In the oil and gas industry, various types of buildings, such as modules, technical buildings, and process skids, are installed on vessels, offshore platforms, on land, and in other locations. But how do these units get to their final destination? There are many stages that the project must work through, from the initial decision to add modular assets up until the buildings are installed on location.
While every project is unique in its scope and execution, there are common steps in almost all projects. This article will break down the nine steps in the lifecycle of a project award for modular packages.
The first step in the process is the development of a request for quotation or RFQ. The RFQ is created once an engineering or service company has been awarded the Front-End Engineering Design (FEED), or Project Award. Occasionally, a preliminary step before FEED, called Pre-FEED, allows engineers to determine a project’s technical and economic feasibility.
The engineers and project managers will develop work packages for each piece of equipment, item, service, and other sections depending on the project. These work packages include the quantity, engineering specifications, and parameters to be met. From here, the individual packages are handed over to the procurement team.
The procurement team takes the engineering team’s packages and organizes them into a structured document with commercial conditions and other requirements for the project. They will then develop a bidder’s list based on their internal approved vendor list (AVL), their client's AVL, or from known sources that can provide the equipment and services requested in the RFQ. The procurement team then sends the RFQ to prospective vendors.
Once the vendors receive the RFQ, they will develop a proposal following the engineering specifications and commercial requirements and submit it by the due date specified in the RFQ. Occasionally, RFQs will require the return of two different proposals. One is a commercial bid that includes all of the procurement team’s requirements and the technical proposal, and the second contains only the technical proposal, unpriced. The unpriced proposal allows the engineering team to review the proposals solely on a technical basis, without the influence of pricing.
After the deadline arrives, the procurement team reviews all the proposals. During this review, they check for compliance with all the RFQ requirements and briefly review the engineering qualifications. The proposals that meet the requirements are then ranked commercially. This ranking metric is specific to the individual project and can include the total price, transportation, service spare parts, or any number of other factors. Two to three proposals are selected from the ranking process and sent to the engineering team for a complete technical review.
Not every company has an internal engineering team. Sometimes, even those who do will use third-party engineering firms to handle the project’s technical aspects. Upon receiving the selected proposals, the engineering team will review the technical aspects of the proposals to ensure that the proposals meet the requested requirements. As the engineering team works through the proposals, they will have rounds of correspondence with the vendors to clarify and finalize the scope of the proposals. The vendors will then revise their proposals with the changes that came from communications during the technical review. For Pre-FEED and FEED stages, the award cycle stops until the organization receives the project award.
The engineering team will then work with the procurement team and determine which vendors are technically and commercially acceptable. From there, the procurement team will reach out to the selected manufacturers and suppliers and allow them to submit a best and final offer. The lowest-priced, technically acceptable offer will usually win the project award, but at times, the team will also review performance on previous projects.
A past performance projects review can include their on-time delivery, change orders submitted, and quality.)
This is also the step when terms and conditions are worked through and finalized. They may skip this step if the two companies have a terms and conditions agreement.
After the Purchase Order is received, the winning vendor will begin working on their engineering documentation for the project and submit their engineering packages for review. Depending on the project’s size, complexity, and timeline, this process can last a couple of weeks or longer. Once the engineering package is approved, the vendor begins the manufacturing or fabrication of the package. During the manufacturing process, the purchasing organization will have set milestones that require inspection of the progress. The vendor will hold production at these points, and the purchaser will verify the status of the project and the quality. Once the purchaser has verified the progress, the vendor begins working on the next milestone. The purchaser will also assign expeditors to the project to ensure all documentation is submitted correctly, requirements are being met, and the project is on schedule to meet the agreed-upon delivery date. This process repeats until the units are complete.
Sometimes the purchaser will assign expeditors to the project to ensure all documentation is submitted correctly, requirements are being met, and the project is on schedule to meet the agreed-upon delivery date.
When the vendor completes the units, a final inspection takes place to verify that all the requirements have been met. Sometimes the final inspection is performed alongside a factory acceptance test (FAT). During a FAT, performed at the vendor’s facility, the units are set up as if they are on location, connected to water, power, or any other agreed-upon items. Each unit is walked through, checking to make sure everything is functioning as designed. Once the units pass the FAT and final inspection, the logistics department will provide all necessary information required for shipment. The final product is then delivered to the site or made available to be picked up at the manufacturing location, depending on the project’s agreed-upon terms.
Once the units are delivered to the final destination, they are then installed and commissioned. The purchaser can elect to have their installation team install and commission the delivered units or utilize the vendor’s experienced service team. If requested, the manufacturer will send an experienced supervisor to assist with the installation. Having a supervisor eliminates many issues that can arise when installing units offshore since the supervisor has been working on the project from construction. The supervisor should be experienced with offshore and onshore installations and commissioning. The units are then ready to be used by the end-user.
Those are the nine general steps that are a part of the lifecycle of a modular package project award. These steps are followed any time modules, technical buildings, process skids, or other buildings are added to a project. Armoda has extensive experience providing modular assets for installation, both offshore and onshore, worldwide. Contact us today if you need offshore buildings for your project.