Starting up new plants overseas

Your company's executive team just approved investing $3.2 billion in a new refinery and petrochemical plant 7000 miles from your corporate offices, and you were selected to be the program director. They asked you, "What are the key tasks we need to accomplish to make sure we have a successful plant startup on schedule?" Your executive team is looking to you for leadership, especially in somet...

01/10/2004


Your company's executive team just approved investing $3.2 billion in a new refinery and petrochemical plant 7000 miles from your corporate offices, and you were selected to be the program director. They asked you, "What are the key tasks we need to accomplish to make sure we have a successful plant startup on schedule?"

Your executive team is looking to you for leadership, especially in something as risky as investing more than $3 billion in your company's first production plant overseas. Projects fail for a variety of reasons, such as business objectives that are not well established, lack of alignment between management and the project team, and lack of experience. The list goes on.

We need to create our operational readiness startup master plan. By far, one of the most crucial early tasks and essential success factors is creating one, integrated, comprehensive master plan. This is the roadmap you will use to guide your team and build the bridge between your executives' vision and business strategy and your plant overseas.

Owner challenges

The owner has literally thousands of challenges and risks that are involved in bringing a new plant online. It doesn't matter if you are planning or designing an oil refinery, liquefied natural gas terminal, steel rolling mill, consumer products facility, pharmaceutical plant, or power-generating station. These owners face many common challenges and risks that must be addressed. Below is a short list of examples:

  • Creating the right vision within the company and the strategies and philosophies to guide the planning and execution activities

  • Conducting market analysis and selecting the correct site, including evaluating employee demographics, environmental assessments, regulatory permitting, and local/regional employment and tax incentives, to name a few

  • Finalizing the operations and maintenance strategy and the outsourcing plan. Securing qualified maintenance service providers early will influence use of best practices that drive top-quartile performance.

  • Optimizing the total cost of ownership using life cycle cost optimization techniques to balance capital expenditure and operating expenditure budgets without sacrificing high reliability, availability, maintainability, and operability.

    • Overseas challenges checklist

      Your new overseas program presents new challenges and increases the probability that " something " will impact your success. Some of the items to address and include in your checklist are below β€” most will add time and cost to your project.

      • Mobilizing your project team to the country may present security issues that must be addressed early. Be sure you have an emergency exit plan.

      • Be sure to check on all the necessary inoculations your project team members will need.

      • Make sure you have addressed living and transportation needs. In some countries, you will not want to drink the water or drive an automobile.

      • Creating the project documentation β€” probably in either a different language or dual languages β€” will be a fun experience.

      • Expect to find a different work culture and value system.

      • Don't underestimate the effort involved in developing and delivering training to the new employees so they can participate and will be ready for startup.

      • The new plant will need many things to support operations. Setting up your supply chain for purchased services, turnaround contractors, MRO materials and supplies, and technical services should be addressed early during your planning efforts.

        • Key success factors for world-class startup

          Start your planning with an emphasis on the end, not the beginning. Rather than creating an execution plan and schedule that pushes the work through each stage from engineering, through procurement, followed by construction, think of the way you will commission and start up the plant. Create a "pull-based schedule" that sequences the work to optimize the plant startup.

          Construction builds according to the sequence you will commission the first systems, and in turn, they pull through procurement, which in turn, pulls from engineering the equipment work packages in the order necessary to optimize the commissioning and plant startup.

          Where to start

          Using key elements of your capital investment approval package, the project director should select an experienced facilitator who will guide the key stakeholders through a focused process to complete these early critical tasks.

          Vision and strategy

          The owner needs to establish and communicate a clear vision and business plan for the new plant initiative, including the key goals and objectives. Successful project teams create a document that defines the new asset, the amount of product being produced, the cost and schedule expectations, the key performance indicators, and similar requirements. The document communicates the vision, strategic requirements, operational philosophies, and principles the team will use to guide it through the design, the evaluation of alternatives, and the decision-making process.

          Team creation and alignment

          Be careful how you create your team. Typically, each department assigns a person who is accountable to "take care of our department's needs" or "make sure all our department requirements are satisfied, and we're ready for startup." This approach can foster silos and narrow or shortsighted decision making that does not use an integrated, optimized work process. Select people who are functional experts and team players.

          Next, be sure your team is properly aligned. As project director, to create an aligned and integrated team, you should conduct an alignment meeting or workshop. Use a methodology to guide your team through a review of the vision and key strategies and to gain clarity on each department's priorities and interdependencies, and their tasks, roles, responsibilities, and deliverables.

