Common Reasons for EPC Project Delays (And How to Avoid Them)
One of the biggest reasons that EPC projects experience delays is that the materials for the project aren’t available on the construction site when they’re needed. When that happens, it disrupts your timeline and can lead to major financial losses. In order to know how to address material shortages when it occurs, it’s important to understand the reasons why this happens.
If you don’t have the materials you need on-site when you need them, this could cause major delays for your EPC project. Raw materials shortages have caused drastic inventory shortages for all categories of products (except alcohol and tobacco products). As a result, your building materials suppliers may not have the materials you need—and as you shop around, you may not be able to find them elsewhere, either. This is because there’s insufficient supply to meet the increased demand for these construction materials. Since the industrial and commercial construction markets have been released (post-COVID) and the flood gates of work have been opened, global supply is not keeping up with global demands.
The vast majority of material manufacturers are still located in East Asia. This is because countries like China and Taiwan are global manufacturing hubs (don’t shoot the messenger). However, shipping between the U.S. and the other side of the world can take an incredibly long time. Additionally, large shipments of heavy materials typically must be shipped via ocean freight, which is one of the most cost-effective but slowest shipping methods. Shipping costs have skyrocketed. Shipping timeframes to the USA have more than quadrupled.
There are a number of factors that only serve to exacerbate these delays and, during the last few years, the pandemic has made this worse. These issues include freight container shortages, backed-up ports, and labor shortages. For all of these reasons, it’s not uncommon to have to wait several weeks for the items you need to finally arrive so that you can complete your project.
Whether you have poor quality materials because you were trying to be budget-conscious, because your first choice wasn’t available, or simply because you didn’t know better, attempting to utilize poor quality materials for a project can cause delays. We have received 911 calls from EPC contractors that have modules that were built in China and they came with A325 structural bolts that were manufactured in China. As the contractor was torquing the bolts they were breaking. We were tasked to provide multiple truckloads of structural bolts and nuts to replace the structural bolts made in China. This caused additional material and shipping costs, additional labor costs, and negatively impacted the job schedule. At Troop Industrial, we understand the importance of providing quality products for critical bolting applications. We follow your jobs Approved Manufacturers List (AML) every time and we do not cut corners when it comes to quality. We have seen it too many times when companies buy cheap material, they spend more money replacing it with quality materials. The cost isn’t necessarily in the material, it's in the labor costs to fix the problem.
Often, when you don’t have the necessary materials for your EPC project at the necessary moment, it’s because at some point during the planning process, misjudgments were made about what would be needed, when materials would be necessary, or what the experience of obtaining materials would be like. Ineffective EPC project planning is often the cause of timeline disruptions. In today's current market, it is more critical than ever to buy materials months before they’re required on-site. You cannot use traditional timeframes for procuring material. You have to get ahead of the job months in advance. Releasing material in the proper sequence that aligns with the project schedule is critical as well.
Aligning Engineering - Procurement - Supply Chain
There has always been a disconnect between these three arms of the construction process. On their end, engineers will do their best to provide a quality drawing with material that is appropriate for the application. During the Front End Engineering and Design phase (FEED), they may assign a coating or grade of material that’s new and would be a great fit for the application. They present this to the end-user for approval.
From there, utilizing the Engineers’ drawing, procurement receives a material dump out of the EPC’s material management software and sends it out for quotes. The supply chain then receives the bill of materials from the EPC and determines if there are grades of material and coatings that are in limited supply or if the coater has limited capacity for a job of this scale.
Because of all of these complex behind-the-scenes processes, the cost of the material and the lead time goes beyond the required “on-site” requirement. At all times, but especially today, there has got to be some flexibility. Without flexibility on all sides, there will be material delays that will negatively impact all phases of the job. However, flexibility doesn’t mean you sacrifice quality. It means we all have to be open to other paths that will contribute to the success of the project. Now is not the time to specify a material that does not have a traditionally robust and mature supply chain. The implications are compounding and have a direct impact on the profitability of the job, completing the job on schedule, and the overall health of the project.
How to Avoid EPC Project Delays
To avoid EPC project delays due to any of the above-described reasons, there’s actually one easy solution: partnering with Troop Industrial.
Troop Industrial is a seasoned and experienced distributor based out of Texas and Louisiana. We have quality approved products that are featured on all the major oil and gas companies' AML, in stock, and ready to ship to your project site with same-day or next-day arrival. Our Projexx Group is available to help you with materials management and tracking to ensure your planning is maximally effective.
When you partner with Troop Industrial, you have so much more than a material vendor. You have a partner that is looking ahead and working for you and your team to prevent delays and bottlenecks. We would love to be involved in the FEED stage of the project. If it’s too late, we can look at your drawings or bills of material and identify problematic lines that may need to have some flexibility assigned to them.
Contact us today to get started.