Management of Medium-Size /

Revamping Projects
Oil & Gas Downstream Projects
9. Construction and Fabrication Management

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013

 Management of Medium-Size /
Revamping Projects: course content

I. Introduction
II. Preliminary Studies
III. Basic Engineering (or FEED)
IV. EPC Contracting
V. Organization and Engineering
VI. Procurement
VII. HSE, Quality and Risk Management
VIII. Project Control (cost/schedule)

© 2013 - IFP Training

IX. Construction and Fabrication Management
X. Completion / Commissioning / Start-up / Closure

RC - PR GES - 08174_A_A - Rev.1 - 18/07/2013 1

 Construction Contracting Issues

© 2013 - IFP Training

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 2
 Scope and objectives

 Scope
• Prefabrication of equipment and transportation to project site
• Site preparation including civil works
• Erection of main equipment, installation and connection

 Objectives
• Assure prefabrication of equipment and transportation to the site
• Confirm and implement the site construction strategy and
organization
• Ensure timely mobilization and control of field subcontractors
• Achieve the construction challenges (Safety, Quality, Schedule,
Cost)

© 2013 - IFP Training

• Adequate communication with Owner, to prepare smooth
handover

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 Construction challenges for Medium-Size
and Revamp Projects

 Availability of construction manpower: a medium-size project

may still require up to 2000 workers at peak (typical in Middle
East), with more than 30 different nationalities

 Remote locations (South and North America, Australia, Deserts,

Africa) with limited infrastructure and serious access difficulties

 Local requirements often call for maximum use of local

construction workforce (capability and productivity concerns)

 Construction schedule pressure due to market pressure, weather

issues, and shutdown durations for revamping projects

© 2013 - IFP Training

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 4
 Fabrication contractors

 Generally Fabrication / Integration Contractors are Yards /

Shipyards

 Fabrication cost (key issue) is continuously changing the

landscape

 Effective fabrication workshop are located sometime in Oil & Gas

production areas
• America: Mexico Gulf, Brazil, Venezuela
• Middle East: Arabic Gulf, Caspian Sea, Northern Russia
• Far East:, Korea, Singapore, Indonesia, Malaysia, Southern Thailand
• Europe: Northern England, Norway, Spain

© 2013 - IFP Training

… but this is sometimes very far from Project construction sites

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 5

 Construction contractors

 Construction Contractors are either locally established Companies

or Companies operating in some areas, or relatively worldwide

 In many countries, local companies are generally specialized by

trades (Civil works, Structural Steel, Mechanical, E/I)

 General Contractors exist in many locations

 Direct Hiring for construction by EPC Contractor is a possibility

 Experienced Construction personnel should be selected for

• Construction field supervision (extensive training may be required)
• Revamping works during plant operation and shut-down

© 2013 - IFP Training

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 6
 Unit-rate contracts

 “Price schedule” or “unit rates” contracts:

• extensively used for onshore Lump Sum projects to meet Project
Schedule
• Direct cost: unit price for each item of a detailed price schedule
• Plus lump sum for indirect costs
• The subcontractor guarantees a progress rate and completion dates

 Flexibility advantage as:

• Quantities cannot be known exactly until detail engineering is
completed
• The subcontractor can progress as long as work front is available,
even if there are some delays for some activities of the construction
schedule

© 2013 - IFP Training

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 7
 Unit-rate contracts

 The contract structure is prepared with a Master Subcontracting

Package (MSP) and specifics are added for each contract type;
e.g., typically:
• Site preparation
• Piling, Civil works, U/G piping, roads, Buildings (independent or
together)
• Structures fabrication
• Piping pre-fabrication
• Mechanical erection (equipment, piping, structures)
• Electrical works

© 2013 - IFP Training

• Instrumentation works…
• Insulation, Painting (independent or together)

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 8

 Transportation

© 2013 - IFP Training

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 9
 Transportation

 Minimize transportation cost / erection cost

 Balance large lifting requirement cost versus advantage of direct

delivery / erection onto foundations

 Delivery of abnormal loads (heavy, large):

• On-land Transportation studies to site foundation
• Rigging study for erection

© 2013 - IFP Training

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 Heavy lifts & Transport on barge

© 2013 - IFP Training

320 tons Coke Drums
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 Heavy lifts - Rigging study

© 2013 - IFP Training

840 tons column
RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 12
 Modular approach

 Modularization may save considerable time and/or cost for:

• Projects in areas where construction manpower is limited and/or
expensive

 And for:
• Revamping projects with modules which will be installed during
shut-downs, instead of erecting corresponding facilities

 Modularization may include all kinds of facilities:

• PAU: Process Assembled Units
• PAR: Process Assembled Racks
• Main constraints are due to transportation limits

© 2013 - IFP Training

Discuss: what is the difference between modules and skids?

