Well I have to apologize to those of you following this blog .. things have been a little hectic this summer and I have been remiss in my commitment to post a new subject every month. Between a son graduating high school, summer vacations, conferences and business commitments I have fallen behind.
One of the major activities for this summer was our sponsorship of the Marcus-Evans Turnaround / Shutdown Management Conference held in early August in New Orleans. It was a productive conference from our view point, the speakers were very informed on their subject matter, what I especially liked about the conference were two things; 1.) attendees were 90% from Owners organizations and 2.) the setting was very intimate in that the setting allowed for an excellent exchange of thoughts and ideas.
As a sponsor we were allowed to present a "white paper" and with Marcus-Evans we thought that a presentation on contracting strategies for turnarounds would be appropriate for the conference. So this months blog will be to post the presentation for everyone to view and question.
Please do remember that discussions are welcome here .. so post away!!
The past few months we have focused on some high level activities to prepare for the strategic development of a turnaround, the turnaround management system and some typical factors of a turnaround ... this month I thought we could discuss how do we actually develop the "right" scope of work that is in harmony with our strategic business plan.
The thing or "key" point is this ..... the turnaround is an investment with an expected return on that investment. This is radical thinking, you wouldn't think so, but it is.
Most organization pull up the past work list from the previous turnaround, then look at open turnaround priority work orders in their CMMS, then spend a month or so polling the organization to open new TAR work orders for items needing repair. After struggling to get information from each organization, they finally set their scope as frozen and begin planning.
What is the problem with this? Well for one, there is no organization of the scope development around the organizations principles for reliability, availability and maintainability. The scope is preferential, un-focused, late in development, provides a band-aide approach and does nothing to improve the facilities long term systemic issues.
We think that the industry needs to change their way of thinking by putting focus, energy, and commitment to the scope development process and develop the TAR scope of work that ensures facility reliability, availability and maintainability. Every scope item must be justified against the strategic business plan and calculated ROI for executing the work.
The flow chart below illustrates the process
The starting point for scope development is to develop the premise by which the turnaround scope of work will be developed. The premise document should be developed by the T/A Steering Team and is intended to be widely distributed and supported by facility management. It should be reviewed with the T/A Core Team during their initial formation.
The premise should be developed utilizing the following major categories: 1. Background & Strategy
Why is the turnaround necessary?
Position in the long range business strategy
2. Premises / Basis
Units to be considered for inclusion in the subject turnaround, premised for a safe, reliable and regulatory compliant operation. Desired run length post turnaround to the next turnaround timeframe with no unplanned outages.
Utility systems to be included (i.e. steam, air, fuel gas, electrical, cooling water, etc.) that should be premised for a safe, reliable and regulatory compliant operation. Desired run length to the next turnaround timeframe with no unplanned outages.
NOTE: Utilities typically require full plant turnarounds as they are not usually independent systems. Utilities turnarounds normally require longer intervals between T/A's
Possible units or specific scope items deferred that would normally be included in the turnaround.
3. Scope Development Basis
Scope will be developed via a risk assessment methodology, defined by an evaluation of probability and consequence of an item in relation to the premise used for the unit being reviewed.
The evaluation will be performed by the T/A Core Team.
T/A work items can be categorized into “Tiers” for analysis and review (contact us for more info, this is addressed in our TAR Manual, section 2.7.3.1 Budget Segmentation)
4. Cost & Duration
Expected cost based on the long range business plan, basis by which any ROI will be justified
Expected duration based on the long range business plan. Serves as the basis by which added scope, high risk scope and the critical path will be analyzed against.
5. Sensitivities & Risk
A brief description of the sensitivities and risks to successful execution and subsequent operation post turnaround
The premise should include the basis by which the Mechanical integrity related work will be developed
What are Management Systems? Management (development) systems are processes designed to improve decision-making and execution of investment initiatives by fostering better planning, collaboration and communication. Use of these guidelines will help the Team to select opportunities well and execute with excellence, therefore increasing the probability of business success.
What is the Purpose of a Management System? To Improve Probability of Business Success. The ability to improve the probability of business success depends on the application of “positive” influence early in the project / turnaround life cycle.
Increase Influence & Decrease Investment Followers of this blog have seen the chart above, this chart, however shows the influence time frame for TAR's and Projects. Influence is greatest in the beginning of any business initiative; staffing & expenditures are low. As time progress; the ability to influence a positive outcome decrease and expenditures increase.
