Scope Plant Shutdown Turnaround

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SABIC PLANT SHUTDOWNS AND TURNAROUNDS,

SCOPE VARIATION PRACTICAL APPROACH

PREPARED BY:

MOHAMMED S. AL-QADDA

51060024

PREPARED TO: DR. M. SRIDHAR

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SABIC PLANT SHUTDOWNS AND TURNAROUNDS, SCOPE

VARIATION PRACTICAL APPROACH

BY

MOHAMMED S. AL-QADDA

51060024

Project Paper Submitted in Partial Fulfillment of the Requirement for the Degree of Master of Business Administration in Project Management

OPEN UNIVERSITY MALAYSIA 2009

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ABSTRACT

As a big company in petrochemical industries, SABIC has more than 100 plants in Saudi Arabia and over the world. To keep those plants running in reliable manner, it is require conducting periodic shutdown maintenance for each plant.

This periodic shutdown maintenance is called turnaround in SABIC terminology. The cycle of the turnaround is different from plant to another according to operation process and type of equipment in each plant. Each turnaround is progressing through four main phases; initial, planning, executing and close out phase.

A huge organization such as SABIC needs effective and powerful maintenance for its plants to help the company in improving reliability and products quality Plant Turnarounds are very important to give SABIC better competitive advantage in terms of products quality and cost leadership. Plant shutdowns for scheduled major maintenance work are the most expensive and time-consuming of maintenance projects because of the loss of production and the expense of the turnaround itself. They can be complex; and as the complexity increases, they become more costly and difficult to manage. A plant shutdown always has a negative financial impact. This negative impact is due to both loss of production revenue and a major cash outlay for the plant turnaround and shutdown expenses.

Managing the changes in turnaround scope is significant for SABIC turnaround management in Jubail in order to reduce its impact on turnarounds cost, quality and time. The aim of this research is to study and analysis the causes of that variation in scope of work in SABIC turnarounds and find out why the final scope is deviate from original scope. The reasons and cause have been proposed to be analyzed by conducting a quantitative survey among a chosen focus group and a case study approach. The quantitative opinions are to be analyzed by statistical measures of mean and Tally tables using the software called MINITAB and EXCEL. Based on the results of the analysis, recommendations have been proposed for SABIC Jubail so as to minimize the changes in turnaround scope of work and to minimize the impact of changes on safety, duration, cost and quality.

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ACKNOWLEDGEMENTS

First, I thank my god for helping me completing this dissertation despite difficulty with the ongoing business hurdle and studying other courses. Also, thanks good for getting support from the company, instructor, and everybody for conducting this study.

I thank my advisor Dr. Sridhar for his support in my dissertation program. He was always there to listen and to give advice. He was responsible for involving me in the project in the first place. He taught me how to develop dissertation questions and express my ideas. He was available whenever I needed his support. He showed me different ways to approach a research problem and the need to be persistent to accomplish any goal.

Thanks also to learning and Organizational department for helping me in the questionnaire formatting, wording, and categorizing.

Let me also say „thank you‟ to the people at my company who participated in the survey and interviews with honest feedback for the interest of the company and their colleagues.

Last, but not least, I thank my family: my parents for educating me with aspects from both arts and sciences, for unconditional support and encouragement to pursue my interests, even when the interests went beyond boundaries of being single, also I want to say thank you very much to my wife and son Fahd whose patience was important in giving me time to search, collect data, analyze it and finally put it in the form of a thesis.

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Declaration and copyright

Name : Mohammed Saleh Al-Qadda

ID# : 51060024

I declare that the work I am submitting for assessment contains no sections copied in whole or in part from any other source, unless it is explicitly identified by means of quotation marks or, in the case of very long quotations, by means of wholly indented paragraphs. I declare that I have also acknowledged such quotations by providing detailed references in an approved format. I understand that unidentified and un referenced copying both constitute plagiarism, which is one of a number of very serious offences under the University's Code of Practice and Ethics.

Copying any information from this dissertation is not allowed without prior approval from the author.

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APPLICATION TO CONDUCT RESEARCH PAPER

PART A: STUDENT PARTICULARS

1. Name of Student : Mohammed Saleh Al-Qadda 2. ID# : 51060024

PART B: PARTICULAR ABOUT THE PROJECT

1. Title of the project :” SABIC Plant Shutdowns and Turnarounds, Scope Variation Practical Approach”

2. Research objective:” to evaluate and analyze the causes, impacts and practical solutions for the work scope changes in petrochemical plant turnarounds in SABIC, Jubail.”

3. Proposed Research Method :

Research Design: Questionnaire Case study

PART C: FACULTY’S INPUT

1. Topic chosen : Acceptable / Not Acceptable Suggested supervisor for the student:

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RESEARCH PROPOSAL SUBMSSION FORM

Project Paper Title:

” SABIC Plant Shutdowns and Turnarounds, Scope Variation Practical Approach” Director

Open University of Malaysia (OUM) Bahrain branch

Dear Sir,

Attached are the following documents of your evaluate and approval Chapter 1: Introduction

Chapter 2: Literature Review

Chapter 3: Scope Change Management and Control Chapter 4: Research Methodology

Chapter 5: Data Analysis

Chapter 6: Discussion of Results Chapter 7: Research Conclusion Chapter 8: Reference

Chapter 9: Appendixes

I have thoroughly checked my work and I am confident that it is free from major grammatical errors, weakness in sentence construction, spelling mistakes, referencing mistakes and others. I have checked with OUM MBA program guideline for writing project paper and I am satisfied that the project paper proposal satisfies most of its requirements.

Thank you,

Student Signature:……….

I have read the students‟ research proposal and I am satisfied that it is line with the OUM MBA program guideline for project proposal. It is also free from major grammatical errors, sentence construction weaknesses, citation and others.

