EPC – What is it and Why/When is Project Logistics Mission Critical?
The expansion of the Energy Industry ( e.g., oil & gas; renewables; nuclear; wind; solar, hydrogen, etc.) worldwide is evidence of the growing need to manage complex projects. Major projects are being planned and executed and many more are in the planning stages to develop, harness, store, and distribute these energy sources throughout the world.
EPC Defined
EPC (Engineering, Procurement, Construction) is the title given to the predominant project delivery model whereby contractors are responsible for the project from start to finish – from initial design and engineering plans through construction and completion. When major construction projects such as those being planned as large-scale and complex projects for the U.S. Infrastructure Program are added to those in the Energy Industry, we have a significant projected annual growth market in the U.S. over the next 1-5 years.
In fact, recent Federal Legislation has created two important categories for Federal funding:The Bipartisan Infrastructure Law (BIL) that will fund hundreds of projects
A focused spending ($billions) to accelerate and expand clean energy deployment; clean water programs; and other energy projects that impact climate change
We note that a new website and LinkedIn address has been created to report on Energy EPC projects (EPCIntel.com) which will be helpful in tracking the major Energy projects.
Project Logistics Defined
Critical to the success of EPC Project Managers, and their funding sources and clients, is Project Logistics – which are the services required in sourcing, moving, storage, and usage of all materials and items for the project or construction site(s). These often involve complex multimodal moves (heavy and oversized cargo); ordering and managing thousands of individual items; and high risks in several logistics functions. Moreover, in most cases new supply chains (source to site) must be planned and setup.
These logistics services and their effectiveness are essential due to several important factors:
- The absolute necessity for timely and accurate sourcing and receiving of goods
- Need for staging, sequencing, and coordinating supplies to continue work
- Ensuring parts seamlessly clear country entry and comply with all regulatory bodies
- Management of onsite inventories to minimize on-site management and warehousing requirements
Many times, the success and profitability of these projects rely on the teams ability to manage the many details and requirements of the project.
Role of Systems
Our eMATE experiences in this industry have included not only evaluating Logistics Service Providers to best meet the special need of the EPC Managers; but, also their use of E2E platforms and systems to support planning and execution. Decision support tools are essential for control purposes as well as visibility into purchase orders and shipments from sourcing to receiving at the project site(s).
Traditional freight provider systems do not address all the functions of Project Logistics. While ocean or air cargo transport are key needs, so also are:
Managing and controlling inventory (e.g., WMS)
Planning tools for aligning supply chains, routing guides, and consumption coordination
Tracking and tracing items real time to enable timely execution
Alerting project teams of decision support elements to minimize project changes and/or delays
Analyzing data (e.g., business intelligence (BI) tools) to manage performance
The criticality to EPC managers of timely and accurate availability of needed materials and items is similar to that of inbound service to production lines; i.e., delays due to essential materials or items can incur costs into the hundreds of thousands of dollars for the slowdown or even shutdown.
Availability of Advanced Systems
As the Energy and Infrastructure industries expand, we expect to see more specialized and improved platforms and tools for enabling EPC managers to deliver projects on-time and on-budget. One system that is in use with international project logistics providers has recently entered the U.S. market as Logiswift — www.logiswift.com.
