Capex/Plant Engineering Don’t Do the Ostrich! – Impulses for Major Plant and Engineering Projects

Editor: Dominik Stephan

With large investment projects, not everything always goes as planned: According to a recent study, 35 % of organisations abandoned a major project in the last three years. Problems such as these are no stranger to construction companies, as many pitfalls can arise between trade unions, contractors and those managing strict timetables. Reason enough for Capex 2013 to take a look under the hood of project management …

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Identifying risks and seizing opportunities: Successful project management starts when the project begins!
Identifying risks and seizing opportunities: Successful project management starts when the project begins!
(Picture: BASF SE/Detlef W. Schmalow)

“You can build anything you want. As soon as it stands, someone will come along and demand changes,” commented one participant in summarizing the dilemma that many engineers face. How large investment projects can also be successfully managed in times of stressed budgets and tight schedules was the main theme of Capex 2013.

To this end, TA Cook invited participants to the Hilton Hotel in Düsseldorf/Germany under the motto, “Successfully managing large projects”. Approximately 50 participants from the process industry and the plant construction and engineering sector arrived and used the opportunity to exchange information and converse with one another.

Head in the Sand? No Way for Plant Engineers!

A lot of money is at stake. Large engineering contractors account for a global turnover of some € 300 billion, according to a new study conducted by the German Engineering Association (VDMA). Now that Korean and Chinese contractors want a bigger piece of the action, the market for established players is becoming ever smaller. The share of Western Europe dropped by 8 % to a mere 37 % in just six years till 2012. At 17 %, Germany can still hold second place behind the USA, but for how long? Relief is also not in sight if one considers that 97 % of companies firmly believe that pressure will continue to increase.

And yet, the head-in-the-sand policy cannot serve as a model for the industry: No fewer than nine presentations sent out an important message on how large projects can be successfully managed on an international as well as local scale. From chemical giant BASF to pharmaceutical companies such as Merck, the presenters shared their experiences.

Project management always plays a key role, especially when adressing complex, multi–layered ventures: “Divide and rule,” promoted Dr. Andreas Harald Gondorf, project manager at Ineos the “breaking down a complex project into individual units”.

With this method, the tangled weave of requirements and project data could be translated into subprojects that can be easily managed. Individual project aspects, especially those that are straightforward and require minimal synergy, could also be awarded to third parties. Such subprojects should, nevertheless, not be too small in scope, as “small contractor projects are quickly assigned a lower priority,” Gondorf added.

Big Plant Projects Require the Expertise of Specialists

But what if you do not have specialists with the necessary management skills at hand? “The only alternative is to provide proper training to compensate for lacking knowledge,” participants agreed.

Another approach that could be to utilize the expertise of contracting partners to educate in particular younger employees. Others feared for the know-how of professionals: “Streamlined processes frequently lead to the erosion of knowledge!” warned Dr. Harald Richter, head of the SE-EC division of the pharma-company Merck. He is equally concerned with his controlling staff and mentions that critical constraints, such as that of determining abnormal distribution of project costs, do not receive enough attention. Risks are therefore not counteracted as well as they could be, nor are early changes sufficiently buffered.

Scoring with Skills gets Projects Done

The project — a hopeless cause? Not quite! Numerous practical examples of how operating firms and service providers successfully manage large and megaprojects every day around the world were discussed at Capex. European companies in particular, with their broad international presence, could score well in this difficult environment.

Matthias Holzenkamp from Management Engineers, who, together with the VDMA, presented the study cited at the beginning of this article, also offered comforting words by saying that leaders in technology are the ones least likely to feel the pressures of competition. Tackling problems instead of ignoring them is the only way to meet challenges.

* The author works as editor at PROCESS.