Any Time, Any Place, Any Product: A Roadmap for Successful International Pharmaceutical Plant Construction Projects
“International relationships are preordained to be clumsy gestures based on imperfect knowledge.” – Rebecca West
By Harold Boman, Vice President, Fluor Corp.
|For an overseas project, the parties' alignment requires a broad analysis of issues and challenges unique to the selected site.|
If Ms. West, an English journalist and novelist, were a project manager in today’s world, she might find a rewarding career in risk management with global pharmaceutical owners and contractors. While she does take a relatively pessimistic view of the challenges facing today’s international project environment, she is correct in one aspect — the cultural and communication issues associated with international projects are in fact the greatest barriers to success.
Our task as engineers and managers in the global construction industry is to use the processes, communication tools and information sources available to us today to perfect our knowledge of a project’s technological, logistical and financial issues. Doing so allows us to overcome “clumsy gestures” and create a model that ensures a high probability of success.
The design and construction of pharmaceutical facilities has never been a simple task. Changing technologies, a stringent regulatory environment and the need for exhaustive product testing add dimensions to projects not always found in those of other industries. International projects must overcome differences in language, politics, climate and time zones and uncertainties associated with ocean freight and material and labor availabilities — not to mention the obvious cultural differences.
This article will address pharmaceutical project execution in a global environment, and outline how proven elements of project management can be combined with modern tools of communication and coordination to improve project delivery.1. Project Assessment: Define, align and assign
The first order of business in any project is to align the objectives of all participants. Yet, a surprising number of projects are initiated, and even completed, without going through this essential phase. Often the schedule is so demanding that projects simply mobilize and start. Neglecting to clearly define objectives and outline the risks associated with them for all parties is the surest road to failure. The alignment process is essential for a project to live up to its potential.
In a conventional alignment, participants articulate the business purpose and functionality of the facility, then discuss cost, schedule and quality criteria so that the project team’s leadership has a clear picture of the road ahead.
All of the key stakeholders in the project owner’s organization — corporate engineering, strategic sourcing, manufacturing and quality — must contribute. Productive alignment sessions address such issues as facility flexibility, expandability, code compliance and amenities.
For an international project, the alignment of the parties requires a broad analysis of issues and challenges unique to the selected site. From the conceptual design on, all significant players in facility design, procurement, construction and qualification must keep in mind unique aspects of the chosen location. Which language will predominate, where design staff will be located and what permitting strategy to use are all key considerations that will vary from location to location.
In addition, the project’s units of measurement (imperial units vs. metric system) should be fixed during the alignment. Changing measurement units later in the project can put a project behind schedule and over budget.2. Project Management: Tough job, high risk
An international project manager must be a seasoned veteran with experience in pharmaceutical facility delivery. The ideal candidate should have adequate tenure with his or her employer to ensure a thorough knowledge of company practices and access to the company’s internal network and resources. The project manager will face a number of potential pitfalls, including:
- Onshore/offshore contractual issues — Negotiating the contract for any project is more difficult these days as the parties attempt to protect their respective corporate interests. For international projects, the negotiation process demands legal expertise on both sides. The parties must first specify the appropriate entity of a corporation that will be signatory to the agreement. In most cases, two or more contracts will be required to provide appropriate legal coverage for work performed in multiple locations. As international project sites are selected, determining the split between onshore and offshore work is critical.
- Commercial issues — Once the onshore/offshore portions of the scope are determined, the two parties must arrive at a mutually attractive commercial deal. Contractors rightfully expect to be compensated for undertaking the additional risks associated with an international project, so fees on these projects will typically be higher than for domestic projects, while lump sum contracting is much more common in the global construction market than cost-plus and reimbursable arrangements.
- Relationship building — Positive personal relationships between designer, builder and owner are absolutely critical in international projects. Managers in certain cultures, notably Southeast Asia and Latin America, will usually not discuss business before they’ve developed confidence in and a connection to their services suppliers, which can take several weeks of “small talk” at dinners and other events. In these instances, one should never talk business before a strong rapport has been reached.
- Site-specific risks — During contractual negotiations, greater attention must be focused upon labor harmony, weather and geopolitical risks. The potential for force majeure events is significantly higher in some locations.
Modularization and preassembly vs. onsite decisions — The benefits of off-site fabrication are well-documented (Pharmaceutical Manufacturing, September 2004), and modular construction can help:
- Mitigate site labor shortages and weather-related delays;
- Improve quality compliance, since shop fabrication programs ensure a higher quality installation;
- Reduce the impact of labor interruptions, and the project’s social and environmental impact.
However, modularization is not a panacea. Many countries discourage any discretionary imports, offering tax benefits for the use of local engineering, construction and materials, so a thorough cost/benefit analysis is critical.
