Are Your Capital Project and Turnaround Groups Aligned?
Here’s How To Get On Track
There are two sure things in life: Death and Taxes. There are other things in life that are not for sure, nor pre-ordained, but stand a pretty good likelihood of occurring such as: Executing Capital Projects during a Turnaround and having an outcome that is less than desirable.
So many of our projects require some amount of outage work to at least perform tie-ins. Many projects may even require significant work when the unit is shut down. This tends to drive up the cost of labor and drive down productivity.
Most of the industry, including the sites that I have worked with over the years, have embraced the need for a unified TA/Construction effort during the turnaround window. This has significantly reduced the need to have two organizations competing for a finite resource of safe work permits, real estate, etc. Having one team planning a combined workload and ensuring all are involved when allocating resources and responding to issues helps to minimize surprises.
Beyond the above, there are several key issues that continue to hinder refineries from really working effectively as a team to complete the maintenance AND project work without cost or schedule overruns or lasting bad feelings.
- Alignment of calendars – This can take years to get right, but is your capital calendar set up to deliver engineering packages 6 months before the TA? Most organization Capital value programs can take several years to work through the gates to ensure that a project is a good use of scarce resources. If the team gets going 48-36 months before the TA to pursue a project they may already be too late. It is important that the Unit Engineers and Capital development teams are thinking ahead and taking this into account.
- Capital vs Expense Clarity – It is important that the TA team keeps a keen eye out for items which may be ruled as a Capital Expenditure. As an example, the TA report from the previous event noted that the Rich Amine drum should be replaced during the next TA as it is at end of life. Under normal circumstances, this would qualify as a long lead item for the next TA, and the team may get serious about a replacement vessel 16 months prior to TA. If the CAPEX ruling is determined to be Capital, this could be sent over to the Projects group. It is now a “break-in” and if it is going through all of the stage gates it will be very difficult to get the drum in time.
- Budgeting – Is the TA team consulted by the project during the estimating phase so that the project understands what to budget for during the event. What is the sites productivity? How do TA overhead costs get shared? How will the Contractor overheads be allocated? Who is paying for the operator time? Chemical wash? Temporary facilities? There are numerous ways these can be handled but working thru this process BEFORE the TA and Project funding is finalized can head off arguments later.
- Hand Off To The TA Organization – Typically, the Project team will perform the Non-TA construction and get to an agreed state and then the TA team will take over and perform tie-ins, etc. and then hand over to Operations for the project start up. Make sure there is a clean agreement on this handover, including inspection, testing, QC, etc.
- Quality Standards – Assuming the Project will be completed and started up during the unit start-up, is it clear what standards will be followed regarding QC, testing, walk-downs, training, turn-over, etc.? Often, the TA department may have slightly different standards than the project group, and sorting this out during the last few days of a TA can be the source of grey hair and arguments.
- Project Control During The Outage – If the TA team is executing the project scope, what are the rules of engagement for changes that will impact the project? What reporting requirements are there during the outage from the TA execution team to the Project Manager?
- Management of Change During The TA – A large project will likely have some dedicated resources on hand to handle the usual changes that come up, but smaller projects may rely on the unit engineer or others for answering questions. It is important to be clear who has this ability and accountability to ensure the changes are handled in a timely fashion to minimize duration impacts AND ensure that the changes are in accordance with the objectives of the project.
The best way to head off these potential headaches is to be ahead of the planning game and ensure you work thru these items BEFORE they become issues. If that isn’t possible, remember it is never too late to get the various teams together and get aligned before getting further into the ditch.
Becht can help. We have performed numerous Capital – TA Alignment reviews and workshops at refineries throughout the US.