The UK Prime Minister Set Out “a 10-point Plan for a Green Industrial Revolution”

The plan involves £12bn of public spending over the coming years in areas from energy generation to building retrofits.

The 10 points

Offshore wind: Quadrupling production capacity to 40GW by 2030, or enough to power every home.

Hydrogen: Up to £500m has been allocated, including for trialling homes using hydrogen for heating and cooking, starting with a Hydrogen Neighbourhood in 2023, moving to a Hydrogen Village by 2025, with an aim for a Hydrogen Town – equivalent to tens of thousands of homes – before the end of the decade. Of this funding, £240m will go into new hydrogen production facilities.

Nuclear: There will be £525m to help develop large and smaller-scale nuclear plants, and research and develop new advanced modular reactors.

Electric vehicles:  The UK will end the sale of new petrol and diesel cars and vans by 2030, 10years earlier than planned. Some £1.3 billion will be spent on accelerating the roll-out of charge-points for electric vehicles. No date has been set yet for phasing out new diesel HGVs but a consultation process is planned.

Public transport, cycling and walking: “Making cycling and walking more attractive ways to travel and investing in zero-emission public transport of the future”.

Jet Zero and greener maritime: Supporting research projects for zero-emission planes and ships.

Homes and public buildings: Improving the energy efficiency of homes, schools and hospitals, with a target to install 600,000 heat pumps every year by 2028.

Carbon capture: An extra £200m of new funding to create two carbon capture clusters by the mid-2020s, with another two set to be created by 2030, with a target to remove 10 million tonnes of carbon dioxide by 2030.

Nature: Planting 30,000 hectares of trees every year.

Innovation and finance: “make the City of London the global centre of green finance”.

Prime Minister Boris Johnson said: “Although this year has taken a very different path to the one we expected, I haven’t lost sight of our ambitious plans to level up across the country. My Ten Point Plan will create, support and protect hundreds of thousands of green jobs, whilst making strides towards net zero by 2050.”

ECI Webinar Towards Net Zero – Event Report

The recent European Construction Institute Webinar on Net Zero was a great chance to discuss the very significant opportunities presented by decarbonisation of the industrial and energy sectors. 

 Jenny Young from ECITB and Prof Mercedes Maroto-Valer from IDRIC the UK Industrial Decarbonisation Research & Innovation Centre provided insight into the work their respective organisations are doing to drive forward this important agenda.  

The discussion was very timely in the context of a recently published the UK Government a 10-point plan for Green Industrial Revolution. One of its key points is to drive carbon capture with an extra £200 million of new funding and target to remove 10 million tonnes of carbon dioxide by 2030. 

The  presentations  considered how new technologies can meet the established environmental targets and bring the UK to the forefront of the global movement against climate change and global warming. 

There was much discussion around: 

  • The necessity to align business, technology, policy and regulatory requirements and environmental models 
  • The importance of the forthcoming carbon budget, which is planned to be announced in December 2020 
  • The significant potential of skills from carbon intensive industries to redeployed in the deliver of low carbon technologies at scale.

2021 will be a crucial year in exploring the role that the Engineering Construction sector can play in developing and deploying new technologies and innovative approaches at scale. As we move towards COP26 (26th UN Climate Change Conference of the Parties ), which will take place in Glasgow, UK in November 2021 there is significant opportunity for ECI and Constructing Excellence members to explore these significant opportunities. 

Download the presentations:  

ECI_Webinar_Energy Transition Skills_ECITB

Don’t Waste The Silver Lining

Every cloud has a silver lining…or so the saying goes.

Today, Engineering Construction is blanketed by some threatening storm clouds. So, is there a silver lining hidden somewhere amongst these seemingly treacherous conditions? I believe so.

For more than 25 years there has been a growing need for change to the way in which Engineering Construction projects are conceived, procured and delivered – a great deal has been written on the subject. In the same period, Engineering Construction productivity has stagnated or declined compared with other industries competing for investment – again, much has been written on the subject.

