Employ a main automation contractor for LNG project success

R. Bhullar, Fluor Corp., Aliso Viejo, California

In today’s competitive and constantly changing technical and business environments, continuous complex demands are being placed on process automation systems. Clients seek optimum solutions that will allow them to manage their worldwide process plant operations in real time, while keeping their capital and lifecycle costs to a minimum. 

Combine this scenario with the challenges of global project execution and plant locations in areas or countries where all technologies and expertise are not available, and meeting these demands becomes a daunting task for engineering contractors. Then, add to this equation the aging technical population and a lack of skilled engineers in the field of digital process automation, and it is clear that process plant automation project execution must be viewed in a different way.

Based on firsthand experience in the global execution, design, engineering and construction of an LNG processing complex in Asia, the author discusses several factors and considerations that may contribute to project success.

Main automation contractor (MAC) concept. A consortium of multinational companies is typically involved in developing today’s mega-projects. In these situations, it may be advantageous to design and engineer the automation project close to the project site, whether in Asia, Latin America or another developing region of the world, using global technical resources.

For process automation and digital system integration, a consortium may want to consider using the MAC concept as part of the EPC or standalone contract with a major MAC supplier. A number of opportunities and risks are involved, and a thorough evaluation must be performed for each project situation. The main objectives of the MAC concept are to:

• Achieve cost savings
• Execute the project within the outlined project schedule
• Leverage the technical resources, skills and expertise of all team members involved
• Work as a team to achieve the project objectives
• Identify challenges, risks and opportunities to achieve project success.

The MAC scope can be limited to a digital system’s related work; the field instrumentation may or may not be included in the MAC scope. Fig. 1 depicts the scope and involvement of a MAC. It is best if the MAC joins the project team at the basic engineering or FEED stage of the project, works with the EPC contractor during detailed engineering, and provides valuable support during plant commissioning and startup.

Fig. 1. Flow diagram of the scope and involvement of a MAC.

Eventually, when the customer takes over possession of the terminal for continuous operations, the MAC can help sustain the terminal—with maintenance, support and technical upgrades as needed—as part of the operations and maintenance team on a service-contract basis. The MAC can also store and supply spare parts and upgrades as needed, reducing lifecycle capital costs.

For the implementation and execution of the MAC and the overall process automation scope of work, it is best that all responsibilities be given to a dedicated and focused process safety automation team. The MAC is a managed and integral part of this dedicated team. Some of the MAC’s responsibilities may be to:

• Assume total digital system and subsystem integration responsibilities, including communication infrastructure
• Ensure total scope technical integrity
• Ensure consistency of overall system and subsystem design
• Create complete definition of all system and subsystem interfaces, which would be transparent and fully functional, as required by the process plant
• Manage procurement, expediting, logistics and documentation
• Execute the project within schedule and on budget.

The intent is to deliver a complete and operating integrated automation system for the process plant, refinery, gas processing or other complexes. This system will monitor, control and ensure plant and process plant asset safety, manage plant operations in real time, and assist in achieving consortium business objectives.

The MAC’s responsibilities will last until the automation systems are handed over to the startup and commissioning team for eventual transfer to the plant operations team. This dedicated team is responsible for resolving all technical issues relating to:

• Hardware for the system, subsystems and associated components
• Digital communication systems and infrastructure
• System and application software, including all licensing
• Logic and sequence
• Communication between all third-party systems and suppliers
• Protocols to integrate various subsystems
• Design guidelines, functional specifications and standards for consistency for the project
• Operational and maintenance considerations
• Health, safety, environment, human and ergonomic issues.

The team is responsible for the entire infrastructure and for satisfactory operation of all automation systems, including:

• Digital infrastructure
• Analog infrastructure
• Fiberoptic infrastructure
• Wireless
• Coaxial cabling
• All system wiring, field wiring, power, grounding, lightning protection and safety
• Marshalling and isolation of signals
• Uninterruptible power supplies
• Field device integration, using common industrial protocols (i.e., HART)
• Subsystem integration
• Integration of SCADA and custody metering systems with customers or suppliers
• Integration capabilities with plant business, maintenance and consortium business systems.

MAC selection process. The selection of a MAC is a crucial step of the process. It is always difficult to select a team player and a working partner that will have common and shared project objectives. Many approaches and execution strategies are possible and are unique to each project situation. The typical process can involve several steps:

• Detailed specifications, drawings, engineering notes and a request for quotation (RFQ) documentation package are prepared for inviting client-approved MAC vendors to bid on the MAC tender
• If there are no preapproved MAC vendors, a pre-selection process may need to be included
• Several meetings, site visits to facilities and discussions must be held with each potential bidder
• All bidders are invited to the bid invitation meeting, where detailed scope and requirements are described to all parties at the same time
• All parties must be equally knowledgeable about technical answers, clarifications and addendums
• Clarification meetings can also be held with all of the bidders present at the same time to resolve issues, clarify grey areas, and answer questions
• After satisfactory clarification of all questions, technical and commercial bids are received
• All bids must be normalized for inconsistencies, differences in scope, offerings and further explanations
• A detailed technical and commercial evaluation must be done for all of the bidders’ documentations; where the information is incomplete, all bidders must be asked individually to supplement or clarify the information
• Based on the technical evaluation, a short list is created with two or three bidders
• These two or three bidders, of the major MAC vendors that offer better technical solutions, can be invited for further negotiations and detailed clarification of scope
• The client must participate in all of these clarification meetings, and all of the responses must be presented to the client, with or without the commercial responses, depending on the contract structure.
• All of the options, maintenance and startup support services and long-term spare parts and other operational needs must be requested on behalf of the client
• Based on the technical offers and on the project risk, execution, coordination and support infrastructure present, a recommendation is made for the selected MAC vendor for the LNG project.

MAC organization. As intended in the MAC concept, the MAC team organization should consist of members from all involved parties. Team members will include personnel from:

• Client organization
• EPC company or consortium
• The MAC
• Third parties.

The author has led several MAC teams, representing the owners and the engineering contractor. Each major task or function must be assigned within the organizational structure. Specific hardware- and application-software-based activities are assigned to each team member. The roles and responsibilities of each individual dedicated for a specific task must also be defined as part of the MAC execution plan.

In addition to the dedicated team members assigned to the MAC team, the project-support team resources can be shared from the main project and utilized for support activities. The support activities can be related to procurement, contract management, project controls, documentation management, logistics, expediting, quality control and quality assurance, third-party audits, validation and other project-related infrastructure.

MAC risks, challenges and opportunities. An important consideration for successful implementation and management of the MAC-based execution is not only the MAC scope definition and MAC selection, but also a joint team understanding of all risk areas, challenges and opportunities facing the project.

Before and during project execution, key risks, challenges and opportunities need to be identified. They can be categorized as follows:

• Interface areas and interface definitions
• Execution skills
• Organization
• Infrastructure
• Logistics
• Special considerations in the country of execution/construction and worldwide execution
• MAC subcontract management.

Table 1 shows the systems and subsystems that typically form the automation scope of an LNG terminal. LNG is used for discussion purposes; the product can be modified to match the needs of a refinery or process plant. 

During the project execution stage, the interface definition typically receives most of the effort, time and resources, and is the biggest challenge. The interfaces can be divided into two broad categories: internal interfaces and external interfaces.

Internal interfaces. These interfaces typically exist within the project execution team, and will be eventually handed over to the client operation team. The key internal interdisciplinary interfaces typically are:

• Process engineering
• Technology licensor(s)
• Mechanical engineering
• Electrical engineering
• Civil and structural engineering
• Procurement, expediting and logistics
• Project controls and subcontract management
• Construction.

The MAC must cater to, and provide for, the needs of the internal and external interfaces, from providing for the process control and safety and protective systems, mechanical packages and electrical equipment automation, to meeting civil and architectural requirements related to the control room, substations and buildings.

External interfaces. The external interfaces typically identified are:

• Client/customer
• Licensor or technology suppliers
• The MAC
• Subcontractors and suppliers, including MAC subcontractors
• Third-party auditing/quality control/consultants
• Electrical and instrumentation subcontractor
• Startup and commissioning team
• Regulatory agencies or governing bodies.

Clear definitions of scope, boundaries of separation and matrices of responsibilities, and the assignment of responsible individuals to interface issues and conflict resolution, are all essential components to the success of the job.

Execution skills. It is of utmost importance that the MAC team has the necessary project execution skills to implement and deliver MAC scope and services, to address specific issues related to process plants, to meet special and complex client requirements, to execute the project on a global scale, and to be knowledgeable on how to execute the project at the specific location.

Organization. The MAC organization must be structured and provided with all of the skills and resources required, and it must be dedicated to the specific objective of delivering the project. The organization must have the experience, skills and understanding of the scope and expectations, and it must have a willingness to take the challenge to success.

Infrastructure. The key factor for the MAC is to have the entire infrastructure in place in time to execute the resources. It relates to all aspects of engineering, execution, manufacturing, assembly, testing, integration, staging, warehousing and providing field support and services in a responsive manner of time and cost, including spare parts storage and supply. If the MAC does not have the needed infrastructure, then the gap must be filled by the contractor or client. The MAC organization must have the resources, capabilities, and the availability of experts and specialized skills dedicated and committed to the project at hand.

Logistics. The challenge is to coordinate all of the required information, interface definitions, hardware, communication devices, software, services and supports, as well as all of the subsystem hardware for staging, on time and in the right place.

The equipment procured may be sourced globally. For example, on an LNG plant, controls for the loading arms came from Germany; the programmable logic controller, human-machine interface and safety controls were developed and integrated by the MAC; the tank management system came from Japan; and the marine monitoring system came from Australia. 

More than 25 subsystems may require integration in a typical LNG processing facility. The coordination must be done so that the engineering, configuration, hardware assembly, factory acceptance tests (FATs) and site acceptance tests (SATs) are performed without delays or problems.

