Iron Ore Beneficiation Africa Conference

Lessons Learnt from Iron Ore DSO and Other Projects that will enhance opportunities for Iron Ore Beneficiation in Africa17 & 18 March 2014Nick Serpentzis Project Manager & Engineering Manager

Agenda

Lean execution – definition, principles and measure

Modularisation – What is modularisation? Reason’s for modularisation, and an example video

GV20130655001.pptx2

Definition – How do we define LEAN?

Definition of Lean –fit for purpose, trim, lowest Capex, fastest delivery etc

but not compromising plant throughput, operating costs, environmental,

community or safety

Accept that there will be trades off’s with ideal design, reliability,

accessibility and items may need to be improved after plant begins to

operate via mod squad or small projects in early production years.

Definition of LEAN engineering, procurement, construction management

are on following slides.

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LEAN Engineering

Fit-for-purpose design (no gold plating)

Select equipment for design duty only (no or limited future capacity), no

redundancy, no duty standby equipment and minimal process flexibility

Seek alternative access to equipment without compromise to safety by

using EWPs, scaffolding and mobile cranes

Consider running pipes on sleepers rather than pipe racks where

practical to reduce quantity of steel pipe racks

Rationalise equipment where practical

Re-use equipment previously selected from other projects e.g. project

‘X’ mill could be a good fit for project ‘Y’

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LEAN Engineering

Re-use area arrangement concepts previously used from other projects

e.g. primary crushing station on project ‘X’ could be a good fit

Use Fluor standards and specifications and not a combination of client

and Fluor’s

Minimise changes (not broken don’t fix it)

Freeze flowsheets and other key documents at study phase

Selective use of modularisation principals for cost savings where

practical and cost effective (identified during study phase)

Use of detailed 3D modeling for design development, review, shop

detailing assistance and construction assistance

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LEAN Engineering (continued)

Consider workshare with low cost execution centres (for repetitive

related drafting activities)

"Hands On" Fluor managers and lead engineers

Once a team members deliverables are complete try to demobilize

individual off the project

Experience lean client team

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LEAN Procurement

Agree on LEAN procurement procedures with client – clear and agreed procedures for award

Consider use of existing preferred vendors from either Fluor or client lists

Prequalify suppliers and limit number of bidders per package; hence bid list short (no more than 3)

Short bidding period (for small to medium equipment)

Sole source where practical (low cost and small packages)

Early engagement of potential suppliers so that facilities are suitably designed particularly long lead items

Don't sweat the details – get the big kit right and let the detailed design address small issues

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LEAN Procurement (continued)

Cost effective steel and pipe sourcing

Cost effective manufacturing

China sourcing for equipment and fabrication

Use vendor standards a lot more – design from their catalogues

Less QC on lower risk packages

Use criticality rating system and only ask appropriate level QA/QC depending on criticality rating

Review potential of EPC packages (ideally ones with few interfaces)

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LEAN Construction

Proven construction manager

Lean experienced (expat) team

Modularisation (where practical)

Complete bulk earthworks and major concrete works during dry season

Clear procedures for award and variations

Clear approval and decision making – not by committee

Sensible roster to keep team motivated and fresh

Use of skilled low cost expat labour (need to be compliant with in-country regulations)

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LEAN Construction (continued)

Have a plan to live with some site rework to keep the fabricated

materials moving to the site and avoid EOT (extension of time) claims

from contractors

Don’t go with the cheapest constructor:

• Choose competent "reasonable" priced and companies that will make

your project a priority

• Will end up with lean construction in the field in the long term

Highly visible schedule and objectives for short and medium term

targets

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LEAN Management

Aligned with client on goals, scope and execution

Don’t change execution strategy during execution phase

Don’t change key people on project both client and EPCM/EPC

Use experience management team members

Single project procedures and standards:

• Not partially Fluor’s or Client’s – just Fluor’s

Lean client team (no need to duplicate EPCM team organisation)

Clear approvals system

Permits and approvals in place before mobilisation of construction

Flatter organisation chart

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LEAN Management (continued)

Simplified reporting:

• Progress reporting, scheduling, etc.,

• Don’t double up Fluor and client reporting – one only

Reduced overhead people where practical

Proper engagement of local authorities and community to ensure no problems or delays down the track

Minimise involvement of client in “detail” design process

Pick an energized management team on EPCM and client teams

Set-up a client and EPCM team combined office and mix up the discipline seating to break down the silos (where practical)

Define roles and responsibilities of key stake holders clearly and in writing

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SUMMARY FOR LEAN SUCCESS

Alignment with client

Lean client team

Experienced Fluor team

Minimal client changes and client to allow autonomy for ‘detailed design’ phase deliverables

Regular face to face communication (video conferencing or literally face to face)

Fix flow sheets and other key engineering documents before detailed engineering

Single project procedures and tools

Shifting detailed design to fabricators, vendors, etc. wherever practical

Reuse arrangements and equipment from previous projects and rationalise wherever practical

Modularize sections of plant wherever practical

More construction involvement with engineering and more engineering involvement with construction

Fast tract procurement award procedures in place.

