Ensuring Project Success and Profitability: The importance of designers in engineering projects.

 

 

Contributed by Chris Chandler – Design Coordinator 

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Ensuring Project Success and Profitability: The importance of designers in engineering projects.

Success and Profitability - The importance of designers on engineering projects.

Sometimes engineering companies only have one chance to provide services to a client. The future relationship depends greatly on the package delivered. Whether mechanical or E&I, providing a quality package on schedule is usually the deciding factor whether or not projects will be awarded in the future.  Profitability is a major factor when determining if an engineering company will survive and be able to provide their services in the future. While all members of the project team play an important role, the designer’s contribution can really make or break things in terms of profitability.

Have you ever wondered why a client uses a particular engineering company over and over again? Or worse, why they never use them again? The three main factors include:

  • Cost of services
  • Quality of the package
  • Schedule

Designer payroll can be a large portion of engineering project cost but what they produce, if done right, is worth every penny.  Often, the majority of charged hours come from the designers on the project. This makes it increasingly important to know your staff. If a top paid designer consistently spends 1 hour a day out of a 10 hour day (10% of their time) being unproductive, project profitability will suffer. These situations are not uncommon and must be fixed quickly and prevented from the beginning if possible.

The experience type and level of an assigned designer can also affect the bottom line of the projects they work on. This is a huge indicator for success. They must have the skills to complete the task efficiently. Even though small capital projects include most of the same metrics as large capital projects, the way the designer approaches and works the job should be evaluated before kickoff to ensure small capital characteristics are taken into account.  Smaller projects may not allow the built-in overhead costs that are usually part of a large job.  1% of a 10,000 MH project allows 100 hours for printing, document control, and other overhead costs. On the other hand, 1% of a 1,000 hour job only allows 10 hours for these functions.  This means the designer must manage resources properly while working these smaller types of projects to stay within budget.  Whoever does the hiring for a company needs to understand the company’s project style and hire accordingly. 10% of a small project may be as little as 100 hours (two and a half weeks). If a senior designer is hired to lead projects for smaller cap revamp type projects but is only experienced leading large capital projects it is likely that efficiency and profitability will suffer.

A designer working on smaller revamp type projects will need to stay flexible and be able to wear different hats to ensure success. If they are not willing to step outside the boundaries of the typical designer role, the costs may become too high.  A 1,000,000 MH green field project over a two year period could employ a survey team, multiple senior designers, multiple modelers, CAD operators and a document control team. There is enough work in larger projects to justify this type of team and those teams members will probably remain in these roles for most of that time. On a small revamp project, let’s say 4,000 hours, there may only be one senior designer in each discipline acting as a working lead for one or two CAD operators. The senior designer must understand what tasks he can do efficiently. They must also realize when/if to manage and delegate to the CAD operators or other available team members. If the senior designer understands this and efficiently utilizes lower level drafters or CAD operators, the composite rate throughout the project will keep project costs within budget.

The goal of any Engineering company should be to provide the client with a package that will make the project a success. The client hopefully understands that the company must also make a profit to be around for bidding on the next project.  Projects can be successful to both clients and the engineering company if it is staffed with the right designers that set both sides up for success….it’s a win win!

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Chris Chandler H+M Industrial EPC

Chris Chandler – Design Coordinator at H+M Industrial EPC

Chris has more than 30 years experience in piping design, coordination and project management in industrial settings. His project design and supervision responsibilities have ranged from small capital projects to multimillion dollar projects. Chris has worked at H&M for ten years, with previous work experience at Jacobs, CDI, Enterprise Products and Mustang Engineering.

 

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Economics of Safety in the Workplace – What Does Safety Really Cost?

 

 

Contributed by Jay Bice – HSE Manager

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Economics of Safety in the Workplace – What Does Safety Really Cost?

What does safety really cost? H+M Industrial EPC

What does safety really cost?  In the old days, employee safety was not exactly valued.    The injuries or fatalities that happened during construction were often just figured into the cost of doing business.  For example, during the construction of the Empire State Building in 1931, five workers lost their lives.  From 1933-1937, eleven workers died building the Golden Gate Bridge. As you can see in the picture below, there was no true safety culture.

1024px-Old_timer_structural_worker2

Jump forward 40 years and it seems that safety was still not a focal point of the industry. While the World Trade Center was being built during the early 1970’s, sixty workers lost their lives during the construction.  Eventually, in 1970, President Nixon signed the Occupational Safety and Health Act into law, establishing OSHA.  This was the start of companies realizing the value of ensuring employee safety.

