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Procurement - Storage

Apr 17, 2023

Procurement - Storage

Material Assignment Schedule: The material assignment schedule is a complete list of equipment and materials set to arrive at the project.  The material assignment schedule (MAS) designates the percentages of equipment and materials that must be inspected per purchase order.  Structural steel, bolts, valves, insulation, instruments, spools, etc., would have a defined inspection percentage.  For example, if 15,000 spools are set to arrive to the project, inspecting all 15,000 spools could be costly in both time and manpower.  The MAS could define a 10% inspection percentage(normal inspection percentage for most materials) for spools.  The procurement team would need to remove spool covers, check for cleanliness/flange damage, and re-install covers for 1500 spools.  If a trend showing spools arriving at the project have a high rate for damaged flange faces, the inspection percentage could be increased.  Rotating equipment could have a 100% inspection requirement due to its importance and cost to the project.

Receipt Inspection: The procurement team should perform a receipt inspection for every shipment that arrives to the project.  The inspection team ensures the correct materials have arrived without damage, and with the correct number of expected items.  Once the procurement team accepts the delivered items, procurement accepts “care, custody, and control” of the equipment and materials received and inspected.  Physical inspections of the equipment along with reviewing the specified documentation is critical to correctly log the shipment as received. A major risk during the receipt inspection process is not re-preserving material/equipment crates, coverings, etc. in the same way they arrived.  Equipment and materials packed in mylar bags have humidity requirements/indicators. If bags are opened for inspection, and often time the crate is then stored outdoors due to limited space.  If water gets inside the crate, the bag often holds water and will ruin equipment and materials in short order.

Once the receipt inspection has been completed and the materials and equipment have been re-preserved, the procurement team must determine where to store the materials and equipment.  Warehouses and laydown yards usually have a grid system for storage.  The grid system defines where the material and equipment will be stored long term, and also allows for quick reference to find materials and equipment requested to be sent to be sent to the construction work front.  Procurement teams have gone mostly digital in their supply chain operations.  Digital supply chains encompass bar codes/RFID technology to track, receive, store, and ship materials and equipment throughout their lifecycle on the project.

Storage Conditions: Storage conditions for equipment and materials should be identified before shipping.  One of the 5 storage conditions should apply to all materials arriving at the project site/warehouse.  Incorrectly storing equipment and materials can not only cause preservation issues but can also result in schedule impacts and delays.  One of the most basic storage requirements that is often overlooked is dunnage height.  Dunnage is critical to keep equipment and materials off the ground.  Equipment should not sit in water or have water splash from the ground onto the side of crates or equipment. Dunnage height should be a minimum of 4-6” from grade.  Period equipment/crate inspections should be conducted on a regular basis…crates covered with tarp should be looked at/inspected quarterly.  Tarps degrade quickly, and replacement is necessary to avoid mother nature finding her way into a crate.  Tilting crates to allow water to drain is also recommended.  6” dunnage timber on one end and a 4” dunnage timber on the other end of the crate is a good idea for crates that do not contain top heavy items. 

Transformers and large motors are often stored outdoors due to size.  Transformers and large motors often require anti-condensation heaters to be energized upon arrival.  Long-term power requirements should be considered/implemented before such equipment arrives.  Generators, light plants, etc. are often used to meet short-term power requirements but are not practical long term.  Generators and light plants need fuel…scheduling fuel deliveries on weekends and holidays becomes problematic.  Indoor warehouse space is often in short supply.  Items designated as indoor storage often have to be placed outdoors due to space limitations.  Shrink-wrap enclosures. Leaving equipment and materials in crates and adding zippered access doors should be considered when warehouse space is limited.  Climate controlled items are usually limited to sensitive electrical equipment, charms boxes, analyzers, etc.

  1.       Outdoor Storage- Not covered
  2.       Outdoor Storage-Covered
  3.       Outdoor Storage-Covered with heat(space heaters energized)
  4.       Indoor Storage
  5.       Indoor Storage-Climate Controlled

UOSD: What happens if equipment and materials arrive damaged, items are missing from the shipment, or equipment and materials that arrived were not what was specified in the purchase order?  Identification, documentation, and segregating UOSD related items is critical.  Proper documentation and pictures related to UOSD issues should be recorded.  Expenses related to damage, re-work, re-placement costs, and missing items should not be borne by the project.