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SUMMARY FOR LEAN SUCCESS (continued)

Fast tract contract procedures in place

Low cost sourcing for bulks and procurement. Investigate methods of allowing shorter delivery times so that materials can be pulled from farther up the supply chain

Avoid wastage, that is, anything not required for delivering value is discarded. This includes defects, overproduction, unnecessary detail, completed work that changed, mismatched deliverables that have either more or less than what is required, double handling or processing, employees waiting for anything and uncompleted work

Value is generated when customer capabilities are expanded, creating new needs and purposes, and when the facility better fulfills the purposes of customers/producers and demands of other stakeholders

Control level scheduling is coordinated by the controls manager and includes key participation by the material manager and field engineering in addition to construction supervision

Fewer site contractors

Integrate site teams wherever practical e.g. one commissioning manager

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Modularisation

What is Modularisation?

The Reason for Modularisation

1st Generation Modules in the Pilbara

2nd Generation Modules in the Pilbara

Video example

Conclusions and Recommendations

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What is Modularisation?

“What is?”

• Modularisation is an execution approach for design, procurement, contracting and construction that shifts construction hours away from the site

• Assemblies of process plant components

• Assembled at one location (fabricator) and transported to another (jobsite)

• Made up of structure, equipment, piping, electrical, and instrumentation

• Made in a variety of sizes

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Prefabrication Preassembly

Process Modules Offsite Fabrication

Why Modularise ?

Project drivers for modularisation (pre-assembly, configuration, and fabrication location)

• Safer controlled construction –avoids onsite work at heights and temporary handrails, and utilises fab yard overhead craneage, transporters

• Reduce (unproductive) work hours onsite and reduce camp size

• Value – grating and handrail can be incorporated, platework, liners, and piping can be included in assembly

• Schedule benefits – parallel activities with earthworks/concrete and offsite fabrication

• Labour availability

• Risk management

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Why Modularise ?

Project considerations

• Schedule acceleration requirement

• Engineering design safety factors

• Need early vendor design information

• Design software for engineering and shop drawings

• Transportation to remote locations

• Skilled labor shortages and/or low labor productivity

• Industrial Relations challenges

• HSE challenges

• Risk mitigation: final cost and schedule certainty

Recent mmodularisation project results

• Allowed for more productive work in shop environment from experienced craft (almost 2:1)

• Reduced field workforce, congestion, travel time, remote location impacts, overtime, and created more work fronts

• Facilitated more ground level work, less preparation, and scaffolding

• Broke job into smaller, more manageable pieces

• Facilitated less dependency on weather, remoteness, or site conditions

• Reduced strain on the availability of experienced site craft and supervision

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1st Generation Modules in the Pilbara

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2nd Generation Modules

Key Lessons Learned(1st Generation to 2nd Generation)

More structures could/should be modularised – stair towers, transfer stations, and train load out facility

Screening building screen support Modules, bins, and hopper Modules worked well – replicate

Maximum of 4 lift points better suited fab yard, ship, and site crane/lifting requirements

Use of lifting trunnions where possible – safer/easier than lifting lugs and shackles

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Key Lessons and Differences (1st Generation to 2nd Generation)

Distance Port Hedland to Site = 350 kilometres (1st Generation)

Distance Port Hedland to Site = 500 kilometres (2nd Generation)

More structures modularised – stair towers, transfer stations, and train load out facility. Max Module weight kept to approximately 200 tonnes due to increased distance and uncertainty of bridge limits during design. Decreased bridge inspection requirements, faster convoys.

Screening building screen support Modules, bins, and hopper Modules worked well – replicated (3 PS Screen Support Modules installed in 1 day).

2nd Generation – Modularisation of Stockyard Transfer Stations proved very effective for site install and access (4 Modules installed in 3 days).

Engaged Chinese Fabricator with more “Offshore” Modularisation experience and better safety culture (Australian scaffold standard essential).

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Shop Detailing – Strategy from Lessons Learned on 1st Generation

The Chinese fabrication facilities can utilise their own in-house shop detailing capability however they will not be familiar with WA and other associated standards, especially mechanical platework detailing, and would require extensive in-house supervision. This issue was experienced on 1st Generation.

Execution strategy was for shop detailing undertaken by WA contractor, and issued directly to the nominated fabricator. Providing shop detail drawings by Perth based shop detailers, allows schedule gains to engineering progress by the early release of drawings.

Detailing of grillage was effectively completed by Chinese Fabricator –simple detailing.

