Why Turnarounds Failto meet management expectations

David MathewsTGE Industrial ServicesCell: 281-507-9386Office: 281-867-9949

TURNAROUND FACTSACCORDING TO CII STUDY

Over 80% of turnarounds experience cost overruns

Approximately 50% of turnarounds suffer schedule slippages

90% report scope growth from 10% to 50%

Unplanned additions cost 30% to 50% more than planned work

Critical part method scheduling is implemented on less than

20% of all turnarounds

Cost control and forecasting is implemented on less than 20% of

all turnarounds

Turnaround staff experiences minimal training in modern

management concepts

Over 90% of critique recommendations are never

implemented

MOST TURNAROUNDS FAIL TO MEET MANAGEMENT EXPECTATIONS

Why Do Turnarounds Fail?

Failure to start early enough Failure to treat as projects Failure to apply Best Practices Failure to assign professional

turnaround management team Failure to control scope

Why Do Turnarounds Succeed?

– TURNAROUNDS CAN BE MANAGED SUCCESSFULLY

– SCHEDULES CAN BE MINIMIZED– COSTS CAN BE REDUCED

MANY BY 10% TO 30%!– 1st QUARTILE PERFORMERS DO IT– WHAT DO THEY DO?

WHAT DO 1ST QUARTILE PERFORMERS DO?

– START EARLY– RECOGNIZE AND MANAGE TURNAROUNDS AS PROJECTS– IMPLEMENT BEST PRACTICES– STRONG MANAGEMENT SPONSORSHIP– TURNAROUND PHILOSOPHY – DEFINITION & PURPOSE– RECOGNIZE AND MANAGE THE TURNAROUND PROCESS– STRONG EMPHASIS ON FEL– COMMITMENT TO PROJECT CONTROLS– APPLY THE RIGHT MANAGEMENT RESOURCES– APPLY ENOUGH MANAGEMENT RESOURCES– AGGRESSIVELY MANAGE AND CONTROL SCOPE– AGGRESSIVELY MANAGE AND CONTROL PERFORMANCE– BENCHMARK FOR CONTINUOUS IMPROVEMENT

Start Early

Turnaround Phase Milestone Plan

Ability to Influence Performance

HighHigh

Ability to Ability to Influence Influence

PerformancePerformance

Start Complete

LowLow

HighHigh

Project Project ExpendituresExpenditures

LowLow

Time

Scoping

Planning & Scheduling

Turnaround

Start-up

Conceptual Planning

Pre-T/A

Problems Here:

Are the result of Failings Here:

Not enough Welders? Then didn’t adequately plan the welding work!

80% Impact! 20% Impact!

TURNAROUND PROCESS- ABILITY TO INFLUENCE PERFORMANCE

Conceptual Development

TIMEMonths

90%

80%

70%

60%

Scope Development

Pre-Turnaround

TurnaroundExecution

&Control

Post-Turnaround

50%

40%

30%

20%

10%

COST

Detailed Planning & Scheduling

Contracting Strategy

Buy Long Lead Items

ResourceLeveling

ContractorSelection

INFLUENCE

                                    1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18

Form TurnaroundTeam

Start Early The Planning Process on most

turnarounds should begin 12 to 18 months prior to Turnaround start.

Pre T/A activities should be scheduled and tracked just as aggressively as the turnaround activities.

Virtually ALL Failures during Turnaround Execution can be traced to a failing in the Pre Turnaround Process.

TURNAROUND MISSION

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Turnaround Mission, Objectives & Customer

Establish clear, objective, written mission and objective

Return the unit to “as designed” condition Implement approved capital projects The “customer” of a turnaround team should be

the unit, the asset or the corporation, as opposed to the traditional view that operations or some other group is the customer.

