From North American Downstream Market Outlook and Insights 2019 | p.73-75
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Improved margins mean more capital projects are on the books and more projects are now executed during the maintenance turnaround window, adding new challenges for managers.
Turnaround managers are often brought in to project planning too late for effective project-turnaround integration, experts say.
Capital project work as a percent of turnaround work has grown from just 2% in 2006 to more than 20% in 2016 and 2017, according to consultancy AP-Networks.
Capital spending increased 6.0% in 2017 and will grow 6.3% by the end of 2018 and 6.8% in 2019, reaching $48 billion by 2022, the American Chemistry Council said.
Scheduled plant outages, turnarounds and shutdowns increased by 5% in 2017, with the petroleum refining industry seeing the biggest increase, according to Industrial Info.
Refiners will increase planned maintenance spend by 38.5% to $1.3 billion in 2018, according to Industrial Info. The chemicals-processing sector will see a 4% increase.
Time and Money
Companies are willing to spend the money to expand and are in a rush to do so, but they don’t want to lose money from lost production in the process.
Integrating capital projects with turnarounds can minimize downtime, saving time and money.
Since an outage at a refinery or a petrochemical plant typically runs for 45 days in execution, 60 days spec to spec, taking two in one year does not make economic sense.
However, lack of effective project-turnaround integration is cited as the top reason for turnaround failures, according to AP-Networks.
“The most challenging state of construction component, in my opinion, is the integration of capital projects with the turnaround realm,” said Joe Jackson, Process Quality Assurance at LyondellBasell.
The larger the percent of capital work to be executed within the turnaround window the larger the risk for schedule and cost overrun, according to AP-Networks.
“Capital projects typically function on their Front-End Loading (FEL) timeline. A project’s point in common with that of a turnaround is the delivery of the Issue for Construction (IFC) packages,” Jackson said.
“IFC package information equates to scope for that turnaround, which needs to be delivered at the same time as the Turnaround plan-to-plan calls for,” Jackson added. “That is why it is important to ensure that the Capital Project FEL timeline is aligned with the Turnaround timeline with the same IFC delivery date being common to both.”
Project definition, feasibility and design approvals must occur a year or so before the turnaround team is formed so that detailed engineering can be completed and matched up to integrate turnaround and capital project activities.
When it comes to integrating capital projects into turnarounds, competitive performance stems not from the dollar amount of the project or resources, but from how effective organizations are in planning for the events.
Companies must refine schedules to get ideal timing and look for lessons learned across the entire company portfolio of sites.
“The problem is that the turnaround teams are often brought in too late,” Jackson said. “The turnaround team should become involved with capital projects as soon as the team is initiated.”
“The turnaround manager needs to become involved with the project as soon as possible after engaging in the role,” Jackson said. “Our plan-to-plan initiates integration activities at T-29 to seven months following project kickoff.”
A good integrated schedule will reflect the split of turnaround activities during the three phases of pre, during and post and will align key project milestone dates with turnaround needs, he added.
Turnaround Team Manages
Project teams should be integrated into the turnaround process to the degree that the turnaround team manages the schedule and the physical work in the field, Jackson said.
“The handover should begin at pre-turnaround and stay with the turnaround team all the way to the end,” Jackson said.
For a capital project less than $10 million, this type of integration would need to happen at least two years before the project is executed to deliver the IFCs and overlap the IFCs and make sure they line up at the right time, Jackson said.
Having a consolidated plan in place ensures consistency and alignment, but it is important that the company sticks to that plan.
“There must be continuity in planning. You must have a holistic outlook on the entire project. If you plan and schedule, the pieces come together. But you must work the plan,” Jackson said.
LyondellBasell is one of many chemical companies using the Primavera solution by Oracle – a project management tool to handle large-scale, highly sophisticated and multifaceted projects by breaking them down into thousands of separate activities – to address planning and to schedule all events to a level 5 detail.
LyondellBasell uses print outs from this solution for a strategy they utilize called the Three Shift Look Ahead. This strategy monitors accountability and helps the team to stay on top of the plan.
The charts, print outs from the Primavera Scheduling software, show the execution team the schedule for the next three shifts. Craft and managers can look at the Look Ahead and manage this shift’s work as well as see what is next.
“What tends to typically happen in these events is that the schedule gets sent out, and people start doing their own thing and there is no accountability,” Jackson said.
“But if you work the plan, you are doing things in the sequential order in which they need to happen from all the logistical issues and aspects. The very best practice is to stay on schedule, stick to the schedule and work that plan,” Jackson said.
The Three Shift Look Ahead follows the activities on a shift by shift basis.
Checks and Balances
For this process to be effective, status reports must be accurate and that means establishing a system of checks and balances.
“The historical dilemma for anyone in this field is that people report where they want to be instead of where they are,” Jackson said. “This is where the Ronald Reagan quote ‘trust but verify’ comes into play.”
LyondellBasell combats that by sending people out periodically to do a checks and balances and make sure that what is reported is indeed completed.
“I recently heard that a lesson is not learned until you do something different,” Jackson said. “It’s one thing to talk about change for next time, but it is another thing to go forward and make the adjustments and negate the gap.”