You’ve heard the term “start with the end in mind,” and this definitely applies to large capital projects, particularly related to commissioning. This means that you actually need to include commissioning upfront in EPC contracts before they’re even awarded. The full definition of the rules of the game and how projects are going to be completed need to be defined upfront in EPC contracts before they’re signed. Listen to this episode to learn about the eight clauses that are required in EPC contracts for commissioning success. Welcome, everyone. Have you ever wondered why the transition from construction to commissioning is so difficult? Why does it usually end up in delays and confusion? Well, the primary reason is that the transition from area-based construction to systems-based completion was not defined properly in contracts. So, we’re going to fix that for you today and show you how to structure your EPC contracts for a smooth transition from construction to commissioning. We do that with the eight commissioning clauses required in EPC contracts to allow that to happen. Essentially, commissioning is testing at the end of projects, but we need to start with the end in mind, and that starts with writing the proper contracts at the beginning of a project so that we can have a strong finish at the end. If you haven’t already, be sure to join the Industrial Commissioning Association. You can become a member or get a copy of the ICA Global Commissioning Standard and access many of the resources that we’re going to talk about today in this presentation. You can join at icxa.net/join, and I’ll see you there. As I’m going through the presentation, if you have any questions, shoot them in the chat.
Why is it important that commissioning must be defined in contracts? When we’re not defining properly upfront in contracts for construction completions and commissioning, it always leads to cowboy commissioning in the end. There’s no structure, no process, and we need to use contracts as a tool not only to start projects but also to finish projects. It’s important to define what that finish looks like and how we’re going to complete commissioning at the end of projects. If this isn’t defined in contracts and there is no definition of how construction is going to be completed, it always impacts the project timeline. There are always delays and misaligned expectations between construction and commissioning groups. We need to set the stage early in projects with alignment and agreement, and that starts with contracts. When contracts are weak in construction elements, it leads to poor construction quality. If we’re not getting quality assets from our construction counterparts, we’re not going to be able to proceed effectively in commissioning. We get incomplete system handovers, and it always leads to budget overruns. It’s the classic story on projects where everything is compressed because it wasn’t defined properly upfront in contracts. When things do go wrong, and there are delays on sites, poor quality, or other issues, there’s no contractual recourse if contracts weren’t set up properly in the beginning. So, let’s get our contracts set up early and properly because they define the rules of the game and how we’re going to finish the project.
One thing is for sure: we do need to allow contractors to have their means and methods. Once the contract is signed, construction groups are entitled to their means and methods; that’s how the contracts work, and we need to allow them to do that. It’s always a bad idea to direct your contractor, as that leads to many problems, and we certainly don’t want to do that. So, if you can’t direct the contractor, and the contractor is entitled to their own means and methods, then how do you get what you need for commissioning? The way to do that is to define that in the contract before contracts are signed. You can write your contracts and put whatever you want in there; it’s a signed agreement between the owner and the construction groups. That’s how you define what you need for commissioning—in contracts, not after the fact. This is an upfront effort, and one of the primary reasons that construction folks need to be involved in projects early is to align on the rules of the game in contracts so we can have a strong finish in the end. The goal, of course, is to work collaboratively with all groups on projects, including the construction group and everyone else. We want to avoid misunderstandings and disputes, and we need to define it all upfront in the contract for how we’re going to finish the project during commissioning.
When we look at contracts after the fact for things that have gone wrong, it always stems from a poor definition of the construction completions phase. Contracts are usually light on details about what this transition from area-based construction to systems-based completion looks like. The concept might exist that we need to focus on system-based completions for commissioning, but it’s rarely defined well in contracts for what that is, what it means, or how construction groups are supposed to work and complete their work to align with systems-based completions. As you know, if it’s not in the contract, it’s not going to happen. So, we need to define this critical phase of construction completions in contracts so that everyone on the project knows exactly what that transition is going to look like. What is that transition from area-based construction to systems-based completion? This figure is right out of the ICA Global Commissioning Standard; this is Figure 1 out of ICA 001. You can get a copy of the standard, download this commissioning phases and handover model, and this presentation is going to focus on the contract requirements in EPC construction contracts to make this construction completion phase take place much smoother on your project.
