Shutdown Turnaround Outage & Reliability Asset Management Manual

Transcription

1 adm Shutdown Turnaround Outage & Reliability Asset Management Manual W O R K S C O P E The approved worklist for a Shutdown, STO or Outage; produced by the Asset Management Team using effective Risk/Cost Benefit Analysis P L A N N I N G The development of Planned Job Packages and the associated list of Activities in logic sequence to execute a Work Order Task safely, with quality and efficiency E S T I M A T I N G The calculated, benchmark time, tools, equipment, resources, and materials required to execute the Planned Job Package P R O G R A M M I N G The entry of data into Primavera P6 and the establishment of the WBS, Activity Codes, Priorities, Resource Limits and Calendars S C H E D U L I N G The automatic calculating of Primavera P6 to produce a Dynamic Plan for each shift to match available Resources W O R K M A N A G E M E N T Executing according to the Plan; providing accurate and timely status from the field to produce a new Plan H E A D O F F I C E Roberts Street Burnaby, BC Canada V5G 4E

2 Copyright 2012 STOnavigator inc. For additional copies please contact us: STOnavigator inc Roberts Street Burnaby BC Canada V5G 4E1 P F All rights reserved. No part of this manual may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without written prior permission of the creator. V1 - First printing 2007 STOnavigator inc. provides industry with Shutdown Turnaround Outage & Reliability Asset Management products, services and training. Visit our website for more information: Shutdown Turnaround Outage & Reliability Asset Management i

3 Workshop-Seminar Agenda Workshop-Seminar Agenda Day 1 Theme: Shutdown Turnaround Outage Minimizing Downtime (efficiency) The theme for this session is Shutdown STO Outage Minimizing Downtime where the participant will gain valuable insight into navigating a STO project following a formal STO Management Methodology and best-practice policies, procedures and tools. Participants will learn how to establish strategies and plans to increase worker efficiency and minimize downtime, while meeting safety and quality key performance targets. 8:00am - 8:30am - Introductions and Course Overview STO Definitions Efficient versus Effective Reliability versus Availability 8:30am - 9:00am - Presentation STO Management Methodology The STO Organization Key Performance Indicators The Milestone Schedule 9:00am - 10:00am - Presentation STO Strategic Planning Worklist Management Budget Control / Cost Management Establishing Stakeholder Strategies and Plans 10:00am - 10:15am - Coffee Break 10:15am - 11:30pm - Exercise Stakeholder Strategies and Plans Create a Stakeholder Strategy 11:30pm - 12:00pm - Presentation Planning & Scheduling Best-Practices Work Package Management Planning and Estimating Programming and Scheduling 12:00pm - 1:00pm - Lunch 1:00pm - 2:00pm - Exercise Work Package Planning Planning and Estimating 2:00pm - 2:45pm - Presentation Work Execution Management Pre-work and Mobilization Operations Shutdown and Isolation Enhancing Wrench-time 2:45pm - 3:00pm - Coffee Break 3:00pm - 4:00pm - Presentation Performance Management Field Updates Managing Change Dynamic Scheduling Capturing Lessons-learned ii Shutdown Turnaround Outage & Reliability Asset Management

4 Workshop-Seminar Agenda Day 2 Theme: Reliability Asset Management Maximizing Uptime (effectiveness) The theme for this session is Reliability Asset Management Maximizing Uptime where the participant will gain valuable insight into equipment reliability, human reliability and process availability. The Reliability Asset Management Program (RAMP) will demonstrate how various strategies are used to determine the scope of work for shutdowns, turnarounds, outages and routine maintenance. Participants will learn how to establish maintenance strategies, perform criticality analysis, failure modes & effects analysis and root cause failure analysis to maximize uptime (process availability) 8:00am - 8:30am - Course Overview Business Objectives 5-Year/10-Year Plan Process Availability Equipment Reliability Cost Management 8:30am - 9:00am - Presentation Reliability Asset Management Reliability Asset Management Model Reliability Centered Maintenance (RCM) Strategies Criticality Analysis (FMEA/CA) Risk Management 9:00am - 10:00am - Presentation Reliability Asset Management Strategies Planned Maintenance Program Preventive Maintenance Predictive Maintenance (condition monitoring) Run-to-Failure / Repair-Replace 10:00am - 10:15am - Coffee Break 10:15am - 12:00pm - Exercise Establish Shutdown Turnaround Outage & Reliability Asset Management Program 5-Year/10-Year Plan Reliability Asset Management Strategy Shutdown, Turnaround, Outage Strategy 12:00pm - 1:00pm - Lunch 1:00pm - 2:00pm - Presentation Workscope/Worklist & Budget Management for STO Work Types Workscope Optimization Budget Control & Cost Management 2:00pm - 2:45pm - Exercise Workscope/Worklist Management (tools) Establish a STO Workscope and Budget 2:45pm - 3:00pm - Coffee Break 3:00pm - 4:00pm - Presentation Performance Management Key Performance Indicators Root Cause Failure Analysis Defect Elimination Shutdown Turnaround Outage & Reliability Asset Management iii

5 Table of Contents iv Table of Contents Workshop-Seminar Agenda... ii Table of Contents... iv Workshop-Seminar Overview... vii Instructor... viii Best-Practices... ix Common Shutdown and STO Terminology and Definitions... xiii THE STO MANAGEMENT PROCESS... 1 KEY PERFORMANCE INDICATORS... 5 Key Performance Indicators Best-Practices... 6 Key Performance Indicators - Worksheet... 7 Goals, Objectives and Strategies... 7 The Execution Plan - Example... 9 The Execution Plan OBS / WBS WORKSCOPE OPTIMIZATION AND RISK/COST BENEFIT ANALYSIS Workscope Optimization Best-Practices Work Types and Categories Risk/Cost Benefit Analysis Best-Practices PLANNING / SCHEDULING Planning / Scheduling Best-Practices Planning / Scheduling Best-Practices Scheduling (Programming) to Create a Plan Work Breakdown Structure Best-Practices Work Breakdown Structure - Worksheet ESTABLISHING THE STO TEAM Establishing the STO Team The STO Team Organization Chart Roles and Responsibilities CREATING A BUDGET Creating a Budget Best-Practices Workscope / Budget Calculator Cost Management Best-Practices WORKLIST MANAGEMENT AND CONTROL (LATE WORK CUT-OFF) Worklist Management and Control Best-Practices Worklist Management and Control Tool MANAGING THE MILESTONE SCHEDULE Best-practices Creating a Milestone Schedule Responsibilities Matrix Milestone Schedule Milestone List The STO Management Core Team Weekly Core Team Meeting Agenda WEEKLY PRE-STO MANAGEMENT MEETING ESTABLISHING CONTRACTS Establishing Contracts Best-Practices SERVICE / CONTRACT IDENTIFICATION MATRIX Contract Types and Definitions Shutdown Turnaround Outage & Reliability Asset Management

6 Table of Contents WORKSHOP EXERCISE PLANNING AND ESTIMATING Best-Practices - Planning Best-Practices - Estimating Equipment Network Logic (graphical) Field Planning Form (example) Assigning Planners by Planned Job Package Field Planning Workshop Exercise Planned Job Package Cover Sheet Planned Job Package File Contents Checklist Planned Job Package Inspection Plan Checklist RESOURCES Resources Best-Practices DEVELOPING STAKEHOLDER STRATEGIES AND PLANS Developing Stakeholder Strategies and Plans Best-Practices SHUTDOWN/START-UP PLANS Pre-STO Strategy Best-Practices Shutdown/Start-up Plans Best-Practices BLINDING Blinding Best-Practices PERFORMANCE REPORTING Performance Reporting Best-Practices Performance S-Curves One Page Performance Report RELIABILITY ASSET MANAGEMENT Design and Construction Asset Maintenance Strategy Selection Process Operate and Maintain Process Defect Elimination Optimization Strategies The Reliability Asset Management Model CRITICALITY ANALYSIS (FMEA/CA) Criticality Analysis Best-Practices Overview Asset Risk Management Process Instructions FMEA and Criticality Analysis Process Supporting Documentation Attachment 15.3.A Developing a Facility Risk Matrix Attachment 15.3.B Sample Risk Matrix Attachment 15.3.C Risk Matrix (blank form) Attachment 15.3.D FMEA/CA- Team Responsibilities Attachment 15.3.E FMEA Question Workflow Diagram Attachment 15.3.F Sample FMEA / Criticality Assesment Worksheet RISK BASED INSPECTION (RBI) PROGRAM Risk Based Inspection (RBI) Best-Practices Guideline Responsibilities Instructions Reference 16.1.A Maximum Inspection Intervals Shutdown Turnaround Outage & Reliability Asset Management v

7 Table of Contents DEFECT ELIMINATION Defect Elimination Best-Practices Guideline Instructions PREDICTIVE MAINTENANCE (PDM) Predictive Maintenance (PdM) Best-Practices Guideline PdM Tools and Techniques PdM Task List Development PdM Close-out Review NOTE FROM THE AUTHOR Ej Lister STOnavigator inc. certification and qualification vi Shutdown Turnaround Outage & Reliability Asset Management

8 Overview Workshop-Seminar Overview Workshop-Seminar Overview This workshop-seminar is designed to provide participants with the best-practice knowledge and tools to enhance Shutdown Turnaround Outage & Reliability Asset Management. Some of the key issues participants will learn to manage: The Asset Management Team The Reliability Asset Management Program (RAMP) STO/RAMP Methodology Business Process & Best-Practices Workscope / Work Order Management Reliability Asset Management Strategies Planning and Scheduling Work Management Resource Management Strategies and Plans Performance Reporting Project Controls Objective The objective of this workshop-seminar is to transfer our expert level knowledge of Shutdown Turnaround Outage & Reliability Asset Management bestpractices to each participant to decrease downtime and increase uptime resulting in lower cost overall. Vision Safety and reliably operate a production or manufacturing facility for a predetermined run duration. Mission Plan, Manage and Control all aspects of the STO Project to meet or exceed the established Key Performance Targets. Key Performance Indicators Key Performance Targets Phase Budget / Workscope Based on Risk/Cost Benefit Strategic Planning Duration Based on Shutdown/Start-up and Longest-path Planning and Scheduling Safety / Environment Zero Incidents Execution Quality Zero rework, zero leaks Execution Direct Wrench-time 55% Execution Shutdown Turnaround Outage & Reliability Asset Management vii

