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Burning Issues For EPCs

There are two major challenges facing engineering, procurement and construction (EPC) organizations.

Aw 2513 0910 Contract Side
One is the impact of the global economic downturn and the other is the growing complexity of automation systems. Emerson Process Management, an automation supplier in Austin, Texas, offers this list of recent trends in the EPC industry.

EPCs and the economy: the market outlook

• Capital projects start with EPCs and owners typically look out three to five years.
• EPCs track commodity prices closely.
• EPCs monitor large equipment lead times closely (turbines, compressors, and the like).
• EPCs own the largest pool of engineering talent on the planet.
• Many plant owners have delayed construction or expansion and instead are shoring up existing resources, particularly in the refining and chemical industries. Power and offshore oil and gas are still pretty bullish in building and constructing.
• The very recent upward price-trend of aluminum, copper, nickel and zinc could be a good indicator of demand recovery.
• The backlog of projects is still positive for EPCs,
despite the economy.
• Engineering resources are going to be a perpetual problem for EPCs. It’s hard to find enough engineering talent to do the work.

The project-to-operations challenge

• Projects have historically been measured by cost and schedule only. Thus, technology decisions sometimes have been totally cost driven without consideration for integration, long-term sustainability and maintenance.
• Control and automation technology are only about 4 percent of a capital project budget, so they have historically been considered late in the project. Yet those technologies determine the overall operating performance of the plant.
• There is a trend to bring operations engineers into the project team to inject real-world operational considerations into project planning and engineering.
• Another trend is to create EPC contracts that extend into the operational life of the plant (six months to two years), so the EPC is held accountable for starting the plant up on time, and also to ensure the actual performance of the plant against stated objectives.
• As a result, the process control decisions are being introduced much earlier in the process—at the front-end engineering design (FEED) stage, or even earlier.
• EPCs are leaning more heavily on main automation contractors (MACs) as subcontractors. This engages the engineering talent of automation suppliers to design and engineer the right solution, not only for the project, but for the lifecycle of the plant.

Related Feature - EPCs Are Working More Closely with Automation Vendors
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