The Business Case for Safety

 

 

Contributed by Matt McQuinn – Director of Construction

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The Business Case for Safety

H+M Industrial - The Business Case for Safety

In our industry there are several measures of success used to evaluate a project upon completion. Some of these measures include:

  • Meeting the customer’s objective
  • Turning over a quality product
  • Completing the project within the approved schedule and budget
  • And many more…

Undoubtedly, the single most important measure of success, from both the customer and contractor, is completing the job without someone getting hurt.  Why is it always about HSE?  The goal, first and foremost, is to get each employee back home to their family each night. However, for all organizations alike, there are many added layers from a business perspective that make HSE excellence imperative to their success.

Customer Perception

When stepping into a new situation, we use our own perspective to immediately form first impressions. It’s human nature. What is the first thing that you take note of when you step into a plant? General plant condition? Cleanliness? Operations interest in your activities? Although you can’t tell from the surface whether or not the plant meets all of its operational goals, EPA requirements, or OSHA targets, you will leave with your first impression. These are not soon forgotten.

Now consider a customer stepping onto a construction site for the first time, what are they taking note of? Barricades well maintained? Everyone wearing gloves to handle material? Working scaffolds clear from tools and debris? Accessible locations for water and trash? All these things define how we manage and operate our projects. If we are getting the basics right, confidence is instilled that the less visible components are also being handled appropriately. All team members may be doing exactly what they need to be doing but for a customer who may only spend 5-10 minutes on-site, they will form their first impression from what’s on the surface (i.e. general housekeeping and PPE usage). Good housekeeping is integral to a safe job-site. It shows a level of respect to the customer that we care about the opportunity to work together with them at their facility.

Business Model & Why It Matters

For example, as an EPC Contractor serving the Gulf Coast region, there is a finite number of industrial facilities which have the project types that we execute, many of which owned by the same company. We currently provide services to a large number of these customers and our business model is dependent on repeat business. Projects with repeat customers are generally more profitable because you are familiar with their requirements which allow you to work more efficiently. This, in turn, allows contractors to optimize their bid which also results in greater cost savings for the customer. It’s a win-win. If the perception exists that a contractor cannot work safely, repeat customers will turn into previous customers.

Most customers have a distribution network that automatically emails out incident reports from a project site to various levels of management. In cases where a contractor has continued events or incidents on-site, a customer’s upper management team receiving these notifications of HSE incidents will form their perception that contractor, likely without even meeting their team. Unfortunately, these perceptions are almost impossible to revert and will negatively affect the ability to work at their facilities.

Business Development teams work extremely hard to build relationships with new customers. Since building confidence and trust can take 1-2 years before quality projects start rolling through the door, it is increasingly difficult to replace valued customers. Part of the pre-qualification process for new customers is a review of HSE statistics, hence the importance to work safely to keep numbers such as EMR and TRIR down. It is important to continue to consistently demonstrate to customers that creating an atmosphere that fosters safe work is simply how business in this industry is done.

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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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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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