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AVEVA World Conference NA - Justin Weaver, Southern Company
- 1. © 2017 AVEVA Solutions Limited and its subsidiaries. All rights reserved. Presentation Overview Digitalization often focuses on engineering and design. But how can digitalization open up opportunities in EPC project performance beyond engineering? This presentation reviews the potential benefits Southern Company has found in procurement, construction, project controls, and commissioning. He will also discuss his implementation plan at Southern Company and how it ties into their larger Advanced Work Packaging and Materials Management initiatives.
- 2. Unlocking Digitalization in Procurement, Construction, Project Controls, and Startup Justin Weaver – Project Manager 2018 AVEVA World Conference – North America February 14, 2018
- 3. 3 About Me 17 years with Southern Company Positions in Engineering, Construction Management, Project Management on Power Plant EPC Projects Currently: Project Manager, Performance Improvement Team Focus: AWP Implementation, Project Automation
- 4. 4 Total Installed Cost 3% 3% 4% Eng Proc Const Cut engineering budget by a third Cut materials budget by 11% Cut labor budget by 10% 10%
- 5. 5 What do we know? Where could we go? Procurement Materials: 28% of capex Construction Management Contracted labor: 40% of capex Project Controls Earned Value Startup Turnover Packages ERM IE&D Net Engage Engineering 2016: IE&D, Net, Engage Object-centric data model 3% ? ?% ?%
- 6. 6 What Does ERM Do? Supports processes downstream of design • Procurement • Construction Management • Project Controls Passes structured data between systems • Systems have common understanding of an object • Eliminates spreadsheet exporting and re-keying AVEVA IE&D AVEVA Net ES Maximo P6 AVEVA ERM Structured Data SPC Maximo
- 8. 8 Current State vs. Future Vision Where are we now? • 3 bids and a buy • Ordering by description • Manual requisitioning • 30-60 day turnaround on invoice payment • No real good idea of what we have on site Where do we want to go? • Release against a master contract • Req is a data transfer • Ordering by catalog item • <Net10 payment • Knowing what we have received and where it is on site
- 9. 9 Procurement Digitalization in ERM Benefits • Efficient requisition creation from 3D/2D design data • Alignment between PO, Receipt, and Invoice • Mobile receipt inspection • Integrates with Maximo catalog • Reduces ordering based on estimated quantities Reduced effort in invoice reconciliation Category contracts across fleet Ecommerce savings Automatic payment discounts Reduces excess materials
- 10. 10 Procurement – Automated Requisition Creation
- 12. 12 Current State vs. Future Vision Where are we now? • AWP with Spreadsheets and Word docs on some sites • CWP is a set of documents with a scope • Decisions made on assumptions, not data • Inability to accurately track progress Where do we want to go? • Object-based packages • Quantity and manhour roll-up • Data-driven decision making • Mobile progress tracking
- 13. 13 AWP Using a Spreadsheet and Word Docs
- 14. 14 Construction Digitalization in ERM Benefits • Links engineering and material data to construction schedule activities for a truer picture of constraints • Improves decision making • Object-based CWPs with automatic quantities, hours, BOMs • Long-term: improved Productivity Factors Reduced overtime and second shift work Further improved pricing from contractors Better estimates, better bids, more projects
- 15. 15 Object-based CWP Assembly in ERM
- 16. 16 Construction Management: CWP Progress Monitoring CWP Progress Monitoring in ERM Mobile
- 18. 18 Current State vs. Future Vision Where are we now? • Earned value for engineering is calculated using spreadsheets and a database • Construction relies on monthly reporting from contractors • No Procurement or Startup earned value • Weeks-old at time of report Where do we want to go? • Total-project earned value (EPCS) • Calculated on a common platform • Fact-checking our contractors • Real-time
- 19. 19 Earned Value Digitalization in ERM Benefits • Reduces time and effort in aggregating data and creating reports • Common Platform for Engineering, Procurement, Construction, and Startup performance tracking • Real-time visibility instead of historical reports Fewer work hours Better reporting Better decision making
- 21. 21 Current State vs. Future Vision Where are we now? • A turnover package (TOP) is: • Equipment lists on multiple spreadsheets • Printed • Inserted into 3-ring binders Where do we want to go? • Object-based packages • Paperless • 3D-visualized
- 23. 23 New Capabilities and Benefits ERM Capability Integrates with Maximo catalog Line-item PR creation from design Ordering exact quantities Alignment: PO, Receipt, and Invoice Materials tied to construction schedule CWPs with BOMs, quantities, hours Total-project EV on common platform Benefit Leverage category contracts Fast payment discounts Reduced excess materials Less overtime and second shift work Better CWP pricing from contractors Less effort calculating EV Better reporting, decision making $4.6M / yr (2.3% of $200M capex) PR $7.9M / yr (3.9% of $200M capex) CM $600k / yr (0.3% of $200M capex) EV $13.1M / yr (6.5% of $200M capex) PR CM EV
- 24. 24 $(10,000,000) $- $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 2018 2019 2020 2021 2022 2023 2024 2025 Cumulative Cost/Benefit Cumulative Benefit Cumulative Cost Total $(5,000,000) $- $5,000,000 $10,000,000 $15,000,000 2018 2019 2020 2021 2022 2023 2024 2025 Cost/Benefit Cash Flow Benefits - aPR Benefits - aEV Benefits - aCM AVEVA Cap Depreciated Other Cap Depreciated Non-Depreciated Return On Investment NPV = $50.8M (7.57% discount rate, 8 years) $13.1M/yr 2018 – 2025: Cost: $4.7M Benefit: $55.6M Break Even Q1 2019 Ramping benefit Steady-state benefits
- 25. 25 Implementation Plan Mar – Dec 2018 • Scoping, installation, configuration, integration, testing Jan 2019 • Go live in production 2020-2023 • Add successive projects • Growing in maturity 2024 • Steady-state maturity • Continuous improvement
- 26. 26 WolfPack How Do We Make This Happen Technically? AVEVA IE&D AVEVA Net Documentum Doc-to-Pkg Attribution AVEVA Engage AVEVA ERM P6 Maximo Package Planning Visualization Pay Sched Receive Doc Repository Data Backbone Docs Docs PkgLists Pkg Lists POs EV Object-to- Package Assembly Object-based CWPs to Contractors Reporting Deliverable Production Object-to-Package Assembly (1D/2D/3D) Pkg Contents PkgContents Pkg Contents Pkg Lists Req Bid Payments Package Workflow Req MM Pkg Status Pkg Statusing
- 27. 27 Different Ideas That Need Cultural Change Management Comfort with technology PM CM E&P SCM Process and workflow PM CM E&P Feed the systems PM CM E&P SCM Building CWPs PM CM Building EWPs and PWPs PM E&P Centralize buying into engineering PM E&P SCM PO structure PM E&P SCM Master Service Agreement model PM E&P SCM PMs that are change agents PM
- 28. 28 Digitalization of EPC Projects 3% 3% 4% Eng Proc Const Digitalization can facilitate 10% TIC reduction. Improvement of downstream processes requires object-centric design. Requires new approaches to procurement and construction management. Requires a culture comfortable with doing things differently. Requires an understanding that the maturity curve is a long one. Digitalization is a win for Southern Company. 10%