Steel Project and Phases in its life cycle

Steel Project and Phases in its life cycle

Steel project consists of activities through which a steel plant is conceptualize, designed, constructed and handed over for operation for the production of steel products. Steel project being a large scale in nature requires considerable time period as well as funds for its execution. Further, steel project is normally driven by the triple constraints which represent the balance of time, resources (human and otherwise), and technical performance (quality).

Every steel project is unique in nature. This is because one steel project differs from other steel project with respect to its composition and the nature of the triple constraints. Also, steel project does not involve repetitive processes which are very common with the operation of the steel plant. Time scale of a steel project is well defined and it has a clear specified start and end date within which the project is to be completed and handed over for its operations.

Steel project has an approved budget and the project is required to be completed within the allocated level of financial resources. Other resources needed for the project execution such as equipment and materials as well as human resources are also usually limited.

Steel project also involves an element of risk. It has to overcome several uncertainties as it moves forward during its execution. Many of these uncertainties are caused by external factors and cannot be foreseen. The uncertainties generally result into disruption in the process of project planning as well as in the execution of the project.

Every steel project has a life cycle. It starts with the initiation of the project and ends with the handing over of the plant for operation. There are some of the project activities, which extend beyond the handing over of the plant for operation.

All activities during the life cycle of the steel project must conform to the three pillars of (i) integrity, (ii) transparency, and (iii) accountability. These apply to all the activities carried out during all the phases of the steel project and to all the people belonging to the project organization as well as to the people working for the consultants, suppliers, and contractors.

There are two distinct phases in a steel project. These are (i) initiation and pre-execution phase, and (ii) project execution phase. In each of the project phase, steel project is to pass through several sub-phases for its progress. There are also several important supporting activities which are required during the project execution phase. The phases of the steel project and the supporting activities are shown in Fig 1.

Phases of the steel project

Fig1 Phases of the steel project and the supporting activities

During the pre-execution phase, possible alternatives for the project are analyzed for the freezing of the project concept. Project execution phase normally starts only after completion of the pre-execution phase.

Several characteristics make these two phases different. Pre-execution phase requires creativity, while a project execution phase needs to be managed with rigor. The work loads and the duration of these two very basic phases are different. Few people are generally involved in pre-execution phase, over quite long and imprecise periods of time, while a large number of people are involved in project execution phase over a short time period. There are several such difference exist between these two phases.

Initiation and pre-execution phase

Before the pre-execution phase, initiation of the project takes place. During initiation, the project promoter takes a preliminary decision regarding the setting up of a steel plant based upon the market information available with him about the steel production and marketing as well as his capability to raise finances for the implementation of the steel project. He is also required to take a decision regarding the type of steel products (flat or long etc.) to be produced from the envisaged steel plant as well as the rough capacity of the plant. However, the project concepts and the product mix are not decided at this stage.

The pre-execution phase of the steel project has several sub- phases. These sub-phases consists of (i) selection of appropriate project site, (ii) preparation of feasibility report, (iii) acquisition of land at the selected site, (iv) tying up of the raw materials and their movements, (v) tying of the funds requirement with the financial institutions for the project execution, (vi) tying up of the utilities such as power, water etc. needed during project execution as well as after the plant goes into operation, (vii) preparation of the ‘environmental impact assessment and environment management plan’ (EIA and EMP) report and taking of the environmental clearance for the project from the regulatory authorities, (viii) obtaining of regulatory approvals needed during the plant execution phase as well as during the plant operation after its construction is completed, and (ix) tying up of the infrastructure development needed for the project execution phase as well needed for when the plant enter operational phase after completion of the project.

The site-selection process is conducted to identify possible sites for the proposed steel plant and to compare their relative merits based on a large number of criteria. The selection of a suitable site is a very critical activity and it is very important since steel plant constitutes very large investment which has considerable influences on the area. It is a strategic decision that cannot be changed once taken. Normally the final site selection is done after evaluating several sites.