So, what is the construction completion phase? I’m sure you’ve heard of construction on projects, but there’s a definitive phase at the end of construction called construction completions, and it’s specific and necessary, as defined in the ICA Global Commissioning Standard, the commissioning phases, and handover model that I just went through. When projects are approximately 60 to 70% complete, this transition needs to take place from area-based construction to systems-based completion. If your construction completions aren’t defined in your contract, they’re not going to happen because construction groups are entitled to their own means and methods. If it’s not defined in contracts, it will never be completed that way and will never align with what’s required for commissioning. This is Figure 1 out of the fifth volume of the ICA Global Commissioning Standard, and it defines this transition from area-based construction to systems-based completion. Projects start out in the build phase, where construction groups are working on civil, structural, and general installation activities. They’re optimized for equipment deliveries, large workforces, and coordination, which often means that construction is planned by area, and that makes sense. Construction groups have their means and methods to do that, and we want them to optimize their construction efforts and the best methods for them to complete their work. That will mean they will plan their work by area, and that’s all good. Then, as the work progresses and is 60 to 70% complete, that work by area needs to transition to a systems-based completion process to align with the systems required for static commissioning and dynamic commissioning. This is transitioning to systems-based completions around the electrical, mechanical, and automation equipment needed for the function of each system. From the build phase, projects then move into the construction completion phase, where construction groups complete their work by system. This is the phase where they’ll be completing AITR check sheets to verify quality control processes and that installations are correct. This is where early verification will take place for flushing, pressure leak testing, point-to-point, mega checks—anything defined in an AITR checklist is performed by the construction group leading up to the construction completion milestone. This is a transition where construction groups will hand over by system to the commissioning group. This is the construction completion milestone that is achieved, and then the formal transfer of care, custody, and control from the construction group to the commissioning group. This all needs to be defined in contracts, or it’s not going to happen.
Why is this transition so difficult? It’s the classic problem on projects: the transition is disorganized, things are delayed, there’s misalignment between construction and commissioning groups, and there are disputes in the field where nobody can agree. When we look at contracts, nine times out of ten, it’s because construction completions are poorly defined in EPC contracts or, worse, there’s no definition at all. Everybody wrote the contract years ago, and nobody was in the mindset of thinking, “Let’s put the right things in here to finish the project.” Everybody was more focused on awarding contracts to get the job started, and commissioning gets missed. With no definition of construction completions, it’s a free-for-all at the end of projects in how construction groups are going to complete their work. When it’s not defined in contracts, it’s a gamble; you’ll get something different every time from construction groups because it was so poorly defined in contracts. The typical approach, I’m sure you’ve been on projects like this, is that commissioning groups are involved late in projects. Commissioning groups will typically join a project after construction contracts were already awarded, and in those contracts, there was no definition of systems-based completion, so the damage is already done before commissioning groups are even part of the project. They arrive at the site late, and for most of the way through construction, they start suggesting late-stage changes, saying, “We need this system here, we need this changed here, we need a focus on this area.” The construction groups are never pleased with that. They’ve already established their long equipment lead times, equipment is arriving at the site in line with how they planned their work, they’ve planned their large workforces, and they’re engaged in construction activities on-site. This discussion with commissioning groups showing up later always causes disputes and delays in the field because there was no alignment in contracts earlier when they were first signed. We must avoid this mismatch in expectations by ensuring that these eight key commissioning clauses are included in construction contracts before contracts are awarded. This is part of the procurement package that is put together when selecting construction groups to perform the work. This is all defined in the ICA Global Commissioning Standard. You can get a copy of the standard, and all of these eight key commissioning clauses are defined in there. You can get even more details on what we’re talking about here. Everything we’re talking about is in addition to all the technical commissioning requirements. You need all the detailed design elements and all the testing or technical aspects of commissioning that’s required—that’s a given and throughout the contract everywhere. These eight key commissioning clauses we’re talking about are related to the commercial elements and the project management elements of commissioning that are often missing in many contracts.