U-Unsatisfactory-Materials and equipment do not meet design standards, project specifications, preservation specifications, or installation requirements were not met.

                Example:  Static equipment arrives without an expected nitrogen purge.  Upon further inspection, water from hydrostatic testing was not fully drained.

O-Overage-The materials/equipment arriving to the project site or warehouse exceed the expected totals on a packing list

                Example: Expected number of ball valves per staggered purchase order release is over  by 6 ball valves on the kick and count.  Documenting the overage is key as the valve supplier may short the next release by 6 valves.

S-Short- The materials/equipment arriving to the project site or warehouse are short of the expected totals on a packing list

                Example: Single release PO is to be supplied with 25 PRV’s and 12 additional springs.  The PRV’s arrive, but the springs are missing. 

D-Damaged- The materials/equipment arriving at the project site or warehouse are damaged, rusted/corroded which require, repair/replacement or re-work.

                Example: Crate of gate valves arrive at the warehouse.  Upon inspection, no protection for the flange faces were installed on the valves even though the PO specified the requirement.  Further inspection of the flange faces shows damage to the gramophone sealing surface below the flange grooves.

Engineering Inspection:  Field Engineeringshould provide inspections for major equipment, tagged equipment, and bulk equipment such as valves, etc., upon arrival to the project.  Ensuring major equipment arrives undamaged is critical.  If equipment is not compliant with design or arrives damaged, expediating design issues/corrections/repair is critical to ensuring project schedules/startup activities are not affected.  The responsible engineer should also determine during the inspection if equipment preservation is adequate upon arrival.  Static equipment is often sent with a nitrogen purge in place, however,  when the equipment arrives, the gauge reads 0.  The responsible engineer should also ensure correct storage conditions have been allocated along with preservation reinstated after inspection has been complete.  The responsible engineer should initiate preventative maintenance/preservation sequences for the specified equipment. 

Preservation Inspections: Equipment that requires preservation and periodic maintenance inspections is critical even in the storage phase of the project. Equipment is often moved several times during storage as more equipment and materials arrive daily.  Precise location of equipment requiring periodic maintenance is time saver.  More time is often spent finding/accessing equipment than performing the actual maintenance activities.  Grid locations, RFID technology, drones, are some of the methods that can be used to find equipment quickly and efficiently in storage. Inspection activities and frequencies should be established long before equipment and materials arrive at the warehouse/project.  During the storage phase access to equipment for ongoing inspections should be established soon after equipment arrival.  Equipment requiring period inspections stored in crates should have access doors installed.  Nitrogen purge will be lost on static and rotating equipment.  Installing drops to allow for ease in reading gauges is a good idea. Ensuring skid drains are opened will keep water from entering motors, openings, etc.

Spare Parts:  Bearings, seals, spare rotors, valves, etc. are often purchased at the beginning of a project to have in warehouse stores for both scheduled and unscheduled maintenance.  Ensuring these critical items are properly inspected, preserved, and stored is often overlooked.   Four types of spares are often purchased for projects. 

Installed spares: Skids often are designed with spares such as extra pumps/motors already installed.  Oil fill levels, megger testing, rotations. Etc. are still required.  Keys are often attached to electrical boxes/panels…collect the keys as they will disappear.  Spare gaskets, flanges, valves, etc. are often sent with skids and need to be identified, associated with the corresponding equipment, and stored properly for future use.

Startup/commissioning Spares: Gaskets, valve gland packing kits, special tools, bearings, O-rings, sacrificial valves for steam blows, spare pumps, and motors, operational fluids, etc. are all necessary to ensure systems are in correct working order before operation.  Cleaning, steam blows, leak checks, electrical loop checks, motor bumps, etc., are all sequenced per system to ensure operational readiness.

Operational(2-year) Spares: The spares are often called two years spares.  The supplier equipment should list all recommended spares that would need to be inspected/replaced after two years in operation.

Capital Spares: Spares in the group are often expensive, long lead-time spares that are critical to keeping the facility operational. 


storage yard


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