About Industrial Projects
Large-scale industrial projects are all unique, but they do all have many features in common, and they often also face similar challenges. In this blog-post we walk you through a typical capital project from start to finish; procurement to installation.
In today’s digital world, there are numerous ways to ease these huge projects, which is also very much a trend in the industry. The problem may lie more in which technologies to choose and make use of. With 20 years of experience in the industry, we will explain how LogiNets’ Material Handling System will facilitate each stage of an industrial project.
A large-scale project has so many variables, it is impossible to keep track of everything without a network of professionals and sophisticated systems that are designed to ease the process – or better yet, just one system that can be used for all functions. Goods may be coming in from many countries and continents, and the list of suppliers can consist of hundreds of companies. From the large components to the smallest parts, all materials need to be carefully monitored. In fact, material shortages are often a major reason behind the most infamous problem these huge projects face: delays. With inflation rising and the global situation being as it is, constructors and project directives are keener than ever to avoid delays, but with such a large web of companies, materials, employees and schedules, processes hardly ever run completely without problems.
A large project needs careful planning, naturally. Many projects use the so-called WBS (Work Breakdown Structure) to formulate careful plans that carry throughout the project (Risto Pelin, 2008, 93). When the project is well-structured, reporting work phases, deliveries and challenges is made easy. This is what LogiNets’ MHS is made for.
Let’s start our journey through the lifecycle of a capital project!
Starting a Project: Planning and Procurement
When initial work to identify the need for a project is done, decisions about its location, timeframe etc. have been made, and biddings rounds are over, clear, structured plans have to be made and procurement of materials started. As stated by Valeria Silva of CRB Group: “A robust procurement plan promotes a steady supply chain of materials and equipment to keep construction projects on schedule and budget.”
Planning includes creating a schedule, of course. As mentioned, the most common challenge in large projects is delays. In fact, as stated in a McKinsey report, “77 percent [of megaprojects] are at least 40 percent late.” To make the matter even more complex, these big projects do not only have one schedule, but rather many smaller schedules; planning schedule, procurement schedule, shipment schedule, installation schedules… In his book on construction project management, Risto Pelin has identified many common problems with schedules. These include weaknesses in communication, the fact that schedules are not updated, tasks are not clearly defined and shared, and also the fact that whatever program is being used, is not easy and intuitive to use (Pelin, 109).
Apart from the project time table, it is crucial to pay attention to which materials are chosen. An important step is to perform comprehensive risk analyses on suppliers and materials. Sustainable materials may be more expensive in the procurement stage, but become much more beneficial in the long run. When selecting materials, one should look beyond the initial cost. Materials Assemble pointed out that “Sustainable materials are a long-term investment compared to cheaply produced materials that have a short lifespan and need constant maintenance. Sustainable materials can be durable, energy-efficient, can create a healthier environment for humans, and can require less maintenance.”
Considering the global situation with conflicts, strikes, etc., planning a project these days also involves creating a plan B. Alternative suppliers, shipping routes and means need to be thought of. The whole project network needs to be kept up to speed on what is happening. MHS can ensure transparent and smooth interaction between engineering, purchaser, logistics, material supplier and site personnel. Different project parties can have different rights and levels of visibility according to what they need to have access to. Orders can be created and viewed in the system by different parties for maximal transparency.
Project Execution: Tracking Materials and Managing Shipments
As materials from countless different suppliers travel across the world to reach the project site, there are so many shipments to track and schedules to oversee that it is virtually impossible to monitor all of them without a well-functioning system. By this stage in the project tracking systems for material movement (RFID, PGS, etc.) and risk mitigation strategies for supply chain disruptions should have been established.
Freight forwarders have online tracking systems where you can view all shipments, their locations and estimated arrival times. But even this will take too much time and effort, if you need to keep track of shipments on many different platforms and websites. MHS provides a solution where all shipment information can be found in one and the same system, saving precious time for more valuable tasks.
As established, poor communication is one root cause of challenges in megaprojects and their supply chains. When systems are not integrated to each other, it is very likely that some shipments get lost, if not permanently, then at least temporarily. MHS has been developed to give project networks one, common database, so that all members have visibility throughout the project. Transparency is key.
Especially in this stage of the process, it is important to pay attention to cybersecurity, as we stated in our previous blog post. This is another reason why centralizing all shipment and tracking information in one system is beneficial. When everything can be found in the same system, there is less risk for stolen passwords, etc.