The first element of the eight to include is clarity on scope and responsibility. No surprise there; that’s straightforward. You always need clear roles and responsibilities for anything you do, and commissioning is no different. We need to know who is doing what at the end of the project, not when contracts are awarded, but how this transition is going to take place later on projects and what construction and commissioning are doing during this transition. This is defined in your division of responsibility matrix, which gives you a clear, crystal-clear definition of what each construction completion milestone looks like and who’s responsible for what. It’s difficult when the lines between construction and commissioning are blurred, and I can’t recommend strongly enough that you cannot blur the lines between construction and commissioning. As soon as you blur that clear construction completion milestone, it’s confusing who’s responsible for what because what does “construction complete” explicitly mean? When you’re writing a contract at the beginning, it seems straightforward: complete construction, then we’ll test some stuff, no big deal. But everybody’s definition of “complete” on projects always means something different. I guarantee that “complete” to the construction folks means something entirely different than “complete” to the commissioning folks, and it’s misaligned right from the beginning because it wasn’t explicitly defined in that distinct construction completion milestone objective for what “complete” actually means. When that is defined upfront in contracts, though, construction groups have a much clearer, crystal-clear view of the construction goalposts they need to achieve, and everything’s aligned right from the beginning in the contract rather than trying to dispute that out in the field later. This is Figure 4 in ICA 005, the ICA Global Commissioning Standard, and this gives the explicit definition of this important milestone for construction completion on projects and what takes place earlier for construction and construction completions in AITR check sheets, and then when that construction completion milestone is obtained, what takes place by commissioning groups afterward in BITR check sheets. I’ve seen this made such a mess on projects because this wasn’t well-defined, or it’s messed up, and we’ve defined this in the ICA Global Commissioning Standard explicitly so that there’s no reason for confusion anymore on what takes place during each of these phases and what takes place during this complex transition on projects. I encourage you to follow this; this is the best practice, the standard approach on projects. If you try to change things or mix things up here, it only causes confusion on projects. Wouldn’t it be nice if this was the same on all projects, a standard approach on what this transition looked like so that everybody knew upfront what they’re responsible for even before joining the project? This definition is important and needs explicit attention in defining this in your contract, and I’m going to show you how. This is the division of responsibility template. We’ve got two templates; if you log into the Industrial Commissioning Association members’ area, you can download either one of these templates. There’s a template for if the EPC is responsible for commissioning, which can present its own challenges, but for where the EPC is responsible for construction and then hands over to the commissioning group, there’s a DOR template in there as well. Don’t reinvent the wheel; just go get this template. You can then take it, modify it, and make it specific to your projects. All of the commissioning management deliverables are listed in this division of responsibility matrix; all of the groups on the right-hand side are marked with what they’re responsible for. Get a copy of these templates and use them as a starting point to make them specific to your projects. That’ll help you a lot in what’s required to include in your EPC contracts for your DOR templates.
The second aspect, again no surprise, is quality. We need to be receiving quality systems from construction, and if it’s not defined in contracts, it’s tough to get quality. You would think this is straightforward, that you need to include in contracts all the specific quality requirements, but I’ve been on projects where there was no request to receive the construction group’s quality management plan. If you’re not asking for quality in the contract, it’s tough to get quality in the field. Proper construction quality management system processes and reviewing contractors’ plans for quality in their proposal submission, right upfront when contractors are being evaluated during the procurement process to select contractors, need to be evaluated as part of the proposal selection. But then, not only having a solid document that defines how they’re going to manage quality but actually confirming that their field processes and documentation in the field align with what’s in the document. There’s no use having a document on the shelf if it’s not being followed in the field. Typically, quality audits are a good idea to confirm that what’s in the document is actually what’s being executed in the field for construction quality control processes. Then, what does quality assurance oversight look like to ensure that construction groups are following the quality processes they’re supposed to? What oversight processes are taking place in the field to ensure that the QMS is being adhered to? This again would seem straightforward; we need quality, but when it’s not defined in the contract, it’s unlikely to happen in the field.