Electronic Tools — When properly applied, electronic design, project management and construction tools can dramatically improve coordination. However, the project must be properly configured and managed to best use these modern conveniences:
- Communication — E-mail communication is convenient, but it should not be overused. In international projects, particularly, the potential for misunderstandings is great. In general, if the subject is complicated or controversial, pick up the phone.
- Site infrastructure — Don’t assume that an adequate communication infrastructure exists in remote locations. In less-developed areas, phone and wireless access are more difficult to set up. Many people assume that, with a satellite receiver in place, the issue is resolved. However, some countries do not allow unpermitted transmissions and obtaining an appropriate permit from local authorities or communication agencies can take months
- Centrally hosted project collaboration systems — It’s now widespread practice to maintain all project documentation in a central database, accessible by the engineer, constructor, key suppliers and owner. For pharmaceutical projects, the main advantage of these systems is the fact that they allow team members to reuse the engineering data, stored in templates, for commissioning and validation.
- Remote design review — Many projects use 3-D engineering tools and project database systems to provide a virtual representation of the proposed project. These tools offer benefits over 2-D technology, but maximum benefits are obtained when all project team members use the model for planning and scheduling their work.
Cost estimating — A common source of severe estimate swings is the broad application of U.S. or European productivity standards. Construction productivities vary significantly around the world, primarily due to local work practices, tools, work hours, governmental influences and customs. In addition to estimating systems, project cost systems should be tested and proven capable of dealing with multiple currencies and conversions.
Facility qualification strategy & validation master plan — Without the approval of the appropriate drug regulatory agency, pharmaceutical plants become the “white elephants” that every CEO dreads. With international projects, the regulatory approval requirements are likely to involve multiple agencies, complicating the design process. Facility design must consider the “worst case” regulatory position of each of the various agencies.
Risk assessment/mitigation — The project manager must conduct an early assessment of the risks expected, and categorize each based on the likelihood of it occurring and its potential severity. The assessment is a living document — as the project progresses, some risks will go away as new risks emerge. 3. Engineering — Designing for the region, serving the world
For many international projects, the conceptual and preliminary engineering scope will be executed in a region close to the owner’s technology center, or in an area where specific process engineering expertise is available. The execution of the detailed engineering, however, is typically performed in the international region where the project is to be located.
By splitting the design in this way, an owner is usually guaranteed the best of both worlds — a front-end definition package by a world-class engineering firm and construction drawings prepared in a location familiar with the site’s codes, permitting requirements, local materials, climate, workforce and design standards.
Owners and consultants should focus their attention on the following:
4. Procurement: Think locally, act globally
- Engineering (3-D vs. 2-D) — Most projects in developed regions have migrated to 3-D project execution platforms. However, if the local contractor doesn’t have experience with 3-D, many of the benefits can be lost, and converting data from 3-D back to 2-D is more expensive than using 2-D methodology from the start.
- Engineering data — At the outset of the project, the owner and engineer should commit to the central management of the project data, with the goal being to migrate data to the commissioning and qualification templates. The data is thus available for commissioning, validation and, ultimately, the seeding of the owner’s operations and maintenance system.
- Materials and specifications — Throughout the engineering process, the owner and engineer should be aware of the differences in tolerances for international materials, and the availability of the materials themselves. For instance, in many locations, the low carbon version of stainless steel (304L, 316L, etc.) is the only form available. Owners and designers should not automatically specify their “home standards” without first checking material availability and pricing in the plant’s ultimate location.
- Complexity of controls systems/automation — The degree of automation must be evaluated early in the project’s life cycle to prevent catastrophic impact should the initial concept fail. In most international locations, “less is better.”
Procurement and shipping/trafficking are major concerns for projects sited in remote locations. Suppliers must be experienced in overseas shipment, customs and excise taxes, and local routing in the site location. In some cases, tax benefits for process and support equipment can be impacted by the choice of the supplier. In addition, proper marking and tagging of freight entering a country is necessary to preserve tax savings offered to the Owner. An improperly marked crate or container can be held up for weeks in customs, or can cause the project to incur unnecessary costs for taxes and fees.
Every country has unique requirements for the entry of equipment and systems, so supplier prequalification and preplanning is essential for successful procurement. If a preferred supplier does not have proven experience in shipments to international locales, the owner should contract a freight forwarding consultant to advise in the process. Large pieces of equipment and modular systems will present significant challenges for the project, and in many cases, the transports (trucks, low-boy trailers, dollies, etc) must be imported along with the equipment.
