On a capital project team, relationships aren't linear, they're circular. So why are materials managers so often left out of the loop?
Scott Bullentini is a veteran in the global capital projects industry, with deep experience in supply management, business development and sales management. For more than a decade, he led expediting, logistics, project and materials control groups at Jacobs Engineering. Before that, he drove sales and marketing at Illinois Tool Works, establishing engineering and construction contracts with manufacturers across the refining and petrochemical sectors, among others.
The overarching goal of materials management is -- and always has been -- to maximize construction productivity. Fundamentally, this means making sure the right materials are available at the right time. This is easier said than done, as evidenced by the chronic delays and multi-million dollar cost overruns that occur on even the most sophisticated petrochemical projects. There is a pressing need for innovation in this area of capital project management. Simply stated: How do we best ensure timely material availability on-site?
The answer is to create and implement a new and robust construction-driven approach to materials management. To do this, we will need to leverage technology, re-tool the Workface Planning process, and improve the way we issue Installation Work Packages.
The goal is to develop a system in which engineering and procurement activities are fully integrated with materials management and construction planning. This critical integration is established at the very beginning of a project and becomes the cornerstone of an effective materials management process. In practice, it means -- ideally -- that engineering deliverables like equipment lists and bills of materials (BOMs) will be transferred to construction such that field engineers can simply dovetail them with Installation Work Packages and allocate materials accordingly, and prepare these work packages with minimal effort.
Understanding the materials management problem
The unfortunate reality today is that too many capital projects force their materials management teams to operate on an island, and a lack of construction representation or poor communication in the engineering phase will almost always result in problems down the road.
Engineering will have difficulty timing issue of its materials-related deliverables, including BOMs and materials requisitions (MRs). They may release them too early, causing rework or surplus. They may release them too late, causing schedule delays and premiums for freight. Field engineering may be forced to duplicate much of the quantification activity in support of the issue step, primarily in allocating materials and timing IWPs.
For example, say an engineering team begins with a series of shop-fabricated pipe spools. They’re organized by area and by system, and articulated in a series of piping and installation diagrams (P&IDs). Ultimately they make their way into isometric drawings, and those isometrics are attached to each of the Construction Work Areas.
The problems is that isometrics are released to the fabricator whenever engineering completes them, and not in the sequence of the Path of Construction. The fabricator gets the order, starts at the top of the pile, and works their way to the bottom. Depending on the level of sophistication of the fabricator, it’s very hard for them to re-order the fabrication sequence. The materials are released when they’re done, and they move on to the next order.
Lagging indicators vs. leading indicators
The result is that materials management is continually working with lagging indicators. They’re simply managing materials as they come in, which isn’t the same thing as having the right materials on hand when construction needs them. When we don’t have what construction needs, they’re forced to create workarounds -- and that’s expensive.
Simply put, if the ISO-release curve is not accurate, managed well and provided to materials management, there’s no way for materials managers to fully understand when they’ll receive critical materials, such as fabricated pipe spools. Construction, through field engineers or field materials coordinators, may need to revisit parts of the quantification process in developing construction plans, work packages, and ultimately the IWPs to support the installation process.
Conversely, when there has been a close coordination with construction, engineering will have used construction planning information such as the Level 2 or Level 3 schedule, and work packages to organize these lists and BOMs.
The root of the problem here is that in some cases, materials management is not effectively integrated into project team. This is compounded by the fact that the tools they’re using to track and manage materials are not integrated with other critical project systems. Construction planning that takes place in the early stages of a project is not meaningfully connected to materials management downstream, a disconnect that is compounded when construction process begins. This creates delays, increases costs, and causes a great deal of frustration for materials managers and construction managers alike.
Materials management and the constructability mindset
The first step in solving this problem is to integrate materials management into the overall constructability mindset. Integrating materials management into the earliest stages of the Advanced Work Packaging process can help to ensure that materials are ordered, built and delivered in a sequence that supports the Path of Construction.
This means the procurement plan must aim to meet the required-on-site dates that are established early on. Ultimately, the procurement sequence, the requisition sequence and the materials take-out sequence will all work toward those critical required-on-site dates.
The importance of a single source of truth
The second step is to develop and maintain comprehensive data around each stage of this process to create a single source of truth (SSOT) -- a clearinghouse of reliable, up-to-the-minute engineering and non-engineering information about the project.
The SSOT solves a chronic problems for materials managers and the construction managers they work with: They are all constantly forced to make decisions based on lagging indicators. By introducing an SSOT, they can work with leading indicators, and make better decisions, faster. Alongside field engineers, they can leverage this current, trustworthy data to build IWPs that make the most sense.
In short, project management is not a linear relationship, it’s a circle. Everybody needs to have the same information at the same time.
A better way: What effective integration looks like
If you have strong integration across all project phases, you’ll benefit from having fully informed, proactive field material management personnel who are well-positioned to supply construction with what they need, when they need it. Critically, they can work from leading indicators to help develop solutions when the inevitable problems arise.
The takeaway: Integrating materials managers with the overall project team is key to resolving the resulting delays, and improving ROI on capital projects.