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INTRODUCTION
1.1
PROJECT BACKGROUND
The annual production of methanol exceeds 65 million tons and continues to grow by 4% per
year. Methanol has traditionally been used as feed for production of a range of chemicals
including acetic acid and formaldehyde. In recent years methanol has also been used for other
markets such as production of DME (Di-methyl-ether) and olefins by methanol-to-olefins
process (MTO) or as blend stock for motor fuels.
From the estimated 65 million tons of annual production, Malaysia produced 3% of methanol in
Asia-Pacific region in the year of 2012. However, this value will increase by 2% with the new
methanol plant in Kuantan, Pahang. Kuantan is the suitable site to construct a methanol plant due
to its location near to the raw materials to be used, natural gas supplied by PETRONAS. The
plant capacity is 100,000 metric ton/year for local uses. The duration for the construction to
finish is 3 years as estimated in the time management section in this report.
1.2
PROCESS DESCRIPTION
At the methanol production plant, there are three process sections and 1 utility section involved.
Below are the brief description of each sections involved:
a) Synthesis gas separation CO, CO2 and H2 are required in the reaction process. For this
project, the synthesis gas produced by autothermal reforming is rich in carbon monoxide,
resulting in high reactivity of the gas.
b) Methanol synthesis - In the methanol synthesis conversion of synthesis gas into raw methanol
takes place. Raw methanol is a mixture of methanol, a small amount of water, dissolved gases,
and traces of by-products
c) Methanol purification Distillation columns to be used to increase the concentration of
methanol and to remove impurities (by-products) produced in the process.
d) Utilities heating and cooling elements needed to be installed to ensure the quality of the
product and the requirement during the process.
1.3
Methanol is one of the most versatile compounds developed and is the basis for hundreds of
chemicals, thousands of products that touch our daily lives, and is second in the world in amount
shipped and transported around the globe every year. A truly global commodity, methanol is a
key component of modern life and new applications are paving the way forward to innovation.
1.3.1
i. Transportation fuel methanol has a high octane rating that allows for superior vehicle
performance compared to gasoline. Many countries have adopted or are seeking to expand
methanol fueling programs, and it is the fastest growing segment of the methanol marketplace
today.
ii. Wastewater denitrification - used in wastewater treatment facilities to aid in the removal of
nitrogen from effluent streams. As wastewater is collected in a treatment facility, it contains high
levels of ammonia. Through a bacterial degradation process this ammonia is converted into
nitrate.
iii. Biodiesel transesterification - used to convert the triglycerides in different types of oils into
usable biodiesel fuel. The transesterification process reacts methanol with the triglyceride oils
contained in vegetable oils, animal fats, or recycled greases, forming fatty acid alkyl esters
(biodiesel) and the by-product glycerine.
iv. Electricity generation methanol used as the fuel source to create steam to drive turbines.
1.3.2
Chemical feedstock
Methanol is a key component of hundreds of chemicals that are integral parts of our daily lives.
Methanol is most often converted into formaldehyde, acetic acid and olefins - all basic chemical
building blocks for a number of common products. Listed below are among the types of
materials that are made from methanol:
Plastics
Synthetic fibers
Paints
Resins
Magnetic film
Safety glass laminate
Adhesives
Solvents
Carpeting
Insulation
Refrigerants
Windshield washer fluid
Particle board
Pigments and dyes
CHAPTER II
SCOPE MANAGEMENT
2.1
PROJECT REQUIREMENT
Project requirement is one of the most important factor shall be identified in the project
management plan. This project requirement will be as guideline in this project. The list of this
project requirement as follows:
i.
The project need to be completed according to time provided and budget allocated by
ii.
iii.
OWNER
All the design must follow the standard and regulations
All changes in the design must get approval from OWNER before proceeding with
iv.
construction
All documentations must be recorded properly
2.2
PROJECT BOUNDARIES
i.
The scope of work for this project is from detailed engineering design until
ii.
iii.
commissioning work.
Conceptual design and basic engineering design will be provided by OWNER
OWNER is responsible on landscaping which getting approval from landowner and
government
2.3
PROJECT DELIVERABLES
Project deliverables have been identified according to work phases for control purpose as follows
4
PHASES
Engineering
Procurement
Construction
Commissioning
2.4
i.
ii.
2.5
i.