9 Instructor Instructor Instructor Ej (Ted) Lister is an internationally recognized innovative leader and soughtafter Shutdown, STO and Outage Navigator and Keynote Speaker and Presenter; author of several books and manuals relevant to STO Best- Practices. Gifted, patient and enthusiastic communicator and people-person; projects are not successful, the project team is. 25 years of combined experience in the field and in the war-room. Certified Red Seal Electrician and Instrumentation Technologist. Qualified Planner/Scheduler and Project Controls Specialist with HR and Change Management accreditations. Ej is the Editor of STO Navigator learning blog, contributing weekly to share knowledge and experience to more than 10,000 visitors monthly. In 2005 Ej published Successful Change Management and is currently completing a High Performance Organization book Lead, Manage or Dig. Ted s favourite quote: People invented work so they could keep playing together STOnavigator inc. # Roberts Street Burnaby BC Canada V5G 4E1 P: F: viii Shutdown Turnaround Outage & Reliability Asset Management

10 Best-Practices Best-Practices Best-Practices We supply our clients with a number of best-practices for turnaround management. The following list of best-practices by category are available to our existing clients. They will soon be available to anyone registered on our upcoming web-portal: 1. TURNAROUND STRATEGY STO Management Team Goals and Objectives / Establish KPI s Management Checklists / Milestone Events STO Management Plan Work Breakdown Structure WBS STO Organization OBS Supplemental STO Support Planning Resource Requirements Job Descriptions Budget Management Process / Tool Workscope Change Management Process STO Team Information Binders STO Readiness Assessment Tool 2. WORKSCOPE OPTIMIZATION Risk / Cost Benefit Analysis Review Worklist Management and Approval Process Worklist Item Optimization Worklist Management Tool Work Order Management Data Management / Control Document / File Management / Control 3. SAFETY / ENVIRONMENT PLAN Job Safety Hazards Analysis Incident/Accident Investigation and Analysis Planned Safety and Environment Inspections Meetings / Communications Occupational Health Services Employee Training Emergency Response Planning Environmental Management Contractor Management System Evaluation Behaviour Based Safety Containment Procedures Shutdown Turnaround Outage & Reliability Asset Management ix

11 Best-Practices Best-Practices Best-Practices (continued) 4. QUALITY MANAGEMENT PLAN Quality Management Quality Assurance Quality Control Inspection and Test Plans Non Destructive Examination Roles and Responsibilities Codes, Specifications and Standards Welding Procedures and Qualifications Non Conformance Reports 5. MATERIALS MANAGEMENT PLAN Materials Management Strategies Free Issue / Consumable Warehouse / Distribution Process Laydown Areas / Storage Safety Supply Management 6. TOOLS / EQUIPMENT PLAN Tool and Equipment Supply Policy Onsite Receiving and Security (Contractors) Small Tools Issue Policy Owner Supplied Equipment Contractor Supplied Equipment Crane Surveys Equipment Operator Strategy Equipment Coordination / Staging / Setup Rigging Policies 7. LOGISTICS PLAN Logistics Strategy Logistics Team Organization Transportation / Parking Accommodations / On-Site Office/Lunch Room Management Mobilization / De-mobilization Rental Equipment Maintenance and Fuelling Garbage / Housekeeping Plan Trucking / Asset Management x Shutdown Turnaround Outage & Reliability Asset Management

12 Best-Practices Best-Practices Best-Practices (continued) 8. COMMUNCIATION PLAN Communication Protocol Communication Methods STO Meetings STO Execution Information Handbook Orientation and Indoctrination Signage / Information Boards Radio Protocol / Management 9. CONTRACTING PLAN Contracting Methodology Contractor Selection and Award Process Contract Administration Contractor Organization Contractor Co-ordination and Control Workforce Rules and Regulations Contract Claims Management 10. ADMINISTRATION PLAN Workforce Mobilization and Demobilization Labour Management Procedures Offsite Services Security Overtime / Meals Authorization Cost Control / Management Timesheets Administration Logistics / Shifts Administration Management / Tools / Systems 11. PLANNING / SCHEDULING MANAGEMENT Planning Methodology Planner s Responsibilities Library Database Management STO File Management Labour and Cost Estimating Planned Job Package (PJP) Document Control Planned Job Package (PJP) Development Routine Maintenance Work Integration Scheduling Methodology Shutdown Turnaround Outage & Reliability Asset Management xi

13 Best-Practices Best-Practices Best-Practices (continued) 12. PROJECT CONTROLS / PERFORMANCE MANAGEMENT Found Work Strategies Report Generation Methodology Update Meetings / Information Sessions Field Updates and Progress Management Performance Reports Performance Management Meetings Trending and Analysis Tracking KPI Status 13. EXECUTION PLAN Pre-STO Strategy Shutdown Feed / Oil Out Strategy STO Outage Strategy / Phases Resource Management Contingency Plans Start-up Feed / Oil In Strategy Post-STO Strategy 14. CLOSURE / CRITIQUE PLAN STO Closure Methodology STO Closure Report Initiate the STO Worklist Lessons Learned Reporting Subsequent Outages / 5 10 Year Plan Contractor Evaluations Planned Job Package Updates Data Transfer and Analysis KPI / KPT Success Measurements 15. RELIABILITY ASSET MANAGEMENT The Reliability Asset Management Model Reliability Asset Management Strategies Maintenance Management Process Failure Management Systems Preventive Maintenance Predictive Maintenance Performance Management xii Shutdown Turnaround Outage & Reliability Asset Management

14 Common Shutdown and STO Terminology and Definitions Common Shutdown and STO Terminology and Definitions Accountable e.g. ; you are accountable for the overall plan, however, you are not responsible for developing it (accountability is a leadership role as compared to responsibility which is a management role) Activity a logical step in a series / parallel network which has a defined duration supported by resources. Activity Type Insulate, erect, install, clean, open, etc. (the action associated with an activity regardless of who is performing the work) Actuals the real time measured in hours to complete and activity or task Asset Integrity the condition of an asset compared to its original design; measured by material degradation. Baseline Estimate the estimate of an activity based on industry standards which does not include any friction time. Best-Practices procedures that are practiced that deliver the best results based on industry surveys, i.e., vessel cleaning, planning, hot-bolting, safety, etc. CAPEX capital expenditures Consumable materials or indirect items which are consumed during work execution, i.e., pipe dope, lubricants, tape, wipes, etc. Coordinate field management of cranes, vac trucks, people, etc. during the execution of a shutdown or turnaround. Crashdown an expected, uncontrolled, interruption in a process unit, system or equipment. Critical Job a task or activity that has run out of float and exceeded its process availability calendar. Critical Path a project management term indicating a series of activities which drive the duration of the project (not used in management shutdowns and turnarounds) Direct labour resources and costs associated with wrench-hours. Direct work is when actual hours are associated with earned hours. Earned the percentage of time in hours in which an estimated activity or task has progressed, regardless of the actual time it took to complete. Equipment Type Exchanger, Vessel, Pump, Drum, Stack, Compressor, Tank, etc. Estimating determination of what activities need to be performed to execute a task and the amount of resources, time/duration, human, tools, materials, etc. that are required to perform it; based on industry benchmark standards not including friction. Feed-out Day 1 of a shutdown or turnaround when feedstock is no longer flowing into the plant; shutdown. Field Planner an individual responsible for completing a field estimating form out in the unit to determine the activities and resources required to execute a task. Float the amount of time an activity or task can slip before it becomes a critical job (before it exceeds Process Availability) Shutdown Turnaround Outage & Reliability Asset Management xiii

15 Common Shutdown and STO Terminology and Definitions xiv Free Issue materials or indirect items which are not consumed during work execution and do not require a Materials Traceability Record MTR, i.e., safety glasses, pipe nipples, fittings, etc. Friction Time non wrench-time, i.e., time waiting for permits, coffee, lunch, standby, etc. Guidelines (Documents/Notes) guidelines are written parameters associated with a process where strict policies or procedures are not required. Indirect support resources for direct wrench-hours; i.e., tools, materials, travel, trailers, safety equipment, scaffolding, welding rod, etc. (typically 115% of direct wrench-hours when determining the initial budget). Initial Budget a budget created for a shutdown or turnaround based on the estimates of direct wrench-hours, materials, equipment, purchase orders and indirects prior to the Worklist Cut-off Date. Key Performance Indicators the key things whose performance we wish to measure during a shutdown or turnaround; i.e., safety, duration, cost, quality, worker performance. Key Performance Targets the limits of key performance indicators. For example, 0 incidents, 18 days, $24M, 0 leaks, etc. Leveling the process of allowing Primavera P6 to schedule tasks automatically within the constraints of the programmed limits to create a schedule that meets or exceeds the key performance targets, or establishes the key performance targets by determining the shortest duration, lowest cost, least amount of resources, etc. (typically done as what-if prior to working in a live project). Longest Job the task, or series of tasks, with zero float which determine the duration of a shutdown or turnaround MOC Management of Change form required to be completed prior to any process or materials changes are executed. Network activities belonging to a network (Work Order / Task) connected by series or parallel links to form a logical sequence, i.e., strip-down rebuild procedure for an asset or piece of equipment. The Network is the lowest level of the WBS. Operator a person responsible for developing a schedule. OPEX Operating Expenditures (including maintenance and maintenance projects) Performance Measure of productivity Phase a timeframe duration occurring during the execution phase of a shutdown or turnaround; i.e., shutdown, decommission, purge, drain, open, clean, inspect, repair, maintain, close, deblind, etc. PJP Planned Job Package Plan an overview of all the scheduled activities for an entire project Planner a person responsible for the planning function Planner/Scheduler a person responsible for the planning and scheduling functions Policy a rule implemented by the company, i.e., no smoking in a process unit Shutdown Turnaround Outage & Reliability Asset Management