          Alignment is critical, and mutual commitment by all stakeholders is necessary, including common goals, candor, transparency, effective teamwork, win-win decision making, and barrier elimination. The team should meet regularly throughout the project to ensure it stays aligned.

          Operational readiness startup masterplan

          Once the team has a clear vision, understands the strategy and guiding philosophies, and completes the alignment step, it is time to create your roadmap to being operationally ready for startup. Following a proven master planning process is essential to realizing the executive sponsors' vision, implementing the key strategies, satisfying the business case, starting up on schedule, and keeping your career moving forward.

          There are thousands of tasks that need to be completed in parallel with the front-end engineering design, detailed engineering, procurement, and construction and precommissioning activities in order for the owner to be ready for startup.

          As the project director, you need to determine how complete your current planning is and if you have any tasks missing that will impact your true startup readiness.

          Readiness review

          Conduct an audit to evaluate all elements of the project and rank your readiness at several "gates" during the project. This audit provides a thorough evaluation at key project transition points to validate that the necessary work is tracking well to the project schedule before you transition to the next stage. This effort should identify potential risks to your flawless startup and the ongoing operation and maintenance of the new plant.

          Program execution planning

          After the readiness review, you are ready to create or update your program execution plan (PEP), which identifies all the tasks to be accomplished by the owner and your contractors and service providers involved in the project. The risk-centered master planning (RCMP) process links all the elements of the project together, including the engineering, procurement, and construction (EPC) contractor, your original equipment vendors, the training companies, materials suppliers, etc. There are literally thousands of inter-related tasks to identify.

          During this planning effort your team conducts a risk analysis to determine the potential risks in each functional area, including operations, maintenance, quality, supply chain, systems and automation, staffing, training, commissioning, and startup, all of which can impact your project's costs and schedule. Fluor, for example, uses a work process called business risk management framework to guide the teams through the risk-analysis process. When a risk is identified, a severity level is assigned based on a combination of the probability and consequences of the risk occurring.

          As the project schedule begins to take shape, the gap closure action plans from the readiness review are incorporated into the RCMP. Once all the tasks are loaded into your scheduling system, the project critical path is determined. Performing a monte-carlo risk sensitivity analysis to examine the potential impact to the project is recommended. Risk mitigation plans are then developed for all critical path tasks that were ranked with a high or medium severity level.

          Following this process will provide the executive sponsors and the owner's project director with one, integrated, comprehensive startup readiness master plan. This roadmap can guide your team through each phase of the project, from preliminary engineering to commissioning, handover, production startup, rampup, performance testing, and ongoing operations and maintenance.

          The plan includes:

          • Readiness gap closure actions

          • Risk mitigation plans

          • Schedule of tasks

          • Critical path analysis

          • Hiring/staffing forecast

          • Resource histogram and S-curve

          • Task, role, responsibility and deliverable matrix.

            • Together, these comprise the program execution planning process. This integrated plan provides the project team the roadmap to address all of the owner's responsibilities. The plan addresses many topics, including creating operating procedures, conducting reliability-centered maintenance analyses, hiring and training the entire owner's staff, preparing for commissioning, introducing feedstock, performance testing, quality accreditation, and delivery of new products to your customers.

              Summary

              Preparing an integrated master plan that encompasses all the mandatory elements is crucial to enjoying a world-class startup. Without one, you probably will not.

              The plan integrates all the key stakeholders, including you, the owner, and your suppliers, contractors, and customers.

              By identifying, evaluating, developing, and acting on the owner's responsibilities as early as possible, risks are reduced, and total cost is reduced. An earlier startup will accelerate the positive cash flow, and maybe your career.


              <table ID = 'id3002733-0-table' CELLSPACING = '0' CELLPADDING = '2' WIDTH = '100%' BORDER = '0'><tbody ID = 'id3002834-0-tbody'><tr ID = 'id3002837-0-tr'><td ID = 'id3008830-0-td' CLASS = 'table' STYLE = 'background-color: #EEEEEE'> Author Information </td></tr><tr ID = 'id3001645-3-tr'><td ID = 'id3001647-3-td' CLASS = 'table'> Jim Leitch is a Senior Director within Fluor's Operations & Maintenance group. He has 25-yr experience in engineering, operations, maintenance, program management and more than eight plant startups. For further information, he can be reached at jim.leitch@fluor.com .</td></tr></tbody></table>


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