Industrial Design/Build Blog

Increase ROI by awarding projects based on VALUE instead of just PRICE



Contributed by Brad Sawyer, Business Development Manager


Increase ROI by awarding projects based on VALUE instead of just PRICE

Value vs Price H+M Industrial EPC

“Value” is defined as the monetary worth of goods or services, and “price” is simply a number on the tag. This is especially true in the petro-chemical industry where capital project services are custom and not likely to be repetitive.  This situation makes it challenging to determine the difference between value and price, and the breakeven point as to which is the best option.

Let’s take a look at engineering and design services:  By choosing the least expensive option when selecting an engineering/design contractor, a company will no doubt save money at the start of their project.  However, when the design package is completed and issued for bids to construction companies, the possible mistakes could prove far more costly than the high quality, more expensive engineering package.  This is obviously not to say that expensive = quality, only that it must be ensured that the necessary deliverables are provided accurately to have a successful project.

Usually, construction costs and process equipment are the most expensive parts of a project. This makes it important to invest in your project early to get it started out on the right track. If it’s not, change orders from construction will add to the job cost and the schedule will be compromised.  So if you look back at the 10 % “cost savings” achieved by going with the cheapest option, what did you really save?

A company must look at the total value over the lifetime of the project, not just the price. It is increasingly important to make sure the benefits outweigh the cost and provide the desired return on investment. The cost side of the equation includes things such as project bid cost, cost due to change orders, maintenance costs, and ongoing operating costs. ROI considerations include income from operations, income as a result of increased efficiencies, and additional income due to quick startup.

A simple example of value integration is EPC companies who have a dedicated civil/structural engineering department to work alongside construction. When dealing with a civil construction job that you did not engineer, you will no doubt end up scratching your head with questions like “why do we need this much concrete?” or “is this much steel really necessary?” In order to reduce engineering/design costs to become the low cost provider, many civil/structural engineering companies just throw in huge amounts of concrete or way too many supports just to reduce the engineering hours. So by reducing their engineering “cost”, you’re now paying for it on the construction side…and we all know how expensive concrete and steel can be.

A perfect example of this recently happened to us, H+M Industrial EPC, on a very large civil/structural construction only project.  After looking over the drawings, the H+M construction team noticed it was significantly over-engineered.  Our customer allowed us to re-engineer it, stamp it, and bid on the construction as it was then designed.  In the end, we were awarded the project, re-engineered it, stamped it, and constructed the whole project for way cheaper than the competitor with the original bid.  Now our customer has a better product for a better price, and recognizes the value in starting their project off right.

Determining value requires more than just following a formula. It changes for each job, company and industry. You must use your past experience to determine what is truly valuable to stakeholders. Do not always look for the low cost provider. Look for companies who are confident in their designs and create them with constructability in mind and the intent of bidding and being awarded the construction.  Doing so, you are increasing your chance of getting a good package that leaves little room for change orders. Look for someone who plans on being around when the project is completed, is eager to form a mutually beneficial relationship, and proud to put their name on your project.



Brad Sawyer – Business Development Manager at H+M Industrial EPC

B.S. in Industrial Distribution Engineering

Brad has more than 10 years of business development experience in the heavy industrial markets including Petrochem, Refining, Power, Mid-stream, and Terminals. His responsibilities include managing the Business Development and Marketing divisions at H+M. Industry experience includes capital projects, turn-arounds, outages, and maintenance along the Texas Gulf coast region.

Success or Failure – Using the 5 Steps of Project Management to Plan Yours



Contributed by Kevin Bautz, Senior Project Manager


Success or Failure – Using the 5 Steps of Project Management to Plan Yours

5 steps of project management H+M Industrial EPC

I wanted to write about a topic that would allow me to discuss something personal yet applicable to work, important to me yet topical to others, and in-the-moment yet timeless.  I found no better way to write about success and failure than in the context of a recent workplace competition.

I entered the workplace competition to succeed, not fail.  Isn’t that why most people compete?  If so, why is it that many will fail?  Why will few succeed?  What is the difference between success and failure?  What is the same between success and failure?  It is this last question that helps me understand answers to the others.

This competition had many motivating factors; “want” alone was not enough to succeed.  Both success and failure take effort; you have to try. Both outcomes require initiating, planning, executing, controlling, and closure. Coincidentally, those are also the 5 Steps in Project Management.

These steps can either support or thwart a positive outcome.  They can help you succeed, but they can also help you fail if not used correctly.  In the case of the workplace competition, many used these steps to execute a plan contradictory to their ultimate goal.  They subconsciously planned how to do everything BUT work toward the goal.

The same is true at work.  In my field, Project Management, the steps below are the ones that guide my work.  These steps, when used effectively, ensure the highest level of success.  They are specific, predictable, consistent, thoughtful, tested, uniform, familiar, and teachable to name a few.

