Stress never takes a day off during major capital projects.
Whether it’s a new plant build or a facility expansion, the questions and concerns persist: Will we finish on time? Are we going over budget? How many changes are going to be made throughout the process? How can we incorporate the latest design changes while maintaining cost and schedule plans we committed to? What unforeseeable risks will installation and commissioning bring? Is everyone involved with the project on the same page?
These concerns are valid. A Construction Industry Institute analysis of 975 light and heavy industrial projects found that only 5.4 percent of the projects met initial cost and schedule targets within an acceptable margin. Additionally, the 2012 PricewaterhouseCoopers Global Project Management Survey found that “poor estimates/missed deadlines” was the greatest factor contributing to poor project performance.
Front-end engineering and design (FEED) plays a key role in preparing projects for success. More than simply providing a project cost estimate, FEED comprises a detailed project scope, complete project budget, total cost of ownership, implementation timeline and risk assessment — all of which combine to help reduce risk and uncertainty during the design and commissioning phases, and can help create lasting value throughout the production life cycle.
A FEED is conducted as part of a project’s concept phase. Initial feasibility and conceptual studies will help make the business case for a project and generally provide a cost accuracy of around plus/minus 30 or 40 percent. A well-funded and well-executed FEED can deliver a cost accuracy of plus/minus 10 percent — although preferred cost accuracy will vary by industry and customer preference — and help an organization understand a project’s technical requirements in detail. These requirements can include the control system architecture, equipment lists, process flow diagrams, piping and instrumentation diagrams, I/O, motor and electrical specifications, among other things.
Important as FEED studies may be, however, they don’t always get the attention, support or funding they need. When preparing to conduct a FEED, these top considerations can help better position the outcomes for success:
Put Design Ahead of Cost
Too often, FEEDs are conducted for a primary outcome — a cost estimate. But a FEED serves as the foundation and technical detail from which a project is built, and the basic engineering decisions made during the FEED will have a profound impact on every subsequent project phase.
Unfortunately, some organizations keep up-front engineering investments minimal, either because they don’t see the value in the FEED or because of time or cost restraints. As a result, they limit their ability to accurately define project scopes. Ironically, this can actually cost an organization more in the long run.
Poor project definition can lead to cost and schedule overruns, resulting in stressful discussions with senior leadership – explaining why additional funding and time is needed to complete the project. If the design basis is thoroughly challenged and then accepted, it provides a springboard for the project. If design decisions are based on too many assumptions and price estimates are made in haste; however, it could haunt an organization during the project execution phase.
A Rockwell Automation FEED executed for the U.S. energy company, ConocoPhillips, is a good example. Key FEED objectives included optimizing the project’s site selection, and identifying pipeline specifications, providing refinery process design basis and preliminary P&IDs; providing the design-phase HAZOP (hazard and operability study) and LOPA (layer of protection analysis) analyses, as well as developing the project schedule and providing a plus/minus 20 percent cost estimate. In the implementation phase of the project was delivered 14 percent under the high end of the estimate, and delivery was improved from 43 weeks to 39 weeks
Remember: The FEED is a project design that leads to a project cost — not the other way around.
Select the Right Partner(s)
Manufacturers and industrial operators have traditionally turned to engineering, procurement and construction (EPC) firms to conduct FEEDs. But end users and EPCs alike are losing their engineers to retirement, resulting in a skills shortage. Meanwhile, industrial automation is only becoming more complex, comprehensive and connected across the enterprise. Engaging resources with automation expertise is critical to building the correct basis for a successful project.
A control system may only represent a fraction of the total project cost, but it’s integral to the overall operation and respective goals. In the mining industry, for example, as much as 50 percent of a project’s cost can come from mechanical equipment, such as milling machines or compressors. The real challenge, however, comes in making all the equipment work in harmony. A mining site won’t receive the right recoveries or achieve the payback that’s expected on paper if the control system doesn’t have the plant running at an optimal rate.
As a result, automation solutions providers are playing a growing role in carrying out FEED studies in tandem with EPC firms. And using a single solution provider in place of multiple vendors can be more cost effective and efficient while also reducing risk and engineering costs.
When evaluating automation providers for a FEED, consider their industry experience and knowledge. Do they speak the industry language and technical jargon that your workers speak? Do they understand your applications and the environments you work in? Are they familiar with the equipment, safety regulations and technology trends in your industry?
For example, as more manufacturers embrace the Internet of Things, it’s important to consider if your automation partner can help you understand the risks and rewards of implementing such a technology in your plant. Can they help address cyber-security needs? Can they ensure you’re collecting the right data and getting it to the right people in a context that’s relevant to their jobs?
The automation provider should also have a track record in conducting and managing FEEDs, and have a strong understanding of what constitutes a good one.
Ensure Stakeholder Support
A properly executed FEED requires support and involvement from a cross-functional team within your organization. This includes the engineering, plant management, finance, operations, end-user and regulatory teams.
Early stakeholder buy-in, including ensuring their commitment to the process and confirming their requirements, will assure project agreement up front, which can help eliminate surprises down the line. Otherwise, changes made to a project’s specifications after the FEED stage or discrepancies that weren’t addressed early on can significantly impact a project’s cost and schedule.
With a stakeholder team in place, designating a FEED lead contact can help bring focus to the process. This person can help ensure all stakeholders are involved throughout, such as with collecting their input and ultimately confirming the FEED meets their specific requirements. And as changes are made during a FEED, the lead can immediately relay changes to all stakeholders and help avoid confusion or surprises.
Know Your Deliverables
FEEDs are equally important for both greenfield (new build) and brownfield (rebuild, upgrade or extension) projects, but the deliverables can differ slightly between them.
Greenfield projects essentially provide a blank canvas for the FEED, meaning most deliverables are generated from scratch and you can directly proceed into engineering the solution. Conversely, brownfield projects require more effort at the onset to document what’s currently installed and to confirm the information that is used as the basis from which you start.
Because of this, you will need to develop obsolescence, spareage and probability of irreparable failure reports for brownfield projects, as well as conduct site surveys. You also will need to develop clear commissioning and qualification strategies for any new processes being introduced into the existing facility, particularly for highly regulated industries such as life sciences.
Engineer to Evolve
FEEDs are conducted first and foremost to meet the needs of a specific, near-term project. But plants evolve. It can be tempting to implement the most cost-effective production system that solely satisfies the needs of your project. However, consider the time and financial costs of reinvesting to replace that system in a few years. Is it worth the risk?
The more practical approach is to invest the time and resources up front, at the basic-engineering phase, to examine how your system will need to evolve as the plant evolves. Your FEED can help you understand a plant’s requirements today, but it also should take into consideration what will be happening in the years ahead.
A production site’s value will only be fully realized after production begins, but that value is defined and built in far in advance, during the FEED stage. A good FEED can help determine a project’s usability, performance and cost effectiveness, as well as its long-term operability, safety and environmental compatibility.
A good FEED can only happen, however, with the right partners, the right approach, and the full buy-in and support from all stakeholders involved.
Kevin McCarthy is a Global Process Technologies Business Manager and Graham Stead is an EMEA Business Manager of Mineral, Mining and Cement, both with Rockwell Automation.