On-time delivery of products and services is critical for customer satisfaction and in order to strengthen professional relationships. Poor delivery performance is seen as an indicator of poor materials handling, bad project management, and low production efficiency. This reflect on a business’ reputation and the likelihood of winning future projects. This is particularly applicable for EPC (Engineering, Procurement and Construction) projects as they are usually vast, as well as highly schedule driven. This post will look at the factors that affect the on-time completion of EPC projects and how to improve the likelihood of meeting deadlines.
Risks for EPC’s who don’t deliver on time
EPC projects require highly skilled employees, complex technology, high-quality manufacturing equipment, fast information flow and close collaboration between various departments. A Lump Sum Turnkey contract (LSTK) gives the EPC contractor full responsibility of the project including the schedule and budget. This means that delays in the delivery of a project often results in contractors being liable to pay large financial penalties that have the potential to be detrimental to their business.
Proper management of time and resources, as well as partnering with highly-competent subcontractors are some of the key factors that can help teams deliver an EPC project on time.
Contributing factors for EPC delays
EPC contractors face many challenges in their operations. Here are some common factors that can contribute to the delay of a project schedule as well as cost overrun.
- Design changes. Change in design specifications is unavoidable, especially as the project progresses. When a design change is made, the team will have to assess what particular areas will be affected as well as determine the resources needed to apply changes. The ability of the team to cope with these changes could dictate how and when the entire project will be completed.
- Lack of manpower. Manpower plays an important role in the execution of projects. Lack of skilled and qualified personnel to get the job done can become a problem and can cause the project to be delayed. The team will need to ensure that they have the complete headcount ready before the project starts, and consider bringing in outside expertise at critical stages.
- Rework. Rework is often a result of the insufficient experience of workers, poor material specification, and poor quality of raw materials used. Rework not only causes delays but will also lead to higher production cost. EPC teams will have to ensure that the right person is deployed to do the job in order to ensure the design is correct and the most suitable materials are specified.
- Material shortage. Improper planning of resources can often lead to material shortage. This can be caused by the delay of procurement and late delivery from suppliers. Procurement teams need to ensure that a sufficient supply is on hand, with an applicable amount of buffer material just in case the production team needs it.
How can outsourcing help the on-time completion of EPC projects?
Outsourcing helps businesses to reduce cost and allows internal staff to focus their time on core business functions. This also allows them the opportunity to solve capacity issues, enhance service quality, and have access to intellectual capital.
Outsourcing engineering processes has been growing steadily over the years due to the expensive cost of building and maintaining internal engineering resources, high fixed costs during peak product development periods, and a shortage of highly-skilled engineers.
EPC companies who outsource their design and development activities can expect to benefit from the following:
- Knowledge and expertise from highly skilled engineers. Outsourcing companies have highly experienced engineers that have successfully executed product design and developmental life cycle projects for global EPC teams. This means that a team of engineers who are proficient in product engineering, reverse engineering, and value engineering can help companies develop feature-rich, high performing products.
- Access to product research and development while controlling costs. While investing in research and development areas may seem too much of a cost for some companies, outsourcing them can actually work out way cheaper. Organizations with a Value Analysis / Value Engineering team (VA/VE) can help EPC teams identify and eliminate areas where high costs could be incurred, therefore saving potentially huge sums of money.
- Maximize the use of external resources. Outsourcing helps companies focus on the areas where they have the strongest capability while passing on those that require too much time and financial resources. A subcontractor with the right resources such as product simulation and engineering (SAE), and mechanical engineering and design services such as CAD conversion and CAD digitization can fulfil jobs and activities that the company is unable to do at a pre-determined and agreed stage of the project.
For EPC teams who are looking for ways to save time, effort, and unnecessary expense, Cambay offers amazing design and development services. Talk to our specialists today to find out how we can help you complete your EPC projects on time.