Construction groups know how to plan and complete their work in alignment with what’s required for static commissioning and dynamic commissioning. You may have heard of the term “plan projects from right to left”; well, this is exactly how you do that—in the contract. The concept would be, if you’re thinking about your Primavera P6 schedule starting on the right, you’ve got your project in-service date. What do you need to do to achieve your project in-service date? You need a startup and energization sequence that meets your project in-service date. What do we need for our startup and energization sequence? We need some items commissioned, and we’ve got our commissioning sequence to go through there. What do we need to achieve our commissioning events? We need some construction completions in that sequence to align with the commissioning sequence. That early project planning and definition in your EPC contract is how you define that sequence of construction completions and explicitly define that in your EPC contract so that construction groups know the sequence and details of each system completion to align identically with your commissioning and startup sequence to meet your project in-service date. This is what this will look like; this is right under the ICA Global Commissioning Standard as well. All of the system definitions on your project will be going through various stages of your gated commissioning workflows at various stages of completion. While some systems are starting static completion, other portions of the project are still under construction. But as each system progresses through these sequences, you end up with a series of construction completion milestones: C1, C2, C3, C4, C5, C6, C7. You’ll have a sequence of all these construction completion dates defined in contracts explicitly in the order required for construction completions to align with your commissioning and startup sequence.
The fourth aspect to include in construction contracts is to define what each system-based completion actually is with an associated payment milestone. This includes what the physical assets are that are part of that handover and, maybe the part that gets missed the most, what the documentation deliverables are associated with each of these system handovers. What is the specific, explicit definition of “complete” in order for contractors to get paid to achieve each of those system handovers? Because everybody’s definition of “complete” always seems to mean something different. If you have misaligned expectations in your contracts, it’s going to be tough to sort out later with lots of disputes in the field. It’s also important to include back-loaded payment milestones with each of these construction completion milestones and each milestone of your staged-gate commissioning sequence as well. There’s certainly a balance; we need to provide the necessary payment milestones upfront so contractors have payments for equipment procurements and installation, but we can’t forget about the back-end payment milestones as well through our commissioning sequence to make sure that there’s enough percentage still remaining for each of these commissioning milestones so that contractors remain motivated to achieve these completions in the end. When defining your payment milestones, it’s very important to define what is required at each construction completion milestone for payment to be released, and it needs to be explicit in contracts because everybody will overlook and say, “Well, we don’t have the OEM manual yet, but let’s proceed anyway and still achieve the payment.” When it’s defined explicitly upfront in contracts and what payment constitutes, it’s much easier to enforce in the field. This is easily all known when EPC contracts are being put together; these aren’t magical things that appear later in the project. We know what these are: we know we need red-line drawing markups, construction quality data for flushing reports, pressure leak test reports, point-to-point check sheets, mega check sheets, all those good things. All of the construction AITR is completed, factory acceptance test results, any settings files, OEM manuals, categorized punch lists—all of these things we know are required. To list them out explicitly and say that they’re an absolute requirement part of each construction completion milestone, with an associated paymen,t makes it clear what’s required to complete each system and achieve that payment milestone. On most projects I’ve been on, the money usually motivates. Tying these things to a payment milestone and an actual construction completion sign-off in our commissioning software actually gets everybody’s attention. I think I’ve only been part of one project where the contractor wasn’t motivated by payment milestones, but in most cases, construction groups are motivated by the money, so tying it to a payment milestone should get some attention for sure.
