researchpaper - business chemistry · startup of new plants and process technology in the process...

Startup of new plants and process technology in the process industries:organizing for an extreme event

© 2012 Institute of Business Administration3Journal of Business Chemistry 2012, 9 (1)

* Centre pour l'Innovation Technologique & Entrepreneuriale, Grenoble École de Management,12 rue Pierre Sémard - BP 127, 38003 Grenoble Cedex 01, France, [email protected]

In the startupofnewprocessplants or in the introductionofnewprocess technology,even minor installation work can cause plant downtime. On the other hand, theincreased income from compressing time schedules for the introduction of newprocess technology or launching of associated new products on themarket surelyoffers an incentive for securing efficient startups,which is thepurpose of this study.A review of publications in the area of startup of process plants shows thatorganizational issues are scarcely discussed. A new conceptual framework hastherefore been developed for organizing startups and themodelling of alternativestartup organization structures. Four types of organizational models have beendepicted,derived from information from the literature survey and the author’s ownfirst-hand experience of startups. They include a “fully integrated” type oforganizational model for startups together with a profiling of startup contexts.How to organize a startup is, however, only one aspect that will determine theoutcome of a project, and other influencing factors ought to be further explored.The frameworkmust be tested and validated in real-life startup situations and infurther empirical research.The information fromthe literature survey, thealternativetypes of startup organizationalmodels and determinants can already be deployedby firms in the Process Industries, triggering discussion and providing guidelinesin their selection of preferred startup organization.

Thomas Lager*

Research PaperStartup of new plants and process technologyin the process industries: organizing for anextreme event

product quality from the production unit.Calculations of the cost of process disturbancesor unnecessary downtime associated withstartup stumbles often give frightening results(Leitch, 2004a). On the other hand, the increasedincome from compressing the overall projecttime schedules by excellence in introducing newprocess technology and/or launching ofassociated new products on the market surelyalso offers a strong incentive for securing smoothand efficient startups.

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Some experience from startups in the SteelIndustry can serve as an important introductionto the problems of practical implementation ofprocess technology. Experience from introduction

1 Introduction - preparing for anextreme event

The Process Industries, including manydifferent sectors like minerals and metals, pulpand paper, food and beverages, chemicals andpetrochemicals and pharmaceuticals, constitutea large part of all manufacturing industry. To erra little on the conservative side, one can say thatabout 30 percent of the most R&D-intensivefirms worldwide belong to the Process Industries(Lager, 2010 p.23). In the startup of new processplants or in the introduction of new or improvedprocess technology in existing plants, even minorinstallations or modifications can causedisruption of the process and/or plant downtime.Such disturbances not only result in loss ofproduction volume but often seriously affect

© 2012 Institute of Business Administration 4 Journal of Business Chemistry 2012, 9 (1)

Thomas Lager

productivity, varied from 2 to 42 months (Baloff,1966). Comparable durations were also foundin the glass, paper and electrical productsindustries. In a large case study covering 41process plants in the area of extraction of basemetals, including flotation plants, leaching plantsand smelters, the poor startup performance formany of these plant installations was scary(McNulty, 1998). The organizational aspects ofthose startups were not discussed explicitly, butit was hinted that for the group of low-performing projects, hands-on training of theworkforce was lacking, supervisory staff wereinexperienced, and technical support duringcommissioning and startup was inadequate.

A smooth startup is however of interest notonly to firms in the Process Industries, but alsoto equipment suppliers, contractors, consultantsand suppliers of raw materials and reagents.Successful introduction of their technology andstartup at a customer's plant is of an importancesecond to none (Lager and Frishammar, 2010).

Startup of plants in the Process Industriesmay have interesting similarities with startupof plants in other kinds of manufacturingindustry, but there are also many differences.The most important difference is probably thatprocess plants often have continuous (or semi-

of partly new, novel and untested technologyand from startups of large-scale steelmakingprojects between 1995 and 2000 was generallydismal (Bagsarian, 2001). Figure 1 shows thatnone of the plants had reached design capacitywithin one year, and only one after two years.

These slow startups were mainly attributableto investment in new and untried processtechnology and other managerial andorganizational issues.

Companies that expected startups to lastmonths were still trying to get the millsworking smoothly years after the first heat.The more new technologies a mill installed,the longer the startup took. … Some millsalso had the wrong people in place. Despitethe millions of dollars companies spend onthe most modern systems, new furnaces,casters and rolling mills, putting the rightpeople in charge of starting up a new mill isparamount (Tom Bagsarian, 2001).

The experiences reported by Bagsarian areunfortunately not solitary events! In a fairly oldbut interesting study of 24 steel industry processstartups the duration, as measured by theamount of time required to achieve steady-state

Figure 1 Startup of 11 steel plants between 1995 and 2000 in the USA*

Nucor Chapparral P.