How to Increase Influence? Develop a Management Systems that;
Establish organizational responsibilities for the Team
Provide a basis of understanding for Team Members
Improve the effectiveness of the Team's performance
Provides guidelines and procedures for uniform preparation
Serves as an Aid to the preparation to improve execution efficiency
Expected Results of Management Systems? A well developed Management System will improve Team influence by;
Placing decision making to the front end of development
Fostering communications & collaboration between Groups
The following is an abbreviated excerpt from the Axis Global Turnaround Planning & Execution Process (TPEP). Documents are copy right materials and are not to be reproduced or distributed without the written permission of Axis Global Consulting Services, LLC.
Axis Global Consulting Services, LLC
1100 Poydras, Suite 1300
New Orleans, LA 70163
Overview
Most turnaround problems typically stem from two distinct causes; the first being inappropriate assignment of roles & responsibilities and the second is an inadequate exchange of information between participants.These two factors combine to inhibit the collaborative effort required to meet the complex challenge of managing efficient turnarounds.
The key elements to providing continuity, consistency and alignment is the formation of a dedicated management organization. This entry will discuss the recommended best practices for the formation of the Turnaround Management Organization.
The key elements to success are the formation of a T/A Steering Team and a cross-functional T/A Core Team.The Steering Team is responsible for maintaining high-level oversight of the T/A efforts in accordance to the long range strategy.
Below is a sample Steering Team organization chart (generic)
The Core Team is responsible for the detailed planning and implementation of the established strategy.The Core Team must work together as the scope, schedule and execution plan come together.
The functions represented on the Team provide checks and balances as the full scope and plan is assembled.The end result is a Team plan, not a sum of several parts.
The Core Team members are responsible for prioritizing and bringing their departmental action items generated during the planning phases to the respective parties in their department.They should report and follow-up on these actions items.
The Core Team must have a functional leader or facilitator.This person schedules the Team meetings, keeps the master scope, schedules, etc., and develops the agenda for meetings (with presenters) for updates to the Steering Committee.This functional leader is normally the Turnaround Manager.
Below is a sample Core Team organization chart (generic)
Strategic development focuses on selecting the “right” opportunities early enough in the process to ensure that success options are leveraged. The graph below is a simplified illustration of the relationship between influence and investment; influence is never greater than during the strategy phase, as time progresses the baility to influence decreases and investment (cost) increases. Influence is greatest in the beginning of any improvement initiative; expenditures are low. As time progress; the ability to influence a positive outcome decrease and expenditures proportionately increase.
Axis Global works with their clients to review their strategy for their projects, turnarounds or maintenance practices. The purpose of the strategic review is to assess and optimize existing strategies and assure that it is consistent with the business objectives.
Axis Global helps their clients increase their ability to influence a positive outcome to their improvement initiatives by focusing on developing the right strategy. Resulting in less expenditures over the life cycle of the initiative.
Strategy’s must be target oriented, consistent with the business objectives and have clearly defined short term / attainable goals that are also sustainable. These goals are implemented via change management within the organization. The long term systemic goals will be achieved as a product of system implementation.
To illustrate, consider the development of a turnaround strategy either at the facility level or across multiple business units.
Turnaround strategy development is a structured process designed to investigate and identify the reasons and drivers for TAR’s based on;
Business drivers for shutdowns and TAs
Mechanical integrity drivers for TAs
Process / operations reasons (i.e. catalyst life, fouling)
Legislative and corporate requirement
Capital investment opportunities
Interactions with other units and plants
The facility must consider the sources for input during strategy development in order to account for all perspectives that influence the outcome. Alignment to the strategy is crucial to success; most business initiatives fail due to inadequate alignment within and across departmental boundaries.
The strategy should consider each sources output that defines the complexity and drivers (reasons) for the initiative. This system is cyclical and should be readdressed each turnaround cycle.
In the end, the strategy should deliver and provide;
Increased Mechanical Availability and Optimized Run-Life
Decreased Lost Profit Opportunities
Ensured value for the work that is carried out
Aid to the preparation in order to improve execution efficiency
Mr. Coffee is the President of Axis Global Consulting Services, LLC. Axis Global is an independent consulting and services group that provides Consultation and Field Services to the refining and petrochemical industries.
