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October 2007

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Controlling automation contractors

Front end planning may take time, but will save you big time in the end

By Saleh A. Alqaffas

Process automation system (PAS) expenditures represent about 3% to 5% of an overall project budget. Improper planning, design, and implementation can drive the cost of PAS by an additional 10%-25% of its value. In addition, PAS is the foundation for plant operations, which can result in 100% downtime if not properly designed and configured. That is why it is key to focus on PAS during the initial front-end engineering design phase to ensure overall PAS design, scope, and integration requirements get the proper definitions.

Traditionally, PAS projects’ front end engineering design (FEED) phase has been done by design contractors in the absence of a supplier.  Similarly, during the detail design and construction phases, lump sum turnkey (LSTK) contractors have typically performed the role of the automation contractor while the supplier remained limited to implementing the design packages.

This approach has resulted in numerous project execution problems including:

• Unplanned scope changes
• Unplanned resources
• Design inconsistencies
• Poor interfaces between technicians, project management teams, and subcontractors
• Inconsistent selection of equipment and materials

As a practice in the industry to overcome the problems associated with the traditional project execution approach, the main automation contractor (MAC) came about to address the following business drivers:

• Economics
• Accurate definition of PAS scope prior to project detailing
• Reduction in change orders
• Improvement in project schedule
• Better integration with third party equipment

With the MAC concept, an early involvement in the project design can positively influence project cost, while late involvement in a project could result in additional cost expenditures due to change orders and contingencies.

Starting MAC early in the project design phase can positively influence project cost.

The MAC concept is an industry trend and widely used by major oil and gas users as a strategic project execution tool.  MAC can cut process automation project costs by 10-15%, improve the overall schedule, improve total integration quality, and reduce risks.

MAC benefits include:

• Involvement in each automation area will contribute to consistency and higher quality of procedures and specification documentation.
• Will contribute to higher quality integrated systems from the field instrument to the board room.
• Early involvement during front end engineering design phase reduces project cost via reduced change orders, lower contingency, and shortened development time. Estimated project cost reduction is in the range of 10-15%.
• Will improve overall automation schedule due to early involvement in front end engineering design package development. Typically, a user can save more than five months in project schedule due to MAC early selection and basic design availability.  This concept would take the automation system out of the critical path during detail design and construction phases.

MAC execution

In support of the MAC concept, an engineering procedure details applicability, execution methodology, selection criteria, scope boundaries, and proposed activity timeline. This procedure applies to all types of process automation projects.

Applicability

MAC is applicable to all project types involving PAS.  For all project types, the project management team should pre-select MAC with the scope clearly defined and rolled directly under the lump sum turnkey contractor.

Project types limited to PAS equipment expansion, upgrade, total replacement, and modernization can contract directly with MAC without the need for a lump sum turnkey contractor. 

In projects with multiple lump sum turnkey contractors, the MAC scope should go out to all contractors. Each lump sum turnkey scope shall cover the PAS scope specific to its area.  One lump sum turnkey contractor should have the overall responsibility for PAS integration.

MAC should be the single point responsible body for the overall PAS scope including integration, rationalization, and standardization.

Execution methodology

Once a project concept design wraps up, the assigned project management team can detail the PAS section and generate a MAC bid package for selection.  MAC selection process should follow company established practices and procedures.  MAC execution methodology should cover scope boundaries and follow the timeline described in sections below.

MAC scope

MAC responsibility and scope boundaries include:

1. Equipment
   a. Control systems
   b. Auxiliary control systems
   c. Safety systems
   d. Field instrumentations
   e. Applications
2. Engineering services
   a. PAS design development
   b. Material ordering and handling
   c. Systems configuration
   d. Systems integration
   e. Third party system management
   f. Systems testing and shipment
3. Construction services
   a. PAS and auxiliary systems installation
   b. PAS network systems installation or supervision
   c. Site testing
   d. Commissioning and startup
4. Operation services
   a. Training
   b. Spare parts supply
   c. Systems maintenance and management

TimeLine

The following milestones structure should ensure early involvement of the MAC in the front end engineering design phase and capture benefits realized from MAC executed projects:

MAC bid package: 

Upon approval of a project Concept package, project management team should immediately commence preparation of the MAC bid package.