Another 40 years later, the One World Trade Center began construction.  This video  shows that safety is becoming a true workplace value and not just an accepted risk.  During the construction of One World Trade Center, the fourth tallest building in the world, two workers lost their life…a drastic decrease from earlier years.

Some have a perception that safety only costs the organization money. This perception leaves much of the story untold. To understand how safety really affects your bottom line you must understand the direct costs versus the indirect costs.  Direct costs are associated with the initial cost of an injury or accident; the cost of a doctor’s visit, the cost of new fender the truck needs. Then you have the indirect costs that are much like the iceberg analogy; 90% of the cost of an incident is hidden as an indirect cost.

Direct Costs:

  • Medical Expenses
  • Payroll/Indemnity

Indirect Costs:

  • Replacement Employees
  • Production Delays
  • Overtime
  • Lost Work Time
  • Reduced Productivity
  • Loss of Expertise

Indirect costs are staggering in comparison to the direct cost of an incident.  Indirect costs take into account the time it takes your safety professionals and management to respond and manage the incident.  A major indirect cost is the lost productivity of those involved.

Lost productivity just scratches the surface of indirect costs incurred after an incident. The question is, what does that really cost?  If it delays your project, it could send a message to your client that you cannot keep your deadlines.  What could that cost you? Possibly a future contract worth millions of dollars to your organization.  What about insurance cost to cover your losses, or the increased EMR (experience modifier rating) rating you receive because of the incident? This could affect future contracts since clients are more frequently awarding projects based on these statistics.

This calculator will give you the estimated impact of a workplace injury on a company’s profitability. For example, if a company makes a 10% profit margin and we look at an incident that has a direct cost of $20,000 and indirect cost of $22,000, you will have a total cost of $42,000.  The company would have to generate $220,000 in sales to cover the indirect cost and almost half a million dollars to cover the total cost of one minor injury.  This shows how the costs of one incident can really add up.

So how are you going to control these costs? Add more safety professionals? Add more training? Hire only experienced employees?  Just one tactic alone will not solve all safety problems.

Implementing an effective incident reporting and investigation program will help demonstrate the value a company puts on employees safety. Reporting incidents and near misses are extremely important to organizations that want to improve their safety systems and culture. Near miss investigations are typically viewed as a negative finding. It is actually the opposite. A true near miss will have minimal cost and no injuries or damage. These show where the gaps in your system are before they have an opportunity to cost you a fortune. This is a prime opportunity to investigate, identify gaps, and report to your management team the recommended corrective actions.

Corrective actions will typically come in four categories:

  • Elimination of the hazard
  • An engineering control of the hazard
  • An administrative control of the hazard
  • PPE to protect against the hazard

The most effective way to approach and minimize the losses is to first have a very safety supportive management team.  Safety has a true place in a company’s culture, where everyone on staff is a safety leader and safety is not the sole responsibility of the company’s safety professionals.  Everyone should have a direct role in safety, and ultimately, it is the responsibility of management to execute projects not only on time but safely as well.  A quick fix could be to add someone with “safety” in their title to every crew, but how cost effective would that be?  Some can sustain that kind of cost but most would not be able to remain competitive in the marketplace with that increase in staff.  Management must understand and support the safety culture.

Safety does cost money, but it can cost a lot more if safety is not a valued part of a company’s culture.  I have been around the gulf coast industrial business all my life. I have seen my share of what can go wrong. There have been a number of incidents that help remind me every day of the importance of having a safety culture valued by all.

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Jay Bice H+M Industrial EPC

Jay Bice – HSE Manager at H+M Industrial EPC

Certificate of Technology in Occupational Health and Safety 

Jay has more than 20 years of industrial health and safety, experience in construction, pipeline environmental services and petrochemical facilities. He is responsible for developing and executing safety and health policy and objectives for H+M, as well as any sub-contractor workforce all of which represents exposure of a high risk nature. Jay provides management oversight to various safety and occupational health related programs. These programs include injury prevention, fire and emergency services, behavior safety, drug and alcohol prevention, training and occupational health. Jay is a member of the American Society of Safety Engineers.

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Small Project vs. Large Project Planning – Schedule Slippage and Recovery

 

 

Contributed by Matt McQuinn – Director of Construction

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Small Project vs. Large Project Planning – Schedule Slippage and Recovery

Small vs. Large Project Planning  - H+M Industrial EPC

Recovery.

It’s not that you shouldn’t do it, it’s that you shouldn’t HAVE to do it.

As the summer comes to a close and our daughters birthday approaches later this fall, my wife and I have been kicking around ideas for how to celebrate. This isn’t just any birthday, it’s her GOLDEN birthday which is extra special, according to my wife, as she will be turning two on the 2nd. My wife takes birthdays seriously and the only thing that might make her happier than a birthday celebration is a trip to Disney World.