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LIST OF TABLES

Table 2.1. Turnaround Vs Project………...………..………13

Table 2.2. Milestones in the Plant turnaround management system…………..……...………17

Table 3.1. A sample template for the scope identification………28

Table 3.2. A sample template for the scope acceptance and changes…….…...……...………29

Table 3.3. Sample Template for Scope change tracking log……….………38

Table 3.4. Sample Template for Scope Change Request………...………...…………39

Table 3.5. Sample Template for Scope Change Request approval………..………….…40

Table 3.6. Sample Template for Scope Change Impact Assessment………41

Table 3.7. Sample Template for Scope Change Cost Assessment………41

Table 6.1. Methods of stream to stream TA duration calculation……….…86

Table 6.2. The standard Turnaround stream to stream time duration (in Days) per plant unit based on the TA list and the maintenance………..…86

Table 6.3. The TA cycle and the Planning period……….…89

Table 6.4. Performance assessment by critical success factors……….………93

Table 6.5. Scope change request template………96

Table 6.6. Change cost estimation template………..97

Table 6.7. Impact assessment template………..……...……98

Table 6.8. Change Approval form ………99

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LIST OF FIGURES

Fig. 2.1 Total production by the six business units of SABIC

for 2008 (SABIC reports and accounts, 2008) ………..…..………9

Fig. 2.2. The strategy of including the plant turnaround process in the corporate business plan……….……15

Fig. 2.3. Factors influencing the operations and activities of the turnaround steering committee………...……19

Fig. 3.1. The prominent scopes in a petrochemical plant turnaround process…...………33

Fig. 3.2. Sample Change request form………...……34

Fig. 3.3. The Sequence diagram for a Scope Change Control Process……….…35

Fig. 4.1. The possible Likert scale………...……..…50

Fig. 5.1. Quantitative data interpretation in the Likert scale……….…60

Fig. 5.2. The descriptive statistics of Part 1 questions………..61

Fig. 5.3. Tally statistics for part 1 question 1………...…….…62

Fig. 5.4. Tally statistics for part 1 question 2………...………….…62

Fig. 5.5. Tally statistics for part 1 question 3………...….…63

Fig. 5.6. Tally statistics for part 1 question 4………...…….…64

Fig. 5.7. Tally statistics for part 2 question 1………...……….…65

Fig. 5.10. Tally statistics for part 2 question 4………..…66

Fig. 5.11. Tally statistics for part 2 question 5………...…………...…67

Fig. 5.12. Tally statistics for part 2 question 6………...……...…67

Fig. 5.13. Tally statistics for part 2 question 7………...…………..…….…68

Fig. 5.14. Tally statistics for part 2 question 8………...………..….…68

Fig. 5.15. Tally statistics for part 2 question 9………...…………...…69

Fig. 5.16. Tally statistics for part 2 question 10………...………….69

Fig. 5.19. Tally statistics for part 3 question 1………..…………...…….…72

Fig. 5.20. Tally statistics for part 3 question 2………..………....…72

Fig. 5.21. Tally statistics for part 3 question 3………..………...….…73

Fig. 5.22. Tally statistics for part 3 question 4………..……...….…74

Fig. 5.23. Tally statistics for part 3 question 5……….….…74

Fig. 5.24. Tally statistics for part 3 question 6………...…...…75

Fig. 5.25. Tally statistics for part 3 question 7………...…76

Fig. 5.26. Tally statistics for part 3 question 8………..………...….…76

Fig. 5.27. Tally statistics for part 3 question 9………..…………...………….…77

Fig. 5.29. Tally statistics for part 3 question 11………...………….…78

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Chapter 1: Research Introduction

1.1. Introduction:

The aim of this chapter is to introduce the research background and the research problem statement. Also, this chapter introduces the aims and objectives of the research, the research questions and hypothesis. The chosen research methodologies have also been discussed in detail. The areas under study or the scope of the research and the organization of the research chapters have also been explained in detail.

1.2. Research Background:

Petrochemical products have become a part and parcel of our everyday life. These products range form cables, insulators, cloths, plastic products, fertilizers and even toys. In the recent past the demand for these products are seen to be increasing drastically. The base petrochemical products are the intermediates, polyolefin, polyesters and fertilizers. According to Al Mady (2004), Saudi Arabia accounts for nearly 10% of the world‟s petrochemical products. The two industrial cities, Jubail and Yanbu in Saudi Arabia are the home for many petro chemical plants. There are about twenty two petrochemical plants in these cities. These petrochemical products are manufactured by technical procedures in specialized industries or process plants. There may be many related processes associated with the production of these petrochemical products; these may be done in the main process plant itself or in subsidiary plants. The petrochemical projects have to be executed according to the specified standards in adherence to the budget and time duration. Every petrochemical process is seen to be of unique nature as the technical approach and methodologies are different. The issues related to shutdowns, turnarounds and outages in petrochemical plants are crucial as they decide the plant performance and profit. Managing these petrochemical processes and turnarounds needs special care. The present day demands with regard to turnaround and shutdowns in petrochemical plants are such that, the duration of turnaround processes are chosen to be very less so that the production profit could be maximized, thorough and detailed scope identification, realistic shutdown or turnaround plan, execution

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of the activities in the critical path based on Risk Analysis Procedure, delay free start up, innovative safety plans and reduction in scope variations based on risk inspection. Also the situation becomes more complicated when there are work scope changes in these turnaround processes. The scope change again demands special management techniques for overall benefit in terms of cost, risks and time of the petrochemical plant turnaround processes.

This research intends to analyze the variations in scope of work in the turnaround processes in SABIC Jubail. The research tries to analyze the causes, impacts and practical solutions of the scope changes in the SABIC plant turnarounds.

