Balancing schedule versus cost in engineering, procurement and construction (EPC) is a continuing challenge. Both elements are critical to a successful project, yet the emphasis on one over the other can vary depending on customer priorities and project requirements. At S&B, guiding customers through these priorities is key to achieving successful project outcomes. We assess each project's unique needs and act strategically to maximize quality results. Let’s explore the distinctions between schedule-driven and cost-driven projects, the strategies employed to cater to each and how S&B strikes a balance based on specific project goals.
What Are Schedule-Driven and Cost-Driven Projects?
The distinction between schedule-driven and cost-driven projects is determined by the principal priorities guiding the project.
Schedule-Driven Projects: These projects are largely governed by stringent deadlines. They have a firm timeline, often dictated by market demands or contractual obligations. The primary goal is to meet these deadlines, even if it results in higher costs. In the midstream and chemical markets, delivering a project on an accelerated timeline may be crucial to capitalizing on market opportunities or fulfilling delivery commitments.
Cost-Driven Projects: Cost-driven projects prioritize financial efficiency, often featuring more flexible timelines. The focus is on finding the most cost-effective solutions, which typically involve extensive price differentiation. These projects might be more prevalent when there is no immediate market pressure, allowing for a broader timeframe. It’s important to understand that no project is entirely cost-driven or schedule-driven. They fall somewhere along a range of priorities depending on the expectations and goals of the project.
Benefits of Each Project Type
Schedule-Driven Project Benefits:
● Market Advantage: Faster project completion enables customers to gain a competitive edge, capturing market share more quickly.
● Accelerated Revenue: Early completion can boost revenue streams from new facilities.
● Customer Satisfaction: Meeting tight deadlines helps customers fulfill commitments, strengthening long-term reputation.
Cost-Driven Project Benefits:
● Cost Efficiency: Prioritizing cost efficiency and flexible schedules avoids premiums for expedited labor, equipment and material procurement.
● Reduced Supply Chain Strain: Flexible timelines reduce workforce strain and mitigate procurement challenges.
● Enhanced Quality Assurance: Ample lead times allow for additional quality assurance and enhanced inspection on more complicated equipment, minimizing the risk of rework.
How S&B Strategizes for Project Goals
Extensive Vendor Relationships and Rapid Mobilization: Through strong vendor relationships, S&B enables our team to deliver expedited services beyond standard capabilities. Every purchase order is meticulously tracked and managed to avoid delays by our expediting team, handling everything from documentation to delivery.
Working with S&B’s network of established and trusted vendors, who are familiar and aligned with S&B’s processes, also allows us to accommodate fast-tracked requests, ensuring swift mobilization.
Competitive Bidding: In cost-driven projects, competitive bidding is crucial. Leveraging an extensive network of vendors helps ensure the most cost-effective solutions for customers. S&B’s established supply chain relationships consist of both domestic and international suppliers. This allows us to quickly scale and obtain multiple competitive bids and maximize our ability to secure favorable pricing and terms. By taking a broader market approach, S&B is able to provide customers with the most comprehensive view of available cost options to support their project goals.
Resource Allocation: To meet tight deadlines, S&B significantly scales up its resources according to project needs. A project requiring 50 purchase orders in eight weeks will necessitate a larger team compared to a project with a two-year timeline for the same number of orders. Smaller staff equates to reduced man-hours and lower costs.
Risk Management and Contingency Planning: Cost-driven projects often require meticulous risk management to avoid unforeseen expenses. S&B develops comprehensive risk mitigation plans, including contingency budgets and alternative sourcing strategies. While international vendors may offer cost advantages, they can also introduce additional project risks, such as longer transit times and reduced oversight capabilities. It’s important to evaluate options based on project goal, budget and timeline. Leveraging a higher percentage of international vendors for cost-driven projects may work best, whereas utilizing domestic vendors for schedule-driven projects may help mitigate risks with meeting a required schedule. S&B’s procurement experts can help you determine the best path forward to mitigate risk and achieve your respective project goals.
Continuous Improvement and Growth
S&B's commitment to continuous improvement is a key part of our project management approach. With over 55 years of experience across engineering, procurement and construction, S&B applies proven insights and strategies in project execution. Advanced project management software and innovative data-driven decision-making tools are also continuously integrated into our processes to enhance accuracy and efficiency.
The EPC industry continues to evolve, with fluctuating trends in customer preferences for cost-driven projects versus schedule-driven projects. As market dynamics shift and new technologies emerge, S&B remains equipped and agile, adapting our methodologies to deliver on changing demands.
Balancing schedules and cost considerations are crucial in EPC to ensure customer goals are fully achieved. S&B’s expertise in navigating these priorities helps enable our customers to achieve their specific project goals – whether prioritizing tight timelines or adhering to budget constraints. By leveraging strong vendor relationships, robust resource allocation, and continuous improvement practices, S&B delivers projects that meet and exceed customer expectations.
Contact S&B’s experts to discuss how we can help you achieve project success. For more information on industry trends and EPC project insights, visit S&B’s Insights blog.
