Capital projects inherently involve integrating the work of numerous subcontractors for the on-time delivery of hundreds of facility systems and millions of project deliverables. If your company is involved in any of the lifecycle stages of a process facility, this article will help you learn some of the current pitfalls.
Lifecycle configuration management can be very challenging when dealing with process-facility types, including those involving oil refining, oil and gas production, petrochemical, chemical, specialty chemical, and electric utility plants, whether they be hydro, fossil, or nuclear. Capital projects inherently involve integrating the work of numerous subcontractors for the on-time delivery of hundreds of facility systems and millions of project deliverables. New build facilities (known as Greenfield projects) and modifications or expansions of existing facilities (known as Brownfield projects) require that you carefully manage large-scale capital projects that are scope, schedule, and cost sensitive. If your company is involved in any of the lifecycle stages of a process facility, this article will help you learn some of the current pitfalls.
One of the biggest challenges is handling the receipts and management of the volumes of documents that are generated during the engineering, procurement, and construction or capital-project phase of the facility lifecycle. Configuration management and document version control are essential elements to all lifecycle phases of the facility.
A second major challenge is the document- and content-creation cycle that consumes a tremendous amount of cost, time, and energy when you have to reenter the same information repeatedly into disconnected systems and databases to meet individual deliverables and reporting requirements. These challenges extend to both Greenfield and Brownfield capital projects. These challenges occur during all project phases, such as the following: the project initiation phase where facilities are identified, appraised, selected, and the requirements are defined; the project execution phases where facilities engineering, procurement, construction (EPC), and commissioned processes are conducted; and the operations phase in which the owner operators (O/O) operate and maintain the facility.
By implementing a few basic changes to capital project business practices and implementing a data-centric configuration management-based interoperability solution (CMIS) you can create a proactive work environment that enables you to address these requirements and ensure that your investors enjoy a healthy return on their investment. Capital projects can range in costs from $100 million to $10 billion depending on the complexity of the project and whether the project is Brownfield, Greenfield and type of facility as described above.
On one of the projects that I worked on, it was estimated that the first implementation solution could cost upward of $40 million. It should be noted that this initial cost included activities normally performed by the O/O, including the following: the creation of a CMIS solution and data model; extracting project content into enterprise asset management (EAM) or maintenance application; extracting design content for use in asset performance management (APM) or reliability system; and developing the relationships necessary to implement a work clearance management (WCM) or lock-out-tag-out system. In the project estimate above we also found that the anticipated return on investment could potentially reach $55 million with an additional return of $30 million in yearly efficiency improvements. For each subsequent capital project, costs would be significantly reduced while the returns would remain the same due to the reuse of the solution software and hardware.
Moving on, innteroperability challenges within the capital project industry stem from the highly fragmented nature of the various industries involved and are further compounded by the large number of small companies that have not yet adopted advanced information technologies that would lessen the problem. The National Institute of Standards Technology (NIST) estimates that this lack of interoperability and the cost of converting data from multiple incompatible sources, adds an average of $15.8 billion (in 2002 dollars) to capital infrastructure projects on a yearly basis, with facility owners bearing approximately 68 percent of the burden; this equates to more than $10 billion. 
Remember that handover losses are defined as the loss of information collected by the previous process owner that are placed into a proprietary database and then published as a document and reassigned to the second process owner.
The following figure depicts the occurrence of handover losses throughout the capital project phases that directly result in increases to the overall cost of the facility and affect operating efficiencies.
Figure 1. Occurence of Handover Losses
On one of the projects that I worked on, the EPC delivered a vault full of disorganized documents to the O/O during turnover. You can imagine how much time it took to uncover the supporting information when the first equipment failure occurred.
The current business model of managing a $1 billion-plus facility on document-based processes has resulted in a reactive work environment that repeats the data-creation cycle over and over. This business model impedes productivity and unnecessarily drives up operating costs.
In my experience, the operational organization (OPEX) struggles with the current practices of EPC project handover. Each time there is a component failure, teams of OPEX personnel walk down the facility to determine which component failed, its condition, and as-built configuration. OPEX is burdened by searches for supporting design documentation and supplier documentation component/part identification. Stores personnel walk down warehouses to identify if spare components exist and research in stock configurations, only to determine that critical parts were cannibalized from the spare components or that the parts are out of stock. Additionally, critical personnel manually locate documents and extract content to build missing failed component EAM data.
Some companies hire subject matter experts to determine procurement requirements, paying exorbitant surcharges for overnight airfreight only to discover that a sister-plant’s inventory has the parts they needed all along. OPEX develops disassociated databases with conflicting content that stores critical facility information and acts as a shortcut for future lookups. OPEX spends countless hours validating that changes to structures, systems, and components (SSC) do not violate requirements or regulatory commitments.
I believe that O/O should consider changing the capital project practices that result in a reactive environment. EPCs currently provide a single turnover of millions of hard copy deliverables at the end of a capital project; this should be replaced by a continuous handover of deliverables like critical content. The capital project organization (CAPEX) measures project earned value by comparing quantities installed and unit rates against the original estimate. CAPEX should be validating that each contractor deliverable is complete and meets contractual quality requirements that improve operational readiness.
OPEX should not be populating EAM after a component fails; EAM systems should be populated with all maintenance plans prior to the completion of construction. OPEX should document startup testing conducted during the commissioning in the EAM system in order to allow the reuse of test procedures for future maintenance activities. Reliability should be conducted during the early design of the facility rather than years after the facility has been in operation.
Currently, owner operators pay EPC contractors to develop the same content, multiple times. Capital project information should be created once and then be shared by contractors and OPEX to reduce costs.