1.3. Discussion of the Research Problem:

As the research scenario for this research work happens to be the petrochemical plants in Saudi Arabia, the SABIC Jubail United has been chosen. As the Saudi government aims at increasing its production of petrochemical products from 8% to 15% by the year 2015, effective process management and turnaround management have become highly essential. A plant turnaround process has five distinct stages namely strategic planning stage, detailed planning stage, organizing stage, executing stage and close out stage. In reality, these stages may overlap. Shutdowns and Turnarounds in a petro chemical plant cost nearly 30% of the maintenance budgets. Any lag or improper performance or delay in starting this turnaround/shutdown process may lead to severe loss in terms of operating benefit. Hence the shutdowns and turnarounds need to be managed in a professional manner. In such an optimized turnaround process, the rise of work scope change pose a major threat for the overall benefit of the petro chemical plant Turnarounds. The impact of this turnaround scope change could be felt in terms of increased cost, increased time for turnaround completion, and quality of turnaround, turnaround risk and loss of turnaround control. Thus the management of scope change in turnaround seems crucial. The reasons for turnaround scope change could be improper original scope, insufficient history of the equipments in the plant, difference in the type of plant, ageing of the plant and other such aspects. With respect to any plant turnaround process, scope change management is the process of ensuring that all the scope changes in the plant turnaround process are being

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carried out in an authorized and planned manner. Turnaround Scope Change management could also be defined as the formal process of tracking and documenting the scope changes in the turnaround or project. If the scope changes are not tackled efficiently, then these changes would be a threat to the success of the project or turnaround/shut down process.

1.4. Aim and Objectives of the Research:

Any research work needs to have a clear aim and specific objectives. These objectives need to be framed such that they satisfy the research phenomenon and thus it has to accomplish the research aim. Thus the aim and the objectives, when defined properly would provide a clear idea about the research phenomenon. The objectives of a research work also aids in the proper choice of the research methodology.

The main aim of this research work is to evaluate and analyze the causes, impacts and practical solutions for the work scope changes in petrochemical plant turnarounds in SABIC, Jubail.

The major research objectives of this research work could be stated as follows,  To determine the reasons of increasing changes in SABIC turnarounds scope of

work.

 Identify the negative impacts of changes in SABIC plant Turnarounds scope of work.

 To find out how to minimize the changes in SABIC Jubail turnarounds scope of work to less than ± 5%.

 To propose practical solution for minimize the negative impact of changes in turnaround scope.

1.5. Research Questions:

In a research work, the research question best describes the research phenomenon and the research hypothesis that support the discussion of the research phenomenon. Any

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research work should have a specific target phenomenon. The aim of this part is to analyze this target phenomenon. To have a more detailed literature survey, specific strategy for research data collection, the target phenomenon has to be described properly. This research phenomenon could be stated in the form of a research question or research statement. If the research phenomenon is in the form of a research statement, the following literature survey and the related discussion should in the form of for and against the concept of the chosen research phenomenon. This approach of research question definition is called as the inductive approach. According to Marike Hettinga (1998), the inductive approach could be described as:

“A researcher should not commit himself to one specific theory because then he becomes insensitive and is preoccupied with testing, modifying, and seeing everything form this one angle”.

Another method of defining the research phenomenon happens to be the deductive method. In this approach, the research phenomenon is stated in the form of a research question. Here, the deductive approach of the research proceeds to formulate a question that, when answered would describe the research phenomenon. Marike Hettinga (1998) states that this question has to be framed based on:

“Statements about what is to be explored, the purpose of the exploration and the criteria by which the exploration will be judged successful”.

This research has opted the deductive approach of representing the research phenomenon, where, the major research questions have been detailed as follows:

 What is the reasons of variation in SABIC turnarounds scope of work?  Is there enough time for turnaround scope development?

 What is impact of scope change on turnaround budget and duration?

 What can be done to minimize the changes in SABIC Jubail turnarounds original scope of work?

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 How can be the turnaround scope management process modified to minimize the negative impact of scope changes on turnaround process?

1.6. Research Hypothesis:

After defining the research phenomenon in the form of a question or statement, the research work has to formulate the research hypothesis which would help in exploring the research phenomenon in more detail. The hypothesis is more closely related to the research question and hence they could help in answering the research question in a better way. Generally, these hypotheses are in the form of statements that are explained elaborately during the research discussion. Most of the research works are driven by more than a single hypothesis, but are usually restricted to not more than three hypotheses. This hypothesis could be explained as the more specific predictions of the nature of relationship between two or more variables in the research phenomenon. Thus the research hypothesis not only aid in the direction of progress of the research, but also aids in analyzing the major factors involved in the research phenomenon. Hence, the research hypothesis could be viewed as the basic building blocks of the research process to acquire the expected research output.

The major hypothesis of this research work could be listed as follows:

 Insufficient Time for turnaround scope development process could be a significant cause of unclear and unspecific scope of work.

 Failure and defect in equipment after between scope cut off and turnaround time could be significant reason of changes in the scope.

 Poor Scope change management process is significant reason to control changes in the scope.

1.7. Scope of the Research:

The scope or the conceptual areas of this research work include the processes in the petrochemical plants. As the research phenomenon is related to petrochemical plant turnarounds and the scope changes in these processes, the scope happens to be wide. These

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topics include the overview of SABIC Jubail, concepts and the stages in turnaround / shutdown / outage process, proposal for turnaround planning and preparation, scope identification and planning, quality and safety management in turnaround, cost considerations, the five phases of turnaround and their implementation, turnaround inspections, work scope changes in turnaround processes, concepts of scope management and project management, scope change control, principles of scope change management, different formats or templates for scope change requests, scope change impact, scope change approval, scope change inspection and cost estimates.

