By Munir Ansari – Senior Vice President, Local EPC
Introduction
Gerab National Enterprises has been accompanying the region’s growth for the past 45 years. Throughout that time, we have worked closely with our clients and their stakeholders, and supplied pipe system solutions to the projects that constituted the pillars for the most vibrant economies in the world. Across municipal, industrial, power & desalination, oil & gas, and civil applications Gerab has been trusted to provide the right pipe system solution materials consistently, reliably, and efficiently.
Supply to these projects requires extensive collaboration between all the stakeholders along the value chain: from the client through to the end user. Project designers, financers, consultants, and contractors must work with manufacturers, suppliers, logistics chain operators, legal and regulatory authorities, as well as other stakeholders in the B2B engine of the economy to ensure a smooth, productive, and profitable enterprise that meets operational objectives.
At the core of the supply chain for pipe system solutions to critical infrastructure and industrial projects is the link between the Engineering, Procurement, and Construction (EPC), and the pipe system supplier delivering materials for the project. The intersection of the EPC and the Supplier is where the final order and schedule come into play, and where any outstanding issues have to be addressed – with project challenges starting from the initial drawings and continuing through to final delivery, installation, and testing. In order to succeed, EPC teams must be able to rely on suppliers to deliver pipes, fittings, accessories, and ancillary materials on time across demanding project time lines, operational difficulties, budget constraints; and within stringent health, safety, and environmental requirements.
Challenges Faced by EPCs
In the course of their operations, EPC contractors face challenges that require collaboration and cooperation between stakeholders. From the early planning stages, resource constraints, financial risk assessments, and availability of resources must be addressed with the cooperation of parties spanning multiple countries, jurisdictions, laws, and languages. Quality manufacturers from around the world need to be identified and vetted with the help of the local suppliers who work closely with them. Costs must be accurately determined in the context of delivery times and locations, storage and handling requirements, as well as installation, fabrication, coating, and finishing that may be needed. Onsite considerations can add significant steps and costs to a delivery schedule, especially in offshore, remote, and difficult-to-access locations. Cash flow needs to be constantly monitored, and potential risks identified and hedged against.
This presents an opening for a second wave of challenges, this time relating to geo-political considerations. Once project materials are agreed to, budgeted, and scheduled, logistical considerations will expose material supply to trade policies, regulations, and reporting requirements across national borders, international standards, and fluctuating socio/political environments. Finally, unforeseen project delays can force into play considerations and challenges that could tip the scales on finely tuned project finances, workflow, and dependencies. All this needs to be addressed while retaining unwavering commitments to safety and quality control across every stage, and the management of cash flow in the event of unforeseen circumstances.
Overcoming the Challenges
To overcome these challenges, EPC contractors rely on the following:
Comprehensive Planning and Scheduling
Effective planning and scheduling are imperative to avoid delays, cost overruns, and resource availability issues. Unforeseen changes or scope creep can further complicate project timelines. To mitigate these risks, thorough feasibility studies and risk assessments must be done in cooperation and coordination with relevant stakeholders. All must be using the same project planning and scheduling tools, and leveraging the latest technologies in predictive tools fed with robust data from multiple sources across the value chain.
Effective Communication and Collaboration
EPC projects involve multiple teams from different disciplines including engineers, procurement specialists, and construction crews – often dispersed across various locations. This complexity can lead to miscommunication and misalignment of project activities. Establishing robust communication channels and collaboration platforms is essential. Utilizing project management tools that allow real-time updates, document sharing, and seamless communication among all stakeholders can significantly improve coordination. Regular meetings and status updates ensure that everyone remains on the same page and that any issues are promptly addressed, further strengthening the overall team cohesiveness necessary for these types of projects.
Cost Management
EPC projects are susceptible to cost overruns due to inaccurate estimates, fluctuating material prices, logistical bottlenecks, and unforeseen expenses. Robust cost management techniques, including detailed cost estimation, budgeting, and continuous monitoring, are critical.
Quality Assurance and Control
Ensuring consistent quality across all phases of an EPC project can be challenging, especially when multiple vendors, subcontractors, and specialists are involved. Developing a comprehensive quality management plan that includes clear quality standards and regular inspections and audits for all suppliers is essential for maintaining quality. Implementing industry-standard quality control systems like Six Sigma or Total Quality Management (TQM) helps to continuously monitor and improve quality.
Risk Management
EPC projects face numerous risks, including safety hazards, environmental impacts, and regulatory compliance issues. Failure to manage these risks can result in significant project delays and legal ramifications. Conducting thorough risk assessments during the planning phase to identify and prioritize potential risks and the impact of each risk is a necessary first step and budget item. Developing a “risk management plan” that outlines mitigation and avoidance strategies for each identified risk, and regularly monitoring and updating the “risk register” is crucial. Involving all stakeholders in risk management activities and implementing safety protocols and environmental protection measures can mitigate specific risks effectively.
Regulatory Compliance
Navigating the complex web of local, national, and international regulations can be daunting, and non-compliance can lead to project stoppages and legal penalties. Staying informed about relevant regulations and engaging legal experts to ensure compliance is essential. Incorporating regulatory requirements into project planning and execution phases and conducting regular compliance audits can help maintain adherence to all applicable laws and standards. Detailed documentation demonstrating compliance is essential and can prevent legal issues and ensure smooth project progression.
Project Delays and Change Orders
Change orders are inevitable in EPC projects, and they can disrupt schedules, impact costs, and lead to scope creep. Maintaining a structured change management process that includes documentation, evaluation, and approval of change orders is necessary. Clearly defining the scope of work in contracts to minimize ambiguities and ensuring that all stakeholders are aware of the implications of changes before implementation can help manage change orders effectively, but the ability to respond to project delays and change orders should always be sharp.
Supply Chain Management
An accurate project schedule built with the input of all contributors along the supply chain is critical to project success. It helps the supply chain identify critical path items and provides a more accurate scheduling of arrival of materials on site.
The Role of the Supplier
Supporting the EPC functions across projects and applications is a trusted supplier that is relied on to provide the agreed materials according to a project management schedule and in accordance with the specifications and international standards that are ideally suited for the application and environment at hand. In today’s complex supply ecosystem, a supplier plays a key role in the selection of materials and throughout their useful life. They provide initial input on product availability, budgetary costs, and logistics path, as well as cover any legal and regulatory requirements of multiple suppliers from around the globe, effectively contributing to the overall management of resource constraints, and financial risks, and offering alternative options to safeguard the supply chain.
Throughout the supply cycle, the supplier actively secures the availability of reliable suppliers, maintains adequate stocks to hedge against project variations, and ensures quality control at all stages. They support EPC functions with on-time deliveries, technical support from manufacturers, installation, machining, and coating. They ensure the availability of the relevant ancillary materials, equipment, and tools – in the right quantities and at the right locations. To do this, Gerab operates 291,635 m2 of indoor and outdoor stocking area in the UAE, KSA, and Iraq to strategically feed into client supply chains and project requirements.
Over a 45-year history, Gerab has consistently applied innovative and best-practice processes to provide EPC with a competitive edge through supplying diverse product ranges, as well as meeting short notice periods, on-time delivery schedules, and bulk requirements at competitive rates.
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Munir Ansari – Senior Vice President, Local EPC