Productivity improvement in downstream EPC projects using value streams based organization

Abstract

Productivity improvements in manufacturing facilities have been studied in detail and there are many standardized tools and frameworks readily available to the industry for implementation. However the concept of productivity improvement in large engineering projects that involve high white-collar job content is less clearly understood. While lean concepts like value streams or continuous improvement apply to this environment there are no ready tools available for implementing a lean improvement initiative. This thesis applies lean and concurrent engineering concepts to large scale engineering design and development projects. ABB Lummus, the sponsor company for the internship behind this thesis, is in the business of executing such large-scale projects. Lummus is an EPC contractor providing engineering, procurement and construction (EPC) services for building manufacturing plants. EPC projects run for few years and involve coordination of efforts by hundreds of engineering staff. There are inherently many productivity and information flow issues in such projects. EPC industry in general has been facing significant operational efficiency difficulties leading to cost and schedule overruns in recent years.

(cont.) The main issue was identified as rework due to the fact that the existing project structures do not deal with concurrent engineering nature of the projects. In this thesis we leverage the concepts a combination of lean value streams, Design Structure Matrix (DSM) and Theory of Constraints (TOC) to propose a value streams based organization for EPC projects. We show how this approach addresses the common problem in the EPC projects and sets the stage for improving productivity. The discussion in this thesis has helped launch an initiative that has enabled the acceptance of value streams and DSM techniques at ABB Lummus. Currently a dedicated program is planning a large (> 1 Bn Euro) EPC project along the line of value streams. The following are the key contributions in this thesis: From first principles we define a way to decompose an EPC downstream project into nine value streams. We use DSM to analyze a key value stream in detail and show the need for a value-stream-based organization. Using value streams and DSM we enable the implementation of TOC planning in EPC projects and show how these tools complement each other.