Special considerations in host country. It is essential that execution address special considerations relating to the host country. This relates to regulatory authorities; state-owned agencies; special clients; local regulations and laws; special issues relating to procurement of materials, transportation, licensing and permitting; and dealing with local suppliers, contractors and labor-related issues. Most countries require some sort of local content in terms of labor, skills and materials.

MAC subcontractor management. Realistically, the MAC will need to secure services or materials from its partners, parent companies, or other subcontractors and suppliers. It becomes a challenge to ensure that the final product is consistent with the overall design; compliant with all project specifications; and built to the same quality, standards and industry practices as the contracted MAC has promised to deliver. It is prudent to become involved with subcontractors, and the MAC execution plan adequately addresses the issues and risks relating to this area.

MAC system integration scope. Using an LNG terminal as an example, the system integration scope for the subsystems includes:

• Project management
• Engineering and design
• Procurement and supply
• System and console fabrication
• System and subsystem integration
• Mechanical package integration
• Marshalling or remote integration
• Field device integration
• Inspection, quality assurance and third-party audits
• Subsystem FAT
• FAT
• Integrated FAT
• SAT
• Precommissioning
• Commissioning
• Documentation
• Spare parts for commissioning and operation
• Training
• Client services related to maintenance and spare parts.

Special lessons learned. Having executed several automation projects using the MAC concept, the author believes that these lessons require special consideration while attempting to use the MAC:

• Mutual expectation
• Objective
• Resources
• Costs
• Communication.

Mutual expectations. Understanding and managing expectations between the MAC and other parties are important. What each party brings to the table and what each party is expected to do should be clearly communicated and understood to avoid misunderstanding. The learning curve must be shortened, and the meshing of client, contractor and MAC cultures must be achieved quickly.

Objectives. The objectives of the MAC and the contractor could be different, and may not be shared objectives for the project. One party may be interested in selling more products or services, while the other party may not need these services.

Also, the MAC must be objective and use the best solution possible, rather than providing only the solution most favorable to the MAC. If the team exploits contractual loopholes or other legalities to take advantage of another party in an abusive or financially unfavorable way, then the project is doomed to fail. It must be a win-win situation for all parties involved.

Resources. Resources must not be allocated to other objects, tasks or projects that may impact or jeopardize the project. The MAC must have enough resources or backup to address normal manpower turnovers and unexpected workload management. In the author’s experience, sometimes it may be necessary for the EPC contractor to provide, support and add experience and other resources that the MAC may lack, especially in developing countries or remote locations.

Costs. Cost management is a key lesson. The MAC and the contractor must work together to keep costs under control and communicate openly when discussing work processes and deliverables, and to minimize or avoid rework and wasted effort. It may be necessary to review and manage work processes where costs are kept under control. There is much room for combining work processes; avoiding duplication; leveraging resources; and avoiding delays, rework and optimization.

Communication. Communication in a team relationship between the MAC and the contractor is extremely important; there should be no surprises. The MAC and the EPC contractor must work as a team, and each team member must know what the other is doing, what is expected, what needs to be done, what is needed and what is not needed. Each stakeholder must be flexible to each other’s needs with regard to information, data, timing and wasted effort.

Special considerations. In some cases, LNG plants may also be part of the National Security Policy, especially as it relates to energy independence. This applies to many island nations and countries that are exclusively dependent on imported LNG. National security concerns place additional requirements on the plant design, requiring very high reliability and availability.

Traditional designs—particularly low-cost or lump-sum projects—may not typically consider these factors; however, in light of these strict requirements, the MAC and the design and engineering teams must execute the project with these requirements fully understood and agreed upon, including by regulatory authorities or involved governmental agencies.

Significant effort is also required to ensure that automation assets and associated process automation network systems and infrastructure are not subject to unauthorized cyber intrusions or attacks. Most MACs lack in-depth expertise in the rapidly evolving field of cyber security. In such situations, the expertise of a specialized cyber security organization may be required.

Recommendations. For global mega-projects to be successful, especially with regard to process plant automation scope execution, project execution using the MAC approach can be a useful concept. The basic idea is to leverage resources, skills and expertise to manage costs and meet the project’s schedule and success objectives.

The success of the project depends on a clear scope with defined interfaces, the proper selection of a MAC partner, the management and understanding of expectations, the allocation of proper and timely resources, and the understanding and management of risks and costs.

The MAC execution approach is a concept worthy of serious consideration. The author has executed and implemented this approach on several global mega-projects alongside most major digital process control system suppliers. GP

Romel Bhullar is a senior technical director and a technical fellow with Fluor Corp. He has more than 35 years of experience in design engineering and the implementation of process controls, system integration and automation requirements for the refining, gas processing and power industries. He has authored several articles for international and national technical publications and conferences in the areas of process control, system integration, process automation and safety implementation. He holds an MS degree in chemical engineering and an MBA degree, and is a registered engineer in the state of California. He is also a fellow of the International Society of Automation and is a consultant on system integration for the SLNG project in Singapore.