Mining The Pilbara

Modularisation for the Pilbara Region 17 July 2013

Matthew Cobbett Executive General Manager Cory Fisher Project Manager

Agenda

Safety - Potential for Improvement with Modularisation

Who is Fluor?

What is Modularisation?

The Reason for Modularisation

1st Generation Modules in the Pilbara

2nd Generation Modules in the Pilbara

Conclusions and Recommendations

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Safety Improvement with Modularisation

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Typical Pilbara Site TRIFR = 7.5

2nd Gen Fabrication Yard 3.25 Million Man-hours – 2 First Aid Treatment

Fluor Corporation

Industry leader – One of the world’s leading publicly traded EPCM and project management companies; #110 on FORTUNE 500 list in 2013

Global reach – Over 1,000 projects annually, serving more than 600 clients in 79 different countries

Worldwide presence – Offices in 29 countries on 6 continents

Depth of resources – 41,000 employees globally

Celebrated 100 years in 2012

60 Years in Australia

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Fluor Corporate Headquarters

Dallas, Texas

2012 Financial Performance

Revenue: $27.6 billion

New awards: $27.1 billion

Backlog: $38.2 billion

Fluor Corporation is rated at investment grade levels:

• Long-term Ratings: Standard & Poors “A-” Moody’s “A3” Fitch “A-”

• Short-term Ratings: Standard & Poors “A-2” Moody’s “P-2” Fitch “F-2”

• Outlook: Standard & Poors - Stable Moody’s - Stable Fitch - Stable

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Fluor Corporation

56 Years on NYSE

Fluor Australia: Current Projects

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*

* Note: Executed as part of FAST JV

What is Modularisation?

“What is?”

• Modularisation is an execution approach for design, procurement, contracting and construction that shifts construction hours away from the site

• Assemblies of process plant components

• Assembled at one location (fabricator) and transported to another (jobsite)

• Made up of structure, equipment, piping, electrical, and instrumentation

• Made in a variety of sizes

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Prefabrication Preassembly

Process Modules Offsite Fabrication

Why Modularise ?

Project drivers for modularisation (pre-assembly, configuration, and fabrication location)

• Safer controlled construction – avoids onsite work at heights and temporary handrails, and utilises fab yard overhead craneage, transporters

• Reduce (unproductive) work hours onsite and reduce camp size

• Value – grating and handrail can be incorporated, platework, liners, and piping can be included in assembly

• Schedule benefits – parallel activities with earthworks/concrete and offsite fabrication

• Labour availability

• Risk management

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Why Modularise ?

Project considerations

• Schedule acceleration requirement

• Engineering design safety factors

• Need early vendor design information

• Design software for engineering and shop drawings

• Transportation to remote locations

• Skilled labor shortages and/or low labor productivity

• Industrial Relations challenges

• HSE challenges

• Risk mitigation: final cost and schedule certainty

Recent modularisation project results

• Allowed for more productive work in shop environment from experienced craft (almost 2:1)

• Reduced field workforce, congestion, travel time, remote location impacts, overtime, and created more work fronts

• Facilitated more ground level work, less preparation, and scaffolding

• Broke job into smaller, more manageable pieces

• Facilitated less dependency on weather, remoteness, or site conditions

• Reduced strain on the availability of experienced site craft and supervision

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1st Generation Modules in the Pilbara

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Case Study – 2nd Generation Modules

Key Lessons Learned (1st Generation to 2nd Generation)

More structures could/should be modularised – stair towers, transfer stations, and train load out facility

Screening building screen support Modules, bins, and hopper Modules worked well – replicate

Maximum of 4 lift points better suited fab yard, ship, and site crane/lifting requirements

Use of lifting trunnions where possible – safer/easier than lifting lugs and shackles

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Key Lessons and Differences (1st Generation to 2nd Generation)

Distance Port Hedland to Site = 350 kilometres (1st Generation)

Distance Port Hedland to Site = 500 kilometres (2nd Generation)

More structures modularised – stair towers, transfer stations, and train load out facility. Max Module weight kept to approximately 200 tonnes due to increased distance and uncertainty of bridge limits during design. Decreased bridge inspection requirements, faster convoys.

Screening building screen support Modules, bins, and hopper Modules worked well – replicated (3 PS Screen Support Modules installed in 1 day).

2nd Generation – Modularisation of Stockyard Transfer Stations proved very effective for site install and access (4 Modules installed in 3 days).

Engaged Chinese Fabricator with more “Offshore” Modularisation experience and better safety culture (Australian scaffold standard essential).

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Shop Detailing – Strategy from Lessons Learned on 1st Generation

The Chinese fabrication facilities can utilise their own in-house shop detailing capability however they will not be familiar with WA and other associated standards, especially mechanical platework detailing, and would require extensive in-house supervision. This issue was experienced on 1st Generation.

Execution strategy was for shop detailing undertaken by WA contractor, and issued directly to the nominated fabricator. Providing shop detail drawings by Perth based shop detailers, allows schedule gains to engineering progress by the early release of drawings.

Detailing of grillage was effectively completed by Chinese Fabricator – simple detailing.

