Work is underway on 80 modules bound for the Suncors Fort Hills oilsands mine at ENGIE Fabricom's Fort Saskatchewan facilities. Photo: Aaron Parker

Modular industry strives to keep costs down and productivity up

Anyone looking for signs of the oilsand industry’s financial woes will be disappointed when setting foot on ENGIE Fabricom’s modular yard in Fort Saskatchewan, Alta. Opened last year, the 35-acre location is a hive of activity as it works through its first contract: 80 modules for Suncor Energy’s Fort Hills oilsands mine. Crews are busy guiding steel girders into place and insulating pipe before its journey north. Off in one corner of the yard, completed modules are waiting to hit the road and skids of material from South Korea are sitting in rows, ready to be assembled.

But a closer look reveals a company very concerned with doing everything it can to boost productivity and save money. ENGIE—and other modular fabricators servicing the oilsands, for that matter—is dealing with a clientele that needs to keep spending down in order to survive lower-for-longer oil prices. Modularization has always been the choice for cost-conscious companies, but now the sector will need to get leaner and even more efficient if it is to thrive in the current economic climate.

Any potential improvement, big or small, is up for consideration. In the lunchroom, there’s a whiteboard where workers can share innovation ideas, ranging from a request for more garbage cans near the modules to a suggestion to use sleds to move material skids more easily on the soft spring ground. Crew foremen stock mobile toolboxes scattered around the yard to ensure workers aren’t constantly running back to the tool crib. In a moment of inspired bargain hunting, the company even picked up its warehouse shelves as part of Target Canada’s closing sale.

On the same page

Making the yard more productive and cost-effective is important, but the company wants the entire modular ecosystem to operate more efficiently, and that requires better coordination between owners, engineers and builders. ENGIE’s solution to this challenge is its proprietary Fabricom project management system. Launched in the late 1990s and regularly updated ever since, the program was born out of a couple of nightmarish overseas projects in the 1980s that forced the company to re-evaluate how it managed modularization.DSC 6450Material skids from South Korea wait to be put together into full modules at the ENGIE Fabricom Fort Saskatchewan site. Photo: Aaron Parker

According to Jef Verdickt, strategic development manager at ENGIE, many companies in the modular space still use more general software applications or even just spreadsheets to manage projects. In a speech at Calgary’s Modular Construction and Prefabrication Summit Canada 2016 in March, he explained that the Fabricom program integrates every aspect of the project into a single system: field engineering, materials, costs, construction, schedule and quality control. A change entered in one area—an engineering revision, perhaps—will be reflected everywhere else. Potential clashes and other problems are significantly easier to highlight as a result.

“With this system, your whole company becomes quality control, because you all work for the same system,” he said. “You all become members of that quality control department.”

Anything from low productivity to material delays can slow the project, but the system brings all of that information together to provide a real-time picture of the situation, allowing companies to make informed decisions and address problems quickly. The company says it has never had to pay liquidated damages on a late project during the 20 years it has used the program.

Greater standardization

Another speaker at the modular summit has set his sights even higher. Verdickt wants to ensure the entire project team works from the same information; Anirudh Kumar wants every project across the industry to work from the same standards and specifications. With the current approach, something as simple as a $5-million compressor skid can spur months of wrangling between the owner and vendor as the companies work to resolve spec deviations. The Swift Resources construction engineer and project manager believes that greater standardization could lead to cost savings of 15 to 20 per cent for the industry.

In an interview, Kumar cites a previous project where the team had planned to add a closed hydrocarbon trench to help drain vessels during turnarounds. This single choice opened up an entire world of new issues. More valves were needed. Drains had to be placed underground, which increased construction costs. Maintenance costs would rise. The system would need to be monitored to ensure no hydrocarbons leaked.

Or you could just bring in a hydrovac to clean out the vessels whenever necessary and avoid all of the extra design and construction work.

“We don’t realize that when we customize too much, we’re not letting the operations crew manage the operations,” he says. “Let’s design it one way and let operations come up with their own procedures. Have faith in the ability of those guys to do it safely and efficiently, so we don’t have to incorporate these things into the design.”

The client ultimately dropped the trench idea, but more because of the 2008-09 financial crash than any special epiphany about the dangers of overdesign. However, cost reductions are just as important today as the oilsands industry faces an “existential threat” from low prices, Kumar says.

The most significant hurdle may simply be encouraging the owner companies to relinquish some of the internal standards that have developed piecemeal over the years. The industry has enough challenges to worry about these days without having to think up new solutions to the same old problems each time a new client comes along.

“On one of the projects I’m doing, I’m supervising our construction contractors, and they’re all good at what they do,” Kumar says. “The problem is they have to retrain themselves. We have amazing talent, but we’re not utilizing it because they’re constantly relearning.”

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