While market demand for, and the price of, oil have fluctuated over this period, both have been sufficiently stable to mask the deficiencies in Engineering Construction contracting arrangements and the corresponding wastage inherent in declining productivity.
Although there have been several productivity and performance enhancing initiatives over the period, these have not been widely adopted. The potential benefits of previous “silver linings” (such as the 2014 / 2015 oil price collapse) to change the approach to projects and improve productivity and performance were sacrificed in preference of preserving the status quo. But, with few exceptions, Engineering Construction productivity, performance and project out-turn results continued on their relentless decline.

Today, we are in a different world of:

1. Economics
Plant investment costs and delivery times are typically, respectively, too high and too long and there is considerable uncertainty regarding the forecasts of the final position on both. Conversely, supply chain margins are generally unsustainable, thereby restricting the investment necessary to upgrade competences, expertise and capability. Taken “in-the-round”, Engineering Construction is not an attractive investment prospect.

2. Oil Price
Following a reasonable recovery after falling to less than USD 20 per barrel at the global onset of COVID-19, the price of oil has regressed today to around USD 40 per barrel as demand continues to remain depressed and production is relatively high. The corresponding negative impact on Oil Majors’ share prices has been reported widely.

3. Competing Providers
What was a burgeoning renewables industry 25 years ago, especially wind and solar, has now become a major energy sector player and a serious competitor to fossil-fuels. However, with the development of new energy sources, there was not, despite the opportunity, any new thinking about the way these projects are conceived, procured and delivered – most follow the conventional system and we can observe the results.

4. Covid-19
While the pandemic will eventually be overcome, there is no certainty at the present time when this is likely to happen. The full effect on the world economy has not yet been determined but it may be expected that this has some long-lasting effects, not least for Engineering Construction globally.

So where is the “silver lining”? I suggest it resides in a combination of:

• Identifying and learning from missed opportunities for change in the past, e.g. industry has not made the most of collaborative working practices that have existed for the last 20 years or more
• Accepting that the “traditional contacting arrangements” – the race to the bottom in terms of price, risk and conditions – are no longer fit-for-purpose
• Recognising that emerging new energies (e.g. “green hydrogen” etc.), like renewables before them, provide an opportunity to conceive, procure and deliver projects completely differently and far better
• Knowing of, recognising and understanding the positive results already obtained from innovative working practices and adopting and progressively developing these, e.g. Advanced Work Packing and associated interventions
• Building on the “benefits” of COVID-19 such as remote working, effective communication, less travel etc. and being aware of and providing against the downsides
• Embracing fully, digitalisation and transparent data and making the most of artificial intelligence
• Driving standardisation in Components and Sub-Systems across common Industries, e.g. JIP33 in Oil & Gas driven by IOGP
• Recognising that, notwithstanding technological advancements, it is people who deliver projects and will be so for the foreseeable future – driving improvement in “people performance” and reinforcing underlying competence and experience is fundamental to delivering projects successfully.
• Recasting the workforce capacity in terms of quality and quantity and making Engineering Construction an industry attractive to the younger generation through latest technologies
• Removing unnecessary bureaucracy and keeping processes lean for faster and more reliable controls and reporting

For those who say “we have been here before and nothing changed, so what makes you think it’s different this time?”, I have two things to say:

1. We are confronted with a combination of factors that are unprecedented – there is no benchmark against which to measure or assess, nor any formal reference point or guide
2. There is, especially in Europe, political will, particularly to invoke action to eliminate carbon emissions, that is already and will continue to fundamentally affect Engineering Construction.

The imperative for Engineering Construction is to become an attractive investment proposition by reducing investment costs and delivery times substantially so that plants are competitive & affordable while simultaneously enabling the supply chain to achieve reasonable & sustainable margins, and improving the reliability of forecasted project out-turn results.

The key is to eliminate waste and thereby improve productivity significantly. In this context I believe there are three interdependent pillars of sustainable change that need to work in unison as illustrated below:

 

 

 

 

 

 

 

 

Case Studies indicate that Collaborative Working in conformity with the ECITB Project Collaboration Toolkit can reduce wastage and improve productivity, resulting in reduced cost and delivery times.

Reports from industry applying AWP also indicate signification reductions in wastage and improvement in productivity to produce considerable cost and schedule savings.

AWP (Advanced Work Packaging) utilises or can also encapsulate several other Innovative Working Practices such as Workface Planning (or Last Planner), 4/5/6-D Planning, Lean Construction, Factory-Thinking and Modularisation, Standardization and use of off-the-shelf components and Building Information Modelling (BIM).

