Sep 05, 20223 minute read

Project Controls for Industrial Projects — Definitions
Mohamed El-Mehalawi

Refinery

The 1986 UNIDO Manual for evaluation of industrial projects defines an industrial project as: "An industrial project is the proposal for an investment to create, expand and/ or develop certain facilities in order to increase the production of goods and/ or services in a community during a certain period of time. Furthermore, for evaluation purposes, a project is a unit of investment which can be distinguished technically, commercially and economically from other investments." This is a comprehensive definition that covers the purpose, value, and economic aspects of an industrial project.

For project controls we like to have a definition that addresses "what" the final product is and "how" we will build it. In other words, we are looking for a definition that covers the scope of the industrial project and the execution strategy to build it.

Looking at different fields that use industrial projects such as the oil and gas, chemical, pharmaceutical, power generation, and food industries, we found that the scope of their projects has six categories of scope:

  1. Foundation
  2. Steel Structures
  3. Piping
  4. Equipment
  5. Electric Cables
  6. Instrumentation

We find these six categories in any industrial project regardless of the application. For example, pipes might be used to transport gas, oil, steam, or a component of the food mix. The equipment may be a compressor, a boiler, a cracker, or a catalyst. The same applies to other categories.

These projects usually start with an "idea" to solve a certain need as defined in the first paragraph. Majority of the time the idea does not specify the six categories mentioned above. In most cases, the person or team who come up with the idea or the solution to the problem does not know even what it takes to build the industrial project. They know for sure that once the project is built it will increase the capacity of production of goods or it will create new goods. The idea team interfaces with the project teams to start defining the specifics about the new facility and how it will be built. In most industries, this is called front end planning (FEP) or project development phases. A project controls manager is a key member of the project development team.

FEP usually has three phases:

  1. FEP-1: Opportunity studies and idea deliberation
  2. FEP-2: Technology selection and initial feasibility studies
  3. FEP-3: Final: a. Scope definition b. Feasibility study c. Development of execution strategy

In step 3.a, the team defines and hopefully freezes the scope of the project completely. This includes defining the quantities of each of the six categories mentioned above. For example, the team will define in details the sizing of steel, pipes, cables, and selection of equipment and instruments.

In step 3.b the team looks at the economics of the facility to be built. All economic considerations besides the market share and brand names are considered to determine if the project will be feasible in serving the long-term goals of the owner organization.

If the project passes the gate at the end of FEP-3, it moves to execution which include four phases:

  1. Engineering and design
  2. Procurement
  3. Construction
  4. Commissioning and startup

Another definition of these projects is called EPC (engineering, procurement, construction). From a contractor side, the EPC definition might be enough. From an owner side, the project is not just an EPC. It has other phases before getting to execution and s.

Based on the execution strategy defined by the owner in step 3.c, the owner might award the whole execution to an EPC contractor or self-execute the project and then award certain parts of the project to multiple contractors. The execution strategy also provides more details about core project team, contracting strategy, vendor management, sequence of work, schedule of execution, etc. In the option of awarding the project to an EPC contractor, we find that we have two project teams that need to aligned and integrated. In the option of self-execution, there will be one core project team to take the project from start to end.

A project controls manager (PCM) is key member of these teams regardless of the strategy. It is always recommended to have the same project controls manager for both project development and execution. It is the policy of many owner organizations to have different PCMs for the two phases. This is also acceptable provided that the PCM will not change during the course of either development or execution phases.