Manufacturing facilities are one example for which productization can provide enormous engineering benefits, especially when paired with digital tools. But many engineers don’t take it far enough.
Engineers at engineering, procurement and construction (EPC) companies continually face pressure to design, build and commission their products better, faster and cheaper. This pressure doesn’t just apply to small, straightforward, high-volume products. It also applies to huge, multimillion-dollar facilities that are traditionally viewed as requiring custom designs and builds. Digital transformation can alleviate some of this pressure.
There are many opportunities for engineers to productize large facilities, according to Cathy Farina, co-founder and vice president of operations at DyCat Solutions, who spoke at the Project Production Institute’s (PPI) annual technical conference in July 2023.
Productization is hardly a new concept. However, Farina presented a persuasive case that productization in many industries can be more widely applied, especially through digital transformation. She also argued that productization can be more extensively applied to designs even at companies that believe they’ve fully implemented productization.
What is industrial productization?
While productization can apply to a wide range of products and services, this article focuses on large, complex, expensive facilities requiring considerable engineering effort. Industrial productization:
- Designs and builds manufacturing facilities with the intent to replicate the initial facility with little change at other locations.
- Applies sustainable concepts to design standardized modular units.
- Applies lean fabrication and assembly concepts to build standardized modular units.
“The definition of productization is about standard modules for which the design can be replicated with minimal engineering and procurement effort,” said Farina during her PPI presentation. “The list of modules and standards does not vary from one facility to the next in a series.”
Digital transformation can further productization by:
- Enabling digital twins for simulation.
- Automating the supply chain.
- Automating the management of fabrication and assembly.
- Reducing reliance on paper and physical models.
Productization examples
Productization of facilities can improve performance for all EPC companies and owners. These examples focus on extensive, complex facilities where the benefits of productization are substantial.
Discrete manufacturing examples, often involving assembly lines, include:
- Appliances, automobiles or trucks.
- Virtually all consumer products.
- Industrial products such as airplanes, compressors, pumps and controls.
- Electronic products such as chips, circuit boards and related components.
Continuous manufacturing examples include:
- Crude oil and natural gas production, transportation, refining and distribution.
- LNG export and import terminals, and renewable methane plants.
- Small-scale nuclear electricity generation plants.
- Consumer liquids such as soda, milk or beer.
- Electricity production based on either fossil fuels or renewables.
Infrastructure examples include:
- Fiber cables and switching facilities for telecommunications.
- Data centers for computing infrastructure.
- Distribution and fulfillment centers for brick-and-mortar and online retailers.
- Railways, roads, ships, airports, bridges and tunnels for transportation.
- Warehouses, ports and terminals for supply chain management.
- Electricity generation, transmission and distribution.
The benefits of productization
Productization has and can work without digital transformation. It then relies heavily on paper and physical models. However, digital transformation makes it possible to:
- Define products and processes in more detail at an acceptable cost.
- Reduce the importance of informal, shared cultural knowledge in the business.
- Revise products and processes as problems and opportunities arise more quickly and at a lower cost.
Productization benefits for the facility project include:
- Reduced project management, engineering and procurement costs.
- Reduced engineering and procurement schedule.
- Increased fabrication labor productivity and quality due to building modules inside.
- Reduced fabrication rework leading to reduced cost.
- Reduced number of requested change orders, leading to better scope control and reduced cost.
- A shorter project construction schedule that achieves earlier time to market.
- Reduced project risks that improve cost and schedule projections.
- More reliable project cost and schedule projections that minimize the risk of cost surprises.
- Reduced requirement for experienced engineers who design the initial modules, not the entire facility. The module copies can be developed by less experienced staff.
- Reduced commissioning and startup learning due to consistent design.
Productization benefits for the facility operation include:
- Reduced facility capital costs that increase project attractiveness to investors.
- Higher facility ESG performance that leads to better social acceptance through reduced resource consumption and emissions.
- Improved facility safety performance reduces injuries and unscheduled outages.
- Reduced facility lifecycle costs improve return on investment.
- Higher quality facilities improve product quality and reduce maintenance costs.
The productization benefits engineers can achieve apply not just to the final product but also to its subassemblies and components.
These many productization benefits are offset by higher upfront engineering costs to establish the initial module designs and related standards.
“Ideally, productization benefits increase over time through continuous improvement of the standard design,” Farina told Engineering.com. “Engineers should develop the next generation design to incorporate lessons learned such as optimizations, advancing technology and regulatory changes.”
Productization strategies
Productization strategies maximize the use of standard components and repeatable design, build, test, install and commission processes. When engineers review their company’s productization strategies, they will find additional opportunities to expand productization. For example:
- Design standardized modules with as many common components as possible.
- Follow defined fabrication and assembly processes as much as possible.
- Build modules that contain as much production equipment, HVAC, piping, instrumentation, electrical wiring and controls as possible.
- Maximize fabrication and assembly in a controlled environment to maximize labor productivity and achieve consistent quality.
- Minimize onsite construction work to minimize labor costs and the impact of weather risks.
“A productization strategy that has a huge influence is the selection and operation of the module fabrication plant,” says Farina. “Well-defined fabrication and assembly processes operating in the context of a comprehensive quality control program ensure productization is a success.”
Estimating the value of productization
To quantify the value of productization for a given series of facilities, compare the estimate for the traditional custom design and build to the estimate for the productized version. The primary cost categories where productization is lower will include:
- Onsite labor. Productization requires significantly lower onsite labor hours.
- Engineering design effort. Productization requires more detailed design effort for the initial modules and less for the replications. The traditional custom design approach requires more total effort.
- Materials. Productization achieves lower costs due to a smaller facility footprint and standard designs.
- Fabrication and assembly. Productization achieves lower costs by moving onsite labor offsite to a more controlled environment.
- Costs associated with project schedule duration. Productization tends to require less schedule that, in turn, lowers cost.
- Program management. Productization achieves lower costs by shortening the schedule duration.
The primary cost categories for which traditional custom design and build and productization are similar include site preparation, onsite utilities and transportation.
Impediments to productization
Productization initiatives may encounter impediments and skepticism. For example:
- Lack of engineers with productization subject matter expertise.
- Some engineers believe they can design each facility better through custom designs.
- Some engineers feel their design creativity is being constrained by productization.
- Successful project teams using traditional custom design and build methods will be adverse to change.
- Some organizations will challenge the benefits case for productization as exaggerated.
- Some engineers will misunderstand how to execute a productized design and build properly and reject the concept.
- Some organizations will not be willing to accept that some productized facilities may be slightly over-designed and some may be somewhat under-designed due to differences in local conditions.
“Owners have to accept that some of the facilities may be over-designed, and some may be slightly under-designed,” Farina told Engineering.com. “That’s a small price to pay for the significant benefits of productization.”
Owners and EPCs continue to migrate from traditional custom design and build to productization for the benefits described. They far outweigh the cost of introducing the change to productization.
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Yogi Schulz has over 40 years of Information Technology experience in various industries. He writes for ITWorldCanada and other trade publications. Yogi works extensively in the petroleum industry to select and implement financial, production revenue accounting, land & contracts, and geotechnical systems. He manages projects that arise from changes in business requirements, from the need to leverage technology opportunities and from mergers. His specialties include IT strategy, web strategy, and systems project management.