Birmingham Steel(shut down)

Qualitech (Shut down)

TRICO

SDINort Star

BHPGallatin

Ipsco

Algoma Direct

Nort StarSteel

Start up YYeeaarr 11 YYeeaarr 22 YYeeaarr 33 YYeeaarr 44

2200%%

4400%%

6600%%

8800%%

110000%%

Product capacity compared to design capacity

* The data provided by Bagsarian have been further compiled and presented in the form of a diagram (Bagsarian, 2001).


Journal of Business Chemistry 2012, 9 (1) © 2012 Institute of Business Administration 5

startup organizations. The input was based onthe author’s own practical experience of startingup base-metal plants and a large iron-oreproduction plant in West Africa, and additionalinformation from a handful of experiencedstartup leaders in the author’s personal network.

This approach is in line with Doty and Glick(1994).

“Organizational typologies have proved tobe a popular approach for thinking aboutorganizational structures and strategies.Authors developing typologies, however,have been criticised for developing simplisticclassification systems instead of theories.Contrary to this criticism, we argue thattypologies meet the criteria of a theory”.

The author’s own startup experience gavehim a status of not only researcher butinformant, inputting first-hand knowledge ofstartups in the Process Industries into this study(Yin, 1994 p.84). Such a research approach alsoresembles “innovation action research”, notbecause of the aspect of implementing researchresults, but as action research in aconceptualisation of his own hands-on startupexperience (Kaplan, 1998). This is also arecommended research approach when theoryis nascent or intermediate (Edmondson andMcManus, 2007).

“Before collecting extensive quantitativedata, the researcher wants to be confidentthat the key hypotheses are sensible andlikely to be supported. This requires extensiveconceptual work to develop the ideascarefully, obtaining considerable feedbackfrom others, and refining the predictionsbefore data collection.”

This article is “started up” with anidentification of contextual determinants forstartups. Afterwards a formal startup workprocess has been outlined as a processualperspective on startup activities. Using thistemplate, four alternative structuralorganizational models are afterwards developed,followed by a final review of the startup morerelational teambuilding activities. Managerialimplications are put forward and suggestionsfor further research are presented.

continuous) material flows which make themnot only difficult to start up but also difficultto shut down and restart, e.g. blast furnaceoperations. From the outset the need for 24-hour shift operation, sometimes also combinedwith complex physical or chemical reactions ofa phase transformation character (e.g.petrochemical crackers, boilers in the forestindustry), often makes a startup in the ProcessIndustries an extreme event.

Startups of new process technology andproduction plants in the Process Industries areconsequently very important corporate activitieswhich unfortunately are often discussed simplyin terms of “plant commissioning” (Horsley,2002), and such general guidelines for startupsare many (Gans, 1976, Gans et al., 1983). Startupperformance in a wider context is only sparinglydiscussed in the literature, which could temptthe author to draw the conclusion that successdepends solely on following such proper startupprocedures. However, referring to the previouspresentation, experience tells that there aremany other factors that influence the outcomeof startups. In such a typical engineering startupcontext, however, the fact is sometimesoverlooked that startup is very much aboutpeople interacting with technology! Because ofthat, organizational aspects of startups do notalways get the attention they deserve in firms;sometimes, indeed, they are almost entirelyneglected. The purpose of this research was thus,focusing on the organizational issues of startups,to develop a theoretical platform for furtherempirical research.

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In the light of this introduction, the followingresearch question was formulated and hasconsequently also guided the development ofthe new conceptual framework:

RQ1. In a “work process perspective”, whatalternative types of organizational structurescan be outlined, and which potentialdeterminants can be identified for their selectionin startup of process plants and new technologyin the Process Industries?

A literature search was initially conductedwith a view to establishing a theoreticalknowledge base. Since this indicated that thistopic has not been very well researched recently,the author, using his own first-hand personalknowledge of startups, began to develop aconceptual framework for alternative types of

Thomas Lager

Journal of Business Chemistry 2012, 9 (1)© 2012 Institute of Business Administration 6

organization compared to a startup of a largenew production plant using new technologyand producing new kinds of products?

Identification of potential contextualdeterminants

In the selection of a startup organizationthere are a number of possible determinantsthat could be considered for the guidance ofsuch a selection. One is the novelty dimensionof the selected process technology (Bagsarian,2001, Leenders and Henderson, 1980). One toolin the discussion of technology newness is the“S-curve” concept (Foster, 1986). For furtherdiscussion on the newness of process technologysee for example (Tushman and Anderson, 1986,Utterback and Abernathy, 1975). The newness oftechnology was also singled out by Agarwal asone of the most important factors to considerin startups in the Process Industries (Agarwalet al., 1984, Agarwal and Katrat, 1979). Apartfrom the newness of technology, a number ofother potential determinants are also presentedin the following.