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 13

 Modularized sulfur recovery unit

© 2013 - IFP Training

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 14
 Module construction

© 2013 - IFP Training

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 15
 Module transportation

 Road transportation on low-bed trailers possible for smaller

modules
 Sea transport of modules requires
 A MOF facility at or near site to berth barges or vessels for
unloading:
• RO/RO (Roll On – Roll Off) using SPMTs (Self Propelled Modular
Transporters)
• LO-LO (Lift On – Lift Off) using Heavy Lift Vessel cranes
• Shore cranes
 And a suitable hauling road from MOF to site.

© 2013 - IFP Training

Sea Transportation Vessels and SPMTs Transporters are in limited
in numbers and should be hired well in advance (pre-commit
before project sanction)
RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 16
 Module transportation + lifting

© 2013 - IFP Training

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 19
 Site Construction Execution

© 2013 - IFP Training

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 Subcontractor selection process

 Objective: select construction contractors who will ensure

cost/schedule effective fabrication and construction
 Surveys of potential contractors / pre-qualification criteria:
• Motivated by the Project
• Qualified for the works to be performed / similar successful
experience
• Qualified manpower resources available in the projected time
window
 Preparation of a list of acceptable Subcontractors
 Competitive bidding (formal tendering procedure) leading to:
• Acceptance of contract conditions

© 2013 - IFP Training

• Good understanding of the scope
• Most competitive rates
RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 21
 Strategic highlights

 Construction / fabrication activities split by work packages,

according to WBS:
• By Process Units
• Then, by discipline
 Splitting allows to group several packages after analyzing bid
responses
 Splitting or not splitting is a trade-off between:
• Securing enough contractor resources to provide reliable execution
• Limiting the number of interfaces and of different contractors
 Too many interfaces will make the project difficult to manage by
Owner

© 2013 - IFP Training

 Medium-size revamp projects, if too small, may not be split

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 22

 Construction challenges for Revamping Projects

 Construction must overcome general challenges, as discussed before:

• Availability of construction resources, particularly manpower
• Remote or semi-remote locations
• Local Content requirements
• Schedule pressure from Project schedules shortening
 But, revamping projects include works in live facilities (“pre-shutdown”
works) and during facilities shutdowns (S/Ds); to be executed with
specific methods:
1. To protect safety of Site Operations & Project Construction personnel and
integrity of the facilities with stringent work procedures: Site HSE
Management System, PTW (Permit To Work) with detail Method
Statements
2. To minimize facilities shutdown time due to project execution: pre-
fabrication, modularization; use of planned « usual » S/D and of « given »
S/D; controlled pre-shutdown cold works and « hot work » in live facilities

© 2013 - IFP Training

3. To tightly control execution time during S/Ds: use of a detailed planning &
control system (“Job Cards”); to mobilize dedicated S/D construction
teams (Project, Plant)

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 23

 Skids: special concerns

 Skids are often small (“EPC”) units; concerns for alignment with
other facilities design, procurement & construction include:
• Design capability of Vendor e.g. for instrumentation, electrical
design to be carefully checked and controlled
• Equipment standardization: consider free issue of components
(instrumentation, minor piping parts, pump seals)
• Process Control integration (PLCs: Programmable Logic
Controllers…): standardization, design, FATs, SATs
• Acceptance of “Vendors standards” in particular for utilities skids
such as N2 production, instrument air, cooling systems

© 2013 - IFP Training

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 24
 Execution Plan Highlights

