Jan 2023

While manufacturing excellence can sharpen the bottom line, growth in the Chemicals Manufacturing Industry is fueled by capital expansion projects. Yet the industry is riddled with projects that have gone astray with spiraling costs and extensive delays. In fact, poor project execution is so rampant that it is sometimes even accepted as the norm. But, is effective project execution so complex that the industry has to live with these problems? Are there measures that manufacturers can take to mitigate these issues? Thankfully, yes there are.

In this series of articles, we will go over the key measures that the industry could take to savor a smooth and controlled project execution experience. To exercise these measures effectively, it is essential to understand the project lifecycle. So, this first article of the series discusses the project lifecycle phases. Depending on the nature of the project, the duration can take a few months or even a few years. However, the phases that a project traverses remain principally the same. Broadly, the project lifecycle can be broken out as follows:

1. Engineering:

The final purpose of the engineering phase is to develop high-quality documents for the procurement and construction phases efficiently. To arrive at these documents, the engineering phase goes through the following stages and associated gates:

1.1. Conceptual Design: The objective of this stage is to conceptualize the project with activities like technology finalization, master planning, stage 1 (Preliminary) estimates for the project CapEx, and the project plan.

1.2. Basic Engineering / FEED: Basic Engineering / Front-End Engineering Design (FEED) defines the project’s process framework. Activities here comprise developing specifications for equipment, their interconnecting piping and instrumentation, and the equipment’s layouts. Stage 2 (Interim) estimates for project CapEx and project plan are also developed here.

1.3. Detailed Engineering: The objective here is to add discipline-wise details to the process framework for the development of the procurement specifications and construction drawings for the project. Additionally, applicable statutory approvals are initiated in this phase. Stage 3 (Final) estimates for project CapEx and project plan are also developed here.

2. Procurement:

The purpose of the procurement phase is the cost-effective and timely delivery of the project items and materials in line with the engineering specifications. This phase consists of the following stages and associated gates:

2.1. Preparation: Typically conducted in parallel with the FEED, preparatory activities include selecting and listing out the vendors for the project. In the case of special items, some vendor development activities may also be required. Logistic aspects are also covered here. And finally, the activity for identification and planning for the long-lead items is also conducted here.

2.2. Pre-Order / Order: Carried out in parallel with detail engineering, structured and time-bound pre-ordering / ordering of the items & materials goes a long way to ensuring schedule-driven projects. Activities consist of floating inquiries to the identified vendors, and techno-commercial discussions followed by negotiations and order placement.

2.3. Post-Order: Carried out towards the later part of detail engineering and thereafter, the objective here is to manage timely and quality-driven fabrication, inspection & testing, dispatch clearance, and delivery of items and materials.

3. Construction:

The purpose of the construction phase is the cost-effective and timely installation of the project items and materials in line with the engineering specifications. This phase consists of the following stages and associated gates:

3.1. Preparation: Carried out in parallel with detail engineering, the objective here is to efficiently plan the construction work. The erection tenders are accordingly prepared, floated, and awarded. The availability of utilities like electricity, water, etc. for the construction work is also planned.

3.2. Material Inventory: The purpose is to ensure that all materials received at the site are in good condition and safely stored for easy identification and retrieval during erection.

3.3. Erection: The purpose here is structured mobilization and management of the erection teams for quality, costs, and schedule of the erection process. The HSE aspects have strict adherence.

3.4. Finalization: As the erection works are completed, the plant gets readied for mechanical completion, followed by pre-commissioning and commissioning steps, and finally flows seamlessly into plant operations.

In the next article of this series, we shall discuss the first phase of the project, namely the Engineering Phase along with the potential risks for project delays and cost control measures.