Modularization aims to reduce the number of interfaces, the total installed cost (TIC) and overall schedule length of a project while optimizing the return on investment and allowing standardization of future similar projects. Originally used for offshore platforms starting in the 1980s, this design philosophy has made slow progress in onshore applications. However, today’s low oil prices are prompting increasing interest in modularization because it promises to cut project costs.
In contrast with conventional field-constructed (stick-built) projects, modularization splits a unit into parts — so-called “modules” — to be prefabricated in an offsite workshop and assembled later onsite on a pre-laid foundation.
The defined modules are compact and portable, and offer the combined functionality of multiple skids. Modules also are self-supporting and consequently removable, if required. From a design perspective, this means focusing at a package level rather than on individual equipment as is the case with conventional engineering.
Modularization offers many significant benefits including cost savings by reducing field erection; higher quality and safety from having fabrication done in an offsite shop; decreased schedule (by up to 25–50%); increased efficiency; module mobility and re-usability; and less site construction complexity due to fewer interface points for modules, reduced onsite logistics, etc. These advantages become even more important at remote locations, and at any site contending with adverse weather/climate, lack of skilled personnel onsite, and concerns about downtime on brownfield projects.
However, the approach also poses critical challenges that if not addressed properly can trigger higher costs and delays. So, a careful evaluation of the viability of modularization is essential.
The decision about whether to use modularization should be made very early after starting a project, typically during the conceptual/pre-front-end-engineering-design phase, when the engineering consultant evaluates the most cost-effective design strategy. A feasibility study of modularization versus stick-built design should take into account the owner’s input and assess all critical factors. The following points deserve particular consideration:
• Is future plant capacity suitable for modularization? The approach already has proven itself for mini-refineries with capacities up to 50,000 bbl/d, gas plants up to 200-million scfd capacity (in two similar trains) and floating production, storage and offloading (FPSO) units.
• Are there any restrictions on where and who can fabricate modules? Depending on modules type and complexity, you must assemble a shortlist of potential fabricators, which later will be refined based on local codes and regulations, distance from final destination, country taxes or other criteria.
• Is modularization impacted by shipping and transportation limits? Existing transportation infrastructure (highways, railway system in place, sea access) at fabricators or the destination may become critical. Typical modules sizes are 12 ft ×12 ft × 60 ft up to 24 ft × 24 ft ×120 ft by truck/rail, or larger by sea; weight limits are up to 400–600 tons by truck/rail or as much as 12,000 tons by sea.
• How would equipment spacing limitations impact modularization? Plant owner standards may not always align with the equipment spacing philosophy of fabricators; in such cases, industry practice (i.e., existing similar facilities) may become decisive.
• Are site permits available at the start of the project? This can save considerable time in project development. However, a project can progress in a fabricator workshop in parallel with permit application in case of modularization versus typical standard stick-built projects.
• What is the availability of onsite heavy-lift cranes (> 300 tons per module)? This may impact modules’ sizing. When such cranes are needed, proper scheduling of their availability onsite is essential to avoid runaway project costs.
• How experienced are the shortlisted fabricators in modularization? Demonstrated competence in previous modularization projects may become a major advantage in favor of adopting modularization.
• What is the gap between field and shop fabricator labor cost and productivity? Invariably labor costs are lower (by as much as two-thirds) and productivity is much higher when work is done in a fabricator’s shop rather than onsite.
Modularized projects, if properly managed, can provide significantly compressed metrics. Figure 1 illustrates schedule savings typically achieved by a modularized project compared to a conventional stick-built one.
Addressing Potential Challenges
Modularization also poses some negatives. Some of the most important issues are:
1. Cost of first design can exceed that of the conventional design by up to 50–60% or reach as much as 12% of the TIC  depending on familiarity and past experience of the contractor with the modular approach.
Solution tips: Because the front-end effort is more intense than in conventional engineering and the number of long-lead items is greater with orders placed much earlier during the project, good planning, scheduling, and activities sequencing are crucial to meet hookup and commissioning target dates. You must identify and freeze module interfaces early to allow progress of parallel workshop and site activities, restrict deviations to a minimum, and ensure continuous schedule alignment. Good coordination and claim management are essential because procurement starts at an earlier stage. In addition, expediting needs to be constantly evaluated to anticipate and avoid major delays.
