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  2. 2. EditorialAS THE CRISIS ABATES PROJECTS RETURN:PROGRESS IN DOWNTIMESAgeing plants and equipment as well as increasing competition from the FarEast and the growing investment pressure has led to radical structural changesin the turnaround market and in the planning and execution of industrial plantshutdowns. The current edition of Insight Report discusses approaches tochange management and optimisation and highlights the different viewpointsof plant operators and suppliers.Changed market conditions, the relocation of down times without increasing the risk toorefineries and petrochemical plants overseas much? What other means are available to in-and not least the economic crisis have caused crease efficiency and ensure economic viabilityoperators to look for ways to optimise the plan- under these changing conditions? In fact, therening and execution of plant shutdowns and are several approaches to enhancing efficiencyinvestment projects. The chief aim is to reduce and optimising the cost of a turnaround eventhe length of shutdowns and turnarounds and to with little effort. A change in perspective or theincrease plant uptime. However, because of the consistent implementation of simple measureshigh volume of projects, TAR scheduling has can result in considerable improvements.become more complex. This added complexity Based on best practices and interviews, flexibleultimately increases the potential risk. A further planning, changes in scope through greaterfactor is the anticipated rise in investment vol- project integration and possible solutions will beumes following the crisis due to the large back- contemplated in this Insight Report from thelog of projects that built up in recent years. In viewpoint of both plant operators and contrac-this light, is it feasible to further reduce shut- tors.CONTENTSProject integration from the perspective of contractors: interview with Dieter Greuter, BIS Chemserv .... 3Greater flexibility despite increasing complexity? ............................................................................... 5Good practices in project integration ................................................................................................ 6Is the upswing on its way or already here? ....................................................................................... 8Challenges from the operators’ point of view ..................................................................................... 9
  3. 3. Project integration from the perspective of contractorsProject integration from the perspective of con-tractorsDieter Greuter is responsible for the execution of turnaround projects at BISChemserv in Linz, Austria. In this interview he talks about the ideal way toplan and execute a turnaround with project integration and future market de-velopments from the perspective of contractors.What advantages and disadvantages do you see The reality is different because turnarounds arein the integration of investment projects in a expensive and the main priority is to keep plantturnaround? downtime as short as possible.The advantage is certainly that it makes sense What are typical investment projects during ato integrate projects during a plant turnaround shutdown?because then the right structures are already in In general, they involve plant expansions andplace. In other words, personnel are on site, the optimisation but also replacing equipment, suchplant has been shut down, theres an order as columns or heat exchangers as well as theapproval system that I can integrate to make necessary piping. In the case of actual plantfull use of the many resulting synergies. The components, the asset does not have to alreadydisadvantage is that shutdowns are relatively be shutdown as the component can be built inshort and the projects are always critical. That parallel. All that then has to be done during acan lead to problems if one tries to force shutdown is to incorporate the installation intothrough such a project by all means. the existing plant.What would be the ideal way to execute such a How much of a turnaround is spent on mainte-project? nance work and how much on projects nowa-The ideal case would be that the project deter- days? Has anything changed in this regard overmined the schedule and the shutdown was ar- the last years?ranged accordingly. Usually, however, the shut- Projects have been on the up over the lastdown is planned first and attempts are then while. By that I mean over the last ten years ormade to integrate the project. Frequently, pro- so. In the case of newer plants, such as Totalject integration only happens when the shut- Raffinerie Mitteldeutschland which was built indown plan is already set. But a long-term capital 1997, its still not really a big issue. But overall,project should always be the priority and the plants are getting older and the need to replaceshutdown oriented around the project. That sections of piping or machinery is growing. Thiswould be a novel approach for once. development will definitely continue.Is this plan realistic or is the real picture quitedifferent? 3 T.A. Cook Consultants Insight Report 03 – 07/2011 Trends in Shutdown and Turnaround Management