Development of the MAC bid package should occur with the assistance of a specialized PAS design contractor, pre-qualified to perform this activity.

The MAC Bid Package should wrap up no later than two weeks after the start of the front end engineering design phase.

MAC selection: 

The MAC bidding, evaluation, selection, and approval should final no later than two weeks after the start of the front end engineering design phase.

FEED phase: 

MAC personnel should be onboard with the front end engineering design contractor to develop the process automation package no later than 8-12 weeks from the start of front end engineering design phase.

MAC scope adjustment: 

MAC should adjust any scope changes during front end engineering design package development and prior to issuance of lump sum turnkey bid package per the approved project schedule.

Lump sum turnkey selection: 

MAC should be part of the project team supporting job explanation, clarifications, and evaluation during lump sum turnkey selection.

MAC/LSTK scope validation: 

Selected lump sum turnkey contractors should verify the PAS scope under its responsibility with MAC within a grace period of two weeks after selection.

Identified changes and clarifications should be discussed and resolved by project management team, MAC, and lump sum turnkey contractors. Based on the validation process, changes affecting MAC and lump sum turnkey scopes should adjust accordingly.

Detailed design: 

MAC is part of the lump sum turnkey team to provide engineering services per the approved project schedule.

Construction: 

MAC is part of the lump sum turnkey team to provide construction services per the approved project schedule.

Operation: 

MAC should be available to execute operational services such as training and systems support.

Front end engineering design phase captures MAC benefits.

MAC capabilities

MAC selection comes from an evaluation process to assess its capabilities and experience on executing MAC type projects covering the following minimum criteria items to ensure successful implementation and mitigate any potential risks:

Scope 

Capabilities to supply project scope boundaries of equipment, engineering, construction, and operation services.

Optimum solution 

Has the resources and methodology used to conduct evaluations required to identify most cost effective solution and best suited technologies that meet project functional requirements.

Total solution integration 

Capabilities to provide total process automation solution integration comprising of its own supply products and products from third party suppliers.

Projects experience 

Executed MAC type projects over the last three to five years covering all project phases of front end engineering design, detail design, construction, commissioning, startup, and operational support.

Manpower resources 

Has the quantity and right manpower resources to execute MAC type projects scope and throughout the all project phases.

Third party resources 

Has resources and methodology to establish formal coordination with major packaged equipment vendors to ensure supplied instruments and control systems are compatible with the MAC system for overall process automation solution and integration.

Project management 

Has methodology, manpower resources, and expertise available within its project management organization to successfully execute MAC projects.

Project control 

Has project control and engineering tools within its project management organization to successfully execute MAC type projects.

Change management 

Ability to manage unexpected scope changes or demanding schedule changes during project execution and the ability to resolve disputes and conflicts with contractors and third party suppliers.

Procurement resources 

Has methodology, tools, and manpower resources within its procurement organization to successfully execute MAC type projects.

Documentation control 

Has methodology, tools, and manpower resources available within its organization for effective management and control of project documentation including its and third party supply.

Quality assurance 

Has methodology, manpower resources, and expertise available within its quality assurance organization to successfully execute MAC type projects.

Execution centers 

Has execution centers locally and worldwide to execute MAC type projects with proper infrastructure of staffing levels and organization structure.

Third party alliances 

Has established alliances with as many of the following parties involved in projects execution:

a. Oil and gas customers

b. Lump sum turnkey contractors

c. Auxiliary system vendors

d. Major equipment suppliers

ABOUT THE AUTHOR

Saleh A. Alqaffas is an engineering consultant with Saudi Aramco, Process & Control Systems Department. He holds a BS degree in Electrical Engineering from the University of Pittsburgh, and a MBA degree from the University of Hull, U.K. He is the chairman of the Process Control Standards Committee with Saudi Aramco and president of the Saudi Arabia Section of ISA.