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Project Management: Involve Contractors Early

June 16, 2020
Doing so can improve project delivery for complex chemical facilities

The traditional design-bid-build project delivery method, a linear process in which the engineer completes a design before contractors bid and well before work commences, can effectively handle straightforward projects where few changes should occur as construction progresses. The problem is that most projects aren’t that simple. Chemical ones, for example, are logistically complex.

So how can a project team adequately address such complexity? The answer is: through planning, planning and more planning. And the only way to plan well is to have as much upfront knowledge and information as possible. Early consultation with contractors — a project delivery method known as early contractor involvement or ECI — provides a means to gain upfront knowledge. This method heightens attention to detail early in the design process.

While closely related to design-build project delivery, ECI brings contractors to the table even earlier in the process, at the design concept or schematic phase. Because the design phase isn’t yet complete — and overall project cost still is unknown — the contractor typically is hired for a fixed fee and performs the role of a consultant. The contract may cover preconstruction services only or may include additional project stages.

Early input from contractors gives both the owner and engineering team an experienced viewpoint on a project’s constructability. Contractor knowledge can influence:

Estimating and procurement. A wider selection of products may be considered and items with long lead times can be ordered early, leading to improvements in both cost and scheduling. Accuracy of estimates also gets better. Often, the “boots on the ground” knowledge of the contractor can identify unique project conditions that could pose potential cost risks. The owner then becomes aware of these risks during the project funding stage.

Labor. Chemical projects often have heightened construction safety and quality requirements due to the significant risk to life present during daily plant operations. So, work on site calls for more-skilled craftspeople; they invariably are in high demand and not always readily available. Plant owners should choose an ECI contractor that can assist them in creating early in the ECI process a plan for staffing, recruiting, training and retention. Such a plan enhances confidence that adequate labor will be available as the construction window approaches. For chemical facilities, being able to onboard and retain a high volume of qualified craftspeople is the top item than can lead to success or failure for any given project.

Scope and scheduling. Project schedules can be coordinated to align with engineering and procurement timelines. Doing so can shave weeks to months off the construction schedule. Especially critical for chemical projects are plant shutdowns or turnarounds because site downtime must be minimized. Discovery work and unknown deficiencies often impact outages, leading to increased turnaround duration. To address this problem, contractors and the owner’s internal planning team should work side-by-side in the field to fully develop work packages as part of normal preconstruction activities. This brings realistic cost and schedule impacts to the forefront, allowing the team to properly right-size turnaround duration and workforce.

Value engineering. A broader source of inputs can foster coming up with creative ways to control costs. For instance, contractors brought on as consultants can identify cost-saving opportunities associated with prefabrication, modularization, means and methods, and more.

Waste elimination. Finding ways to minimize waste, such as reducing order quantities and planning efficient routing, can streamline designs to simplify both construction and plant operations.

Risk identification. Projects that progress through the construction phase with inadequate project scoping are inherently riskier. ECI identifies gaps in project information as well as pinpoints risk areas early, improving risk management and mitigation throughout project execution.

Assuming the ECI contractor ultimately is selected as the construction partner, the contractor can transition its ECI team directly to the field, providing deep knowledge and consistency from one phase of the project to another.

Proven outcomes for ECI include faster permitting, fewer (by orders of magnitude) change orders, better regulatory compliance, and reductions in overall project time and costs.

Making ECI Work

When implementing ECI, a few key steps — along with acknowledgement of the shift in culture required — will ensure the process achieves all its associated advantages.

It’s important to keep in mind that while ECI saves time and money over the course of the entire project, it may incur greater initial time and labor demands than with traditional project delivery. The tendering period often goes on longer than it would with design-bid-build project delivery; the construction period itself is where benefits accrue. Investing in a preconstruction process results in more-efficient use of funds. Combined with the shorter construction schedule, projects typically are delivered on budget.

Of course, bringing contractors on as consultants adds new costs. However, these are mitigated because contractors don’t have to cushion their price as they would with traditional bid models; getting involved early informs the contractor’s strategy, which in turn results in the most accurate pricing.

For chemical projects, there’s another consideration when calculating the return on investment associated with ECI: some cost savings may not result until operations begin. As more plants shift to proactive preventative maintenance programs, they are finding that operations and maintenance tasks aren’t optimized. Often, simple items such as effective placement of key isolation valves can significantly help or hinder day-to-day operations. ECI contractors can approach a new plant design from a practical point of view, suggesting improvements that will save the owner time and money. While these enhancements may require upfront investment, they usually will pay for themselves many times over during the lifecycle of the plant.