DELIVERABLES
Detailed Engineering Design Report
Final drawings including PFD, P&ID, Plant Layout, and etc
Final Process Datasheet for all equipment
Plant safety analysis such as HAZOP, FMEA
Completion of selection of vendor for all equipment
Datasheet for all equipment from vendor including mechanical
drawings
Scheduling for equipment deliveries
Maintenance manual for all equipment from vendor
As Built Drawing
Completion of installing all equipment including control and
PROJECT ACCEPTANCE
Production capacity of methanol is 100,000 metric ton per year
The purity of methanol must achieve 98%
PROJECT CONSTRAINT
Time
- Proper scheduling and time controlling shall be specified for every work phase in
order to avoid delay in the project. Safety margin shall be considered in order to avoid
the delay especially on the delivery of long lead items. The project is expected start
ii.
iii.
project
Natural Disaster
- Natural disaster such as flood shall be taken into account in project constraint since it
is beyond human control. However, precaution step such as weather forecasting
during construction (to avoid delay) and proper water drainage system shall be
installed at methanol plant
2.6
The Work Breakdown Structure (WBS) is used for defining work packages and developing and
tracking the schedule for the project. In this project, WBS has been divided into 4 phases which
are:
i.
ii.
iii.
iv.
Engineering Phase
- Detailed Engineering Design
- Safety Analysis
Procurement Phase
- Contract
- Purchasing
Construction Phase
- Site Work
- Installations
Commissioning Phase
- Testing
- Start-up & Operation
Please refer Figure 2.1 for details Work Breakdown Structure (WBS).
2.6.1
Engineering Phase
Engineering phase will cover detailed engineering design and safety analysis. In detailed
engineering design the job scopes is preparing final drawings, final sizing of each equipment,
and final datasheet. For safety analysis, HAZOP and FMEA will be conducted.
At the end of this phase, final drawings and process datasheet will be developed together with
detailed engineering design report and plant safety analysis report.
2.6.2
Procurement Phase
Contract and purchasing are two major activities that will be covered under procurement phase.
Preparation of vendor contract, open tender, selection of vendor and contract award are the main
activities under contract activity. While quotation requisition selection of best quotation and
purchase order preparation are the main activities under purchasing activity.
2.6.3
Construction Phase
Construction phase is the main phase in this project. It will cover site work and installation
process. By this phase, all equipment including major and minor equipment are expected to be
arrived before installation. Clearing the site work and preparing good water drainage system will
be done under site work activity. While installing minor and major equipment and construct the
building such as administration building, maintenance workshop, control panel room, cafeteria
and etc will be completed under installation activity.
2.6.4
Commissioning Phase
Commissioning phase will cover testing and start-up & operation. In testing activities, all the
testing will be conducted including for major equipment testing and leakage test before start-up
the plant. Start-up & Operation activity will be operated after all equipment have been installed
accordingly and all the testing had been conducted. The job scopes are preparing final drawings,
final sizing of each equipment, and final datasheet. For safety analysis, HAZOP and FMEA will
be conducted.
At the end of this phase, start-up procedure, shutdown procedure, operation manual and
maintenance manual will be produced.
CHAPTER III
TIME MANAGEMENT
3.1
Time is the most elements to be controlled in every project to ensure that the project can be
completed within the project durations. The duration for each activity need to be allocated in
order to manage the time. The duration for each work package as follows:
PHASE
ENGINEERING PHASE
PROCUREMENT PHASE
CONSTRUCTION PHASE
COMMISSIONING PHASE
DURATION (MONTH)
3
15
14
4
3.2
PROJECT SCHEDULE
The details of activities have been listed in the project schedule. Gantt Chart is one of the tools to
monitor the activities of the project. The plan Gantt Chart is the based guideline for the project
while the actual progress need to be monitored in order to keep track if there is any delay in the
project. Thus, time management is important to make the project success on time.
Please refer Figure 3.1 for Gantt Chart for this project.
PHASE
ENGINEERING
PROCUREMENT
CONSTRUCTION
COMMISSIONING
ACTIVITY
DURATION
(MONTH)
C-Safety Analysis
D-Vendor Contract
E-Contractor Selection
F-Contract Award
G-Purchasing Process
10
H-Site Works
J-Equipment Installation
11
K-Testing
11
12
3.3
Critical path analysis has been analysed using Critical Path Method (CPM). In order to
control the project, finding the critical path is important. In CPM, the activities that fall on
the critical path represent any task that will delay the whole project if it is performed behind
schedule.
