Why modularization should not be based on cost and size alone

2000 Tonnes or more!

Dr Neveen MoussaPrincipal – Sinclair Knight Merz

Contact: [email protected]

Why modularisation decisions should not be based on cost and size alone

Topics covered

� About SKM

� Why modularise and the benefits of modularisation.

� A methodology for “right sizing” your modularisation decision.

� Some final thoughts.

About Sinclair Knight Merz

� Global engineering services & project delivery firm

� Established 1964 in Sydney, Australia� Annual revenue of over A$1B� Employs 6500 personnel globally� Operates across four market areas

(Business Units): • Water & Environment, Mining & Metals, Buildings &

Infrastructure, Power & Industry

� On track to reach goal of becoming a Global Top 10 Firm within 5 years, as measured by the benchmark Engineering News Record

About Sinclair Knight Merz

Working with our clients to “deliver a positive

and enduring impact on the world”

SHANGHAI

WHERE HAS SKM WORKED IN CHINA?

SKM Projects in China

Why Modularise?

“Modularisation has the potential to enhance project outcomes for all stakeholders (owner, project delivery team, fabricators, contractors, suppliers), whist offering the opportunity to reduce consumption of resources and promote sustainability for future generations”.

Modularisation Trends

Site Stick Build

Build in placeSTD construction practise

Site Pre-Assembly Build

Minor workshop assembliesOff plot construction facility

Local Module BuildRoad transport

Local yard

Overseas Module BuildSea transportSpecialist yard

Mass Module BuildShipyard

Mass production

Modularisation must provide a benefit (at an acceptable cost and level of risk) to the project.

The benefits of Modularisation

� Lower material rates� Lower labour rates� More skilled labour available� Controlled environment - higher labour

productivity & quality� Less man-hrs on site� Smaller construction camp/ Lower FIFO costs� Allows fabrication to start early.� Construction safety is improved� Reduction in land disturbance/ impact on

community/environment� Compressed construction schedule� All weather related risks minimised� Reduced site commissioning time� Early start up.

Quantifying the benefits of Modularisation Traditional

on-site

“stick build”

Transportcosts

Off-siteInspection/ QA/QC costs

Additional coordination/ engineeringcosts

Tax & duty

Benefits

ModuleYard costs

Cost advantage

Risk mitigationcosts

Cost premium

Right sizing

Stick Build Execution Fully Modularised Execution

optimum

position

� Difficult execution

environment remoteness,

weather, etc)

� No local fabrication capability

� Skilled labour shortages

� High cost of labour

� Compressed schedule

� Safety drivers

� IR delay threats

� Sustainability drivers

Arriving at the optimal position is project specific and requires a BUSINESS CASE.

� Cheap skilled labour

� Local fabrication centre

� Equipment/bulks sourced locally

� Brownfields works

� No port near by

� Port structural/spatial/tidal constraints

� Infrastructure constraints

� Local content laws

� IR sabotage threats

� Other logistical challenges

� Transport equipment shortages

Methodology for Business Case Development

Step 2 – Supply Chain Considerations

Step 3 – Select Pre-assembly/Module sizes / Fabrication location3. Apply technical/construction knowledge to derive multiple module configurations (splits).4. Economic evaluation of cost, man-hours, schedule impacts & risks for each split &

location. 5. Select optimum split and location.

Step 4 – Develop Overall Modularisation Strategy & Execution Plan6.Collate fabrication selections and finalise overall pre-assembly strategy.7.Develop shop detailing, contracting and commercial strategies.8.Develop overall execution strategy & further develop PEP, schedule and estimate.

Step 1 – Location & Transport Considerations1. Define fabrication location and transport and logistics constraints

2. Understand supply chain capabilities, capacities and limitations.

Step 0 – Define your modularisation driversDefine your project’s modularisation drivers

Methodology for Business Case Development

Step 0 – Define modularisation drivers & set-up a modularisation teamDefine your project’s modularisation drivers and set-up a team t manage process

• Set up a dedicated multi-disciplinary team with strong modular skill sets.

• Define project drivers with client, document, prioritise and communicate them to all team member as they will dictate your decisions & designs.

• Understand that modular may come at a premium depending on labour cost at site location and transport distances.

• Bring the engineers along on the journey.• Plan the details early.• Don’t make change without understanding their full

impact.

Step 1 – Location & Transport Considerations1. Define fabrication location and transport and logistics constraints

• Identify alternative fabrication centres both local and overseas.• Survey site constraints in terms of labour availability/skills, rates,

productivity, IR, local content laws, weather, environmental issues, permits, safety issues.

