(1) The document discusses how operational readiness is often underestimated during project development, leading to issues during commissioning and start-up that cost owners millions. (2) It advocates for establishing an operational readiness team early in projects to provide input on design decisions and ensure deliverables like manuals and training are on track. (3) Jacobs Consultancy offers operational readiness assurance services to help owners implement best practices through all project phases to smooth the transition to operations.

1. Real-Time
Operational Readine ss
EFFECTIVE TRANSISTION FROM PROJECT TO OPERATIONS
AND HOW IT CAN HELP ASSET OWNERS TO BE IN CONTROL
B y T i a g o V i l e l a
O P E R A T I O N A L R E A D I N E S S A S S U R A N C E
Jan.2016

2. CONTENTS
INTRODUCTION ...........................................2
TYPICAL OPERATIONAL READINESS
ISSUES FACED BY PROJECTS ....................2
THE FUTURE ASSET OWNER.....................2
PROJECT-TO-ASSET TRANSITION
OF OWNERSHIP............................................2
REAL-TIME OPERATIONAL
READINESS ASSURANCE............................2
SUMMARY ......................................................2
HOW JACOBS CONSULTANCY
CAN HELP.......................................................2
© 2016 Jacobs Consultancy. All rights reserved.

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ora
O P E R A T I O N A L R E A D I N E S S A S S U R A N C E
The capital project lifecycle is characterized by
economic based decisions, technical design,
engineering, procurement and rigorous construction
planning and execution. Project teams are very much
focused on the technical design, construction
planning and execution.
Today, project teams still underestimate the impact of
their decisions during project development on
Operational Readiness – often based on incorrect
assumptions. Lack of operational input during
engineering and design is the main cause for
changes in projects, with extensive delays on
start-up, quality issues and significant rework,
resulting in considerable production losses.
It is undisputed that these practical implications are
causing significant value leakage at the transition from
project execution into operations. As such, it is
increasingly recognized that early focus on
Operational Readiness is key for project success.
Operating companies struggle to timely and efficiently
integrate operational readiness requirements (and
industry best practices) with the project development
activities during the project life cycle. More and more,
major projects come under budget and schedule
pressures which tend to promote focus on
construction completion rather than optimized
operation/production. It is a tremendous endeavor to
fully integrate Operational Readiness in projects from
day one.
Most Owner organizations fail to recognize the need
to establish an effective project-integrated
Operational Readiness work process. Others still
struggle to implement them effectively.
During project development and construction phases,
the owner (operational) organization needs to be
recognized as the future asset owner since it will be
expected to take full ownership of the facilities at the
end of the construction phase – typically during the
Handover and Acceptance period after Mechanical
Completion. For this, operational teams need to be
ready much earlier to guarantee an efficient Project
Ownership Transition. Owner organizations are
generally unprepared to take ownership of their
facilities.
“…project teams still underestimate
the impact of their decisions during
project development on Operational
Readiness.”
INTRODUCTION

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O P E R A T I O N A L R E A D I N E S S A S S U R A N C E
Operational issues are typically seen as
something that can be handled in the
future, and not valued sufficiently by
both Engineering and Owner teams.
Project owners often remove important
Operational Readiness requirements
from the FEED
1
stage to reduce
development costs.
Value engineering practices are often
only focused on reducing Capex
2
rather
than optimizing project whole life value.
Key “Operational” decisions during FEED
are not being sufficiently challenged – to
prevent Capex increase – insufficient focus
long term value of the project.
Non-existent or unrealistic
understanding of Reliability,
Availability and Maintainability
characteristics of the project.
1
Front End Engineering Design
2
Capital Expenditure
Non-existent or inadequate project-
integrated operational readiness strategy
and supporting work process (roadmap).
Unstructured and fragmented
implementation of a project-integrated
Operational Readiness work process.
Understaffed and insufficiently
empowered Operational Readiness
Organization to support and structure
the much required operational input
early in the project.
Lack of Operations and Maintenance
input during FEED: Insufficient focus on
equipment Maintainability and
Operability during design in order to
prevent Capex increase; Unrecognized
operational implications of (late) design
changes.
Key Operational Readiness deliverables
are “dumped” into the scope of the FEED
contractor without proper follow-up and
oversight from the asset owner.
Based on our direct experience of major projects across the globe, we are able to get an insight into the key
operational readiness challenges facing the industry:
“Project owners often remove
important Operational Readiness
requirements from the FEED stage to
reduce development costs.”
TYPICAL OPERATIONAL READINESS ISSUES FACED
BY PROJECTS
FEED

