PROBLEMS AND PRACTICES IN EPC PROJECT MANAGEMENT

EPC projects face many challenges to stay in the competitive world despite of the efforts made towards compressing activities by phase overlapping, in order to reduce time scale and to obtain better EPC projects. These project challenges lead to cost overrun and schedule delay.

But what are the specific factors and problems in EPC Projects; and the effective Project Management (PM) practices especially on petrochemical and oil and gas EPC projects in Thailand?

Mr. Raman Awale made a case study on “Problems and Practices in EPC Project Management: A Case Study on Petrochemical, Oil and Gas EPC Projects in Thailand”. His study reveals that major factors contributing to schedule delay and cost overrun are mostly related to material and equipment; lack of EPC contractor’s experience, lack or poor coordination and communication between Client, contractor and suppliers resulting to late approvals; poor planning and controlling; lack of top management commitment and unrealistic project scheduling.

His full abstract is copied and posted here.

ABSTRACT

EPC (Engineering, Procurement and Construction) projects are highly schedule driven where phases are overlapped to complete the project as early as possible. Moreover, these EPC projects are massive, utilize high skill and well train employee, acquires complex and complicated methodology/technology, needs fast information flow between different phases and close collaboration of multidiscipline as well. EPC projects are facing serious problems like crew idleness, rework and management dilemma which lead to cost overrun and schedule delay. Hence, this study aims to explore effective project management practices and problems faced in EPC projects especially on petrochemical and oil and gas EPC projects in Thailand, such that necessary proactive planning can be performed before to conduct such project effectively.

Methodology consists of three steps - pilot survey, interview approach and case study approach. Interview Approach (adjusted Grounded Theory Approach) is purposed to find out the significant delay and success factors together with effective management practices from various factors collected from literature review and pilot survey. Later, case study approach is used to validate the information gathered previously and to understand the relation and consequences of each factor in real situation. The respondent and interviewee were chief civil engineer, deputy chief engineer, director, project managers, construction manager, project engineers, process engineer, vice presidents, (Professional Experts) etc from 15 different EPC companies (9 Client companies and 6 Contractor companies).

The study reveals that major factors contributing to schedule delay and cost overrun are mostly related to material and equipment such as material shortage, procurement delay, or late delivery on site. Besides, delay in placing purchase order, design changes, lack of EPC contractor’s experience, late approvals, vendor information coming in late and further most due to the lack of coordination between Client, contractor and suppliers regarding exchange of information are other factors contributing cost overrun and schedule delay.

In addition, poor planning and controlling, lack of top management commitment, unrealistic project scheduling and poor coordination and communication are poor project management practices explored. However, subcontractor management and control mechanism, lesson learnt practice, involvement of construction and operational personnel during conceptual phase are success project management practice found. Furthermore, interface management and control, integrated team management, real time reaction, dispute management, risk management, stakeholder management, continuous and dynamic detail planning and monitoring during execution and being proactive to issues, carrots and sticks approach (incentive criteria), clear roles and responsibilities, etc are also the big concerns in terms of project management practice regarding controlling cost overrun and schedule delay.

The findings from this study can be helpful to EPC contractors, owners, investors, project managers, construction managers, engineers and other construction stakeholders to understand the major factors, causes and problems related to phase overlapping of EPC process. This will guide them in developing and adopting necessary effective and efficient project management practice to conduct EPC projects on cost, on schedule with good quality providing clients satisfaction and safety measures. This research can be viewed as a lesson learned approach.

Keywords: EPC Projects, Phase Overlap, Delay and Success Factors, Project Management Practice, Long Lead Items, Scope Changes, Lesson Learned