EPC & EPCM
Dan Gleeson spoke with Tony Morgan, President, Mining and Metals, Fluor, to find out how the contractor is
continuing to win business and differentiate its offering from the rest of its peers.
IM: How important is securing early-stage involvement in mining projects
in terms of eventually winning the major EPC/EPCM contract?
TM: It is very important and there are some good reasons for that. If you
get a contractor that is used to building significant projects and can apply
the right tools in the earlier phase of the project, you will receive an
aligned project in terms of the technology used, execution strategy and
the techniques, such as modularisation. All of these plans will be built in
at the front-end of the project and, when you go into the execution phase,
the personnel executing the project will be well-versed in the strategy.
Quellaveco in Peru, South Flank in Australia, a bauxite mine in Guinea
and Peñasquito in Mexico are good examples of projects where we were
engaged in the early stages and helped set the projects up for success.
This isn’t to say that if one contractor starts a project, another
contractor cannot come in. We have taken over and succeeded in the
execution of several projects in this way. This typically occurs when the
client deems that the previous contractor will be unable to perform the
project’s execution phase because of the project’s size or the contractor
has failed to perform in the current phase.
IM: Has the talk from mining companies of more EPC/EPCM contracts
being offered with incentives/penalties that effectively share execution
risk become a major trend in the industry?
TM: There’s always been a desire to include penalties and incentives in
contracts. The extent to which these can be evenly applied really depends
on the market, whether contractors are willing to take them on and then
the client’s desire to have control over the project.
The best way to execute a project is to allocate the risk to the party that
can best control it. If you step away from that principle, it can create
inequalities in the contract.
Fluor is willing to take incentives and penalties where we have full
control of the project, ie where we have been engaged from the start, we
understand the project and have control over the execution phases. In a
lot of our projects, we do that, especially using our engineering,
procurement, fabrication and construction (EPFC) model.
In projects where we don’t have full control, there are other contractor
arrangements that can be used successfully. For example, we are carrying
out a project at the moment where we have an integrated project
management team that combines the best personnel from both our
client’s team and our team. On this project, there are significant
performance incentives at the end of the project.
IM: How important has it become to provide all, or the majority of,
services for a typical mine build? Has this acted as a differentiator when it
comes to winning contracts?
TM: We are proud of our capability to provide services for a complete
mining project. We have the process technologies to help shape the
project at the front-end, the execution capabilities to execute through the
design and procurement, and the construction expertise to marshal the
labour appropriately and get the right productivity in the field. Then, we
have personnel to help clients commission these plants.
There may be certain scopes of work within our projects that are better
suited to specialty sub-contractors. Where these sub-contractors have
better skills sets or relevant experience than us, we will use them
appropriately for the advantage of the project and client.
Clients typically want someone to take responsibility for the project. To
take this responsibility, contractors need control of the scope. Our EPFC
approach really allows us to control a project’s critical path and deliver the
success our clients demand.
12 International Mining | DECEMBER 2018
IM: How has the proliferation of
automation, electrification and
digitalisation impacted your work as an
EPC/EPCM provider?
TM: It’s fair to say nobody – our clients
especially – wants mines coming into
service in the 2020s and beyond that
use the technology of 10 to 15 years
ago. Automation, electrification and
digitalisation are all critical to the
success of these future projects.
At Fluor, we are investing a great deal
Tony Morgan thinks the best
in developing our automation and
way to execute a project is to
digitalisation expertise. We are working
allocate the risk to the party
that can best control it
with IBM on several efforts around
predictive analytics. We also have a
section of the company focused purely on innovation. We are bringing
innovative and automated solutions to projects, including some active and
passive sensing technologies used to help safeguard personnel in the
field and track equipment and materials.
One of the solutions we have developed is Safety Pin, which allows us
to know where every worker is and to notify workers of areas that are not
safe to enter.
Innovation is a differentiator for us as we have been adopting various
innovations on a number of projects. We know what works and what
doesn’t. Others talk about innovation without having applied innovations
to large-scale projects.
IM: How will Fluor leverage the big data analysis capabilities that come
with the IBM Watson partnership to offer mining customers something
different?
TM: There are two parts to this. There is the EPC Project Health Diagnostics
(EPHD) tool and the Market Dynamics/Spend Analytics tool. Over the last
several years, we have been putting data into the EPHD tool to predict
patterns on projects. It enables us to determine the likely project outcomes
given the scenarios we input – all based on historical project performance.
This allows us to have a very meaningful conversation with the project
teams about what we have learnt and seen in the past. We can use this as
a tool to make better decisions on projects and better deliver cost and
schedule certainty.
The Market Dynamics/Spend Analytics tool helps us to get the best
global price and maximise our supply chain across the world.
IM: Where is Fluor seeing most demand for its services on a regional and
commodity basis?
TM: We have projects globally, including bauxite and diamond projects in
Africa, iron ore projects in Australia and gold projects in Mexico. Copper
projects in South America are extremely active right now. We are executing
a number of projects in South America – Quellaveco and Spence being two
of the largest – and are also engaged on a number of other ones.
IM: Anything else to add?
TM: Yes. At Fluor, we have a huge focus on safety and have just rolled out
a new safety culture and theme within our company called ‘Safer
Together’. We are focusing on the care of everyone coming onto our
projects and ensuring they can go home every day as they arrived. That is
one of Fluor’s core values and we don’t ever compromise on that.