Technical Procurement in Oil and Gas EPC Projects by: M. Elango - - PowerPoint PPT Presentation

Technical Procurement

in Oil and Gas EPC Projects by: M. Elango Chandran - MCIPS

Index

Sl# Contents

1.

Introduction

2.

Definition of Technical Procurement

3.

Typical List of Technical Material and Services

4.

Technical Procurement Process



To understand EPC project procurement in oil and gas industry, we need to understand the concept and philosophy of project evolution.



The oil industry is broken down into three segments: upstream, midstream, and downstream.

• 1. Introduction

Description Feasibility EPC Phase - 1 : FEED Phase – 2: FEED Detailed Engineering Procurement Construction O & M (operation and Maintenanc e Conceptual Design Pre- FEED Light Normal Extended Estimated Accuracy +50 to +100 +15 to 30 +10 to 20 +3 to 15 Duration 6 -12 months 8-16 months 8-10 months 10-12 months 12-14 months 1 or 2 years

• 2. Definition of Technical Procurement

 Materials and Services for which customized specifications

and technical details have been arrived, on tailor-made basis by the selection of or development of equipment or materials that are suitable for its intended purpose, which are in accordance to codes, standards and process requirements for the project.

 These materials are also called Project permanent material

and remains as an asset of the Client and must be procured as per Client specifications and approvals.

• 3. Typical List of Technical Material and Services

Materials Mechanical Electrical Instrumentation Packages

• Pressure Vessels
• Tanks
• Pumps
• Compressors
• Turbines
• Piping and Values, etc...
• Switchgears
• Transformers
• Motors
• Solar Power Systems
• Emergency Power Generators
• Power Cable, etc..
• Distributed control system
• Telecom system
• Supervisory control and data

acquisition system

• Security Systems
• Meters/ Analyzers
• FOC and Instrument cables,

etc..

• Boilers
• Air Handling Units
• Water Treatment Plants
• Metering Skids,
• Separators
• Fire Fighting system, etc..

Services

Mechanical Electrical and Instrumentation Civil Specialist Subcontracts

• Painting and Coating
• Fire Proofing
• Insulation
• Non-Destructive testing
• Heavy Lifts
• Prefabricated Building
• Field Erected Tank
• Automatic Welding, etc..
• Cathodic Protection
• Over Headline Lines works
• Cable Jointing and Termination

works

• Electrical Heat Tracing
• VSAT / Telecommunication
• Instruments Calibration and Testing

etc..

• Topographic survey
• Geotechnical Investigation
• Soil Improvement
• Earth works
• Structural works
• Building works
• Road works
• Marine Works, etc..
• Detail Engineering
• Health, Safety and

Environmental Impact Assessment Study

• Third Party Inspection
• Non-Destructive Road Crossing
• Caliper survey.
• Commissioning services
• HVAC works, etc..

• 4. Procurement Process for Technical Material and Services

Issuance of RFQ Receipt of Offer Commercial Evaluation Coordinate for TQ closeout Negotiations Award Recommendation (*) Order Issuance Vendor Kick Off Meeting VDDR Submission Mfg. Progress Monitoring & Expediting Inspection Notification (*) Issuance of Dispatch Note Arrange for Shipment / Logistics Port Clearance and Inland Transportation Material Receipt on Site Warehousing Issuance of MR/ SOW (*) Technical Evaluation & SEPQ (*) Technical Bid Evaluation (*) Purchase Request Participation in KOM (*) VDDR Approval (*) Receiving Inspection at Site(*) Issuance of Inspection Release Note Depute QA/QC Inspector Inspection Test Plan Issuance of Inspection Report Depute Third Party Inspector

ENGINEERING PROCUREMENT

Pre-Order Post-Order

QA/QC Third Party Inspection

* client to be notified and Involvement or Approval Required in these stages

Q1: At which stage of technical procurement process, the product optimization is achieved? a: award recommendation

• b. Purchase requisition
• c. Material requisition

Q3: An order is issued not based on …. a: Technical Evaluation b: technical bid evaluation c: Award recommendation Q2: At which stage of technical procurement process, the price optimization is achieved? a: Technical Evaluation b: Commercial Evaluation c: Award recommendation A1: b: technical bid evaluation A2: c: Award recommendation Q3: c: Material requisition

Q & A

Agile approaches to procurement is speeds up the process and lowers risk Agile procurement is a way of purchasing solutions according to the outcomes you seek, rather than a product specification. It’s about being flexible, you don’t begin by looking for a particular solution, but rather discuss your needs with potential vendors and subcontractors and become aware of what solutions exist. With agile approach comes innovation. Unless you have been through a procurement process multiple times before, it is difficult to know exactly what you are looking for. Agile allows you to move away from full-scoped project details, and instead explain your problem and let the vendors and subcontractors do the rest. You run the project, not the vendor: For Agile to succeed you need to drive the project. The vendors and subcontractors may take on the lion’s share of project management and development, but is your responsibility to ensure that your business challenges are being addressed. Understanding the vision for your agency, and ensuring this is kept at the centre

• f the project at all times, is the only way to make sure the final result will meet your needs.

Vendor relationships: Agile contracts do not define what solution you are purchasing, they define the expectations of a relationship between you and the vendor. You need to be clear here on what you expect in terms of performance, and also the role of your representatives, as vendors may need access to people who are able to make quick decisions. Responding to change rather than following a plan: Agile procurement is outcomes based it offers much more flexibility than requirements-driven procurement, meaning that projects can be adjusted as new needs are discovered. Having the

• ption to respond to these changes results in much more successful outcomes for procurement organization. Overall the

benefits of an Agile approach are huge: better, more targeted solutions that solve the intended problems whilst enabling a smooth vendor-client relationship.