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Summary of Fabrication Strategy

China Based Fabrication

• Drivers No mechanical or electrical

equipment to be shipped overseas for fit out of Modules

Remove work hours offsite Reduced cost (improved value) and

improved schedule Larger transport envelope. EPCM efforts to be concentrated in

one location and maintain a level of tonnages that will be attractive to the larger fabrication workshops

• Scope Modularisation of inflow, OHP, and

outflow building steelwork Shuttle trusses and GTU drive

towers, transfer stations, and TLO bins

Australian Based Fabrication

• Drivers Install equipment – pulleys, idlers,

etc. Optimise local fabrication content

(IR local content) Locally fabricate and deliver early

steel to site to enable early mobilisation of SMP contractor

• Scope Conveyor steelwork COS hoppers and chutes Dust collection structures. Train load out smart Module (PAM)

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Total Tonnes = 15,000 Total Tonnes = 5,200

Offshore versus Onshore Fabrication and Pre-assembly of Modules/Trusses

Fabrication, pre-assembly, shipping, and transport to site

• Offshore fabrication = 15,300 tonnes

• Onshore fabrication = 5,296 tonnes

Schedule comparison – tonnes per month from award to completion in fab yard

• Offshore fabrication output 850% more tonnes per month compared to

onshore fabrication

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Modularisation – Safety

Key requirement in selection process/criteria for fab yards as well as tender presentations and evaluations.

Almost 3.25 million work hours were recorded on the Offshore Fabrication project, with no lost time injury and 2 first aid cases

Safety culture during the life of the project changed due to supervision and the introduction of the hazard card system

Hazard cards – encouraged increased management focus on close out of action items

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Traffic Management Plan – Overall Philosophy

Objective was to minimise police and pilot resources and to reduce the number of disruptions

Night time movements down Great Northern Highway to minimise community impact

MRWA approval was required, requested, and granted for Project

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Night Time Movements Study

A report that quantitatively analysed the impact of night time movements of oversize load operations between Port Hedland and the mine site compared to day time was commissioned

30 kilometers/hour average speed – 9:00 A.M. Port Hedland departure:

• A scenario in which oversize load operations are conducted across three days. Two campsites are utilised in route. Operations commence at 09:00 on each day.

30 kilometers/hour Average Speed – 9:00 P.M. PH departure:

• As above, except that operations commence at 21:00 on each day.

As illustrated in the figure to the right, switching to night time operations results in a 91% reduction in the number of light vehicles delayed, and a 76% reduction in the number of heavy vehicles delayed. Total delay, as quantified by vehicle hours expected to reduce by 85%.

Scenario

9 A.M. 9 P.M. Change

Vehicles

Delayed

Light 454 39 -91%

Heavy 348 84 -76%

Total Delay 269 hours 39 hours -85%

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0

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Total Delay

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Vehicles Delayed

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9AM:Heavy 9AM:Light 9PM:Heavy 9PM:Light

Divisible Loads – Optimisation

Approximately 19 off loads (stacked flat packs)

• 70% reduction of police

escorts

• 70% reduction of road

closures for passing

Approximately 63 off loads (disassembled flat packs)

• Unachievable police

escort requests

• Significant other road user

interface issues

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Transport with Approval for Night Time Moves and More Than 2 Loads/Convoy

Night time Module movements – 3 nights travel to site rolling road block

136 Modules moved over 27 night time convoys

Total = 81 nights of rolling road blocks

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Transport Without Approval for Night Time Moves and Greater Than 2 Modules per Convoy

Day time travel (refer impact on traffic on GNH) 3 days

136 Modules would have been moved more than 68 convoys

Resulting in total = 204 days of rolling road blocks, compared to 81 nights

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Transport Envelope from Port Hedland for Offshore Fab

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Transport Envelope from Perth for Onshore Fab

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Incentive for using Freight Forwarder – Module Shipping and Transport

Total Transport Solution – Door-to-door solution i.e. ex-China organise origin transportation/export clearance/marine warranty surveying/pre AQIS compliance/sea freight/customs clearance/ discharge/craneage/haulage to site and offloading at site

Cost Effective – a multinational freight forwarder, with the ability to negotiate in the market place with shipping companies, airlines, and heavy haulage without sole sourcing

3 Site SMP install contracts meant site was the obvious interface for Module handover

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Project Photos Critical Path Ship 7 – Product Screen Support Modules

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Project Photos Critical Path Ship 7 – Product Screen Support Modules

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Modular Construction Recommendations

• The decision to modularise is a program execution decision NOT one that is made in construction

• To be successful it is a detailed process of --- What, When, How, and Why --- to modularise

• Need a commitment to move engineering forward to support the decision

• Need a commitment from the owner’s approval process to support all earlier execution requirements

• Understanding of the early work sequences must be built into the fabricator's organisation

• Fabricator selection process provides a clear understanding of the fabricator's internal work processes and sequences. Shop drawings, nesting plans, weld maps, QC documents, and erection mark drawings

• Ensure that engineering requirements matches the material grades and component configurations available within the fabricators market

• Designing with rolled sections produced within that country

• Have the original engineering drawings translated into the local language

• Ensure Engineering Platform matches the fabricator’s

• An advantage to Module Fabrication in a major shop is the ability to work double or triple shifts, coupled with a larger permanent workforce

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Modular Construction Recommendations

Ensure route survey and transport corridors are understood

Detailed planning for Module moves

Understand the critical path

Recognise that Risk exists and manage that risk

It’s a cultural change

Modularisation can accelerate schedule and firms up cost certainty

Modularisation can deliver cost savings, but expectations must be tempered by shipping costs

Modularisation can lead to higher quality

3rd Generation – “Smart Module” Maximisation

Use someone who has done it before – make use of the “lessons learned”

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