It’s a good idea to establish agreements with local suppliers shortly after mobilizing on the site. Many bulk material items, such as structural steel, siding and concrete panels, and non-hygienic piping, may be sourced locally. The facility will rely heavily on its area suppliers after completion, so establish these relationships during construction.5. Construction: Bringing it all together
Thirty years ago, contractors from the United States and Europe would simply “airlift” all necessary resources to the site, complete with the associated costs for labor camps, expatriate subsistence and travel. Today, the expertise of construction craft personnel aro und the world has increased dramatically, to a point where it is hard to justify many expatriates for construction of an international project.
However, there are certain functions of the construction process that must be evaluated during the initial planning phase to ensure that the construction approach is sound. Management in the field should never be compromised. Close attention must be paid to:
6. Facility Qualification: If it won’t pass, it won’t pay off
- Safety — Owners may be surprised to find that safety programs that are taken for granted in developed countries don’t exist in many locations abroad, so the owner and contractor must establish a rigorous and effective safety program. Procedures should be developed to fit local culture and customs, but the ultimate goal is to establish a “project culture” that ensures worker safety and environmental protection.
- Transfer of design intent — Initial planning for the project should consider the means by which the design intent will be transferred to the site. Once the design has gotten “cold” in the field, it is occasionally difficult to reconstruct the decision process that led to a specific design feature. Sound international projects always include a methodology for ensuring that the construction site staff has the benefit of the project technical approach established during the conceptual phase and formalized during detailed design.
- Contractor capability — Knowledge of the local business environment and the capability of area contractors is critical for execution in an international locale. In every instance, contractors should be prequalified prior to bidding to verify the number of available craft resources, ensure that proper management staff and procedures exist, and determine the past safety performance.
- Local customs — The construction manager must be aware of the social, legal and attitudinal differences between his or her home region and the site location. Language and religious customs are the first differences that surface and must be accommodated.
In addition, the site staff must be keenly aware of the holidays and work schedules that are expected by the local work force. In several Asian countries, for instance, workforces can shrink dramatically during the rice harvest season, and the schedule can be impacted if this period was not anticipated. Overtime is commonly used as a schedule acceleration tool, but in many locations the workforce traditionally works a set weekly schedule with little or no variance.
It pays to hire an assistant project manager to serve as a translator and guide to local customs, keeping in mind that indigenous people always appreciate foreign nationals who at least try to learn their language.
- Ethics and legal complications — Bribery or under-the-table payments are still common in some areas of the world. Principled managers must avoid even the appearance of wrongdoing to protect the fiduciary interests of their companies and the owner.
- Differences in construction tools and methods — A construction manager with limited international experience may be shocked to see some of the work practices in developing countries; for example, labor jurisdictional lines may be enforced in some countries, while, in others, these trade distinctions may not exist. In either case, the construction manager and the engineer must be aware of the approach that the local trades take to their work, so that the construction documents can match the local means and methods.
- Productivity assessment — “If it’s not measured, it’s not managed.” The only means to ensure that the project is tracking to its budget and schedule targets is to constantly measure and track the results of construction activities.
Once a pharmaceutical facility has reached mechanical completion, a great deal of effort remains before it reaches its ultimate purpose. Not surprisingly, the key to a successful commissioning and validation phase is set early in the project, when the management team completed the project schedule.
The start-up sequence of systems should be part of the construction completion plan, with the system turnover addressed as a logical cascade of activities instead of a vertical wall of system completions. Most systems in the cascade should be turned over by construction prior to mechanical completion with a few process and HVAC systems at the end.
Some of the more challenging aspects of commissioning and validating an international project include finding qualified staff, determining start-up consumables and spare parts, and ensuring compliance with international regulations. A compliance master plan defines the guidelines to be met, and this living document serves as a road map for compliance, revised as necessary throughout the life of the facility.
By selecting experienced engineering and construction partners for an international project, the owner has taken the first step towards delivering a functional and compliant facility. Much of the project execution process is applying basic risk management and following the best practices established in the past, regardless of project location. However, each project has its unique challenges, which are overcome by understanding the similarities, and more importantly, the contrasts from previous projects.
In the global environment, each new location presents logistical problems, resource issues, and hardships that potentially have not been addressed in the construction of past pharmaceutical projects. However, if the project team thoroughly considers the location-specific aspects of the work, and is constantly aware of the cultural implications, no location is beyond the reach of the industry.
About the Author
Harold Boman serves as vice president of operations for Fluor’s Life Sciences business. He is responsible for project operations including sales support, contract negotiation, project execution, and client relations, as well as direct supervision of regional and functional managers in six countries. His 30 years of industry experience includes project engineering and construction management for biotechnology, pharmaceutical, manufacturing, oil & gas, and modular facilities. Boman holds a mechanical engineering degree from the Georgia Institute of Technology, Atlanta. He can be reached at Harold.email@example.com