There is indication that the combination of Collaborative Working and AWP has the
potential to drive down plant investment costs and delivery times significantly as well as improving safety and quality and also afford the opportunity to generate better supply chain margins. The full benefits of AWP can only be realised by adopting Collaborative Working practices.

As with Collaborative Working, the implementation of AWP and associated innovative work practices primarily require a mind-set change to the way in which work is planned, organised and executed. AWP also benefits significantly from the adoption of digitalisation and standardised data models. However, operating digitalised systems effectively also requires Collaborative Working.

Therefore, as an industry, we need common data standards that underpin our typically generic activities, in order that we can, as eco-system partners, effectively collaborate in a transparent and productive manner using a ‘common language’. In this context, AWP can drive a fully integrated solution by steering digitalised engineering through standardising the data requirements from document metadata, project schedules, model attributes, material management systems, turnover systems etc.

The Case Studies exhibited in the ECITB’s Project Collaboration Toolkit and the
projects applying AWP practice, typically operate on existing forms of contract. It is evident that the change in project execution practice brought about by these innovative interventions could be reinforced and accelerated into wider common use by a contracting arrangement specifically geared to the principles of collaborative working set out in the ECITB Project Collaboration Toolkit. In this context, the European Construction Institute intends to launch the preliminary draft of its Collaborative Working Agreement (the contract for collaborative working) for industry peer review in the coming weeks.

The need to change the way in which Engineering Construction conceives, procures and delivers projects is real and present, the tools and systems to implement that change are available and developing, and the benefits of change are evident. Engineering Construction ought not to waste the opportunity to change. However, change can only, realistically, be owner / investor driven and building cross-industry momentum and support is key to effecting this change.

So, as an industry, let’s not waste the silver lining!

John Fotherby
Chair
European Construction Institute

Advanced Work Packaging Webinar Recording

The recording from the webinar on Advanced Work Packaging held on 25 June is now available to view at GoToWebinar.

You can also download a copy of the slides that Stuart Block from Fluor used to introduce the topic. If you are interested in finding out more about Advanced Work Packaging and the work that ECI doing on it, this work is being led by Stuart Block from Fluor and Luigi Anselmi from Tecnimont.

Advanced Work Packaging – What is it?

Advanced Work Packaging (AWP) is all about improving project productivity.

As well as better productivity it also brings greater predictability, increased safety and lower project costs

  • Construction-driven process
  • Supports the path of construction
  • Align the different elements of a project for improvement
  • Provide a disciplined and rigorous process for detailed construction planning
  • Ensures work is executed in a safe, organized, sustained, and effective manner
  • Assure Construction as its customer allowing the field to receive drawings & material in correct sequence thus allow for a more efficient build, commission and start-up/handover

COAA Construction Owners Association of Alberta

Journey / Path of AWP

2005 – Construction Owners Association of Alberta (COAA) recognized it as a best practice. The purpose of the development of WorkFace Planning (WFP) was to overcome the challenges facing in executing and construction its Oil Sands projects. Those challenges are manifesting in cost overruns including in front end planning, design, procurement, organization processes, construction, etc.

2009 – Construction Industry Institute (CII), an American non-profit consortium of more than 100 leading owner, engineering, contractor and supplier firms, initiated a Research Team (RT) aiming to develop an executable model of enhanced work packaging based not only on WorkFace Planning but also on other industry work packaging practices. Following a review of industry and trade literature and in conjunction with the development of case studies, the team developed a lifecycle execution model for work packaging with an emphasis on field implementation.

2011 – CII Research project RT272 Phase 1 Released – focusing on the development of an execution model for the project life cycle with an emphasis on field implementation along with a set of industry case studies and collection of benefits evidence.

2013 – Joint CII / COAA Research project RT272 Phase 2 Released – Extending the execution model of Advanced Work Packaging with consideration of implementation challenges documented through surveys and expert interviews in North America and globally.

2019 – 1st London AWP Conference

Benefits

Potientally 10% more tool time is nearly 25% improvement in productivity. Labor is typically 40% of TIC = AWP Provides Up to 10% Reduction in TIC.

