Championing Efforts to Eliminate Costly Surprises
By Paul Scott Abbott
When industry expert Margaret Vaughan extols the virtues of advance planning in project cargo logistics success, she’s prone to quote Benjamin Franklin and engage in a bit of cleverly demonstrative hand play.
First, the hand play: Vaughan, who has more than three decades of experience in project cargo logistics, including 12 years with Wood Group, begins by holding up one hand.
Then Houston-based Vaughan, who chairs the Exporters Competitive Maritime Council, lifts up one finger as she ticks off what she proclaims are “the five Ps” of project cargo management:
“Always remember your five Ps: Proper project planning prevents poor performance. Oh wait, that’s six. Wait a minute. I didn’t plan this out properly.”
Beneath such humor lies a vital reality also embodied in the Franklin quote: “If you fail to plan, you plan to fail.” It’s a truth that, if ignored, can often result in costly surprises.
While Vaughan is viewing the essentialness of planning from the standpoint of her most recent role with an engineering, procurement and construction company employer, it’s a tenet ascribed to by leaders of other EPCs, as well as the third-party logistics sphere.
Speaking to Breakbulk, project logistics veterans at EPCs Fluor and Bechtel and third-party logistics firm C.H. Robinson each homed in on the necessity of planning.
Cyril Joseph Varghese, Fluor’s United Arab Emirates-based global logistics director for strategy and commercial, said the EPC’s information management process, including its service-marked Zero-Base Execution approach, helps ensure clients delivery certainty and capital efficiency, with safety and operability at its foundation.
“By engaging in advanced work packaging, we develop the path of construction in the design phase, with a focus on safety, quality and productivity,” Varghese said, having worked in project logistics for 15 years. “We generate details on the materials, equipment, tools and schedule needed for work to take place at site, creating a seamless construction path for craft teams. Once at site, work takes place in that planned, orderly sequence and follows that path of construction.”
Experiences on previous projects, market intelligence, ability to predict freight rates and various specific data analyses are all applied to Fluor’s estimating and planning capabilities, inclusive of detailed work packaging, Varghese said. “Our shipping processes also stem from the advance work packaging philosophies. Shipments to site are defined by the way and sequence in which the site wants the materials to be received.
“This type of early planning helps provide delivery certainty for a project, creating confidence that projects can achieve their planned schedule and cost goals,” he said. “This is accomplished through greater construction predictability, enhanced safety and improved productivity.”
Flexibility Still Key
Andrew Young, a 23-year industry veteran who serves as functional logistics manager and critical equipment transport subject matter expert for Bechtel Oil, Gas & Chemicals, said it is imperative for each of the three EPC arenas to engage in ongoing communications while being able to adapt to on-site changes.
“Construction is where we physically deliver a project to a client,” said Houston-based Young. “But successful construction depends on how effectively we plan and flow information between the different disciplines – engineering, procurement and construction.
“For sure, the quality and timing of planning is important, but it is continuous planning and communication that ensures results,” Young said. “EPC projects are dynamic, and we need to be flexible in planning to ensure we maintain an efficient and effective supply chain. Early planning may help set logistics strategy, but that can soon be changed by environmental conditions on site. Being able to identify and track potential future changes and being flexible enough to manage change when it comes is the key to success.”
Young gave an example of a 700-ton cold box module being shipped from Spain to Australia for a liquefied natural gas project. Bechtel booked an appropriately equipped vessel eight months in advance of shipment, with a narrowing clause, and, as dates of cargo readiness and site need shifted, benefited from flexibility to slow down delivery and commensurately reduce costs.
Early Role Debated
Whereas Vaughan said she believes it is “absolutely” essential that all parties – from EPCs and their clients to forwarders and 3PLs – have a seat at the project planning table from the outset, Bechtel’s Young said he believes such joint early involvement isn’t always merited. It depends, he said, upon the EPC.
“My concerns are that, by involving logistics service providers from the outset when there is only preliminary data available, EPCs could be unnecessarily exercising the market or could be partnering too early,” Young said.
