A PwC global survey of project management leaders identified the following as the top four factors that contribute to poor project performance:
- Poor estimates/missed deadlines
- Lack of executive sponsorship
- Poorly defined goals/objectives
- Change(s) in scope mid-project
These identified factors solidify the importance of strong pre-project planning, accurate cost estimates, early alignment, and robust scope definition. One of the most common methods utilized to address these challenges is through the front-end engineering and design, or FEED, process.
Front-end engineering and design, often synonymous with basic engineering, is the third phase of the front-end planning (FEP) stage gate process that follows a conceptual design or feasibility study. The front-end engineering and design process can be done standalone to allow the project owner to competitively bid detail engineering and design and construction or as part of a formal stage gate process. In other words, it can serve as the foundation for the detail engineering and design phase or a full engineering, procurement, and construction (EPC) project delivery approach that includes front-end planning.
Let’s take a deeper look into what this process entails as well as the benefits of front-end engineering and design for capital projects.
Key Objectives of Front-End Engineering and Design
Front-end engineering and design encompasses all work required to produce quality process and engineering documentation with sufficient detail, defining all project requirements necessary for project execution. The goal of front-end engineering and design is to produce a total installed project cost estimate that is +/- 10-15% accurate. This usually will enable the project owner and the stakeholders to proceed with full funding of the project.
However, front-end engineering and design isn’t just about obtaining an accurate cost estimate—this project phase is typically used to:
- Develop engineering packages that can be used to bid a lump sum EPC contract, or it may be utilized to provide the foundation for the detail engineering and design phase.
- Evaluate any potential design options that may improve return on investment (ROI).
- Conduct hazardous operations reviews to improve safety outcomes.
- Support internal funding approval processes.
- Provide a framework that can be referenced and checked against as the project progresses through the engineering and construction phases of the project.
The utilization of front-end engineering and design benefits larger projects (~$1 million+) in particular but can also provide significant benefits for medium-sized projects.
Benefits of Front-End Engineering and Design
The FEED process refines the project scope while identifying and mitigating potential project risks and can often result in greater success during project execution while reducing the likelihood of cost and schedule overruns. Investing in front-end engineering and design can greatly improve overall project success and owner satisfaction. The core benefits of front-end engineering and design are detailed below.
- Lower life cycle costs: Without the use of front-end engineering and design, costly change and/or rework will likely be required at some point during the project. Front-end engineering and design identifies the cost of tagged items (equipment and instrumentation) and bulk items (pipe, steel, concrete, civil, and electrical quantities) required to complete the project. With this higher level of definition, the risk of rework is greatly reduced, thus lowering life cycle costs.
- Reduced technical, schedule, and cost risks: When front-end engineering and design is utilized, the detail engineering and design schedule is much more complete. Consequently, there is less potential of having schedule slippages, which increase costs and risks, before mechanically complete. Front-end engineering and design also identifies many of the technical details, such as equipment layout, infrastructure and utility availability, and specialty item definition, that may otherwise be missed without the use of the FEED process. Constructability plays a key role in the front-end engineering and design process, identifying “pinch points” in which construction may have potentially high costs if the design is not adjusted to save construction costs, reducing cost risks.
- Faster time to achieve plant or process start-up, commissioning, and turnover: Front-end engineering and design can improve the efficiency for the detail engineering and design phase, as major challenges should have been identified and planned for, enabling everything to fall together in a proper schedule sequence. This can significantly lower costs, particularly for large projects.
- Improved risk identification and mitigation: Some of the many risks that are evaluated during FEED include: Safety, environmental, financial, supply chain, change and schedule. One of the most influential benefits of front-end engineering and design is improved risk identification and mitigation of the risks. Risk is money—the higher the risk, the more costs involved. Projects that are completed with the FEED process have fewer unknowns and thus fewer risks and lower Total Installed Costs (TICs). While there are still risks, even with a full, well-executed front-end engineering and design process, the risks are mitigated.
- Reduced health, environmental, and safety (HSE) risks: HSE risks are identified, reviewed, and discussed in depth during front-end engineering and design and therefore do not need to be revisited in the detail engineering and design phase. However, without the use of front-end engineering and design, HSE risks can cause changes to the detailed design, which can cause additional costs as well as schedule slippages.
The H+M Advantage
At H+M Industrial EPC, we provide in-house technical advisory services as part of the overall front-end engineering and design package. Our experts review and provide oversight of all design aspects, collecting and prioritizing project needs and challenges while developing and optimizing concepts to meet your needs and drive your capital project to successful execution.