Newness of process technology

For categorization of the newness of processtechnology, the dimensions from a processmatrix developed by Lager (2002) were selected,where newness is considered in the twodimensions of “newness to the world” and”newness to the firm”.

Newness of process technology to the world

The degree of newness of a processtechnology to the world can sometimes berelated to whether the process can be patented,but since new processes are sometimes notpatented but kept secret, the newness can alsobe estimated by how well it is described inprofessional publications.

Low: The process technology is well knownand proven (can often be purchased).Medium: The process technology is asignificant improvement on previously knowntechnology (incremental process technologydevelopment).High: The process technology is completelynew and highly innovative (breakthrough orradical technology development).

2 Organizing for startups – thedevelopment of a conceptual frame-work

Organizational matters are usually high onfirms’ agendas for achieving good performance.The traditional functional or departmentalorganization is still most common forproduction, sales and marketing, and R&D inmany sectors of the Process Industries, but issometimes complemented with cross-functionalwork processes and networks (Bergfors andLager, 2011, Mintzberg, 1999). A matrixorganization is nowadays still also a fairlycommon solution that captures the best featuresof functional and project organizations. Leanproduction focuses on more efficient resourceutilization and eliminating factors that do notcreate value for the end user (Liker and Meier,2006). In a similar vein, a “lean startuporganization” concept could be defined andutilized as deploying better functioningorganizational solutions and work processes forstartup, aiming at the creation of more valuefor the firm for less input of startup resources.

In this context one should not overlook theinstallation and startup of even minorequipment integrated in large plants because,regardless of size, there is always a potential ofmajor process and production disruption.Consequently, when things do not go accordingto plan, which is often the case during startup,this may influence not only the internal andexternal production environments, but customersatisfaction with delivered products. Regrettably,in preparations for the plant startup, theimportance of the process and productdimensions are sometimes neglected becauseof too much focus on the engineeringdimensions and commissioning. That is to say,and it is argued, that the final outcome andrelated success in startups is not the successfulplant commissioning as such, but the deliveryof products (within or above set specifications)from a well-functioning production process(delivering design product volumes at targetproduction cost).

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Depending on different projectcharacteristics, one could imagine thatalternative organizational solutions are moreor less functional for startups. That is to say, asmall project introducing well proven technologyprobably requires a different startup


Journal of Business Chemistry 2012, 9 (1) © 2012 Institute of Business Administration 7

High: A super-system of process systems(large production plant).

Size of installation or process plant

The size of the process installation could alsoinfluence the selection of the most appropriateorganizational solution. A small installation maythus only require a more ad hoc organizationcompared to a startup of a very large productionplant. Nevertheless, even small startupsintegrated in a very large productionenvironment may cause serious problems if notprepared and executed well, as has been pointedout in the previous presentation. The followingclassification is only tentative, and each firmshould develop its own scale.

Small: < €100 000Medium: €100 000 – 100 000 000Large: > €100 000 000

Supplementary project specific determinant(s)?

For each new installation there may be someproject specific aspects that ought to beconsidered in the selection of a startuporganization. Such determinant(s) can naturallybe included as well.

Profiling the startup context

In Table 1 the selected potential determinantshave been put together and used in acharacterization of the startup context. Theimportance of each determinant can thus firstof all be estimated for each project andafterwards the position of the project on eachdeterminant can be made. The resulting “snakeplot” can afterwards be used in furtherdiscussions related to the selection of anappropriate startup organization.

The results from a profiling of the startupcontext and the analysis of the contextualsituation bring us further to the issue of howstartups are carried out; a processual perspectiverelated to a startup work process.

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There is nowadays general agreement thatthe development and use of more formal workprocesses can often facilitate repeatableindustrial activities of different kinds. It is oftenclaimed that carefully crafted and continuallyimproved innovation work processes, like a

Newness of process technology to the firm

There are several possible ways to define thedegree of newness of a process technology toa firm, but before a firm starts a processdevelopment project, one of the most importantconsiderations is how easily the processtechnology can be implemented in thecompany’s production system.

Low: The process technology can beimplemented and used in existing processplants.Medium: The process technology requiressignificant plant modifications or additionalequipment.High: The process technology requires acompletely new process plant or productionunit.

Newness of product(s)

In a study by Booz Allen & Hamilton andfurther presented and used by Cooper, thenewness of products is positioned in a productmatrix of which the following scales for the twodimensions have been derived (Booz Allen &Hamilton., 1982, Cooper, 1993).

Newness of product to the world

Low: Minor product improvement.Medium: Major product improvement.High: Completely new product that maycreate a new market.

Newness of product to the firm

Low: Existing type of product within anexisting product line.Medium: New product within existingproduct line.High: New product and a new product line.