 Occupational Health & Safety Plan, Security Plan

 Organization, Management plan, Subcontractor administration

 Accommodation, site offices, Accesses & Traffic, various Logistics

 Construction methods, heavy lifts, prefabrication

 Materials Management

 Change Management

 Field Engineering and Supervision, Schedule and Quality Control

© 2013 - IFP Training

 Anticipation of Commissioning and Handover

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 25

 Key Construction Management procedures

 Interfaces Management
 Roles and responsibilities between Subcontractors, and with
Owner
 Decision Process (changes, financial matters, safety issues)
 Project quality documentation circulation, approval and follow-up
 Communication (periodic meetings, reporting, staff
presentations)
 Deviation Requests to construction standards, approval
authorities
 Non-conformance procedure, near-misses, incident investigation

© 2013 - IFP Training

 Change Order Procedure, Owner and Contractor rights,
traceability

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 28

 Specific safety risks for projects in existing facilities

© 2013 - IFP Training

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 29
 Construction HSE Prevention Plan components

 Subcontractors Selection Criteria, Subcontractor Management

Commitment
 Professional Competence (qualification and training of workers)
 Safety Communication, Safety Information, Safety Meetings
 Work Preparation and Organization, Risk Evaluation, Job Safety Analysis
 Accidents / Near Miss Incidents Investigation and Reporting
 Report and immediate correction of Unsafe Conditions and Behaviours
 Field and System Audits, Continuous Improvement System
 Permit To Work system for work in existing facilities

© 2013 - IFP Training

 Safety awareness at site and at facilities used to work at site

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 30

 Work permit types

 Cold work permit

 Hot work permit category 1 (involves positive source of ignition)
• Naked flame, electric welding, grinding, hot air gun, electrical induction
pre-heating / stress relieving
 Hot work permit category 2 (involves potential source of ignition)
• Dry grit shot blasting, cutting, chipping or wire brushing using air /
hydraulic tools, use of electrical drills, use of equipment with portable
diesel engines, use of non-certified electrical equipment, opening or
working in live electrical junction boxes, use of radioactive sources, use of
powered vehicles / cranes...
 Enclosed space entry permit
 Excavation permit

© 2013 - IFP Training

 Radiography permit
 Electrical isolation permit

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 31

 Construction schedule drivers

 Availability of up-to-date Engineering documents

 Equipment and bulk timely delivery

 Consistent progress by trades, consistent with planned progress

 Workfront availability

 Recovery measures in case of schedule slippage

 Completion by systems, as soon as works complete

© 2013 - IFP Training

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 32
 Construction schedule: taking advantage of shutdowns

 Existing facilities are subject to maintenance S/D from time to time, to be

considered when planning a project which requires stoppage of units or other
facilities
 Planned Shut-Downs (shown in the Plant; several years sliding operation
calendar):
• Major Plant turn-around S/D for general inspection, repairs… (Typ. every 3 years;
typ. duration several weeks)
• Major unit turnaround S/D (if several trains or spared units or unit by-pass
possible)
• S/D for major overhaul of large unique equipment
• Other intermediate shut-downs (e.g.: “hot path” inspection of GTs: typical every
8,000 oper. hrs; typ. duration 2 days)
• S/D due to planned shut-downs of upstream facilities providing feedstock to the
Plant (outage)
• S/D for execution of other projects under way

© 2013 - IFP Training

 Unplanned Shut-Downs occur from time to time due to unexpected reasons
within the existing facilities concerned by the project or upstream an provide
possibility to perform “opportunity tie-ins”.

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 Works during shutdown phase

 Civil: foundations replacements and reinforcements (should be avoided

due to duration)
 Mechanical: equipment replacement (exchangers, vessels…); column
trays and/or other internals replacement; rotating equipment
modifications (pumps, compressors, GTS…); chemicals replacement
(e.g. mole sieves); heaters modifications…
 Piping completion: dismantling, remaining erection, remaining tie-ins,
hydrotests, insulation, painting
 Instrumentation completion: dismantling, remaining installation &
connections; loop checks
 Electricals completion: dismantling, remaining connections

© 2013 - IFP Training

Dummy assembly of piping, structure, equipment internals, column
trays… to avoid erection problems as far as possible; marking of items
to be removed

