Controlling quality supply chain issues for infrastructure projects

CONTROLLING THE POWER
PLANT AND INFRASTRUCTURE
PROJECTS SUPPLY CHAIN
Key Issues to look for and how they can
be solved
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PREFACE
In huge infrastructure facilities and projects, such as power plants, unfortunately it is not always possible to
prevent poor installation quality. Discovering poor quality at a late stage can add an exponential increase
to the costs, with dreadful consequences for the client and the development of the whole plant. To the the
contrary, by using the Supply Chain risk mitigation methods enabling good surveillance for quality, there is a
chance to discover poor quality early thus allowing for immediate solution.

CONTROLLING THE POWER PLANT AND INFRASTRUCTURE PROJECTS SUPPLY CHAIN
A project is a set of activities with a defined start point and a defined end state, which pursues a defined goal and uses a defined set of
resources with a common goal for which we try to control costs, resource usage, completion time, and quality of the output.
Supply Chain Management in power industry is a critical activity for the success of the project and the industry required supply chain
practitioners with diverse knowledge not only on the business side but on also on the technical side enable them to procure the right tools
and services at competitive price and quality with minimum risk exposure.
The understanding and practicing of supply chain management (SCM) has become an essential prerequisite for staying competitive in the
global race and for enhancing proﬁtability.
Defining Project

Proportions of Projects that encounter Cost & Time Control
Proportion of Projects Time overrun Cost Overrun
> 90% 2.9% 4.4%
60 - 90% 1.5% 7.4%
40 - 60% 8.8% 11.8%
10 - 40% 48.5% 35.3%
< 10% 38.2% 41.2%
Reference; Cost & Time Control of Construction Projects by Yakubu Adisa Olawale
Construction management and Economics
Why the Need for Supply Chain Management
Survey conducted on 250 construction projects in UK
Controlling the Power Plant and infrastructure projects supply chain

Supply chain is NOT a CHAIN of businesses
BUT A NETWORK of businesses & relationships
That offers the opportunity to capture the full potential of intra and inter-company integration and management to organize – people,
activities, information and resources involved in moving a product at the right quantities, right locations and at right time when linking them
from supplier to end-user satisfying the service level requirements. In other words it is management to efficiently integrate all resources.

Power plants have:
1. Complex structures.
2. Involve large amounts of capital.
3. long-running construction period.
4. Multivendor supply chain.
5. Complex procedures and activities and equipment integration.
For example: A coal fired power plant of the 700 MW class consists of approximately 9000 activities
and 18000 logic links to determine the critical path and to identify schedule changes and subsequent
impacts.
(www.energy.siemens.com/hq/...power-plants/1_Successful_Complementation.)

POWER PLANT CONSTRUCTION SUPPLY CHAIN
A CRITICAL PHASE.
The construction phase is identified as a critical phase in power projects supply chain where
many unforeseen factors occur.( Article - Supply Chain Risk Management in power industry-
Vienna University of technology) Failure to manage project risks leads to significant
problems for the project and a project risk management in the supply chain in the
construction stage of power plant projects should be conducted to achieve and support:
 Shorter construction periods.
 Mitigate uncertainty factors and considerably high risks.
 Prevent time delays and cost overruns .
 Deliver quality.

BENEFITS OF SUPPLY CHAIN IN CONSTRUCTING A POWER PLANT
Supply chain has immense benefits to the adding value while minimizing total cost of project. Some of the benefits are listed below:
 Decrease in inventory cost by more accurate estimation and scheduling construction
execution to match it,
 Reduce the overall construction cost by streamlining the flow of supplies to the
execution process and by improving information flow between the agencies,
 Improve client’s satisfaction by offering better qualities, timely completion of projects and
minimizing the costs,
 Reduce the replenishment time of the supplies at the construction sites,
 Helps in accurate forecasting of change orders and making available actual estimation
information to all levels, Helps in standardizing of construction processes by
implementing quality assurance plan,

Sample of a System of Multiplier Supplier – Integrated Supply Chain Systems
CLIENT FEED & DESIGN ENGINEERING
PROCUREMENT
(VENDORS
LOGISTIC
OPERATION COMMISSIONING
PROJECT
COMPLETION
SITE
SUBCONTRACTORS
/SUPPLIERS
MAIN CONTRACTOR
Source: Supply Chain Improvement in Construction Industry- National technical University of Athens-Greece.

Supply Chain Risks
0
1
2
3
4
5
6
Rating of Concern on a scale of 1-10 (10 Indicating greatest Concern)
Reference: Managing Risk in the Global Supply Chain faculty - University of Tennessee

Supply Chain Risks Mitigation
0
1
2
3
4
5
6
7
8
Preference on a scale of 1-10 (10 Being Most Preferred )
Reference: Managing Risk in the Global Supply Chain faculty - University of Tennessee

Supply Chain Risks- Influencing factor when constructing a Power Plant
0
1
2
3
4
5
6
Right Contractors &
Subcontractors
Strong QA/QC
Strong Supplier Visibility & Due
Diligence
Expediting &
Inprocess
Inspection
Best Practice for
Shipping, Clearing &
Packaging - Pre
Shipment Inspection
PreShipment
Inspection
Purchase Insurance
Rating of Concern on a scale of 1-10)
Quality
RiskofSupplierFailure
Design
Consideration
MeetingClient
Expectation
Wrong
Specificationfor
Manufacturing
TransitLossduetoPoor
Packaging/Accidents
Customs
Political
Instability
R
I
S
K
S

TRADITIONAL COST AND HIDDEN COST OF POOR QUALITY( COPQ)
Hidden COPQ: The costs
incurred to deal with these
chronic problems
Traditional Cost
Hidden Cost

Quality and Supply Chain Management advantages
Source: Effectiveness of quality in Supply Chain management- Noida International University-India.

SUPPLY CHAIN RISK MITIGATION MEASURES- PROCUREMENT AND
CONSTRUCTION
1. Selection of Right Vendors and Suppliers.
2. Continuous Quality Surveillance System at site.
3. Listing Inhibitive and Mitigation Measures.
4. Understanding Critical Path for time Analysis and management.
5. Understanding importance of Criticality Index for reliability

Factory Evaluation – Vendor Assessment Procurement
VMT- Verification of Manufacturers testing Product Quality
In-process and Factory Acceptance Testing Product Conformance as per purchase specification.
Pre- Shipment Inspections Shipping of lesser quality material to the site.
Receipt Inspections by the means of enterprise part tracking system Receiving wrong or lesser quality material /substitute material
SQR pre-shipment and site QA/QC program guidelines and checklists Non Conventional and sub standard loading and unloading practices
SQR Guidelines for Marking and Packaging for shipping equipments Non Standard Packaging and Damage in transit
SQR Guideline for preservation and checklist for conformance of activity Non Standard preservation of critical equipments on site
SQR site QA/QC program and site material handling guidelines and checklists Defective or Non Standard methods of material handling on site.
SAT, after installation, Verification of performance as per PTC and relevant
standards after commissioning.
Commissioning of Power Plant/Infra Projects
Addressing Supply chain High Impact factors for quality-Solutions to the key
issues from SQR
Professional Services
To address following issues

Thank
you
CONTROLLING THE POWER PLANT
AND INFRASTRUCTURE PROJECTS
SUPPLY CHAIN

Controlling quality supply chain issues for infrastructure projects

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