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Integrating Procurement within AWP: Insights from a Practitioner

In accordance with the CII IR 272-2 v.3 “Design through Workface Execution” Vol. I, the Advanced Work Packaging (AWP) is “the overall process flow of all the detailed work packages (CWPs, EWPs, and IWPs). It is a planned, executable process that encompasses the work on a engineering, procurement and construction project….

The key word here is a flow (i.e. a workflow). Womack & Jones (1996) in their book “Lean Thinking” had applied the term flow while describing “lean thinking” principles for manufacturing industry where the value of all activities contained in production processes should be made to flow. The introduction of “Lean Thinking” into construction industry had been made by Lauri Koskela (“Application of the New Production Philosophy to Construction”, 1992). As a result of these efforts, a concept of “Lean Construction” based on integration of three schools of thoughts (Transformation, Flow and Value Generation, i.e. TFV Theory) has emerged where Construction Project should be viewed as a “temporary production system”.

While going through the Implementation Resource CII IR 272-2, I could not locate any definition of Value in implementation of AWP methodology. All what I could find were the “Benefits “, i.e. Productivity and Predictability.

Benefits and values are two different things, and the difference can be described by a simple formula: Value = Benefits - Costs. With respect to a construction project, the outcome from making effective use of the system's output is a realized benefit – however to realize an actual value, the outcome needs to be aligned with strategic objectives of the project organisation. Assuming strategic alignment is achieved, the realised benefits should translate into a Value for the Project Owner, provided that the gross benefits exceed the gross expenses incurred in their realization.

In my view, as a project practitioner, the value of the AWP based project delivery system is supposed to be the ability to design, fabricate, deliver and install quality materials, equipment, assemblies and related systems in their correct positions on a project site the first time in strict accordance with construction schedule, and in sequence that results in a productive flow of work for all project disciplines and trades while achieving the optimum project life cycle cost.

The set of currently identified AWP deliverables (EWP, CWP, IWP) can definitely provide benefits in specific areas of construction project planning and execution. One ”Missing block” in the foundation of the current AWP structure is the Procurement Work Package (PWP). Without proper definition of PWP structure, its composition, functionality related processes and alignment with other AWP deliverables, the project delivery system will lack the AWP’s Value Driver: a productive flow of work for all disciplines and trades. Why? The answer to this question can be found in the logic of AWP methodology – the design schedule for project materials, engineered items and related technical data & documentation should be driven by the procurement schedule, which is construction driven.

The Implementation Resource CII IR 272-2 places procurement deliverables, as a sub-set or component of Engineering Work Package, together with engineering deliverables. The reality, a typical business structure of Project Owners and EPC Contractors has a stand-alone Supply Chain or Procurement Division responsible for all contract management (engineering, procurement and construction) as well as purchasing, expediting, logistics and material management functions. What each Project Engineering Discipline can provide for initial stage of project procurement process is a Material Requisition (MR) as a document used by Project Procurement / Supply Chain to request materials for technical supplying or fabrication requirements: data sheet, quantities, applicable code, specifications, etc. The development and issuance of Project Procurement Plan as a part of PEP, RFQs, POs and other related commercial and contractual documentation is controlled and managed by Procurement / Supply Chain Team.

Another reason why we need to establish PWP as a separate AWP deliverable is the nature of Construction Project where its processes, viewed as value streams, are characterized by inability to maintain continuous material flows between upstream and downstream activities and “batching” at the project supply chain’s decoupling point is dictated by IWP planning and their release schedule requirements. We have to install a “pull system” where continuous flows are interrupted and upstream processes can still operate in “batch” mode. This is one the critical features of AWP methodology applicable to construction and procurement activities and may be explained by the fact that current CPM framework and “macro-economic “ CPM based scheduling practices cannot be effectively used by front line construction managers and workface planners at the project site when they plan and execute a multitude of IWPs in various CWAs.

In few words, AWP methodology requires adoption of the entire project delivery system in a holistic manner rather than applying techniques in a piecemeal fashion which would inevitably lead to system sub-optimization.

Oleg Koudriavtsev, MSc(Eng), IIMS(UK) is a mechanical engineer by trade (Ukrainian State’s Technical University, MSc. Eng in 1985) and holds a Diploma of a Certified Marine Cargo Surveyor ( International Institute of Marine Surveying in the U.K.).

Oleg started his career as a technologist, designer and test engineer in transportation machine building industry ( late 70’s - early 80’s ). In 1989, he made a drastic change in his career and joined the oil & gas industry (project procurement, material management and logistics). He has been involved in multiple oil & gas exploration projects in Russia, CIS countries and MENA region.

Oleg moved to Canada in 1997 and worked as a Logistics Consultant and Business Partner of third party service company for a few years with the focus on the oil & gas project work. In 2006, he joined Fluor Canada Ltd. (Material Management Department) and engaged in various capital projects in MENA countries ( KSA and Kuwait) and Canadian Oilsands Projects in Alberta ( Kearl Lake, Syncrude MLMR and others ). Since 2015, Oleg has been with Suncor Energy, as a Senior Advisor, Logistics.

#procurement #PWP #procurementworkpackaging #construction #definitions #value #lean #leanconstruction

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