BEST PRACTICES

Project Management Approach -Application of CII Best Practices Alignment

Benchmarking and metrics

Change management Constructability Design effectiveness Disputes prevention &

resolution Implementation of

products

Materials management Partnering Planning for startup Pre-project planning Quality management Team building Zero accidents

techniques

Additional Best Practices for Turnarounds

Defined turnaround “purpose”

– What it is– What it is not

Strong management support Robust scoping process Aggressive change

management Start early – with adequate

resources Documented project

execution plan Documented roles &

responsibilities Develop Alliances

Archive historical data Build templates by equipment Emphasis on project controls All activities scheduled Pre-turnaround schedule –

and accountability! Involve all parties – early –

including contractors Conduct schedule reviews Conduct risk analysis Conduct readiness reviews Documented pre-turnaround

milestone schedule Capital & maintenance fully

integrated Lessons learned

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0.00

0.50

1.00

1.50

2.00

2.50

Rec

orda

ble

Inci

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Rat

e

Implement all ImplementMost

Implementonly a few

Results of Implementing Best Practices

0.00

0.79

2.37

CII Study – Correlation of Best Practices to Safety Performance

Control Scope

Scope

#1 Cause of cost over runs on projects?– SCOPE CREEP

#1 Cause of cost over runs on turnarounds?– SCOPE CREEP!

Scoping Process Scoping process aimed at eliminating all non-essential, non-

turnaround scope items. Scoping team comprised of engineers, designers, operations

personnel and others to assess the condition of unit equipment and to identify gaps between current condition and as designed condition.

Apply a comprehensive scope quantification, control and change process during the course of turnaround planning & execution.

Plant turnaround scoping processes are often ineffective and can represent the primary source of cost and schedule over runs. Loop-holes in the scoping process can allow for significant scope growth after the scope freeze.

PROJECT CONTROLS

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Turnaround Project Controls

Implement a comprehensive project controls system to include estimating, planning, cost engineering, CPM scheduling, software etc.

Develop standard estimates, work packages and schedules to be utilized across multiple sites.

Most turnaround project controls are fragmented, ineffective and do not effectively utilize modern project controls software and methodology.

Resource Leveling

Allows work to be done by fewer people over the entire time.

Avoids hiring, screening and processing people for a short period.

Supports Supervision Buy-In Maximizes Use of Tools and Equipment Promotes Better Use of Management Support Minimizes the “infrastructure” required

RESOURCE REQUIREMENTSEarly Schedule

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RESOURCE REQUIREMENTS (cont)Late Schedule

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Risk Analysis (Primavera Risk)

Provides accurate probability of success. Identifies potential problem areas. Basis for critical management decisions. Develops list of key milestones. Establishes best and worst case scenarios for

both cost and schedule. Increases confidence in schedule/budget. Supports subcontracting evaluations and

decisions.

Turnaround Cost Control

Earned Value Management System Earned vs. Actual – Productivity Factor Cost Variance Schedule Variance Real Time Information

The Objective should be “Decision Quality Information” not necessarily Accounting Level of Accuracy

PROCUREMENT AND CONTRACTS

Procurement and Sub-Contractors Turnaround Procurement strategy to include

early procurement management involvement in the FEL stage.

Develop contractor selection process aligned with performance objectives of turnaround.

Standardization of materials, services, procedures, specifications; and multi site vendor/sub-contractor alliances.

Turnaround procurement is often reactionary, fragmented and sub-optimized. Procurement decisions are often made at a management level, and a late date that is not conducive to producing low cost solutions.

EXECUTION MANAGEMENT

Execution Methods – Example Areas

Productivity Management Safety Audits & Management Permit Management Process Schedule & Cost Control

– Status each shift– Daily Status Meetings & Reports

Small Tools & Mobile Equipment Work Hours QA/QC Process Flange Management Procedure (Leak Free Start-up)

SAFETY

Safety

Implement aggressive Safety Management program in FEL stage.

Incorporate Safety considerations in all phases of scoping, planning, scheduling & execution.

Control execution to plan to avoid unplanned work.

Turnaround Critique

“Lessons Learned” Meeting Identify “Well Dones” & Opportunities for

Improvement Produce Final Job Report Serves as Basis for Continuous Improvement Implement “Lessons Learned” on Future

Turnaround

Summary

How DoTurnarounds Succeed?

Start Early Treat Turnarounds as projects Apply Best Practices Assign Professional Turnaround

Management Control Scope

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OPPORTUNITIES FOR TURNAROUND IMPROVEMENT

Contractors and Manpower:

Just the Tip of the Iceberg

-Scope Control/Optimization-Program Management

-Project Controls-Procurement &

Subcontracts-Contractor Selection-Best Practices

-Productive Planning-Safety Management-Materials Management-Resource Leveling-Schedule Optimization-Sub Contractor Management-Execution Methods-Turnaround Critique

The Real Opportunities:

ADDITIONAL INFORMATION

The following slides are excerpts from another presentation that details the different stages of turnarounds and some of the activities that should be executed at each stage.

