Thoughts on the Work of Small and Medium-sized Chemical Engineering Design Institutes

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Thoughts on the operations of small and medium-sized chemical engineering design institutes. With the abolition of the Ministry of Chemical Industry, the nine major chemical industry ministries’ affiliated institutes underwent restructuring, thereby setting the trend for the development of the entire industry. Provincial and municipal-level design institutes have undergone restructuring, and as a result of fierce market competition, numerous small companies such as XXX Design Institute Co., Ltd. or XXX Engineering Company have emerged across the country; the vast majority of these are small to medium-sized design institutes. I was fortunate enough to experience just a small part of that process, and today I would like to share my personal views on carrying out work in small and medium-sized institutions. I welcome any criticism and guidance from everyone! Below, using the main components of a complete chemical project as an example, it is described in approximate chronological order of work progression. 1. Source of technology: The development paths of design institutes within the chemical industry and those in the oil refining sector differ. The former focuses on engineering aspects, with the project owner typically purchasing the process packages, whereas the oil refining industry, when introducing foreign technologies in its early days, placed emphasis on understanding and adapting those technologies as well as localizing them. Additionally, since oil refining products are relatively limited in variety, almost all the technologies used in this sector are of domestic origin. Of course, in recent years, chemical engineering design institutes have also placed increasing emphasis on the joint development of process technologies. There are generally two reasons why small and medium-sized design firms can survive in the fierce market competition: (1) they possess their own key technical products, or they are able to develop the necessary technologies quickly in response to market demands ； (2) Having its own niche market. The technical sources for small and medium-sized plants are not different from those of large plants (which generally have their process packages purchased from abroad); typically, the sources are as follows: (1) independently developed by domestic research institutions ； (2) Independently developed by domestic universities ； (3) Joint development by small and medium-sized research institutes with scientific research institutions, universities, or manufacturing enterprises ； (4) Other mixing modes. Of course, with the advancement of science and technology in recent years, the process packages developed domestically are no less superior to those from abroad, especially in the coal chemical industry, such as coal gasification, methanol-to-olefins, and syngas-to-ethylene glycol. 2. Commercial and technical discussions prior to bidding: This stage represents the preliminary research phase for the client before proceeding with a project; it is very important, as the client typically conducts comprehensive comparisons and thorough evaluations. The first impression is very important; the client usually focuses on examining the operational performance, whether the technical solutions are advanced and reasonable, as well as the strength of the design or technical team itself. Projects of different tonnages generally engage service providers of corresponding levels, so the capabilities of these service providers are usually on a similar level. The real comparison lies in the technical solutions; owners who truly understand the matter will give priority to technology. Therefore, technology should take the lead at this stage; only good technical solutions can make a good impression and win over clients who understand the matter. Of course, it is also important to keep one’s technical solutions confidential. One can share everything with the client, but strict secrecy must be maintained regarding competitors. 3. Study the tender documents: After the first phase of research, the client already has a clear idea of what’s needed; a preliminary version of the tender documents is then prepared. Subsequently, a tendering agency can be hired to draft the full set of tender documents (or they can be prepared in-house), after which they are issued and the bidding process is organized. Once the design team receives the tender documents, they must, absolutely must, study them carefully, and organize specialists to thoroughly examine the tender documents. Whether it is a pure design project or an EPC project, this step is extremely important; the tender documents represent the requirements of the client and are directly related to ensuring the cost and technical performance of the project. If one acts rashly without a thorough understanding of the tender documents, the consequences can be severe! Clarify promptly any issues identified during the review of the tender documents. 4. Preparation of tender documents: At this stage, two main documents are required, namely the commercial bid document and the technical bid document. However, a large amount of data is required as support; work should first be carried out on the basis of studying the tender documents. There are mainly four scenarios: (1) pure design projects, with the technology provided by the designer ； (2) Pure design projects, where the client purchases third-party technology ； (3) The EPC project and technology are provided by the designer ； (4) EPC projects, where the owner purchases third-party technology. Depending on the situation, the scope of work and supply, as well as the responsibilities assumed, vary. In case 1, in addition to the standard bidding documents, a complete set of technical process packages, personnel training, commissioning services, and operation support must be provided (with adjustments made as per the owner’s requirements). In terms of responsibilities, in addition to those related to the engineering aspects, responsibility for the process performance must also be assumed ； If it is Case 2, then it is a regular bidding document ； In case three, a bidding project team is established. Based on a study of the tender documents, this team organizes various specialists to prepare cost estimates, which are then provided to the cost estimation specialists. These specialists calculate the project cost taking into account market conditions, using this figure as the basis for the bidding price. At the same time, comparisons