On-site material inspections
Once materials have arrived to the site, it is time to inspect them. As defined in MaterialX’s blog: “A material inspection is the process of examining and evaluating the physical and chemical properties of a material to ensure it meets specific standards, specifications, or product quality.” With large amounts of pieces shipped, there is always room for human error. And, unfortunately, it is always possible that goods get damaged during shipment. Performing quality control on all containers, pallets and packages arriving is important to enable early reacting to deviations. When deviations are spotted as early as possible, it is more likely that their fixing costs will remain at a reasonable level. Abnormalities spotted at last minute are more likely to lead to a need of reordering and hasty transportations with costly air freight.
At this stage of the project, there needs to be a standardized inspection protocol in place. It should be established which personnel carry out the inspection, in which order, what is the procedure with pieces that are not fit to be used, etc.
With MHS all goods are logged in the system in a detailed fashion, and the system supports QR-codes. This way, the materials are easily inspected using a mobile device, and any abnormalities can be logged in immediately. Different deviation types can also be specified in the system, for example from minor scratches to severe flaws that prevent materials form being used.
On-site warehousing
With mega-scale projects, the sites are huge, and of course, even the warehouses take up a lot of space, housing thousands of components. This is why it is imperative to have a modern warehouse software up and running, so that all materials are easy to find when they are needed. Smart warehousing is being developed rapidly, and as Neuroject states, “it becomes clear that adopting these technologies is not just a choice but rather a need for businesses that want to stay competitive and adaptable in a sector that is always changing”.
When on-site inspections have taken place and the materials are warehoused, it is still important to remain ideal conditions for their safe keeping. A modern, well-rounded on-site warehouse software will allow inserting material-specific information, such as their location in stock, possible review images and required storage conditions. In MHS you can specify if materials need to be kept indoors, in a warm storage, etc. The rise of IoT is taking this even further; as Neuroject states, it is now possible to track “temperature, humidity, and stock levels — thanks to sensors that are implanted throughout the facility and collect data”. So, the future of on-site warehousing looks even more detailed!
With a well-functioning system, unproductive work phases can be cut to achieve faster and more effective processes. We once identified 7 most common problems in on-site warehousing, such as difficulty in locating materials and inaccurate inventory management. MHS can reduce work phases in the warehousing stage by as much as 50%. All data is stored in the same system that enables picklist creation, too.
Conclusion
As Pelin concludes, rapid changes in the global situation may even further increase the use of project formed work. One has to be better prepared to sudden changed that may occur faster than before (2008, 381). Having said that, it is even more evident that having all stages of a large-scale project well planned in advance and substituting plans in place is a must. Drafting careful plans can end up saving a lot of money during the course of a project. Keeping all project stages as transparent as possible and ensuring good relationships throughout the supply chain will ease communication which in turn can help in problem prevention.
As Rebecca Van Wyck wrote in her Medium blog post: “A project is deemed successful when it meets its objectives within the defined scope, time, and cost constraints.” An alarmingly large percentage of megaprojects do not meet their objectives when it comes to time and costs. Our system has been created in cooperation with project professionals from many fields. It is designed to target the points where problems are most likely to occur. After all, materials are the lifeline of a project, whether it is a small one or a huge megaproject with a multi-billion budget. In general, taking advantage of new technological solutions throughout the project will likely lead to lower costs, safer working environments and fewer mistakes.
Keeping up smooth processes throughout the supply chain and project is in the best interest of all parties involved. It is often stated that time is money, and the magnitude of over costs in a project with a multi-million, let alone a billion-euro budget can be enormous. When all project stages from planning and procurement to installation on site are carefully planned and communication runs throughout, the risk of unpleasant surprises decreases.
References
- Pelin, Risto: Projektihallinnan käsikirja. 5. painos, Gummerus, 2008.
- https://www.crbgroup.com/insights/construction/procurement
- https://www.getmaintainx.com/blog/materials-inspection
- https://materialsassemble.com/magazine/sustainable-materials/
- https://www.mckinsey.com/~/media/McKinsey/Industries/Capital%20Projects%20and%20Infrastructure/Our%20Insights/The%20construction%20productivity%20imperative/The%20construction%20productivity%20imperative.pdf
- https://medium.com/@rvanwyck/project-lifecycles-in-different-industry-sectors-and-project-product-success-and-failure-examples-75353b7ed02f
- https://neuroject.com/smart-warehouse-in-construction/
- https://www.projectmanager.com/blog/what-is-the-project-management-life-cycle
Did you enjoy this post? You might also be interested in our blog posts on
- Material efficiency in capital projects
- Review from material suppliers on modern materials management tools in capital projects
- Implementing new software in capital projects- how to get supplier buy-in?