• Site access, elevations, laydown areas, heavy lift footprint.• Survey all transport routes for physical constraints: powerlines, bridges,

roads, turning circles, etc. • Look at available public Wharfs (structural strength) or alternative

Material loading/off -loading facilities.• Identify tidal movements/depth and dredging potential at offloading port.• Identify vessel/barge/tug limitations: speed, draft, deck capacity, ability

to discharge and acceleration characteristics.• Identify land transport axle limitations.• Define transport envelopes maximum & optimum) – these dictate

maximum module sizes for each route.

Methodology for Business Case Development

Methodology for Business Case Development

Step 2 – Supply Chain Considerations

2. Understand supply chain capabilities, capacities and limitations.

• Survey alternative fabrication centres both local and overseas.

• Survey market for available lifting/transport equipment

• Survey market for available ships• Understand quarantine & customs requirements• Ambient road laws, vehicle size constraints & local

police availability, if escorts required.• Province requirements/lead time for permits.• Other community/environmental risks.

Methodology for Business Case Development

Step 3 – Select Pre-assembly/Module sizes / Fabrication location3. Apply technical/construction knowledge to derive multiple module configurations (splits).4. Economic evaluation of cost, man-hours, schedule impacts & risks for each split &

location. 5. Select optimum split and location.

Technical Considerations:• Design to eliminate unproductive hours and address safety by examining ways to minimise:

– workforce congestion.

– manual handling.

– working at heights.

– scaffolding.

• Modularise around equipment not around structural steel and considering installation sequence.

• Modularise only where economic, i.e. do not ship air.

– Where modularisation is not possible assemble at ground level and utilise flat packs/panels.

• Optimise shipping by ensuring that modules fit standard vessels.

• Optimise cranage usage - consider lifts (single vs. dual) by conventional (vs. specialised) cranes and

four point lifts.

Methodology for Business Case Development

Technical Considerations (continued) :• Assemble modules including grid mesh, handrail & plate work c/w liners.

• Assemble modules with cable tray, brackets, light and accessories.

• Product bins to be shipped c/w liners.

• Loose steel to be shipped as large nested flat-pack panels including

grid mesh and pre-fabricated handrail panels .

• Maximise personnel access by including flooring, handrail, electrical access

for cable installation, and complete access towers.

• Sub-stations & control rooms and transformer kiosks (c/w distribution panels)

to be fitted out as transportable units.

• Consider alignment issues

• Consider construction sequencing and module placement

• Consider crane movement and laydown areas.

• Temporary steel should be part of the structure as much as possible.

• Make allowances for grillage, sea fastening, temp steel, double

columns/module connections Expect to see more steel quantities.

• Adopt standard connection details, lifting points/lugs.

Example of splits

Economic Evaluation

Man-hour comparisons

Economic Evaluation

Cost comparisons: based on data sourced by procurement

Schedule Evaluation

� Undertake schedule comparisons with a baseline stick build timeline for all options considered based on reduced man-hours.

� Quantify schedule benefits.

Risk Evaluation

• If you think modularisation is business as usual THINK AGAIN!

• Plan, plan, and then plan. Stuff ups

are too messy and too costly!

• Do it during FEL2 or earlier otherwise

you risk schedule, budget and rework.

• The following risks should be assessed:• Technical

• Multiple locations/languages/currencies

• Transport & logistics

• Material management

• Lifting

• Laws, regulations, permits

• Skills in modularisation

• Interfaces

Methodology for Business Case Development

Step 4 – Develop Overall Modularisation Strategy & Execution PlanStep 4 – Develop Overall Modularisation Strategy & Execution Plan6.Collate fabrication selections and finalise overall pre-assembly strategy.7.Develop shop detailing, contracting and commercial strategies.8.Develop overall execution strategy & further develop PEP, schedule and estimate.

• Modularisation team to use a structured approach to assess each option looking at iterations of:

• Cost models• Schedules• Risks

•May assign weights to each attribute•May use simulation to arrive at optimal decision per facility•Collate all selections and rationalise to align strategy with market conditions.•Develop strategy and execution plan accordingly.

Final thoughts

� The inland nature of most mining projects will limit modularisation opportunities to pre-assemblies

� A structured approach to arrive at an optimal modular decision aligned with market conditions will be required.

� Focus will have to be on “right-sizing” of modules to suit project drivers and constraints.

� Pre-assembly density will be a key factor and will be largely determined by the location of equipment fabrication

� Procurement of bulk and special materials and equipment should not be fixed until modular decision is made

� Areas that do not justify full assemblies/modules will be done as prefabricated panels/flat packs, e.g. conveyors.

� Anticipated benefits may not be fully realised if not executed effectively.