EPC Companies tackle huge challenges in bidding for large projects where design automation provides strategic direction, improving productivity & efficiency.
In January 2015, Qatar Petroleum and Shell decided not to proceed with the Al Karaana Petrochemicals project after evaluating commercial quotations from Engineering Procurement and Construction (EPC) bidders. The reason – the project turned out to be commercially not viable. It is no surprise that valuing a bid correctly is critical to the success of EPC companies. However, this is easier said than done as there are fewer projects to pursue in a slowing economy, and when the pressure to outbid the competition is significant.
Infrastructure, construction, highways, mines, oil and gas – pick any EPC sector and you will find it to be highly capital intensive. Bidding is a make-or-break phase for EPC companies looking to score high-value projects. It is, therefore, essential to ask a few fundamental questions before initiating the bidding process. What factors could make us win or lose a bid? How do we pitch a bid without undercutting the margins while at the same time enhancing our chances of winning? How do we minimize the variability that can creep in at the later stages of a project?
The answers to these critical questions can help EPC companies estimate plant costs accurately, resulting in a bid that is sure to get converted.
Put Design First
Accurate cost estimation hinges on developing a near-complete, initial plant design. The design needs to be elaborate enough to help bidders effectively estimate the requirement for material, labor, and services. However, this is not always straightforward because of the stringent timelines involved in the bid submission process. The time constraints sometimes force EPC firms to come up with designs that are not well thought through. This inevitably sets the stage for failure later on, as these initial designs are used as the baseline for detailed engineering.
This means, instead of putting together a preliminary design just to get the bid through, EPC companies should treat this design as the final cut. In January 2016, the EPC firm Amec Foster Wheeler won a contract from the oil company Preem, to build its vacuum distillation unit in Sweden. Amec Foster Wheler proactively completed the front-end engineering design (FEED) for the project a year in advance (in 2015), and wrapped up their technical feasibility study as early as 2014.
A leading construction player we work with ensures that it completes 90-95% of its building design work during the tendering stage itself. This laser-sharp focus on design, early in the cycle, results in fewer changes during the construction stage. More importantly, it allows EPC firms to concentrate on other critical aspects such as procurement and material traceability, in the later stages, which consume 80-90% of the project cost.
Adopt a Modular Approach to Design Automation
Automation is a great way to accelerate the development of plant designs, but is it really as simple as it sounds? How easy is it to achieve design automation, and do we need to ensure 100% automation? The good news is that it is possible to easily automate at least 80-90% of the design process that is common across projects. Thus, even achieving 80-85% automation can provide significant benefits to EPC firms.
A modular approach to design considers three kinds of modules – common, optional, and new. Typically, the ‘common’ module takes care of about 90% of standard design requirements, while the ‘optional’ and ‘new’ modules address the remainder. The percentages may change depending on the type of industry, but the main objective here is to automate the predominantly standardized functions first.
Reap the Benefits of Design Automation
By reducing the time spent on repetitive tasks, design automation solutions help improve overall productivity and efficiency of EPC firms. McNally Bharat Engineering found that automation could potentially bring down the design and drafting time by half. Since manual intervention is substantially reduced, the number of errors also goes down drastically. For example, for a design activity that is carried out manually, there are multiple inter-departmental iterations which delay the entire process. Additionally, inter-disciplinary reviews may not even be effective, due to collaboration issues.
Automation supported by integrated applications and spreadsheet-based models, and backed by project databases containing historical information can significantly boost productivity. The drawings and models required for bid submissions can be automatically created, reducing the design time from three to four weeks to just a couple of days.
What’s Your Long-term Design Strategy?
We feel that design automation initiatives cannot be a one-time activity. They should be an integral part of the long-term plan with sustained backing from the management, supported by a systematic effort to capture organizational knowledge. Catalogs and project databases need to be updated with the latest design rules, data, and cost figures for material, labor, and services. While the initial efforts may be high, the payoffs can be significantly huge.