and cut it into pieces to reduce laborcosts and other risks.

So what is the next step?The next step is for companies to approachmodularization as an engineering standardizationprogram. Standardization should be a way ofworking, a business problem rather than anengineering problem. There is a lot of standardequipment available, however clients often requestcustomization, negating the benefits ofstandardization and leading to disillusionmentwith the concept of modularization.

Where are efforts currently focusedregarding increased standardization?Some elements of projects could more easily bestandardized such as oil wells, helicopter pads,compressors and heat exchangers. By building aplant based on as many standardized pieces aspossible, and designing something which can beused repeatedly for different projects, it is possibleto gain the most efficiency from standardization.

Standardization enables designsto be re-used, both saving time atthe design phase and also offeringbenefits from the ‘learning curve’gained by reusing standardizedpieces. Each project has a largenumber of interfaces. By reducingthem you can speed up deliveryand begin production earlier.

Is the potential level ofmodularization that isachievable recognized by oiland gas companies?Not extensively. Applyingstandardization to an entirerefinery is not where the best valuecan be found. But if you look afew levels down from the wholeplant level there are many morerecurring elements than peoplethink, such as heat exchangers,which can be standardized.

One factor limiting a companies’adoption of standardization andmodularization is the focus on asingle point estimate. When aspecific single point output isidentified at the start of the projectand becomes the focus of the

project, the likelihood is that aperfectly tailored facility will bedesigned for that point. If a modularapproach is to be truly embraced,projects need to be viewed at apackage level rather than focusingon just one feature.

How far have you gonetowards quantifying thebenefits, particularly theknock on effects?A ‘look back’ assessment ofprevious projects identified 20%savings, of which around 10%came from knock-on effects suchas preventing delay, 5% direct costsavings and 5% installation savings.Companies usually quantify benefitson a project by project basis.However the benefits of a modularapproach are broader than you cancapture from a single project.Therefore cross functional recordingsystems and processes need to bein place. These could fully identifyand quantify the benefits across acompany’s whole portfolio.

What is your suggestion forhow companies can putsomething in placestructurally to bring aboutmore modularization?All companies have standardsdepartments. But a thought for thefuture is that project design teamswill have one member of the teamwho provides an integratedperspective. In around five yearsfrom now there will be a newfunction of ‘module architect’ toview the whole picture and spotopportunities for optimizationacross projects. This function willwork across commercial, technicaland supply chain elements and alsoacross multiple projects. n

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“Standardization should be a way ofworking, a business problem ratherthan an engineering problem.”

Koen Vermeltfoort is partner in McKinsey’s oil & gas practice based inAmsterdam. He leads the procurement and capital project service line in EMEA.He works with oil & gas companies as well as engineering, equipment andservices companies on topics ranging from growth and technology strategy tosupply chain management to design optimization and capital project execution.Before McKinsey he worked for 9 years at Philips ETG as operations andprocurement manager. He has an MBA from Simon School (NY) and an MSc inmechanical engineering from Delft University of Technology.

Fluor has a ‘modularization road map’. Becauseexecution of modular projects can be moreintricate than stick built construction, it requirescareful planning and a wider view point. This willrequire a new generation of engineers and achange in how projects are executed. Because ofthese changes and advances, it will take time toget the depth of experience across the industry.

What changes can organizations make thatwill take modularization to the next level?The design of the modules themselves, while veryimportant, is just one component. The key point isthe execution of the project.

The area where a real culture change can andshould occur, to enhance modularization, isthrough increased standardization- furtherdeveloping and implementing standards forengineering, vendors, modules and construction.Engineering standards will continue to improve andbe refined. Vendor standards will lead to standardpackages and materials, similar to those found inthe automobile and commercial building sectors.This will need to be supported by increasedcataloging and electrical management ofinformation.

It may take some time for change to take place butheavy industry needs to embrace modularization tomaximize efficiencies. n

size. By providing information up-front about services, potentialsolutions, equipment and experi-ence, heavy lift and transportproviders can influence the designand execution of projects,reducing the risks for their clients.

What do you think about theidea of a ‘module architect’role?At Fluor there are modulemanagers or module coordinatorswho provide that overview.However there are a limitednumber of people with the skillsand experience for that role. Asmodularization develops the poolof people with that expertise willgrow. But at the moment it can beone of the roadblocks to moreeffective use of modularization. Toget the most out of themodularization processes at Fluorwe use a combination of in-houseexpertise with running workshopsand providing external reviews, a‘cold eye review’ of project plansto identify opportunities for furthermodularization and to spotpotential problems.

What is driving the moveto increasing levels ofmodularization?In many industries – including oil &gas, chemicals, power andmining – the current pressure toreduce costs is driving theincreased implementation ofmodularization. Owners andindustry leaders recognize thatproductivity is decreasing andthese industries have laggedbehind manufacturing which hassteadily advanced through movesto increase use of modularizationand standardization.

Fluor has been taking a lead inmodularization; standardizing oiland gas plants, using method -ologies to maximize modularconstruction and establishing thepatented 3rd Gen ModularexecutionSM process. 3rd GenModular execution significantlyincreases the level of achievableoffsite work by splitting the projectinto process blocks and thenleveraging the module design todrive the plot plan. Throughdesign and fabrication withelectrical components andinstrumentation built in, modulescan be quickly assembled on sitereducing commissioning timeimproving our clients’ time tomarket.

How do transport and liftingconstraints impact onmodularization?Transportation constraints, particu-larly in land-locked locations, are amajor factor that must be consid-ered. Projects have encounteredmajor problems in the past whenthere has been insufficient under-standing of the module envelope

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“Transportation constraints, particularlyin land-locked locations, are a major factor

that must be considered.”

Fred Haney is an executive director for Fluor. He studied engineering in Victoria,Canada and has over 40 years of experience in engineering and construction ofoil, gas, and refinery, chemical and mineral processing plants. He is one of Fluor’ssubject matter experts for modularization and the champion to Fluor’s newexecution methodology 3rd Gen Modular executionSM. Fred has participated onprojects from front end engineering through to startup. Fred’s engineeringbackground is the field of materials, corrosion, welding and quality.