Delays in Project Execution Engineers working in projects often share that they are under tremendous pressure from Management or Client due to the delays in execution. It is true for PC folks as well. I will touch upon two areas. 1) Statutory and Regulatory Approvals during Pre-Project : Some organisations do not consider the project as initiated unless all the required approvals and permissions are obtained. The Project execution resources are accordingly planned and mobilized only when the green signal to proceed is granted. Until then only the relevant internal teams will be working. However, many organisations try to utilize the approval time for preparing specifications, tendering and contracting activities. The time required for approvals is assumed considering the current status or direction from the top. This is a risk and should be handled under risk management. The Problem starts when the contracts are awarded and still some of the critical permissions/approvals are pending. It is then the delays are observed, highlighted, reviewed and attributed. The complete project team gets impacted. A few projects might never take off if the approvals are put on hold. 2) Foreign Vendors : Many EPC projects require major equipment to be purchased from foreign vendors (mostly European and US). These equipment generally drive the critical path of the project and any deviation from the schedule baseline can jeopardize the project. Here as well, the schedule is prepared based on the project’s need and concurrence from the vendors during the bidding stage. However, some vendors don’t follow the timeline, neglect to provide progress updates, avoid sharing information and often function based on their own priorities. The Project team becomes helpless in such situations to deal with the vendors and expedite the deliveries. In the above two scenarios, is ‘delay’ the issue? Who is responsible? What can be done to improve? Meanwhile, engineers need to continue their work of planning, execution, monitoring, highlighting the concerns, doing their best and leave the rest to the higher ups. Please share your thoughts...... #projectmanagement #projectcontrols
As explained above , many critical equipment which drive the project schedule have to be ordered much before actual award of EPC project as long lead items. Present trend is that enquiry indent is entrusted with pmc to be made with advance information from licensor. Offers evaluation technical recommendation and order placement is completed before EPC . Certain information like nozzle orientation. Nozzle loads civil loads data. Foundation template. Involves exchange of information with long delivery equipment vendor and EPC coordinated by PMC. Hence in whole process licensor, client. Long lead item vendor PMC and EPC are involved. Often conflict of interest occurs for justifying delays.pmc suffers in this process and result is for delays, lions share of blame is transferred to pmc.
Most of the project residual risks is most of the time cascaded to Construction, Pre commissioning & Commissioning. Being on the Contractor side, we fail at meeting the initial and critical milestone which drives the aspect of project management and risk management. For example, a contractual milestone such as Planning Package Submission to be done by +15D from Contract Effective date. Contract Effective date is 10-May and signing off of contract happens on 20-May and Proposal to Project Team handover happens on 22-May. This delay might have a cascading effect on the project.
Vivek Lamba
1mo
Thank you for sharing these insights! Delays in project execution are indeed a multifaceted challenge. The points you raised about statutory approvals and foreign vendors are critical. It's interesting to consider how proactive risk management and clear communication channels with vendors could mitigate some of these issues. Perhaps incorporating more stringent contract clauses or penalties for delays could incentivize timely deliveries. Additionally, leveraging technology for real-time tracking and updates might help keep all stakeholders aligned. #ProjectManagement #RiskManagement
There are three 3 general stages of the project. 1. Bidding to award 2. Award to start of execution 3. Execution If you have to succeed in execution, you have to utilize the time of stage 1 & 2, positively in planning, construction and procurement strategy, resources, mobilization of project team, streamlining the execution procedures, cash flow, funding. You may feel the initial cost/ expenditure more but this will avoid lot unnecessary cost overruns in execution.
Delays in Statutory and Regulatory Approvals From the client's perspective, delays in statutory and regulatory approvals can significantly postpone project timelines, causing financial strain and potential legal repercussions. For the contractor, these delays disrupt planning and resource allocation, often leading to idle labor and equipment, and increased overhead costs. Delays with Foreign Vendors When foreign vendors are involved, delays in procurement and delivery can arise due to logistical challenges, customs clearance issues, and currency fluctuations. These delays impact both the client's schedule and the contractor's ability to maintain workflow continuity, leading to potential penalties and increased project costs. Responsibility and Mitigation In these scenarios, the issue of 'delay' affects both the client and the contractor. Responsibility often depends on contract terms and the specific cause of the delay. To improve outcomes, project teams can adopt proactive measures such as rigorous risk management, enhanced communication channels with stakeholders, and robust contingency planning. Engaging in early and thorough coordination with regulatory bodies and foreign vendors can also minimize potential delays.
Binny VT AAPE
1mo
Point 2: I've encountered this scenario frequently during EPC execution. It's essential to understand the process: Clients often have an Approved Vendor list specified in the contract that they want the EPC contractor to use. In many Middle Eastern FIDIC contracts, even though vendor management is the contractor's responsibility, the contractor can raise an excusable delay if the client insists on using a different vendor than the one initially proposed by the contractor during the TBE cycle. Additionally, while awarding contracts to vendors, many companies have revised their PO terms. For example, 10% payment after PO, 5% after KVD approval, 15% after manufacturing starts, 10% upon adhering to monthly and weekly reports, 40% upon completion of Man and FAT, and 10% upon delivery. Implementing stringent terms can mitigate risks. Frequent vendor visits by project engineering (with budget allocated) are crucial to addressing bottlenecks.
What can be done to improve vendor performance? There are many aspects involved. Do the Vendor see continuing business with the EPC or End Client important? Are there stringent requirements in End Client's standards over and above industry standards? Is the owner team competent and willing to look at the spirit of what is in the standards rather than looking at the letters the same way you mentioned about the report review situation? Do the EPC Contract allow EPC Cash Flow to release payments to vendors as per their terms with the EPCs? Is the EPC stable and motivated? etc. etc. Many of them are beyond any single entities' reasonable control. Stay focused, plan, replan, plan again, stay focused and complete. Not easy at all and no one size fits all. Schedule-good if it is met, else seek approvals and re-baseline. Again, easier said than done.
Other type delays in dealing with vendors. 1)Normally EPC packages are split plant wise, ISBL, OSBL for a big complex plant. EPC places order on the lower bid vendor as per approved vendor list. This lowest bid vendor naturally is getting order from the other EPC packages and he is oveoaded and not able to meet delivery schedule 2)Other delays like technical conflicts and deviation in the course of the project, client takes too much time to conclude. 3)Also any variation in contract, client do not approve resulting in too much delay
Lead Planner | Project Controls Manager
1moPoint 1: During FEED execution, clients are often well-informed about the market and may advise contractors to obtain quotes from various construction contractors to establish pricing. When the EPC (Engineering, Procurement, and Construction) contract is definitive, vendors and contractors tend to show maximum interest in responding to inquiries from the main FEED contractor, who could potentially become the EPC contractor. During this process, the EPC contractor can coordinate with the vendor to understand whether they are procedure-driven and paper-oriented and take note of this information. You only approach the vendor once you have a complete MTO (Material Take Off), plot plan, and drawings. Area details are usually provided by the client as part of the early FEED package. Additionally, contractors typically prefer to approach subcontractors who are local or have better knowledge of the area. So why can't these groundwork tasks, such as understanding the requirements for obtaining permits (including the worst-case scenario for duration), local area requirements, and regulatory norms, be thoroughly addressed before the closure of FEED to avoid the risk of carryover to EPC?