Interviewer: Yogesh, what do you see as the main risks in LNG projects?

Yogesh Srivastava: Based on historical data from the Invesco Canadian Energy Income ETF (ENY) study, 91% of LNG projects are destined to fail. Only leaving less than 9% of projects to have a chance of success. Single companies often struggle with such complex, expensive and high-risk projects, which is why joint ventures are common. Among the three projects we’re reviewing—Nigeria LNG Train 7, Shell Canada LNG, and Golden Pass LNG—two have experienced disruptions and delays and challenged to meet planned project objectives for budget and schedule ar, while one is currently performing well and forecast to be successful.

This high failure rate underscores the importance of careful planning and risk management, particularly in managing supply chain complexities and regulatory compliance. Moreover, reaching a Final Investment Decision (FID) is often one of the greatest challenges, followed by the execution of the project itself, which involves multiple stakeholders and complex logistics. Relying on individual expertise, dynamically following process, plans and bidding the work and resulting stringent contract condition to frame success has not been a success formula.

Interviewer: Jacek, can you talk about the integration issues you’ve observed?

Jacek: Sure. The Exxon GC systems are complex and very expensive due to volume of unintegrated data. Our system, which integrates data through construction blocks of work containing the scope from first principals, has proven to be both efficient and cost-effective. Additionally, Exxon purchased most of the forecastl material requirements to ensure availability for planned field worksupfront and reliance on storing in laydowns and warehousing utilising receipt and tagging of location, however due to the magnitude this proved to be a source of significant effort and traceability and time delay finding specific items for planned work, leading to extra costs and time loss.

If they had used an integrated data systems, like our PACE OS, help streamline processes, reduce redundancies, and improve overall project efficiency by ensuring that all material is accounted for , stored and issued efficiently. This approach not only saves costs but also minimizes delays, enhances productivity and safety due to limiting the handling of materilas.

Interviewer: Why is material tracking so critical?

Jacek: Poor material management and tracebility will result in significant delays, effort and additional costs. It’s essential to manage and track materials from delivery to their use on-site effectively. Without a dynamic materilas managent sytem/process, projects face issues such as misplaced materials, delays in construction, purchasing of critical material replacements for items not found at site and resulting overall inflated costs.

Interviewer: Yogesh, how do initial processes impact the project’s success?

Yogesh Srivastava: If initial processes aren’t set up correctly, even the best workforce can’t ensure success. Issues with materials on-site can become primary reasons for failure if not properly managed. Establishing strong foundational processes, such as thorough planning, risk assessment, risk management, change management, and resource allocation, is critical. These processes set the stage for a project’s success by preventing common pitfalls and ensuring that the project can adapt to unforeseen challenges progressively and collaboratively.

Interviewer: What about the Lean strategy, Jacek?

Jacek: The Just-In-Time (Lean) system minimizes storage costs and increases efficiency through timely delivery of materials. Lean strategies focus on reducing waste and optimizing workflow, which can significantly improve project outcomes. By receiving materials exactly when they are needed, projects can reduce storage costs, minimize waste, and enhance productivity. Dynamic allocation and visibility to what is required, and status of inventory is crucial to ensure all site work is deemed ready to be executed with all material available.

Interviewer: Let’s talk about project comparisons. How do Lean and AWP play a role, Yogesh?

Yogesh Srivastava: Combining Lean and Advanced Work Packaging (AWP) allows for better project management and increases efficiency. Creating AWP packages without using them is a waste of time and resources. Both strategies focus on optimizing work processes and ensuring that every part of the project is well-coordinated and efficient through control of scope and readiness confirmation prior to execution..

Interviewer: Jacek, how has PACE OS been applied?

Jacek: Our PACE OS solution has been successfully applied in projects in Nigeria, helping solve many problems faced by other projects. PACE OS integrates various project management aspects into a cohesive system, improving communication, traceability alert and action tracking accountability and overall project control. This has led to significant improvements in efficiency and cost savings, demonstrating the value of a digitally integrated project execution system.

Interviewer: Dan, what role do contracts play in project success?

Dan: Contractual terms are crucial for the project’s success. Issues with contracts can lead to significant delays and budget overruns. Well-defined contracts help ensure that all parties understand their responsibilities, deadlines, and the project’s scope. Ideally, the contract T&C’s should be fair and equitable with opportunity for the contractor to be incentivised for performance through an agreed set of KPI objectives aligned with the project objectives.

Interviewer: To sum up, what are the common problems of LNG projects?

Jacek: Managing such projects is challenging due to the need to control various factors, including materials, workforce, contracts, and processes. Only an integrated data management approach and effective coordination of all aspects can ensure a successful project.