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Progress in EPC project

5 replies [Last post]
Thu, 2007-09-13 04:53
Nar Thap
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Joined: 12 Sep 2007
Posts: 73
Groups: Petro-Chem / Oil & Gas
I am currently involved in a EPC project where the procurement carries the largest amount than designa nd construction. The project at design phase and some of the important and high cost mechanical items are being procured.
My program shows only physical progress in design and procurement and ignores the cost, which is commented by client. They asked me that as more money is already used for procuring mechanical items, why the progress is so low?
Is there any way of giving weighting to different phases of EPC so that progress is represented costwise and or timewise?
cheers
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Replies

Thu, 2007-09-20 04:28
#1
Zanudin Ahmad
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Joined: 20 Sep 2007
Posts: 13
Groups: GPC Malaysia, Petro-Chem / Oil & Gas
Dear Nar, for a previous EPCC Project, my Contractor have complied with our ITB requirement (because it is consistent with their own standard practice) that the overall Project (at Level I) is divided into following main phases and the weighted percentage is assigned on the basis of the project cost (i.e. the relative cost of each work discipline, which is essentially the breakdown of thelumpsum cost given in their bid proposal)
1. General Management
2. Engineering & Procurement services
3. Procurement (say 59%)
4. Construction
5. Pre-commissioning
6. Commissioning & startup

Assigned weights shall remain unchanged throughout the duration of project unless all parties agree upon changes in scope of work, these weights will be modified accordingly.

I myself still searching and asking around whether the above practice is based on any codes & standards, or whatever, but I can see the wisdom in using it. You can’t disregard the Cost factor because the amount of payment released to a Contractor should follow closely with the reported physical progress (Earned Value).

I can elaborate further on Level II, Level III if so needed.
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Tue, 2007-09-18 20:53
#2
Frederic Fasquelle
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Joined: 16 Mar 2006
Posts: 61
Groups: Petro-Chem / Oil & Gas
Hi Nar,

First of all, your program is working well because it gives you Work Performed. This have to be compared to mhrs spent for engineering part and shall give you some trend like productivity and efficiency.

I don’t know how you manage your progress for Engineering / Procurement and Construction, but for my part there are measured independently by using excel files and usual methods in each cases.
Thus, I know physical progress associated to phase E/P and C.
To calculate your overall progress, you multiply each component by its weight factors. You just have to define one serial weight based on physical progress (currently used by you) and one other based on Cost.

But I am not sur eto understand you fully, can you prescise what you are waiting more ?
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Tue, 2007-09-18 09:16
#3
Nar Thap
User offline. Last seen 17 years 5 weeks ago. Offline
Joined: 12 Sep 2007
Posts: 73
Groups: Petro-Chem / Oil & Gas
Christin and Frederic,
Thanks for your valuable tips. Frederic if you put the weighting after work progress ( based on time), what will be the basing crieteria? How do you determine the E/P/C weightings? so that I could make some ideas on my situation.
Cheers

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Sun, 2007-09-16 23:38
#4
Frederic Fasquelle
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Joined: 16 Mar 2006
Posts: 61
Groups: Petro-Chem / Oil & Gas
Hello Nar,

I am currently involved on contract where I faced exactly the same problems as yours.
As previously explained by Christian, Cost & time are two different things. Here in Korea, use is to have progress driven by Cost, while in western country progress is driven by Work performed.
As for you our procurement cost was very heavy, 59% of the overall project, 13% for Engineering and 28% for Construction.
If your Client want to follow cost curve you will find on your S-curve deep incoherence. For instance, you will reach almost 95% of progress (based on payment) while it should be 75-80% based on work performed. This means that they should have paid 95% and having on site civil work performed but piping / mechanical on going. This seems crazy.

Bus as scheduler, we must only follow Work performed. Well, at the end we proposed to use artificial factor to be applied on weight value for E/P/C to get both result physical and cost view.
You just have to define your own E/P/C weight based on Cost.



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Sun, 2007-09-16 15:31
#5
Christian Adrian ...
User offline. Last seen 5 years 44 weeks ago. Offline
Joined: 3 Jun 2003
Posts: 193
Groups: None
Hello Nar

Cost & time are two different things, both item can show progress but not exactly the same. What you need to do is have your management agreed on which method should be used for showing progress (by cost, by time , or by other ways)then proposed that method to your client and tell them that it’s your best way to monitoring your project.

IMHO

Christian
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