Costs

Typically a project must dedicate 1-2% of project costs to increase planning by having cross-functional engagement, training and developement and dedicated construction personnel.

Next steps

Gain further knowledge about AWP / WFP

Stuart Block from Fluor is leading on ECI’s involvement in Advanced Work Packaging.  Get in touch to find out more.

Collaboration – The Sensible Way Forward

Since the outbreak of COVID-19 and its effects on global Engineering Construction projects, I have held the view that the only sensible way for project stakeholders to address and resolve the challenges confronting them as a result of this pandemic is by collaborating together to find solutions that provide the most effective, productive and economic means that are fair and work for all concerned. In this context, there are two key areas that must be addressed;

  • Re-commencing or continuing projects. Re-baselining in terms of project organisation, completion dates, time schedules, execution plans, material & equipment deliveries and resource loading, based upon what is needed, is realistically and reliably available and becoming available. Availability of cash will be fundamental.
  • Additional costs. Realistic assessments of the additional costs involved in continuing and completing projects together with a viable apportionment of such costs based upon those stakeholders most able to bear them taking the greater amount of the burden. It is unrealistic to consider that, in the current circumstances, a single stakeholder on any project bears all the additional costs or that others will avoid bearing any.

Allowing the project challenges to escalate into disputes is unthinkable. In the UK, the Construction Leadership Council (CLC) has expressed concern “…that the construction industry will become embroiled in costly and long-running disputes over the effects of the pandemic on projects if it does not look to engage in collaborative discussions to resolve these issues…”. In this context CLC co-Chair, Andy Mitchell CBE, said: “…it is vital that we all work together to minimise potential disputes in order to secure the industry for the long-term…” – follow this link 

The CLC COVID-19 Task Force has published practical guidance on how to minimise potential disputes. These were endorsed by the UK Government on 7 May 2020 to which the CLC said “…We welcome the endorsement of our approach from the UK Government in its Guidance on responsible contractual behaviour in the performance and enhancement of contracts impacted by the Covid-19 emergency…” and “…We anticipate that all businesses will understand the unprecedented situation we find ourselves in and work collaboratively…”.

While the foregoing relates to the UK construction industry, the underlying principles of avoiding disputes and litigation by finding collaboratively driven solutions, applies equally to projects undertaken by the global Engineering Construction Industry.

Collaboration is not an easy option, but it is the one most likely to achieve satisfactory and lasting resolution of the challenges currently confronting project stakeholders. For those interested in a taking a collaborative approach to resolving commercial / contractual issues on their current projects without getting into dispute, as recommended by CLC, and are unsure how to approach collaboration, then the Engineering Construction Industry Training Board (ECITB) Project Collaboration Toolkit (PCT) which embraces, amongst others, ISO 44001 and the Engineering Construction Institute’s Active Principles, could provide some useful guidance, particularly regarding the behaviours that need to be practiced in finding solutions to the challenges on projects collaboratively – follow this link

While the PCT provides the means for the collaborative procurement and running projects in replacement of traditional methods, and was not intended as a dispute avoidance process, the principles which it embraces could well be applied to finding solutions to the challenges now confronting global Engineering Construction.

However, COVID-19 is not the only crisis currently confronting the Industry. The recent collapse of the oil price has added to the burdens created by COVID-19. Investments in new projects are likely to decline significantly unless measures are taken quickly to bring down costs, reduce schedule durations and assure delivery in line with the commitments made so that realistic business cases can be established, endorsed and implemented. The traditional procurement methods that have been in use for decades will not enable these objectives to be achieved – these methods are broken beyond repair and are ineffective for addressing the challenges confronting the Industry today.

On 6 May 2020 the Engineering Construction Institute and Constructing Excellence joint Webinar: Major Projects – Driving Long Term Value Through Collaborative Procurement, addressed the actual benefits experienced by Industry of collaborative working practices over “traditional” procurement methods – significant cost reductions, shorter delivery times and dispute avoidance. In this context there are many current initiatives that are geared to the elimination of wastage, improved efficiency and greater productivity (eg. AWP, BIM, Artificial intelligence, Digitalisation, Factory Thinking, Digital Twin etc). In order to obtain maximum benefit from these initiatives collectively or individually, collaborative working is essential.