16 Common Shutdown and STO Terminology and Definitions Procedure (Steps) the steps outlined in a document or in Primavera P6 required to properly execute and activity; i.e., changing the oil on a compressor. Process Availability Work Breakdown Structure with assigned start and finish times, i.e., Stabilizer System is available from Day 3 Day 13 Process Integrity the condition of an asset, system, process, or unit with respect to cleanliness; measured by differential, or production throughput, i.e., catalyst, filters, exchangers, coolers, etc. Productivity a factor applied to a benchmark estimate to account for friction time, standby time and non-productive time. QA Quality Assurance Quality Assurance is the responsibility of the owner, i.e. Engineering, Technical or Inspection determines the limits, specifications, or design parameters and verifies that they are correct, i.e., gasket type QC Quality Control Quality Control is the reasonability of the contractor, i.e., to ensure the gasket is installed correctly to ensure quality workmanship. Resource human, tool, equipment, materials, procedures (anything that is consumed or expends effort to execute an activity). Responsible when you are assigned to perform a task and you perform it as requested; if you delegate it you are still accountable, but no longer responsible (either way you are in trouble if you don t lead or manage). Risk/Cost Benefit a process of scrutinizing all worklist items to determine their validity for execution during a shutdown or turnaround. If they don t support the vision of a safe and reliable facility for a pre-determined run duration, they don t make the worklist. Schedule a list of activities to be executed in a 24 hour period Scheduler (Programmer) a person accountable for developing a schedule Shutdown an outage planned for cleaning or maintaining a facility, unit, process, system or equipment (non-inspection related) Strategy a method of determining how something will be done while considering what-if scenarios. Task Type Inspection, Mechanical, Electrical, etc. (the key resource associated with the task). STO an outage planned for inspecting and cleaning a facility or unit as regulated by government policies. STO Readiness Assessment the review of pre-planning effort prior to feedout WBS Work Breakdown Structure the structure of a project to define levels of project management and control, i.e., plant, area, unit, system, process, equipment type; similar to and OBS Organizational Breakdown Structure. Work Order an approved Work Request Work Request a formal request for expenditure for equipment repair Work Type Budgeted (prior to cut-off), Late (after cut-off and before feed-out requires additional approval for expenditure), New (a task identified after feed-out as a new worklist item or Work Order, Found (an activity added to an existing network [task] due to inspection and entry findings). Shutdown Turnaround Outage & Reliability Asset Management xv

17 Common Shutdown and STO Terminology and Definitions Worklist a controlled list of tasks (Work Orders) to be planned and executed during a shutdown or turnaround Worklist Cut-off Date A date established by the STO Leader in which all worklist items (Work Orders) need to be submitted by (Typically 6 months prior to feed-out and generally coincides with the establishment of the initial budget). Workscope Optimization reducing the scope of work for any project by performing risk/cost benefit analysis and probability/consequence reasoning. Wrench Hours the time spent physically working; as opposed to waiting, breaks, travel, etc. xvi Shutdown Turnaround Outage & Reliability Asset Management

18 Best-Practices The STO Management Process The STO Management Process The STO Management Process is a business process that consists of a defined set of events and activities that are practiced consistently to produce a desired outcome. The purpose of the STO Management Process is to provide a method of consistent management for all turnaround events and activities using established, clearly defined guidelines and procedures. Once the business need has been identified for a production outage a project is established. Each production outage must be managed in accordance with the STO Management Process. The STO Management Process contains a series of events and activities that must be planned, managed and executed based on the established STO Management Methodology Established from a Corporate Vision Consistent throughout the Organization Supported by a defined Methodology Supported by Guidelines and Procedures established as reference documents in a controlled Reference Manual Established as a Business Process based on six distinct phases Strategic Planning Phase Workscope / Budget Phase Work Package Planning Phase Work Execution Schedule Phase Work Execution / Resource Phase Work Follow-up / Critique Phase Supported by a workflow, gated sign-off process, of events and activities that clearly identifies Elements, Events and Activities for each Phase. Must be supported by Management Checklists represented by a Milestone Event Schedule Must be enhanced through Continuous Improvement Shutdown Turnaround Outage & Reliability Asset Management 1

19 The STO Management Process The STO Management Process (continued) A Management Process instils consistency in performing activities related to STOs. FIG 0.1: The STO Management Process on Flow. 2 Shutdown Turnaround Outage & Reliability Asset Management

20 The STO Management Process The STO Management Process (continued) The illustration on the right demonstrates the various phases of a turnaround project and the associated elements and work types. FIG 0.2: The STO Management Process phases. Shutdown Turnaround Outage & Reliability Asset Management 3

21 Notes The STO Management Process The STO Management Process 4 Shutdown Turnaround Outage & Reliability Asset Management

22 Section 1 Section 1: Key Performance Indicators Key Performance Indicators Objectives This section describes the Key Performance Indicators essential for project success. You will learn to: Establish your project Key Performance Indicators Establish the project vision Establish the project mission Establish goals, objectives and targets for each Key Performance Indicator Key Terms Key Performance Indicators Vision Mission Goals & Objectives Key Performance Targets Shutdown Turnaround Outage & Reliability Asset Management 5

23 Best-Practices Section 1: Key Performance Indicators Key Performance Indicators Best-Practices The success of any project is based on the ability to measure performance in real-time. What to measure is determined by the project team. The key indicators for facility and unit outages are generally identified as: Establish a Vision for each project (purpose, reason, benefit and risk of executing the project) Establish a Mission for each project (the outcome of the project itself) Establish Key Performance Indicators for every project Safety / Environment (responsible care) Cost Outage Duration Quality Worker Performance Establish Goals, Objectives and Strategies for each Key Performance Indicator (it does no good to say you re going to do something and not have goals, objectives or strategies in place to indicate how you intend to meet or exceed them) Key Performance Indicators must be established by the Project Leaders Team and agreed to by the Project Core Team or Steering Committee Key Performance Indicators must have realistic targets (don t pretend you re going to get 5.5 hours of direct wrench-time when the entire industry is measuring 3.5) Communicate all project performance statements, indicators and targets to everyone involved in the project (this includes contractors) During project execution update each Key Performance Indicator daily with current data to measure performance, trend and forecast outcomes, take corrective action and offer recognition 6 Shutdown Turnaround Outage & Reliability Asset Management

24 x Worksheet Section 1: Key Performance Indicators Key Performance Indicators - Worksheet Write down your vision for the operational / manufacturing process you are shutting down, i.e., a safe and reliable process for an on-stream run duration of 3 years. Write down your mission for the success of the outage with regards to planning, scheduling and executing, i.e., to meet all key performance targets (keep it measurable Record your Key Performance Indicators and Initial targets E5. Goals, Objectives and Strategies Shutdown Turnaround Outage & Reliability Asset Management 7

25 Section 1: Key Performance Indicators Item Key Deliverables (what are the goals of the Execution Team) 1. Execute all work with minimum resources (5.5 hours of wrench-time) 2. Ability to have real-time status reporting for cost and schedule duration 3. Execute all work with quality control target of zero re-work Item Objectives (what are the objectives to achieve the goals) 1a. Plan and Estimate all Work Orders build Planned Job Packages 1b. Establish a 6 : 1 ratio for Supervision 1c. Develop strategies and plans for all key stakeholder departments 2a. Use Primavera Scheduling Software to produce real-time reports 3a. Establish Inspection & Test Plans 3b. Conduct training on Quality Procedures for all Crafts Item Strategies / Tasks (how-to) Due Date Responsibility 1a1. Create Planned Job Package filing system 05/31/** E. Lister 1a2. Order file folders and labels 06/11/** E. Lister 1a3. Print labels and create Job Packages 06/30/** E. Lister 1b1. Develop WBS and OBS 06/30/** D. Moore 1b2. Develop Roles and Responsibilities 06/30/** D. Moore 1c1. Develop Shutdown Plans and Strategies 07/30/** D. Goodey 2a2. Develop Primavera plan 07/30/** M. Psenicka 2a3. Develop Primavera reports 08/12/** M. Psenicka 3a1. Identify all QA requirements and ITP s 08/18/** R. Radik 3a2. Secure all QC Inspection contractors 08/22/** R. Radik 3b1. Establish training and orientation plan 08/30/** S. Wood 3b2. Conduct training and orientation on site 09/30/** S. Wood 3b3. 3b4. 8 Shutdown Turnaround Outage & Reliability Asset Management

26 Example Section 1: Key Performance Indicators The Execution Plan - Example The Execution Plan encompasses all the necessary management functions and strategies that must be determined to support the execution of activities during the Execution Phase of the STO. The Execution Plan should consist of the following elements: The Logistics Plan Radios and Communication Protocol Trailers Washrooms Gators Sea-Cans Tool distribution and control Computers, telephones, faxes, photocopiers Bussing and transportation Parking Fencing and barricades Water, lighting, sewage The Inspection Plan The Operations Process Cleaning Plan The Safety / Environment Plan Orientation Evacuation Containment Rescue The Contracting Plan The Engineering Plan The Mobilization Schedule Crane surveys The Materials Management Plan Consumables / Free Issue Meetings and Meeting Agendas The Safe Work Agreement Plan The development of plans and strategies for each Stakeholder department should be identified on the Milestone Schedule and assigned to the appropriate Core Team Member responsible for the department. The Execution Plan should be completed and reviewed by the STO Leaders Team prior to implementation. The Execution Plan should be used as part of the general orientation for all employees, contractors and vendors involved in the turnaround. Shutdown Turnaround Outage & Reliability Asset Management 9

27 Example Section 1: Key Performance Indicators The Execution Plan - Example (continued) Purpose For effective work execution, Supervisors, Planners, Operations, Technical and Support personnel require an accurate Daily Shift Report that is updated each shift. Changing priorities and added, extra and cancelled work combined with work crews scattered across various Process Units demand effective communication and co-ordination plus efficient progress and cost status control. The methods used to effectively and efficiently manage the execution of the STO workscope must be established within the STO Management Process. The success of the Execution Phase will depend on the extent to which the guidelines and procedures that document the STO Management Process are implemented. The purpose of the STO Outage Strategy is to identify the issues that must be managed during the Execution Phase. The Execution Plan must define the strategy to manage all resources assigned to the STO workscope activities to ensure all work is completed on schedule and budget while achieving the goals and objectives for safety, environment and reliability. The plan to manage these issues must be defined in the STO Management Plan. Best-Practices The success of the STO depends on effective management of labour resources. Constantly monitor all support functions to ensure maximum support is given to Execution Supervision regarding: Proximity of Planners to the work site, Access to tools, materials and information, Loading, hauling, lifting equipment, Streamlining the progress, timekeeping and cost reporting process. Use a formalized Arms Length field audit process throughout the execution phase to identify and report on Pinch Points such as: Traffic Flow Lunchroom Congestion Crane Placement Tool Crib / Warehouse Bottlenecks Permit Issuance Contractor Staffing and De-staffing Workforce Performance Field Scope Changes Ensure Contractor Employee Orientation and Sign-on logistics are designed to put people to work efficiently and effectively. Remember you only get one chance to make a good first impression. A new employee s motivation and attitude is greatly influenced by their first impression of how you conduct your business. 10 Shutdown Turnaround Outage & Reliability Asset Management

