One of lime and another of sand
Entrepreneurship, learning and reaffirmation
Reflections from my experience
As way brief introduction, I am a civil engineer, with 44 years of experience in managing construction projects in America (Colombia, Dominican Republic, United States and Cuba), Europe (Romania) and Asia (Indonesia, Cambodia and Vietnam). This is the fourth reflection exercise on learnings throughout
In today’s story I will try to share my first experience as an entrepreneur. Somehow, it was a time similar to the one we are currently living in, detached from the tutelage of the large multinational organization, I worked with less financially strong companies, with fewer resources, with greater exposure to risk, and with significant job precariousness. That context motivated the idea of starting a company, that along with the illusion of being my own boss, of seeking a better life and, that the business would prosper and endure.
One of lime…
In the mid-eighties, five engineers with reasonable experience founded, with little capital, but with great enthusiasm, an engineering and construction company, our experiences and academic preparation were complementary and the time was propitious, the downward economic and construction cycle seemed to be coming to an end and an upward cycle was in sight, due to various circumstances, large companies had left the market and left open a space of opportunities, the hiring policies of state entities had opened the door to stimulate the creation of small and medium-sized enterprises (the term “SMEs” was in vogue), job conditions began to deteriorate and therefore being employed was no longer so stable and promising; in short, with those conditions we decided to “jumped into the water.”
Early within the operation of the company we realized that we had to focus the effort on specialized jobs, we were lucky to understand that the most promising area for us was associated with jobs in the construction of the infrastructure to bring natural gas to all homes in the country, its use was incipient, but of dizzying growth. We first got a stake in the works of the urban gas pipeline in Barrancabermeja, then another job in Villavicencio. Things were looking good for us.
At that time, Ecopetrol, the National Oil Company, had implemented a policy of executing some pipelines by unbundling them, that is, contracting the execution in short sections and in some cases in phases.
That policy brought us the opportunity to obtain a contract in the construction of the Cisneros-Popalito variant, of the Sebastopol-Medellín pipeline, for the execution of the welding phase and construction of special crossing intersections in the Santo Domingo — Popalito Station section.
The contract was in the name of a qualified contractor with whom we had a private partnership agreement, so even though we performed the work, we did it on their behalf. Alberto, the partner with experience in transmission lines and who had been in charge of urban gas pipelines, acted as Director of the Work, I was the resident engineer. The partner with experience in the management and operation of equipment would be in charge of supplying the equipment that we had previously defined were needed to execute the works.
We would not be concerned with the “bending” of the tubes, that is to give the tubes the curves that are needed according to the topography of the land, that was such an specific activity that we decided to sub-contracted to a specialist contractor in that work.
The main equipment we needed was welding equipment and a backhoe. The initial plan was to buy them new, but there was an opportunity to make some savings, buying them used, at an auction that Cerrejón would do. This decision was the beginning of a series of events that brought us to the brink of failure. In the first instance, the purchase of the equipment at the auction delayed de arrival of the equipment on site, putting us against the ropes, the schedule was delayed, the costs had skyrocketed because we had the people ready to work, the qualified welders, the assistants willing, the bender and
his crew, the drivers, the pipe yard guards, the trucks, etc., etc… And things got serious when the equipment that arrived on site and that we were waiting so urgently was practically unusable.
We had already identified a plan B, and we activated it eagerly, we obtained rented equipment, at rates much higher than those estimated in the budget for the work, but less expensive than the loss of profits and the potential for fines. With the rented equipment, the jobs were progressing fast and we were making up for the delay, when an unforeseen difficulty arose, the welding tests began to show a recurring error. Repairing a weld is far more expensive than getting it done right, and our failure numbers were unimaginably high for the quality of welders we had. We tackled this issue with an additional crew, again, costs were hanging over us.
