Transcript Lean Thinking in EPC Projects

Lean thinking in EPC Projects
November, 2014
Outline
Characteristics of EPC industry
Lean and its traditional connotations
Lean in a new light: Essence and example
The basic questions
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The traditional approach is to look outside to find reasons
why EPC Projects exceed timelines and bleed profits
Often cited reasons
 Long drawn projects - 2 to 4 years
 Each project is different - business
model, customer, location, risks
 No right of way, clearances not
obtained, fronts not available
 Local influences - weather, culture,
political climate, access and
logistics, skills, unionized work force
 Client pays for material supplied to
site, that does not get installed
 Customer’s inability ability to pay
 Many hand-offs – internal / external
 Customer urging to “go slow”
 Many opportunities for problems to
be hidden behind externalities
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Controls
Schedule
Scope
Cost
Quality
Lean Construction: Most often understood as a project site
level waste elimination approach
▪ Tools stored far away from
▪
▪
the workmen
Poor communication
systems (e.g., operators
move to get instructions)
Equipment and practices not
ergonomically designed
▪ Material transported to the
▪
working area several weeks
in advance
Threading more
reinforcement bars than
required
▪ Unbalanced activities
▪ Tying reinforcement
▪
▪
multiple times due to
improper tying the 1st
time
Assembling formwork
material in the incorrect
sequence
Changing activity plans
because of wrong
interpretation of design
drawings
▪
▪
(e.g., many workers
wait until some others
finish their activity)
Workmen waiting as
reinforcement material
is not available when
required
Overall work delayed
as design drawings are
not available from
client
▪ Unidentified and mixed
▪
materials
Storage areas not marked
clearly
Excess stored material
prone to damage
▪ Reinforcement material
The benefits of waste elimination seem obvious…
handed off multiple
times
Confusing work instructions
▪ but do we see profits at ▪the
…
business
level
from
such
initiatives?
▪
Use
of slow speed
▪ Multiple versions of daily
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activity plans
tower cranes`
We used Lean thinking to evolve an operating strategy for
timely and profitable execution for an EPC business
Proposal,
Bidding and
Contracting
Engineering
Procurement
Earlier: Entire project is one big batch
Entire project with some
conventional milestones – material
delivered, tonnes of pouring, tonnes
of fabrication
•
•
•
•
Finish all engineering for the project in shot
Place all procurement orders at once
Make erection schedule for the entire project
Engage contractors for the whole project
End result
Poor profitability and delay
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Planning &
Mobilization
Construction
/ Installation
Commissioning
& Testing
Now: Finish one “work unit” at a time
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1
2
3
4
• Break project into “invoicable” work units
• Sign off delivery sequence of work units with
client
• Each work unit has its EPC plan
• Finish one work unit and move to next one
End result
Timely and Profitable delivery
Once the operating strategy was in place, local process
changes were introduced using Lean principles
•
•
 Introduced Concept of
 AMT (Area management
Teams)
 OEE (Overall equipment
effectiveness)
 Full kitting for Invoicable
work units
 Lot/project wise
Production
 Project wise full
kitting
 Packaging&
forwarding
 Weekly invoicing
Process
x
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Process
Y
Quantity release
mechanism
Introduction of Quantity
release calendar
Engg
We used lean thinking in construction for demand levelling
resulting in reduced operating costs
Earlier: Transportation lags demand
Factory
Demand
To
based
Work Front
 Higher Logistics Cost
 Lower Utilization of trucks
 Material non availability
Now: Transportation meets demand
Daily
Milk run
40% lower Logistics Cost
Higher Utilization of trucks
90% + Material availability
Factory



To
Yard
Demand Fluctuations
Supply strategy to meet demand at site
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To
Work Front
Next we adopted a manpower levelling strategy to improve
productivity and reduce waste at project site
60
Bottleneck
Earlier
31
23
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Manual Manual Threading Shifting
unloading segregation
x6
Now:
Resource
balanced &
Waste
eliminated
x10
31
30
