Supply Chain Management

Supply chain management is a new concept of doing business, which has been recognized and practiced by the manufacturing industry for the last two decades. It has also emerged as new practice in construction industry.

Because of emerging technological advances and to maintain competitive advantage in business environment, it has become essential to plan, organize, and control

TABLE 1.14

Typical Categories of Risks in Oil and Gas Projects

Sr. No.	Category	Types
1	Management	Selection of project delivery and contracting system Selection of project management consultant
2	Contract (project)	Scope/design changes Schedule Cost Conflict resolution Delay in changer order negotiations
3	Statutory	Statutory/regulatory delay
4	Technical	Incomplete design Incomplete scope of work Design changes Design mistakes Errors and omissions in contract documents Incomplete specifications Ambiguity in contract documents Inconsistency in contract documents Inappropriate schedule/plan Inappropriate construction method Conflict with different trades Improper coordination with regulatory authorities Inadequate site investigation data
5	Technology	New technology
6	Construction	Delay in mobilization Delay in transfer of site Different site conditions to the information provided Changes in scope of work Resource (labor) low productivity Equipment/plant productivity Insufficient skilled workforce Union and labor unrest Failure/delay of machinery and equipment Quality of material Failure/delay of material delivery Delay in approval of submittals Extensive subcontracting Subcontractor’s subcontractor Failure of project team members to perform as expected Information flow breaks

TABLE 1.14 (Continued)

Typical Categories of Risks in Oil and Gas Projects

Sr. No.	Category	Types
7	Physical	Damage to equipment Structure collapse Damage to stored material Leakage of hazardous material Theft at site Fire at site
8	Logistic	Resources availability Spare parts availability Consistent fuel supply Transportation facility Access to worksite Unfamiliarity with local conditions
9	Health, safety, and environment	Injuries Health and safety rules Environmental protection rules Pollution rules Disposal of waste
10	Financial	Inflation Recession Fluctuations in exchange rate Availability of foreign exchange (certain countries) Availability of funds Delays in payment Local taxes
11	Economical	Variation of construction material price Sanctions
12	Commercial	Import restrictions Custom duties
13	Legal	Permits and licenses Professional liability Litigation
14	Political	Change in laws and regulations Constraints on employment of expatriate workforce Use of local agent and firms Civil unrest War
15	Natural/environmental	Flood Earthquake Cyclone Sandstorm Landslide Heavy rains High humidity Fire

TABLE 1.14 (Continued)

Typical Categories of Risks in Oil and Gas Projects

Sr. No.	Category	Types
16	Geological	Estimation of accessible reserves
17	Supply and demand	Financial crises and macroeconomic factors
18	Operational	Availability of skilled workers

EPC, engineering, procurement, and construction.

Source: Abdul Razzak Rumane. (2013). Quality Tools for Managing Construction Projects. Reprinted with permission from Taylor & Francis Group.

TABLE 1.15

Potential Risks on Scope, Schedule, and Cost during Construction Phase and Its Effects and Mitigation Action

Sr. No.	Potential Risk	Probable Effects	Control Measures/Mitigation Action
1.0 Scope
l.l	Scope/design changes	• Project schedule • Project cost • Claim	• Compress schedule. • Resolve change order issues in order not to delay the project.
1.2	Different site conditions to the information provided	• Change in scope of work • Delay in project	• Contractor has to investigate site conditions prior to starting the relevant activity.
1.3	Inadequate site investigation data	• Additional work • Scope change	• Contractor has to investigate site conditions prior to starting the relevant activity.
1.4	Conflict in contract documents	• Project delay	• Amicably resolve the issue.
1.5	Incomplete design	• Project scope • Project schedule • Project cost	• Raise request for information (RFI). • Resolve issue in accordance with ontract documents
1.6	Incomplete scope of work	• Project scope • Project schedule • Project cost	• Raise RFI. • Resolve issue in accordance with contract documents.
1.7	Design changes	• Project scope • Project schedule • Project cost	• Follow contract documents for change order.
1.8	Design mistakes	• Project scope • Project schedule • Project cost	• Raise RFI. • Resolve issue in accordance with contract documents.
1.9	Errors and omissions in contract documents	• Project scope • Project schedule • Project cost	• Raise RFI. • Resolve issue in accordance with contract documents.