Complexity of technology

The survey of project management literatureprovided an important aspect that well suitedthe classification of the startup context. Thesystem scope dimension proposed by Shenhar& Dvir provided an important missing link (1996).Their original trichotomy has been modified tosuit the Process Industry startup context better:

Low: Only one process unit operation.Medium: A process system including anumber of unit operations,

Thomas Lager


product development work process, are usefultools not only for improved efficiency but alsofor improved organizational learning (Cooper,2008). In the framework of such work processes,technology transfer has long been recognisedas a weak area (Holden and Konishi, 1996,Leonard-Barton and Sinha, 1993, Levin, 1993).This is a noteworthy fact since successfulstartups in many instances often rely on efficienttechnology transfers. In a study of success factorsfor process development (Lager and Hörte, 2002),the importance of technology transfer was alsorecognized and “using the results from processinnovation” received by far the highest rankingpoints in that study. A review of late publicationsin the area of project management literatureindicates, however, that focus nowadays is moreon the issue of reduction in project cycle time(Hastak et al., 2007, Hastak et al., 2008) ratherthan on startup organization as such. For furtherreading about work processes see for example(Hammer, 2007, Malone et al., 2003, Margheritaet al., 2007). It has already been pointed out byLeitch (2004a) that an integrated work processand upfront planning for the startup arerecommended actions.

Innovation in the Process Industries, be it

product or process innovation, will in its finalstage often involve modifications of existingproduction equipment, new process installationsor even the erection of a complete newproduction plant. The product development workprocess starts with ideation and developmentand finishes with the launch of the product onthe market outside the company (Cooper, 2008).In a similar vein, the process development workprocess also starts with ideation anddevelopment and finishes with the startup ofthe new process technology, but then inside thecompany, see Figure 2.

A startup of new process technology in aproduction plant environment can thus belooked upon as an analogy to a product launchon the market in product innovation. In thedevelopment and implementation of new (andolder) process technology, it is thus essential ina work process perspective to secure that startupwill not be the weakest link in the long chainof activities and cause project disturbances oreven failures.

In a work process perspective, startups couldbe considered as a sub-work process of the total“construction and erection work process” inwhich the “startup work process” must be well

Table 1 Defining startup context*

Contextual startupdeterminants

Importance ofdeterminants to the

project(low =1; high = 5)

Project Characteristics

Low(small) Medium High

(large)

Newness of process technology to theworld

Newness of process technology to thefirm

Newness of the product to the world

Newness of product to the firm

Complexity of technology

Size of insallation of process plant

Supplementary project specificdeterminant(s)?

* The profile for a startup has tentatively been illustrated. For the characterization of each determinant a round symbol(thee point ordinal scale) connected by a “snake plot” has been used. For the importance rating of each determinant, afive point ordinal scale is suggested.


Journal of Business Chemistry 2012 9, (1) © 2012 Institute of Business Administration 9

construction and erection are consequently notincluded. The inclined lines in the figuressymbolize that pre-commissioning,commissioning and even startup oftenconstitute a very much overlapping exercisewhen different parts of a larger installation aresuccessively brought on stream.

This simplified map of the “startup workprocess”, was afterwards used as a template forthe development of alternative structuralorganizational models which are presented inthe following section.

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The startup of new process plants and newprocess technology, if not carried out entirelywithin the production organization, is an activitywhere two different forms of organization meet– where a project organization, normally incharge of such an installation, transfersresponsibility for the plant or new installationto an operational line organization.Organizational interfaces often have a tendencyto create problems, and the issue of successfulstartup is thus not solely within the domain ofproject management but also most certainlywithin the even larger context of operationsmanagement and sometimes also innovation

integrated. This has been the selectedperspective for the development of thisconceptual framework for the startup and thedelineation of alternative organizational models.To initially clarify and operationally define theconcepts used in this article, startup will bereferred to both as the startup point of time andthe startup space of time, see Figure 3. Startuppoint of time is here defined as the time whenpre-commissioning without material is completeand commissioning with material, often on ashift basis, begins. Startup space of time, on theother hand, is defined as the time frame fromstart of pre-commissioning until the newtechnology (production plant) has been fine-tuned and tested on completion. Naturally, thestartup space of time should always be precededby pre-startup preparations and followed up bypost-startup improvements.