20
x12
x4
5
Fixing 1
Fixing 2
Fixing 3
Fixing 4
x25
x60
x50
x12
60
31
30
25
31
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Manual Manual Threading Shifting
unloading segregation
x6
x4
Fixing 1
Fixing 2
x25
x60
Fixing 3
x130
Fixing 4
x12
Productivity increase by 60% and manpower reduction by 9%
through resource balancing & eliminating waste at each stage
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Lean applied at both strategic and local levels leads to
breakthrough results
Factory- OEE
•
•
Complete utilization of factory capacities
40% increase in throughput
Quantity Release
•
•
Qty release from Sites to Supply Chain as per invoicable work units
Supply Chain delivering right material for the work units at the right time
Lot-wise
production
•
•
Manufacturing cycle time of invoicable work units reduced to 30%
Production and dispatch of kits required for work units
•
•
•
Reduction in manpower at stores by 90%
Immediate issue of material to subcontractor in kit form
Erection cycle time of work units reduced by 30%
•
•
•
40% lower Logistics Cost
Higher Utilization of trucks
90% + Material availability
•
•
Labour Productivity Improvement
Reduction in Construction Cycle time
Kits for invoicable
work units
Lean Logistics
Resource balanced
Execution
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Processes introduced for transparency, coordination and
execution discipline – not relying only on mindset change
What was done…
…Through what deliverables
Open interaction and consultation among
all stakeholders
SOP for quantity release
Date
Eliminated “wishful thinking” about target
quantity and dates. No imposition of targets
that cannot be achieved.
Activity
<25th June
25th June
Responsibility
i) All sites to send their Sept requirements to respective clusters
ii) Clusters to finalize priority among sites, collate and send to Sector
iii) Sector to collate all requirements, pare down/ add up as per factory loading
requirement
iv) Sector to assign priorities to various sites and prepare a comprehensive qty
release document
SMP, SRKR
SMP & SRKR to send September qty release to factories
SMP, SRKR
1st July
Factories to respond back to ASA if BOQ for the above qty releases are available
ASA
2nd July
SMP, SRKR & ASA to sit together to finalize production plan for September (with
priority assigned to each project)
SMP, SRKR, ASA
5th July
ASA to send material purchase request to HQ-Materials
ASA
Hopefully, PO to be released for material purchase
HQ-Materials
15th August
Material receipt at factories
SP, VG (ASA)
25th August
Material loading for September to start
SP, VG (ASA)
Material loading for September to finish (with 0 completion lots anytime during the
month)
SP, VG (ASA)
Responsibility and action-by dates
12th July
24th Sept
Sector 1
Site 1
Site 2
Site …
Sector 2
Site 1
Cluster
Office 1
Process for site build order consolidation
and prioritisation for factory supplies
Site 2
Site …
Cluster
Office 2
All cluster offices send
quantity releases to
respective sector offices
Factories just
give the
material request
to HQ-Materials
Cluster
Office 1
Cluster
Office 2
Sector 1
Sector 2
Decides
Priority
Decides
Priority
Sectors discuss among
themselves to prioritize
sites; also ensure that
factories have enough
loading. Because SMP &
SRKR decide priorities, no
confusion in system
Documented Qty Release process
Pondy
Factory
Pith
Factory
Sends
mat req
to HQMaterials
Sends
mat req
to HQMaterials
Look Ahead QR
Date of QR
Cluster
Office 3
Q1
Q2
Q3
Q4
Actual
QR
1st Apr
Adherence to time schedule for releasing
quantities – build orders, procurement
orders, manufacturing raw materials
25th Apr
July
25th May
Aug
25th June
Sep
1st
July
25th July
Oct
25th Aug
Nov
25th Sep
Dec
1st Oct
25th Oct
25th Nov
25th Dec
1st Jan
25th Jan
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Jan
Activity timeline with dependencies
Feb
Mar
Apr
25th Feb
May
25th Mar
June
Lean thinking in EPC: a few basic questions to answer
What is our invoicable work unit?
What is our “EPC factory” - structure and processes that deliver the work
unit profitably and on time?
How are the drawing requisitions, vendor POs, build order quantity releases,
manufacturing quantity releases aligned to the schedule for delivering the
invoicable work units?
How do we enable front-line people to solve everyday site problems (e.g.
resource sharing) at their level?
How do we set up local level processes / systems for resolution (e.g.
resource levelling, site skill development centre)?
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