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FMI Quarterly/March 2015/March 1, 2015

Redefining Field Logistics in Canada’s Oil and Gas Industry

OilPipelines_imageDramatically improve site logistics and reduce rework with effective equipment and material tracking.

In a recent FMI research study focused on the oil and gas and oil sands industries in western Canada, conversations with owners, EPC (Engineering, Procurement, Construction) firms and energy infrastructure construction companies revealed some gaping disconnects among project stakeholders. Because of this disparity, the industry faces frequent project delays, cost overruns, low project performance and ongoing labor fluctuations.

To overcome these challenges, progressive companies have started to look at new ways to collaborate and improve project performance. The following case study highlights an innovative partnership between two firms — JV Driver and Intelliwave Technologies Inc., one of JV Driver’s Preferred Suppliers — and shows how these two firms are dramatically improving site logistics and reducing rework through effective equipment and material tracking.

Paradigm Shift

Since 1989, JV Driver of Canada has been providing industrial construction services to the oil and gas, energy, petrochemical, forestry and mining sectors. Over that 25-year span, the company has come to appreciate the value of innovation and technology in ways that many of its competitors have yet to recognize. “Innovation is definitely a big part of what we do,” said Dale Beard, president, Intelliwave Technologies Inc., one of JV Driver’s Preferred Suppliers. “We’re changing the way construction is done and using innovative technologies that have already been tested by other industries — not just in construction.”

In the construction world, approximately two-thirds of projects’ costs are spent on materials and equipment (30% each); the remaining 30% to 40% is spent on labor. Therefore, being able to manage and track these resources becomes critical in saving cost and time. “Construction has typically been very chaotic in terms of handling and tracking materials just because there are long lead times on parts,” explained Beard. “Often there are multiple contractors involved and a lot of different hands in the pot, so to speak.”

To overcome that obstacle, JV Driver turned to Bentley and Intelliwave Technologies to create an innovative solution that would allow it to successfully complete projects using fewer crew than usual. In response, the two software companies developed a revolutionary site management tool that integrates Bentley’s ConstructSim workface planning software with Intelliwave SiteSense® RFID sensor technology. SiteSense collects RFID tag data thousands of times per tag per day by installing “ ROVER” (SiteSense RFID vehicle readers) onto operational forklifts and other construction equipment, which allows SiteSense to continuously read the RFID tags whenever ROVER drives within 1,000 feet of each tag, whenever the forklift is performing its daily duties. This groundbreaking tool enables effective tracking, managing and installation of pipe and other tagged equipment pieces and helps crew foremen lessen redundancy and rework.

W.E. (Bill) Elkington, chairman of JV Driver, stated, “As an industry, we need to continuously improve productivity. New technology can help with this substantially. We find SiteSense has a significant impact on the ability of the project to know where all of its material is at any given time and to locate that material effectively. This reduces material handling costs and improves tool time and productivity.”

Wanted: Better Site Management

According to Beard, JV Driver’s innovation efforts centered mainly on site management, although the company does begin identifying parts at the fabrication stage. For example, some of its larger fabricators pretag parts as they are made — a move that makes those parts visible to the contractor via its SiteSense Web portal. “That’s a component of our collaboration effort,” said Beard. By utilizing SiteSense, JV Driver gains access to real-time information and answers to questions like: Is the part in production? Has it been delivered to the job site? Was it installed? This intelligence helps the construction firm better schedule its human resources and work lineup while also facilitating worker-to-worker communication regarding parts availability and status.

“Our clients can see within a few minutes whether they have the parts they need to build out their packages and get the work completed,” said Beard. “That capability has dramatically decreased the planning and prep time, and the inefficiency of different crews or indirect labor looking around for their parts.” The same concept can be applied to the equipment used on the job site, where generators and welding machines are often misplaced and/or sitting idle. “Workers can spend hours looking for the machines that they need on-site,” said Beard. “Simply being able to track the equipment and know where it is at any given time has helped out quite a bit.”

Training the Troops

JV Driver has been using SiteSense across multiple projects and is already seeing the benefits of improved site management. Like any new initiative, this one has required a shift in mindset on the part of the company, its managers and its crew workers. “People are generally resistant to change,” said Beard, “and some will hold off as long as they can before being forced into it.” In many cases, that extra nudge results in an “ah-ha” moment and prompts users to think: Well, why haven’t we been using this from the beginning?

“Some crews out in the field want to do work as usual,” said Beard, “because they’ve been doing things a certain way for 20 or 30 years.” To break through that barrier, Intelliwave’s Field Engineers educate and train work crews on an ongoing basis. “JV Driver could be onboarding 100 new workers every week due to the size of its projects as well as to high industry turnover,” said Beard, “so we really have to do this on an ongoing basis.”

As an element of that training, the engineers help workers get through the “we think this is broken” mentality and show them that in many cases the technology tools just aren’t being used properly. In other instances, users simply don’t understand the details behind the technology itself — or they have preconceived notions about its capabilities. “We’ve tried to develop our systems so that they work behind the scenes and deliver on their promises,” said Beard. “Still, aligning expectations across the owner, EPC and contractor levels can be challenging.”

Measuring the Benefits

In 2008 the Construction Industry Institute (CII) examined the number of indirect man-hours (not related to actual tool time — such as building the plant) saved by the use of radio-frequency identification (RFID). Using boiler management as the reference point, the organization found that the average worker using manual systems spent 40 minutes searching for each of the 1,000 parts that are used to make a boiler. Those using RFID took just four minutes to locate each part. “That’s a 10:1 or better ratio,” Beard pointed out. “Inefficiencies in materials management during construction can delay the start-up of a new facility and the daily loss in production due to a slipped construction schedule can result in mega cost overruns.”

When assessing the progress JV Driver has made by leveraging innovation, Beard said owner buy-in has served as a key ingredient in the initiative’s success. “When an owner takes it under his wing and really supports the technology as a key priority for the project, the more the EPCs and contractors buy into it,” said Beard. “This is important because if there’s no buy-in at the lower levels with the users, then essentially you’ve bought a technology that’s going to be shelved.”

Elkington added, “Leveraging SiteSense on materials and expanding that into personnel and equipment tracking has improved our ability to get work done. This product will revolutionize how everything on a construction site is eventually tracked and traced. It reduces manhours, helps improve safety and improves dollar efficiency.” Q

Sabine Hoover is a content manager with FMI Corporation. She can be reached at 303.398.7238 or via email at shoover@fminet.com.

 

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