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O P E R A T I O N A L R E A D I N E S S A S S U R A N C E
EPC
3
contracts do not include sufficient
operational readiness requirements or
clear completion milestones.
EPC payment schedules do not consider the
importance of the quality and timely delivery
of key Operational Readiness deliverables
(i.e. manuals, procedures and plans), critical
to CSU
4
planning and O&M training.
Owner operational organizations heavily rely
on the assumption that the EPC contractor
will timely prepare the deliverables and with
the required quality.
Project Management Teams are generally
inefficient in bridging the interface(ing)
between the CSU team and the EPC
Contractor – deficient definition of the
interface between the EPC contractor and
the Operational Organization.
Lack of Engineering and Construction back-
end support during CSU execution.
3
Engineering, Procurement and Construction
4
Commissioning and Start-Up
Inability of the asset owner to draw upon
previous project experiences and develop
purposed operational issues register
(Operational “Bugs”) due to short-term
project focus – no real strategic view.
Insufficiently empowered Operational
Readiness Organization to proactively
follow-up, track progress and drive the
completion of Operational Readiness
deliverables.
No real collaborative approach between
the EPC contractor and the Operational
Organization in preparing and reviewing
CSU plans, procedures and operating
manuals.
Inadequate Operations and Maintenance
Training resulting from poor training
programs, late mobilization of resources
and deficient Operating Manuals and
Procedures.
Inexperienced and fragmented CSU
teams which are generally understaffed
and mobilized too late.
“EPC contracts do not include
sufficient operational readiness
requirements or clear completion
milestones.”
EPC
CSU


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O P E R A T I O N A L R E A D I N E S S A S S U R A N C E
The Operational Readiness Organization needs to be
an integral part of the project to provide structured
operational input and systematic validation. The
Operational Readiness Team is representing the
future asset owner and is, therefore, responsible for all
the planning activities required to ensure the owner
organization is ready to receive, operate and maintain
the new facilities (often includes commissioning and
start-up).
Today, the project interface between project owners –
represented by a PMT
5
– and the FEED & EPC
contractors is relatively well defined with long-time
established contracts (FIG. 1). At the same time, the
critical interface between Operations and
Maintenance (O&M) – the future asset owner –
remains unstructured, without a standardized
work process and proper consideration in the
established contracts. This creates barriers to a
timely operational input into the project. O&M
organizations still tend to be very disconnected from
the project with very little influence on the key
operational decisions. Successful projects require a
more structured approach to operational readiness
supported by a suitable operational readiness
organization.
5
Project Management Team
FIG. 1 - CRITICAL PROJECT OPERATIONAL INTERFACES
(ILLUSTRATIVE).
Project Management is very much focused on
constructing the “project” and there’s no real concern
with future implications to the operate phase of the
project: design to construct, construct to operate and
operate to produce <<Operational-Centered Project
Execution>>.
FEED / EPC
Contractor
Project Team
Operations &
Maintenance
OPERATIONAL
READINESS
PROJECT
“The Operational Readiness Organization
needs to be an integral part of the project
to provide structured operational input
and systematic validation.”
THE FUTURE ASSET OWNER

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O P E R A T I O N A L R E A D I N E S S A S S U R A N C E
During the design and building phases, the “Future
Asset Owner” has very close to zero project
ownership (FIG. 2). Project Ownership Transition
normally happens over a short period of time with a
relatively quick handover and acceptance of the
facilities – transition from no (0%) to full (100%)
ownership.
FIG. 2 - TYPICAL PROJECT TO ASSET TRANSITION OF
OWNERSHIP (ILLUSTRATIVE).
A structured operational readiness work process
will, not only promote the required operational
input early in the project, but will also guarantee
a smoother Project-To-Asset transition of
ownership.
Typical approaches to Operational Readiness are only
focused on identifying Operations scope to assign to
the project (Operations input into the project). An
approach far more comprehensive is required to
elevate the role and responsibilities of a structured
Operational Readiness Team integrated in the project
to continuously ensure project objectives are aligned
with the operational requirements of the facilities.
Successful project outcomes can only be attained with
proper discipline and governance in ensuring that the
operational readiness work process is sufficiently
covered. Without a structured focus on operational
readiness – supported by an adequate organization –
the holistic and synchronized integration of the
design, construction, commissioning and start-up
phases will not be possible.
Providing assurance that the future asset owner will
be ready to operate requires a structured framework
with a well-defined common work process and
supported by an industry best practice assessment
tool (to consistently assess project operational
readiness). Such framework will promote the much
needed collaboration to strengthen how efficiently
owner organizations are preparing to receive and
successfully start-up the new facilities.
OPERATE“Future”
Asset
Owner
Project
Management
Team
(PMT)
PRE-COMMISSIONING
PROJECT-ASSETOWNERSHIP
MCC FA
COMMISSIONING&START-UP
100%
0%
CONCEPT – DESIGN – BUILD
PROJECT-TO-ASSET
TRANSITION OF
OWNERSHIP
REAL-TIME
OPERATIONAL
READINESS ASSURANCE
OPERATIONAL READINESS
ASSURANCE

