20 March 2013 03:34 [Source: ICIS news]
SAN ANTONIO, Texas (ICIS)--With labour shortages impacting current and planned megaprojects, a key to leading a successful project is involving contractors in the front-end loading (FEL) process, an energy consultant said on Tuesday.
Early contractor involvement (ECI) is a three-phase FEL model that encourages construction participation from clients and engineers in appraising the opportunity, developing the scope and defining the project before execution and start-up, said Daniel Lumma, senior vice president of Kiewit Oil, Gas & Chemical North America.
In a study involving over 1,000 projects valued at about $96bn (€74bn), the amount of money spent on the front-end loading process was only 2-5% of the total installed cost, Lumma said during the American Fuel & Petrochemical Manufacturer (AFPM) annual meeting.
However, the payback outweighed the initial costs, earning the company $3-10 for every $1 spent.
That amounts to 6-25% in cost savings and 6-39% in schedule reduction, provided support and evidence for the ECI model, he added.
Lumma explained that the ECI model gives clients a number of benefits including improving the ability to resource craft and staff needs and improving team integration.
It also identifies risks and mitigation plans early on, as well as assigns the party best suited to manage those risks.
In addition to creating cost and schedule certainty and improving cost and schedule performance, ECI is also a transparent estimating process that avoids conflicts later.
While the labour shortage is not a problem that can be immediately addressed, the need for construction during the front-end planning was identified as a significant key to lead a project to success, Lumma said.
The AFPM annual meeting ended on Tuesday.
($1 = €0.77)
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