As this research work intends to analyze the causes, impact and practical solutions for the scope change of work in the SABIC turnaround processes through a thorough case study and quantitative survey, the scope of this research also encompasses concepts related to the quantitative method of data analysis. The survey questionnaire preparation, sampling size of the participants, focus group, ethical issues related to survey method have also been detailed. The other aspects that come under the scope of this research work include the statistical analysis of the quantitative data, the statistical measures for quantitative data, correlation principles and different chart representations of the statistical data. The main scope of the data collection forms a part of the case study of the SABIC Jubail united.

1.8. Research Design and Methodology:

Any research work has to be accompanied by valid data collection and valid research methodology. The most important part in any research work is the choice of research methodology and research design. The research design process as described by John W. Creswell, (2003), is

“Research is the process of making claims and then refining or abandoning some of them for other claims more strongly warranted”.

The research design and the data collection methodology, specifies the process that has to be adopted to achieve the desired research objectives. For this research work, the research aim is to formulate a set of recommendations that would help to manage and

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monitor/control the scope changes in the turnaround process. It is required to come up with an idea and base the research recommendation relative to the practical solution for TA scope change. This recommendation is required to cover the ways of minimizing scope change, ways of minimizing the negative impact of TA scope change and the ways to handle / control / track TA scope change in better way.

To accomplish this, the chosen research methodology happens to be the case study of SABIC Jubail and a survey with quantitative questions. The survey has been proposed to be conducted among the focus groups, who are often involved in the turnaround processes in petrochemical plants. The focus group comprises of technicians, planners, engineers, supervisors and team leader or managers, each of them have at least 2 years of experience in the TA process.

1.9. Research Organization:

This research has been organized into various chapters. After the introduction of the research concepts in this chapter, the second chapter deals with the literature review. The literature review covers the concepts of turnaround management, project management, petrochemical plant turnaround / shutdowns / outages, turnaround scope of work in petro chemical plants, milestones in the Plant turnaround management system, periodic reviews in turnaround, the five phases in the turnaround process, performance metrics of plant turnarounds, causes for deviation between final and original scope of work, general impacts of change in turnaround scope of work and the scope change management and control in turnarounds. The next chapter deals with the concepts of scope change management, the discussion under this chapter includes scope management plan, goals and purposes of scope change management, scope change management and control, primary drivers in plant turnaround scope change management. A few sample templates for scope change requests, scope tracking, scope inspection, scope impact and cost assessments have also been presented. The fourth chapter deals with the research data collection and research methodology. The data collection includes a case study for benchmark and a quantitative survey. Hence the fourth chapter deals with the sample space, validity and reliability of the

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data. The fifth chapter has been organized to analyze the data collected. Statistical analyses using Excel and MINITAB have been proposed. The sixth chapter discusses the results of the data analysis and comes out with a set of recommendation for how to minimize the changes in turnaround scope of work and recommendation for how to minimize the impact of changes on safety, duration, cost & quality. The final chapter presents the research conclusion.

1.10. Chapter summary:

This chapter has introduced the research background and the research problem statement. Also, this chapter has dealt with the aims and objectives of the research, the research questions and related hypothesis. The chosen research methodologies like quantitative survey by questionnaire and case study of SABIC Jubail have also been discussed in detail. The areas under study or the scope of the research and the organization of the research chapters have also been explained in detail. The research proceeds to the next chapter of literature review.

Chapter 2: Literature Review 2.1. Chapter Introduction:

This literature review discusses about the concepts related to turnaround management. As the research is based on the SABIC petrochemical industry, a brief introduction about SABIC, Jubail has been given in the beginning. The chapter then discusses in detail about the concepts of general turnaround process in any industry. It later correlates the turnaround principles to the plant turnaround, shutdown and outage concepts of process plants including petrochemical plants. The turnaround scope of work has been detailed with respect to a petrochemical plant; the different phases of the plant turnaround processes have been explained. Finally, the scope change characteristics in turnaround processes have been discussed along with an introduction to scope change management and control for change in work scope in the plant turnaround processes.

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2.2. Overview of SABIC:

The SABIC is the Saudi Basic Industries Corporation (SABIC), headquartered in Riyadh, Saudi Arabia is a leading manufacturer of chemicals, plastics, metal and fertilizers. The company operates in many countries like Asia Pacific, Europe, America, Africa and Middle East, whose major stakeholder is the Saudi government (70%) and the remaining 30% by private parties. The company is a high profit making company with revenue of SAR 150,809.6 million during the financial year ended in 2008, this was an increase of 19.5% over the previous year. The operating profit of the company keeps fluctuating and was at SAR 37,335 million in the year 2008, which was a decrease of 12% compared to the previous year. The success of the company has been based on three major principles, which are best technology and research practices, partnership with local investors and ambitious growth strategy. There are seven business units in the company geared by 16 research and technology establishments across the globe. The official site of SABIC states that

“These are: Chemicals, Polymers, Performance Chemicals, Fertilizers, Metals, Innovative Plastics and Manufacturing. Each of these is headed by a Vice-President. Six of these business units make four different kinds of products”

(http://www.sabic.com/corporate/en/ourcompany/default.aspx)

With employee strength of 33,000 in all the hundred countries, SABIC is a fast growing producer of petrochemicals, fertilizers and steel products. According to the annual report for the year 2008, the total production (in MT) of these six business units in SABIC for the year 2008, has been shown in Fig.2.1.

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Fig. 2.1 Total production by the six business units of SABIC for 2008 (SABIC reports and accounts, 2008).

