Neeraj Nandurdikar, Director of Oil & Gas Practice at Independent Project Analysis, Inc., was featured in an April 14, 2016 UpstreamOnline.com article in which he cited poor engineering as a leading reason why E&P projects experience first production target date slip.
A presenter at LNG 18 in Perth, Australia, Nandurdikar is quoted as saying: “Often times FEED isn’t done and incoming FEED then goes into execution, and that leads to the most worrisome problem that we see facing the industrial sector today, which is predictably bad engineering performance.”
The entire article can be read below.
This article was published originally by UpstreamOnline.com on 14 April 2016, and is protected by copyright.
Photo Credit: Eoin O’Cinneide/Upstream
‘Bad Engineering’ Biggest Project Bane
By Eoin O’Cinneide in Perth
“Predictably bad engineering performance” is one of the most serious problems facing the oil and gas industry, which must rid itself of increased complexity if it wants the projects of the future to work effectively.
Poor engineering is virtually always the culprit when it comes to slippages in first production at projects, while some live projects should never even have seen the light of day, Neeraj Nandurdikar, director of oil & gas practice at Independent Project Analysis, said at LNG 18 on Thursday.
“I define project management as the science of planning combined with the art of reacting to surprises. By that definition, we are not very good artists,” the analysis firm director said.
“The projects of today are extremely complex … There is too much specialisation in companies. There are studies because we can do studies – it is the only reason we do studies sometimes,” he said, arguing that this leads to problems, errors and lengthening of projects schedules.
“We go into execution with open scope and assume that the contractor to fix it or deal with it– that’s not their problem. There is wandering beef FEED (front-end engineering and design) and execution.
“Oftentimes FEED isn’t done and incoming FEED then goes into execution, and that leads to the most worrisome problem that we see facing the industrial sector today, which is predictably bad engineering performance.”
Nandurdikar highlighted how companies – in the energy and other industries – work their projects in phases, with him using the analogy of gates to segregate project phases.
“The problem is that the gates are broken, they are off the hinges – the gates don’t work. Because Gate 2, where we are supposed to start projects that are ill-defined, don’t get started. We do projects today that we shouldn’t even have been doing.
“And then further it is exacerbated because Gate 3, which is supposed to mark the conclusion of FEED, slides somewhere between end of FEED and detailed engineering. Often we find an execution where (a company is) still trying to figure out how to finish FEED, let alone start execution – and this creates problems down the line.”
Increased complexity in design and engineering creates a “fog” which slows down execution, and ultimately creates faulty projects.
“For any projects, when a project slips its first hydrocarbon date or first cargo, almost every time there is only one reason for the origination of that slip: that slip originates in (detailed) engineering,” Nandurdikar said.
“The project failure doesn’t usually start in the field – it is not that we don’t know how to build something. The failure actually starts when little or nothing physical is happening – it is in the engineering, it is in the scoping, it is in the front-end design… The information flow is the problem.”
To stop repeating the mistakes of the past, simplicity needs to permeate the through all project processes. “We need to start with asking ourselves, ‘what capabilities are we looking for in the future?’ Do we want more engineers, or are we looking for something beyond that,” he added.
“We need to build capabilities of projects and not just discipline engineering… We need more generalists rather than specialists.”
Nandurdikar’s concerns were echoed by fellow panellist and president of oil, gas & chemicals at Bechtel, Jack Futcher. “Project complexities are definitely increasing… The industry would serve itself well to try to recognise and evaluate up-front and before a project is launched what it will really take from a design and construction stand point, all the supply chain elements that go into a job, when the jobs keep getting bigger, harder, more complex, tougher specifications.”
Mike Utsler, chief operations officer at Australian independent Woodside Petroleum, commented: “The reality is we need to come back to a simpler manner in which we produce our products and hydrocarbons … and more enabled to allow our operators from a design implementation and operation standpoint to use the equipment efficiently.”