The fifth element that is important to include in EPC contracts is your CMS phase. This is your CMS software and how your gated commissioning workflows are defined in your commissioning software and how this will be used for completing the project—not only that we’re going to be using commissioning software but what the specific needed milestones are that apply to your specific project and how these are going to be enforced in the field. How are these modeled and tracked in your CMS software? When you’re preparing your EPC contract, you may not know the specific name of your software; maybe there’s still a selection process to take place, but the workflows you will follow are known for sure and must be identified in contracts with the particular CMS or maybe identified a little bit later in the process. These workflows are all known upfront and need to be defined in contracts, indicating that CMS software will be used to manage and track each of these workflows. It’s also important to define what the contractor’s responsibility is to interact with this CMS software. Construction groups will show up with their own software, whether that’s Procore or whatever document management system they use. We need to allow them to use their own systems, but as construction is making that transition at 60 or 70% complete, what are the expectations for contractors to be using the specific project CMS software interface? Are they expected to have one CMS admin interfacing with the software? Will it be everyone on the project expected to use the primary software? What about vendors that are only with the project for a few weeks or short months? Are they expected to use the CMS software? Will documents be scanned and uploaded in the software, or will contracts define how AITR check sheets are completed directly in the software? This needs to be defined in contracts. If you try to say later in the project that you’re going to be using CMS software, there’s going to be resistance because the construction groups have their own software already and don’t want to use another tool. This needs to be defined upfront in contracts if there’s an expectation to be using CMS software for construction completions and commissioning.
The sixth element to include is the transition at each construction completion milestone and how the roles change. Up to the construction completion milestone, contractors are leading all the activities, but the roles change at construction completion. The contractor is no longer leading those activities for that particular system or area; that transitions to the commissioning team, where they’re then responsible for leading the activities in that specific area. What commissioning support is required after each construction completion milestone is achieved? What’s required for punch list closeout? How are construction groups required to request access to areas that are under the commissioning group’s responsibilities? Are there any field resources required from construction groups to support any of the testing or startup activities? Is there any need or requirement for construction groups to help assemble any temporary test setups needed for particular commissioning sequences? If issues are discovered as we go through commissioning, how are these addressed by construction groups? This all needs to be defined, including the roles and responsibilities before and after construction completion, to ensure we have the support needed to continue with commissioning.
The seventh element to include in contracts is contract performance management. We all do our best to select the best and brightest construction groups on projects, but that doesn’t always happen, and sometimes we end up with an underperforming contractor. What is the method to rectify any incomplete system handovers? If we’ve explicitly defined what makes up each construction completion handover but those objectives aren’t being achieved, how is this addressed in contracts to rectify any incomplete system handovers? Who has the final decision authority on what things are actually complete? We want to avoid disputes, but if there is a dispute in the sign-off of a particular system, how is that addressed? Who is the final decision-making authority to say, “No, this isn’t complete, and we must finish this before this system can move to the next stage”? How are issues escalated, and how are recovery plans implemented if we end up with an underperforming contractor?
The last item, of course, is to focus on health, safety, security, and environment during this transition. In some of our startup activities, commissioning plays a big role in project safety. Earlier in the project, even for HAZOP, HAZID, and PSR processes that we’re putting in place, the commissioning team is relied on heavily to ensure that all startups take place safely. We need to evaluate the construction group’s safety when they’re being evaluated during procurement processes to ensure they align with what’s required for commissioning safety later in the project. In most cases, construction groups are much more familiar with working in a non-energized facility with construction activities taking place. Toward the end of their activities, as we’re starting up some of these facilities, they will be working around an energized facility with additional hazards they may not be as familiar with, given that they’re more accustomed to working in a construction environment, and the bulk of construction work is performed in a non-operational environment. The commissioning folks are relied on heavily to keep everyone safe as the state transitions from a construction facility to an operational facility. How is this defined in contracts to ensure everyone stays safe?