The potential cost of fines that could arise if there was any delay in the work was so brutal, that making an effort, which compromised our assets, we decided to cover the additional costs and we managed finish the work on time. Only at the end, when we welded the special crossing intersections, did we understood what had happened, in these sections, the pipe was new and we did not have any failure in the welds; While the pipe that Ecopetrol had supplied to us for the main section were recovered pipes from a line that had been dismantled, although almost imperceptible, the internal section of the pipes was not uniform, and that difference was what generated the failures. We documented a claim to receive compensation for the cost overruns derived from this situation, but we, under the scheme of associated with a private contract, had neither a voice nor a face before the entity that owned the pipeline. And our associates, the contractors, to whom this claim did not suit them in their business relationship with the entity and had a financial position that allowed them to bear the economic consequences of the event, withdrew the claim.
Shortly after that job, the company we had created was dissolved and each of the partners embarked on a new path. I learned (sometimes at a very high price), that you have to find the niche in which you are very competitive, that there are not only differences between theory and practice but also between practice in one environment and practice in another similar environment when there is a difference in resources; that any implementation that involves people requires time and that this time in general is not short term, it is medium to long term; that external pressures can lead to emotional decisions rather than pragmatic ones and that the consequences of these decisions can lead to situations of extreme difficulty; Therefore we learned that, the service must be sold at a price that compensates costs and with a profit margin; that plural societies are very difficult to manage, and that, if at critical moments
the unity of criteria of the partners fails, the society is diluted and what began with a great feeling of friendship can end up distancing friends and that In general, over time we understand that what we judged at the time as a failure was actually the trigger for the change that led us to another path.
One of sand…
At the beginning of the 1990s, the Chichimene-Apiay pipeline was built to transport the crude that Chevron extracted in the Chichimene field to Ecopetrol’s collection station in Apiay, near Villavicencio; a 40-kilometer line that crossed a good number of streams (called “caños” by the people of the region) and the channel of the Guayuriba River, which at the place of the crossing stretched for a width of almost 2 kilometers.
The Montecz-Conequipos Consortium won the Bid for the construction of the pipeline and invited me to direct the work. The consortium had the necessary resources, that is, qualified people, with a sense of belonging to the organizations, familiar with and committed to good safety and quality practices, with well-maintained equipment in good working order, with a reasonable inventory of consumables and materials and good purchasing management that guaranteed a supply on time. Open to improvements to procedures and with a good bonus scheme to stimulate achievements at all levels of the organization.
The challenge consisted in taking advantage of these conditions, maintaining the spirit of unity of the consortium and creating an atmosphere of cooperation with the owner and with the controller. This would allow the work to be carried out, quickly overcoming any technical and contractual discrepancies (that often arise throughout the development of these type of projects), and to be prepared as an entity (Owner, Controller, Contractor) to give a timely and forceful response, with the necessary resources, to any potential setbacks or emergencies.
We knew that the most critical activity of the project was the subfluvial crossing of the Rio Guayuriba. In this section of the river, the channel is very extensive, the water flows divided into several torrents, not very deep and usually not very large, however, the hydrology records, which are scarce, and especially the records of the local neighbors, indicated that in rainy seasons, the river ran the full width of the channel and the water level rose notably; with this information, we agreed with the owner of the work and with the auditors on the procedure to install the pipe; We would do it in two stages, first building some dikes or cofferdams that would channel the river through the middle of the channel and protect the excavation work of the trench and installation of the pipe to the middle of the river; and doing in a second stage the same work in the other half.
For the first stage, the preparation of the cofferdams took us more than a month of continuous work with an important train of bulldozers and backhoes stacking thousands of cubic meters of material forming the protection dike, we excavated the ditch, we prepared the section of ballasted pipe and when we were ready to do the “launching of the pipeline section”, as a consequence of torrential rains the river overflow above the levels we had estimated and in a few hours, it swept the cofferdam and filled with drag material and sediments the ditch. Responding to the emergency plan outlined in a general way, and based on the trust built with the counterpart, we rebuilt the cofferdams, re-excavated the trench and installed the pipes; Upon completion of the work, with the proper documentation, we obtained from the owner the compensation for the additional costs generated by the emergency. The project was delivered on time, the owner clearly expressed his satisfaction, and the contracting consortium received fair compensation for their effort. This experience reaffirmed my understanding of how important it is for a company to be very strong in its niche and the need to have control over essential resources; concept that was the basis of my next entrepreneurship.