developing the “right” modularization decisions for … & prefabrication must be an early...

Copyright © 2012 Fluor Corporation

IQPC Prefabrication & Modularization Conference, March 2013

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Developing the “Right” Modularization Decisions for Mining Modules in China

Wang Junfeng & Tony Kretzschmar Fluor China Engineering & Construction


Fluor Reaching 100 Years: A Business Milestone

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China Office Profile

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Executing projects in China since 1978 More than 250 projects completed in

China Strong FSR/FEED/PMC/EPCM/EPC

execution capabilities 9 Mega Projects executed during the last

decade

Fluor has worked with more than: – 20 Class A China Engineering

Companies – 70 Super Class / 1st Class

construction companies

Current staff ~ 900+ Office Locations:

– Head Quarters, Shanghai Dawning Center

– Beijing Lido Plaza

Beijing

Shanghai


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Introduction

Modularization and prefabrication solutions have brought many projects commercially and technically from dreams to reality

There are no end to the challenges in successful modular and prefab solutions including proper design, prefabrication, shipping, and installation

Successful offsite modularization and prefabrication needs a new approach at all levels within the design, delivery and installation activities

Insights into recent modular developments that target to overcome the issues & challenges, from design innovations throughout the course of each project from concept to commission


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Modularisation & Pre-Assembly – Definition

Modularization is an execution approach for design, procurement, contracting and construction that shifts site construction hours away from the site

Includes skids, pre-assemblies, entire process structures, machines, and other structures including bridges


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What Are They? Assemblies of process

plant components

Assembled at one location (fabricator) and transported to another (jobsite)

Made up of structure, equipment, piping, electrical, and instrumentation

Made in a variety of sizes

Modularization & Pre-Assembly – Examples

Prefabrication Preassembly

Process Modules Offsite Fabrication


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Safety Drivers

Fluor Managed Jobsite Construction Work Hours: 2010: 20,916,315 2009: 16,487,350 2008 : 20,213,603 2007 : 2,664,611 2006: 11,934,729 2005: 24,953,635 2004: 50,811,158

Fluor projects in China meet Best-in-Class standards

0.930.98

0.87

0.64

0.5

0.370.46

0.42

0.280.22 0.23 0.24

1.67

1.03 1.02

1.23

0.88

0.72

0.58

0.68

0.570.64

0.13 0.12

0

0.12

0.28

0.170.1

0.180.23

0.02 0.02 0.04

1.16

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Fluor GlobalU.S. CIIFluor China

Total Recordable Rate

# Fluor Self Perform & Subcontractor Combined Total Recordable Rate * Calculated per 200,000 hours worked

#


Cost Factors


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Sample Cost Comparison – Stick Built vs. Modularisation

Item Stick Built Modularisation Comment

Tradeworker Productivity Higher Shop environment more productive

Tradeworker Hours Reduced Higher productivity

Tradesworker All-In Labour Cost Reduced Lower overheads; low cost labor resources

Field Indirect Costs (Camps & Catering)

Higher Fewer Tradesman on site

Scaffolding Costs Higher More work above grade

Engineering Costs Higher More structural design; added project management

Transportation Costs Higher Heavy haul/heavy lift costs

Material Costs Higher More structural steel

Project Contingency Higher Less risk factors in shop environment

Execution Flexibility Reduced Design and procurement frozen earlier

Material Surplus Neutral Neutral May be less with modular approach

Cost of Cash Higher Earlier spending


Schedule Considerations

Key activities prior to the detailed design phase are: Business Planning Phase Recognize drivers Collect Information related to the modular decision Scope Definition Phase Strategic evaluation – (simplified cost delta analysis, CII tool or similar) Conceptual transportation, handling studies, maximum module size Process considerations Preliminary configuration studies Cost delta evaluation (as described above) and labor requirements comparison Schedule impact evaluation Decide level of modularization/complex preassembly Preliminary Engineering Phase Develop procurement and contracting strategies Develop fabrication strategies Detailed transportation, handling studies Sequencing studies and schedule evaluations Finalize configurations, extent of modularization/offsite fabrication Develop estimates, quantities, and schedules Develop modular specifications and responsibility matrices Finalize execution plan


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Environment/Socioeconomic Drivers

Environmental Footprint • Does reduced footprint provide environmental value to company,

community, country? • Does high peak craft levels create local environmental impact?