should be made with similar installations that have already been built. If there are significant differences in scale or construction time, the investment scale index method can be used for calculations. However, it should be noted that variations in the locations where projects are built and the different requirements of project owners can lead to substantial differences in investment costs. The results obtained using this method are for reference only; careful analysis is necessary when comparing these results, and it must not be used directly for pricing, as the consequences could be severe! In Case 4, no responsibility for process performance issues caused by the process package is assumed; otherwise, it is the same as Case 3. The focus of a commercial bid is the commercial quotation; currently, the approach used for most projects is the target price method, so it is very important to estimate the price accurately ； The focus of a technical bid is the technical solution, which determines factors such as costs, energy consumption, the advancement and rationality of the process, etc. The quality of this solution, to some extent, reflects the company’s capabilities, its ability to generate profits from the project, and the operational standards of the project once it is completed. Many good chemical projects in the country are launched in a rush, which leads to overcapacity and fierce competition among these facilities; only those with lower operating costs and stronger profitability can survive. Therefore, the importance of choosing a good technology and service provider is self-evident. 5. Signing the contract generally includes a commercial contract and technical annexes. The key points of a business contract are the payment timing and proportions, which should at least keep pace with the progress of work, and ideally be ahead of it. The focus of the technical annex is on the evaluation indicators. Evaluation criteria should be both advanced and achievable; otherwise, those who are evaluated will only end up being punished. 6. Project Implementation: The specific implementation phase of a project mainly includes three aspects: design, procurement, and construction. Chemical projects are typically carried out with engineering design as the guiding principle. Compared to pure design projects, EPC imposes higher requirements in terms of staffing, specialization, organizational structure, management methods, etc. The transition from D to E is a rather difficult and lengthy process. (1) Design 1) Process package review: If the owner purchases a third-party process package, it is first reviewed (usually, the owner organizes experts to conduct this review, with the design party also invited to participate). The focus of the review is to determine whether the completeness of the process package, the depth of its content, and the consistency among various documents meet the required standards, and whether it can serve as input for the subsequent engineering design. This review can be carried out item by item in accordance with the provisions of SHSG 052-2003, the Process Design Package for Petrochemical Plants (comprehensive technical and process package). Any missing or insufficient content should be listed item by item, and the package provider shall be required to complete and improve it within a specified time frame. 2) Regardless of where a process package comes from, there is always a possibility of errors in it and room for optimization, but one must not blindly raise a bunch of ignorant and naive questions without any understanding. Only after in-depth research can one put forward one’s own opinions. The research on the process package includes the following aspects: ① Collecting all information related to this technology through all legitimate means and conducting thorough studies, including technical principles, production experience, engineering design experience, etc., with a view to identifying and assimilating it ； ②Material and energy balance calculations are performed for the entire process, with analytical calculations carried out for all equipment. After analyzing each of the identified issues individually, the findings are forwarded to the process package provider for further technical discussions and consultations, leading to a final conclusion. Many technical professionals involved in engineering design consider this measure to be completely unnecessary; since they are only engaged in engineering design, there is no need at all to understand the contents of the process package. The author does not agree with this view. If one has only a superficial understanding of the manufacturing processes for the device they have designed, how can they set appropriate requirements, how can they prevent potential problems, and how can they complete the project successfully? 3) Plan discussion: The plan discussion mainly included discussions on the general layout plan, equipment layout plan, and automatic control scheme. Due to a shortage of staff, tight project deadlines, many project managers holding multiple positions and possibly also administrative roles, many small and medium-sized institutions have severely neglected this process. On the surface, it seems that the process has been simplified, time has been saved, and the project has progressed rapidly. What’s not realized is that as the project progresses, various problems keep emerging, leading to numerous revisions and rework – tasks that consume a great deal of time. Moreover, these repeated modifications often result in inconsistencies; some parts are altered while others remain unchanged, or upstream departments make changes while downstream departments do not. All of this ultimately shows its effects during construction and equipment operation, causing harm to both others and oneself. Furthermore, the surge in workload has led to low efficiency; what used to take the effort of one project now requires the effort of three to five projects. I’d like to ask gently: are man-hours costless? With three to five times more effort, the return is only one-fifth of the performance – where do the project bonuses come from? A group of unfortunate brothers work from dawn to dusk – how can they explain this to their wives and children back home? Therefore, discussing the plan is really important; for areas where one is not sure, it is even possible to hire external experts. If this is done properly, it will save a lot of trouble later on. 4) With the prerequisites established earlier, as each specialty carries out its work, whenever the required depth is reached, it should