One of the basic and essential goods produced by SABIC is seen to be the Basic chemicals (23,691 MT). The Al-Jubail plant, which is a major petrochemical hub, acts as the main contributor for the basic chemicals. According to the SABIC reports and accounts (2008),

“The fifth expansion of the Saudi Methanol Company (AR-RAZI) in the Jubail Industrial City went on stream on May 1, creating the world‟s largest single chemical methanol production complex. The new plant added 1,500 metric tons a day, taking production up to 5,000 metric tons a day. AR-RAZI now produces more than three million tons a year from its four plants.”

Apart from this, the plants in Jubail also contribute to the production of Polymers and its feedstock–Ethylene Glycol, Polypropylene, Fertilizers (AL-BAYRONI), methanol (AR-RAZI). In the year 2008, the Linear Alpha Olefins (LAO) technology was implemented at Jubail United. In spite of all the above credentials, the major challenges

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facing the SABIC Petrochemical industry are the rapidly rising global competition, increased cost of projects and long lead times, geo–political issues, disturbance sin the energy environment and economic imbalances.

2.3. Plant Turnarounds:

Turnarounds are planned activities in certain process industries like petrochemicals, refinery, pulp and paper mills, electrical power plants and the like. These turnaround activities intend to revitalize the existing operations or in other words, they renew the process units in the plants. Turnaround is one of the general procedures in which the process unit is taken off stream for revamping. This process of turnaround may include many processes like shutdowns, inspection and testing, revamps, debottlenecking the projects, catalyst change out, outages, etc. Turnarounds are planned in the yearly business plan budget and the cost of turnaround is considered as maintenance expense. They are highly expensive as the production would cease. Not only the production losses, but also the expenses for the turnaround process like labor cost, material cost, cost of equipments and tools, cost of heavy materials and other such expenses. These turnaround expenses form a major portion of the plant‟s budget.

2.3.1. Defining Turnarounds and Shutdowns:

Turnaround is a planned procedure that is undertaken for the maintenance, inspection and testing of plant units. This process lasts for specified time duration and is essential for plant safety, reliability and efficiency. A shutdown is an outage that exists for a pre – determined time, when the entire plant is shutdown. A shutdown could be a planned or unplanned shutdown or even an emergency shutdown.

2.3.2. Turnaround Management:

The management of these turnaround processes requires unique management strategies. If not managed properly, the turnaround process can affect the plant‟s operations in terms of loss of revenue due to delay in turnarounds and increased turnaround costs.

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Turnarounds constitutes to the largest expense for a company in terms of maintenance. Managing the time and cost in a turnaround process are crucial and challenging. The potential to save cost in a turnaround process is large and hence it could directly constitute to the bottom line profit of the company. The management of the turnaround process is done under the leadership of experienced personnel and based on the highly proven systems and procedures. These tested and proven procedures can lead to less failure of the turnaround process and can increase the overall efficiency of the plant. These systems and procedures also improve the information flow within the turnaround operations and that of the organization. Assigning the responsibility is an important task and has to be based on the decisions needed and the decision making capacity of the personnel involved. Thus organizing a turnaround needs rearranging the flow the information and the authority levels. To have fewer delays, few people need to be involved in the information flow path. Generally a turnaround organization chart is prepared and presented to all who are involved in the turnaround process.

2.3.3. The turnaround Process:

The actual turnaround process deals begins with the setting of clear goals and objectives, developing the turnaround scope and work list, estimating the budget, planning, scheduling, balancing the man power and man hours, reporting the progress, documenting the activities, auditing , planning for additional work, critical path scheduling, estimating the repair work and preparing the turnaround schedule. The actual field scope of the turnaround process includes requirements for alignment, cranage, scaffolding, NDT, offsite, insulation, equipment, painting, torquing and cleaning. The entire turnaround process is carried out in five different phases.

2.3.4. Turnaround Vs Project:

Understanding the difference between the concepts of project and turnaround is highly essential to manage turnaround situations efficiently. The general project management follows Engineering Procurement and Construction (EPC) for civil projects and the like for other process industries. The demands and characteristics are different for

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turnaround and require a unique management methodology. The differential characteristics of the project management and turnaround management have been outlined in Table 2.1.

Table 2.1. Turnaround Vs Project.

Turnaround Project

Definition of scope is vague and is based on past turnaround experiences, operation requests, inspection reports.

Scope is well defined based on specifications, execution plans, and contracts.

Scope changes dynamically based on inspections.

The scope is static in nature and very few changes occur while executing the project. Planning and scheduling could be done only near

shutdown, after the approval of scope.

The process could be planned in advance and scheduled.

Turnarounds are based on work orders and

defect. Projects are cost / commodity based.

Extensive safety / shift permits are required. Normal safety / shift permits are sufficient. Manpower staffing varies a lot due to

fluctuations on scope.

Staffing would not vary during the execution of the project.

Updates need to be done daily. Updates could be on a weekly or on monthly basis.

Time management is crucial and hence time is measured in hours or shifts.

Time measurement is not so crucial and is in days or months.

Scope could be flexible. Scope is not flexible but is mandatory. The schedules are compressed and opportunities

to correct failures in the critical path seem to be minimum or nil.

As the schedules are uncompressed, the slippages could be corrected by schedule acceleration.

Requires a strict scope management control than that of the project management scope control methods.

Scope management control need not be strict and it is sufficient if the baseline schedule is followed.

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2.4. Petrochemical Plants and Turnarounds:

Petrochemical products are very important products in daily life. The different types of petrochemical products range from fertilizers, polyolefin, polyesters, insulators, cable wrap, plastics and others. According to the annual report of Saudi Arabia General Investment Authority, SAGIA (2005), the demand for petrochemical products has been increasing in the past decades. The projects in petrochemical plants need to be carried out with precise quality specifications and budget within the stipulated time. Most of the petrochemical projects are hi - tech projects and are generally patented.

