EPC contractors at the point of change
9 Sep 2003
Fluor Corporation’s John McQuary shares with PE his vision of where the engineering, procurement and construction contractors might be in five years time - and the challenges they face on the way.
Amechanical engineer from the University of Arkansas, John McQuary has worked with Fluor for 21 years and is now vice-president of global automation and knowledge management. With his role requiring a global perspective and a clear vision of future possibilities, his views on the future for the EPC companies make interesting reading.
’The business model for many EPC companies in five years will have global execution at its core,’ he believes. ’We will need to work anywhere and with anyone, from local EPC firms to emerging market players. There will be more multi-party EPC execution on ’mega-projects’ with joint venture partners that may include competitors.’
In his view, global execution will require global collaboration from locations with limited fixed IT infrastructure. The continued growth in performance of wireless technologies will help connect a global execution team from locations that are not currently practical, he says. Increased use of local suppliers and local EPC firms will also present new challenges.
But, McQuary adds, ’despite global collaboration technologies, there is still value in a workforce that can be mobile. The workforce in North America and Europe is ageing and will be leaving the industry in the next five to ten years.’ The loss of this expertise and talent will be difficult to replace, he says. ’Attracting, retaining and educating a new workforce will be critical to long-term success.’
Another challenge he sees is that there will be more revamps and modernisation projects at existing locations. The challenge here is that ’in many cases the technology that helped create these facilities no longer exists or is completely outmoded.’
The ability to adapt well to change can be a sustainable competitive advantage, McQuary believes. Due to the proliferation of so many new tools in the marketplace, EPC companies will have to quickly evaluate their value as true business solutions, and not just the latest and greatest ’bells and whistle’ add-on.
As he puts it, ’changing the way we do business requires ’transformational leadership’. We are at a point in time where information technology is allowing us to change many of our traditional work processes and practices. Along with these changes, we need to create an organisational structure that is nimble enough to accept them, and quickly apply them to create value.’
McQuary also sees more multi-party EPC execution in the future. Many of these projects will be one-off groupings of organisations on a project-to-project basis. Fluor currently uses and will probably still use different project automation tools, and it will not be able to dictate that all partners use the same tools. ’The effort to integrate the technologies of these partners at the project level must be very cost-effective and efficient,’ he says. ’We will need to have common data-sharing protocols both inside and outside of our industry. The Engineering Framework from Intergraph, for example, can provide this integration platform, but it must be flexible enough to integrate with other products. Intergraph does a good job of looking at and listening to customer requirements and the new features and capabilities of its SmartPlant 3D are good examples.’
So what technology excites Fluor for the future? ’The challenge,’ says McQuary, ’is to select technologies that provide the best business value. For Fluor, value comes from predictable costs, reduced cycle times, low capital and lifecycle costs and project risk mitigation. At the same time, compromising safety is not an option. That said, SmartPlant 3D looks very exciting - it’s a step change in the way we will create 3D models and do overall project execution. With it, we can have all disciplines working in the same model at the same time, to help us make quicker decisions.’
However, as McQuary concludes, ’none of these technologies will work without the human element. The real excitement will be in creating a culture that can embrace these technologies to improve productivity as well as increase the company’s collective knowledge.’