  4. 4. Project integration from the perspective of contractorsDo you see a trend towards more investment What developments do you see here over theprojects now since the crisis has been over- next five to ten years?come? The major concern will be how long plants inNot yet, really. I think that at the moment eve- Central Europe can hold on because relocatingrything is happening too fast. We are on a sharp to the Far East or Middle East is an issue. Thisupwards curve but usually the curve goes right will particularly affect plants that are alreadyback down afterwards. With regard to new in- older and which raise the question whether itsvestments, natural growth has not yet estab- worth investing heavily in the plants or to givelished itself post crisis. Noticeable is that there them up. I believe that the investment volumeis enough work again and that theres a lot of in Central Europe will decrease because plantscatching up to do. But whether it continues like will be decommissioned. Investments and pro-this and when the backlog will be cleared, can- jects will move east.not yet be said. We have not seen an increasein investment projects up until now. 4 T.A. Cook Consultants Insight Report 03 – 07/2011 Trends in Shutdown and Turnaround Management
  5. 5. Flexibility and complexityGreater flexibility despite rising complexity?Turnaround scheduling always needs to be flexible so that unexpected eventscan be dealt with promptly. How can this flexibility be safeguarded in the faceof rising planning complexity due to the integration of an increasing number ofprojects?Turnaround planners often get caught in the schedules are planned for all activities dividedcomplexity trap. The combination of longer into levels of differing complexity and with dif-production cycles, increasing cost pressures and ferent timelines. These are then compiled into athe considerable investment that is required in rough and transparent management plan. Tothe relatively old plants across Europe is result- ensure that a schedule is actually applicableing in more and more complex scheduling and requires a matured and consistently appliedproject planning for upcoming turnarounds. The reporting system. Such a system defines themain issues here are: is moreplanning necessary in order to fitand coordinate all jobs in theplan or is it better to develop arough plan that maintains acertain amount of flexibility?Does it still make sense to havea TAR team or is it better in viewof the high volume of investmentprojects to give the responsibilityfor turnaround planning over toa project team? exact start and end point of a task but the rest of the process remains dynamic. If there areThere are many approaches nowadays to make weaknesses in the reporting system, errors willa turnaround more economical and faster. As quickly occur in the schedule plan, rendering itwell as innovative substitutes for common test- useless. At this point consistency is an absoluteing methods, online order approval systems must. Whether maintenance or an investmenthave proven particularly valuable. These sys- project is to be the main priority when conceiv-tems help improve the transparency of a TAR ing a turnaround has to be decided on a case byand to prevent errors – well-founded, thorough case basis and should depend on which task hasschedule and project planning is still only realis- the larger planning requirements. The planningable by an experienced planning team, howev- team then has to decide which processes re-er. Obviously, pending investment projects quire one hundred percent control of all jobsshould be incorporated into the schedule too. and tasks and where a flexible concept withOne option to reduce complexity is to develop a greater freedom to make decisions at all levelsschedule plan with different levels. Detailed is more appropriate. 5 T.A. Cook Consultants Insight Report 03 – 07/2011 Trends in Shutdown and Turnaround Management
  6. 6. Good PracticesGood practices in project integrationDifferent tasks require different approaches and planning. But why reinventthe wheel? What has been tried and tested in one place can be applied in oth-er companies too.Usually pending projects are integrated into the ered in order to optimise the whole process ofturnaround schedule. Due to increases in pro- the turnaround.ject volumes, the notion of integrating the turn-around into the project plan is currently beingconsidered. Total Raffinerie Mitteldeutschland,for example, has declared the planning andcontrol of projects to be a central managementrole. In the past, maintenance comprised twothirds of all activities conducted during a shut-down at Total, one third was dedicated to capi-tal investments. It made sense for plant opera- In other cases, the operation cycle is length-tors to plan both sets of jobs together. It was ened where possible so that plant installationsalso practical during implementation – the pro- that used to have different inspection schedulesject manager for maintenance and the project can now be tested in one turnaround. Fewermanager for investment projects now work shutdowns, and the reduction of the time re-together in one office, so short distances and quired for the phased shut down and start up ofdirect communication are easily guaranteed. the plant shortens the total downtime within a test cycle.For the joint management of both large turna- BASF in Ludwigshafen is in the process of reor-rounds and investment projects general contrac- ganising its TAR competences globally. Thetors are still employed are independent of con- global organisation of turnarounds across loca-tractors who conduct routine maintenance work. tions allows best practices to be determinedThis ensures that maintenance will not suffer internally, which in turn leads to a reduction inunder the growing project scope.In order to the complexity of maintenance and investmentreduce the overall scope, Wacker Chemie at projects thanks to the standardisation of sched-Burghausen no longer inspects all apparatus at uling and scope planning. The company has alsoone and the same time. In cooperation with released the operative manager for mainte-TÜV, the company is investigating how often nance from day-to-day business so that he caneach asset needs to be shut down and tested. manage all of the tasks executed during a turn-In some cases, a reduction of the operation around. This gets rid of the double workloadcycle of certain equipment is even being consid- which was susceptible to errors. Research & Studies 6 T.A. Cook Consultants Insight Report 03 – 07/2011 Trends in Shutdown and Turnaround Management
