February 20, 2014 by AP-Networks 1 Comment A continual topic of discussion at our Turnaround Industry Network Conference (TINC) is the challenge of large turnarounds. The question that gets asked again and again is, “When is a turnaround too big for a site or organization to handle?” Addressing this issue has become even more critical in recent years, as turnarounds have continued to grow significantly in size and complexity. Industry data shows that performance outcomes are better for smaller, single-unit turnarounds than they are for larger, multi-unit or “clustered” turnarounds. But why is that? Why can’t the challenge of larger turnarounds be solved simply by scaling up the practices that are already working for smaller turnarounds? To answer that question, we drew upon the information contained in our industry database, as well as the experience of our consultants, and identified several key factors that make large turnarounds so difficult to implement. Decreased Labor Productivity Our data shows that labor performance declines as labor hours grow. And as the number of workers on a turnaround increases, maintaining relatively high time-on-tool ratios becomes more and more difficult. Labor is the single largest cost item in a turnaround, commonly ranging from 40-50% of the total cost. As such, the costs resulting from decreased labor productivity have a direct and substantial impact on the bottom line. Indirect Costs Increase Larger events require greater management and supervision. These costs average 18% of a typical turnaround, but increase to over 30% with larger events. Organizations and Processes are Overwhelmed There is often a lack of personnel in key positions, making the tracking and monitoring of cost and schedule more difficult. At a recent TINC conference, a presenter discussed his site’s struggles to successfully execute large turnarounds. In an effort to address the difficulties they were having, the site studied their previous turnarounds. In doing so, they were able to establish an upper limit in terms of the peak field labor that they could effectively manage. Since then, they’ve defined turnarounds to stay within that limit by using a number of strategies, including breaking their large turnarounds into smaller events, extending the planned duration of large turnarounds, and reducing the activities that run in parallel with turnarounds. We’ve seen other sites apply similar tactics after the bitter experience of living through a train wreck. Rather than attempt a Mega Turnaround (>1,000,000 labor hours), these sites are opting to break up their turnarounds into smaller events. This practice of establishing a reliable performance threshold—and structuring turnarounds so that they don’t exceed it—is a trend we predict will continue to grow. With a focus on running leaner and accomplishing more, turnarounds have begun to test the limits of industry. Only by identifying and respecting these limits can train wrecks be consistently and dependably avoided. Authored by Brett Schroeder – Managing Director and Co-Founder | AP-Networks To find out when new posts go live, follow us on LinkedIn.