28 Example Section 1: Key Performance Indicators The Execution Plan - Example (continued) Best-Practices (continued) Keep the duration of formal meetings and number of attendees to the absolute minimum. Set up the mechanism for continuous improvement early in the Work Execution phase. Ensure the Planner has an accurate force report within the 1 st hour of each shift. Reconcile available manpower against schedule requirements and take corrective action immediately with the Contractor s management. Audit the Progress Status Updates provided by Execution Supervisors on a daily basis to check the accuracy of progress reporting. Provide all Execution Supervisors and Support Personnel with the information they need to carry out their job responsibilities effectively. Provide the mechanism for effective communication to Execution Supervision prior to Day 1 of the Execution Phase: Plot plans Phone numbers Support resource contacts Procedures Meeting Schedule Organization charts, etc. Guideline The STO Management Team and the Execution Co-ordinator must prepare the Execution Plan that includes the Objectives, Strategies and Tasks that will ensure the Execution Phase workscope is executed efficiently and effectively and must include: SHA - The procedure that will be used to ensure compliance with all SHA requirements. Ensure all Execution Supervisors are familiar with the SHA procedures, have received the necessary orientation and have access to the procedures and support resources as required. Quality Control - The procedure that will be used to orient all Execution Supervisors in their responsibilities for the Inspection and Test Plan (ITP). The process to be used to ensure that effective communication is established between the Execution Supervisor and the QC Inspector to ensure all work is performed in a quality manner to optimize reliability over the next Process Unit Run Cycle according to the specifications detailed in the Planned Job Package (PJP). Shutdown Turnaround Outage & Reliability Asset Management 11

29 Example Section 1: Key Performance Indicators The Execution Plan - Example (continued) Guideline (continued) Contractor Management - The procedure that will be used to interface with the Contractor s Supervision regarding force reporting, tools, worker performance, manpower loading, etc refer to Section 12.5 Contractor Coordination and Control. Material, Tools and Consumables Delivery and Issue The procedure that will be used to manage the delivery, issue and security of all materials, tools and consumables required to support the workforce refer to Section 9- Materials Management Plan and Section 10 Tools / Rental Equipment Management Plan, Administration The procedure that will be used to manage the Workforce: How will the workforce will be mobilized and demobilized - refer to Section Workforce Mobilization and Demobilization, How will Overtime and Meals be authorized Overtime and Meals Authorization, How will Labour Relations issues be addressed Labour Management Procedures and Workforce Rules and Regulations: Job site Rules and Regulations Grievances and disputes, Worker performance and discipline, Absenteeism and Late Start / Early Quit, Sign-on and layoff, Work Stoppage, Workscope Change Management The procedure that will be used to provide supervision with clear instructions on scope clarifications, resolution or changes. How changes will be initiated / authorized / communicated to comply with the Guideline Workscope Change Management Process. Work Permit Issue and Renewal The procedure that will be used to obtain Work Permits and conduct pre-job tool box talks, Daily Shift Report The procedure that will be used to orientate all Execution Supervisors in the process to use the Daily Shift Report to control the work activities, report accurate progress to the Planning Group and verify compliance with the schedule. Shift Turnover Co-ordination The procedure that will be used to manage the turnover of work between the shifts effectively. Continuous Improvement - The procedure that will be used to log all deficiencies as they occur to ensure continuous improvement in the Execution Strategy. 12 Shutdown Turnaround Outage & Reliability Asset Management

30 Example Section 1: Key Performance Indicators The Execution Plan - Example (continued) Guideline (continued) The STO Management must use the audit tools available in The STO Management Process refer to Section 14 Audits and Corrective Action Plan to continuously monitor logistics, safety, quality, schedule, cost and worker performance to ensure that all impediments to the effective execution of the work are eliminated immediately. Issues that result in poor performance include: Excessive work crew absenteeism, Lack of available resources: Tools Materials Equipment The activity does not match worker capabilities, Lack of Information: Procedures Drawings Related supplemental information Poor weather conditions and work location protection, Equipment / permit not available when scheduled, Unsafe work conditions: Poor housekeeping Lack of attention to cleanliness Improper scaffolding, barriers, supports Manpower and / or equipment congestion Lack of qualified supervision, Inadequate reporting and feedback on technical resolutions, Poor network plans developed by the STO Planners, Poor workscope identification and instructions for added and extra work, Extended hours and / or days of work without adequate rest Shutdown Turnaround Outage & Reliability Asset Management 13

31 Section 1: Key Performance Indicators The Execution Plan OBS / WBS Three-Amigos by WBS PLANT STO Leader PLANT STO Coordinator The Three-Amigos assist the Scheduler/Programmer with developing the plan for the next shift. The Shift Reports are issued to the Three-Amigos to ready equipment, permits, safety resources, materials and tools prior to the Execution Work Forces arriving for work. Indirect Support Logistics Inspection Administration Planning Engineering Safety/Environment Equipment Maintenance Scaffolding Insulation SWAT Teams Execution Coordinator Operations Coordinator Safety Coordinator Backshift Amigos AREA Execution Coordinator Operations Coordinator Safety Coordinator Dayshift Amigos The Buck stops here (owner/client third-party management WORK TYPE Pipefitters Welders Boilermakers General Foremen Crew Foremen Contractors Work Crews 14 Shutdown Turnaround Outage & Reliability Asset Management

32 Notes Section 1: Key Performance Indicators Key Performance Indicators Shutdown Turnaround Outage & Reliability Asset Management 15

33 Section 1: Key Performance Indicators 16 Shutdown Turnaround Outage & Reliability Asset Management

34 Section 2 Section 2: Workscope Optimization and Risk/Cost Benefit Analysis Workscope Optimization and Risk/Cost Benefit Analysis Objectives This section focuses on the tools and techniques used to develop a realistic scope of work for turnaround projects. You will learn to: Categorize work by type Use a risk assessment tool to determine probability and consequence Establish a formalized work approval process Establish a formalized and controlled worklist document Key Terms Risk/Cost Benefit Analysis Work Types Worklist Shutdown Turnaround Outage & Reliability Asset Management 17

35 Best-Practices Section 2: Workscope Optimization and Risk/Cost Benefit Analysis Workscope Optimization Best-Practices At the initial STO Management Meeting which is conducted 12 to 18 months before Feed / Oil Out, the AMT (Asset Management) Team begins the process of approving the items on the Worklist and establishing the preferred method to provide the most cost effective solution for executing the work. The AMT Team is responsible for ensuring that the workscope activities are optimized (Repair verses Replace, Scheduling Parameters, Process Availability, Equipment Priority, Material Availability, Work Breakdown Structure). When the Optimization Process is completed for each approved Worklist Item, the Planning Group can then begin the process of preparing the Planned Job Package (PJP). The Planning Group must ensure the most cost-effective schedule and work methods are used to execute each Worklist Item. Regulatory Inspection, Reliability Enhancements and Process Engineering Improvements on equipment must be consolidated by system to optimize the cycle time between outages. Ensure that all related system assets are scheduled for maintenance in the same STO outage. Conduct feasibility studies to spare equipment that will allow maintenance work to be conducted on-stream rather than during a STO. Perform Risk / Cost Benefit Analysis when optimizing Worklist Items that require a major capital / plant-change expenditure or affects the on-stream availability of the Process Unit (typically 5% of the Worklist items). Reduce the Worklist content to items that require an outage (do not include spared equipment on the Worklist). Studies indicate the cost to perform work during a STO is 350% to 380% more expensive than performing the work on-stream. Conduct Standardization and Spare Part Inter-changeability Studies to reduce the cost of Inventory. Identify and group all activities that require the use of specialty equipment (large cranes) to ensure the schedule and the cost of resources are optimized. Operations and Process Engineering must focus on reducing the duration of the outage not the budgeted cost. Consider reducing the throughput of the Process Unit to perform specific activities on equipment rather than taking a complete Unit outage. Use Hot Tapping / Stopple methodology rather than taking a Process Unit out of service. Consider using portable utility generation equipment rather than taking a Process Unit out of service. 18 Shutdown Turnaround Outage & Reliability Asset Management

36 Best-Practices Section 2: Workscope Optimization and Risk/Cost Benefit Analysis Workscope Optimization Best-Practices (continued) Conduct on-stream cleaning (back-flushing cooling water systems to reduce U Values rather than taking a Process Unit out of service). Conduct the Worklist Optimization Review early in the Workscope Development Phase for items that may require Long-Lead material delivery. Ensure all Capital and Plant Change Initiatives are identified early in the Workscope Development Phase. Consolidate the Worklist Items by System or Equipment Tag not by Work Order. Ensure that all workscope activities on a specific piece of equipment are consolidated into one equipment network. Optimize the schedule for Worklist Items that require specialty equipment (large cranes, bundle pullers, etc.) Consider the impact of congestion, heavy equipment, access, safety and logistics. Manage the repair and replacement of valves and fittings by list. Backseat valves and repack while in service. Shutdown Turnaround Outage & Reliability Asset Management 19

37 Section 2: Workscope Optimization and Risk/Cost Benefit Analysis Work Types and Categories All work must be classified as one of the following types: Budgeted this classification includes all work approved for turnaround at the time of creating the Initial Budget (Worklist Cut-off Date) Late this classification includes all work approved after the Worklist Cut-off Date and prior to Feed-out (Control Budget) Found this classification includes any activities added to an approved Task (Work Order) after the initial planning is completed. New this classification includes all new approved Work Orders generated during the Execution Phase of the turnaround. All work must be categorized as one of the following: Regulatory this category is associated with all inspection work governed by the regulatory board, i.e., PSV overhauls, Pressure Vessel Inspections to maintain a safe operation for the defined runduration. Asset Integrity this category is associated with any maintenance type work (including projects) where assets require repair, replace, overhaul or modifications to maintain a reliable operation for the defined runduration. Process Integrity this category is associated with any process cleaning, filter replacement, catalyst replacement, etc. to ensure a reliable process for the defined run-duration. 20 Shutdown Turnaround Outage & Reliability Asset Management