  7. 7. Market Study Western EuropeTechnical services for Turnarounds in petro-chemical Plants Study factsThe Western European refining and petrochemical industry is un- 173 plantsder pressure from competition in emerging regions, making costs 461 Technical service providersand effi ciency critical to their ongoing operations. Turnarounds as 143 Interviewsa major cost can be a source of crucial competitive advantage. 25 Experts questioned with a delphiTAR-management and en efficient shutdown conduction aiming to surveyshorten downtimes is therefore crucial for plant operators. 101 Illustrations 23 TablesThe success of these project depends mainly on the managementan the competences of external technical service providers. But technical service providers have todeal with shorter downtimes, lower budgets, longer TAR-cycles and the need to conduct more andmore investment projects.This study aims to help you understand the European TAR-market, providing authoritative infor-mation on: legal frameworks business and organisational mo- dels services and trade specialties for turnarounds future trends strategies for the TAR businessThis study is therefore an useful source ofinformation for improving acquisition flexibil-ity as well as identifying international part-ners and new business opportunities.For more information visit:www.tacook.com 7 T.A. Cook Consultants Insight Report 03 – 07/2011 Trends in Shutdown and Turnaround Management
  8. 8. Development after the crisisIs the upturn on its way or already here?"We have survived the crisis." This sentiment can be heard everywhere butwhat changes can really be felt? Is investment on the up?"A tsunami of projects is on the way." This investment as a lot of money has to be investedstatement from one plant operator makes it into decommissioning a plant and specialistclear that huge investment is expected in plants waste disposal for the old plant and machinery.up to 2016, triggered by the catch-up effect Newer plants in the European region do not yetfollowing the crisis. This may sound at first that have to deal with such issues. According to Axelthe strain on German and European markets will Koberstein, Unit Manager of Technical Projectsease but is soon relativized by the fact that at Total Raffinerie Mitteldeutschland, a refinerymost planned investments target Asia, the Far built in 1997: "We didnt have a crisis." There isand Middle East. Investment plans are afoot in no backlog of investment projects at this plant, and there has not yet been any need to consid- er investing heavily into the replacement of larger plant components. "We have the ad- vantage that our plant and equipment is pretty modern and we can fully meet the quality standards demanded by the market in terms of the environment, sulphur etc. The investments that we are currently undertaking revolve around energy improvements, energy effective- ness and measures for the production of niche products," says Koberstein. Overall it seems that investments are beingGermany too but their scope is hardly compara- planned by plant operators. Contractors andble with the intentions in Asia. On account of service companies, however, have not yet seenthe age of many European plants, their profita- any indication of a growing order volume. If andbility will be questioned in the future with re- when the planned projects will actually be im-gard to the amount of investment required. plemented and whether the German and Euro-That said, in Europe the construction of a new pean markets will experience an upturn remainsplant is not considered to be the only type of to be seen. 8 T.A. Cook Consultants Insight Report 03 – 07/2011 Trends in Shutdown and Turnaround Management
  9. 9. Projektintegration aus BetreibersichtChallenges from the perspective of operatorsHow do plant operators feel about the integration of investment projects in aturnaround? What advantages and disadvantages can they expect?Plant operators differentiate between invest- that, a different contractor strategy is requiredment projects to expand capacity and reliability- especially when integrating large projects intocentred projects, the objective of the latter turnarounds as few contractors can executebeing to increase plant availability. However, both large turnarounds and extensive invest-when it comes to integrating these projects in a ment projects. Plant operators recommend thatturnaround they see no difference: Because the large projects are allocated to various contrac-highest priority for all plant operators is that the tors on account of the differing requirementsproduction continues with as few interruptions and priorities even if this increases the organisa-as possible, projects of all kinds are preferably tional burden. The integration of maintenanceintegrated in a turnaround in order to prevent work and projects in work packages poses par-considerable losses. One of the main causes for ticular difficulties for all work processes of athese losses are the long start up and shut turnaround, necessitating more personnel indown times which, for example, in the case of organisation, logistics and infrastructure and lengthening the dura- tion of the whole turn- around. Projects that can be executed dur- ing normal