We are now in the process of laying out our Disney plan to ensure we make the most of our daughter’s first visit. Meanwhile, we are working to cross off the remaining stragglers from the “2015 Summer Bucket List” we created to have some fun while getting to know an area relatively new to us. From a planning and execution standpoint, these two scopes are at opposite ends of the spectrum.

For the purposes of the next few paragraphs:

  • The summer bucket list will be labeled our “large project” (3 months).
  • The Disney trip will be labeled our “small project” (1 week).
  • Both projects have well-defined scopes.
  • The large project has a long list of activities varying greatly in terms of level of effort needed for completion, along with plenty of time in the schedule to complete the scope.
  • The small project contains a limited number of activities to be executed during a very short window of opportunity.

There is a laundry list of differences of how large vs. small projects are planned, executed, and measured. A few of the key differences are seen in:

  • Budgeting
  • Tracking
  • Work breakdown structures
  • Level of detail in project schedule
  • Reporting metrics
  • Contingency levels

For small to medium size projects (<$20MM), such as those performed by H+M, the most detrimental factor to project success for both the owner and contractor is schedule slippage.  Why? The recovery time simply isn’t available on small projects.

On our large project (summer bucket list), the remaining scope is quickly outpacing the remaining schedule duration. The list included twenty activities to be completed within a ninety day schedule, one activity every four and a half days. Sounds simple, right? Especially when the activities are things like “visit a new playground” or “go out for sno-cones”. But, as we watch the Houston, TX temperatures top 100F the entire week, activities like “go to the zoo” and “have a picnic” may need to keep sliding right. There will always be unforeseen events that affect schedule logic which is why it is imperative to complete activities as they become available. This keeps from eating up float early in the project life.  The key to large projects is finding activities like “lunch with Dad” which can be pulled up despite the 100F heat. This keeps from back-loading the schedule and controlling population densities in critical work areas.

How does this early slippage happen? Large projects give a false sense of security. During the first 25-50% of the project it is easy to adjust the plan and sequencing to fit the circumstances. Justifications for this include “the original schedule had built-in contingency” or “it was resource leveled to minimize work force”. If there is sufficient time to add resources to work multiple fronts simultaneously or if another activity can be pulled forward for resource limited projects, it often times does not hurt the project to slide activities right. Unfortunately, there are a similar number of cases where the amount of parallel critical paths caused by all the shifts start growing faster than Pinocchio’s nose.  On large projects there are several avenues to recovery, however most of them add significant project cost.

Small projects do not afford the same execution flexibility that a large project allows.  As the market has fluctuated, more and more large companies are willing the take the smaller projects as fill in work.  We have been seeing the results of large companies doing small projects, and it’s not good.

One of the first construction managers I worked for coined the phrase “Doyle’s Law: Organization Breeds Efficiency, Efficiency Breeds Productivity.” Although many of the same principles of large projects do in fact apply to small and medium projects, the execution strategies do not. Three months before our trip, thanks to Doyle’s Law, I could have told you when and where we will have a lunch date with Winnie the Pooh, how we are going to utilize our Fast Pass, which rides are toddler approved, and which additional park has local purchasing availability in case we just haven’t had enough.

Would it be reasonable to arrive at Disney World for the first time expecting success without having some rough ideas of how to accomplish the goals of the trip?  I think not.  So, why would it be reasonable to award a project that is critical to plant operations to a contractor who cannot clearly demonstrate their road map to successfully meet your project objectives?  It is important to understand each contractor’s strengths and weaknesses along with what type of projects fit them best. You definitely don’t want Uber on speed dial trying to squeeze Magic Kingdom, Epcot, and Animal Kingdom into the final day of your project.

You see, I’m confident we will knock out our large project (summer bucket list) despite the slow start. I am willing to suffer through a long drive home from Galveston with a fussy almost-two-year-old if we have to jam the zoo and building sand castles into the same day. There’s always a cost associated with recovery. That’s why I don’t like to do it.

Did I mention this is the first we’ve done a summer bucket list? Oh and by the way, we’re visiting Magic Kingdom day #2, not day #5.

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Matt McQuinn H+M Industrial EPC

Matt McQuinn – Director of Construction at H+M Industrial EPC

B.S. in Mechanical Engineering

Matt has more than 10 years of industrial engineering, construction, and commissioning experience in both domestic and foreign project settings. Responsibilities include: engineering drawing and specification interpretation; resource planning and allocation; project schedule analysis; constructability reviews; contracting strategies and management. With previous EPC contracting experience for CB&I, Matt joined H+M in 2014 to lead the construction efforts.