38 Best-Practices Section 2: Workscope Optimization and Risk/Cost Benefit Analysis Risk/Cost Benefit Analysis Best-Practices Risk/Cost Benefit Analysis is a formalized process for establishing a realistic scope of work to satisfy the vision of the organization to achieve a safe and reliable production facility for a specified run-duration. This process is based on the probability of failure, and the resulting consequences. All work identified by each facility stakeholder department must be approved by the Asset Management Team using the risk/cost benefit analysis tools and techniques to ensure only work that absolutely needs to be executed during a production outage, and supports the vision, constitutes the scope of work and makes it on to the worklist for planning, scheduling and execution. A common tendency of World Class Organizations is to optimize the scopes of Plant STOs. This makes it necessary to count on methodologies and multidisciplinary teams to support these objectives. At present, many Companies are using methodologies based on Risk to improve their performance. Risk is defined as the combination of the frequency with which an event can occur and the consequence of its occurrence. The Work List elements that can not be evaluated using this matrix due to its economic impact (penalization, procurement restrictions or main equipment), must have been submitted to a detailed Cost-Risk-Benefit analysis to decide if they are to be included or not in the work scope. The best known pace-setting companies use the Work Selection Based on Risk methodology to optimize the work scopes defined for all their Plant STOs. The success of the methodology application depends on senior management s support. The work team responsible for defining the STO scope must manage the methodology. Methodologies based on Risk; support cost reduction initiatives without a negative effect on reliability and maintenance, thus achieving greater competitively. It is important to consider business objectives when applying these methodologies. The STO scope must be limited to an optimum level in order that cost and duration are kept at the lowest possible levels. The work team responsible for optimization must be consulted if any modification is to be introduced to the optimized scope after the Risk Based Work Selection methodology has been applied. Work scope optimization studies for Plant STOs must be done at least nine months before turnaround execution. Shutdown Turnaround Outage & Reliability Asset Management 21

39 Notes Section 2: Workscope Optimization and Risk/Cost Benefit Analysis Workscope Optimization and Risk/Cost Benefit Analysis 22 Shutdown Turnaround Outage & Reliability Asset Management

40 Notes Section 2: Workscope Optimization and Risk/Cost Benefit Analysis Workscope Optimization and Risk/Cost Benefit Analysis Shutdown Turnaround Outage & Reliability Asset Management 23

41 Section 2: Workscope Optimization and Risk/Cost Benefit Analysis 24 Shutdown Turnaround Outage & Reliability Asset Management

42 Section 3 Section 3: Planning / Scheduling Planning / Scheduling Objectives This section focuses on the tools and techniques used to properly plan and schedule a turnaround project. You will learn to: Estimate Worklist Items Develop Planned Job Packages Develop a realistic Execution Plan using Dynamic Schedule Management Key Terms Planning Scheduling Programming Shutdown Turnaround Outage & Reliability Asset Management 25

43 Best-Practices Section 3: Planning / Scheduling Planning / Scheduling Best-Practices Planning - consists of breaking down a task into a network of logical and executable activities with estimates for duration and resources. Work packages should include all the required manpower, services, materials, tools, rental equipment, special procedures and any related documentation Develop detailed Equipment / Asset Network Libraries for all process unit equipment activities Equipment networks should be developed within the STO scheduling software. Data is then exported to other maintenance management software (i.e., CMMS), if required The Planning and Scheduling software should be dynamic and capable of reacting to changing conditions quickly. Interfaces should be designed and developed to upload or download only the specific information required. The Equipment / Asset Networks should include all the activities that can be performed on a specific piece of equipment, i.e., maintenance, operations and support activities, e.g., scaffolding, safety, etc. Assign qualified individuals to plan work packages Use Critical Path Method (CPM) when developing Equipment / Asset Networks rather than Precedence Analysis (PA) Equipment network activities should be: No less than one hour duration No more than one shift duration New activity for change in key resource New activity for change in equipment component New activity for change in scheduling logic Work packages should be identified by a sequential number tied to the equipment identifier Develop one equipment network that contains all the work activities that must be executed on a piece of equipment. Networks must be equipment driven by Equipment / Asset Tag Number. Work Orders are only a mechanism to distribute costs Assign sort codes at the equipment or activity level during work package development to facilitate filtering the data by a specific sort query. Operations must define the shutdown and start-up activities that will be included in the STO plan Execution Workbooks that contain Equipment / Asset Networks must be assembled and provided to each supervisor who is responsible for the execution of the activities as per the WBS and OBS. The Execution Workbooks should be distributed and reviewed 2 weeks prior to Feed / Oil Out 26 Shutdown Turnaround Outage & Reliability Asset Management

44 Best-Practices Section 3: Planning / Scheduling Planning / Scheduling Best-Practices (continued) Establish Planned Job Packages and Equipment Specific Network library files to limit the planning effort required for each STO Establish a Planning Department and the required facilities to support the Planning Methodology Ensure Planners are trained, certified and qualified to perform all Maintenance Planning functions, i.e., STO, Routine, Materials and Projects Studies show that a minimum of 38% of the labour costs in a STO can be directly attributed to travel of one form or another, e.g. not identifying blind sizes, locations, gasket specifications, wrench sizes, etc. Identifying all the resource requirements in a Planned Job Package (PJP) can significantly reduce this percentage. Planning is the effort of developing detailed plans (PJP s) for executing work associated with the maintenance and upkeep of equipment assets. For STO related maintenance work, the development of Planned Job Packages and Equipment Specific Network library files will significantly improve the outcome of STO execution while reducing the future planning effort. The primary function of planning is the identification of all the resources and the duration that is required to execute the STO scope of work. Focus should be on accurate identification based on planning and estimating resources at the activity level of each Planned Job Package Shutdown Turnaround Outage & Reliability Asset Management 27

45 Best-Practices Section 3: Planning / Scheduling Planning / Scheduling Best-Practices Scheduling - is a technique used to program the scheduling software to establish a dynamic plan. A formalized scheduling process must be incorporated into the STO Management Process and supported by a Scheduling Management Checklist. Scheduling codes must be established for consistent schedule development and control. Scheduling parameters and controls must be assigned during Work Package and Schedule Development to allow the scheduling software to produce shift schedules and status reports that accurately reflect changing conditions. The schedule plan must be created with a defined Work Breakdown Structure (WBS) Area Unit Process System Equipment Type Equipment ID (Task / Work Order Header) Activity Network Steps The scheduled plan must be equipment driven and prioritized by: Area Equipment Type Equipment ID Key Resources. The scheduled plan must be broken down into logical and manageable phases : Pre-STO Shutdown Blinding / Purging Cleaning Opening Venting Inspection Repair Closure De-blind Start-up Post-STO 28 Shutdown Turnaround Outage & Reliability Asset Management

46 Best-Practices Section 3: Planning / Scheduling Planning / Scheduling Best-Practices (continued) Schedule Work, not Manpower work must be scheduled and resources made available to execute as per the plan. Front load the manpower required in the schedule by the percentage of expected Added and Extra work to ensure adequate resources are available to execute the Added and Extra work if it is identified. If no Added or Extra work is identified you can reduce the manpower, resource and indirect support resources. The most effective and efficient shift schedule is 10 hour shifts 6 days per week. After that the cost increases and performance decreases substantially. Emphasize overtime by exception - consider multiple shifts rather than overtime. Maximize pre and post turnaround activities - move as much work outside the turnaround execution window as possible. Use the Back Scheduling technique to schedule Pre-STO work from the Feed / Oil out date to determine the number of resources required and duration required to complete all Pre-STO work prior to Feed / Oil out. Plan and schedule a number of small turnarounds within the master STO time frame. Track all work by activity work types: Normal, Added, Extra, Ignored, Late and Cancelled. The best schedule is one that optimizes resource utilization in terms of cost and duration between two opposing concepts: Unlimited resources- equals shortest duration Restricted resources- equals longest duration All work to be completed within the STO window must be integrated into the master schedule, i.e., Capital Projects, Operations Shutdown and Start-up Plan. The STO Management Team must maintain control and responsibility for all of the work conducted during the outage. Establish the critical path early to provide Management, Marketing and Stakeholders with an estimate of production outage duration and number of maintenance days available to schedule remaining work Process Unit Availability - establish scheduling parameters and ensure they have been assigned to the appropriate equipment types Shutdown Turnaround Outage & Reliability Asset Management 29

47 Best-Practices Section 3: Planning / Scheduling Planning / Scheduling Best-Practices (continued) Apply constraints to equipment networks and activities as required, i.e.; blocked days, mandatory start / finish, work holidays, etc. Activity Dependency - link activities from separate networks that are dependent on activities being performed on other networks Allow the scheduling software to automatically balance and level work based on the Work Breakdown Structure and / or Process Availability Information Review resource requirements, critical path, and schedule slippage with tabular and graphic reports Run the automatic schedule utility using What-If scenarios to determine the most effective schedule, i.e.; more manpower resources, less manpower resources and shift variables to measure the impact on cost, manpower and duration. Ensure function and sort codes are assigned to filter the data required to generate daily shift reports. Take a snap-shot or baseline target of the schedule to be used for status updates. Take advantage of the scheduling software s ability to make numerous calculations quickly and effectively to reschedule and determine the impact of changing conditions during the Work Execution Phase. Never allow scheduled tasks to become unscheduled worklist items Work Schedule Development is one of the least understood and utilized elements of STO Management and unfortunately one of the most critical to the outcome of the STO project. The primary reason for this is the failure to include all aspects of STO planning, logistics and execution into the development of the STO Work Execution Schedule. The STO Management Team must focus on supporting the objectives of developing an effective STO Work Execution Schedule. To accomplish this, a scheduling process must be established. To be effective, the scheduling process must result in a schedule that provides targets for schedule and budget compliance while optimizing the utilization of resources. The schedule must drive the turnaround and enable management to proactively determine and manage the impact of changing conditions rather than just monitoring progress and reacting to the impact of changing conditions. The information and results produced by the STO Work Schedule can be divided into three unique phases. Each phase produces information and results that are critical at pre-determined times throughout the turnaround. 30 Shutdown Turnaround Outage & Reliability Asset Management

48 Best-Practices Section 3: Planning / Scheduling Scheduling (Programming) to Create a Plan First Phase The objective of Phase 1 is to establish the critical path and resulting duration of the production outage. The schedule established during this phase must be made available early in the Work Scope Development Phase of the turnaround. The Planner should be able to illustrate optimistic, realistic, and pessimistic Critical Path Milestone Schedules using the equipment logic networks from: The Operation s Shutdown Procedures The STO Worklist (critical jobs with the longest duration or series of jobs making up the longest duration) The Operation s Start-up Procedures. The shift selection for this Critical Path Schedule should be identified to provide seven days a week, 24 hours a day coverage to minimize the production outage. Presentation of critical path milestone schedules adjusted for contingencies may be prepared using various shift selections if desired to allow decision making by Management. Successful completion of this phase and determination of the duration of the outage will set the foundation for the second phase of the scheduling process. Second Phase The objective of Phase 2 is to establish a Baseline Work Schedule. Following the decision and approval from Management on the critical path schedule and production outage duration, the remaining work is scheduled within these parameters. The majority of the work related to the second phase in schedule development should begin at the identified Cut-Off Date. At this point most of the worklist items have been identified and approved and work packages consisting of equipment network logic and scheduling parameters are in the process of being developed. The steps associated with the second phase of the scheduling process are: Assign scheduling parameters to the equipment logic Calculate different scheduling scenarios, review manpower and resources requirements, duration s, costs and potential problem areas Analyze and approve a schedule based on this information Prepare shift reports for the first day of the Work Execution Phase. Do not use bar charts or graphs to execute work activities. Use tabular shift reports generated and distributed by Craft Foreman, Crew Leaders, Coordinators, etc. Just prior to Day 1 (Feed-out) take a snap-shot or baseline copy of the schedule Remember, the only scheduled activity that may resemble the baseline schedule by the end of the STO will be the first activity and the last. Shutdown Turnaround Outage & Reliability Asset Management 31

