Article by Don Lee, Shanta Sloan, and Rosita Johnson
Photo courtesy of Kent Savage
“Project material staging” – I googled the term and almost every search result was over two years old. Of course Covid stopped or delayed most projects of any kind. Staging, sometimes also called pre-staging, parts and equipment is the last thing on most business’ minds these days. However, with supply chain disruptions becoming almost a norm in the past year and a half, staging is one of the best ways to avoid material shortages, project delays, and overpaying for rush shipments and overpriced material.
There are different strategies to procure material for a scheduled project. Some companies have equipment and parts coming in throughout the project, based on the material availability and project milestones. Others prefer the staging method – ordering all or most of the items before the project starts, grouping and staging it by the job requirements, and moving material to the job site when it’s needed. Both methods have advantages and disadvantages. Material arriving just in time reduces storage costs and saves warehouse or yard space. However, you can also run into trouble with late deliveries due to unexpected events such as bad weather. Staging can increase upfront warehousing costs due to the space and labor required to store material. However, staging also helps to have material available when it’s needed, and can help companies stay on track when running multiple projects. How can your business benefit from using the staging method?
Let’s start with project material being available when you need it and be in the operational status. Not all companies have resources to maintain their warehouses and yards, and materials can end up neither accounted nor cared for. This often leads to interruptions to the project due to improperly cared or missing material. In this case, businesses often react by over-purchasing parts and end up with cost overruns and surplus material after the project is over. Even if the proper amount of material is purchased and is steadily coming in, the increase in transactions means more visits to the warehouse to pick it up or deliveries to the job site. Staging means all or most of the material can be on site and ready for use right in time when the project begins.
Another benefit of having all the materials in advance is the ability to “kit” materials for sub-projects or sub-work scopes. Let’s say one of the tasks for a project is installing a valve. You might have the valve, the gaskets and the stud bolts all together so they can easily be grabbed and taken to the work area when the time comes for that task. The same could be done for instrumentation or switchgear.
A good materials management plan should be part of any project planning well before execution begins. As soon as the engineering package is released and the material requirements are known, parts and equipment should be ordered, deliveries scheduled and items properly received. Proper receiving means that all of the items have been counted, inspected, identified and logged into a system to show the confirmed quantities. Proper receiving also means that the items have been verified for quality and accuracy, including specifications, for any type of material: pipe and fittings, wire and electrical, or lumber and fasteners. Having quality and accurate material is an important requirement of any project staging activity.
Once material has been verified for accuracy, it should be put away into a designated area. If your company has two or more jobs scheduled within the next few months, grouping items by the project and its start date is the obvious way to go. For a large job with multiple milestones, parts and equipment should be identified based on the date when they will be needed. The items would then be grouped, shrink wrapped/palletized, and stored in different locations organized in order of the required date for the project. The final step would be labeling the material – this way it can easily be found, pulled and taken to the job location.
Staging area should always be secured, monitored and have material check-out processes and procedures in place. Some of you may cringe when reading this sentence – deploying strict security measures shows that the company does not trust its employees and contractors. Not necessarily. This is not just about the possibility of employees or contractors stealing items. Imagine parts and equipment sitting in the warehouse that shares staging for multiple projects. If the Project Engineer comes in and cannot find the part that he or she needs, and there are no warehouse personnel to assist them, in some cases the Engineer will pick the part from another project. It does not mean that the Engineer is not a trust-worthy person. If you are working on a project that you think is extremely important and the part you need right away is sitting in front of you, would you take it? Especially if there is no one to help you? Maybe it’s OK if you leave a sticky note? Decisions, decisions... Which are more difficult to make without proper processes and oversight.
The project is over and you have some surplus items sitting at the job site. Staging is one of the best ways to prevent surplus, but there are always unforeseen circumstances – earthquakes, politics, Covid, name a few. Staging would make it much easier and quicker to disposition the surplus as long as you would have a record of everything that was received and everything that was issued. Systems like ASCI’s SmartStager record information such as quantities, material description/manufacturer/part number, project charge code and person in charge, and the vendor that the material was originally purchased from. The vendor record would make the buy-back a valid option. And, since you took pretty good care of the material you were staging, you should be able to sell it back at a pretty low discount. By the way, if your company is too small to purchase a system to keep track of you staged material or inventory, MS Excel can be a viable option.
Going back to my search results. Most of the posts and articles in my search results referred to the construction industry. The construction industry is one of the pioneers of this advanced supply chain management tactic. Any type of project that requires parts and equipment can benefit from material staging, not just construction of a building. Maintaining crude oil pipeline, or let’s say sewage system, is just as complicated. The cost savings, avoiding schedule delays, zero or very little surplus material in your yard means that your project was successful and profitable. If you think that your company can benefit from staging, contact us at hello@ascillc.com to set up a free consultation for cost benefit analysis.
