Benefits Driving Growth in Modular Systems
PART 2 - Four Ways Modular Systems Cut Costs
A primary goal of any customer, when building new or adding equipment to an existing facility, is the ability to source equipment at the lowest and most economical cost possible while maintaining a high level of quality. Modular system suppliers, who provide turn-key systems, have the necessary design, engineering, management, and fabrication capabilities to properly do so. Internal engineering and construction procedures are developed to expedite the design, fabrication, and management aspects of a project, and are constantly refined to minimize the overall time from project kick-off to start-up and commissioning. Saving time equates to saving money when sourcing and building equipment. A reduction in the overall length of a schedule consequently reduces the cost of the project. In this installment, we will review some of the many ways in which cost savings can be realized when building a modular system.
Labor and FacilitiesStick-built systems by definition are built piece by piece at the customer’s site, while modular systems are constructed in a controlled shop environment. Savings associated with construction practices include:
- Travel and living expenses associated with outside contractors going to and from a job-site each day are eliminated.
- No wasted time is spent each day on handling, unlocking, and locking up tools at the beginning and end of each day, which commonly occurs at an open job-site.
- Delivery and storage of materials and equipment provided for fabrication are readily available and better controlled in a closed shop environment. Consequently, labor efficiencies are much higher, reducing the overall time required to fabricate the equipment.
- Construction delays and costs associated with them, i.e. loss of power, weather, labor strikes, equipment and material deliveries, are minimized when fabricating a modular system in a controlled shop environment.
- All materials shipped to an open site must be received and transported to either storage or final assembly. Coordination costs and the risk of damaging or losing the materials are greatly increased.
SafetySafety at an open job-site and eliminating any accidents that can commonly occur when having multiple, independent trades working there, is an important goal that all customers strive to achieve. Many man hours are dedicated toward safety at an open job-site, coming in the form of periodic safety meetings and safety over-site by dedicated individual(s) on the project. A new or different tradesman that comes to site typically has to go through safety training, resulting in wasted man hours by the trainer and trainee. Safety at a modular system supplier is equally important, but many less man hours are spent, since the workforce is stable and does not require the constant training of new employees that occurs at an open job-site.
ConsistencySince Henry Ford installed the first assembly line in 1913, it has been proven that repetitive actions allow for an increase in efficiency. Modular system manufacturers utilize repetitive procedures and construction practices in designing and fabricating systems. Engineering and design procedures developed for each task on a project are utilized from one project to the next. Fabrication practices and ‘tricks of the trade’ are also utilized from one project to the next. These efficiencies are passed on to a customer in the form of cost savings because of the reduced time required to complete the disparate activities. These same efficiencies are not realized when stick building a system onsite, since the players, design methods, and management procedures involved vary from one project to the next.
Fixed Price vs. T&ECost increases associated with changes in scope or because one of the groups involved in building a system onsite ‘didn’t receive the correct information’ are reduced. Stick-built systems involve many different groups to complete a project, such that it becomes very difficult to actually capture the cost of a system, while modular system manufacturers very typically provide a ‘firm bid’ for a project, based on a defined set of deliverables. In IPEC’s case, if a process flow diagram is not provided as part of the Request for Quote (RFQ), one is developed, along with preliminary Bills of Materials (BOMs) to ensure the customer/end-user has a complete understanding of what is being provided in terms of equipment and services. Cost increases or overruns are greatly reduced because the scope of the project is clearly defined at the start. Any changes from that point forward are compared to the original agreed upon scope.
This summarizes some of the many cost savings that can be realized when building a modular system. In the next installment, I will review some of the advantages seen in development/collection of Turnover Documentation and preliminary tests that can be performed on Modular Systems.