What Do Suppliers Think?

EPCs make huge IT investments and work largely in the information space. With the volume of digitally stored data involved with most projects, information management is a necessary and critical competency. New documents and data being input into the systems must be properly categorized and managed, such that it can flow out to the end user plant operations on turnover. Less time is available to verify and interpret data received, so the suppliers are being asked (forced?) to pre-process information to suit the EPC input requirements.

The EPC is also faced with the responsibility to ensure equipment is properly procured and properly manufactured. Specifics of the contract between the EPC and end user may impact how the procured material is managed. Schedule factors can put a very high importance on receiving vendor data as the project moves into the critical start up stages. At that point, receipt of vendor data can easily be on the project critical path, jeopardizing EPC performance. By ensuring a careful review of supplier data at critical check points, the EPCs ensure mistakes are not made.

Of course, the validation and checking of processes drive up the volume of documentation required especially in terms of drawings, testing and traceability. These two components lead both to an explosion in the quantity and complexity of documentation as well as the work required to submit the documentation packages.

Generally, suppliers understand these requirements and accept them as part of the supply. The frustration (and additional cost) arrives when each and every minor mistake/variation trigger the document rejection / resubmission process. A lack of empowerment at the document control function leads to frustration in the supplier community. Further, once a working relationship is established, the high turnover within the EPC document control function forces suppliers to revisit every hard won concession agreed by their previous contact.

What our survey found

In 2016 we interviewed 106 respondents – 45 suppliers and 61 EPCs – and asked them questions about their difficulties, challenges and frustrations they each encountered executing project document control. Suppliers considered their main challenges while working with EPCs to be the following:

In addition to identifying the biggest pain points from suppliers, the survey uncovered more general feedback which should be of interest to suppliers. The acceptability of explicitly billing for additional document-related workload was supported by 55% of EPC respondents, while only 30% of suppliers explicitly identify project documentation as a line item on their proposals. The presumption is that itemized billing comes hand in hand with a higher tolerance and greater commitment to execute the work correctly, leading to better project results.

Over 75% of suppliers reported experiencing payment holdbacks related to documentation; 15% agreed it was a fair practice while 25% felt it was a ploy to defer payment. Most suppliers are frustrated by EPCs who are slow to respond; 50% agreed that with shorter review/approval cycles, they would categorize holdbacks as fair.

• EPCs don’t choose suppliers based on document management skills. It would seem that although document control is an important factor in the execution of a successful project, a supplier is rarely evaluated on this skill during the selection process. In fact, only 21% of EPC respondents listed supplier document management skills as a criterion when evaluating potential suppliers.
• Although high quality document control is a basic expectation of EPCs, very little time is spent during supplier selection and project kickoff to set up the project’s document control scope for success. This leads to more time spent during the course of the project managing documents, costing additional time and money on both sides.
• Only one in four suppliers reported that most of their documents are approved upon first submission. The same proportion felt that their document submissions are never approved the first time. Obviously some EPCs are very good at giving clear document requirements, and some give very poor, unclear, or unrealistic ones.

For more information on how you can better handle your document control challenges, download a free copy of our survey Supplier vs EPC, Why is Vendor Documentation So Painful?

Next time, we’ll take a look at how Suppliers look at their relationship with EPCs.