49 Best-Practices Section 3: Planning / Scheduling Scheduling (Programming) to Create a Plan (continued) Third Phase The objective of Phase 3 is to control or drive the turnaround to meet the intended target regardless of the conditions or situations that may occur. Scheduled activities must never be transformed into unscheduled worklist items. Each shift schedule must be developed to issue only the amount of work that can be safely and effectively accomplished by the resources available. The ability to reschedule work activities quickly to deal with identified problems is critical to the success of the STO. The primary function of the STO Planning Group supported by the STO Management Team members is to develop and manage the Work Execution Schedule. The first level of the STO Management Team begins the process of schedule development and control by establishing the following: Work Breakdown Structure (Refer to Work Breakdown Structure) The Process / Operations representative(s) assigned to the STO Management Organization support the Planning Group with schedule development and control by establishing the following: Shutdown / Start-up Plan Execution Strategy Process Availability Parameters Equipment Priority The Planning Group develops and controls the schedule using the following methods: Identify Scheduling Parameters during PJP Development Establish a STO within the Scheduling Software Guideline: The Area Planner establishes a new STO in the scheduling software following the closure of the previous STO and sets the calendar dates for worklist cut-off and oil-out for the subsequent STO. Existing Equipment Libraries files can be transferred from the Equipment Network Library folder to the new STO as identified by the Worklist. When 90 percent of the worklist item jobs are transferred or planned and entered into the scheduling software, the formal process of schedule development and control can begin. 32 Shutdown Turnaround Outage & Reliability Asset Management

50 Best-Practices Section 3: Planning / Scheduling Scheduling (Programming) to Create a Plan (continued) Phase One Step 1. Assign Scheduling Parameters to Logic Networks Step 2. Input Operations Shutdown Logic Step 3. Determine Critical Jobs & Input Logic - longest job or series of jobs based on zero float Step 4. Input Operations Start-up Logic Step 5. Link Critical Logic Networks to Establish Outage Duration use Task Dependant method of scheduling to link Steps 2, 3 and 4. Phase Two Step 6. Update Planning Codes and Scheduling Parameters on all Planned Job Package Equipment / Asset Networks in the Planning and Scheduling software, i.e., shift, work type, shifting, work holidays, pre-schedule-post, etc. Step 7. Link Task to Dependant Logic Network, i.e., activities from on Equipment / Asset Network one dependant on schedule start or finish of one or more activities other Equipment / Asset Networks Step 8. Apply Mandatory Start and Finish Constraints apply mandatory start and finish times to activities that cannot be automatically scheduled, i.e., scheduled Step 9. Automatic Level by WBC or Process Availability Table Step 10. Review Resources Requirements Step 11. Re-run Automatic Leveller using What If? Queries Step 12. Establish Shift Schedule Report Criteria Step 13. Snap-Shot Baseline Target of Schedule Step 14. Print Shift Reports & Graphs Phase Three Step 15. Update Task Completions Step 16. Schedule Cancelled, Added & Extra Step 17. Re-Schedule Constraints if Required Step 18. Review Status by WBS or Process Availability Step 19. Is Performance and Issue? Step 20. Adjust for Next Shift s Schedule Step 21. Review Performance Issue Step 22. Print Shift Schedules & Distribute Shutdown Turnaround Outage & Reliability Asset Management 33

51 B e Best-Practices Section 3: Planning / Scheduling Work Breakdown Structure Best-Practices Purpose The Work Breakdown Structure defines how the STO Management Team intends to partition the Workscope for the STO into manageable sections that can be effectively planned and executed. Best-Practices Develop a Work Breakdown Structure that is consistent with how you intend to execute the Workscope. Define the Work Breakdown Structure that integrates with the Organizational Breakdown Structure. Define the Work Breakdown Structure before initiating the Workscope Development Phase for: The Planned Job Package preparation The Equipment Networks (Sort, Trade and Company Codes) The Process Availability (Process Area and Equipment Type) The Contracting Strategy and Request for Quotation Packages (RFQ) Schedule Development (Manpower Planning by Process Area and Equipment Type) Report Generation (Process Area, Equipment Type and Supervisor) The Work Breakdown Structure serves as the basis for partitioning the work into packages as part of the Contracting Strategy. If the size and complexity of the Workscope or the contracting philosophy of the Facility dictates the maximum amount of work that will be given to one Contractor then the work must be partitioned into separate RFQ s according to the WBS as follows: Establish Prime Contracts for all work by Area / Process Unit except Rotating Equipment and Electrical / Instrumentation which should be awarded as a separate package by System, If it is necessary or advantageous to subdivide the work under the Prime Contractor, ensure the Prime Contractor is held accountable for the day to day direction of all support sub contractors in the area regardless of who ultimately pays the Subcontractor s invoices. The reasons why subcontractors may be required include: The Prime Contractor may not be financially capable of handling the entire Workscope A portion of the Workscope involves special skills or equipment that the Prime Contractor is not capable of supplying The Facility has an existing contract with a Specialty Contractor who they want to use to execute part of the Workscope. Work Breakdown Structure Best-Practices (continued) 34 Shutdown Turnaround Outage & Reliability Asset Management

52 Section 3: Planning / Scheduling Best-Practices The WBS is an important management tool to: 1. Partition the STO Workscope into smaller components to improve the accuracy of planning, budgeting, scheduling and control 2. Assign responsibility and accountability to individuals in the STO Organization to execute the Workscope 3. Provide a mechanism that allows the Planning / Scheduling software to optimize the utilization of resources 4. Sort reports, e.g. Daily Shift Report, Progress / Cost Status Reports, Permit Report, etc. for work distribution and data collection Utilize the Work Breakdown Structure (WBS) to partition the total STO into component elements. The WBS represents the hierarchy of the STO broken down by level into manageable areas, equipment types, work packages, equipment networks and finally into activities. It serves to organize the STO by grouping all the activities that must be performed in the identification, planning, scheduling, execution and management of the STO. As the levels of the WBS become more detailed, the scope, complexity and the cost of each level becomes smaller, until the individual activities are defined, quantified and measured. At the lowest level, the logical sequence of activities, grouped as Equipment Networks and organized into Planned Job Packages, are identified as manageable components which can be planned, budgeted, scheduled and controlled. Fig 4.1: on the following page illustrates a Facility Breakdown Structure provides a graphical representation of the Work Breakdown Structure that describes a typical WBS for a STO as follows: Level 1 Summary - the top box represents the total STO, Level 2 - Area / Process Unit - this level provides more detail and would typically be assigned to one Execution Co-ordinator and Area Planner to manage, Level 3 Equipment Type / Asset Classification - this level separates the Area / Process Units into the Types of Equipment or Systems that form part of the STO Workscope, Level 4 Planned Job Packages - this level defines the individual Planned Job Packages that make up the approved Worklist for the STO, Level 5 Activity / Task in Logical Sequence - this level defines the Equipment Network for the Workscope within each Planned Job Package. Shutdown Turnaround Outage & Reliability Asset Management 35

53 Section 3: Planning / Scheduling Work Breakdown Structure (continued) The Work Breakdown Structure has no time constraints. By adding calendar time we establish Process Availability. The Work Breakdown Structure (WBS) provides a visual representation of a facility (Plant) down to the lowest level of activities. Level 1 - Plant Level 2 - Area Inlet Separation Compression / Process Middle Lake Gas Plant Utilities / Sulphur Plants Refrigeration / Dehy Flare / Waste Water Level 3 - Unit Stabilizer Unit No. 1 Stabilizer Unit No. 2 FIG 3.1: The Work Breakdown Structure (WBS) Level 4 - System Level 5 Equip Type Towers Process Utilities Exchangers Level 6 Equip ID E-101 E-102 Level 7 Work Orders (Task Open/Clean/Inspect) Level 8 Activity Networks (Blind, Open, Clean, Inspect, etc.) Blind Open Clean EXERCISE: Sketch a Work Breakdown Structure. Steps 1. On the following page, sketch a Work Breakdown Structure that represents your facility / turnaround project. 36 Shutdown Turnaround Outage & Reliability Asset Management

54 Worksheet Section 3: Planning / Scheduling Work Breakdown Structure - Worksheet Shutdown Turnaround Outage & Reliability Asset Management 37

55 Notes Section 3: Planning / Scheduling Planning / Scheduling 38 Shutdown Turnaround Outage & Reliability Asset Management

56 Section 4 Section 4: Establishing the STO Team Establishing the STO Team Objectives Establish a STO Leaders Team Establish a Core Team (Steering Committee) Establish a Dynamic Organization Chart Establish a Planning Team Establish Roles and Responsibilities Key Terms Leaders Team Core Team (Steering Committee) Project / STO Manager Planning Team Shutdown Turnaround Outage & Reliability Asset Management 39

57 Best-Practices Section 4: Establishing the STO Team Establishing the STO Team The establishment of the STO Team and the ability to lead them through the various elements and phases of the turnaround is essential to the overall success of the turnaround project. The STO Team is responsible for establishing the Vision, Mission and Key Performance Indicators and Targets for the outage The STO Team is responsible for establishing the budget in a collective manner by contributing as a Core Team Member / Stakeholder What constitutes a STO Team? Asset Management Team (Leaders Team) Accountable to Senior Management to meet Key Performance Targets Part-time commitment Assigns Project Manager Project Manager (STO Manager) Accountable to Asset Management Team Core Team (Steering Committee) Accountable to Project Manager (STO Manager) to meet Milestone Schedule Targets Stakeholder Department Leads Part-time commitment Planning Team (Project Controls) Accountable to the Lead Planner (Stakeholder Department Lead) Responsible for planning, scheduling and project controls Full-time commitment with support from Operations and Technical The STO Team must be phased into existence according to the Milestone Schedule and STO Management Process The Milestone Schedule Weekly Meeting must be attended by each member of the STO Core Team The Planning Team is a sub-set of the STO Management Team The STO Team should consist of owner / prime contractor / independents or third-party members The STO Team must be lead by the STO Manager The STO Team lead and manage their department resources to achieve the contributing activities as outlined in the Milestone Schedule The STO Team is responsible for training and coaching of support resources The STO Team must operate from one philosophy; one vision, one mission and one set of rules, i.e., STO Management Process 40 Shutdown Turnaround Outage & Reliability Asset Management