Socioeconomic Impact • Does high peak craft levels create local negative or positive

socioeconomic impact? • Is there a minimum local labour content requirement?

Standard Design • Can the facility be standardized so that the design can be used for

duplicate facility • Can we design one/build many?


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The Module and Prefab industry is maturing…

Trends: • Modules are becoming more sophisticated, more being packed into them • Dependence on fit for purpose materials and designs to drive down costs • Start up times after module delivery minimized to deliver projects quicker • Shipping solutions are very creative, nothing to big or too small • Project & risk management overcoming challenges to deliver success


Critical Considerations

Project Managers don’t like surprises, and should pay special attention to the following critical items:

Engineering design schedules Equipment & material deliveries Shipment sequencing Weather patterns along shipping route Design Changes after start of module fabrication Selection of module handling equipment Control of fabricators’ activities Weight management


Mining Modules Case Study - Design

TIME

Target Weight‘Not to Exceed’ Weight

FabricationDetailed Design & ProcurementConcept Phases Comm +

Approved Design Changes

Engineering Reserve Management Reserve & Operators Reserve

Design Margin

End of FEED

WEIGHT

Fabricator’s Used Reserve

Reported Weight

Module Weighing

Weight Contingency

Calculated Weight

Reported Weight ≤ Target Weight

Steady Reported Weight throughout the project life cycle


Fabrication & Material Management


Shop Preassembly Fit-up


Packaging and Packing


Protected Transportation


Unloading & Site Preassembly


Storage & Site Installation


Challenges - Common Threads

Multinational Execution • Engineering / Design • Fabrication • Installation / Erection

Codes and Standards • Design and fabrication to non familiar codes & standards

Materials Management • Materials used in fabrication mostly from China

Shipping Logistics • Sea and road transportation to final installation location

Media / Public Relations • Sensitive to attention regarding “outsourcing” & “quality”


Mitigating Risks

Risks are like an iceberg, some features are apparent, others are hidden below the surface.

Alignment: • technical • cultural • procedural

Communication: • Communication • Communication plan • More Communication • Even more communication


Module Execution Roadmap

I. Develop Module Definition • Transportation restrictions • Design Criteria • Modular Plot Plan (sizes, weights, quantities) • Select transport and handling methods • Assume location of module fabrication facility • Determine facility/equipment requirements for

handling modules at both mod yard and site • Finalize cost and schedule analysis (baseline) • Document benefits and risks and confirm extent

of modularization II. Award Critical Contracts

• Ocean transport • Land transport



III. Develop integrated project execution plan • Module setting sequence • Module production durations • Stowage plans for transport • Assembly area and warehousing requirements • Shop fab capacities and manpower curves • Material delivery schedules • Engineering drawing completion schedule • Detailed procurement plans & procedures • Establish milestone schedules

IV. Engineering Design & Procurement • Perform design & procurement activities • Incorporate transportation & handling requirements



V. Module fabricator selection • Contracting philosophy • Assess facilities, capacity and capabilities • Award in timely manner

VI. Establish oversight organization & project controls • Timely procurement activities • Material tracking • Fabricator performance measurements


Conclusions

1. Modularization & Prefabrication will continue to be a viable, even preferable solution, increasingly so due to globalization.

2. Modularization & Prefabrication will allow projects to proceed that may have otherwise not been viable.

3. Modularization & Prefabrication puts to test Project Management principals (planning, logistics, risk management, communication, etc).

4. Modularization & Prefabrication must be an early decision in a project, then project planning, communication and controls need to follow suit for the strategy.

5. Alignment regarding technical, cultural and procedural gaps is critical to success of project.


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Questions & Answers

The decision to modularize on a project is one that needs full commitment, early on, from the entire project team including the client.

developing the “right” modularization decisions for … & prefabrication must be an early...

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