Feasibility report is a base document for a steel project for the decision making with respect to investment in the project. It is an engineering study based on test work and engineering analysis, which presents enough information for the steel project, when it is advanced to the project execution phase, to proceed. In fact, it is a complete document for investment decision-making, approval, and planning. It is a step in firming up the proposal of the steel project. It is a basic document based on which further work on the project is carried out.  It firms up the proposal for the capital cost as well as the various facilities.

EIA and EMP report is needed to obtain environment clearance for the steel project and to assist in the decision making process by identifying the key impacts/issues and formulating mitigation measures. The objective of EIA and EMP report is to foresee and address potential environmental problems/concerns at an early stage of project planning and design. It ensures that the project options under consideration are environmentally sound and sustainable. It often prevents future liabilities or expensive alterations in project design at a later stage.

Project execution phase

The project execution phase is also known as the project implementation phase, project materialization phase, or project realization phase. It is normally initiated after the project has been appraised to be feasible and funding arrangements for the project have been tied up. Once launched, nothing is supposed to interrupt the realization of the project.

Since the steel project is a complicated project, the project execution phase is divided into several sub-phases. The starting of sub-phases normally follows a sequence. But once started, the activities of the sub-phases usually run parallel to each other and may continue till the steel plant goes to operational phase. Further, after starting, the activities for the sub-phase generally pick up and reach a peak before tapering down.

The sub-phases of the project execution phase include (i) engineering of the project (ii) enabling work, (iii) procurement and storage of plant and equipment, (iv) selection of contractors for the various activities to be carried out at plant site, (v) site activities which include civil work, building structural work, and erection work of the plant and equipment, (vi) construction of auxiliary facilities such as plant road network, plant rail network, inter-shop piping network, and inter-shop cabling network etc., (vii) commissioning activities for plant and equipment, (viii) post commissioning support in production stabilization, and conducting of performance guarantee tests, (ix) project closure work.

Parallel to the activities of sub-phases there are several important supporting activities which take place during the project execution phase. These important activities include (i) creation of administrative network for project execution, (ii) handling of the project finances, (iii) recruitment of project manpower, (iv) recruitment of operational manpower and their training, (v) operation of facilities such as power, water, construction stores, communication facilities, mobile equipment, and maintenance facilities needed during plant construction, (vi) monitoring of the project progress, (vii) obtaining of the regulatory approvals (viii) liaising with state and regulatory authorities, media, and project stakeholders, and (ix) coordinating and monitoring of the infrastructure development activities which are not part of the project work and which are carried out by other agencies. Though the infrastructural development activities are not part of project but they are important activities for the project since without the required infrastructure, the steel plant cannot achieve its rated performance when is goes to operation stage after its commissioning.

Close co-ordination between different activities during the project execution phase is a very important aspect for success. If the activities during the project execution phase are not properly coordinated then the performance suffer very badly. Hence there is necessity of proper project planning. Also, the activities of the project are normally one time activity and they are not of repetitive nature. Hence standard operating procedures for these activities are not available. Hence, the responsibilities of the people carrying out these activities are much higher for the systematic and smooth execution of the activities.

Another important activity during the project execution phase is the control of work quality.  Any relaxation on work quality means a large number of modifications during the project execution which takes away a substantial amount of the limited time available for the project execution.

Project monitoring is an integral part of the project phases and is an important management tool for the monitoring of the progress of the project.  It consists of regular systematic collection and analysis of information to track the progress of the project implementation against pre-set targets and objectives. Effective monitoring of the project is a critical element for the project to overcome triple constraints.

