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Asset Performance Networks has always had a unique vantage point. We work with companies across the globe that span the petroleum, chemical, and energy industries. We observe trends, identify widespread challenges, and pick out those tactics that help Industry leaders excel. It’s this vantage point that we seek to share in our AP-Monitor newsletter.
Inside this inaugural issue, youll hear from our clients and our consultants as they discuss strategies for rolling out best practices, essential components of effective risk management, and more.
Our goals with this newsletter are to provide a look at the ways in which AP-Networks is propelling Industry forward, and to share insights from our world-renowned team of consultants. The content inside is meant to aid those teams who wish to improve their projects and turnarounds, as well as those who are already excelling. So read on!
The refining industry has struggled to execute large, highly complex turnarounds on budget and on schedule. Our data indicate that more than two-thirds of turnarounds exceed their planned cost and schedule by 10 percent or have a trip after startup. Forty percent of turnarounds experience a cost overrun or schedule delay of more than 30 percent.
The turnaround work scope is the most critical item related to performance outcomes, as it is the foundation for cost, schedule, and plant reliability. Minimizing the amount of scope and the level of scope growth during the turnaround execution window is the primary driver of competiveness.
This paper discusses the challenges to scope control, describes a methodology for benchmarking scope, and illustrates how this methodology can be used to benchmark scope and provide early and reliable forecasts of labor hours and costs.
Turnaround outcomes are directly impacted by a number of factors. These factors can be categorized into three types of drivers: inherent risks, scope, and level of readiness. Key factors—including turnaround risk elements, turnaround readiness elements, and organizational capabilities—are quantifiable and can be used by leadership to not only identify problems before they occur, but to maximize the likelihood of turnaround success. But while these factors are identifiable and quantifiable, the level of control that managers have over each driver varies significantly.
Based on quantitative data collected from recent turnarounds, this presentation examines the three types of drivers and isolates their effects on turnaround performance. In addition to Turnaround Risk and Readiness indices, a new study associated with Organizational Capability will be summarized. This study serves as the precursor to a new leading indicator—Capability Index.
Turnarounds are critical events within the maintenance framework of refineries. Today, many industry turnarounds are executed in conjunction with one or more large capital projects. Experience and data show that the inclusion of greater than 30 percent capital project work into a turnaround execution window severely heightens the complexity of the event. The interface between the capital project and turnaround teams has historically been one of the most difficult to manage and is even more critical when large projects are involved.
Best and emerging practices for these High Complexity turnarounds require more advanced planning, coordination, and alignment between the capital project and turnaround execution teams. These best practices are the focus of this presentation. The presentation utilizes case studies and industry data to substantiate the impact that a large capital project component has on a turnaround event. The presentation also looks at the metrics for success of the turnaround outcome.
Maintenance Turnarounds are major events for refineries and petrochemical facilities. They typically cost large sums of money to execute. But the cost of executing the turnaround is often dwarfed by the “opportunity cost” of production lost while the facility is shut down. Hence, historically, the development of accurate estimates and strong cost controls has taken a back seat while the focus has been placed on driving the turnaround schedule to minimize the lost production time. However, in recent years, refineries have become more interested in accurate costs as refining margins have narrowed. Similarly, petrochemical plants, where the production opportunity cost driver is less, are also beginning to focus on ideas for improving cost estimating and control.
The technical literature available to the cost estimator wishing to learn more about estimating for capital projects is prodigious. But there is a dearth of similar literature on estimating for turnarounds.
This paper examines the different estimate methodologies used to calculate the base estimate for a turnaround and the effectiveness of those methodologies. It then moves onto a discussion of how allowances and contingency are typically dealt with in turnaround estimates and draws on ideas from the project world to suggest how the calculation of these items might be improved.
Many industry turnarounds are executed in conjunction with one or more large capital projects that serve to heighten the complexity of the event. The interface between the capital project and turnaround teams has historically been one of the most difficult to manage and is even more critical when large projects are involved. Case studies and data will be utilized to substantiate the impact a large capital project component will have on the turnaround event and the metrics for success of the outcome. Best and emerging practices for these high complexity turnarounds require more advanced planning, coordination and alignment between the capital project and turnaround execution teams; and these best practices are the focus of this presentation.
This article examines the allowances and contingencies that are needed in Turnaround estimates, the different methods used for calculating them, and how much money is typically allocated and required. From this, it provides some “rule of thumb” benchmarks for turnaround estimators to use.
It then will discuss how the benchmarks might be refined, the advantages of tracking the use of allowances and contingencies during execution of a turnaround, and finally some recommendations for steps that estimators can take to improve their estimating capabilities for allowances and contingencies.
The article is available on the Oil & Gas Journal website, here: www.ogj.com under the article reference “Lawrence, G.R.: Analysis Yields Turnaround Benchmarks for Allowance, Contingency – Oil & Gas Journal, April 2nd, 2012 pp 106-11”
Approximately 1 in 4 turnarounds are considered to be total “train wreck” failures, and nearly 80% of all turnarounds do not meet established goals. Organizations with best in practice processes and procedures can find themselves mired in failure. The reasons for these failures can be complex, subtle and rooted in an organization’s fabric. As such, teams often do not identify their functional shortcomings until it is too late to effect positive change.
A compelling case will be presented for aggressively driving towards an optimum state of readiness by showing industry data relationships between turnaround readiness and outcomes. The paper will describe the preparation practices that are critical for achieving optimal readiness. The paper will also focus particular attention to the key deliverables and interfaces of operations, maintenance and reliability plant personnel in the context of turnaround excellence.
