The engineering, construction, and successful testing of engineered equipment is a highly complex task that requires careful coordination between an equipment provider and a client. Unfortunately, the delivery and integration of that equipment into the site of an equipment provider is too frequently overlooked. The after-market and field services portion of order execution is actually one of the most important and potentially overlooked periods, requiring a more dynamic & integrated relationship between client and supplier teams. Often times, it is one of the most stressful periods of order execution. This the phase of the project where the client team is finally judged on its overall ability to deliver an integrated facility and project. For the equipment provider, it provides an excellent opportunity to really shine by meeting the real-time needs of the client, and cementing your reputation in the industry as being an equipment provider of choice.
A major disconnect seen at many equipment providers is the project team often considers their involvement to be over after the equipment has shipped. However, the aftermarket team is usually a small group with limited resources and will require continued support from the project management team. This is accomplished by providing historical order context to field personnel when necessary and through the provision of items such as drawings and technical support.
Commercial Arrangements
Commercial arrangements set the stage for successful aftermarket services. An estimated amount for these services should have been included in the original bid proposal as a placeholder for bid comparisons and to enable the client to understand likely future costs. If the purchase order was not updated prior to equipment shipment, now is the time to provide the client with an estimated value of the remaining site services. The timing and duration of many after-market and field services are largely under the direction or influence of the client. Therefore, these services are generally estimated on a time and material (T&M) basis. The cost for these services can either be amended to the current PO, or to keep records cleaner, set up as a separate, standalone work order.
Regardless of the agreement terms, it is incumbent upon both parties to track and report ongoing expenses in real-time, using client approved and signed timesheets for all T&M work. The shorter the activity and duration of intended or planned field service support, the more likely any small site delay could push the actual costs over the current PO work order. Additionally, from a timing perspective, it is important to get these PO’s or work orders in place well in advance of the anticipated need date of field service support. As a client, many client work sites and operating facilities will not allow work to be performed on a job site without agreed upon contracts in place, with all terms and conditions including liabilities for people and equipment defined. To avoid potential delays to completing site activities, it is highly recommended to get this process completed well before the equipment provider is needed onsite.
Another commercial concern is warranties. The aftermarket team from the equipment provider must understand the terms and conditions included in the original purchase order.
This applies equally for the client team. Clients must be aware of what events trigger warranty periods and their durations. A typical example is a twelve-month warranty period beginning at startup of the equipment or facility, or eighteen months after delivery of equipment, whichever is shorter. While warranty provisions generally do not affect the scope of work, they do dictate commercial responsibility.
Logistics and Delivery to the Site
The delivery of the equipment to its final destination is often included in the equipment providers scope of supply.
General arrangement drawings should reflect a lifting path that is approved by the client. Once the transport method is agreed upon, another consideration is understanding the shipping method and routes. If your equipment is tall, wide, heavy, or slow-moving, you may need to investigate special permitting requirements, route selection to avoid low clearances, or high traffic areas. Some permitting restrictions, depending on the area or state may require restricted hours of travel and/or escorts. Extra care and attention should be paid to any journey management plan that crosses jurisdictional regions such as state lines, whereby permitting requirements may change along the intended route. Large barges for international shipments must often be reserved months or even decades in advance. For international shipments, understanding of any customs and duties requirements and paperwork provision avoids any unplanned delays with equipment being held at the border for extended periods of time.
Shipping labels and bills of material are crucial to the smooth delivery of equipment. Too often items are shipped loose in boxes strapped to a skid or piece of equipment. Or boxes shipped separately are received at the final destination, poorly labelled with an assortment of miscellaneous components inside. This typically occurs when the equipment provider leaves packaging for shipment to the freight forwarding company. Instead of this sub-optimal process, an equipment provider should provide detailed bills of lading for each box of items being shipped. This helps the client team properly inspect and document any damages, missing items, or overages. Without this detailed shipping information, disputes between client and equipment provider arise as to whether parts are missing and who bears responsibility for reordering the missing parts. Lastly, for the client team, it is important to fully inspect all items once received. Enforcing damages and warranty claims with the equipment provider and/or freight forwarding companies is generally harder to enforce the longer the equipment has been in your possession.
Preservation and Maintenance
One item that can affect warranties and the overall success of field market services is the enforcement of preservation and maintenance plans. Due to the nature of large capital projects in the energy industry, the field construction phases can last several months to years. This can include staged or staggered development of a site, or could include onshore fabrication, integration and pre-commissioning prior to a much later in-service date. A point of emphasis is that equipment may sit idle or in a hybrid state for many months before being commissioned. Therefore, in order to ensure warranties are maintainable, and that equipment performs as intended, the equipment provider must require documentation demonstrating compliance to a preservation plan.
From a client team perspective, it’s important to abide by the equipment provider’s recommendations. If you know the equipment will not be installed immediately upon receipt, discuss if the equipment has been shipped in a preserved state that requires little to no involvement from the client team. Often times, the equipment can be packaged, enclosed, or critical components isolated and plugged, wrapped, or otherwise treated to ensure they can handle the elements until it is installed and connected in its final configuration. Understand your likely field installation and commissioning programs and communicate those to the equipment provider prior to shipment from their facilities. Often times, a better solution can be devised if long term needs are known in advance.
By Michael Nasser of Punchlist Zero