Detail Engineering Completion Rating Index System (DECRIS) for Optimal Initiation of Construction Works to Improve Contractors’ Schedule-Cost Performance for Offshore Oil and Gas EPC Projects

Abstract

Engineering, Procurement, and Construction (EPC) contractors with lump-sum turnkey contracts have recently been suffering massive profit losses due to re-works and schedule delays in offshore oil and gas EPC megaprojects. The main objective of this research is to develop and implement a detail engineering completion rating index system (DECRIS) to assist EPC contractors to optimize fabrication and construction works schedules while minimizing potential re-work/re-order. This is achieved through adequate detail design development and results in minimizing schedule delays and potential liquidated damages (i.e., delay penalties). The developed DECRIS was based on findings from an extensive review of existing literature, industry-led studies, expert surveys, and expert workshops. The DECRIS model is an evolution, and improvement of existing tools such as the project definition raking index (PDRI) and front-end loading (FEL) developed specifically for the early stage of engineering maturity assessment (i.e., planning, basic design, and front-end engineering design (FEED)), prior to EPC projects. The DECRIS was evaluated and validated with thirteen sample as-built offshore megaprojects completed recently. When the DECRIS was applied to the completed projects post-hoc, a correlation (R-squared 0.71) was found between DECRIS scores and schedule/cost performances. This is much superior to the PDRI-Industrial model's correlation (R-squared 0.04), which was primarily devised for owners' basic engineering or FEED completion assessment. Finally, as a means of further validation, project schedule and cost performance of an ongoing project was predicted based on the correlations found on the thirteen completed projects. The resultant predicted schedule and cost performance was well matched with the current project performance status. Based on the accuracy of the DECRIS model found in the validation, said model is an effective prospective tool for EPC contractors to manage their engineering and procurement/construction risks during the initial detail design stages. of the total global oil supply [1]. In 2011, shale oil and gas were introduced to the oil and gas market with the development of cost-effective hydrofracturing technologies. This has led to an over-supply of oil and gas and, consequently, an era of low oil prices decreasing major oil companies' profits [2].An offshore project requires a significant amount of early investment for drilling and production facility design and construction. To combat lower revenues and increase profits, major oil companies have placed a great deal of attention on cost-saving strategies in these early stages for offshore oil and gas projects [3]. However, these strategies are often poorly planned and implemented, leading to inadequate resource allocation, and improperly accelerated design and construction. This all results in poor quality of work, schedule overrun, and even safety-related accidents on site [2].Therefore, how can planning be improved? Merrow collected and analyzed project pe...

A Forecast and Mitigation Model of Construction Performance by Assessing Detailed Engineering Maturity at Key Milestones for Offshore EPC Mega-Projects

“…There are many existing publications dedicated to causes of profit losses and construction delays on international EPC mega projects: Asia [5][6][7][8][9][10][11][12][13][14][15][16], Europe [17,18], Africa [19][20][21][22], Americas [23][24][25], and Australia [26,27]. Among the factors identified, the most common cause of project schedule and cost overrun was found to be poor design development prior to construction [5][6][7][8]12,13,[15][16][17][18][22][23][24]27].…”

“…The PDRI's hierarchy consists of sections, categories, and elements. Each element is assessed on a scale of 1 to 5, and a project definition rating is calculated using a scoresheet which is weighted and normalized for each element [8]. The CII recommends that the cutoff score of the PDRI at the end of the FEED stage should be 200, as the performance of a project with a score higher than 200 was historically not satisfactory in terms of cost and schedule.…”

Using Text Mining to Estimate Schedule Delay Risk of 13 Offshore Oil and Gas EPC Case Studies During the Bidding Process

“…While there exist a multitude of studies modelling construction schedules, research on estimating schedules and predicting the potential delays for O&G project construction related to automated modelling are few. A detailed engineering completion rating index system model was developed and implemented to assist offshore EPC contractors for optimizing fabrication and construction work schedule with minimizing possibility of repetition of works [20,21]. Jo et al [22] developed a methodology of piping construction delay prevention to improve material procurement management and avoid shortage of piping materials and to minimize delays, by using the critical chain project management.…”

“…Note, this process of developing an SDRI scoring has precedence within existing literature, though the score has been given many names. The scoring method most similar to the presented SDRI models the project definition rating index (PDRI) by the Construction International Institute (CII) [44] and two papers on the Detail Engineering Completion Rating Index System (DECRIS) [20,21]. These two indexes are typically used by the project owner and EPC contractor to quantify the level of basic and detailed engineering maturity to determine whether the project can move to the next development stage by mapping PDRI scores and DECRIS score to project performances of schedule delay and cost overrun in the EPC execution stage.…”

“…For example, the term "escape tunnel" likely has a greater impact on the schedule than "nozzle". While this remains a limitation, using count data to develop risk scoring has been used historically in the literature [20,21,33,44].…”