In Figure 3, the overall main phases of astartup work process from pre-commissioningto steady-state operation are outlined in a rathersimplified manner and in a time perspective.The three sub-phases included in the startupwork process are (1) commissioning withoutmaterial; pre-commissioning, (2) commissioningwith material, and (3) final adjustments and finetuning of the process and test on completion.Only a small part of an installation is thusillustrated in the figure: pre-studies, design,

Focus oninternal

productionneeds

Improvedproduction

process

PPrroocceessss DDeevveellooppmmeennttPPrroocceessss

PPrroodduucctt DDeevveellooppmmeennttPPrroocceessss

Focus onexternal

customerneeds

Improvedproducts

on themarket

Interaction

TThhee ccoommppaannyy iinntteerrnnaall pprroodduuccttiioonneennvviirroonnmmeenntt

TThhee RR&&DD eennvviirroonnmmeenntt

Figure 2 A simplified model of the product development work process and the process development workprocess in the Process Industries*

* The horizontal arrows symbolise that the two processes start with different customers and end up with differentcustomers. The vertical arrows indicate an interaction between product and process development (Lager, 2000)

Thomas Lager


Commissioningwithout material

(Pre-commissioning)

Commissioningwith material

Final adjustments,fine tuning of the

process and test on completion

Project closure”kick-out”

Pre-startupactivities

Start up point of time(Operations started on a

shift-basis)

Start up space of time

Post-startupactivities

Figure 3 An outline of the “startup work process”*

* The three sub-phases included in the startup work process are (1) commissioning without material; pre-commissioning,(2) commissioning with material, and (3) final adjustments and fine tuning of the process and test on completion.

Figure 4 Organizational model No 1


(Pre-commissioning)







shift-basis)



The production organization(production)

The project orgaization is fully embedded in the production organization (design, construction, start-up)

Project start &”kick-off”(Prestudies,design &constructionnot includedinthe figure)


management. As pointed out, problems often occur in

handovers and in organizational interfaces, andthis interface is no exception. Sometimes oneimagines that management is hoping thatstartup is just a matter of “pressing the button”,after which everything will run smoothly fromthe word go and that there is consequently noneed for any special arrangements. Referring tothe previous presentation, nothing could bemore wrong, since startup is and always will bean extreme event which consequently demandswell adapted organizational solutions. Referringto the previous section, experience suggestshowever that the organization of startups is notgiven proper attention in connection withinvestments in new products, process technologyor in new production plants.

Modelling alternative startup organizations

The need for a separate project managementorganization before startup is often wellrecognised, and the consecutive takeover by aproduction line organization is only natural, buthow to manage and organize the “fuzzy-in-between” startup phase?

Organizational model No 1: Productionorganization fully responsible from “kick-off”to “kick-out”.

The model presented in Figure 4 is most likelyfeasible only in smaller installations under alimited frame of time, and even then it cannotbe done without the assistance ofsubcontractor/supply chain specialists. One canexpect an easy and fast handover after startupwith a minimum of paperwork. Nevertheless,this model may possibly also be used successfullyeven in fairly large installations of well proventechnology, if additional project and other expertresources are sub-contracted (Frazier et al., 1996).However, it is not often that a line organizationhas the necessary resources to manage a largeinvestment project, and there is consequentlya certain risk for project mismanagement withthis model.

Organizational model No 2A: Projectorganization is responsible until startup andproject handover; production organization isresponsible for startup.

A presumably fairly common organizationalsolution, presented in Figure 5, is a handoverfrom the project organization to the line

organization when the pre-commissioning isfinished and when it is time to “press the startbutton” and run the process on a continuousshift basis with material (Bodnaruk, 1996). Suchhandovers sometimes work, but are often asource of startup problems. Commissioning withmaterial invokes the production organization’spermit-to-work system when systems “go hot”.

If the line production organization has notbeen involved in the design and commissioning,its people are often not familiar with the newequipment, and the startup may run intoproblems. At the same time the projectorganization sometimes has a tendency todisappear too soon after pre-commissioning isfinished. The situation has been well describedas: “They leave us with an unfinished plant; thevoice of production. Production will never let usgo and wants us to stay forever; the voice of theproject (Eriksson, 2008).”

Organizational model No 2B: Projectorganization is responsible during startup;project handover when the plant is operatingwell.

This organizational alternative, presented inFigure 6, relies fully on the project organizationduring startup, which allows the projectmanager to assume the role of startup leader.The project organization will then be in chargeof plant operation during pre-commissioning,commissioning and subsequent finaladjustments and tests on completion. When theplant is operating smoothly, it is handed overto production. The solution of letting the projectorganization remain in charge during startupis sometimes complicated because of union orother organizational problems with the“ownership” of equipment. In one alternative,plant operators are recruited by the productionorganization but are “borrowed” during startupby the project organization; in anotheralternative the project contractor uses his owncrew. This is a model often used in some“turnkey” installations. The project usually hassome production organization “implants” whocan check that their specifications have beencomplied with. If not, this model may end up intears. Experience of this model was not veryencouraging for IPSCO, and in their lawsuitagainst Mannesmann it is stated (Bagsarian,2001):

“Not only was the completion of the projectdelayed for an extraordinary and whollyunanticipated amount of time, but neither the

Journal of Business Chemistry 2012, 9 (1) © 2012 Institute of Business Administration


11

Thomas Lager


Figure 5 Organizational model No 2A

Figure 6 Organizational model No 2B



(Pre-commissioning)






Start up point of time(Operations started on a shift-basis)



The projectorganization

(design, construction)

The productionorganization

(production)

Project closure, production takeover ofproduction plant



(Pre-commissioning)







shift-basis)

Start up space of time Post-startupactivities

The projectorganization

(design, construction & start up)

Production takeover ofproduction plant and

operation

Theproduction

organization(production)

facility components, nor the plant in general,has the quality, fitness for purpose, productivity,and performance as represented, warranted,and guaranteed.”