Common mistakes: Lack of previous fabricator and engineering/procurement/construction (EPC) contractor experience in completion of similar projects and especially lack of modular project management expertise.
Under-estimated aspects: Activities progress of various suppliers of modules may impact the overall schedule, as well as shipping routing and the local country’s legislation and taxes. Also don’t neglect coordination of activities onsite versus parallel ones in a fabricator’s shop.
2. Equipment and instrumentation within a module have less access/maintenance space than in a conventional design. Module design must allow access to the components needing to be shut off; this may require advanced 3D ergonomics analysis.
Solution tips: Identify early critical items requiring periodical maintenance and ensure proper layout access.
Common mistakes: A focus on making the module more compact to fit into the shipping limits without any consideration of accessibility of personnel to key instrumentation or critical equipment.
Under-estimated aspects: Often a conflict arises between EPC contractor and fabricator equipment spacing standards or versus typical industry practice.
3. Module sizes/weight limitations imposed by local transportation regulation impact the optimization of the level of modularization.
Solution tips: Follow industry practice or previous experience from similar projects.
Common mistakes: Combining too much functionality within a module to reach maximum limits may result in a high level of complexity.
Under-estimated aspects: Number and location of interface points, sometimes difficult to access or mismatching those of other modules to be assembled together.
4. The number of long-lead items is greater and ordering must be done earlier versus conventional design.
Solution tips: Develop a transportation strategy (e.g., access routes, loading/offloading facilities) for intense expediting and to ensure all design issues are properly addressed.
Common mistakes: Design changes during the procurement phase.
Under-estimated aspects: Management of change process to deal with design changes unavoidable during project development.
5. Managing a modularization project within a conventional one requires consideration of equipment spacing requirements and confined area accessibility for maintenance in an existing limited plot area.
Solution tips: Have a good understanding of operational issues and existing plant configuration.
Common mistakes: Ignoring operational needs and only concentrating on complying with the available plot area.
Under-estimated aspects: The cost impact of loss of productivity during downtime of brownfield projects.
6. Interface management and execution strategy requires experience in both offsite modular fabrication and field construction/assembly, which also implies supervision of multiple work sites and possibly more complexity.
Solution tips: Previous experience with modularization projects helps in achieving a good coordination of multiple sites.
Common mistakes: Misalignment of activities onsite with those in the fabricator shop.
Under-estimated aspects: Importance of activities’ sequencing.
7. Shipping incurs significant costs. Larger modules are transported by sea. Transportation and lifting in land-locked locations (with few or no roadways) also may become very challenging.
Solution tips: When shipping by sea, you may need to consider damage, delays or loss risks and fees related to insurance, marine surveyors and customs, plus costs for heavy lifting and special transport.
Common mistakes: Neglecting or minimizing the importance of having a detailed shipping plan.
Under-estimated aspects: Characteristics of existing local transportation infrastructure.
8. Awareness of local national laws is critical for modularization project planning because they may impact shipping schedule and coordination between multiple sites.
Solution tips: Gather early in the project all available information related to local legislation and get a clear understanding of local authorities’ requirements.
Common mistakes: Discovering too late hidden fees or shipping restrictions that may require readjustment of project schedule and replanning.
Under-estimated aspects: The value of having a local contact familiar with local authorities’ regulations.
9. Implementation of construction and quality standards or deviations from them may become critical.
Solution tips: Use industry practice to resolve potential conflicts between fabricator and owner standards and adopt standards deviations, if justified. Fix standards to follow shortly after project kickoff and indicate them in the project procedure and execution manual.
Common mistakes: Developing standards during project progress to address modularization issues.
Under-estimated aspects: Local site legislation.
10. Material and equipment timely delivery and handling, heavy lifting/hauling, shipping constraints (truck/rail/barge), routing and clearances all are critical.
Solution tips: Good planning can anticipate fabricator and onsite needs in materials, logistics and manpower.