Conceptual Development Activities

Identify Turnaround Sponsor Form Management Team and define responsibilities. Define turnaround philosophy and goals. Review previous turnaround history. Review lessons learned from past turnarounds. Establish major work items, both expense and

capital. Develop scope criteria based on the philosophy. Develop contractor strategy. Create turnaround preparation milestone schedule Develop cost control and tracking process.

Conceptual Development Deliverables Turnaround Execution Plan Preliminary work list. Basic cost estimates (±30%). Estimated duration. Turnaround preparation milestone schedule. Manpower forecast for turnaround planning resources. Organization structure. Quality assurance, quality-control requirements. Completion of this stage can be 12-15 months before

starting the next turnaround.

Scope Development – Sources

Work order system. Capital works. Compliance items. HazOp study outputs. Operational requirements. Process engineering requirements. Environmental, safety, and health needs. Maintenance requirements. Maintainability, reliability, and constructability reviews. Resolution of conflicting needs. Long lead-time material procurement.

Scope Development - Deliverables

Work development deliverables include: Integrated plan (schedule, equipment, and resources). Preliminary critical path schedule. Refined budget estimate (±20%). Updated preliminary and approved work list. Long lead-time materials ordered. Critical lift plans. Additional work approval process. Work scope frozen. This stage should be completed 12-15 months before

the shutdown.

Detailed Planning & Scheduling- Activites

Final work list. Work Packages. Final plan for equipment cleaning and personnel entry. Contracting plan in place and all major contracts let. Critical-path schedule. Detailed execution plans. Detailed safety plan. Additional work approval process. Turnover of all capital work. Completion of materials procurement plan. Final estimate. Definition of format and frequency of performance and progress

reports.

Detailed Planning & Scheduling - Deliverables

Integrated execution plan (finalized on critical and sub-critical work).

Final budget estimates (±10%). Final work list. “What if” scenarios. Lifting plans. Mobile equipment requirements. Detailed shop loading plans. Risk Assessments. complete this detailed planning stage 4-6 months

before the turnaround.

Pre-Turnaround Activities Safety plan implementation. Operations training. Maintenance and contractor training and orientation. Team building. Environmental, safety, and management of change (MOC)

requirement review. Beginning the prefabrication work. Beginning the on-site pre-shutdown work. Detail of shutdown and unit clean-out sequences. Prepare temporary connections. Identify blind locations and hang the blinds. Install temporary offices, stores, and tool houses. Mobilize the execution team. Cost tracking and reporting. Detailed execution plan. Shutdown and clean-out plan. Work performance. Turnovers. Start-up plan.

Pre-Turnaround - Deliverables

Final execution plan. Completion of pre-shutdown work. Training the execution team. Developed turnaround organization charts. Creation of a reporting plan. Completion of field mobilization. Finalized shutdown meeting procedures. Beginning of communications-alignment meetings.

Turnaround Execution - Activities

Unit and equipment shutdown and preparation for entry. Daily turnaround meetings. Schedule reviews and updates. Daily cost tracking and reporting. Documenting MOC requirements. Additional work review and processing. Tracking additional work and scope changes. Ensuring that records reflect as-found conditions. Documenting all repairs. Documenting all inspections. Prestart-up safety review.

Turnaround Execution - Deliverables

Turnaround executed per the plan and Schedule.

Objectives met. Contingency plans reassessed as needed. Prestart-up safety review. Start-up on schedule. Release to operations.

Post Turnaround - Activities

Demobilization of contractors. Post-turnaround unit and lay-down area clean up. Resolution and disposal of excess material. Repair and inspection history reports. Updating the turnaround historical database. Post-turnaround MOC requirements. Freezing the turnaround accounts. Issuing the final cost report. Lessons learned and recommendations for future

turnarounds. Preparing the final turnaround report.

Post Turnaround - Deliverables

Post-turnaround unit and lay-down area clean up.

Planned run length. Improvement opportunities. Final reports. Final audit report of performance and adherence

to the work process. This stage should be completed 1-2 months after

the turnaround.