Organizational model No 3: An intermediate,fully integrated type of startup organization(project together with production) is formed toassume responsibility from pre-commissioningwithout material until the plant is operatingwell.

A study of the transfer of newbiotechnological processes from research anddevelopment to manufacturing also highlightsthe importance of a more closely integratedtechnology transfer team with membershipfrom development, manufacturing, engineering,quality and validation (Gerson and Himes, 1998).In this model, Figure 7, the two organizationalstructures, project organization and productionorganization, are supplemented by a very distinctand formal intermediate startup organization(Lager, 2010 p.256). From the start of pre-commissioning activities, and naturally inpreparations long before startup, theintermediate organization takes fullresponsibility for all startup activities. In sucha merger of the project organization and futureproduction organization, the startup leader isfully in charge of an exceptionally strong andwell-integrated organization. It is oftenreinforced with internal and external resources,and there should be no mistake about who isin charge. The team is gradually mobilised beforeand during pre-commissioning, and at fullstrength when commissioning with materialstarts. This startup organization then stays inoperational control until the plant is runningsmoothly. It may take a few days, weeks or evena few months (hopefully not years). When agreedperformance criteria have been met, theproduction organization takes over operationof the plant. After the plant has been inoperation for some time and the list ofoutstanding construction items has been seento, the production organization finally andformally takes over the production plant fromthe project.

3 Building a startup organization – arelational perspective

Regardless of whether the productionorganization or the project organization is fullyresponsible for a startup situation, or whetherhandover takes place in the middle, or whethera fully integrated organization is created, a

startup team must always be mobilised for thisevent. In the planning and preparation forstartups, the importance of completing a riskanalysis before plant commissioning is stressedby Cagno & al. (2002), but one should notconclude that complete risk avoidance is theproper route to follow. When new technologyis introduced, preparations before startup can,however, considerably reduce associated risks.

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One can recognize, in a work processperspective, that many issues must be addressedwell before startup (Leitch, 2004b), e.g. pre-studies and mechanical completion. On the otherhand some must be addressed just before thestartup, while some must be addressed duringor even after startup. In collaboration betweenequipment manufacturers and process firmsover the life cycle and installation of processequipment, Lager & Frishammar (2010) haverecognized the importance of such collaborationwell in advance of startup:

The collaborative solutions and selectedorganizational structures and mechanismsmust not only be adapted to the situationbut also facilitate management of thetechnology transfer between the equipmentsupplier and the process firm. … It is thereforeimportant that both parties agree at arelatively early stage of the procurementphase on how the equipment is to be put onstream .

Good planning before a startup is thusextremely important and has been reported asa success factor of the highest rank (Callow,1991, Meier, 1982, Leitch, 2004b).

This also emphasizes the fact that successin startups is also related in many cases todecisions already taken during the pre-studiesof an installation. The startup leader and startuporganization are thus not always to blame ifthings go wrong; the fault may also be traceableto management decisions which have failed toallow sufficient resources (time and training)for rehearsing the startup of this type of process.Other factors may influence startupperformance, and taking new plants, productionprocesses, minor unit operations or even a singleitem of equipment on stream is not only aproduction and financial risk, but an activitythat is also a safety-critical endeavour (Agarwalet al., 1984). The importance of post-startupactivities is seldom touched upon in theliterature. This too, however, is an area that



13

should deserve more attention; the conclusionfrom the startup of Temple-Inlands’ Paper MillNo. 5 was that they managed the planning andstartup well, but they could have done betteron post-startup activities (Ferguson, 1995). Theremay thus be many factors influencing thesuccess and performance of startups. Referringto the quotation from Bagsarian, one factor toconsider is how to select and set up a properstartup team.

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Preparations before startup like recruitmentand training of people, mobilisation of externalresources, preparing for efficient communicationbefore and during startup, and selecting a properstartup team are issues that ought to have highpriority when successful startups are desired.It is thus not the knowledge of individuals inthe firm that counts, but knowledge shared andexecuted as a joint effort that is the hallmarkof a professional and successful startuporganization. As such, excellence in startup is agood example of successful corporateorganizational learning (Nonaka and Takeuchi,1995). The importance of building a resourcefulstartup organization that is well prepared to

handle the extreme environment associatedwith startups appears paramount. The publishedliterature relating to startup organizationalissues is however surprisingly scarce, and theissue is only sparsely discussed in somepublications (Bodnaruk, 1996, Bowdoin.K.A, 2001,Mueller et al., 2002, Powell, 1999).