However, Fluor’s Varghese sided with Vaughan, commenting: “Early involvement of all parties, including forwarders, creates value for projects. We engage with vendors and contractors early in the project planning to develop solutions that provide the greatest capital efficiency and schedule certainty to a project.”
Not surprisingly, Frank Guzman, Texas-based director of project logistics for Fortune 500 third-party logistics provider C.H. Robinson, is a proponent of broad-ranging early engagement as well.
“Yes, it absolutely makes sense for 3PLs to have a seat at the table from the beginning,” Guzman said. “At C.H. Robinson, we can help project owners make informed decisions about their vendor and fabrication selection with our comparative cost analysis and mode evaluation services. And, as long as the project owner clearly defines roles and the scope of work between all parties involved, the EPC is, in our experience, collaborative and transparent. Problems tend to occur when there is ambiguity.”
Visibility Held Vital
Guzman, who has been engaged in project management for more than two decades, said such transparency can be fostered by early involvement of the full spectrum of parties.
“As you plan for transportation and logistics for capital projects, information management and advance planning are equal in importance to the actual construction,” Guzman said. “They are dependent on each other.
“Information that flows to and from the construction site is critical to managing change and risk,” he said. “You are dealing with global sourcing from numerous suppliers, vendors and manufacturers. There are also numerous parties involved, including, but not limited to, the project owner; the EPC; the original equipment manufacturers, or OEMs; asset-based carriers; and regulatory agencies. The control, management and visibility of information to and from these parties are all vital to the success and overall safety and timely delivery of the project.”
Early planning yields more time for designing and building the structure for work breakdowns while supporting development of contingency and emergency plans, Guzman said.
“You can also better align all of the stakeholders and build ironclad procedures and communication channels between parties,” he said, concluding, “There is no downside to early planning.”
Holistic View Crucial
Vaughan would seem to be on the same figurative page as Guzman. “I’ve always said the two most critical aspects of any project are documentation and communication,” Vaughan said. “They come into play when you’re planning the project, looking at everything that can go wrong, everything that’s going to happen, everything that has to happen. You’re looking at it from a 50,000-foot perspective, and then you start drilling down.
“If you don’t properly plan, then you miss things,” Vaughan said. “And missing things are surprises, and surprises always cost money.”
Taking a holistic view in advance is imperative, according to Vaughan, so that potential challenges and obstacles are taken into consideration. Whereas Vaughan prefers to use a focused risk assessment rather than a traditional – and, in Vaughan’s eyes, “kind of cutesy” – SWOT analysis that charts strengths, weaknesses, opportunities and threats, she believes a thorough advance evaluation is indispensable.
“It’s Murphy’s law – if something can go wrong, it will,” Vaughan said. “Well, if you know it can go wrong, you can actually put in place mitigations. At least you’re aware of it, and your client is aware of it.”
Prepare For The Unexpected
Vaughan gave the example of a ship’s captain, with a booking note for full liner terms of hooked-on/hooked-off, who allowed use of the ship’s lifting gear for cargo discharge at Corpus Christi but would not permit use of his crew because he was annoyed night discharge would not be undertaken due to a lack of lighting plans.
She said that in all her 30-plus years in the business, she had never encountered such a circumstance, but, while having to bring a crew 200 miles from Houston to address the immediate concern, she now always plans for the remote possibility a similar situation should arise in the future.
“You plan for a worst-case scenario, and you hope for the best,” Vaughan said. “Planning is more than planning particular shipments. You have to look at everything in the whole schedule.”
That includes planning around critical path elements, with the understanding path elements may shift, thus requiring nimbleness, she said.
“Planning prevents things slipping through the cracks,” Vaughan said. “If you actually list out everything that can happen and walk it step by step by step, you can monitor and oversee and cover things so stuff doesn’t slip through the cracks.”
A professional journalist for nearly 50 years, U.S.-based Paul Scott Abbott has focused on transportation topics since the late 1980s.
Photo credit: Bechtel
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