The current crisis confronting global Engineering Construction – the combined effect of COVID-19 and the Oil Price Collapse, provides the opportunity for the Industry to fundamentally change the way it undertakes projects. That change can be started immediately by stakeholders finding collaborative solutions for the re-commencement and completion of current projects – enlightened owners are taking this approach already. The learning from this experience can then be applied to new project investments to be undertaken utilising collaborative procurement and for which there is now growing support.

We only need consider how other industries, (eg, automotive, aerospace, shipbuilding etc.) embraced radical change, driven by crises and that created transactional solutions to existential challenges. The global Engineering Construction Industry would be wise not to waste the opportunity for change that is now presented with.

John Fotherby

Chair

European Construction Institute

Download the slides from the session:

 

Collaborative Procurement – A better way of procuring and delivering Engineering Construction Projects.

The saying don’t fix what isn’t broken is sometimes good advice, but when something is broken beyond repair, then replacement is the only effective option.

A great deal has been written about why mega projects fail and many hypotheses have been expounded. The simple truth is that engineering construction projects, mega or otherwise, succeed or fail because of human endeavour and behaviour.

The procurement models in common use in Engineering, Procurement, Construction arrangements (eg. Lump Sum Turn Key, Lump Sim etc) are not of themselves bad; it is the way in which they are used and abused that sows the seeds of project failure and because, most frequently, there is little or no opportunity for collaboration and improvisation.

In the long history of humankind…those who learned to collaborate and improvise most effectively have prevailed (Charles Darwin).

Collaborative style contracts have been around for several years. However, it is not the contract itself that brings the results, it is the people using the contract that practice collaborative working within the legal framework of the contract that drives success. Mindset and the willingness to do things differently are the basic levers for success – collaboration and improvising to prevail as per Darwin’s observations.

Those that have practiced collaboration and improvisation on their projects effectively have generally been successful – performance and delivery is achieved safely and to the required quality, in less time and at less cost than other procurement methods and provided a satisfying experience for the people. What is there to disagree with? In engineering construction, use of the ECITB’s Collaboration Toolkit has shown significant improvements compared to “traditional” methods of contracting in the UK North Sea sector.

So why has collaborative working practices on engineering construction contracts not been adopted universally when the benefits are so obvious to substantially reduce or eliminate the risk of project failure or put another way – increase considerably the possibility of success?

Simple:

  • although those procuring engineering construction supplies, work and services often recognise the obvious benefits of collaborative working, many prefer the master – servant relationship that resides at the core of LSTK EPC and similar contracting arrangements, and
  • those financing the projects often prefer that the supply chain takes and absorbs the risks, even though it is invariably well-recognised that they are not the parties most able to bear and manage many of the risks.

Here lies the origin of project failure. Those continuing to participate in this approach are destined not to prevail. Except in specific circumstances where used and applied as orignially intended, the LSTK EPC and similar contracting models are broken beyond repair and no longer fit for purpose. What further damage will be done to the engineering construction industry by perpetuating procurement of EPC work on the basis LSTK and similar contracting arrangements?

Conversely, those organisations willing to adopt collaborative working practices within the framework of suitably crafted contracts will create the opportunity for successful project delivery, leading to greater and more certain investment and industry sustainability.

The European Construction Institute in collaboration with Constructing Excellence, is holding a WEBINAR on 6 May 2020COLLABORATIVE PROCUREMENT. This will explore, through case studies and the personal experiences of a panel of practitioners and specialists from a wide spectrum of industry, including an exposition of the successes achieved thus far with ECITB’s Collaboration Toolkit, the benefits of collaborative working for the engineering construction industry and the actions needed to be taken to accelerate the use of this procurement model.

This WEBINAR is open to owners / investors, contractors, manufacturers, suppliers, specialists and consultants engaged in global engineering construction projects.

To register your participation and receive details of the WEBINAR, go to https://www.eventbrite.co.uk/e/major-projects-driving-long-term-value-through-collaborative-procurement-tickets-100806232154

Join us and help to transform your industry and put an end to failing projects.