Additionally, design content, in the form of two-dimensional (2D) drawings, is created that documents the results of design calculations and analysis; subsets of engineering content are then reentered by procurement teams into purchase requisitions and again reentered by construction teams into construction work packages. Process and instrument diagram (P&ID) content is extracted and re-entered by engineering or by OPEX into templates used to perform reliability analysis. Then, construction reenters the project content into system completion punch lists and system-turnover documents.
Over the last fifty years, the process for working on capital projects has not changed significantly. In this process, owners contract one or more EPC firms to design, procure, and construct Greenfield facilities or expand existing Brownfield facilities.
Engineering firms use proprietary and commercially available software as well as spreadsheets and databases to manage the information for the facility’s design development. Computer aided design (CAD) applications manage the results of engineering analysis, calculations, and simulations. CAD tools are used to graphically represent the 2D and 3D deliverables for the facility. The procurement process uses both proprietary and commercially available software to gather materials and services and manage the inventory. Suppliers use proprietary and commercial available software to provide drawings, certifications, reports, analysis, bills of materials, and equipment manuals. The construction and commissioning stages are typically managed using a document-based process to record the installation, inspection testing, and startup of the facility.
EPC firms develop multiple databases to manage the relationships between document deliverables from EPC work activities. All of the project deliverables are published as hard-copy documents using portable document format (PDF) files. EPC firms validate the quality of the hard copy deliverables under their respective quality assurance program and store the documents in a document management system. EPC's provide the deliverables to the OPEX using electronic transmittal letters that contain agreed upon document metadata. This metadata is used by OPEX to migrate the deliverable into a records management system. It should be noted that metadata (data about data) does not include content found within the transmitted documents.
Prior to turnover, EPC firms complete the construction and installation activities and prepare mechanical completion work packages and punch lists. As commissioning processes prepare the facility for operations, static commissioning cleans out the pipe and equipment while dynamic commissioning tests the systems under normal operating temperatures and pressures to assure that the mechanical and electrical instruments and controls are functioning within operational ranges. System-structure turnover is completed when the contractor physically turnover the accountability of the facility to OPEX. It is not uncommon during the turnover process that this is OPEX’s first review of the project deliverables.
Owner operators invest heavily in infrastructure projects—both Greenfield and Brownfield—to replace or expand aging facilities. Capital projects in the oil and gas, utility, and chemical processing industries represent extensive investments for the O/O.
Many of the hard copy deliverables contain essential content that supports the required configuration management that occurs on a daily basis in order to operate and maintain the facility. This content represents systems and equipment attributes and the relationships to the supporting documents.
Capital projects are monitored by CAPEX personnel who are solely responsible for project scope, schedule, and budget. Project progress is measured by validating the installed quantities and unit rates for each WBS activity against the original estimate. Progress payments are paid out based on the EPC's ability to meet WBS activity completion goals prior to any review by the client in order to validate acceptance. OPEX rarely specifies the detailed handover requirements in its EPC contracts.
As identified earlier in this article, there are multiple interoperability opportunities that are being missed that would allow OPEX to begin consuming capital project information during early stages of design if only the information was made available to OPEX.
OPEX should consider a continuous handover approach in which facility documents and content is provided as soon as it reaches a Revision 0 approved state. This will allow OPEX to begin consuming the key content that supports operational readiness.
There are several basic issues with current capital practices. First, owners rely heavily on EPC expertise to deliver a facility that will operate for sixty years and they invest billions of dollars in new facilities with minimal involvement. Additionally, the owners’ handover requirements found in EPC contracts are unclear or nonexistent.
Owners need to analyze the facility lifecycle processes and capital project deliverables to determine what content is critical to support operations. They need to develop a detailed series of standard or taxonomies in the form of a data model that will be used to manage the content and supporting documents facility lifecycle requirements. EPC's need to invest in technologies that share content with subsequent process owners, minimizing data re-entry and reducing project costs. Owners need to realign a capital project team's responsibilities, develop measures that validate deliverables, and focus on operational readiness. They need to take advantage of today’s technologies that provide lifecycle value and major operational cost reductions.
OPEX has the ability to begin consuming capital project content as early as conceptual design, in which relationships between license requirements and design requirements are being finalized.
Additionally, owners need to consider changes to EPC contracts, changes to the technology, and changes to how facility personnel interact. Their capital project contracts do not include enough detailed requirements for handover deliverables from prime contractors, their sub-contractors, and the suppliers of materials and services. Owners should invest in a lifecycle configuration management technology solution that supports the entire facility lifecycle and integrated directly with fleet-operating systems.
Owners should also realign the goals of the CAPEX and OPEX teams so they do not conflict. Currently, CAPEX personnel manage what happens before the project is completed—this includes the project’s scope, its schedule, and its overall budget. OPEX personnel oversee the facility after it is completed, including its operations management and maintenance. Very few companies require that CAPEX personnel have any responsibility to ensure that the facility is ready to operate. The CAPEX personnel should consider being accountable for validation of the content quality found within the EPC and supplier deliverables. The OPEX personnel should consider being accountable for verifying that the capital project content is correctly captured within the configuration management interoperability solution (CMIS) database.
Configuration management is an essential component of any business. Greenfield and Brownfield capital projects of all types require a special set of skills, including managing the interactions of contractors and operators along with the millions of deliverables that are used to operate and maintain the facility for the next forty years. Interoperability adds costs to a capital project that can be easily eliminated with just a few basic process changes. Shouldn’t your company consider implementing a CMIS on your next capital project?
 National Institute of Standards Technology NIST GCR 04-867 Cost Analysis of Inadequate Interoperability in the US Capital Facilities Industry. Published August 2004.