These are the eight critical elements to include in construction contracts to define our construction completion phases. When I look at most contracts, I don’t see these items, and it’s clear why there are challenges in the field because nothing was defined upfront to get alignment on what this transition is going to look like. When it’s not defined in contracts, you’re entirely relying on the people, processes, and whether groups understand systems-based completion or have never worked in that environment and have no intention of meeting systems-based completion because it was not assigned in contracts. We need to ensure that when selecting construction groups, we’re selecting qualified contractors that understand systems-based completion and can align with commissioning’s needs. If I can add one last thing, please follow a proven procurement process. There’s no reason to make up a homemade procurement process or contract structure because procurement is a solved problem. There are proven processes out there that work well. I’ve had lots of success with the FIDIC contract structure; there are others as well, but do not use a homemade procurement process when selecting your contractors. This is a solved problem, so don’t try to reinvent the wheel. There are decades of lessons learned in these procurement processes and contract structures. Even though you might feel your project is a unique, special snowflake, I assure you it’s not, and these proven processes that have been used for decades need to be followed to implement our projects and contracts on-site so we can follow a process with proven success.
The goal here, of course, is that when writing our EPC contracts, we need all phases of projects to be aligned: engineering, procurement, construction—all of this needs to be defined in contracts with commissioning needs in mind. Working in silos is never going to work on projects; we want all groups to be aligned, and that’s done when contracts are written at the beginning of projects. The contracts are the rules of the game and how this is going to take place. Getting that alignment upfront in contracts is essential for all groups to work together and successfully complete in the end. We need to plan for a smooth transition from construction to commissioning, and that starts before contracts are even awarded, so we can plan for a safe and efficient startup on our projects. I’ve got a few additional resources to help you as well. We’ve just launched our brand-new course series, the leading-edge commissioning processes on projects, all based on the ICA Global Commissioning Standard. Check those out if you need help or support in filling in any gaps in your commissioning processes. There are strategy and planning courses, processes on digitalizing your commissioning workflows, and all stages of the ICA Global Commissioning Standard. Everything seen in the commissioning and handover model we looked at earlier has a module that focuses on each section. From this presentation, you can see that technical skills alone will not get you to commissioning success. Everything we’ve talked about here is the commercial and project management aspects of commissioning. There are lots of skill sets required for successful commissioning in the end: strategy and planning, digitalizing your commissioning process, data management throughout all stages, off-site factory acceptance testing, construction completions (a large focus of this discussion), on-site testing, work closure, project handover, in-service lessons learned, and commissioning safety. There’s something in there for everything. You can check that out at icxa.net/store if you want to sharpen any of your skill sets. As I mentioned at the beginning, if you don’t have the ICA Global Commissioning Standard, definitely get a copy because it’s a cutting-edge document that will help you on your project. Get a copy at icxa.net/join. We also found this single-page brochure very helpful for discussions with your project manager; they don’t necessarily want to see all nine volumes of the standard, but a single-page brochure is often good for those discussions. You can get it at icxa.net/brochure. Definitely check out those resources; they will help you on your projects for sure.
I do this presentation every week, so I hope to see you next week as well, and I’m happy to answer your questions. Can we get the PowerPoint on-site? This recording is definitely available; it’s live-streamed on LinkedIn and a few other places. You can access it, download it, and share it with others. That gives you the presentation, the video, the slide presentation—everything you need. Definitely use it as a discussion point with others on your project to help them understand what’s required to start with the end in mind and start contracts in the right method.
Hello, Clint, good to see you. I got your phone message yesterday, so I’m glad you were able to join. I trust you found this helpful.
Q: Permission to share?
A: Absolutely, share this information. One of the primary objectives of the Industrial Commissioning Association is to get this commissioning information in the hands of as many people as possible. By all means, share the standard and this presentation to help people understand the importance of commissioning on projects because commissioning is not well understood in the industry, and it’s hurting our ability to complete projects. If there’s anything I can do to help, please let me know. That’s the goal here: to help people understand commissioning.
Q: Should the balance of plant be considered a predecessor milestone for commissioning?