It examines the current state of cost estimating techniques in the field of process facility maintenance turnarounds and offers suggestions on how to improve cost estimate accuracy, by adapting ideas from the capital project world.
This article discusses the importance of turnarounds to the bottom line, the special challenges associated with Oil Sands turnarounds in Alberta, and the practices that can lead to superior performance. The data presented are based on an industry dataset of recent (past 5 years) turnarounds in the industry. The dataset contains more than 500 refining and chemical turnarounds from across the world. More than 25 of these turnarounds are from Alberta, including Oil Sands.
Plant turnaround economics are highly complex. There are many variables which impact the overall business performance of a turnaround and multiple trade-offs need to be considered. Decision-making in this very dynamic environment however has often been based on assumptions. This paper explores the fundamental relationships between the major cost-contributing factors such as shift-patterns, labor productivity, and turnaround duration, fixed costs, quality and lost opportunity costs. Once basic relationships between these variables are established the paper then proposes a generic turnaround trade-off model and a case study is then presented to illustrate –through the use of sensitivity analysis- the impact of specific trade-off decisions upon overall economic viability of the turnaround. This research study is based on more than five hundred turnaround events with detailed performance data.
This article discusses how risk management can aid in projects success. It looks at the potential gain from good risk management, examines some typical risks that recur regularly on projects, and offers a suggested methodology for managing project risks.
This article presents some helpful "tips and suggestions" regarding building capital projects in China.
Organizational learning is a fundamental attribute of present day companies who wish to survive in the ambiguous ever-changing world of modern day economies. Companies who are able to learn and adapt quicker than the competition can leverage this attribute as a competitive business advantage. Traditionally, learning has tended to be more focused on training from those more expert and the implementation of known solutions to known problems. A turnaround professional need not look far to see clearly that today’s problems are in fact much different from those in only the recent past. Solving these problems with the “Expert” systems of the past most likely will be limiting in some way and will certainly not be delivering the optimal strategy for the new reality.
Plant-based projects (or small projects managed by the plant) are largely unpredictable, and appear to management that they are inefficiently managed. Rarely does a plant-based project system satisfy all its direct and indirect customers. Many owner companies either neglect their plant-based project systems, or apply large project processes and metrics to manage them. Both positions result in frustrating inefficiencies at best, and at worst - significant operational risks. This paper describes the challenges facing plant-based projects and how they are distinct from those of large projects, and hence they require different metrics and a fit-for-purpose approach to effectively manage them.
In current day business environment where optimistic margins are expressed in single digits, the ability to predictably deliver competitive turnaround performance is essential. With few exceptions, the industry now includes turnarounds as an integral component of the short and long range business planning process. Today’s turnarounds are complex events that require entire plant cooperation and focus and involve work scopes that far exceed the traditional maintenance jobs of the “just do it” era.
This article presents reasons how and why a stage gated approach to capital project approval is efficient in terms of both time and money. It also dispels some of the common misconceptions about such an approach.
This article presents the general principles of what contingency and estimate accuracy are in order to remove common misconceptions about their composition and use.
High levels of complexity for capital projects and turnarounds in the oil and gas industries have historically led to some of the highest project losses. The application of traditional risk-models and management principles has proven insufficient to prevent a high rate failure in this sector. Empirical evidence collected for various oil and gas related projects and plant turnarounds suggests risk categories, which, if left insufficiently managed, can lead to severely negative project impacts. This paper presents the most significant risks identified by project and turnaround teams in the oil and gas sector, and presents tools and techniques to improve the effectiveness of risk management.
Turnaround outcomes are impacted by numerous factors with varying degrees of controllability. Based on quantitative data collected from recent turnarounds, this paper examines and presents the drivers ("Leading Indicators") of turnaround performance and quantifies their effect on turnaround outcomes. The paper introduces turnaround risk and readiness indices ("TRI") and their relationship to turnaround outcomes. Further, the concept of a standardized turnaround scope index is explored. Finally, benchmarks of best turnaround practices are shared.
Increased project complexity and pressure to improve plant uptime has driven many improvements in the process industry over the past decade. Some of this improvement is a result of identification and repeated implementation of best practices gathered through benchmarking and incorporated into standardized project management systems. Although project management technology has greatly improved over the last 10 years, the industry itself face substantial challenges due to a large knowledge gap developing as seasoned professionals retire and take with them decades of knowledge. This paper will examine how combined project management, risk assessment and asset management tools and methodologies can achieve optimum systems integration capable of addressing every aspect of a project.
The value of improving turnaround performance has been long overlooked in the refining industry. Some refiners have recognized the need for improved turnaround performance, yet recognition and successful implementation have proven to be worlds apart. This paper explores how a mid-sized refining company successfully instituted a culture of excellence in approaching and managing turnarounds. Their step-by-step implementation of turnaround excellence can be used a roadmap that will benefit other refiners.
Organizational learning is a fundamental attribute that can separate companies that are able to learn and adapt quickly from those that are not. Traditionally, learning has focused on training from those more expert. Today's problems, however, are much different from those in the recent past and solving these problems with expert systems has proven to be limiting. This paper presents a three part overview of the theory and practice of going beyond the bounds of traditional approaches to learning to ensure delivery of turnaround excellence.
The petro-chemical industry invests billions annually in new technology, IT solutions and work processes to reduce capital costs, improve cycle time and operability. Unfortunately, these investments do not always pay off. An often overlooked area, however, that can yield large benefits at low costs is the development of a corporate wide process that uses internal project experience and transfers that knowledge into new projects. This paper details how AP-Networks worked with a large petroleum company to help implement and maintain a company wide capital projects database that is central to increased shared learning and improved capital productivity across the company.
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