TABLE 1.15 (Continued)

Potential Risks on Scope, Schedule, and Cost during Construction Phase and Its Effects and Mitigation Action

Sr. No.	Potential Risk	Probable Effects	Control Measures/Mitigation Action
1.10	Incomplete specifications	• Project scope • Project schedule • Project cost	• Raise RFI. • Resolve issue in accordance with contract documents.
1.11	Conflict with different trades	• Project delay	• Coordinate with all trades while preparing coordination and composite drawings.
1.12	Inappropriate construction method	• Project delay • Claim	• Raise RFI and correct the method statement.
1.13	Quality of material	• Project delay	• Locate suppliers having proven record of supplying quality product.
2.0 Schedule
2.1	Incompetent subcontractor	• Project delay • Project quality	• Contractor has to monitor the workmanship and work progress.
2.2	Delay in transfer of site	• Project delay	• Contractor has to adjust the construction schedule.
2.3	Delay in mobilization	• Project delay	• Adjust construction schedule accordingly.
2.4	Project schedule	• Project completion	• Compress duration of activities.
2.5	Inappropriate schedule/plan	• Project delay	• Contractor has to prepare schedule taking into consideration site conditions all the required parameters.
2.6	Delay in change order negotiations	• Project schedule	• Request owner/supervisor/project manager to expedite the negotiations and resolve the issue.
2.7	Resource availability (material)	• Project delay	• Contractor has to make extensive search.
2.8	Resource (labor) low productivity	• Project quality • Project delay	• Contractor has to engage competent and skilled labors.
2.9	Equipment/plant productivity	• Project delay	• Contractor has to hire/purchase equipment to meet project productivity requirements.
2.10	Insufficient skilled workforce	• Project duration	• Contractor has to arrange workforce from alternate sources.
1.11	Failure/delay of machinery and equipment	• Project delay	• Contractor has to plan procurement well in advance.
1.12	Failure/delay of material delivery	• Project delay	• Contractor has to plan procurement well in advance.
2.13	Delay in approval of submittals	• Project delay	• Notify owner/project manager.
2.14	Delays in payment	• Project delay • Claim	• Contractor has to have contingency plans. • Owner has to pay as per contract.

TABLE 1.15 (Continued)

Potential Risks on Scope, Schedule, and Cost during Construction Phase and Its Effects and Mitigation Action

Sr. No.	Potential Risk	Probable Effects	Control Measures/Mitigation Action
2.15	Statutory/regulatory delay	• Project delay	• Regular follow-up by the contractor and owner with the regulatory agency.
3.0 Cost
3.1	Low bid project cost	• Project quality	• Contractor has to try competitive material and improve method statement and higher production rate from its manpower.
3.2	Variation in construction material price	• Project quality • Project cost	• Contractor has to negotiate with supplier/ manufacturer for best price. Contractor has to request for change order if applicable as per contract.
3.3	Damage to equipment	• Schedule	• Regularly maintain the equipment. Take immediate action to repair damage equipment.
3.4	Damage to stored material	• Project delay • Material quality	• Contractor has to follow proper storage system.
3.5	Structure collapse	• Injuries • Project delays	• Contractor has to ensure that formwork and scaffolding is properly installed.
3.6	Leakage of hazardous material	• Safety Hazards	• Contractor has to take necessary' protect to avoid leakage. Store in safe area.
4.0 General
4.1	Failure of team members not performing as expected	• Project quality • Project delay	• Select competent candidate. Provide training.
4.2	Change in laws and regulations	• Scope/specification changes • Variation order	• Contractor has to inform owner/consultant and raise RFI.
4.3	Access to worksite	• Extra/additional time to access site	• Access road to be planned in coordination with adjacent area and local authority.
4.4	Theft at site	• Project delay	• Contractor has to monitor access to site. Record entry/exit to the site. Provide fencing around project site.
4.5	Fire at site	• Project delay	• Contractor has to install temporary firefighting system. Inflammable material should be stored in safe and secured place with necessary' safety measures.
4.6	Injuries	• Project delay	• Contractor has to keep first aid provision at site. Take immediate action to provide medical aid.

TABLE 1.15 (Continued)

Potential Risks on Scope, Schedule, and Cost during Construction Phase and Its Effects and Mitigation Action

Sr. No.	Potential Risk	Probable Effects	Control Measures/Mitigation Action
4.7	New technology	• Scope change • Schedule • Cost	• Owner/contractor has to mutually agree for changes in the contract for better performance of project.t

Source: Abdul Razzak Rumane. (20I6). Handbook of Construction Management: Scope, Schedule, and Cost Control. Reprinted with permission from Taylor & Francis Group.

all supply chain-related activities at all the levels of product/project life cycle to ensure competitiveness of end product. It is a process to ensure that the customer gets right product or service having right quality and quantity on time.

Supply chain management is very complex process which has involvement of many participants both within and outside the organization. Each of these participants has influence over the activities to be performed to ensure availability of the product for further processing.

Supply Chain Management

The Role of Supply Chain Management in Corporate Strategy

WHAT IS SUPPLY CHAIN MANAGEMENT?

STAGES OF SUPPLY CHAIN MANAGEMENT

Supply chain management

Introducing supply chain management

Supply Chain Management

SUPPLY CHAIN MANAGEMENT AND THE SUPPLY VALUE CHAIN

Supply Chain Management

Supply chain management and pathway design

Supply Chain Management