The
energy sector is executing demanding projects to make LNG plants and refineries
greener, and to implement completely new green energy solutions. These are now
added to the familiar portfolio of projects by engineering, procurement and
construction (EPC) companies and by licensors of processes and equipment.
Some
projects are less taxing and may present less uncertainty or limited issues, but
many are in uncharted territory. In addition, these projects require solutions
under lead-time pressure.
These
developments are taking place in settings where governments are subsidizing
innovation. This encourages partners to tune their organizational structure and
processes per project to address:
This
article will explore the tuning of an organization to deliver a successful
project, beginning with the organizational model within EPC firms, followed by
the tuning steps needed once uncertainty, cooperation and challenges are
introduced.
The current perspective: Functional engineering
and low-cost solutions. For large projects, all EPC companies are organized
around functional capabilities and a reliance on strong project management.
Most EPC organizations have an execution model where much of the engineering is
performed with low-cost labor. The office where the basic design work is
completed will hand over further engineering to a separate office that will
then detail piping, structure and controls. A solid quality process has been added.
The goal is to avoid design questions that will lead to unnecessary backward
and forward communication, which would add to costs, lead to extra reviews and
extend lead time. Efficiency requires a sequential process with a solid handover
of work.
Additional perspectives. What if an innovative
green process is part of the project? Let us assume that the new process has
been lab tested. Next, equipment must be designed—this step usually requires
process engineers and mechanical engineers to solve issues together. These
issues cannot all be itemized beforehand, and new problems will also typically
arise, meaning that this process requires daily cooperation. This is an
unpredictable way for information to be exchanged for tasks that must often be redone
and for decisions that must be made. This mix makes the “functional division”
of labor, along with an emphasis on the project schedule, to be ineffective. It
is better to have a team that is flexible, that works full time and that has
individuals that are mutually accessible, among others.
Another
factor is that innovative development is being supported by governments under
provisions that parties cooperate with labs and researchers. In principle, the
required process is the same but requires perfect alignment. In particular, designers from the various organizations
must have accountability to the project alone; otherwise, disparate leadership
will disable cooperation.
Apart
from the first uncertainty, as participants focus on a solution and start to
detail it, the innovative project will progress. Solutions will be tested and
approved or reworked as necessary. This may lead to
regression, resulting in intense interaction among process and mechanical
engineers to advance and solve new challenges in the project—this interaction
may include teams responsible for controls and piping, as well.
Issues
may also pop up late in the project, even during commissioning. Scale factors
may not work out as expected, leading to additional fixes, scheduling
challenges and additional financial pressure to finish the project on time and
on budget. Relying on executing a project within a strict functional framework
and schedule to solve issues is counter-effective.
Ammonia cracking: An example of
uncertainty, cooperation and challenges. Several technological developments
(such as ammonia cracking) fall into the previously mentioned categories of uncertainty,
government support (cooperation) and challenges. An ammonia cracking process is
known and tested, and catalysts have been developed; however, the plant must
still be designed and tested for the best way to insert and control heat. These
items are mutually dependent; they involve many choices, and their impact
cannot be modeled with 100% certainty.
The
cracker is the heart of the installation, but other units/aspects are also
important parts of the project. These include:
The
non-cracker components are not impacted by uncertainty, and mutual dependencies
are minimal; that part of the project can be executed in a functional way.
Therefore, the entire project has parts that are processed as usual in a
controlled way and one innovative part: a subsystem that requires different
tuning (FIG. 1).
Making
a split is key. However, how can organizations apply two solutions under one
project roof? The best solution is not solely a mathematical one. Making the
correct choice of people who can successfully execute and lead is essential.
During the design process, organizational tuning may be needed over time,
oscillating between efficiency and solving challenges and issues. One option is
to tune during execution by monitoring evolving events with insight into the
functioning aspect (i.e., does it work, or does it need further tuning?).
The dual mission of the project
organization.
Similar
projects with unknowns and new solutions can be found in the “greening” of
refineries and chemical plants, or in new low-carbon or zero-carbon power
stations. The following will discuss further details that relate to these
situations: designing with uncertainty, cooperation among organizations and
anticipating issues when executing.
The
project structure should fit two domains. The first domain consists of the
subsystems that 1) encounter no uncertainty, 2) are not under the umbrella of
cooperation, and 3) do not anticipate issues. For this domain, EPC firms have a
proven process in place. If more parties are involved, strict definitions of
boundaries and structure are understood. No revisions are expected or
supported. A functional organization with strict project controls should advance
well, and resources and procurement are predictable.
The
second domain is the innovative subsystem, enhanced by resources from at least
two organizations. These should house talented and driven engineers, eager to
explore beyond their expertise and to work in teams—with evolving insights on
how to advance together, insert unplanned tests, design the work, and be
willing to drop non-working ideas. This implies that work processes are in
place but are not limited to each individual. Process and mechanical teams must
be willing to shift their work if it benefits progress. That need can be led by
a mission coordinator who will track what is mutual and what data is needed.
