Automation Projects - Online, On Time, On Budget |

Automation Projects - Online, On Time, On Budget

January 042016
Automation Projects - Online, On Time, On Budget

By Bill Lydon, Editor

At Emerson Exchange 2015, Emerson Process Management introduced Project Certainty, a method designed to improve the economic performance of projects. Emerson’s Jim Nyquist, President Systems & Solutions, presented some depressing statistics about project performance, citing that 25% of projects are over budget and 50% are over schedule. He also cited an estimate that 65% of projects valued at more than $1 billion and 35% of projects valued at less than $500 million fail.

Nyquist highlighted the following quotes from Blue Canyon Partners interviews with global EPC, Oil & Gas, HPI leaders:

“We are more complex. Our suppliers, our construction approach, and our engineering have all become more complex.”

“It’s becoming harder to deliver projects on time because they are more complex, not only the type of projects, but also the variety of contractors and stakeholders.”

“The complexity of projects is increasing daily – technically, geopolitically and commercially with partner complexities.”

“In today’s world we have to put everything on the table. Things we wouldn’t have considered 10 years ago, even 5 or 2 years ago, we would consider today.”

“Our projects are in a very rigid system…and the EPC’s we work with have their own rigid processes. We could probably reduce our costs 20% if we added in more flexibility.”

“The era we are going into is way more about alliances and partnerships and mutual benefit than the old way of transactional relationships.”

There is a great deal of motivation to improve project outcomes. Nyquist suggested it is time for a “reset” to achieve less project variance and reduction in overall cost and duration. Based on analysis by Independent Project Analysis (IPA), the top quartile performers have 54% lower cost and 49% shorter schedules than fourth quartile performers. Considering these numbers, better project performance could preserve $430 billion per year of capital that could be deployed for other uses including production, reliability, safety, energy conservation, training, security, community, and innovation.

Nyquist stated that it’s time to look at projects differently. Emerson Process Management launched Project Certainty to eliminate cost, reduce complexity, and accommodate change. 

Kevin Jackson, Emerson’s Vice President Global Project Operations, discussed possible cost savings using an actual project example. He said using electronic marshaling and smart junction boxes could eliminate $14 million of wiring and save 95% of control room space. Further, electronic marshaling and smart junction boxes could eliminate $23 million of spare hardware requirements. Using transformational technologies like virtualization and electronic marshaling, Emerson’s Remote Virtual Office, and Emerson’s new Project Data Link project-engineering environment, companies can reduce errors, shorten configuration schedules, lower configuration hours, and reduce rework errors. 

These technologies have a big impact on FAT (Factory Acceptance Test) by reducing risk and freeing up a significant number of man-days. Jackson quote François Davin of Sanofi who said, “Emerson’s Remote Virtual Office allowed us to collaborate with experts and resources from multiple sites to conduct our Factory Acceptance Test (FAT).” “The result was less travel and site disturbance to our operations. Also, more operators could participate remotely which improved the new automation system adoption.” The ability to accommodate change easily using these new methods and products help keep automation systems off the critical project path and generate significant savings in time and money.

The core component of Project Certainty is expert partnering between customer, EPC, and Emerson to accomplish a common project vision and collaboration plan. Fluor’s David Hoeppner, Sasol’s Mike Kane, and Exxon’s Sandy Vasser all discussed how using this Project Certainty method saved them time and money.

Thoughts & Observations

I later discussed Project Certainty with Sasol and Exxon privately. Both companies were very satisfied with the method and said it has helped them achieve their project and company goals. They recognize that to gain these efficiencies a commitment must be made to rely on Emerson Process Management to architect and select system components.

Having dealt with various types of projects during my career, this type of approach works well when there’s a great deal of trust between the players and no one gets greedy. There are huge gains to be made when the team functions together with a common goal rather than traditional contracting methods that inherently create adversarial relationships.

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