A critical activity is defines as the activity that involved in a project which does not have any
slack time. Critical path analysis for this project as follows:
ACTIVITY
DURATION
(MONTH)
ES
EF
LS
LF
SLACK
10
18
18
18
21
18
21
18
21
20
23
11
21
32
21
32
32
34
32
34
34
36
34
36
ES: Earliest Start Time. This is the earliest time an activity can be started, allowing for the
fact that all preceding activities have been completed.
13
EF: Earliest Finish Time. This is the earliest time an activity can be finished or completed.
LS: Latest Start Time. This is the latest time an activity can be started without delaying the
start of following activities which would put the entire project behind the schedule.
LF: Latest Finish Time. This is the latest time for an activity can finish in order to remain on
project schedule.
Slack: Activity Slack Time. The amount of slippage in activity start or duration time which
can be tolerated without delaying the whole project.
Based on this analysis, all activities except D and I are critical activities. The network of the
critical path analysis is shown in Figure 3.2 where red indicates the critical activities.
CHAPTER IV
RISK MANAGEMENT
14
4.1
RISK ASSESSMENT
In this section, possible risks are included and analysed by Qualitative Risk Assessment
(QRA) to determine the severity and impact of each possible risks. The common risks faced
in the industry are technology, market, financial, people, structure or process. Among these
risks, this project had eliminated technology and market from the possible risks. Due to the
fact methanol production from natural gas had been commercially produced for a long time,
making it is a proven technology with already known risks during process. The market
demand of methanol is high in Malaysia and the world and will keep increasing because of its
vast uses and application; thus, eliminating the risk of low market demand and prices. Other
possible risks are studied and listed below with its preventive and control measures.
Table 4.1: Probability ranking
Probability (P)
Very low
Low
Moderate
High
Very high
Description
Insignificant effect to the project
<5% change to the project
5-10% change to the project
10-20% change to the project
>20% change to the project
Rating
1
2
3
4
5
Impact (I)
Catastrophic
Major
Minor
Negligible
Description
Unacceptable to the Investors
Major changes to the project
Minor changes to the project
Insignificant change to the project
Rating
4
3
2
1
Possibilit
y
Impact
Very low
Risk
Rating
1 to 4
Low
5 to 9
Catastrophic
4
15
Descriptio
n
Low risk
Medium
risk
Moderate
High
Very high
Risk area
12
16
20
9
12
15
Risk Scenario
Error in estimation
6
8
10
3
4
5
>10
High risk
Risk Assessment
Probability
Impact
Descriptio Rankin Descriptio Rankin
n
g
n
g
Risk
rating
Low
Catastrophi
c
Moderate
Major
Conduct
study; O
supplier
Proper d
each item
in cost e
Forecast
expensiv
Contract
of MYR
increme
expense
Clauses
be revise
documen
each item
Conduct
study; R
required
& contra
documen
activity;
for estim
Cost
Fluctuations in price of
bulk items
Preven
Low
Major
Schedule
Error in estimation
Low
Low
High
16
2
4
Catastrophi
c
Major
Minor
3
2
6
8
Review
projects
Hire an
estimatio
Include
for recei
Priority
supplier
contract
Choose
good bac
Management
/ HR
Moderate
Very low
Low
Major
Major
Major
Brainsto
detailed
design b
Hire an
detailed
design; P
documen
prepared
need for
Posts ma
skilled w
of Malay
Post of a
for each
health sc
hiring; P
documen
progress
Setup ER
Commu
the staff
Staff turnover
Very low
Major
Welfare
taken ca
Compen
breach o
Organisation restructed
Very low
Catastrophi
c
Clauses
be revise
Proper P
Setup ER
Appropr
construc
Fire exti
Prepare
Efficient
Instrume
ERT com
PPE ontraining
shutdow
Setup ER
Prepare
Efficient
Injuries during
construction
High
Negligible
Safety
Fire / Explosion
Natural disasters
Very low
Very low
17
Major
Major
From the risk assessment prepared, there are no possible high risks scoring more than 9 and
all are classified as low and medium risks. Thus, no further risk assessment should be taken.
However, preventive and control measures must be followed properly to avoid bigger issues.
