How Logistics is a Major but Underestimated Contributor to Project Risk

Based on our experience consulting for large, complex industrial projects globally, we find that logistics is a major source of disruption to projects, while not being identified as such in most risk assessments and project organisations. In our new White Paper 2024-03 ‘How Logistics is a Major but Underestimated Contributor to Project Risk’ we investigate this issue, why it is underestimated, and what can be done to address effectively this risk area.

In our experience, there are roughly two different categories of logistics risks: loss and damage during transportation to site, and on-site logistics driving erection productivity.

Loss and damage during transportation is much more prevalent than generally considered. In a dozen years’ experience as project consultants on major industrial projects, we can’t count projects that have been put in jeopardy (or have been very closely jeopardised) because of ships sinking, containers being lost at sea, lifting mishaps, out-of-size convoy trailers encountering bridges and other obstructions… resulting in the damage of key pieces of equipment requiring long durations for replacement. The consequential impact of such events on projects can be significant, orders of magnitude more than any compensation by insurance of the actual event.

Worksite logistics from lay-down and prefabrication areas to erection areas is a major driver of on-site productivity. While in this case damage appears to occur less frequently, the general organisation of logistics on the worksite is often under-analysed resulting in major project impacts in terms of erection productivity and schedule. Often, the erection teams are blamed for productivity shortfall while the issue may actually be more due to the logistics arrangements that create bottlenecks or do not deliver material in a way that is easily usable by erection teams. Productivity issues during erection where large teams are mobilised on site have very significant impacts on project cost and schedule.

Logistics is an underestimated area of project performance risk, and it comes to play much more frequently than estimated in large, complex, international industrial projects. This applies both to off-site logistics and to on-site logistics feeding erection. As logistics is considered a secondary function it often does not receive adequate attention during the planning and risk mitigation assessment stage. Our recommendation is to increase this level of attention by mobilising experienced professionals early in the project and providing them with the means to effectively control the key critical points in the project logistics setup. Discover more in our new White Paper 2024-03 ‘How Logistics is a Major but Underestimated Contributor to Project Risk’

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