Turnarounds in petrochemical or any process plant does not necessarily mean corporate crisis, it could also apply to situations of major maintenance or scheduled process outage. This outage, called as “plant shutdown”, requires specific type of management which is referred to as “Plant Turnaround management”. This process of plant turnaround happens to be continuous from one major outage to another outage. The plant turnaround process begins well before the actual outage (off line) and continues for some time even after the scheduled maintenance work is over. There are many phases in plant turnaround, in that; the plant shutdown stage comes under the execution phase.

The main advantages of the plant turnaround process are the reliability of the asset (equipments) increases, reduced risk of unexpected or unscheduled outages, and reduction in catastrophic failure. On the other hand, the drawbacks could be listed as, the turnaround expenses would be high, plant shutdown are time consuming and expensive, shutdowns and turnarounds are generally complex and difficult to manage, turnaround leads to a negative financial impact due to loss in production revenue.

The duration of plant turnarounds are generally very short. The plant turnaround cost consumption within four to five weeks could be equivalent to the cost of the yearly maintenance budget. John McLay (www.pmpt.org ) states that plant turnaround

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“Requires the greatest percentage of the yearly process outage days. As the plant shutdown is the major component of plant downtime and maintenance costs, proper plant turnaround management will have a significant impact on the bottom line.” Generally, the management team trades off between the excessive turnaround budget and the plant‟s improved asset reliability due to turnaround. John McLay adds that

“Without scheduled maintenance outages, equipment will fail, and an unscheduled outage is up to ten times more expensive than a scheduled outage. The cost is much higher again if the outage is due to a catastrophic failure.”

Due to the advantage acquired by this tradeoff the owner / senior management team tend to include the process of plant turnaround in the business plan budget itself. As the business plan budget and the schedules of process outages need to be predicted long before, details of the expected turnaround estimates are derived from plant turnaround support plans and existing maintenance work packages. The strategy for including the plant turnaround process in the corporate business plan is shown in Fig. 2.2. It could be seen that the planning, structuring,

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executing and closing of plant turnaround need to be given importance in the business budget of the corporate. It could be said that the philosophy of plant turnaround has to be integrate with the vision and mission of the corporate plan. Integrating the plant turnaround in the corporate business plan would increase the benefit and reduce the cost during outage. The turnaround process begins with the documentation of the procedures, policies and guidelines. The policies and procedures should account for all the key issues like run time, unexpected outages, turnaround frequency and the like.

2.5. Turnaround Scope of Work in Petrochemical Plants:

The petrochemical (or any process industry) plant turnaround process has five fundamental phases. These phases are the strategic planning phase, detailed planning phase, organizing phase, execution phase and close out phase. The plant turnaround process is always a continuous process and requires overlapping between turnarounds. When the turnaround overlaps, the budget has to be standardized and appropriate cost control measures need to be adopted, proper training has to be given to improve the skills of the turnaround team.

The turnaround team should include personnel from all areas like operations, administration, maintenance, engineering, health and safety environment (HSE), product procurement and planning (PPP), quality assurance (QA) and turnaround supervision. When the complexity of the turnaround process increases, third party contractors could be involved to supplement the existing resources of the company. The selections of these personnel are done in the initial phase of the plant turnaround process. The various stages in the turnaround process could be listed in the form of a milestone listing, called as the “Master Milestone Schedule (MMS)”. This MMS acts as a guideline for the various activities and time schedules for the turnaround team. These milestones are as shown in Table 2.2. These milestones encompass all the stages / phases of the plant turnaround process. The below described milestones help in measuring the rate of progress in the turnaround process compared to the expected progress. This schedule and the measurement of progress would help in future planning of the scheduled outages.

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Table 2.2. Milestones in the Plant turnaround management system.

Phase of T/A

Milestone

Responsible area

1

Selection of T/A manager Owner or Senior management

Turnaround kick off T/A Manager

Set T/A strategy/premises T/A manager T/A scope statement (work list) T/A team

Initial cost estimate T/A Team

Work breakdown structure T/A Manager Cost Control Structure Administration Organizational Breakdown Structure T/A Team

2

Work list cut-off date T/A Team Support plans complete Support plan rep Work Package complete Planning

3

Master Execution Schedule complete Scheduling/Planning Detailed cost estimate T/A Manager

Procurement of materials Procurement Procurement of machinery Procurement T/A Readiness Review Audit T/A Team

4

Plant feed-out Operations ( 0 months )

Plant feed-in Operations

5

Reports & documents complete T/A Team Evaluate plant turnaround T/A Team

Postmortem meeting T/A Manager

T/A Summary report T/A Manager

If the strategic and detailed planning phases are not given enough care, then variations may occur in between, the planned budget and the actual cost, the work progress and the work scope. These variations would be apparent in the execution phase. The turnaround process facilitates the replacement / changes in design / updates the procedures

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of certain critical jobs. A Management of Change (MOC) process would justify and control these changes and hence the turnaround cost. These changes need to be recorded. The MOC process has to begin before any interdepartmental review and authorization.

The major players in the plant turnaround process are the planners, technicians, supervisors, engineers, and managers. The scope of work in the turnaround planning and execution phases include formation of the turnaround team, information gathering, preparing the turnaround work list and work order, organizing work order, defining activities, estimating duration of activities, estimating repair work, estimating extra work, contracting bids, critical path scheduling, shutdown scheduling, maintenance scheduling, schedule refinement, daily turnaround scheduling, interpreting a Gantt chart , setting priorities after evaluation, manpower scheduling, manpower leveling, critical mass, assessing the tradeoff between overtime–premium time and time / cost benefit, analyzing the productivity (earned value), daily meeting regarding turnaround progress, managing information flow at various levels of the turnaround process, and measuring and reporting progress.

