The role of digital transformation in EPC: Benefits, challenges, best practices

Engineering, Procurement and Construction (EPC) companies are facing unprecedented challenges and opportunities in the current market scenario. Volatile oil prices, environmental regulations, changing customer demands, and new entrants are some of the factors that are reshaping the EPC industry. To survive and thrive in this dynamic environment, EPC companies need to embrace digital transformation and leverage the power of emerging technologies such as cloud computing, artificial intelligence, machine learning, the Internet of Things, and blockchain.

Digital transformation is the process of using digital technologies to create new or modify existing business processes, products, services, and customer experiences. It is not just about adopting new tools but also about changing the culture, mindset, and capabilities of the organisation.

In the case of India’s first commercial-scale hydrogen purification (fuel cell grade), compression, storage and dispensing facility. This project involved the use of digital tools such as 3D modelling, simulation, and virtual reality to design, engineer, and execute the plant. The project also leveraged big data analytics to optimise the performance and efficiency of the hydrogen production and purification processes.

Digital transformation can enable EPC companies to achieve the following benefits:

• Operational efficiency: Digital technologies can help EPC companies automate and optimise their core processes such as engineering design, procurement, project management, construction, and commissioning. For example, cloud-based platforms can enable seamless collaboration and data sharing among different stakeholders, reducing errors and delays.

Artificial intelligence and machine learning can provide insights and recommendations for better decision-making and problem-solving. The Internet of Things and blockchain can enable real-time monitoring and tracking of assets, materials, and resources, improving quality and safety.

• Customer satisfaction: Digital technologies can help EPC companies deliver more value to their customers by offering customised and innovative solutions, faster and cheaper delivery, and enhanced performance and reliability. 

Also Read

Will the GeM-Udyam tie-up unlock the procurement portal’s underutilised potential for MSEs?

For example, digital twin technology can create a virtual replica of a physical asset, such as a plant or a pipeline, allowing the customer to visualise, simulate, and optimise the design and operation of the asset. Digital platforms can also enable better communication and feedback between the EPC company and the customer, improving trust and loyalty.

In our case, the first usage was in projects 400 TPD Sulphur Recovery Unit (SRU), 250 TPD Chlor-Alkali and IOCL's Bio-Ethanol Plant Project. They used extensive digital solutions, such as cloud-based collaboration platforms, remote monitoring and control systems, and digital twins, to enhance the project delivery and operation of various plants in the region. 

• Competitive advantage: Digital technologies can help EPC companies create new sources of differentiation and growth by exploring new markets, segments, and business models. For example, EPC companies can leverage their domain expertise and data to offer value-added services such as asset management, maintenance, and optimisation. EPC companies can also partner with other players in the ecosystem, such as technology providers, suppliers, and contractors, to create integrated and holistic solutions for the customer. 

However, digital transformation in EPC is not without its challenges. EPC companies face several barriers and risks that hinder their digital transformation journey. Some of the key challenges are: 

• Unclear definitions and goals: Digital transformation is a broad and vague term that can mean different things to different stakeholders. It is important to have a clear vision and strategy for what digital transformation entails and what it aims to achieve for the EPC company and its customers. 

• Poor integration and adoption: Digital transformation requires not only the implementation of new technologies but also the alignment of business processes, organisational structures, and cultural mindsets. It is a challenge to integrate digital tools with existing systems and workflows and to ensure that they are adopted and used effectively by employees and partners.

• Complex and dynamic environment: EPC projects are often large, complex, and long-term, involving multiple parties, locations, and regulations. They are also subject to various uncertainties and risks, such as volatile oil prices, environmental issues, and changing customer demands. Digital transformation needs to cope with these challenges and provide agile and flexible solutions.

• Talent and skills gap: Digital transformation requires new capabilities and skills, such as data analytics, automation, and IoT. However, the EPC industry faces a shortage of talent and skills in these areas, as well as difficulty in attracting and retaining the best talent. EPC companies need to invest in training and development, as well as create a conducive and collaborative work environment.

To overcome these challenges and achieve successful digital transformation, EPC companies need to adopt some best practices that can guide their journey. Some of the best practices are: 

• Define and communicate the vision and strategy: EPC companies need to have a clear and compelling vision and strategy for digital transformation and communicate it effectively to all stakeholders, including customers, employees, partners, and suppliers. The vision and strategy should be aligned with the business objectives and customer needs and should be reviewed and updated regularly.

• Scale and Sustain: EPC companies should not try to transform everything at once but rather start with small and manageable projects that can deliver quick and tangible results. They should also learn from the feedback and data and scale up the successful initiatives across the organisation.

• Leverage partnerships and ecosystems: EPC companies should not try to do everything on their own but rather leverage the expertise and resources of their partners and ecosystems, such as technology providers, suppliers, contractors, and consultants. They should also collaborate and co-create with their customers and involve them in the design and delivery of the solutions.

• Foster a culture of innovation and learning: EPC companies should create a culture that encourages and rewards innovation and learning and embraces change and experimentation. They should also empower their employees and partners to use digital tools and technologies and provide them with the necessary training and support.  

Digital transformation is not a choice but a necessity for EPC companies in the 21st century. By leveraging the power of the cloud, artificial intelligence, machine learning, the internet, and blockchain, EPC companies can streamline their processes, reduce costs, enhance quality, and deliver more value to their customers. Digital transformation can also help EPC companies create new sources of competitive advantage by enabling them to innovate, differentiate, and adapt to changing market conditions. To succeed in their digital journey, EPC companies need to adopt a holistic and strategic approach involving leadership, culture, capabilities, and partnerships.

(Anil Tyagi is the Founder and CMD of Nuberg Engineering—a global engineering, procurement, construction (EPC), fabrication and project management company.)