Developing the “Right” Modularization Decisions

for Mining Modules in China

IQPC Prefabrication & Modularization Conference, March 2013

Wang Junfeng & Tony Kretzschmar

Fluor China Engineering & Construction

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Fluor Reaching 100 Years:
A Business Milestone

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 China Office Profile

 Executing projects in China since 1978

 More than 250 projects completed in
China
 Strong FSR/FEED/PMC/EPCM/EPC
execution capabilities
 9 Mega Projects executed during the last
decade

 Fluor has worked with more than: Beijing

– 20 Class A China Engineering Shanghai

Companies
– 70 Super Class / 1st Class
construction companies

 Current staff ~ 900+

 Office Locations:
– Head Quarters, Shanghai Dawning
Center
– Beijing Lido Plaza

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 Introduction

 Modularization and prefabrication solutions have brought many

projects commercially and technically from dreams to reality
 There are no end to the challenges in successful modular and
prefab solutions including proper design, prefabrication,
shipping, and installation
 Successful offsite modularization and prefabrication needs a
new approach at all levels within the design, delivery and
installation activities
 Insights into recent modular developments that target to
overcome the issues & challenges, from design innovations
throughout the course of each project from concept to
commission

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 Modularisation & Pre-Assembly – Definition

 Modularization is an
execution approach for
design, procurement,
contracting and
construction that shifts
site construction hours
away from the site
 Includesskids, pre-
assemblies, entire process
structures, machines, and
other structures including
bridges

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 Modularization & Pre-Assembly – Examples

What Are They?

 Assemblies of process
plant components
 Assembled at one
location (fabricator) and
transported to another Prefabrication Preassembly
(jobsite)
 Made up of structure,
equipment, piping,
electrical, and
instrumentation
 Made in a variety of
sizes Process Modules Offsite Fabrication

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 Safety Drivers

Total Recordable
Fluor Managed Rate
1.80
Jobsite Construction 1.67
Work Hours: 1.60 Fluor Global
U.S. CII
2010: 20,916,315 1.40
Fluor China
2009: 16,487,350 1.20
1.23
1.16

2008 : 20,213,603 1.00

0.93
1.03
0.98
1.02

0.87 0.88
2007 : 2,664,611 0.80
0.72
0.68
2006: 11,934,729 0.60
0.64
0.58 0.57
0.64

0.5
0.46
2005: 24,953,635 0.40 0.37
0.42

0.28 0.28
2004: 50,811,158 0.20
0.17 0.18
0.23 0.22 0.23 0.24
0.13 0.12 0.12 0.1
0.02 0.02 0.04
0.00 0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

# Fluor Self Perform & Subcontractor Combined Total Recordable Rate

* Calculated per 200,000 hours worked

Fluor projects in China meet Best-in-Class standards

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Cost Factors

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Cost Factors

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 Sample Cost Comparison – Stick Built vs. Modularisation

Item Stick Built Modularisation Comment

Tradeworker Productivity Higher Shop environment more productive

Tradeworker Hours Reduced Higher productivity
Tradesworker All-In Labour Cost Reduced Lower overheads; low cost labor resources

Field Indirect Costs (Camps & Higher Fewer Tradesman on site

Catering)
Scaffolding Costs Higher More work above grade
Engineering Costs Higher More structural design; added project
management
Transportation Costs Higher Heavy haul/heavy lift costs
Material Costs Higher More structural steel
Project Contingency Higher Less risk factors in shop environment
Execution Flexibility Reduced Design and procurement frozen earlier
Material Surplus Neutral Neutral May be less with modular approach
Cost of Cash Higher Earlier spending

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Schedule Considerations

Key activities prior to the detailed design phase are:

Business Planning Phase
 Recognize drivers
 Collect Information related to the modular decision
Scope Definition Phase
 Strategic evaluation – (simplified cost delta analysis, CII tool or similar)
 Conceptual transportation, handling studies, maximum module size
 Process considerations
 Preliminary configuration studies
 Cost delta evaluation (as described above) and labor requirements comparison
 Schedule impact evaluation
 Decide level of modularization/complex preassembly
Preliminary Engineering Phase
 Develop procurement and contracting strategies
 Develop fabrication strategies
 Detailed transportation, handling studies
 Sequencing studies and schedule evaluations
 Finalize configurations, extent of modularization/offsite fabrication
 Develop estimates, quantities, and schedules
 Develop modular specifications and responsibility matrices
 Finalize execution plan

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 Environment/Socioeconomic Drivers

 Environmental Footprint
• Does reduced footprint provide environmental value to company,
community, country?
• Does high peak craft levels create local environmental impact?
 Socioeconomic Impact
• Does high peak craft levels create local negative or positive
socioeconomic impact?
• Is there a minimum local labour content requirement?
 Standard Design
• Can the facility be standardized so that the design can be used for
duplicate facility
• Can we design one/build many?

