Project Partners Blog

The Engineering, Procure, Construct (EPC) industry, in general, has struggled for years to find solutions that would enable integrated operation across the enterprise.  Manufacturing firms found several software vendors developing innovative solutions that allow the planning of material purchases, scheduling of shop floor activities and management of the distribution and logistic process all in a single integrated system that allowed enterprise level reporting and drill down to the underlying transactions that support detail analysis.  Part of this was due to pure numbers, with thousands of companies to purchase MRP and ERP systems, but only hundreds of larger firms to purchase EPC systems.  Niche players developed to fill certain gaps and larger firms developed in house custom applications to support their business.

With the evolution of ERP systems, the major EPC players have started to see solutions that are being developed for the professional services industry, which can be directly used for much of the engineering and design activities found within an EPC firm.  One area that the ERP packages have not addressed well involve the move from historic “standard cost” models used in manufacturing to the “actual cost” model used in some engineering and design work and most construction work.  Systems, such as JD Edwards, have offered an integrated solution between the ledger and payroll systems that allowed penetration into the smaller EPC firms but still relied on other niche and point solutions to provide the complete needs across the enterprise.  By building so much functionality into the GL database, firms with a large number of projects or the need to provide detail job costing ran into conflicts with the financial reporting needs of the firm since there was no sub ledger to off load the detail.  Other niche firms, like Deltek, developed a comprehensive solution for smaller firms doing business with the Federal government but were not practical for most commercial applications.  Firms like Niku and MPower targeted specific project driven needs and built solutions that did a fine job of meeting that specific problem, but did not integrate well into the enterprise view. Other firms, like SAP, sought to build “integrated solutions” by designing in certain aspects of the project management function but ran afoul of the large firm need for very powerful project management tools, such as Primavera, that were beyond the capacity they could reasonable afford to design in.

As engineering systems moved from the drafting board to the computer, systems were evolving greater ability to speed up design by defining various recurring equipment and design elements and relating these elements to specific purchased items.  This allowed the development of automated take-off capability and creation of purchasing systems that were integrated to the design elements and take-off lists.  While this made the procurement process more efficient for some types of projects, such as heavy industrial, it did nothing for civil and less “item” intensive projects.  Other point solutions were developed to aid these industries.  Intergraph and other design tool companies developed solutions to fill specific gaps, such as Marian.  Project management companies either built out additional offerings, such as Expedition from Primavera, or were acquired like Niku did with ABT or Primavera did with TeamPlay. Various niche players developed project-estimating tools, such as MC2 (MC squared) and others developed collaboration and document management solutions like Documentum and ERoom.  Companies, like Meridian, have built up solutions such as Proliance, Prolog and Project Talk for the industry.

As all these various solutions started to appear on the market, EPC, APC, E&C firms were besieged with solutions that did not integrate, did not fill all their needs, were feature poor, plagued with problems and expensive to implement and maintain.  Many of these problems were driven by the segmented nature of the industry and lack of critical mass to fund development and improve the solutions.  As a result, the same large firms are shown as satisfied users of multiple competing systems designed to meet the same need.

In the last 2-3 years, Oracle Corporation has started to expand the Oracle ERP applications into solutions that can better be utilized in the E&C space.  As is true with all the various companies that have offered products in the past, the Oracle Applications have significant gaps that need to still be met by other solutions or custom development.  One of the primary drivers behind the acceptance Oracle is finding in the E&C market is less how well it meets the specific needs of the industry and more the feature rich functionality it offers firms that have been struggling with limited user base and integration as business expands, companies merge and government regulation reaches deeper into the company.

Historically, consulting firms did not find much traction in the E&C industry. Solutions were fragmented and it was difficult to develop critical mass to support a consulting group.  As a result many solution companies either helped customers implement their software or clients were forced to self-implement using internal teams that were sent off to training.  With the sudden up turn in Oracle activity within the E&C industry, a new model has started to appear. Because Oracle has been widely used across manufacturing firms and has thousands of clients across international firms, a significant consultant base exists across the world.  Most of these consultants have strong Oracle application knowledge, understand the complexity of multinational business transactions and the utilization of Oracle applications within a business process re-engineering implementation.  Very few consultants have truly worked across both the ERP and E&C environments.  Since several parts of the solution still require niche or point solutions, this creates a significant challenge for firms doing a true global integrated solution.  This is further compounded by pent up demand that is being met by a software solution that is marketed heavily by the solution company to justify continued development work for the industry.  In contrast to the historic model of implementation, the Oracle solution requires consulting assistance to leverage the true benefits and cost savings envisioned in the ROI model that are used to justify the expenditure.  With limited experienced resources across the ERP and E&C worlds and multiple companies seeking to do their implementation immediately, there is very high demand for a limited number of specialized individuals.  This is driving a need to team across consulting companies to meet the implementation challenges found in the E&C industry.

In the EPC and E&C world, very few firms can offer the complete set of services required to accomplish everything from initial design through final punch list sign off.  What matters most is the ability to bring together the right resources, at the right time, in the right place, to keep a project on track, on schedule and on cost.  With the entry of Oracle Applications significantly into the E&C space, this same model applies.