Common mistakes: Lack of heavy lift crane availability.
Under-estimated aspects: Costs associated with maintaining onsite heavy lift cranes for longer duration.
11. Modularization is not as change-friendly as stick-built projects and so requires effective project management.
Solution tips: Permit no changes (except for safety or code reasons) after process and instrumentation drawings are issued for design.
Common mistakes: Design changes during procurement stage.
Under-estimated aspects: Costs associated with modifications added to already fabricated equipment.
12. A fabricator not only must have the ability to build and assemble modules but also the capability to plan/coordinate their transport, which depends upon access to roads, rail system or deep water (for larger modules).
Solution tips: Shortlist available experienced fabricators during the bidding phase; have the fabricator already selected when the project is awarded.
Common mistakes: Poor expertise in modularization of selected fabricator or its logistics limitations.
Under-estimated aspects: Heavy modules not acceptable to existing road infrastructure.
A Hybrid Approach
As the points above illustrate, modularization strategy can be very challenging. Sometimes hybrid solutions, which combine advantages of both modularization and stick-built, can make a project attractive in terms of budget, quality and delivery time. Pipe rack fabrication provides a good example. For large projects, modularization may require additional design time (10–15%), more steel for transportation and installation (20–30%), proper scheduling for material delivery earlier in addition to the availability of large cranes onsite to put pipe rack modules into place. An alternative hybrid solution might opt for pre-assembled pipe rack modules for smaller sizes (e.g., about 3-m wide) but rely on traditional stick-built methods for larger assemblies. Combination of the two project strategies is becoming more complex — but is feasible for companies with proven industry experience.
An Increasing Need
The chemical and refining industries lag in adopting modularization compared to other heavy industries (e.g., automotive, civil infrastructure, shipbuilding, etc.). Process licensors and workshop fabricators have adapted faster to this new reality than EPCs, where efforts still are ongoing to improve their competitiveness.
The key elements in modularization are interfaces’ standardization and change management. However, keep in mind a few other significant aspects:
• Standardized modularization. As already noted, mini-refineries with capacities up to 50,000 bbl/d, gas plants with as much as 200-million scfd capacity and FPSOs have been built and operated based on the modularized approach. Companies have reported important cost savings from replication or templating in multiple similar parallel trains. This implies that engineering companies will continue to adapt to the market with a new set of engineering standards and will become familiar with vendors’ standards for packages and materials;
• Minimizing peak staffing pressure in the field. Maximizing the work in fabrication shops will continue to reduce reliance on increasingly scarce skilled field workers. This includes performing offsite most of the pre-commissioning and commissioning work;
• Reorganization of engineering companies. Many EPCs now are expressing more interest in reviewing for owners the integration and optimization opportunities of existing and future plants. In this area, modularization also may become a “preferred choice.” In fact, many companies now have established a “module architect” position, which is a more-skilled engineering job requiring not only a techno-commercial overall project view but also the know-how of supply chain elements across multiple projects;
• Technologies offered as packages. Many licensors started and will continue to offer technologies based on a modularized package concept.
Assess The Opportunity
With proper expertise and when applied based on accurate project coordination and planning, modularization certainly becomes a successful design strategy, one worth pursuing despite any reservation or resistance from teams used to the classical stick-built way of engineering. After all, modularization already has proven its benefits on many recent projects. Modularization allows moving complex and costly tasks from the field into the fabricator’s yard — reducing risks and labor effort while improving quality, schedule and savings via higher offsite productivity. However, modularization requires both fabricators and contractors with strong knowhow based on past experience and lessons learned in similar projects.
The trend to modularization will continue in the coming years under the pressure of fluctuating oil prices and reduced availability of skilled workers, along with tighter environmental regulations.
However, successful modularization requires a more mature design and project execution organization. Engineering companies need to invest in this new reality. They must improve their expertise, be open to alliances with specialized fabricators, and especially adapt their project management approach to the challenges of standardized modularization.
CATALIN EFTIMIE is a consultant based in Calgary, AB, specializing in oil and gas technologies. Email him at Catalin.Eftimie@shaw.ca.
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