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O P E R A T I O N A L R E A D I N E S S A S S U R A N C E
FIG. 3 - OUR STRUCTURED FRAMEWORK TO ASSESS, MEASURE
AND MANAGE OPERATIONAL READINESS IN PROJECTS.
All operating companies can appreciate an enhanced
ability to take full control – whole cycle project
ownership – of their projects from beginning to end,
and at the same time promoting a contractual
collaborative approach.
The focus and level of detail of the operational
readiness work process will change depending on the
project stage. In the early stages of a project, key
operational readiness activities will promote a
structured input from Operations and Maintenance
on evaluating major configuration options supported
by RAM
6
and LCC
7
analyses. During FEED, the main
6
Reliability, Availability and Maintainability
focus is to ensure key operational decisions, risks and
trade-offs are being regularly challenged with
sufficient operational input.
During EPC, the main focus is to ensure key
operational deliverables are timely prepared, reviewed
and effectively communicated to all project
stakeholders. Also during this stage, the recruitment
and hiring plan is executed to timely secure any
resource needs.
As such, owner operational organizations need to be
sufficiently staffed and project-empowered to fully
support the implementation of the operational
readiness strategy – in collaboration with the PMT and
other project stakeholders.
Effective assurance will require a proven operational
readiness assessment tool to enable future asset owners
to consistently measure the level of preparedness of the
operational requirements for the project and
understand the potential impact for being (and staying)
Ready To Operate the new facilities (FIG. 3).
7
Life Cycle Costing
RISK
MANAGEMENT
OPERATIONAL
READINESS
ASSURANCE
OPERATIONAL
BUGS DATABASE
READY-TO-OPERATE
PLAN-TO-PLAN
ASSESSEMENT
TOOL
OPERATIONAL READINESS
ASSURANCE
“An approach far more comprehensive is
required to elevate the role and
responsibilities of a structured
Operational Readiness Team integrated in
the project to continuously ensure project
objectives are aligned with the
operational requirements of the facilities.”

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O P E R A T I O N A L R E A D I N E S S A S S U R A N C E
The industry is littered with projects that have failed to
start-up and operate at the required performance,
many with delays, some with ongoing reliability issues
requiring extensive shutdown and rework.
From our database, major oil and gas projects
overrun commissioning and start-up, on average, by
3 months. For a 300,000 barrels/day refinery we
estimate a total cost of $307MM of lost opportunity
and other fixed costs. For a project with a $1B TIC
8
this represents more than 30% of TIC. This means
that a little effort during FEED and EPC phases can
potentially add significant value to the project
profitability.
Although most Operational Readiness activities and
deliverables are embedded in the project processes,
their ownership is often diluted and many times
unclear. Operating companies (Owners) need to
increase their focus on this issue; developing a well-
structured (holistic) operational readiness work
process to ensure operational readiness is sufficiently
covered throughout the project life-cycle.
Integrating a standard Operational Readiness work
process with the project development process is the
starting point. Developing a fit-for-project Ready-To-
Operate (RTO) Plan-To-Plan and Progress Tracking
Tool, if managed correctly, will effectively drive the
(project) Operational Readiness planning activities. A
progress tracking tool is helpful in surfacing “hidden”
operational readiness deliverables.
8
Total Installed Cost
The effectiveness of a best practical RTO Plan-to-Plan
requires a true collaborative approach between all
project stakeholders (namely the PMT, ORT
9
and the
FEED and EPC Contractors) supported by a suitable
operational readiness organization.
Key Ready-To-Operate milestones need to be
embedded in the FEED and EPC contracts with clear
deliverables and ownership, fully aligned with the
project objectives and contracting strategies. Project
success will strongly depend on the quality and timely
delivery of key Operational Readiness deliverables.
A collaborative approach with the FEED and EPC
Contractors is crucial to actively drive the project
integrated operational readiness efforts and effective
project-asset ownership transition planning.
9
Operational Readiness Team
“We estimate lost opportunity benefits
can be as much as 30% of TIC meaning
that a little effort during FEED and EPC
phases can add significant value to the
project profitability.”
SUMMARY

10. Jacobs Consultancy advises Asset Owner companies on
Operational Readiness strategy, planning and overall
assurance. Our Operational Readiness Assurance (ORA)
program aims to reduce the impact of project specific
and common Operational Risks and Bugs during
Commissioning, Start-Up and Initial Operation.
Jacobs Consultancy seeks to identify, promote and
support the early project implementation of good
operational readiness practices and work processes
utilized industry-wide for projects with similar scopes.
We provide a structured framework to assess, measure
and manage operational readiness in projects.
We offer an integrated toolkit of consulting services
supported by a network of experts, tools and knowledge
databases.
KEY CONTACTS
Tiago Vilela
Senior Asset Management Consultant
Tiago.Vilela@Jacobs.com
Edwin Plug
Supervisor, Asset Management
Edwin.Plug@Jacobs.com
Steve Mabey
Director, Asset Management
Steve.Mabey@Jacobs.com
Greg Stock
Director, Petroleum, Chemicals & Energy Practice
Greg.Stock@Jacobs.com
HOW JACOBS
CONSULTANCY CAN HELP