The project engineer

In the following chapter, which takes the viewpoint of economic analysis, we will outline some of the difficulties faced by the project engineer in quantifying the value and efficiency of his contribution to the project.

1 Colloquially described as ‘bullshit’ in the industrial environment!

Irrespective of the difficulties, they are part of the context in which he must live and be able to demonstrate his competitive value. The first problem of so doing is to establish the goals in relation to which his performance will be measured.

Given the occasional inevitability of unrealistically marketed projects, the project engineer is likely to face, sooner or later in his career, the challenge of unreasonable goals (following, if you like, the process described above). Maybe he and his team can rise to the challenge with a superhuman performance, but even if this is the case, how demotivating to have such a performance graded as standard, as just meeting the goals!

The key to survival, and the retention of sanity, in these circum-stances lies in being able to reduce the work definition, the technical issues, the budget, and the schedule into a breakdown and plan whose logic is incontestable. This is not meant to imply, for instance in the issue of engineering costs, that there is a magic figure which is the

‘correct’ cost of engineering, arrived at as a universal truth. It means that the underlying issues can be exposed and the potential implications of either more or less engineering input can be demonstrated.

Ultimately, there will always be the possibility that a given task can be done more or less efficiently, but it is only by breakdown to a low level of task, for example the document level, that true comparison can be made. Otherwise, there is always the danger of simply eliminating inputs and thereby creating adverse consequences to another part of the project, for instance the DFCs or plant maintainability. And if it arises that the ‘goals’, the project budget and schedule, have been arrived at without any such low-level breakdown, then it can be surmised that the commitment is purely a gamble.

We will discuss three basic forms of contract under which the engineer may work, and some of the consequences in terms of how work should be conducted and its effectiveness judged. The first is the lump-sum turnkey job, in which the contractor has total responsibility to build a plant that complies with a specification, within an agreed time-frame. This is in many ways the least frustrating way to work, because the contractor is free to choose his approach to the work, and how to structure and optimize his inputs to arrive at the most economic end result, consistent with technical acceptability and completion schedule.

An essential challenge in controlling the work is to maintain absolute clarity about the scope of work and the plant specification. It is not uncommon for clients to want the best of both worlds, to want to control the engineering of the plant in accordance with their ongoing

preferences, but to maintain a fixed price and schedule. This is obvi-ously a nonsense: a fixed price for an unspecified product. The most common device for clients to attain this end is to specify that project work shall be ‘subject to approval’, either without further qualification, or more usually with reference to cover-all phrases such as ‘good engineering practice’ or ‘state-of-the-art design’.

Clearly any project engineer who wishes to avoid a sticky end must insist on clarification of such open-ended terms, before advancing too far into the work. Failure to do so is no different in principle from advancing into detail engineering without freezing the conceptual design. There is no knowing the outcome. Despite the possible negative perception by the client, it is essential to agree a fair definition of the basis for approval, and this is always easier to achieve prior to the arrival of a contentious issue. A fair basis is not baskets of specifications such as ‘all relevant national and international standards’, but one in which approval is based on stated parameters and specifications without the imposition of arbitrary preference, which, if required by the client, should be the subject of provisional pricing or change orders.

The second contracting mode is the hourly paid EPCM contract.

Here the potential for conflict between contractor and client is minimized, and the contractor’s job is simply to perform professionally.

There is generally correspondingly little incentive for the contractor to perform above expectations, and there may be strong pressure to minimize the input costs per manhour by minimizing staff costs – not a happy position for the manager charged with maintaining quality.

There is little scope for manoeuvre in this situation other than the negotiation of a bonus according to comprehensive performance targets, which effectively hybridizes the contract with the next type to be considered.

Finally, there is the lump-sum EPCM contract, arguably the most challenging in that there is a fundamental adversity between client and contractor. Once the lump sum has been agreed, there is no financial brake on the client’s aspiration to reduce DFC and make ongoing improvements to plant design by demanding additional work by the EPCM contractor. It is just as important to maintain a rigorous control of workscope as for turnkey work, but it is more difficult because the product is less tangible. To control the engineering workscope, both the activities (and, by inference, the number and type of documents) and the definition of work acceptability have to be rigorously controlled.

This involves the strict application of the precepts outlined for planning engineering work, in Chapter 4, and in particular the following.

• Develop and obtain client approval for comprehensive design criteria and design approval checklists before doing any other work. Try to ensure that design criteria and checklists contain only clear requirements and no debatable issues, that is, no words such as ‘best practice’,

‘optimum’, or ‘vibration-free’, which are likely to lead to controversy through lack of quantifiability.

• Work by increments: do not commence with detail designs until conceptual designs and layouts are approved.

• Strive to maintain a regime under which any proposed design change is regarded as a change to the scope of the contract, unless the change is necessary for plant performance as specified, or needed to satisfy safety criteria.

7.4 Conclusion

Some of the views, concerns, and practices which have been discussed may be regarded as confrontational and unnecessarily pessimistic of human nature. In many situations this may be the case: engineering work may be conducted in a harmonious and professional manner without any client/contractor conflict; relationships of trust may be developed without any abuse or loss of competitive performance.

However, the project engineer must be aware of the full range of working relationships and their consequences, if only to reinforce his determination to maintain the status quo of an existing relationship.

On the other hand, it is entirely possible for an engineer to find himself in a situation which cannot be managed in terms of the logical methodology discussed. For instance, to be locked into a contract with a defined price, defined project schedule, undefined scope of work, and an unreasonable client. The only response to this situation is firstly to analyse and expose the basic unmanageability of the task, and then to negotiate, preferably before doing too much work.

Chapter 8