Capital Project Optimization
Updated: Oct 29, 2019
Manage capital projects is one of the most key focuses of management. When should supply chain function be included in the discussion and how can supply chain optimization and transformation help the capital projects? Every time when I walk into the project meeting, I always have my seat in the back of the room and start listening to all the discussion and conversation between project engineers and EPCM. Many times, when I was going to ask questions or making comments, the answer from engineers and EPCM always tells me to be patient as they will let me know when is my time to speak and when is never. In their minds, the supply chain’s job is to buy whatever they need and get the supplier to deliver when they need it with the best price we can get. As an experienced and innovative supply chain expert, I totally disagree with their thought and comment. I fully appreciated engineers and EPCM likes to keep their job simple and try to stay in their comfort zone as much as they can, as their primary responsibility is to design a system that delivers the result required by the company. The less voice comes out of the meeting is easier for them to manage and control the project. Is it a good way to manage the project? yes, is it right? no. If you remember my project from a few years ago, one of the key equipment in the system which both engineers and EPCM decided to purchase from a well-known global supplier, unfortunately, 14 months lead time with additional installation and commission time puts us way out of our schedule. We checked different options and suppliers, one of the suppliers came to us and tell us that they have a piece of different equipment, with a proper change in the system can meet our functional requirement also provide a better solution. I brought this to the engineering manager and EPCM project director for their comments. I was shut down immediately and asked to back off. I went ahead to talk with the project director and requesting a discussion session with the alternate supplier. I understand both engineering and EPCM are not comfortable with to change the system as they are not familiar with the process and worry responsibilities and problems may arrive after this change. After a week-long discussion, this system is changed from EPCM managed package to MEV package and was accepted by the project director. We make it 5 months ahead of schedule and 7% cost reduction achieved. It is all matter transformation and change management.