Turnarounds: Strategic Opportunities to Improve

August
,
2018

To be successful, both capital projects and turnarounds need to be planned and implemented as one event.

Turnarounds in continuously operating process plants, such as petroleum refineries, are complicated and costly events, and each day of downtime translates to lost revenue. Mitigating the risk of cost and schedule overruns is vital to competitiveness and profitability. Turnaround teams are tasked with coordinating a limited workforce in a constrained time period and must also ensure maintenance crews are safely working on only the assets that need attention. Missing a required maintenance service or doing unnecessary work could extend the turnaround schedule and increase the probability of an unscheduled shutdown after the turnaround.

The traditional view of turnarounds is that they are just maintenance events. In reality, turnarounds extend far beyond maintenance and can have significant impacts on capital and operating budgets that can determine profitability for the manufacturer. These planned shutdown events are strategic opportunities for processing facilities to improve operational efficiency, reliability, and safety. Operating plants that are not improving are falling behind their competitors. A turnaround is the planned shutdown opportunity to implement a capital improvement project (1).

Traditionally, capital projects and turnarounds are treated as two separate events led by different project managers and, many times, executed by different contractors. Because the two events are not coordinated, the performance of such turnarounds is subpar. Ever-changing regulations and the increasing abundance of discounted opportunity crudes have driven refiners to take on larger capital projects. At the same time, teams are pressured to reduce the duration of the turnaround. Thus, turnarounds are becoming more complex because so many activities must be coordinated safely in a limited timeframe. Unfortunately, these added activities and the increased number of workers onsite often result in budget and schedule overruns, as well as a higher probability of a safety incident.

Traditional approaches and current trends

Ineffective turnaround planning can cause a turnaround to go significantly over budget and over schedule. Table 1 shows the top 10 reasons for turnaround failure (2). The inability to integrate a capital project within a turnaround is one of the top reasons, behind only unrealistic targets for turnaround success. An example of an unrealistic target is to plan a turnaround duration that is shorter than the critical-path work.

Table 1. The top 10 reasons for turnaround failure (2).
10. Quality issues at startup
9. Improper management of contractor resources
8. Significant scope growth
7. Delayed decontamination and unit handover
6. Lack of resources for optimum preparation
5. Incomplete adherence to turnaround work processes
4. Inadequate/incapable execution organization
3. Ineffective turnaround strategy and/or turnaround teams
2. Inability to integrate with capital projects
1. Unrealistic targets for turnaround success

At many continuous processing facilities, capital projects are traditionally considered a separate event from the turnaround, even when both are carried out at the same time. Surprisingly, capital projects often require more labor hours than are required for the turnaround (3). The planning of the turnaround and the capital project must be coordinated so that the right equipment, materials, and personnel can get where they need to go at the right time, and so that the work for the turnaround does not interfere with the capital project and vice versa. For example, if scaffolding needed for a turnaround will block access required to perform the capital project upgrade, that needs to be communicated in advance. Or, if only one crane is available or can fit around the process unit, it would need to be shared between the turnaround and the capital project (Figure 1). Separating the planning for the two events creates misalignment between the turnaround team and the project team.

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Figure 1. The work schedule of turnarounds and capital projects must be synchronized. For example, if only one crane can fit in the workspace, it must be shared between maintenance and capital project activities.

Many times, the turnaround and the capital project have different contractors and contracts. The capital project may have a lump-sum turnkey (LSTK) contract (i.e., a fixed payment amount for the delivery of a defined scope of work) and the turnaround contract may be based on time and materials. Many turnaround managers would agree that the time-and-materials contract carries the highest risk for the processing facility. However, manufacturers can still implement cost controls in the form of negotiated labor rates, maximum labor hours, material markup, and a maximum total cost. A LSTK contract is typically not implemented for...

Author Bios: 

Timothy Olsen

Tim Olsen has been with Emerson Process Management for 17 years, and 25 years in the refining business. He is a refining consultant within the global refining industry solutions group where he supports Emerson’s technical and business strategy. 

Tim is a Past Division Chair for the AIChE Fuels & Petrochemicals Division and the Meeting Program Chair for the 2014 AIChE Spring Meeting in New Orleans.

He has a B.S. in chemical engineering from Iowa State University with emphasis in industrial engineering and process control, and an MBA from the University of...Read more

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