 

John Fotherby

Chair

European Construction Institute

Downstream EPC Conference

John Fotherby, Chair, European Construction Institute (ECI) is joining Tony Maplesden, Collaboration Coordinator at the Engineering Construction Industry Training Board (ECITB), to deliver The Benefits Of Collaboration and Collaboration Contracts at the Downstream Project Management Conference in Brussels on 3 and 4 December 2019Project Management In the Age Of Digital Transformation. John and Tony will remind delegates that it is people that deliver Engineering Construction projects and put the proposition that the universal adoption by the industry of digitalisation, collaborative working practices set out in the ECITB Project Collaboration Toolkit as well as other complimentary interventions being supported and promoted by the ECI, Construction Industry Institute (CII) in the USA and other industry bodies will, collectively, revolutionise the way projects are conceived and delivered. The ECI is a membership organisation open to all organisations engaged in global Engineering Construction.

ECI & Constructing Excellence Productivity Workshop 23 October – output

ECI & Constructing Excellence Productivity Workshop 23 October – output

We had a lively and productive day at the joint ECI and Constructing Excellence workshop on Eliminate Waste – Maximise Productivity – Become Successful.

ECI John Fotherby from Kingsfield Consulting provided a stark message that if the industry does not change itself, disruptors will and urged a holistic approach across the four key areas of People, Process, Technology & Organisation.  We are thankful to the excellent facilitation provided by Constructing Excellence members Aspen Global to drill into delegates priorities and viewpoints.

Attached is a paper that covers a summary of the key points arising from the pre-event survey output from delegates, output from the event and proposed approach to getting the Revolution underway. We have prepared this in PowerPoint format so that you have a good visible representation of the workshop that you can share with your colleagues, management, customers, subcontractors, vendors and consultants – we seek your support to “spread the word” and generate interest in the Revolution that we agreed at the Workshop was necessary if the industry is to be sustainable. We would also appreciate you and your colleagues’ input / comments / suggestions regarding the way forward proposed in the attached paper.

We encourage you to join the ECI portal on Microsoft Teams. Those who were present on the day should already have received an invitation link to Teams. Please email colm.quinn@bregroup.com for further invitations or help logging in.

Help us prepare for the next event in February 2020 where with your help and support we will drive the Revolution to the next level.

Thank you for your continued interest, support and commitment.

Eliminate Waste – Maximise Productivity – Become Successful

Global Engineering And Construction – Owners, Contractors, Vendors / Suppliers, Service Providers

HELP TO REVOLUTIONISE YOUR INDUSTRY

“Revolutionise: to significantly change something so that it is much better”

Eliminate Waste – Maximise Productivity – Become Successful

Constructing Excellence & European Construction Institute Cross-Industry-Sector Workshop

Engineering and construction is a USD 10 trillion per annum global industry forecast to grow to USD 14 trillion in the coming years – it is a significant contributor to the global economy.

The way in which major projects are conceived, developed and delivered has not changed in almost half a century when other industries have revolutionised beyond recognition – WHY?

In the past 20 years global engineering and construction productivity has remained almost stagnant when other industries have made massive strides eradicating waste and generating greater productivity – WHY?

Despite countless sensible initiatives over the last 20 years designed to improve engineering and construction performance there has been virtually NO LASTING EFECTIVE IMPROVEMENT – WHY?

Engineering and construction must attract far more investment – without it the industry is not sustainable long term in its present form. Sufficient investment is only likely if there is ROI certainty for owners / investors and supply chain profit margins are commensurate with the risks taken and the value added by performance and delivery excellence. To achieve this we must revolutionise the industry.

INTERESTED? Join stakeholders from various industry sectors operating in the domestic and global arenas on 23 OCTOBER 2019 in a ONE-DAY WORKSHOP hosted jointly by the European Construction Institute and Constructing Excellence at WATFORD – 30 minutes from Heathrow, 20 minute form Luton and regular fast rail links form London Euston.

WORKSHOP OBJECTIIVES

  • Decide how industry sectors can align and collaborate on change initiatives to revolutionise engineering and construction for long term sustainability.
  • Identify synergies and interdependencies within and between the various change initiatives.
  • Create communities of practice in defined areas of change
  • Establish communication channels and forum to ensure continuation of discussions and actions following the workshop – embed new practice

REGISTER HERE