ECI demands participation from the owner and senior level management of involved firms during the preconstruction process. In exchange for the time invested, an owners quickly gains insights that help determine if a project is or isn’t viable. As the project progresses, the owner retains greater control than with traditional delivery methods because decisions made upfront tend to “stick” and require fewer alterations. The owner also reaps the benefits of greater cost certainty throughout the project.

Studies have tracked the benefits and challenges of ECI. An article, “Early Contractor and Facility Management Team Involvement in the BIM Environment,” in Periodica Polytechnica Architecture summarizes these. Collectively, the studies identify seven main barriers to adopting ECI:

1. Responsibility allocation;
2. Reluctance to change;
3. Insufficient understanding of benefits;
4. Deficiencies in mutual trust and respect;
5. Uncompetitiveness;
6. Inadequate technical support; and
7. Lack of mutual knowledge.

Overcoming Barriers

Several strategies can mitigate these challenges. Working with the right consultant can ensure adequate technical support and proper responsibility allocation. An owner can use ECI workflows to address plant conditions that might normally fall outside the scope of construction decision-making — as long as the company carefully selects an ECI contractor with relevant expertise. For example, in a chemical plant, often the number one item that kills productivity is site congestion, specifically when dealing with process piping. Finding the right contractor at the ECI stage allows time to develop plant-specific means and methods to lessen the impact of productivity loss.

To keep the ECI process on track, the consultant, working with the owner, controls the timing of information release and sets objective criteria that tenderers must meet. The consultant also enforces deadlines for proposal submissions and helps differentiate between alternative design proposals and value engineering (such as suggested substitutions of materials). As the ECI process unfolds, an experienced consultant will thoroughly evaluate all aspects of tenderers’ proposals as well as tie up any loose ends associated with the submitted ideas.

A prequalification exercise will help start things off right and should result in a viable shortlist of candidates. Prospective contractors should provide documentation including:

• A company profile;
• Information on company financials;
• Experience with similar projects;
• Staff experience and resumés; and
• Current capacity to take on new projects.

While it’s important to fully commit the necessary resources for ECI success, it’s also important to keep the process as streamlined as possible. Restricting the initial shortlist of ECI consultants to three to five candidates is ideal.

Keeping decision-making activities during preconstruction well focused is crucial. A key aim is to identify and eliminate unsatisfactory designs early. To be a viable alternative, a proposed design must maintain the quality and safety standards of the original design, including any green building or other certifications sought by the project.

Achieving competitive pricing is possible by maintaining transparency throughout the ECI process. Careful management and proper sequencing support competitive pricing, for example, by requiring agreement among parties before moving to the procurement stage. Dedicating separate efforts to value engineering also helps keep design alternatives focused.

Training and open conversations can help ease concerns among team members who are suspicious of change, lack respect for other participants, or don’t understand the overall benefits of ECI. In addition to formal training, informal sessions or even individual conversations can be valuable for earning trust among team members. When done properly, ECI can reduce friction among the various stakeholders and harness collaborative attitudes. It fosters building positive relationships early and allows everyone on the team to begin the construction phase with a better understanding of the project’s constructability.

The owner and consultants must be sensitive to the need for confidentiality. For instance, in suggesting alternative designs or proposals, a contractor may divulge proprietary information. Protecting that information not only is a practical consideration but also earns the trust of contractors participating in the ECI process.

Some experts recommend an honorarium for unsuccessful tenderers because these parties are investing significant resources in the ECI process. Compensating their efforts would encourage ongoing interest in the ECI approach.

It’s important to note that ECI is focused on execution, not merely contractual arrangements. Establishing accountability certainly is a priority for everyone on a team. However, when attention centers on legalities instead of the project itself, quality suffers. This can result in more problems than necessary on the jobsite, undermining the original intent of opting for the approach.

The goal of owners, engineers, designers and contractors is the same: safe, timely and quality completion. Therefore, successful adoption of ECI mostly depends on changing existing habits and mindsets. Investing fully in the preconstruction phase of work is vital when implementing ECI — including a focus on training and communication — so that members are functioning as a team in practice as well as theory. Doing so will help teams successfully navigate ECI and improve project delivery.

SHAWN BUCHANAN is vice president and general manager of Graycor Southern, Kennesaw, Ga. BRIAN GALLAGHER is vice president, corporate development of Graycor Southern, Kennesaw, Ga. Email them at [email protected] and [email protected].

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