Long-Term Optimization Changes for TAR Preparation and Execution
A large refinery suffering from poor TAR preparation and execution practices had resulted in its failure to meet both schedule and budget for over 8 years.
Over the following 5 years, the facility´s planned TAR expenditure had reached over $1 billion, leading to the decision to focus on cost reduction. An objective assessment of the existing tools, techniques, processes and methodologies was undertaken to identify and quantify opportunities to reduce costs and improve performance.
5 Week Analysis: The T.A. Cook team collected and analyzed data surrounding current practices related to TAR preparation and execution. Opportunities for cost reduction and process improvement were identified and quantified in the following areas:
• Organization design;
• Contractor strategy;
• Work logistics and productivity;
• TAR preparation practices;
• Planning & scheduling;
• Scope optimization;
• Management control & reporting of key performance indicators; and
• Training & Coaching to achieve desired behaviors to support sustainability.
Short Impact Program (SIP)
With several TARs already underway, an SIP targeting quick hits and productivity was implemented. During the 12-week effort, the focus was on increasing contractor productivity through more effective logistics (bussing, parking, and improved tent positions), more effective permitting and better adherence to schedule. Contractors were requested to reduce their work estimates by 15%.
These changes produced the first TAR in 8 years to come in on schedule and to budget.
The analysis identified a TAR cost reduction potential of $300m (30%) over a 5-year period. The benefits would be achieved via a combination of contractor labor costs, material and equipment costs, scope optimization, productivity and better commercial terms in contracts. Scope optimization was identified as the single greatest opportunity to reduce costs and improve the EDC quartile ranking.
A Long-Term Optimization Program was kicked off focusing on attaining significant and sustainable benefits for the refinery. The program consisted of a joint client-consultant team deployed over 18 months to engage the site in building ownership for the needed changes, develop solutions required to drive improvements and to implement the new tools, processes, behaviors and methodologies across the site.
The TAR organization was redesigned to better optimize resource utilization, clarify and align roles and responsibilities in preparation and execution, and to more effectively integrate the support of TARs by other functional groups.
Standardized tools were implemented for determination of scope. This permitted a more effective and consistent evaluation of planned scope by TAR and Operations. Work which did not make good business sense or meet an established level of cost-benefit ratio was either eliminated or scheduled to be done outside of the TAR, reducing the scope by 17% to 35%.
A contracting strategy was created which addressed formal competitive bidding and more effective contractor management, resulting in an average cost saving of 15%. The types of contracts being sent out for bid were re-evaluated, based on risk. Contract types were revised to mitigate risk to the client as well as the contractor. Additionally, several tools were introduced to more effectively manage, track, document and evaluate contractor performance against pre-determined service levels.
By making logistics and productivity a more integral part of the turnaround, time on tools increased by one hour per day for over 2000 contractors, resulting in a saving of over $2m in labor costs.
Aligning metrics and performance
The introduction of a formal Management Control and Reporting System (MCRS) clarified the Key Performance Indicators to be used across all turnarounds. This improved understanding of the performance data, driving more timely decision making. The resulting standardized reporting package allowed for more accurate benchmarking and tracking of performance by the site’s leadership team.
As a result, TAR schedules were met for the first time in 8 years.
Effective planning and scheduling
The preparation phase, particularly planning and scheduling, benefitted greatly from the introduction of the MCRS. By utilizing short interval control of critical due dates, planning and scheduling milestones met the schedule, making TAR execution plans more competitive against industry standards. TAR critical paths were better defined, resulting in planned TAR durations being met or beaten.
All of the benefits from the implementation were realized through joint teams of client and consultant leads. The client leads were trained and coached using a hands-on approach and learned while performing their tasks. Consultant leads were responsible for the professional growth of these individuals, ensuring long-term sustainability.