It all needs to go PEA shaped... to meet AMP6 efficiencies

To meet the AMP6 efficiencies challenge, which averages out at a 20% overall improvement, there needs to be a real left shift of expertise with increased supply chain involvement, says Tom Standring of MWH.

Tom Standring
10 August 2015

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Plus, design must be much more integrated going forward – this means it will need to have considered and integrated all delivery elements.  This includes construction, supply chain, commissioning and operation efficiencies including off-site construction assembly, productivity, robustness and resilience as well as the direct and indirect impact on the operator and the customer.  

And finally, meeting the efficiencies challenge will require all of these elements to be fully supported by everyone involved in delivery and operation. This means change !

Why PEA shaped?                                                                                                                                                                              

The majority of current models are still very much EPC (Engineer, Procure, Construct).  But if we go PEA shaped and put procurement (P) before the engineering (E) and add in assembly (A) rather than construction, this will create integrated designs that bring real delivery efficiencies and  generate significant improvements.

"It’s about identifying the suppliers who are committed to being part of the affordability challenge not necessarily those who are best at playing the traditional unit cost game."   

To do this we have to identify, engage and commit to our critical suppliers much earlier.  We need to optimise the design and innovation input of the supply chain.

Because if they commit to forward planning, upskilling and expanding their upfront capability then we need to commit to programme visibility and minimum revenues.

It’s about identifying the suppliers who are committed to being part of the affordability challenge not necessarily those who are best at playing the traditional unit cost game.    

Skin in the game ...                                                                                                                                        

I hear you say – if it’s all so obvious, why haven’t we done it before?  And isn’t this just early contractor involvement (ECI)?   Absolutely not,  ECI represents a partial involvement of what remains a very designer centric environment.  This new PEA approach focuses on inclusive solution development driven by intelligent design aligned to delivery.  Everyone will have ‘skin in the game’, which will lead to fuller and earlier delivery and operator ownership of the solution.

Why the left shift?                                                                                                                                             

For me this is about getting critical construction, procurement, commissioning and operation expertise meaningfully involved much earlier in the solution development space.  This effectively makes a left shift in the whole development/delivery process.

It’s key because increasingly there is as much value in how we propose to deliver solutions as there is in solution itself.   Effective asset integration and getting the right delivery input and operational support early, including that of our critical supply chain, is vital in developing Totex efficiency that is justifiable to the customer. In AMP 6 we cannot afford numerous solution revisits.

It won't be easy                                                                                                                                                  

We shouldn’t underestimate the significance of these changes and the potential constraints that will have to be overcome to drive the necessary changes.

"We are providing construction, commission and operational input across complete programmes with just five or six additional key people.  The ROI on this investment versus the traditional two or three stage solution revisit is obvious……and exciting "

Traditionally clients, contractors and supply chain have been reluctant to bring their very best people to the front end of projects.  They are too busy either competitively bidding or tied up solving problems created by non-integrated design.  However, when you have the right people with the right design and construct experience this doesn’t have to mean a cast of thousands.  Currently, we are providing construction, commission and operational input across complete programmes with just five or six additional key people.  The ROI on this investment versus the traditional two or three stage solution revisit is obvious……and exciting 

To make it happen we all need to commit to left shifting the involvement of our best people.  If we can get the right people, in the right place at the right time and in the right mix we will get the results and efficiencies we need. 

• Tom Standring is engineering director, MWH Treatment.