18
CHAPTER V
STANDARDS, LAWS AND REGULATIONS
5.1
INTRODUCTION
It is necessary to understand and applied the codes and standards, as well as laws and regulations
in every phase of a project in project management. Since the plant project of Methanol
production is involved in territory of Malaysia, those legal requirements set by the State
government (Pahang) and Federal government (Malaysia) are the main scopes in this section and
are discussed in detail.
5.2
Codes and Standards that required to be complied in this project are described in the following
Table 5.1.
Table 5.1: Codes and Standards applied for the proposed project
Code/Standard
Description
ASME
Boiler
and
Pressure code (2009)
Code of Professional
Conduct/Ethic (Code of
Professional Conduct of
Engineers by Board of
Engineers Malaysia)
ISO 21500:2012
(Guidance on Project
Management)
PETRONAS
Technical
Standards (PTS)
20
5.3
In order to ensure all the operations involved in the proposed project including details
engineering, construction, and commissioning are carried out legally, it is important to abide the
Law of Malaysia.
5.3.1
This is an Act relating to the prevention, abatement, control of pollution and enhancement
of the environment. It is enforced by the Department of Environment (DOE) in Malaysia to
protect the environment. Table 5.2 shows the important section that applied to this proposed
project.
Table 5.2: Important Section of EQA 1974
Section
Section 20:
Requirement
and Approval
of plans
Description
Every application to carry out any
work, building, erection, or
alteration specified in Section 19
shall be submitted to the Director
General of Environmental Quality.
Section 22:
Restriction on
pollution of
the
atmosphere
Section 24:
Restriction on
pollution of
the soil
Section 29:
Prohibition of
discharge of
wastes into
Malaysian
waters
Section 29A:
Prohibition on
open burning
Action
Documentation for the project such as plan and
specifications, layout plan of the site, details of
process and waste indication should be provided
and submitted to the Director General.
5.3.2
This is an Act relating to the contracts. It is important that the contract involved in this project is
clearly defined and precise in order to avoid any problems occur especially during the
construction phase. The following table shows the important Section of the Act.
Table 5.3: Important Section of Contract Act 1950
Section
Section 10:
What agreements
are contracts
Description
All agreements are contracts if they
are made by the free consent of
parties competent to contract, for a
lawful consideration and with a
lawful object, and are not hereby
expressly declared to be void.
Action
The legally valid contracts must be prepared
with all the parties involved in the project to
ensure agreed objectives are achieved as
contracted. These include the contract between
contractor and employer (PETRONAS).
Section 38:
Obligation of
parties to
contracts
Section 48:
Time and place
for performance
of promise where
time is
specified and no
application to be
made
5.3.3
An Act to provide for the control of factories with respect to matters relating to the safety, health
and welfare of person therein, the registration and inspection of machinery and formatters
connected therewith. The important section that applied for the project is described in the
following table.
22
Section
Section 10:
Provisions
relating to safety,
etc.
Description
Without prejudice to any law with
respect to local authorities,
in respect of any factory, the
following provisions relating to
safety shall apply: [(a) to (f)]
Section 35:
Building
operations or
works of
engineering
construction
Section 36:
Installation
machinery, etc.
Action
This section should be considered to ensure the
safety of workplaces and to avoid any accidents
in the site.
5.3.4
OSHA 1994 is an Act to make further provisions for securing the safety, health and welfare of
persons at work, and for protecting others against risks to safety or health in connection with the
activities of persons at work. Table 5.5 described the important section related to the proposed
project.
23
Section
Section 15-18:
Duties of an
Employer
Description
It shall be the duty of every
employer and every self-employed
person
a) To ensure, so far as is
practicable, the safety,
health and welfare at work
of all his employees.
b) To formulate safety and
health policy.
c) To ensure that he and other
persons, not being his
employees, who may be
affected thereby are not
thereby exposed to risks to
their safety or health.
Action
The employer should
- ensure the safety, health, and welfare at work
of all his employees and visitors. A sufficient
training should be providing to the employees.
- prepare and as often as may be appropriate
revise a written statement of general policy with
respect to the safety and health at workplace for
the employees.
- ensure the absence of risks of safety and health
by providing sufficient information to the
persons other than the employees.
