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”
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.