A capital project in its simplest form is a big chunk of metal, metal that has been procured, welded, worked, heat treated and assembled to build an asset that has to meet a long term take off agreement. These assets in their completed forms end up as oil & gas facilities, pressure vessels, rocket fuel containers, tanks, marine vessels, pipelines, architecture and infrastructure, buildings, power generation facilities, nuclear power plants, power distribution networks, reservoirs, buildings and desalination plants.
These assets by their very nature are designed to deliver on their envisaged purpose. A desalination plant must deliver water, oil and gas facilitates have to process product for example against all odds.
These “odds” consist of the sum total of all and any risk factors the asset(s) may be exposed to during its life cycle.
If we analyse these projects, we become cognisant of the fact that the largest part of the project cost is associated with the procurement of material. Project timelines are affected directly by the fabrication of the materials. The risk profile of the completed asset is tied up in the risk mitigation strategy during manufacturing and fabrication.
Ernst and Young released some industry statistics on capital projects in 2016 and indicated that their findings showed that up to 30-40% of the projects total cost goes to rework during fabrication. Up to 42% of projects have defects which incurred during fabrication post-completion. A chain is only as strong as its weakest link (See Figure 1 below).
The significance of these findings lies within the root causes of why work had to be re-done. Even more troubling is the fact that even then, projects end up containing a high degree of defects after being put to service, time and budget have run out and the asset needs to start generating funds, albeit at a lower level than envisaged.
Past experience has proven that the biggest contributing factor to the loss of envisaged value of the asset appears to be the absence of professional metallurgical engineering expertise applied to as these projects from the beginning (front end loading 1) to the end (front end loading 4).
For example, the quality of the weld procedure qualification records and whether the testing was conducted at an accredited facility will directly impact the risk profile of the completed asset. This remains true regardless of whether inspections have been conducted to keep the item in class for insurance purposes.
Professional metallurgical and materials engineering expertise (at Pr.Eng level) could be applied at every stage of a capital project. At front end loading 1 (See Figure 2 below), the assessment of various materials and optimised technologies could be applied, at front end loading 2 (See Figure 2 below) the selection of specific technologies in the context of the project budget, time line, environment and so on can be made with the backing of a professional understanding of engineering materials. The project should be defined in Front end loading 3 (See Figure 2 below) with the backing of metallurgical expertise and should be executed with an integrity and risk mitigation partner who can apply metallurgical expertise during execution. During the operational stage any failure or non-conformance should be evaluated with the backing of metallurgical expertise. The schematic below shows the concept of front-end loading and we believe that employing professional metallurgical expertise at each stage would significantly enhance the envisaged value of the project at completion.
The class societies are not intended to play this role, but there is a latent practice in the industry that results in the blind-sided reliance on the class societies to mitigate the risks carried by the engineering materials in the project. For example, in my previous article I spoke about the dangers of recertification and the practice of regrading of SJ355 from the JR condition to the J2 condition. There is a concerning trend in the industry that has led to the genesis of this school of thought. The idea that “because the class society stamped off the mechanical testing to comply with the rules associated with keeping the item in class”, that the class – approved result must imply all risk is mitigated. This is not the case; the rules only require that testing is witnessed for the item to remain in class. Remaining within class does not mean the materials will perform adequately.
The use of SJ 355 in the JR condition for a J2 application is an example of how not applying metallurgical expertise to a capital project can create severe risk. At FE1 a professional metallurgist would be able to alert the asset owner to such practise which they may not be aware of. Furthermore, it is unlikely that the asset owner would even quantify the risk to the asset with possible down-the-line procurement of JR material for the J2 application. Hidden by class society stamps, the asset owner then blindly carries the risk of potential catastrophic failure when the asset goes into service. These sorts of blindsides exist not only with the use of carbon steels but also duplex stainless steels. In fact, we have seen the use of composite materials, polymers, and all engineering materials that has been inappropriate for its use-case and has created risk for the asset owner. All too often it is the case that when we are approached it is already too late, the loss has been incurred.
Enter One Eighty, we are ideally positioned to assist with a bespoke and focused effort in the greater consulting engineering sphere, with metallurgical and material-related issues addressed at the start of the project, add value to the project during execution, and hopefully improve on the statistics that Ernst and Young presented in 2016. A chain is as strong as its weakest link, the blind side to metallurgical expertise is that weak link and we say replace that with a world class professional metallurgical consulting service.