5 Steps in Project Management

  • Initiating – consists of those processes performed to define a new project or a phase of an existing project by obtaining authorization to start the project or phase. (PMBOK Guide)
  • Planning – consists of those processes required to establish the scope of the project, refine the objectives and define the course of action required to attain the objectives that the project was undertaken to achieve. (PMBOK Guide)
  • Executing – consists of those processes performed to complete the work defined in the project management plan to satisfy the project specifications. (PMBOK Guide)
  • Monitoring/Controlling – required to track, review and regulate the progress and performance of the project; identify any areas in which changes to the plan are required; and initiate the corresponding changes. (PMBOK Guide)
  • Closure – consists of those processes performed to finalize all activities across all the Process Groups to formally close the project or phase. (PMBOK Guide)

Still wondering what workplace competition allowed me to use these steps toward success?  I lost…a lot.  I also won…a lot.  I succeeded at achieving better health, better self-image, a little bit of financial compensation, bragging rights, and everything else that comes with losing 35 pounds in 90-days.  Let’s just say that I don’t like to lose.

My success did not come by accident. I used the steps to accomplish my goal, not conflict with it.  The next time you are presented with achieving a goal, remember it is up to you to put your efforts toward either success or failure.


Project Management Institute. (2004). A guide to the project management body of knowledge (PMBOK guide). Newtown Square, Pa: Project Management Institute.



Kevin Bautz – Senior Project Manager at H+M Industrial EPC

B.S. in Chemical Engineering

Kevin has more than 13 years of industrial engineering experience in operations and project settings. His past experience ranges from process and equipment engineering in semiconductors, process simulation engineer for the oil & gas and chemical industries, and key management roles in engineering and operations for The Sun Products Corporation in Pasadena, TX and Bowling Green, KY. Kevin joined H+M in 2014.

Welcome! – H+M’s Industrial Design, Engineering, and Construction Blog

We are excited to introduce H+M’s industrial design, engineering, and construction blog! We are an industrial EPC company serving the oil & gas, chemical, and petrochemical industry along the TX gulf coast.

We plan to use this blog to share our thoughts and ideas on industrial EPC processes. Our employees are our strongest assets and have decades of experience. We hope to use this forum to showcase their talents as well as inform others with our experience and expertise.

(How Not To) Serve Up Change Orders: The Importance of Project Scope Definition in Small Capital Industrial Projects



Contributed by Brandon Hogan, P.E. – Operations Manager at H+M Industrial EPC


(How Not To) Serve Up Change Orders: The Importance of Project Scope Definition in Small Capital Industrial Projects.

Change Orders H+M Industrial EPC

If you’ve ever been to one of the “weigh the cup” frozen yogurt places, you have probably noticed that the only container options available are really, really big cups.  And without constant micro-management, my kids will soon fill the very large cups with three different ice-creams, seven kinds of candy and top off their leaning towers with whip cream and a cherry that ends up costing more than dinner did.  Good thing they take plastic.

As anyone involved in projects knows, jobs can also run wild without the correct controls in place.  The irony of small capital projects (<$20MM) is that small doesn’t mean easy.  However, due to the reduced capital allocation, small jobs aren’t always controlled as closely as large ones.  In some areas, this is prudent and common sense (who hasn’t been frustrated by a twenty page schedule for a two week job?).  But in other areas it is as important, if not more important, to closely control the small job.  With several jobs running concurrently and short schedules, they will finish quickly, and it doesn’t take much to blow a schedule or budget.

The most important aspect of a project, small or large, is the scope definition.  As simple as it sounds, this is the most common mistake we see repeatedly with projects from many different clients.

After a project is deemed potentially commercially viable and capital budget estimates are sought, it is key that the client or contracted engineering group consider the appropriate priority and sequence of actions that must be taken in order to ensure the budget will be reliable.  The key driver for the project should be identified and made clear from the beginning through the end to all parties involved.  Is it a safety project?  Schedule driven?  Is cost the main factor?  The driver should be posted as a North Star to the project to make sure that work in the weeds doesn’t change or mitigate the purpose of the job.

Preliminary Engineering deliverables should include Infrastructure Surveys, Equipment Specifications, P&IDs and Equipment Layout prior to budget level estimates.  Without these at a minimum, your budget nor EPC bids will be within acceptable limits.  Some owners believe in saving money in the engineering phase and not ordering these complete items.  Many times this will be proven to be an obvious mistake further into the project life when change orders arrive due to unclear scope.  Other times, the project will be negatively impacted, unknown to the owner, because of the less than optimal prices received in bids due to the perceived risk charged for by the bidding contractors.

Most long term contractors, contrary to some opinions, do not relish in delivering change orders.  Change orders can cause tension in the owner-contractor relationship and disturb schedules, supply chain and workforce planning.  An ideal project is one that is well scoped, bid at fair margins, and is installed safely, on time and in-budget.  A client’s value to a contractor is the present value of all future work, not just a single project, so it is in the contractor’s best interest for the owner to be as successful as possible.

So, the next time you let your kids get frozen yogurt, do like I do:  Make them take a scale and Gantt chart with them.


Brandon Hogan, P.E. – Operations Manager at H+M Industrial EPC

B.S. in Chemical Engineering, MBA

Brandon has more than 14 years of industrial engineering experience in operations and project settings. Responsibilities included managing the operations of the Engineering, Procurement and Construction divisions. His past experience includes over 10 years of engineering with The Lubrizol Corporation in Deer Park including process design, capital project management and engineering optimization.