RFID Is the Alaska Gas Pipeline's Strongest Link

By Oliver Hedgepeth Sr., Morgan Henrie and Oliver Hedgepeth Jr.

The Alaska Gas Pipeline will need better processes, such as RFID technological methods, to help control project costs, manage financial risks and keep the project on schedule. When dealing with literal mountains of materials, error rates of 1 percent or more are not acceptable. By way of example: If a single section of pipe is 20 feet long, a mile of pipeline would need 264 pipe sections. For the 2,140-mile pipeline, this would equate to 564,960 pieces of pipe. If the error rate were only 1 per 1,000, there could still be approximately 564 errors made while installing the pipe alone. If using RFID could lower the error rate to a Six Sigma level, the total numbers of errors could conceivably drop from hundreds to in the single digits, resulting in directly measurable result savings in costs and time.

Six Sigma, a method of project management intended to assure excellent performance, is known for a "sigma level" number representing the capability of a business, enterprise or project. This sigma level is defined as defects per million opportunities to get something done correctly. For example, a sigma level of 6 represents 3.4 defects per million opportunities. It can be interpreted as 99.9997 percent accuracy in the completion of a project or task. The table below provides a similar breakdown of each sigma level.

Sigma Level	Defects per Million Opportunities	Percent Accuracy or Yield
6	3.4	99.9997%
5	233	99.977%
4	6,210	99.379%
3	66,807	93.32%
2	308,537	69.2%
1	690,000	31%
Project Defects Defined as Sigma Levels

Oliver Hedgepath, Jr.

This focus on the number of errors or defects is different than that historically used in logistics management or in project management. Six Sigma's use of six different levels is supposed to allow one to compare process or production capability over a wide range of different processes. The point of using Six Sigma and a related error-rate metric (per unit of time) is to insure that much simpler processes do not overtake those that are more complex, especially when an error occurs.

This Six Sigma concept seems to promote simplicity over complexity in project management or logistics management. The Trans-Alaska oil pipeline had no such Six Sigma number for the amount of errors, problems or defects. It did have basic project-management data recorded for risk management, as most projects have today, but 800 miles of engineering work can cloud total asset visibility of the material management for even the top manager—especially in weather conditions well below freezing, in which employees can work outdoors for only 20 minutes at a time before coming in to get warm. Who keeps track of snow-covered parts during windy whiteout conditions? RFID technology could help solve some of the problems, but these tags must be tested in temperatures as low as -50 degrees F.

The logistics side of most projects has many factors. When dealing with a project such as the Alaska Gas Pipeline, logistics factors are greatly magnified due to the enormity of material and supplies that must be transported across a challenging landscape. Logistics transportation involves how to efficiently and effectively transport millions of tons of construction materials. These materials must be categorized, staged in a supply-chain management network, and tracked from production to storage to the work site.