give priority to proposing the conditions specific to that specialty. Careful planning is essential when carrying out work, to avoid excessive additional demands and to build in a margin of flexibility (for EPC projects, cost-saving incentive mechanisms should be used to guide and control things). Long-cycle ordering of equipment, instruments, and valves often hinders the progress of the entire project; therefore, it is essential to submit purchase requests for these items first. In the case of purely design-oriented projects, it is important to remind the client promptly to make the purchases and to obtain the relevant information from the manufacturers, so as to facilitate the engineering design process. Maintaining good communication with the client is a key factor for the successful completion of the project ； For EPC projects, procurement should be integrated into the design, with a proper schedule for procurement to ensure that all project milestones are met. Engineering design is a collaborative process. Compared to larger organizations, smaller ones are weaker in terms of the maturity of their systems and processes, as well as in terms of staffing. Therefore, individual awareness and a sense of teamwork become particularly important. Conditions are key – they determine success; if the time required for meeting those conditions is ensured, then the project schedule can almost certainly be maintained. At the same time, the quality of the conditions must be ensured, and responsibility for those conditions must be assumed; otherwise, the downstream teams will inevitably make mistakes. In addition, it is necessary to pay attention to joint reviews in order to further ensure design quality. 5) The evaluation sessions for each specialty will be arranged according to the specific circumstances of that specialty. Evaluation meetings must be held at key stages, as this is the best way to leverage the strengths of a team; examples include internal reviews of PID diagrams for the process engineering specialty, internal evaluations of equipment layout diagrams for the piping engineering specialty, and reviews of explosion zone classification diagrams for the electrical engineering specialty. Of course, there are also external reviews, such as the PID version submitted to the owner for review, and reviews of the 30%, 60%, and 90% models for the piping discipline. All reviews are a reflection of collective wisdom and will bring more or less benefits to the project. It is important to note here that during the project execution process, one should not send all design details to the client for approval, as this will cause additional problems. On the other hand, it is also dangerous to act in isolation and keep the client completely out of the project. Maintain the right pace – include key content, important milestones, and areas that require the owner’s involvement, thereby ensuring good interaction. All communications should be carried out via letters so that there is a record of everything, allowing for a balanced and efficient approach. 6) The project completion phase includes cross-disciplinary reviews, production of drawings, design briefings, assignment of design representatives, the three inspections and four verifications, individual unit testing, joint system testing, and mechanical completion. Of course, these elements do not follow a strict chronological order; they are present throughout the entire design process. (2) Procurement: Establish and improve a list of qualified suppliers to secure reliable suppliers for the project. Pay attention to controlling purchase prices (by comparing them with the estimated budget prices), payment proportions and methods (which should not exceed those of the overall project). (3) Construction: In China, with very few design institutes having their own construction companies, the rest rely on a model of subcontracting construction work, with supervision and management of that work being carried out thereafter. When subcontracting construction work, small and medium-sized enterprises should pay attention to assessing the capabilities of the contractors, conduct on-site inspections of their past performance, and avoid assigning projects to unregulated contractors. Such contractors have limited skills, which means the quality of work cannot be guaranteed, and construction issues may lead to safety hazards. Furthermore, such contractors have weak risk resistance, and they may abandon the project due to various objective reasons (such as broken funding chains or rising costs of raw materials), leaving the general contractor to clean up the mess. 7. Commissioning, startup, and handover for use are carried out in accordance with the terms of the contract; generally, there are the following scenarios: 1) Assisting the owner with commissioning and startup ； 2) Guide the owner’s technical staff in operating the vehicle ； 3) Carriage and delivery included. In accordance with the terms of the contract, once the conditions for assessment and acceptance are met, an application shall be submitted to the owner for such assessment and acceptance; upon approval, the owner is required to issue the relevant certification, after which the installation is delivered for use by the owner. If the assessment and acceptance are not passed, rectification is usually required within a specified time frame before submission for another assessment. 8. Design follow-ups: Many design firms have never considered conducting follow-ups on designs; the problems that occurred in one set of installations will reappear in subsequent sets, preventing any progress in quality. Of course, at present, most domestic owners adopt the practice of enclosing the installations right after they are built, especially with some new technologies; only a few of the original designers are able to visit the installation sites, which poses certain obstacles to further improving the design. In such cases, groundwork should be laid during the initial contract negotiations to create conditions for follow-up checks after the installation is in operation. The purpose of these follow-up checks is to optimize and improve any technical or engineering-related issues, thereby preventing similar problems from arising again in the future. After all, practice is the sole criterion for testing truth! At present, many small and medium-sized chemical enterprises in China are performing very well in all aspects. The author has provided a brief analysis based on some observations and issues that seem worth paying attention to, for the sake of reference and discussion.