Too often, EPCM Contracts reward on-time, lowest total installed cost (TIC) solution when projects are not justified on this premise but on sustainably achieving a target condition that delivers in an expected business value. The former is a short term view and the latter is a long term view of project success. When it has been estimated that total lifetime costs are 5-8 times larger than total installed costs and that these costs are more than 95% fixed by the time the project is handed over to Operations, more needs to be done during the project phase to reduce costs than what is typically the case in the typical EPCM scenario.
Alcoa Global Primary Products (GPP) has developed a process that aims to improve equipment performance while lowering Operating and Maintenance (O&M) costs by focusing on Reliability Centered Maintenance principles. Based on a similar process originated by BE&K, it is called Pre-Production Reliability Activities (PPRA). The process runs in parallel and intersects with each of the project phases.
The 9 main deliverables of the PPRA are:
- A Maintenance Strategy for the new equipment that is stated and which all the other PPRA deliverables are aligned.
- A Design that considers the following reliability principles:
- Specification of reliability requirements such as desired mean time to repair (MTTR), mean time between maintenance (MTBM), preferred equipment, materials and spare parts, supply of or assistance with developing a failure modes effects analysis (FMEA), required documentation containing the correct minimum content, in the correct format and delivered by certain time, training and/or site support.
- Use of equipment with known reliability or that is proven best practice. When the technology is new to the facility, then where possible it is similar installations are visited and/or people who have had first-hand experience with operating and maintaining similar equipment are interviewed.
- Required reliability and lowest life cycle costs (LCC), i.e. the design alternatives are modeled to ensure the required equipment availability is achievable but that the project is not over-capitalized and that equipment with calculated lowest life cycle costs are chosen over equipment with lowest purchase price.
- Standardization of equipment and spare parts as well as simplification of design so that no more capacity, flexibility, etc is built than what is required.
- Equipment is physically maintainable and is also designed such that the stated maintenance strategy is achievable, i.e. is it TPM and PdM friendly? - Equipment Specifications that are written to let vendors know what is wanted from a reliability standpoint. For instance include reliability targets, FMEAs, material specifications, parts list, manuals, PdM and TPM design considerations & training requirements.
- An updated Computer Maintenance Management System (CMMS) complete with accurate asset catalogue, hierarchy and criticality as well as correct associated spare parts lists and maintenance activities (including resources, special equipment, start date and frequency). All completed before hand-over.
- An updated Engineering Document Management System (EDMS) complete with Original Engineering Manufacturer (OEM) manuals, up-to-date drawings, technical specifications, work procedures, etc in the correct format and location before hand-over.
- Sufficient number of and adequately Trained Maintenance Personnel
- Spare Parts Inventory is minimized by basing decisions on standardization, equipment criticality, lead time and maintenance strategy (run-to-fail vs predictive). The materials are received before hand-over.
- Equipment Maintenance Plans & Procedures that consider criticality & FMEAs, optimization of Preventative Maintenance (PM) & Predictive Maintenance (PdM) and include go/no-go parameters and autonomous maintenance activities.
- Commissioning Plans that ensure precision installation, capture PdM and operating base-lines, generate punchlists, transfer unused project spare parts, provide vendorprovided training, ensure equipment maintenance plans are achievable and documentation is received.
It is when these items are not effectively delivered by projects that opportunities are missed The PPRA begins at project inception to ensure the items are delivered:
- with a focused effort
- in entirety
- in a timely fashion – before hand-over
- ONCE to avoid costly rework
The 9 deliverables are broken down into a series of Tasks and the Tasks are broken down to more specific and sequential Activities. A responsible person is assigned to each Activity along with a target completion date, the document to be generated and any reference material. The suggested timing and duration of the Tasks aligns with capital process phases of Front End Loading Stages 1-3, Detailed Design, Construction and Start-up. The start and end points are based on when information becomes available, budgets need to be finalized, the timing of sequential tasks and system start-up.
The PPRA is imbedded in Alcoa GPP’s major expansion projects and is considered best practice for sustaining projects that either contain critical equipment, new equipment technology and/or involves replacing or upgrading equipment with reliability issues.
Projects are registered on an internal SharePoint Site and progress (% Task complete), costs and benefits (in NPV) are tracked via Project Tracking Sheets. Numeric tracking allows fair comparison across regions without being affected by language (or currency, exchange etc) and allows Project costs and benefits to be rolled-up to Plant, Regional and Global Levels.
The expected cost and benefits of the PPRA are based on past experience:
- Cost to complete PPRA approx 0.5% - 1% TIC although this is dependent on the size and nature of the project as well as the use of internal or external resources
- 40% reduction in spares purchased vs OEM recommended
- 20% reduction in total O&M costs
- 20% reduction in maintenance labour hours (actual vs OEM recommended EMP)
- Plant starts-up with less incidents allowing 100% capacity/target state to be reached quicker and sustainably
Interestingly, the largest lessons learned do not involve the reliability techniques applied during the PPRA but rather project management/administration issues, i.e.:
1) Documentation
- “Early” need for project information
- Typical purchase specifications de-emphasize documentation delivery schedule & format/content requirements
- Typical vendors separate into different business units, new sales from support services (i.e. training & service/start-up)
- EPCM teams traditionally don’t support PPRA documentation needs (priorities are procurement and construction) although this documentation is managed and received by the EPCM team
These factors translate into a “pull” system that requires constant attention and management. It also requires the team to use ‘draft’ process assumptions to enable progress to commence in a timely fashion, albeit revisions are expected.
2) Data Management and Process Tracking
- Track database for completeness and quality
- CMMS configuration for mass uploads
- Suitable PPRA Team Metrics
- Detailed metrics are necessary to focus resources
- Detailed forecasting is necessary to manage resource limitations
Summary
The cost of “getting reliability right” during concept, design, engineering, construction and startup of a new plant will typically cost 0.5-1% of the cost of the new facility. However, the value of that capital asset can easily be 10-20% higher, because it will produce more output at a lower cost for a longer period of time.
