Operational Readiness: The overlooked key to capital effectivenessPosted on Sep 21, 2020 11:34:16 AM by Day & Zimmermann
By Rob Bailey & Tim Trott
Capital projects are typically executed with three primary goals in mind: complete the project on time, under budget, and safely. But one often forgotten aspect of capital projects is the preparation that goes into ensuring the facility or plant is ready to start-up and operate once the project is complete.
This is called operational readiness (OR), and it remains one of the most critical, yet overlooked, processes in our industry. We see it across all of the industries we serve. Whether the facility is being used to make consumer products or pharmaceutical drugs, project managers and site owners are so focused on completing the capital project at hand that they sometimes forget about the preparation required to ensure a seamless transition to operations. Many professionals see the project as having two phases: construct the plant, and then operate it. But these two phases must be intertwined, and time spent preparing to operate the facility or plant must take place during planning and construction.
Late engagement of the OR process often results in poor operational strategies, as well as inconsistent processes and procedures that lead to operational losses. These losses can take the form of delayed launches, reduced initial production, decreased revenue and missing time-to-market windows. The value lost from the slow or underperforming capability and ramp-up often lingers well after startup and can significantly affect operating costs and performance throughout the facility’s life cycle. Case studies have measured this leakage to be as much as 30% of the value that was anticipated during the early stages of the total lifecycle.
Industry best practices indicate that the OR phase of a facility or plant to be included early in the design and execution project phases to best plan for startup and commissioning and to ensure optimal follow-on operations of the facility. OR gets the enterprise ready to operate and lays the foundation for operational excellence and best practice asset management activities. When considered early in the capital project phase and executed effectively, it can ensure your facility or plant is up and running smoothly as soon as possible.
Thankfully, project managers and site owners don’t have to approach OR alone. At Day & Zimmermann, we’ve been helping our clients prepare, assess, and track their OR requirements for decades and are well-versed in the industry best practices required to do so for a wide variety of industries. Below are four benefits our OR experts can provide:
1. Establishing up a soup to nuts OR program
Not every plant manager has experience getting a new or renovated facility up and running. Without prior experience, it is difficult to foresee the problems that may arise and the operational hurdles that must be prepared for. With so many moving parts, getting started can feel overwhelming. At Day & Zimmermann, we implement an OR structure and process that keeps the entire effort organized and provides plant managers with visibility over the entire process. Our OR program uses industry best practices and applies them to the specific facility at hand. Doing so ensures no operational rock is unturned and every possible scenario is accounted for before plant construction or renovation is complete.
2. Starting the OR process early and efficiently
Many plant owners delay OR planning because they feel it’s not worth the investment at the time. But certain aspects of OR are best planned for as early as the FEL 2 phase of the capital project. It requires an experienced OR expert to decide which aspects of OR should be accounted for this early in the process, and which make sense to delay until more work is completed. By being intentional with OR decision making and completing tasks at a time that makes the most sense, project managers can prepare for operations in a cost-efficient manner.
3. Tailoring the OR effort to the specific project at hand
Whether it’s a brownfield or greenfield project, every capital project can benefit from OR. No matter what type of project or industry, OR specialists can facilitate development of an OR project plan while guiding the project team members to set applicable, specific project deliverables. This process usually incorporates the use of an OR checklist as a template tool. This checklist should include everything from reviewing high-level philosophies and plans for operations to establishing an OR project team structure for program management and implementation. Each item must be based on industry best practices and can be tailored to any project type or facility.
4. Setting the facility up for long-term operational success
An investment in OR today will pay dividends in the future. Organizations that implement OR programs early in the life cycle will realize benefits such as expected throughput, asset reliability, safety, and operating cost certainty throughout the life of the plant. Yes, doing so will require an additional upfront investment. But when executed effectively, the benefits of OR will vastly outweigh these initial costs for years to come.
Don’t go at OR alone
At Day & Zimmermann, we see an opportunity to mitigate risk and better ensure expected return on invested capital by using a structured process to best prepare for an efficient turnover to operations. OR gets the enterprise ready to operate and lays the foundation for operational excellence and best practice asset management activities throughout the life of the plant or facility. Our approach guides owner representatives in identifying a plan of action to move toward a state of readiness by performing tasks and creating deliverables in parallel to the Engineering, Procurement and Construction (EPC) project phases. No matter what industry or project type, OR can benefit your next capital project.
About the Authors:
Rob Bailey is the Vice President of Operations for Day & Zimmermann’s Process & Industrial Group. He has more than 30 years of experience in project management, engineering management, operations, procurement and construction in the small and mid-cap EPC markets for multiple industries and clients, with a focus on efficient capital project delivery as well as effective maintenance and reliability support to our clients. Mr. Bailey oversees all capital project life-cycle phases including; strategic planning, feasibility, project development, engineering design phases, project execution, construction management, safety, quality, prime and subcontract development and management, and employee management.
Tim Trott has more than 30 years of leadership experience ranging from sales and marketing, to project management for both the public and private sectors. Mr. Trott currently works in business development for Day & Zimmermann's (D&Z) Process & Industrial group. He develops key client relationships in selective markets to position D&Z as the company of choice for engineering, procurement, construction management (EPCm), and other selective services such as Operational Readiness (OR). Tim has worked with clients and in-house OR specialists over the past decade to successfully implement OR services, resulting in significant cost savings, schedule enhancements, and successful start-up and commissioning of plant operations.