2.6. Turnaround management in petrochemical plants:

The management of the turnaround process in a petrochemical plant is under the control of a steering committee and the activities are carried out by the members of the core team. Regular communication between the steering committee and the core team becomes essential for improved correlation between the scope and the budget.

2.6.1. The steering committee:

The steering committee is the team that acts as the senior management team in the turnaround management. This committee coordinates with the TA planning team comprising the maintenance engineers, Equipment reliability technicians and others. According to Rod Oliver (2001), the responsibility of the steering committee is described as

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“The obvious purpose of such a group is to provide direction and guidance to the TA planning team and ensure that the turnaround meets the needs of the business. However, the more important function of the committee is to ensure that the scope and budget for the turnaround are in alignment.”

The activities and factors that need to be considered by the steering committee have been shown in the following Fig.2.3.

Fig. 2.3. Factors influencing the operations and activities of the turnaround steering committee.

2.6.2. Periodic reviews:

To ensure that the activities of the turnaround process are being executed according to the planned scope, there has to be periodic reviews or audits. Practically these audits are done at the end of each stage in the turnaround process. The individuals involved in the audit or review process should not be involved in the turnaround stage and hence the desired choice is to bring people from outside. This selection of the auditors has to be done by the

Internal constraints (time, money, opportunity, industrial relations)

Steering committee (TA manager, HSE manager, Production manager, engineering manager)

Issues (timing, safety, work scope preparation, resources,

communication, marketing, alignment, quality, contractors)

External constraints (competition, market availabilities, environment, legislation)

Desired outcome (completion of TA within the targets for cost, safety, time, quality)

Group members (stake holders, decision makers, fund providers)

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steering committee. The two most important audits in the turnaround process are the audit after the conceptual development stage and the audit after the detailed planning phase. The first one after the conceptual design audits the basic resources and the turnaround procedures. The later one reviews the preparedness of the plant for the turnaround process.

These audits compare the turnaround progress with the planned milestones by conducting site visits, group discussions and meetings. Each turnaround process has a unique milestone schedule that details the time and tasks in each stage. Thus audits are the prime means of measuring the planned progress and ensure that the individuals are committed towards the tasks, supply of data and information are proper, tasks are progressing as per the turnaround plan.

2.6.3. The phases in plant turnaround process:

As mentioned earlier, the long range business plan of the plant should account for the turnaround process and the deliverables like an annual turnaround schedule, a long term (five year) rolling turnaround schedule, turnaround budget for the next five years, long range improvement plans and the like. Due to the varying nature of the market and the supply of resources, the long term plans become flexible and hence the turnaround should also be flexible.

2.6.3.1. The conceptual phase:

The first phase of the turnaround–the conceptual phase begins immediately after the post turnaround of the previous turnaround process. In this stage the functional members for each of the core area need to be selected and their meeting with the steering committee should be conducted. This meeting would clearly define the philosophy for the upcoming turnaround. Care has to be taken to define the type of turnaround, activities like significant capital items, catalyst change, time till next turnaround, etc. When the turnaround philosophy is defined, the core members start the relevant activities and the outcome of this phase is seen to be

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“Turnaround philosophy, Preliminary work list, Basic cost estimates (± 30 per cent), Estimated duration, Turnaround preparation milestone plan, Manpower forecast for turnaround planning resources, Organization structure, QA/QC requirements, Stage report and the audit schedule, The milestone plan.” (Rod Oliver, 2001).

The time required to complete this phase must be two to three months after the previous turnaround.

2.6.3.2. Work scope development:

The second phase of the turnaround management involves the work scope development. After defining the work, the critical path schedules need to be developed for cost effective turnaround. The major deliverables of this phase include

“An integrated plan (schedule, equipment and resources), Preliminary critical path schedule, Refined budget estimate (±20 per cent), Updated preliminary and approved work list, Long lead materials ordered, Critical lift plans, An additional work approval process, Work scope closed, Stage report, Review or audit report.” (Rod Oliver, 2001).

The timing for this phase has to be 12–15 months before the shutdown stage of the plant.

2.6.3.3. Detailed Planning:

This phase has to be managed by specific application of certain tools to ensure that all the turnaround activities are incorporated into the plan. This work integration is highly essential as it would lead to budget and time overrun. The major activities in this phase include, finalizing the work list, scheduling the critical path, detailing the execution and safety plan, preparing final estimate, finalizing the material procurement plan, defining the format and frequency of the reviews. The outcome of this phase as described by Rod Oliver (2001) has to include,

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“Integrated execution plan (finalized on critical and sub critical work), Final budget estimates (±10 per cent), Final work list, "What if" scenarios, Lifting plans, Mobile equipment requirements, Detailed shop loading plans, Review or audit report.” The timing for this phase has to be fixed at four to six months before turnaround.

2.6.3.4. Pre Turnaround Work:

This phase is just before the execution. The primary activities are orientation and training, mobilization, final execution plans. The major deliverables of this stage include,

“Execution plan finalized, Pre shutdown turnaround work completed, Execution team trained Turnaround organization charts, Reporting plan, Field mobilization complete, Shutdown meeting procedures finalized, Communications / alignment meetings, Review or audit report.” (Rod Oliver, 2001).

This process has to be done three months before turnaround.

2.6.3.5. Turnaround execution:

The actual execution begins in this stage as the feed is reduced. The major activities include; shutdown, schedule audits, cost tracking, tracking additional work and changes in the scope, documentation of findings. The deliverables include turnaround execution, meeting the objectives, safety reviews, start up, and release to operation. The two major aspects in the execution include added work requests and the scope growth of the items in the work list.

This scope growth of the work list plays a major role in the turnaround process. The additional work requisition has to be approved and reviewed on a daily basis. In some situations, all the scope growths have to be documented for the purpose of cost control but it is not needed to go through the approval process. The daily schedule meetings of the core members have to be short and needs to concentrate more on the changes in the work scope and the ways to resolve them efficiently.