Though all the sub phases of the project execution phase are very important for the achievement of the project objectives, engineering activities need added attention of the project management since it is basic as well as central to the project execution. In fact, engineering activities are backbone of each of the phase and the sub-phases of the project. Project cannot move forward without engineering activities which start during pre-execution phase and continue for the complete period of the project execution phase. Engineering activities of the project include (i) feasibility studies and freezing of the plant technologies and concepts, (ii) engineering of enabling works, (iii) plant basic engineering, (iv) development of general layout of the plant, (v) preparation of the standard specification documents which are to be followed during project execution, (vi) preparation of the technical part of the tender documents and after the award of the contract preparation of the technical part of the contract specification, (vii) drawings for regulatory approvals, (viii) plant detailed engineering consisting of detailed shop layouts, equipment GA drawings, equipment mechanical drawings, process flow diagrams, refractory drawings, civil drawings, structural drawings, erection drawings, piping and instrument drawings, control and automation drawings, and electrical and electronic drawings etc., (ix) spares and change parts drawing and listing, and (x) plant modifications taking place during the project execution.

Procurement of plant and equipment plays an important role with respect to (i) control of the project cost and keeping it within the budget, (ii) control of time schedules, (iii) control of quality of plant and equipment, and (iv) ensuring necessary technological features of the plant and equipment so that the required performance parameters are achieved during the operation of the plant and equipment after their commissioning. In this respect, selection of capable supplier in the quickest possible time and finalizing with the supplier a contract specification which is clear, comprehensive, and complete are two special features needed for efficient procurement management. Ethical, unbiased and systematic working and honesty are some of the important traits needed in people handling procurement activities for the plant and equipment.

Stores management is very complex during the project execution phase. This is mainly because lack of proper facilities as well as lack of proper storage space for the plant and equipment. Also, important is the prevention against pilferage and damage of plant and equipment during storage.  Further fire in the storage area can have serious implications with respect to the project schedules though it may not affect the project costs since the stored plant and equipment are normally insured for fire.

Activities related to selection of contractors for site activities and entering of proper contract with the selected contractors are similar to the activities connected with the procurement of the plant and equipment except that these are carried out by different set of people. The main difference between the supplier and the contractor is that the contractor is to perform under conditions existing at the site while the supplier performance depends on the facilities existing at the supplier works. Hence, for the selection of contractors, important criteria are their mobilization capacity and quick adaption to the site conditions.

Site activities need some special characteristics since these activities are normally carried out under time constraint. Time constraint comes to the site activities because these activities are carried out during the latter part of the project implementation and hence it has to absorb the delays which have occurred earlier for keeping of the project completion schedules. Since a large number of contractors are working at the project site, hence close coordination, active cooperation, and quick adjustment to the changing conditions are required from the people working at the site.

Plant commissioning activities start after the erection of the plant and equipment is complete. During this period, trial running of equipment starts for their stabilization. Hence, during this period, there is moving equipment often without safety features and a working environment which is much different than what is experienced during erection. Also, there are a large number of people working in a limited area. Also, operational personnel though trained have limited experience. Hence, safety aspects are very important during this phase since any accident during this stage will have a major effect on the project completion.

The performance guarantee test is generally conducted after all the defects noticed during commissioning are rectified by the supplier and operation of the plant and equipment is stabilized. During this sub-phase, suppliers generally depute experienced operators for quicker stabilization of the plant and equipment. This sub-phase is the time for the plant operating personnel to learn from the experience of the deputed experienced operators. The opportunities available during this period need to be exploited for the training of the operating personnel.

Enabling works sub-phase is an important sub-phase for the success of the project execution. These works are carried out parallel to the engineering and procurement activities. It is necessary that all the enabling works are completed before the site activities start.

Another important feature of the project execution phase is the safety of the plant equipment and people. It is necessary that safety training is given to all the personnel who are carrying out the activities at plant site as well as at the storage of the plant and equipment. Also, the persons carrying out the engineering activities are to ensure that plant and the equipment designs incorporate all the safety features which are necessary for the safe operation of the plant.

In a steel project, the activities to be carried out during the sub-phase of project closure are the most difficult one. This is because these activities receive least support from the organizational management, since the management attention shifts towards the plant operation and the product marketing. However, the project closure activities are important activities, and without completion of these activities, project is not complete.