A previous commentary on ENR.com, Three Industries That Are Helping Drive Construction Companies Forward makes interesting observations about how companies working in the energy sector can learn from other industries.
With one point, I agree. On another, I do not. The author makes an initial point that “Fears of unforeseen cost overruns and schedule delays that have hampered previous projects create uncertainty with new investments. With this uncertainty comes more pressure to deliver execution solutions that provide project delivery certainty.”
Yes, being on time and on budget is an age-old construction dilemma. Many projects in the Canadian oil sands have experienced 50% to 100% cost overruns. What project doesn’t want to decrease costs and downtimes, increase efficiency and predictability, and improve overall competitiveness? Innovative, cost-effective solutions are needed more than ever.
The energy sector is also challenged with the cyclical nature of business and increased attrition of baby boomers that results in the loss of many talented professionals. New talent alone simply cannot replace all the experience and knowledge that leave with them. Companies need to identify and transfer critical knowledge, including what works and what does not (e.g., lessons learned) to achieve and sustain success. Projects continuously need to work smarter with fewer resources.
But the author makes a second point with which I disagree: “Automotive repair shops and insurance companies are now diagnosing car issues and claims virtually through phones. The construction industry can take a similar approach by bringing people virtually to jobsites and suppliers. Through remote visual inspections, companies can virtually perform material and equipment inspections, testing and surveillance. These inspections can support a range of events, from performing an inspection at a supplier’s shop to troubleshooting an issue on a refinery revamp. Through this secure virtual presence, the right execution resources can instantly access the site in real-time, improving quality and schedule deliver and reducing travel costs.”
No, an automotive shop cannot be compared to an energy project supplier. Energy projects have dozens or hundreds of purchase orders (POs) issued to suppliers and their sub-suppliers. Supplier quality surveillance (SQS) is a risk management strategy used to ensure that materials and equipment are delivered completely, correctly, and on time. This is completed using one or more SQS coordinators and a number of local quality surveillance representatives (QSRs), also known as third-party inspectors.
A QSR is a certified or qualified and experienced professional who also acts as the project’s “boots on the ground” or “eyes and ears” at the supplier’s facility. They examine materials and production processes, review documentation, and verify product acceptance before release and shipment. QSR activities are guided by their assignment instructions and the PO quality verification points (QVPs) – e.g., hold, witness, review, and verification points. The PO QVPs are incorporated by the supplier into their inspection and test plan (ITP), which is used to summarize quality-related and other PO requirements.
Each PO may require one or many ITPs, and each ITP may be one or many pages. QVPs and other activities are completed during QSR visits to supplier facilities, when ITPs are signed-off. In addition, the QSR also prepares a daily or weekly report for the project to document these activities, reports findings (including issues or non-conformances), and provides pictures.
A project will have hundreds or thousands of reports that need to be reviewed and filed, with many having action items that need to be addressed. This work typically requires thousands of hours to complete. Projects have worldwide supply chains with multiple QVPs that occur simultaneously and in many time zones. A project may use various methods to waive a QVP and thereby allow production to continue if a QSR is unavailable (e.g., delayed or sick).
In the absence of a QSR, a certified test report, or a picture or video sent by email or text from the supplier may be sufficient (depending on project requirements). The use of these methods would be by exception; these methods would not be used to replace QSR resources. The logistics of using cell phones for project risk management, instead of expertise and oversight provided by QSRs that verify innumerable QVPs, are insurmountable.
QVPs still need to be planned and coordinated. ITPs still need to be signed-off to verify acceptance. Reports still need to be written to advise the project and record the findings as satisfactory or not. Projects will always need boots on the ground.
Roy O. Christensen is a Welding Engineering Technologist who has over 35 years of experience with O&G, pipeline, and other projects. He is the author of several instructions, manuals, plans, proposals, reports, specifications, and other documents that continue to drive success for many projects. He is the founder of the KT Project that leverages expert knowledge transfer for successful project execution.