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New Technical Bulletin on Commercial Quality Control

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The engineering, design, and construction of capital-intensive projects (e.g. petrochemical, refrigeration, pharmaceutical, LNG, etc.) are typically guided by comprehensive Quality Control programs. QC originated in the early 20th century and has never stopped evolving.

ABC on chalkboard

These programs have improved quality, reduced risk, minimized re-work, and saved lives and injuries. Yet several studies and our empirical evidence over the years have demonstrated that we continue to have schedule delays, cost overruns, disagreements between involved parties, and even lawsuits - even though there are many experts out there that provide related support that should be avoiding such problems, such as market analysis, risk management, due diligence, commercial advice, negotiation support, legal services, and so forth. There are dozens of software programs that assist in all facets. With all this expertise, what has been missed?

Commercial Quality Control (CQC) comes to mind!

CQC is simply a logical extrapolation and integration of “traditional QC practices” across the commercial spectrum. An analysis of stakeholder challenges/dissatisfactions across capital project industries over the past 30 years concludes there are well over one hundred problematic issues across the project life cycle that can be better managed by applying Commercial QC. The top five interconnected areas are addressed in our latest Technical Bulletin #0820.

To state the obvious, owners/stakeholders in capital-intensive projects increasingly face new risks in this era with disparate pricing, the multiplicity of owners/stakeholders, long term price volatility, multiple concurrent plant constructions, shortage of skilled personnel, increasingly complex technologies - and now, COVID. Returns-on-investment could be high, unpredictable, or on the other hand, negative. There are controllable impact factors and there are uncontrollable impact factors. CQC is an approach to move more impact factors to the controllable side of the ledger, which helps better identify and mitigate risks across the project life cycle beginning at project inception. This encompasses development, financing, and construction to name a few - and then through operations.

In the Technical Bulletin we briefly address:

  • Ownership structure
  • Contracts
  • Measurability/Auditability/Controllability
  • Fixed vs. Cost-based pricing
  • Scope and Change Control
  • Independent oversight

For a more in-depth look at Commercial Quality Control, click here.

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