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 34

 Job cards

 “Job Cards” sheets: a method to define and control revamping works (in
particular S/D) by detail itemization of work & required resources, material &
time
 Work is defined by reference to Commissioning sub-systems; PIDs, GA
drawings tie-ins list per discipline (showing work definition for ea. S/D)
 Equipment card: new or modified equipment
 Piping card: a piping network with limits defined by tie-ins, equipment nozzles
or sub-systems limits (a commissioning sub-system includes 1 or several JC)
 Job Cards identify applicable technical documents (PID, installation and
dismantling dwgs, list of included isos & tie-ins), & include:
• Detail work description; sketches showing system dismantling, installation, tie-ins
• Safety requirements with required personnel
• Construction personnel & man-hours
• Construction equipment (scaffolding, crane, tools… with sketches for erection)

© 2013 - IFP Training

• Required material and Bill Of Materials by isometric
• Required QC

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 35

 Job cards

 The Job Card detail work split allows, ahead of Shutdown, to:
• Estimate man-hours by Card and globally required
• Plan/schedule Shutdown by Card, with manpower histograms
• Assign construction teams by geographical areas
• Use similar system for construction & commissioning
• Prepare materials by Card (piping spools are identified by their Card
number, erection materials are bagged & tagged per Card)

 During the Shutdown

• Progress report by Card and globally, daily
• Quality control and punch list by Card
• Better evaluation of completion progress

© 2013 - IFP Training

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 36
 Typical Construction Schedule

Site Preparation

Civil Works, Roads, Railways Mechanical

Structural Steel Completion
U/G Piping Installation
Equipment Erection
A/G Piping Erection
Generally on the critical path
U/G Electrical Cables
A/G Electrical Installation
Electrical Tracing
Instrumentation
Fire Proofing

© 2013 - IFP Training

Painting - Insulation
Precommissioning

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 37

 Typical conditions for good piping erection

 % of Isometrics Issued AFC*

 % of Pipe Spools Available

 % of Equipment Nozzles Available

 Pipe Supports and Pipe Racks Available

 Piping Material Supplied to Prefabrication Workshop

 Construction Equipment Available

 Construction Resources Mobilized

© 2013 - IFP Training

*AFC = Approved For Construction

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 38

 Material management system

 Major EPC Contractors have implemented an integrated Material

Management System which incorporates all data on commodities
requisitioned, bill of bulks materials and their procurement status.
 Purchasing, expediting, inspection, shipping, receiving and site storage
and handling information is loaded in the system, successively by
engineering, procurement (expediting) and construction.
 The system allows individual tracking of bulks items from MTOs to the
site
 At Site it allows to:
• Continuously update the material warehouse inventory upon material
receipts
• Issue OS&D reports

© 2013 - IFP Training

• Know the status of material deliveries and check or forecast availability of
material for pre-fabrication or erection in order to plan the fabrication /
construction or expedite lacking items (this can also be done at Home
Office).
RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 39
 Monitoring of construction

 Progress Measurement
• Weekly Progress follow up by Work Quantities / Man-hours

 Productivity Analysis

 Man-hours Expenditure
• Weekly man-hours follow up per trade

 Trending and Forecasting

• Compare Yields Man-hours per Work Quantities
• Look for Trends
• Permanently update the forecasted finishing date

© 2013 - IFP Training

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 40
 Monitoring of construction

 Construction progress control allows to calculate a planned progress

when implementing the system, and to calculate the physical progress
and the forecast progress.
 The construction work is divided into unitary works, all measured in the
same unit (e.g. construction man-hours, using available estimated man-
hours and ratios).
 These works are then aggregated into work item, category,
construction trade, worksite
 Achieved physical progress: work achieved / work planned. Checking of
achieved items allows to calculate corresponding “earned man-hours”.
Physical progress = earned man-hours / planned man-hours
 “Productivity”: earned man hours / spent man hours

© 2013 - IFP Training

 Reports are prepared weekly and monthly.