A: That’s a good question. I would say it depends because they’re largely overlapping activities. Something like the balance of plant, for example, the security system or the fire detection system, we don’t necessarily want enabled until we’re in later stages of commissioning if we’re still going through hazardous activities that are generating smoke or cutting steel. Having the fire detection system as a predecessor milestone may or may not be enabled, so the question can cause issues, but I think it’s a case-by-case basis and how you’re planning your commissioning sequence for each balance of plant item and each larger system that’s being commissioned. Certainly, some balance of plant items like auxiliary power or lighting, if we’re working in northern Canada where it’s -40, we need some heat for sure. Some of those balance of plant items will be required, but others might come a bit later. It depends on your overall commissioning sequence and how you plan that out. Although the commissioning of those aspects could be complete, maybe we’re just not enabling them yet. We’re not enabling the security system quite yet because doors are still being held open by construction or commissioning folks, and we don’t want a bunch of nuisance alarms. It depends on how you map out that sequence.
Q: Hi, Peter, good to see you. This is my favorite subject.
A: This is my favorite subject too. This is the heart of what sets projects up for success—the rules of the game right at the beginning. If we don’t get this right at the beginning, it’s tough to have success later. It ends up in that brute-force, bang-your-head-against-the-wall process because there was no alignment at the beginning. I’ll also say this is very challenging, and it’s a problem on projects since commissioning folks are involved too late and busy on other projects to get involved earlier to write contracts. It’s just not in everybody’s mindset on projects for sure, but this is what’s required to be successful: to engage commissioning early and have them involved in writing contracts. To be fair, your legal group, procurement group, engineering group, or project management group don’t have this commissioning expertise and can’t figure it out. They need expert commissioning folks participating in these processes to ensure the right aspects of commissioning are included in the contract. It’s a group effort, and that’s why commissioning folks need to be involved earlier to set these rules of the game early in projects for success later.
Q: It follows that the scope for each subsystem and system needs to be clearly defined in the RFQs issued to the construction contractors to enable them to look at quantities and resources to commit to the sectional completion dates/milestones. This can be very challenging even for major EPCs or IOCs.
A: Absolutely, and it’s not the construction mindset. It’s natural that they want to complete their work in the most optimized manner specific to construction. Imposing these construction completions at the end throws that optimization out a little and maybe isn’t their optimal sequence for completing the work, but it’s essential for proper alignment between construction and commissioning. We need to work with construction groups and help them understand this systems-based completion mindset because it’s not a natural thought process. Defining it earlier in contracts makes it much easier for them to understand and plan to align their work. Naturally, they will plan their work in a manner that systems-based completions, but defining it in contracts makes it crystal clear for them to have 100% of the knowledge required to successfully plan their work and align with what’s required for later stages of the project. Super important topic.
Q: Is there any involvement required for the RA team for CSU or operational readiness?
A: Definitely, the two processes are taking place in parallel for commissioning and operational readiness. Sometimes it’s even the same group; often it’s a different group, but they work hand in hand because many deliverables coming out of commissioning are needed for operational readiness. On the reciprocal, the best thing plant operators can do is get involved early and participate in the commissioning process as we’re going through static or dynamic commissioning activities. That’s the best time for operators to see the systems, talk to the experts, see the troubleshooting, and learn and experience in the field so that at the project in-service date, they have a much higher level of comfort in operating the new facility. Definitely overlapping, interrelated, and all groups need to support each other in this transition from construction to commissioning to operations so we can support the smooth transition into routine operation and maintenance by getting our operational teams operationally ready for their new roles.
Q: When the EPC is subcontracting commissioning, would you say that the definitions of handovers and all we’ve discussed today should be part of the commissioning plan for the EPC to include in contracts?