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The Module and Prefab industry is maturing…

Trends:
• Modules are becoming more sophisticated, more being packed into them
• Dependence on fit for purpose materials and designs to drive down costs
• Start up times after module delivery minimized to deliver projects quicker
• Shipping solutions are very creative, nothing to big or too small
• Project & risk management overcoming challenges to deliver success

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 Critical Considerations

Project Managers don’t like surprises, and should

pay special attention to the following critical items:
 Engineering design schedules
 Equipment & material deliveries
 Shipment sequencing
 Weather patterns along shipping route
 Design Changes after start of module fabrication
 Selection of module handling equipment
 Control of fabricators’ activities
 Weight management

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Mining Modules Case Study - Design

WEIGHT
Engineering Reserve ‘Not to Exceed’ Weight
Management Reserve Approved
Target Weight & Operators Reserve Design Changes

Design Margin Fabricator’s

Used Reserve

Weight Contingency  Reported Weight

Reported
Weight ≤ Target Weight Module
Weighing
 Steady Reported
Calculated Weight
Weight throughout the
End of FEED project life cycle

Concept Phases Detailed Design & Procurement Fabrication Comm + TIME

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Fabrication & Material Management

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Shop Preassembly Fit-up

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Packaging and Packing

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Protected Transportation

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Unloading & Site Preassembly

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Storage & Site Installation

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Challenges - Common Threads

 Multinational Execution
• Engineering / Design
• Fabrication
• Installation / Erection
 Codes and Standards
• Design and fabrication to non familiar codes & standards
 Materials Management
• Materials used in fabrication mostly from China
 Shipping Logistics
• Sea and road transportation to final installation location
 Media / Public Relations
• Sensitive to attention regarding “outsourcing” & “quality”

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 Mitigating Risks

 Risks are like an iceberg, some features are apparent, others

are hidden below the surface.
 Alignment:
• technical
• cultural
• procedural
 Communication:
• Communication
• Communication plan
• More Communication
• Even more communication

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Module Execution Roadmap

I. Develop Module Definition

• Transportation restrictions
• Design Criteria
• Modular Plot Plan (sizes, weights, quantities)
• Select transport and handling methods
• Assume location of module fabrication facility
• Determine facility/equipment requirements for
handling modules at both mod yard and site
• Finalize cost and schedule analysis (baseline)
• Document benefits and risks and confirm extent
of modularization
II. Award Critical Contracts
• Ocean transport
• Land transport
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 Module Execution Roadmap

III. Develop integrated project execution plan

• Module setting sequence
• Module production durations
• Stowage plans for transport
• Assembly area and warehousing requirements
• Shop fab capacities and manpower curves
• Material delivery schedules
• Engineering drawing completion schedule
• Detailed procurement plans & procedures
• Establish milestone schedules
IV. Engineering Design & Procurement
• Perform design & procurement activities
• Incorporate transportation & handling requirements

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 Module Execution Roadmap

V. Module fabricator selection

• Contracting philosophy
• Assess facilities, capacity and capabilities
• Award in timely manner
VI. Establish oversight organization & project controls
• Timely procurement activities
• Material tracking
• Fabricator performance measurements

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Conclusions

1. Modularization & Prefabrication will continue to be a viable, even

preferable solution, increasingly so due to globalization.
2. Modularization & Prefabrication will allow projects to proceed that
may have otherwise not been viable.
3. Modularization & Prefabrication puts to test Project Management
principals (planning, logistics, risk management, communication,
etc).
4. Modularization & Prefabrication must be an early decision in a
project, then project planning, communication and controls need
to follow suit for the strategy.
5. Alignment regarding technical, cultural and procedural gaps is
critical to success of project.

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 Questions & Answers

The decision to modularize on a project is one that needs full

commitment, early on, from the entire project team including the client.

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