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Summary of Fabrication Strategy

China Based Fabrication

• Drivers No mechanical or electrical

equipment to be shipped overseas for fit out of Modules

Remove work hours offsite Reduced cost (improved value) and

improved schedule Larger transport envelope. EPCM efforts to be concentrated in

one location and maintain a level of tonnages that will be attractive to the larger fabrication workshops

• Scope Modularisation of inflow, OHP, and

outflow building steelwork Shuttle trusses and GTU drive

towers, transfer stations, and TLO bins

Australian Based Fabrication

• Drivers Install equipment – pulleys, idlers,

etc. Optimise local fabrication content

(IR local content) Locally fabricate and deliver early

steel to site to enable early mobilisation of SMP contractor

• Scope Conveyor steelwork COS hoppers and chutes Dust collection structures. Train load out smart Module (PAM)

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Total Tonnes = 15,000 Total Tonnes = 5,200

Offshore versus Onshore Fabrication and Pre-assembly of Modules/Trusses

Fabrication, pre-assembly, shipping, and transport to site

• Offshore fabrication = 15,300 tonnes

• Onshore fabrication = 5,296 tonnes

Schedule comparison – tonnes per month from award to completion in fab yard

• Offshore fabrication output 850% more tonnes per month compared to

onshore fabrication

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Modularisation – Safety

Key requirement in selection process/criteria for fab yards as well as tender presentations and evaluations.

Almost 3.25 million work hours were recorded on the Offshore Fabrication project, with no lost time injury and 2 first aid cases

Safety culture during the life of the project changed due to supervision and the introduction of the hazard card system

Hazard cards – encouraged increased management focus on close out of action items

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Traffic Management Plan – Overall Philosophy

Objective was to minimise police and pilot resources and to reduce the number of disruptions

Night time movements down Great Northern Highway to minimise community impact

MRWA approval was required, requested, and granted for Project

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Night Time Movements Study

A report that quantitatively analysed the impact of night time movements of oversize load operations between Port Hedland and the mine site compared to day time was commissioned

30 kilometres/hour average speed –9:00 A.M. Port Hedland departure:

• A scenario in which oversize load operations are conducted across three days. Two campsites are utilised in route. Operations commence at 09:00 on each day.

30 kilometres/hour Average Speed –9:00 P.M. PH departure:

• As above, except that operations commence at 21:00 on each day.

As illustrated in the figure to the right, switching to night time operations results in a 91% reduction in the number of light vehicles delayed, and a 76% reduction in the number of heavy vehicles delayed. Total delay, as quantified by vehicle hours expected to reduce by 85%.

Scenario

9 A.M. 9 P.M. Change

Vehicles

Delayed

Light 454 39 -91%

Heavy 348 84 -76%

Total Delay 269 hours 39 hours -85%

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Total Delay

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Vehicles Delayed

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9AM:Heavy 9AM:Light 9PM:Heavy 9PM:Light

Divisible Loads – Optimisation

Approximately 19 off loads (stacked flat packs)

• 70% reduction of police

escorts

• 70% reduction of road

closures for passing

Approximately 63 off loads (disassembled flat packs)

• Unachievable police

escort requests

• Significant other road user

interface issues

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Transport with Approval for Night Time Moves and More Than 2 Loads/Convoy

Night time Module movements – 3 nights travel to site rolling road block

136 Modules moved over 27 night time convoys

Total = 81 nights of rolling road blocks

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Transport Without Approval for Night Time Moves and Greater Than 2 Modules per Convoy

Day time travel (refer impact on traffic on GNH) 3 days

136 Modules would have been moved more than 68 convoys

Resulting in total = 204 days of rolling road blocks, compared to 81 nights

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Transport Envelope from Port Hedland for Offshore Fab

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Transport Envelope from Perth for Onshore Fab

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Incentive for using Freight Forwarder –Module Shipping and Transport

Total Transport Solution – Door-to-door solution i.e. ex-China organise origin transportation/export clearance/marine warranty surveying/pre AQIS compliance/sea freight/customs clearance/ discharge/cranage/haulage to site and offloading at site

Cost Effective – a multinational freight forwarder, with the ability to negotiate in the market place with shipping companies, airlines, and heavy haulage without sole sourcing

3 Site SMP install contracts meant site was the obvious interface for Module handover

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Project PhotosCritical Path Ship 7 – Product Screen Support Modules

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Project PhotosCritical Path Ship 7 – Product Screen Support Modules

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Modular Construction Recommendations

• The decision to modularise is a program execution decision NOT one that is made in construction

• To be successful it is a detailed process of --- What, When, How, and Why --- to modularise

• Need a commitment to move engineering forward to support the decision

• Need a commitment from the owner’s approval process to support all earlier execution requirements

• Understanding of the early work sequences must be built into the fabricator's organisation

• Fabricator selection process provides a clear understanding of the fabricator's internal work processes and sequences. Shop drawings, nesting plans, weld maps, QC documents, and erection mark drawings

• Ensure that engineering requirements matches the material grades and component configurations available within the fabricators market

• Designing with rolled sections produced within that country

• Have the original engineering drawings translated into the local language

• Ensure Engineering Platform matches the fabricator’s

• An advantage to Module Fabrication in a major shop is the ability to work double or triple shifts, coupled with a larger permanent workforce

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Modular Construction Recommendations

Ensure route survey and transport corridors are understood

Detailed planning for Module moves

Understand the critical path

Recognise that Risk exists and manage that risk

It’s a cultural change

Modularisation can accelerate schedule and firms up cost certainty

Modularisation can deliver cost savings, but expectations must be tempered by shipping costs

Modularisation can lead to higher quality

3rd Generation – “Smart Module” Maximisation

Use someone who has done it before – make use of the “lessons learned”

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Presentation End

Questions?

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