What is Excellence in EPC Project Execution?
There are many different forms of "excellence" in EPC project execution. Each form has a different impact -- some very, very large and some relatively small.
We have spent our careers focused on achieving excellence where it matters the most. Where is that? It's on improving the ability of Owners and E-C contractors to maximize the returns on the enormous investments made by Owners on their EPC projects -- the ultimate goal in executing EPC projects.
How Well Are We Achieving Excellence Today?
The truth is that we don't achieve the same degree of excellence that can be found today in other industries. It's not a secret, but most people in the engineering-construction industry simply chose to ignore it.
Ed Merrow, President of Independent Project Analysis, Inc. (IPA) summed it well in 2015. He stated that projects with good or excellent engineering and procurement execution often fail to meet schedule, duration, and cost targets in the field. And construction often starts late, runs long, and overruns budgets. This is still more the rule than the exception.
As a result, the majority of E-C industry defines "excellence" as simply getting a EPC project finished on-schedule and on-budget versus its Owner sanctioned targets.
What Are Examples of Project Excellence?
Let's look at three examples of what we regard as "excellent" EPC projects in which we had significant planning and/or execution roles during our nearly 50 year careers in leading international engineering-construction contractors.
Three Examples of Excellent Projects
What are the Rewards for Project Excellence?
On these three projects with TICs ranging from $150 million to $2+ billion, their EPC schedule durations ranged from 20% to 39% less than the industry average duration for equivalent projects. Why were these results so important? It's because of their impact on both the Owner and E-C Contractor's revenues and margins.
And not just an incremental impact. These Owners realized a total of over $2 billion in revenues from earlier than planned production vs. the original targets sanctioned at the end of the FEED Phase, and substantially improved the return on their project investments -- the ultimate definition of "excellence" in this industry.
Note that these were not only excellent projects for these Owners, the E-C Contractor executing these three projects also realized substantial financial benefits. The extra margin they earned exceeded $85 million.