TCO of major capital assets
Global forecasts indicate that between 2007 and 2030, over $26 trillion of capital investment will be needed in the Energy and Utility industries to meet the demands of a growing and more advanced population (ref: weo2008).
To achieve the best return on this investment, companies are looking to minimize the Total Cost of Ownership (TCO) of each new capital asset. The processes adopted in the Front End Engineering & Design (FEED) phase are specifically designed to put in place those elements of an ongoing lifecycle management program that insures the maximum ROI of the capital asset. To that end, during the FEED phase, steps are taken to ensure that the lifetime, and not just original, costs of the alternative types of equipment are considered. However, often no such consideration is made with regard to the lifetime costs and benefits of the collection, categorization, storage and dissemination of the information and documentation that relates to the ongoing operation of the asset.
The key to gaining the lowest Total Cost of Ownership and maximizing the ROI is to treat the asset’s information and documentation as extremely valuable, by:
• Capitalizing on the one-time BEST opportunity afforded by the construction project to establish processes, procedures and systems to handle it long before the asset construction is completed and the asset commissioned.
• Setting asset and maintenance strategies, standard operating procedures, spare parts requirements and standards early, with the assistance of consultants if necessary.
• Capturing all information as accurately and completely as possible in a one–time and collaborative exercise, within the system landscape during the design and construction of the asset. Involve those people who will be charged with ongoing operations and maintenance in the design review to help insure design for maintainability.
• Integrating capital asset information into business processes by linking Asset Information Management systems with Manufacturing systems and Business systems. This is where you really start to realize the value of the ERP system.
• Establishing the integration between the various systems as early as possible in the construction process.
This approach will probably increase the upfront, capitalized cost of the construction project. However, the small additional capital cost will be recouped many, many times over through the increase in ROI. This process will:
• Enable the EPC contractor and owner / operator to monitor the accuracy and completeness of the information and documentation throughout the construction phase, and safely make “on the fly” changes, if needed.
• Enable the steady population and testing of information into the ERP and EDMS systems that will be used in the plant.
• Help smooth the passage of the necessary HSE inspections and regulatory reporting during construction and thereafter through the plant’s life.
• Allow plant operators to be fully trained on the actual systems, and with the actual information, prior to the plant commissioning.
• Ensure that there is no delay in plant commissioning due to take-up of documentation by the owner / operator.
• Make the asset handover to and start-up by the owner / operator as smooth, speedy and accurate as possible,
• Provide the tools to maximize the effectiveness of the planned, and to avoid unplanned, downtime and maintenance costs thereafter. This is actually determined in the operational scenario development in the project scope, or at least it should be.
• Assist with maintaining accurate and complete “as is” information to reflect changes to the design and/or equipment in the plant, as required by law, and thereby improving the safety of the plant and the personnel within it.
While the business case is better when applied to greenfield projects, the benefit of this level of integration between systems and up-to-date documentation is high for existing major capital assets – especially in situations where regulatory requirements must be met.
Atos Origin is currently providing Asset Lifecycle Management services to a number of companies including both an International Oil Company on its North Sea assets and an international downstream company for its oil storage and transportation assets. With our experience in such products as Intergraph, Documentum and SAP Atos Origin is well placed to provide the consulting and systems integration expertise to help clients achieve these benefits.
Who is Phil?
Phil is our Business Development Director for the Energy and Utilities Industry Sector in Atos Origin North America.