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The time for completion of this turnaround execution, is on the start up of the product production.

2.6.3.6. Post Turnaround:

This is the last phase in the plant turnaround process. The major activities include the documentation, de–mobilization, preparation of cost reports, reports of the lessons learnt from this turnaround and opportunities to improve. These activities would be highly useful for the next turnaround. The other activities in this phase are post turnaround MOC requirements, disposing the excess material, inspection of report history, updating the history turnaround database, issuing the final cost report, freezing the turnaround accounts .

2.6.3.7. Measuring the success of the turnaround performance:

Measuring the turnaround performance has to be done by a defined set of metrics as prescribed by Rod Oliver (2001), include

“Duration: oil out to on-specification product in days. Total costs: for both turnaround shutdown and routine maintenance, Turnaround costs: both actual and annualized by plant function, Frequency: run length in months, Predictability: actual versus planned work hours, duration and cost, Safety: accident numbers and rates, Startup incidents: days lost due rework, Unscheduled shutdown: days lost per year during the run, Mechanical availability: time available as a percentage, Additional work: actual versus contingency, Environmental incidents: impact of those attributable to the shutdown, Savings: money saved resulting from changes to these metrics.”

The success of the turnaround specifies that the tasks had been adhered to. Today there are many web based computer software to plan and execute the multitude of tasks, issues and data flow in the plant turnaround process.

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2.7. Deviation between final and original scope of work:

As described above the effective execution of turnarounds in the stipulated short span of time is highly essential. Also, it is important to note that the turnaround execution depends greatly on the growth of the work scope. In actual practice, there may be many variations in the original planned work scope. The reasons, impacts, practical solutions for these scope variations have been discussed as follows.

2.7.1. Causes of big changes in turnarounds scope of work:

Though the plant turnaround process has been devised with great care, there may be situations when the turnaround scope of work has to be changed. The reasons may be unclear original scope, scope changes based on the ageing of the plant, sufficient details are not provided in the existing scope, intermediate audits have proposed some changes in the scope, end user does not agree with the final scope, scope change may be due to unclear implementation cost of the proposed scope, scope is not defined fully, scope variations based on type of the plant and type of the turnaround, proposed scope has hidden assumptions, the proposed scope does not satisfy the objectives of the turnaround, defect in plant equipment after the proposed scope but before the turnaround execution and lack of clear purpose for the proposed scope.

2.7.2. Impacts of change in turnaround scope of work:

The change in scope of work in the plant turnaround process my have both positive and negative impact on the turnaround process. The negative impacts may be due to addition of scope in each phase of the turnaround process, removal of scope work from each or any turnaround process. The factors that may be affected by the turnaround scope change include turnaround cost, turnaround duration, turnaround safety, turnaround quality and turnaround sequence control.

A few practical solutions to reduce the changes in the scope turnarounds would be maintaining a good history of all the equipments, providing sufficient time for scope

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development, well defined scope approval procedure, finding out the alternatives to do the change.

2.7.3. Scope change management and control in turnarounds:

The greatest challenge in plant turnarounds is the management and control of scope. The management of this scope change has to be done efficient scope change management strategies. The major scope management strategies include scope planning, scope definition, scope verification and scope change control. A simple scope management procedure would include the following phases Change Request Form, Change Review and Evaluation, Change Priority and Classification, Change Approval, Change communication and Change implementation.

The concepts of the scope change management and control have been detailed in the next chapter along with specific application to the turnaround scope of work.

2.8. Chapter summary:

This chapter has introduced the concepts related to the turnarounds, shutdowns and outages in petrochemical plants. The different phases in the turnaround process have been explained along with few discussions about the change in turnaround scope of work.

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Chapter 3: Scope Change Management and Control 3.1. Chapter Introduction:

In any turnaround, scope defines the features that need to be included in the turnaround and the features that are not a part of that turnaround. In the initial stage of the turnaround, the turnaround management team has to describe the scope of the turnaround. Managing the scope of the work is highly critical for any turnaround in terms of cost and duration. Thus scope management and the related change processes need to be taken care of. This chapter intends to detail the concepts related to scope management, scope management plan, goals and purposes of scope management. Also the scope change process, change requests, change tracking and change control are to be discussed in detail.

3.2. Defining the scope:

Defining the scope of the work forms the basis for any turnaround management. The written scope statement becomes the agreement for all the turnaround related activities and turnaround related decisions. The scope definition also prescribes the objectives of the turnaround, supporting details for the turnaround, the scope management strategy and the turnaround deliverables.

The requirements for a complete and an accurate scope definition would be,  Understanding the actual turnaround requirement.

 Understanding and identifying the work processes and the flow of work.  Identifying the support processes,

 Working out a detailed Work Breakdown Structure (WBS), to know the gap between the expected work and the actual work status.

The scope definition acts as the base for assessing the potential changes in the scope and for measuring the performance of the turnaround.

Scope Plant Shutdown Turnaround

SABIC PLANT SHUTDOWNS AND TURNAROUNDS,

SCOPE VARIATION PRACTICAL APPROACH

MOHAMMED S. AL-QADDA

51060024

SABIC PLANT SHUTDOWNS AND TURNAROUNDS, SCOPE

VARIATION PRACTICAL APPROACH

MOHAMMED S. AL-QADDA

51060024

ABSTRACT

ACKNOWLEDGEMENTS

Declaration and copyright

APPLICATION TO CONDUCT RESEARCH PAPER

RESEARCH PROPOSAL SUBMSSION FORM

TABLE OF CONTENTS

LIST OF TABLES

LIST OF FIGURES

Phase of T/A

Milestone

Responsible area

1

2

3

4

5