This requires the exchange of information, followed by discussions on issues and
fundamental design choices, and a willingness to iterate relentlessly to
achieve a working solution.
These
two domains—one based on predictability and non-iteration, and the other on the
opposite—will come together on well-defined interfaces. The tension between the
two must be resolved. A classic solution to keep both domains apart is to
appoint someone to act as a liaison in charge. An alternative to this is to
assign a temporary tandem team from both sides that will work together on a
proposed interface aspect. This is more flexible and tuned to the need at that
moment. Exchanging information, scheduling meetings to make decisions and
setting alignment should be done for each occasion. In addition, a special path
should be set to execute revisions that touch both domains—this is a special and
temporary sub-process that is kept away from the functional organization. A
special review staff should be included to ensure that the itemized process is
progressing.
The
team that is working on the innovative subsystem works best if the team members
are all in one location. These innovative team members should work only
intermittently with a broader task structure so they can focus on individual
items vs. larger tasks that involve others. This ensures that team members only
switch from a narrow focus to a much wider focus on project delivery, when
needed.
Tuning
task structures to adjust to varying needs. The design tasks are well mapped.
What is less structured is how the specifics traits are to be set. Should the
task structure inform the team members on a specific focus (F), or on a level
of information sharing (I), decision-making (D), iteration (I) and alignment
(A) and communication (C)? These are also building blocks in functional knowledge.
Part of these tuning tasks are ensuring the FIDI and ACT levels. If these
traits are static, they are covered in process layers such as data sharing,
communication, scheduling and other practices. In general, the level of these traits
is defined by the goal of the process—i.e., efficiency, lead time, quality and
innovation. However, what if an issue on this project requires an unforeseen innovative
solution? Then, the task structure must be tuned to that new situation until it
is solved. For such tuning, one can rely on available weekly data and tune the
settings to each person. This tuning mitigates the risk of failure and enables
project partners to perform well, while recognizing the two domains.
Leadership. The two distinct
domains in a green project—one being functional and guided by project controls,
and the other being a second team where members may have various innovative assignments—point
to two leadership settings. Leadership for the first domain uses scheduling to
assign tasks to personnel and ensure production. Quality processes further
regulate everyone’s contribution. Since these processes can be costly,
revisions should be avoided or reviewed, and other quality steps should be in
place to ensure that. The number of decisions should be limited and taken on a
weekly basis so that issues will not linger throughout the project. One manager
can oversee larger groups and assign junior-level personnel to senior-level
workers within each functional department. This option provides an easier path
to manage larger groups (e.g., > 100).
Leadership
for the second innovative domain is different. The leader is one among equals
and can work on the same development questions and provide solutions among
peers. Leadership may be based on experience in similar settings, which may
help in solving issues. For example, decisions can come in many forms (e.g.,
one or many solutions), and quick decisions are not always the right ones,
since not all information may be known. Secondly, the team should accept such
decisions, as going against informed engineers will drive the team apart.
Leadership must facilitate the team, including utilizing specialists, so they
can execute their tasks and ensure that the team avoids outside distractions to
complete tests and simulations in a timely manner.
Combining
these two types of leadership is not easy. Still, the goal is the successful
delivery of the project. To accomplish this, one principal leader is needed.
This can be an individual or a commission with the power to make choices if the
domain leaders cannot agree. This leadership should also take charge when
different organizations are not satisfied that the goal has been met. It is
their task to monitor and resolve challenges that could otherwise hamper the
support of one of the project partners. Such challenges may arise when
resources are unevenly drawn, or if one project partner is running out of funds
or the lead time is slipping. At this point, a principal leader/commission
needs full power to address such questions and issues regarding the project.
Takeaways. A project’s progress
can be well controlled when functional engineers work with a high degree of
certainty. Since project personnel react to uncertainty by solving challenges
that arise, one should monitor the project on several fronts:
Moreover,
the organizational functionality should be monitored for the different domains,
including:
Weekly monitoring can help ensure
tuning during execution. This relies on indicators on the organizational
functioning where efficiency and innovation should be matched. This active tuning
is part of green innovative projects, even if larger parts of such projects are
hardly impacted by innovation. Tuning on weekly updated intelligence does the
trick. This tuning is needed, especially with EPC firms’ portfolios that
contain new and challenging projects. HP
Maurits J. Van Wagenberg is President of IBASC, an engineering management and research firm, and has extensive experience in tracking the health of engineering organizations and of the engineering execution on complex plants. Dr. Van Wagenberg has worked for more than 30 years in the field of improving engineering performance and on project risk analysis. He has performed comparative analysis among organizations and developed ways to fine-tune engineering execution toward specific project needs. Dr. Van Wagenberg has written papers on design performance, owner/EPC relationships, developments in industrial areas, and energy transformation. He completed his PhD in industrial organization from Radboud University in the Netherlands.