Project Management: Stay on Track Despite Supply Chain Holes

Supply chain problems can create delivery problems for both engineered equipment and bulk items. The constraints on the supply chain make early ordering ever more critical. Engineered equipment includes all items that require customized design or fabrication. Typically, this might include pumps, heat exchangers, towers, vessels, reactors, compressors, large electrical gear and other major plant components. In contrast, bulk items generally include things such as concrete, small diameter piping, structural steel. 

Changes in interest rates and market volatility move us in the other direction of early ordering. Ordering as late as possible delays capital spending, reduces interest and capital costs, and reduces exposure due to market or regulatory change during project execution.

These conflicting trends create a vice for revamping plants. Long-lead time ordering is needed to get major equipment, short-lead time ordering is required to reduce costs and decrease economic risk. The result – often equipment is ordered too late to be sure of meeting a planned turnaround window for execution. Cancellation and schedule slip are always options, but we’ll skip that and focus on ways to keep a project moving forward as close to schedule as possible even when major items won’t arrive in time.

How to Keep Projects on Course

First – substitution. Can you switch out for something with faster delivery? This may mean a different type of equipment, different materials or accepting a shorter life and getting the ‘ideal equipment’ later. In all cases, process requirements must be met and safety accounted for. Often an arbitrary life of 20 years is set in materials selection. Can you live with a shorter lifespan? A shorter lifespan will increase maintenance costs but may still be the right choice to get work done in time. For safety and maintaining process containment there are not any clear standards here, but one approach is to look at the commonly used standard API 510 for pressure vessels. This standard allows for an inspection interval of ½ of the remaining life calculated at the last inspection [1]. If we make our duration to the replacement equal to the inspection interval, this gives an expected life at needed at startup of twice the planned run duration. There are other approaches to setting a minimum life on equipment, even the API has other standards that you can look to come to a good engineering judgment on the minimum life needed. Nevertheless, setting twice the needed life as the starting point seems sound.

Second, standardize. Do you really need everything perfectly customized? Can you accept industry-standard equipment or sizes? This opens up many additional suppliers and can vastly speed purchasing.

Third, used equipment. My personal experience is that used equipment rarely saves as much money as you might hope. What it can save is schedule. Take care when purchasing used equipment. Often documentation is missing, and the condition is unknown [2]. Success with used equipment takes considerable skill and knowledge.

Fourth, make it yourself. With enough skill you might be able to get custom items fabricated by general-purpose manufacturing shops. With additive technology (3D-printing) custom manufacturing is easier than ever. But a warning here – this requires expert-level understanding of the equipment along with considerable practical knowledge of manufacturing [3]. My general recommendation this should be your last-ditch approach.

Fifth, late delivery. Late delivery involves installing major equipment after the ‘normal’ execution window. Options range from having a short shutdown, either hot (unit not inventory not completely removed) or cold (unit purged), to installing equipment while the unit is running. Late delivery can be the only realistic option in many cases. Engineering for late delivery is complex. The unit must run effectively and safely before the equipment arrives. Installation must be done in a short time to make the option economic. And the engineering must account for possibilities of the project being canceled part way through implementation. Later may turn into never if things change.

Of course, the problems and possible approaches outlined apply to more than just revamps. Some of these approaches can allow us to accommodate late-ordering of major equipment for new projects as well.

References

• [1] American Petroleum Institute, 2006. 510: Pressure Vessel Inspection Code: In-Service Inspection, Rating, Repair, and Alteration. Washington, D. C.: American Petroleum Institute.
• [2] Sloley, A. W., 2019. Is Buying Used Equipment Really a Bargain? Chemical Processing. December 2019. Vol. 81, no. 12, p. 31. 
• [3] Sloley, A. W., 2009. Don’t Make Problems for Your Plant. Chemical Processing. November 2009. Vol. 72, no. 11, p. 37.