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 41

 Temporary Construction Facilities

 Adequate temporary facilities are essential:

• Owner/Contractor/Subcontractor offices with modern telecomm
• First Aid / Medical Aid Facilities
• Housing facilities for subcontractors, cafeteria, showers, toilets
• Construction Contractors Warehouse / Consumables Store
• Main Laydown Area
• Concrete Batching Plant (if on site)
• Piping site prefabrication area (in safe location)
• Dress-up area, Air coolers assembly area
• Plant & Vehicles maintenance facilities
• Painting & blasting workshop

© 2013 - IFP Training

• Hot insulation & cold insulation shops
• Access roads & gates

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 42

 Construction quality control

 Detailed Quality Control Plans are prepared to check construction

quality for all areas of construction by inspection and tests, as
construction progresses and works are completed
 Quality is controlled by the Quality Control teams (Construction
Contractor, Main contractor, Company) which include:
 Piping & mechanical inspectors
 Civil works inspectors
 Welding inspectors
 E&I inspectors…
 Non-conformance reports are prepared when works are not in
conformity with specifications, drawings or construction specifications

© 2013 - IFP Training

 Site Quality Control may also be controlled by an Independent Third
Party, for instance for welding inspection

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 43

 Reporting of non-conformances

© 2013 - IFP Training

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 44
 Construction / Operation Interfaces

 End of Construction  Operation

• Pressure Tests • Operators Training
• Static Mechanical Tests • Commissioning
• Precommissioning • Start-up
• Mechanical Completion • Nominal production
• Handover to Commissioning • Performance Tests
Team • Provisional Acceptance
• Mechanical Warranty
• Final Acceptance

© 2013 - IFP Training

Construction Manager Commissioning Manager

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 45

 Precommissioning

 Precommissioning is the last phase of Construction (to be

maximized):
• Piping hydrotests
• Test Electrical Installation and Energize
• Test Instrument Control Loops Continuity Tests
• Align Rotating Equipment
• Punch Lists
− Prepared by both Construction and Operation Teams
− Categorize Punch-List Items
» A = Items to be completed before Mechanical Completion
» B = Items to be completed before Start-Up

© 2013 - IFP Training

» C = Items which can be completed post Start-Up
» D = Nice to have items, but not part of the scope,
Items to be assessed later on their own merit by Operation

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 46

 Construction and Fabrication Management

Key points to keep in mind

 Always consider Safety and Health issues as first priority, and let it know
 Set-up and maintain Trust between all field players
 Clearly define roles and responsibilities (many players at the same time)
 Assure effective and timely corrective actions
 Maintain effective documentation system (issue and sharing)
 Ensure effective implementation by each players of their own system
for:
• Safety and Health awareness
• Quality control
 Provide logistic site support for personnel (temporary facilities)
 Assure clear Contract terms at the working level, no ambiguities

© 2013 - IFP Training

 Give enough authority to the field organization (empowerment)
 Keep close control on schedule – it will have a cost impact
RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 47
 Attachments

I. Specific construction

II. Pre-shutdown works

© 2013 - IFP Training

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 48
 Attachment I
Specific Construction

© 2013 - IFP Training

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 49
 Execution Plan Highlights

 Maximal weight acceptable for lifting, acceptable alternates

 Coordination with local fabrication shop, load out procedures

 Transportation procedures

 Site installation and hook-up procedures, tie-ins

 Equipment construction main procedures

 Safety procedures

© 2013 - IFP Training

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 50
 Typical work during turnaround

Exxon, Shell, BP,

by courtesy

© 2013 - IFP Training

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 51
 Turnaround work
Exxon, Shell, BP, by courtesy

© 2013 - IFP Training

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 52
 Refinery construction work
Exxon, Shell, BP, by courtesy

© 2013 - IFP Training

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 53
 Attachment II
Pre-shutdown works

© 2013 - IFP Training

RC - PR GES - 08175_A_A - Rev. 1 - 18/07/2013 54
 Works during pre-shutdown phase

 Civil works: new buildings, foundations, structures; cables trenches

(excavation may need to be done by hand; should be minimized: cable
trays preferred)
 Mechanical: erection of new equipment on new foundations &
structures; pre-dressing when possible; painting & insulation where
possible
 Piping: all pre-fabrication; spool installation & erection on new
equipment and on pipe racks, up to tie-ins; including supports;
possibility of shop hydrotest with field welds 100% Gamma rayed
 Instrumentation: new cable trays, cable pulling (instrument cables
trench closure), junction boxes, installation of instruments for new
equipment / piping; connections of cables to new instruments
 Electricals: cable pulling (electrical trench closure), connections to new
motors; new lighting & earthling

© 2013 - IFP Training

 Tie-ins which can be performed pre-shutdown: lines which may be
individually shut-down, FW lines, hot taps; tie-ins during “given” S/Ds

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