Section
20-21: 20:
General
duties
of
Duties of Third manufacturers, etc as regards plant
party[suppliers/c for use at work [(1) to (3)]
ontractors]
21:
General
duties
of
manufacturers, etc as regards
substances for use at work [(1) to
(2)]
The safety and health officer shall A qualified person should be appointed as a
be employed exclusively for the Safety and Health Officer to ensure the safety
purpose of ensuring the due and health at the workplace.
observance at the place of work of
the provisions of this Act and any
regulation made thereunder and the
promotion of a safe conduct of
24
Section 30:
Establishment of
safety and health
committee at place
of work
5.3.5
This is an Act relating to employment. For this project, it is important to follow this Act
especially for foreign worker who will work on construction site. The following table shows the
applied section for this project.
Table 5.6: Important Section of Employment Act 1955
Section
Section 60K:
Duty to furnish
information and
returns
Description
Action
An employer who employs a foreign The details information of foreign workers who
employee shall, within fourteen days are employed must be submitted to the Director
of the employment, furnish the General. This is including the termination
Director General with the particulars service of foreign employees.
of the foreign employee.
The employer shall, within thirty
days of the termination of service,
inform the Director General of the
termination in a manner as may be
determined by the Director General.
Source: Employment Act 1955
25
CHAPTER VI
ORGANIZATIONAL STRUCTURE
6.1
26
As shown in Figure 6.1, the organizational structure of this project management team is led by a
project manager and will be assisting by a project engineer. The Project Manager has overall
responsibilities for meeting requirements within the agreed time, cost, scope, and quality
constraints outline in the Project Plan. The roles of Project Manager are:
document management
Ensure Project plan, schedule, and budget is up-to-date.
For this project, several teams have been establishing depend on their respective skills and
knowledge. The teams are technical team, construction team, finance team, human resources
team, and safety team. Each team is led by a Team Leader who is responsible for managing one
part of the project. Role for each Team Leader are:
Technical team consists of Process, Mechanical, and Electrical and Instrumentation engineers.
Each team members responsible for performing engineering activities based on their respective
skills. Process engineers are responsible to oversee the construction of new plants and ensuring
that equipment works to its specification and to appropriate capacities. For the Mechanical,
Electrical and Instrumentation engineers, the main task is to install equipment and utilities such
as water and electricity supply, control valve, and pipeline for the whole plant.
The construction team consists of civil/site engineers, site technicians, and foreman. Site
Engineers provide technical advice about, plan, organize and supervise construction projects.
Site technician will assist site engineer for maintenance works during the construction. Foreman
27
main task is to ensure that the workers at a construction site are following correct work
procedures and safety precautions.
The Finance team led by Head of Finance is responsible for accounting works. The team
members include accountants who responsible to improve the operational and financial
effectiveness. They also perform cost and financial analysis for the project, as well as purchasing
work especially the equipment and material needed for the project.
Human Resources team consists of Human Resources officer as the team member. The main task
for the team is to maintain and enhance the organization's human resources by planning,
implementing, and evaluating employee relations and human resources policies, programs, and
practices. The team also responsible to prepares employees for assignments by establishing and
conducting orientation and training programs.
The Safety team members are Health, Safety, and Environments engineers and officers. This
team is responsible to ensure the safety and health of the employees especially the person
involve in the construction activities. The HSE engineer is in charge of the development and
maintenance of health, safety and environmental systems. The HSE officer is responsible to
ensure workplace safety comply with the regulation requirements and to conduct regular site
safety inspection and follow up actions.
28
REFERENCE
International ASME. 2009. ASME B16.5:Pipe Flanges and Flanged Fittings.USA: The
American Society of Mechanical Engineers.
International ASME. 2007. ASME Boiler and Pressure Vessel.USA: The American Society of
Mechanical Engineers.
International ASME. 2012. ASME B31.3:Process Piping.USA: The American Society of
Mechanical Engineers.
Malaysia. 1974. Contracts Act 1950 (Revised- 1974). (Act 136)
Malaysia. 1974. Environment Quality Act 1974. (Act 127)
Malaysia. 1974. Factories and Machinery Act 1967 (Revised-1974). (Act139)
Malaysia. 1981. Employment Act 1955 (Revised-1981). (Act 265)
Malaysia. 1994. Occupational Safety and Health Act 1994. (Act 514)
National Fire and Protection Association (NFPA). 2012. NFPA Standards. USA: NFPA
29