58 Section 4: Establishing the STO Team The STO Team Organization Chart Shutdown Turnaround Outage & Reliability Asset Management 41

59 Section 4: Establishing the STO Team Establishing the STO Team The illustration on the right demonstrates the core team and the communication channel that planning & scheduling form as the nucleus to the core team. FIG 4.1: The STO Management Core Team. 42 Shutdown Turnaround Outage & Reliability Asset Management

60 Example Section 4: Establishing the STO Team Roles and Responsibilities Each STO Team Member must have a written roles and responsibilities document outlining their specific duties and commitment to the project The STO Leader and STO Team Member must agree and sign-off on their respective roles and responsibilities. Title: Reports To: Planning Coordinator John S. STO Leader Ryan T. Summary of Role The Lead Planner is accountable for the detailed worklist development including labour and material requirements within the SAP system. As the ultimate owner of the worklist, the Lead Planner ensures that the worklist is accurate and complete. Specific Roles and Responsibilities 1. Worklist management & control ensuring alignment with OIP requirements, asset integrity work, and engineering work. 2. Ensure all identified labour and material requirements are effectively entered into the SAP system 3. Accountability for proper classification of all work identified after the work list cut-off date 4. Regular attendance at weekly planning meetings. It is your responsibility to providing an alternate to represent you when you are unable to attend these meetings 5. Timely identification of resource requirements. 6. Communicate status of all turnaround activities to appropriate personnel within their respective group 7. Accountable for effective completion of tasks identified within the milestone schedule 8. Identify any issues from the planning group to the core team members. 9. Support the Mission Statement, Goals & Objectives 10. Identify any necessary training or support requirements 11. Host specific group strategy meetings. Accepted Date Lead Planner Accepted Date STO Sponsor Shutdown Turnaround Outage & Reliability Asset Management 43

61 Notes Section 4: Establishing the STO Team Establishing the STO Team 44 Shutdown Turnaround Outage & Reliability Asset Management

62 Notes Section 4: Establishing the STO Team Establishing the STO Team Shutdown Turnaround Outage & Reliability Asset Management 45

63 Section 4: Establishing the STO Team 46 Shutdown Turnaround Outage & Reliability Asset Management

64 Section 5 Section 5: Creating a Budget Creating a Budget Objectives This section describes how to establish a realistic control budget for turnarounds, you will be able to: Calculate an initial budget using the worklist Establish a control budget using planning and scheduling Manage costs during the execution phase of the turnaround Key Terms Initial Budget Working Budget Control Budget Spending Plan Cost Management Shutdown Turnaround Outage & Reliability Asset Management 47

65 Best-Practices Section 5: Creating a Budget Creating a Budget Best-Practices The Asset Management Team is responsible for establishing budgets for dayto-day operations, maintenance repair and overhaul, process outage shutdowns and unit / facility turnarounds in a five year plan format Facilities Engineering is responsible for establishing budgets for CAPEX projects (including indirect support / resources) The Leaders Team (Senior Management) is accountable for the budgets The turnaround budget is comprised of OPEX, TA and CAPEX commitments The turnaround budget will be established, modified and frozen during various phases of the turnaround management process Five Year Plan Asset Integrity Process Integrity STO Kick-off (18 months prior to feed-out / aligned with Cut-off Date / contingency added for Late Work 20% including indirects) Planned Maintenance Work Orders Inspection Worklist Process Cleaning / Filters / Catalyst Indirects Purchase Orders Working Budget During Worklist Management and Planning Process Work is cancelled or added to the Worklist (Late Work) Found work considerations are planned into the work package Budget fluxuates +/- Control Budget Two weeks prior to Feed-out 10 percent contingency for New Work Budget is frozen as the Key Performance Indicator (Cost) Target The Control Budget is determined by: Planned / estimated direct wrench-hours Purchase orders Materials Indirects (based on percentage of man-hours, or fixed price) Safety Scaffolding Supervision Administration Mobilization Accommodations / Trailers / Washrooms, etc 48 Shutdown Turnaround Outage & Reliability Asset Management

66 Best-Practices Section 5: Creating a Budget Workscope / Budget Calculator The Workscope and Budget Calculator can assist with establishing the Initial Budget Categorize work Regulatory Asset Integrity Process Integrity Number of assets By type Benchmark man-hours Estimate indirects Estimate materials Determine Planning Resources Shutdown Turnaround Outage & Reliability Asset Management 49

67 Best-Practices Section 5: Creating a Budget Cost Management Best-Practices Purpose The Cost Management Process describes the process used to prepare the STO Budget. The funding (AFE) for the STO is requested and approved based on the Initial Budget. The Work Scope Change Management Process ensures that any new approved work items added to the Worklist are estimated and prioritized relative to the existing Worklist. Items may have to be removed or deferred from the Worklist to conform to the approved Budget. The process begins with the preparation of the preliminary budget for the next STO based on the Initial Worklist prepared during the Closure Phase of the previous outage. The Budget is managed through all phases of the STO Management Process and is completed with the final cost reconciliation during the Closure Phase. Best-Practices Formalize the process to prepare and manage the STO Budget early in the Integrated Management Phase. Use knowledgeable, experienced personnel to prepare the budget and the supporting cost estimates Allow sufficient time to prepare accurate cost estimates for all items associated with the STO. All members of the STO Management Team must understand how the STO Budget is prepared. The Facility Management must ensure the budget contains sufficient funds to execute the complete workscope and to satisfy the defined Goals and Objectives that are established for the STO. During the Execution Phase, the STO Management Team must use the Control Budget to manage the cost of the STO. All items and activities added to the Worklist after the Worklist Cut-off Date must be justified and approved using the Workscope Change Management Process. Guideline Budget Phases Each phase of the STO requires a different strategy to manage the budget. Initial Budget Period (Corporate 5 to 7 year cycle to Worklist Cut-off Date) The Worklist and the "Initial Budget" are developed and managed from initiation of the Worklist until the specified Worklist Cut-off date for the STO. The STO Cut-off date is a fixed date for final submittal and approval of work items for the STO. This date is established far enough in advance of the Execution Phase to allow for adequate planning, engineering and procurement of materials and services. 50 Shutdown Turnaround Outage & Reliability Asset Management

68 Best-Practices Section 5: Creating a Budget Cost Management Best-Practices (continued) The Initial Budget is based on the corporate budget cycle that was established 5 to 7 years before the planned outage. Good historical STO information is required to accurately determine the Initial Budget. The amount budgeted is established from the preliminary Worklist information that was identified during the Closure Phase of the last STO. The Initial Worklist is based on the inspection data from previous outages and analysis of the historical equipment performance records. If the analysis is conducted effectively, the cost of the Initial Worklist Items should represent approximately 60% of the cost of the STO. The STO Management Team must add an allowance (40% to 50%) to the Initial Budget amount that was established by estimating the cost of all the workscope items identified on the Initial Worklist. This allowance (contingency) will allow for the lack of full and accurate information about the condition of the assets and an incomplete Worklist. As additional workscope items are identified and added to the Worklist, the cost for these items are deducted from the contingency allowance (40% to 50%). When the Worklist has been finalized (Cut-off Date), the Worklist will represent approximately 80% of the STO cost. Adding the remaining Contingency of 20% to 25% to the Worklist cost estimate will represent the total budget for the STO. Working Budget Period (Cut-off Date to Feed / Oil Out) After the STO Cut-off Date, which may vary from three to six months prior to Feed / Oil-out, all items added or deleted from the Worklist are managed using the formal Work Scope Change Management Process. The budget during this period is defined as the "Working Budget". The Working Budget must include: A detailed review of each Worklist item, A determination of the schedule impact on the critical work items which will establish the duration of the outage and the estimated resource requirements for the STO, A review of the historical benchmarked resource performance and schedule information for each specific work item, A detailed plan and a cost estimate for each work item. Control Budget Period (Feed / Oil out until STO Closure) During the STO Execution Phase and until all costs are reconciled during the STO Closure Phase, the Control Budget is managed using the Work Scope Change Management Process. This Control Budget is the final Working Budget that was approved for the STO at Feed / Oil-out. The Work Scope Change Management Process includes a formal Request for Workscope Change Report to prevent unauthorized workscope growth and limit additional work to only that requiring an equipment outage. Shutdown Turnaround Outage & Reliability Asset Management 51

69 Best-Practices Section 5: Creating a Budget Cost Management Best-Practices (continued) During the Execution Phase, the Audits and Corrective Action Plans are used to ensure compliance with the approved budget and must focus on: preventing unauthorized charges to the STO cost centres ensuring the planning process is effective optimizing the resources on site maximizing the workforce performance ensuring safe and quality work is performed ensuring contractors are fulfilling their contractual terms and conditions. Budget Categories STO Maintenance Items Any work item that can only be completed during an outage and is a repair or replace item. Repair maintenance is usually repetitive in nature and the justification is based on asset / process integrity, operability and safety / environmental considerations. Capital Work Items Any work activity determined to be an improvement or substantial change that requires the capitalization of funds to satisfy accounting policies and procedures. Plant Change Items Any work activity to improve the asset that is not Capital Work but involves modifying, upgrading or changing an asset or system. Demolition Items This category involves work activities to eliminate obsolete equipment. Operational Related Items Any work activity related to the process operations such as catalyst and filter media changes, hazardous waste removal, clearing services, de-coking, etc. Contingency Allowance STO Management Team Must Apply a Contingency Allowance A contingency allowance is included by Management in the Budget to adjust the Cost Estimate prepared by the Planner / Cost Estimator. The STO Management Team must conduct a formal Risk Management Analysis using historical information of past STO performance, current labour availability and process unit conditions. The results of this analysis are used to determine the Contingency Allowance applied to the Cost Estimate to prepare the Budget and must be documented as a reference for future STOs. 52 Shutdown Turnaround Outage & Reliability Asset Management