Selecting the startup leader(s)

Choosing the chief operating engineer(startup leader) is claimed to be 90% of thesuccessful approach to good startup, since hewill be faced with the overall planning for thestartup, as well as the day-to-day decisions (Gans,1976). In the discussion of the roles of the processdevelopment group and manufacturing inbiopharmaceutical process startup (Goochee,2002), the importance of selecting startupleaders is stressed. The recommendation thereis to select process development and plantstartup leaders nine months prior to startup.The importance of giving new management“ownership” of the facility is often stressed, andit is considered a grave mistake to transfer amanager to the startup and then move him toanother facility (Bagsarian, 2001). As leader ofthe technology transfer team, Gerson (Gerson

Thomas Lager

Journal of Business Chemistry 2012 9 (1)© 2012 Institute of Business Administration

Figure 7 Organizational model No 3



(Pre-commissioning)







shift-basis)

Start up space of time Post-startupactivities

The intermediateintegrated start up

organization(start up)

Productiontakeover ofoperation

Plant formaltakeover byproduction

14

Theproduction

organization(production)

and Himes, 1998) points out that the projecttransfer champion is required to take a proactiverole. It must also be crystal clear whatresponsibilities the leader(s) should have duringstartup, to whom they should report and theiravailability during startup. Because of the needfor quick decisions and action during this period,shift-working startup leaders are sometimespreferred. If the project manager for pre-studies,design and plant erection can later assumeresponsibility for being the startup leader andafterwards become the plant superintendent,that is often a good organizational solution tobe pursued.

Assembling the startup crew

Referring to the quotation at the beginningof the first section, securing the availability ofan experienced startup crew is crucial. Forminga startup team well in advance, including millengineering staff, consulting engineers andchemical suppliers who were able to developworking relations in a low-stress environmentprior to startup, was a success factor for theRainy River plant startup (Frazier et al., 1996).The importance of securing a team includingmanufacturing, process development,engineering, facilities, quality control and qualityassurance is stressed by Goochee (2002), andthat the need for individual talent is at leastmatched by the need for team harmony. It isoften also recommended to organise a problem-solving task force (Agarwal et al., 1984),sometimes called a “flying squad”, of veryexperienced personnel on standby to be usedwhen major problems are encountered duringa startup.

Training before startup

Training of plant operators, maintenancecrews and supervisors is naturally of the utmostimportance, but it is also vital to map in advancethe kind of training the startup organizationneeds for each specific project. Apart from manydifferent kinds of startup training, it is necessarythat the operators also gain a conceptualunderstanding of the new process, so thatunexpected problems can be quickly assessedand appropriate responses made (Agarwal etal., 1984). Another matter is how the trainingshould be organised. Traditional classroomtraining with engineering professionals doingslide presentations does not always work wellalone, but may provide the foundation for otherassociated activities outside the classroom. There

are a number of alternative training approaches,the main difference being whether the trainingtakes place on the job or in a classroom in adifferent environment outside the plant(Agarwal et al., 1984). The opportunity to involveequipment and raw material (reagent) suppliersin these activities should not be overlooked, andthe use of dynamic simulation for training isanother approach that is gaining stronger andstronger importance (Frazier et al., 1996,Rutherford and Persard, 2003).

In summary

Since the startup leaders’ qualifications andpersonalities to a large extent will influence theclimate during startup, it is recommended tobegin all activities by such an recruitment.Because a startup is often an extreme event, itis recommended that both a startup leader andan assistant startup leader initially are recruited.They can, depending on the startup context,either share this responsibility each on a 12-hourshift basis or if the startup period is extended,relieve each other on a weekly or on a monthlybases. The startup leaders are afterwards toselect the organization for the startup and,depending on the startup context, build a moreor less resourceful team. Experience thus tellsthat it is not good enough to use the normalnumber of shift operators and supervisors, butthat a “doubling” of operators and supervisorson shift is recommended using resources fromthe previously mentioned different kinds oforganizations. After the structural organizationhas been set up, the training can be plannedand scheduled in accordance with project goalsand needs. A proper mix of classroom and onthe job training is here strongly recommendedwhen the startup team can begin to establishgood personal relations and collaborations.