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Prevent Nuisance Tripping – Proper Conductor Sizing Techniques per 2014 National Electrical Code

 

 

Contributed by Justin Grubbs, P.E. – I&E Department Manager

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Prevent Nuisance Tripping – Proper Conductor Sizing Techniques per 2014 National Electrical Code

Prevent Nuisance Tripping - Proper Conductor Sizing Techniques per 2014 National Electrical Code - H+M Industrial EPC

I have gone skydiving more than a few times in my life. As an active and licensed skydiver, the safety requirements involved are clear and have been established as the cornerstone of the sport. The requirements range from medical considerations to equipment specs, each one extensively thought through and put in place to ensure safety from the time you put on your rig to the time you land under your parachute. Coincidentally, these type of regulations are also common in my line of work. Just like with skydiving, the techniques used when sizing conductors for electrical projects are imperative to the process. You wouldn’t jump out of an airplane with the wrong parachute, so why design electrical systems with incorrectly sized conductors?

Throughout my experience working in the oil, gas, and petrochemical processing industry, I have seen numerous instances of errors committed while sizing conductors and performing voltage drop calculations per the National Electrical Code® (NFPA 70 – NEC). These errors can have a wide variety of effects which range from causing equipment to operate incorrectly or inefficiently to potentially causing serious injury or death to personnel. There are many factors and considerations which must be taken into account when performing these calculations.

For the purposes of this article, assume that we are sizing a conductor which meets the requirements of Table 310.15(B)(16) (formerly Table 310.16) of the 2014 National Electrical Code. Furthermore, assume that a THHN copper conductor will be used. The first consideration one must make when determining the appropriate conductor size is the temperature rating of the conductor. In this application, a 90°C rated conductor is being used. Does this mean one should use the ampacity listed in the 90°C column of this table? Perhaps surprisingly, no, it does not. Remember that the temperature rating in this table also applies to termination points of the conductor as these will be operating at the same temperature as the conductor itself, see 310.15(A)(B) and 110.14(C). In my experience, the most common rating for a low voltage breaker terminal is 75°C. According to an Eaton® (who also manufactures breakers for Rockwell Automation®) Application Paper, the terminals on molded-case circuit breakers are rated for a maximum temperature of 75°C. With this information, the correct column to use for conductor ampacity rating is the 75°C column.

Table 310.15(B)(16) provides a starting point for sizing a conductor. This table makes a number of assumptions, the most notable of which is that the conductor is installed in an environment with an ambient temperature of 30°C (86°F). Most applications in my experience have exceeded this ambient temperature requirement (especially when installed in Texas) and have therefore required an adjustment factor to be used. Table 310.15(B)(2) contains these adjustment factors.

Voltage drop is referenced in a number of places in the NEC as an Informational Note. Section 210.19(A) IN No. 4 is the first reference to voltage drop in the code. The significance of this is that Informational Notes as defined in the NEC are NOT code requirements. These are intended to provide recommendations for best engineering practices and not enforceable as a requirement of NEC, see 90.5(C). This being said, the NEC is intended to be a minimum requirement for electrical installations. It is published by the National Fire Protection Association as a means to mitigate harm to personnel or property. In most cases, good engineering practices, industry standards, and client specifications have requirements which are above and beyond NEC; voltage drop is by far the most common example of this. Consider a 3-phase 480V MCC lineup which is fed from any number of upstream transformers and switchgear. According to NEC, the total voltage drop of all feeder and load conductors to a connected load should be no more than 5% voltage drop for reasonable efficiency of operation. If this MCC were connected to a load which contained protective relaying, even this level of voltage drop may cause nuisance tripping. Additionally, if the voltage drop is too great at the load terminals, the increase in the current passing through the load conductors may cause upstream overcurrent protective devices to trip.

Whether it is skydiving or conductor sizing, it is important not to jump into (or out of) something without understanding all necessary factors. These factors are vital to safe and reliable operational decisions. The potential issues that stem from improperly sizing conductors vary in severity but are all important nonetheless. Always make sure to double check codes, applicable specifications, and industry recommendations to help decrease the likelihood of issues that could arise.

 

References: 2014 National Electrical Code® published by the National Fire Protection Association®, Eaton® Application Paper AP01200004E

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Justin Grubbs H+M Industrial EPC

Justin Grubbs, P.E. – I&E Department Manager at H+M Industrial EPC

B.S. in Electrical Engineering

Justin has more than 7 years of industrial engineering, construction and commissioning experience. He has experience with designing, engineering, leading I&E construction, developing plant control documents, directing commissioning efforts, overseeing instrumentation specifications, validating engineering data, specifying I&E material and training operations personnel.

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