operations are generally not inte- grated in a turna- round. This is seldom, however, as most projects are connected to a production pro- cess at a specific point and thus affect it.synthesis gas facilities and steam crackers, can Assuming that no financial pressures to imple-take up more than a third of the entire shut- ment immediately exist, one option is to con-down time as well as the loss of product that duct projects as far as possible outside of thehas to be removed from the plant and disposed turnaround and then integrate them with theof. process during the next scheduled shutdown.However, in addition to these financial ad-vantages, there are several, critical disad- Depending on the project, the cost of the in-vantages of project integration: plant operators vestment relative to the whole turnaround canface particular challenges due to the increased vary considerably. For example, scheduled ca-complexity of the turnaround. In addition to pacity expansions, such as the erection of new 9 T.A. Cook Consultants Insight Report 03 – 07/2011 Trends in Shutdown and Turnaround Management
  10. 10. columns or turbines, are so cost-intensive that As the core engineering for all projects eventhe expense of the project surpasses that of the those overseas is conducted from Germany,rest of the turnaround. companies have to strengthen their key re-The crisis does seem to be abating for plant sources at home either internally or throughoperators too and investment volumes are be- third-party engineering firms. Following theginning to rise again. The catch-up effect result- reduction of the workforce during the crisis,ing from the backlog of projects that were post- considerable investment is required in personnelponed over the last years creates new challeng- recruitment and the use of external competenc-es for plant operators: es. 10 T.A. Cook Consultants Insight Report 03 – 07/2011 Trends in Shutdown and Turnaround Management
  11. 11. Research & StudiesT.A. Cook Research & StudiesBeside the Insight Report T.A. Cook Research & Studies offers studies in the area of AssetPerformance Management.Current studies: Technical Services for Turnarounds in Petrochemical Plants in Germany, Austria & Switzerland (540 pages, 4400€) How companies use RFID in maintenance (190 Pages, 1500€) Offshore Wind Farm Operations & Maintenance (177 Pages, 2900€) Technical services for Turnarounds in petrochemical plants Western Europe (5900€) TAR Scheduling | Scheduling Practices for Turnarounds (1700€)Exclusive studies and surveys as the basis for your decisionsClients with specific questions related to topical issues or competitors may be best served by a single-client study.With these studies, T.A. Cook Research & Studies offers you the opportunity to specify content and scope tailoredto meet your companys particular needs. Our team will be glad to put together a non-binding quotation for youbased on a pre-defined scope. T.A. Cook Research & Studies Leipziger Platz 2 | 10117 Berlin | Phone +49 (0)30 88 43 07-0 | Fax +49 (0)30 88 43 07-30 E-Mail: studies@tacook.com The Research & Studies division conducts detailed market and company analyses in the area of Asset Performance Management. The focus of the team is to systematically investigate and clarify current mar- ket concerns and requirements as well as anticipated developments and their consequences for market players. As well as studies on topical issues, we compile trend reports and continually expand our data- base of specialised knowledge, which can be applied to each study as needed. 11 T.A. Cook Consultants Insight Report 03 – 07/2011 Trends in Shutdown and Turnaround Management
  12. 12. Author: Nina Wolfs Research Consultant at T.A. Cook Nina Wolfs is responsible for the compilation of market studies and analyses in the area of asset performance. She previously worked for different market research companies and has conducted various studies.ContactE-Mail: n.wolfs@tacook.comTel.: +49 (0)30 88 43 07-0Interview:Greuter, Dieter. BIS Chemserv. Interview on 27.01.2011 Insight Report is a service of T.A. Cook Research & Studies If you have any questions or suggestions please don’t hesitate to contact us: T.A. Cook Consultants | Leipziger Platz 2 | 10117 Berlin | Phone (030) 88 43 07-0 | Mail: service@tacook.com T.A. Cook is a management consulting firm focusing on Asset Performance Management with offices in Berlin, Birmingham, Houston, Paris, Raleigh and Rio de Janeiro. The core competence of the consulting business is the sustainable implementation of asset, operations and service-oriented excellence. As a change management specialist, the firm delivers measurable value enhancement and bottom-line productivity gains. In order to achieve these results T.A. Cook offers a wide range of professional services which ensure that all business processes - from strategy definition through management to organizational design – are effective, efficient and sustainable. Complementing the consulting business, the T.A. Cook Academy has become a leading organizer of international conferences and seminars relating to Asset Performance Management. Annual events include the MainDays summit as well as conferences centered on topics such as Shutdowns & Turnarounds and Capex Management. T.A. Cook’s clients are typically businesses, their suppliers and contractors working with significant industrial assets across multiple sectors. The company has particular expertise in the petrochemicals, plastics, pharmaceutical, transport, mining and food sectors as well as excellent knowledge of the regulated environments occupied by gas, water and electricity utilities. Further information about T.A. Cook may be found at: www.tacook.com T.