4 Discussions and two theoreticalpropositions

In the literature review on plant startups inthe Process Industries one finds many importantearly publications around the seventies andeighties that are certainly still of interest notonly to scholars researching this topic but alsoto industry professionals involved in startups.Interest in the topic seems, however, to havedeclined during the past two decades, possiblybecause of a stronger interest in emerging newindustry sectors and a stronger focus on non-process industries. This is a rather unfortunatestate of affairs, because the Process Industries



15

constitute a large part of all manufacturingindustry, and startup of new plants and processtechnology is nowadays an important part ofcorporate activities, especially in the furtherexploitation of natural resources. The influenceon startup performance of pre-startup and post-startup activities – pre-studies, technologyselection, training, process improvements afterstartup, etc. – has however only been touchedupon in this article. Because of that, aretrospective literature survey of startups hasalready been initiated, where general aspectsof startups will be structured and presented inmore detail in a forthcoming article.

In the light of the problem description insection one, the results from the literature surveyand the development of the framework twotheoretical propositions are put forward:

Proposition 1: In the startup of new processtechnology or process plants in the ProcessIndustries, the selection of the mostappropriate startup organization is onesuccess factor for achieving good startupperformance.

Proposition 2: The newness of processtechnology, newness of products, thecomplexity of installation and size of theproject are important determinants in theselection of appropriate startup organizationsin the Process Industries.

5 Managerial implications and furtherresearch

The presented information from the literaturesurvey and the alternative types of startuporganizational models can already be deployedby firms in the Process Industries in theirdiscussions and their selection of alternativestartup organizations. It is first of all stronglyrecommended that firms initially should profileeach startup context in order to build a solidplatform for the selection of a proper startuporganization. For smaller, not too complexprojects using proven process technology theproduction organization may be the preferredorganizational choice. On the other hand, thefully integrated startup model is recommendedfor large complex startups of new technology.In such an instance the startup organizationshould be a total mobilisation of all necessaryand available resources within and outside thefirm. It is not difficult to demobilise suchresources if the startup runs very smoothly, buton the other hand, it is very difficult to mobilise

more resources during startup if and whenproblems occur. The alternative use of the othertwo “in-between organizations” with either ahandover before commissioning with materials,or a handover after commissioning withmaterials and fine tuning, must be carefullyconsidered because of the previously presentedbad startup experiences sometimes related tothose organizational settings. Finally, smoothimplementation and startup of new or improvedprocess technology or complete productionplants is “money in the bank” for any firm in theProcess Industries.

In further empirical research it is importantto recognise the difference between descriptiveand prescriptive research results. That is to say,visiting companies in different sectors of theProcess Industries to enquire about what typeof startup organizational model they arecurrently using does not necessarily giveprescriptive answers, since the model they arenow using may be, more or less, dysfunctional.A more fruitful approach may be to employ thisframework for a classification of different kindsof startup contexts and to further enquire whichof the different types of organizational model(or suggested alternative models) they believewould provide them with the best startup resultand overall success. If such an inquiry wereinstead deployed in a larger survey, includingmany different sectors of the Process Industries,a statistical analysis of different sectorialbehaviour could be an interesting outcome.Another alternative research approach could beto make in-depth interviews in some selectedfirms supplying equipment to the ProcessIndustries. Their frequent experience withstartup of new installations could then giveinteresting new perspectives and opportunitiesfor learning. If a firm is testing the fullyintegrated startup model in a real startupsituation, it could naturally be a rewardingexercise to follow such a startup in the form ofa single case study. Such a research approachwould then also have attributes related to“action research” methodology.

6 Conclusions

When new technology is introduced in theProcess Industries, it is first of all important ina pre-startup perspective to ensure that suchtechnology is properly tested in advance in pilotplants or in demonstration plants and that thatdesign solutions are professional and robust.Nevertheless, despite following properprocedures, implementation and startup of new

Thomas Lager


technology will always be an extreme eventassociated with a degree of uncertainty. It isnoteworthy that past experience of startupsdoes not make very pleasant reading, and thereasons for startup delays and stumbles appearto be many and varied. Reviewing publicationsin the area of startup of process plants and newtechnology is strangely enough revealing, inthat managerial and organizational issues arescarcely discussed at any depth.

As a consequence of this, four types of startuporganizations have first of all been depicted,relying on the fragmented information in thosepublications and on the author’s own personalstartup experience. A number of potentialdeterminants for a better definition of thestartup context have also been developed. Theconceptual framework gives some initial insightand a platform for further empirical research,but can already be deployed by firms in theProcess Industries in their discussions ofalternative startup organizations. Finally, it isargued that organizational aspects should bemore in focus in the planning of startups, andselecting and building a proper startuporganization as such could be one importantsuccess factor in getting new plants and processtechnology on stream in a more efficient manner.

7 Acknowledgements

Four expert startup leaders have suppliedinformation during the course of this study;their input from both personal and corporateperspectives is sincerely appreciated. Thesuggestions and comments from Nick Beesleyduring the development of an early presentationrelated to this topic is gratefully acknowledged.

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