In 2016, PPI announced three new research projects: Conceptual Frameworks Underpinning Project Delivery, Optimization of MCP Supply and Application of Systems Engineering to Project Delivery. These research projects continue to evolve. Following is further details for each of these projects as well as other ongoing and completed research projects.
A Comprehensive, Integrated, Optimization-Simulation Model for Capital Project Supply Chain Management: An example from Oil & Gas
The majority of the investment made by an owner-operator during the delivery of a capital project is allocated across a complex network of product suppliers and service providers. Currently, it is often the case that owner-operators and their EPC’s look to minimize the risk of schedule delays due to late materials and parts delivery by mandating that parts and materials be delivered far in advance of when they are needed. This is in contrast to many other industries, including automotive, retail and technology, where the timing of orders and deliveries is more closely coordinated with actual needs in order to minimize system costs and better optimize overall system performance. We hypothesize that the existence of large amounts of inventory long before it is needed on capital project sites is a symptom of a sub-optimal supply chain operation.
Based on our interviews reported in , it seems that many of the participants in capital project supply chains believe that the supply is operating close to optimally. We hypothesize that this mindset is a consequence of, among other things, local or greedy optimization. Since there is no obvious way that small, local changes can lead to improvements, participants believe that the current approach is optimal.
Our initial conclusions from the interview responses suggest that a logical next step is to show how to build a comprehensive optimization model to coordinate project planning and scheduling with other supply chain-related decisions in order to globally optimize the supply network in terms of project delivery schedule, cost, and risk management. A comprehensive model-based analysis could help to highlight the inefficiencies of current approaches.
Our ultimate goal is to build a comprehensive optimization/simulation model that will enable us to coordinate project planning and scheduling with other supply chain-related decisions in order to globally optimize the supply chain, in terms of project delivery time, cost, safety, and risk management. The first step in this process involves focusing on a particular specific major capital project, conducting follow-up interviews with participants in that project supply chain to assess the current state of performance, obtaining data on parameters such as lead times, cycle times and processing times, and the throughput of individual pieces of the overall supply flow. Using this data, we propose to build a model of the supply chain, and conduct a number of simulations to address the questions raised in this proposal. The proposed outcome would be threefold:
- Publication of the findings – both of the current state, and recommendations from the modeling on optimizing performance – in a peer-reviewed academic journal.
- An assessment of current tools and approaches for completing this analysis, and initial development of new tools and approaches as appropriate.
- A detailed proposal for developing additional tools and techniques to facilitate future capital project supply chain optimization
Arman Jabbari and Dr. Philip Kaminsky, UC Berkeley, Department of Industrial Engineering and Operations Research.