The energy industry faces numerous challenges: volatile commodity prices, increasing regulation and intense global competition. Consequently, owners/operators face immense pressure to maximize capital.
Critical infrastructure projects have the potential to bring positive cash flow to an organization, but they require a tremendous investment of capital, time and personnel. Stakeholders want to know that the capital is spent wisely and efficiently. A phased approval process can help stakeholders make informed decisions and course-correct when needed. This approach can help decision-makers evaluate the economics of the proposed project as feasible options are narrowed down and the project scope is developed and refined.
Typically the project is broken into five broad phases:
- Concept Development
- Feasibility Studies
- Front-End Engineering and Design (FEED)
- Engineering, Procurement & Construction
Arguably the most important aspect of project management for critical infrastructure projects is pre-project planning. It is an essential component of the process whether you are building a new asset, retrofitting an existing facility or optimizing operations.
Front End Loading Helps Define Scope
The first three stages (Concept Development, Feasibility Studies and FEED) are collectively known as Front End Loading (FEL). The overarching purpose of Front-End Loading is to clarify business objectives, identify deliverables and validate the business case for the investment. “Loading” resources into pre-project planning will take some additional time and expense. However, at this stage in the project, it is much easier and far less expensive to make changes. By systematically narrowing the scope of the project, you can gain appropriate approvals before the time and expense of detail design and engineering work is completed.
Concept Development defines the problem to be solved. There are two somewhat overlapping components to conceptual development: technical specifications and business objectives. The technical side considers capacity, inputs, outputs, throughput, product specifications and cost–all of the elements that make up the actual conceptual design. The business objectives help evaluate the concept, assess the current business situation and frame the project.
At this phase, cost estimates are loose and the design has not been refined. It is more important to identify and prioritize objectives. A solid foundation and purpose for your project will help guide your decisions later in the process.
Feasibility Studies Help Evaluate Proposed Designs
With appropriate approvals from Concept Development, you can move to Feasibility Studies. This process identifies, evaluates and ranks feasible options. Often, in these types of complex projects, there are multiple options to consider. One option may increase performance but cost twice as much, another option may cost less to build but will have considerable maintenance costs. By identifying your business objectives during Concept Development, you have effectively created a rubric that will allow you to evaluate your options. Additionally, the cost estimate is refined during this stage. Estimates can be made based on different specifications and installation costs. It is also possible to begin budgeting for key equipment, raw materials and labor costs based on design. Feasibility studies for critical infrastructure projects narrow the scope of the project and give stakeholders accurate data to help make prudent decisions. If it is not possible to achieve all of the goals of the project within the budget parameters, project objectives can be modified, additional capital can be raised or the project can be delayed or canceled. These studies help protect the capital investment by essentially performing the “due diligence” of pre-project planning.
Front-End Engineering and Design Offers Detail & Accuracy to Your Project
Once a project option or proposal has been approved, you are ready to move on to Front-End Engineering and Design (FEED). This third phase further narrows the scope with detailed design and procurement. This is the most comprehensive and meticulous phase of Front-End Loading. Front-End Engineering and Design, as its name might suggest, is an intense engineering phase. The front-end engineering work completes and finalizes the scope of the conceptual design. Process and Instrument Diagrams (P&IDs), Process Flow Diagrams, Process Hazard Analysis (PHA) and design reports are just a few of the tools that accompany the FEED process.
In this phase, the budget is refined with greater detail and accuracy. Operating and maintenance cost estimates may also be included. Additionally, a preliminary execution schedule can also be developed. This is a critical time for design and engineering conflicts to be resolved. Once the designs are finalized, the project can move to the final round of approvals before procurement and construction begin.
Systematically working through these phased approvals is an efficient approach to project management. Following these best practices will help narrow the scope of the project and give stakeholders accurate data for decision making. Additionally, it will help avoid costly and time-intensive redesign work. This proactive strategy also sets you up for success in the engineering, procurement, and construction phase.
Structuring Your Critical Infrastructure Project
When you are considering how to structure your project, you need to evaluate how your internal resources will best be utilized. Some organizations prefer to work with a single EPC contractor, while others find the EPCM approach best suits their application. You can learn more about the different ways to manage your project here.
Matrix Service Company for Turnkey EPC or EPCM Services
At Matrix Service Company, we are uniquely positioned to offer both pre-project planning and turnkey project management services. Partnering with our subsidiary, Matrix PDM Engineering, we can provide FEL and FEED for projects of any size.
Matrix PDM Engineering offers engineering-led management engineering, procurement, fabrication and construction management while construction-led comes from our sister subsidiaries Matrix Service and Matrix NAC (union labor).
Whether you are looking for an EPC contractor that can complete your project from start to finish or you prefer to tackle some phases of your project internally, we have the solution for you. With more than 35 years of experience, we’ve earned the reputation of the EPC provider of choice for many clients in the energy and industrial markets across North America.
A critical infrastructure project is a large investment for any organization and when so much is at stake, you want to work with a partner you can trust. Find out why Forbes recognized our team as one of the Top 100 Most Trustworthy Companies, not once but twice.