Procurement on the Critical Path: Why Materials Make or Break EPC Projects

Introduction

Procurement is a mission-critical function in the execution of Engineering, Procurement, and Construction (EPC) projects. It links engineering output with field execution and has a direct impact on project timelines, cost performance, and quality. In major industrial facilities such as refineries, petrochemical plants, LNG terminals, and power plants, delays in procurement are often the root cause of overall project failure.

This article explores procurement from an engineering execution standpoint—focusing on the planning, sequencing, and strategic sourcing of long-lead items across all disciplines including static equipment, rotating equipment, piping, electrical, instrumentation, civil, and structural components.

1. The Role of Procurement in EPC Execution

Procurement in EPC projects is not a downstream activity—it starts during the early design phases. The entire material supply chain must be aligned with the engineering deliverables, construction sequencing, and client-specific requirements.

Key Procurement Functions:

• Material requisition and specification
• Vendor prequalification and RFQ (Request for Quotation)
• Technical bid evaluation (TBE)
• Purchase order (PO) issuance
• Vendor document review
• Inspection, expediting, and logistics
• Site delivery and material tracking
• Equipment preservation management

Procurement delays are directly tied to missed construction windows. Any late equipment delivery can affect mechanical completion, commissioning targets, and ultimately the project's commercial operation date (COD).

2. Long-Lead Items in EPC Projects

Long-lead items are those that have extended manufacturing or delivery cycles and must be identified and ordered early. Late ordering of long-lead items results in construction delays and compressed schedules, often leading to increased cost and rework.

Examples of Long-Lead Items by Discipline:

• Static Equipment: Columns, drums, heat exchangers, pressure vessels
• Rotating Equipment: Gas Turbines (GT), Steam Turbines (ST), centrifugal compressors, pumps
• Heat Recovery Systems: HRSGs, Waste Heat Boilers
• Piping: High-pressure lines, exotic alloy piping, pre-insulated pipe, modular spools
• Electrical: Transformers, HV switchgear, UPS panels, cable drums
• Instrumentation: Control valves, safety shutdown systems, analyzer shelters
• Valves: Forged valves, HIPPS, cryogenic valves, automated valve skids
• Civil/Structural: Precast beams, foundation anchor bolts, steel trusses for pipe racks

Lead Time Snapshot (Typical):

Failure to track these early leads to resource idling, construction resequencing, and cost escalation.

3. Procurement and Engineering Synchronization

To mitigate delays, procurement must integrate closely with engineering progress. Each 3D model milestone—30%, 60%, and 90%—unlocks key procurement actions.

Engineering MilestoneProcurement Trigger30% Model ReviewIssue RFQs for long-lead static/mechanical items60% Model ReviewFreeze routing; release piping/electrical RFQs90% Model ReviewFinalize instruments, electrical skids

Essential Deliverables for Procurement:

• Datasheets, spec sheets, and interface control documents (ICDs)
• Finalized vendor lists and inspection class requirements
• MTOs, BOQs, and RFQ packages approved by disciplines
• Construction schedule-driven delivery plans (reverse-calculated)

Procurement must also participate in constructability reviews to flag site limitations and delivery risks.

4. Preservation Procedures for Early-Delivered Equipment

Early procurement, while necessary, creates a storage burden if installation is delayed. Robust preservation is vital.

Preservation by Equipment Type:

• GT/ST/Compressors: Oil misting, shaft locking, dry gas blanketing
• HRSG/Drums: Corrosion inhibitors, flange sealing, desiccants
• Switchgear & MCC Panels: Indoor dehumidified storage, energization every 45–60 days
• DCS/Control Cabinets: Shielding from dust and EMI, firmware updates maintained
• Valves & Actuators: Anti-seize reapplication, actuator cycle checks

Failure to preserve leads to:

• Void of warranty
• Additional FAT/inspection scope
• Delays in commissioning readiness

Preservation should be embedded in vendor contracts with logs maintained through the EPC's materials management system.

5. Case Studies: Project Failures Due to Procurement Issues

1. Middle East Gas Plant (USD 2.1B)
2. North Sea Offshore Platform
3. Combined Cycle Power Plant (Asia)
4. South American Refinery Upgrade
5. African LNG Terminal

6. Integrated Procurement Control Framework

Key Control Elements:

• Weekly procurement look-ahead aligned with schedule
• Discipline-wise procurement leads embedded in engineering meetings
• Live vendor document status tracking (linked with EDMS like Aconex)
• Early freight strategy tied to Incoterms and sea voyage durations

Milestone-Based Tracking Table:

7. Recommendations for Future EPC Projects

• Adopt Integrated Engineering-Procurement Systems: Tools like AVEVA or SmartPlant enable visibility of both drawing and supply chain progress.
• Define Procurement KPIs: Lead time adherence, TBE turnaround, PO placement vs. plan.
• Plan Preservation at Contract Stage: Make it a vendor obligation with built-in hold points.
• Train Engineering Teams on Procurement Dependencies: Design freezes must consider vendor feedback timelines.
• Use Procurement Dashboards for Site Leadership: Visual tools support early resolution of bottlenecks.

Conclusion

Materials truly make or break EPC project success. Procurement, when treated as a strategic project delivery driver rather than a back-office support function, ensures smoother construction execution, mitigates costly delays, and enhances stakeholder confidence.

Putting procurement on the critical path—with early engagement, discipline integration, and preservation excellence—is the only way forward in today’s risk-sensitive capital project environment.

References

• AACE International – Recommended Practices for Procurement Management
• Construction Industry Institute (CII) – Procurement and Materials Management Best Practices
• Shell DEP Standards – Engineering and Vendor Data Requirements
• Siemens Energy Procurement & Logistics Whitepapers
• GE Gas Power – Package Preservation Manual
• Petrofac Vendor Management Guidelines
• AVEVA – Integrated Engineering and Procurement System Models
• API RP 686 – Machinery Installation and Preservation Standards