A: This isn’t my favorite model, having the EPC also subcontracting commissioning activities because essentially you have the construction group and the commissioning group reporting to the same group. It sets up a conflict of interest where the construction group is verifying their own work. I know this is common on projects; it just requires even more scrutiny when preparing the upfront EPC contract and precise oversight to ensure the EPC contract is executed correctly at the end of the project. It’s challenging for sure, as construction takes a lot of time, and commissioning gets squeezed at the end, leading to shortcuts. My much-preferred model is to have construction groups focus on what they’re great at—construction—and then have a separate owner-led contract to lead commissioning. But regardless, if that is the model, technically that would be an EPC model where the same group is doing construction and commissioning. Everything we’ve talked about today still applies; it’s just an internal process the EPC contractor has to manage. That’s where things can fall apart because EPC contractors are very good at construction, but this transition and commissioning isn’t necessarily their strength or expertise. If they don’t have an upfront effort or rock-solid internal processes to manage this transition we’ve talked about today, things can still fall apart in making this transition. In requesting that plan from the EPC, all of this needs to be included in there, maybe not to the same level of visibility, but you at least need assurance that the EPC understands systems-based completion and is managing this transition between their two groups, whether that be a subcontractor for a commissioning group. You want to see this in their commissioning plan to ensure they actually understand this. If that’s the model being pursued, I would want to see that in the proposal stage to ensure the group I’m awarding this to actually understands systems-based completion in evaluating what their plan is as part of the contract process. You would even then, if you’re using the FIDIC structure, include that commissioning plan in the contract signed to show this is their plan and what they’re going to follow to evaluate that this group will perform as expected to manage these handovers. If that’s not discussed upfront when awarding contracts, and you award the contract to a group that knows nothing about this, that’s going to be problems later for sure. That would definitely be a highly weighted evaluation criterion I would include in your procurement practice for your EPC to request that plan upfront and see that they actually understand this.
Q: A proper definition of project turnover flowchart along with DOR would be beneficial since the beginning of EPC contracts.
A: It’s essential. I would say you can’t award an EPC contract without knowing all those details upfront. If you’re awarding contracts to a group that doesn’t understand any of this, you’re going to have lots of problems later. I wouldn’t say it’s just beneficial; I would say it’s 100% essential. The procurement processes I’ve been part of have all requested this information upfront to see these turnovers. The DOR is part of the signed EPC contract so that this is all the way upfront. That’s where we run into problems—trying to figure it out after contracts are awarded, and that’s what we want to avoid because that always leads to problems nine out of ten times.
The main point, if there’s only one thing you take out of this presentation, is to start with the end in mind. That means starting with commissioning before contracts are even awarded. If your EPC contract is signed and you haven’t figured out any of this stuff, your project is already in trouble. This needs to be defined upfront. That’s what the term “start with the end in mind” means: set the rules for the game in contracts before they’re signed. Negotiating this stuff after contracts are signed is a tough discussion to have. It’s always dependent on the level of experience or engagement with your EPC contractor. Some groups are great to work with, and some have zero internal processes for how to manage this. If you try to figure that out after the fact, you’re only asking for trouble. Start with the end in mind, get involved in projects earlier, and define this in your procurement packages to define correctly in your EPC contract before it is signed. This is one of the main reasons commissioning folks need to be involved in projects early: to participate in these early processes. All of this is defined in the ICA Global Commissioning Standard. Getting a copy of this standard walks through the commissioning handover phases and the handover model, detailing all stages of the process of what’s required to set this up for success. If you’re just joining projects later in the process and skipping all these upfront activities for commissioning, your project is not set up for success at the beginning, and it’s a brute-force method at the end to get through commissioning, which is never ideal. I appreciate everyone’s involvement because this is such an important topic on projects. We need to help raise awareness and the importance of writing the right rules of the game in EPC contracts before we proceed with commissioning much later in the project. If you have any questions or need help setting up your contracts for proper commissioning in your EPC contracts, please shoot us a note; email us at info@icxa.net. We can help you out and get your contracts in order prior to work groups. It’s the most important thing you can do on projects to set your commissioning up for success. Please have a great day, and I hope to see you at next week’s live session.
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