70 Best-Practices Section 5: Creating a Budget Cost Management Best-Practices (continued) This allowance provides a financial buffer for unexpected or uncertain events that may occur during the Execution Phase. By including a reasonable contingency amount in the budget, the STO Management Team has the flexibility to deal with a minimum amount of Added (5%), Extra Work (5%) and unexpected events (10%) that may be anticipated but could not be defined during the budget preparation. Budget = Cost Estimate + Contingency Allowance The STO Management Team must use a systematic process to determine and apply the contingency allowance to the Cost Estimate. The amount of contingency included in the estimated cost of the defined workscope is based on historical data and for estimates that may prove inaccurate due to normal errors and omissions. It must not include significant changes in workscope or such items as civil disturbances, major strikes, etc. Contingency is a Separate Item in the Budget The Contingency Allowance should be shown as a separate line item in the budget. No contingency should be carried intentionally in other accounts. Because the contingency allowance is outside the Cost Estimate, planners should not make allowances for contingency when preparing the Resource / Cost Estimate which includes the Direct Cost of each Planned Job Package, the Indirect Labour Costs and the Associated Costs to support the Execution Phase. Resource / Cost Estimates should be prepared based on Benchmarked industry / historical / site specific standards and established estimating units adjusted to account for the anticipated site conditions by applying the appropriate productivity factors. When Planners add contingency at the activity and / or Planned Job Package level, resource, duration and cost estimates will be inflated. Management may then make the mistake of assessing risk as part of a normal management review process and include additional contingency to an already inflated Resource / Cost Estimate. The contingency allowance should not be included in the schedule duration, resources and man-hours assigned to the work activities. Amount of Contingency Allowance When the Budget is frozen at the Worklist Cut-off Date, the amount of Contingency in the Working Budget should be in the range of 15% to 20% based on the following: 1. Unexpected 5 to 10% - events outside the control of the STO Management Team, i.e. overtime due to labour / skill shortage, equipment availability, late material delivery, inclement weather, etc. Shutdown Turnaround Outage & Reliability Asset Management 53

71 Best-Practices Section 5: Creating a Budget Cost Management Best-Practices (continued) 2. Added Work less than 5% with good Work Scope Definition - additional activities associated with defined Planned Job Packages (Cost Estimate) to deal with a certain amount of work that may be anticipated but cannot be established during the preparation of the original cost estimate. 3. Extra Work - less than 5% with good Worklist Management - items that are not part of the Worklist at the Cut-off Date. Major Workscope Changes are not included in the Contingency Allowance The Contingency Allowance should not be used to allow for major additions to the workscope. If a major change in workscope is identified, the resource / cost estimate should be prepared and additional funds to the budget must be obtained by following the established accounting policies and procedures. Each major workscope change in the STO must be justified, estimated and approved on an individual basis. Management of Contingency Allowance During Execution Phase The Contingency Allowance must be treated like any other component of the STO Budget. It is important to remember that contingency funds are established for the uncertainties and risks associated with the STO work and before the Contingency Allowance is reduced, the STO Management Team must evaluate what risks and uncertainties may affect the completion of the remaining workscope activities. Once the contingency allowance is depleted, management must justify and obtain additional funding. The STO Team must manage the Control Budget and identify the need for additional funds as soon as possible since resources may have to be reallocated and schedules may have to be adjusted as a result of the delay. Budget Preparation and Management The person who is responsible for preparing the STO Budget must work with the Planner and the STO Management Team to prepare an accurate cost forecast. The Budget must be prepared based on a disciplined cost estimating methodology using the Planned Job Package scope of work, historical cost / performance information and benchmark / estimating standards and must include: Direct labour cost, materials, rental equipment, speciality services and any miscellaneous cost associated with each Planned Job Package, Labour productivity factors anticipated for the workforce involved, Indirect labour costs / factors for such items as support personnel (supervision, planners, engineers, inspectors, security, SHA, clerical, janitorial, housekeeping, orientation, certification, training, etc.), 54 Shutdown Turnaround Outage & Reliability Asset Management

72 Best-Practices Section 5: Creating a Budget Cost Management Best-Practices (continued) Straight time and / or overtime costs for client staff and the pro-rated costs for infrastructure if applicable, Anticipated overheads and fees for Contractors, Associated costs for tools, consumables, rental equipment, temporary facilities, utilities, transportation and communications, Incremental Operations related costs such as blinding, clearing, catalyst handling, nitrogen / vacuum trucks, A Contingency Allowance (for added / extra work and unexpected events) A detailed cost estimate must be prepared for each work item identified on the Worklist. The control estimate for each item of work / work order is developed using the Planned Job Package. As the control estimates are developed for all Original and Late workscope items, they must be reconciled to the approved Working Budget amount. Partial or complete work items must be dropped from the STO Worklist (cancelled / ignored work) according to the established priority ranking to maintain the approved Working Budget or additional funding must be obtained. All maintenance, operations, SHA and inspection work must be identified, approved and added to the Worklist and the Budget at least six months prior to the STO Feed / Oil-out Date. This deadline is established to allow detailed engineering, procurement and planning to be completed at least three months prior the STO Feed / Oil-out Date. All Capital and Plant Change work must be identified, approved and added to the Worklist and the Budget at least nine months prior to the STO Feed / Oil-out Date. This deadline is established to allow process design work, detailed engineering work and long lead procurement activities to be completed at least 6 months prior to the STO Feed / Oil-out Date. The Budget Worksheet should be compiled and sub-totalled by Worklist Item, Budget Category and Priority for ease of review and analysis. At the Worklist Cut-off Date, three months prior to Feed / Oil out, the Initial Budget becomes the Working Budget. All changes affecting the Working Budget after this date are managed using the Work Scope Change Management Process. After Feed / Oil-out, the Working Budget becomes the Control Budget for the STO. All changes affecting the Control Budget must be managed using the Work Scope Change Management Process. The Control Budget is approved by the Facility Management and the STO Management Team is responsible for ensuring the expenditure of the approved funds are managed and controlled. Any unauthorized overrun / underrun to the Control Budget must be approved in advance by the appropriate level of Management. No Request for Workscope Change is to be approved until you have the funds to pay for it! Shutdown Turnaround Outage & Reliability Asset Management 55

73 Notes Section 5: Creating a Budget Creating a Budget 56 Shutdown Turnaround Outage & Reliability Asset Management

74 Notes Section 5: Creating a Budget Creating a Budget Shutdown Turnaround Outage & Reliability Asset Management 57

75 Section 5: Creating a Budget 58 Shutdown Turnaround Outage & Reliability Asset Management

76 Section 6 Section 6: Worklist Management and Control (Late Work Cut-off) Worklist Management and Control (Late Work Cut-off) Objectives This section introduces the Worklist Management Tool. You will learn to: Understand Best-Practices and the Worklist Management Tool View the roles dictionary Describe resources Identify the differences between labour, non-labour, materials and equipment resources. View the resource dictionary Key Terms Budgeted Work Late Work Found Work New Work Shutdown Turnaround Outage & Reliability Asset Management 59

77 Best-Practices Section 6: Worklist Management and Control (Late Work Cut-off) Worklist Management and Control Best-Practices The STO Worklist must consist of approved Work Orders only The STO Worklist must be controlled using a controlled spreadsheet tool or Work Order Management System where only limited personnel have access to modify The Worklist Management Tool must be capable of grouping and sorting The Worklist must be established as the STO Scope of Work and must be used to establish the initial budget Once the initial budget has been established the Worklist must be capable of establishing a Cut-off Date category of work, i.e., Late Work The Worklist must be capable of tracking all Late Work The Worklist must be capable of tracking work by category, i.e., Inspection, Maintenance, Process, Projects, etc. The Worklist must be capable of assigning and tracking all Planned Job Package progress A Worklist must be established for all outages identified on the 5 10 year plan Worklist tools must be capable of data transfer from system to system Worklist tools must be reconciled weekly with the Work Order System to ensure integrity and accuracy Worklists should be capable of tracking: Estimated Costs Filtering Sorting Grouping Totals / Sub-Totals Status Work Type MOC (Management of Change required) Planned Job Package Status Ability to Defer Ability to add information (Work Order Description) Key Field (Work Order Number) 60 Shutdown Turnaround Outage & Reliability Asset Management

78 Tools Section 6: Worklist Management and Control (Late Work Cut-off) Worklist Management and Control Tool Shutdown Turnaround Outage & Reliability Asset Management 61

79 Notes Section 6: Worklist Management and Control (Late Work Cut-off) Worklist Management and Control (Late Work Cut-off) 62 Shutdown Turnaround Outage & Reliability Asset Management

80 Notes Section 6: Worklist Management and Control (Late Work Cut-off) Worklist Management and Control (Late Work Cut-off) Shutdown Turnaround Outage & Reliability Asset Management 63

81 Section 6: Worklist Management and Control (Late Work Cut-off) 64 Shutdown Turnaround Outage & Reliability Asset Management

82 Section 7 Section 7: Managing the Milestone Schedule Managing the Milestone Schedule Objectives This Section describes how to develop a Milestone Schedule for pre-planning / strategic planning in support of the STO Management Process. You will learn to: Create a Milestone Schedule Establish a STO Management Organization Establish Pre-Planning meetings and agendas Establish best-practice guidelines, policies and procedures Key Terms Milestone Schedule Meetings Guidelines Strategies Shutdown Turnaround Outage & Reliability Asset Management 65

83 Best-Practices Section 7: Managing the Milestone Schedule Best-practices Creating a Milestone Schedule Purpose The purpose of this guideline is to define the process used to manage the Execution of all the required functional activities during the Integrated Management, Workscope Development and Closure Phases of the STO. The Management Team must select and assign the individuals responsible for managing the Functional Activities identified on the Management Checklist. When the individuals have been assigned the responsibility for specific functional activities on the checklist, the progress of each activity can be monitored and controlled manually using the status column on the Management Checklist. For complex STOs, the data should be input to Primavera to create a Milestone Event Schedule that is used electronically to status and control the resources required to develop and manage the functional activities. Best-Practices Use the Management Checklist Assignment Matrix to assign resources by Functional Area to the activities that support STO Management (i.e., safety, quality, administration, planning, etc.). Establish the Management Checklist Assignment Matrix as an electronic Excel file in the STO File Structure Template The Management Team is responsible for assigning the primary responsibility (R) to each activity identified on the checklist during the initial STO Management Meeting. Create the Milestone Event Schedule (Primavera) using the information, i.e. activity, duration, start / finish, resource, etc., identified on the Management Checklist. The Management Checklist Assignment Matrix and the Milestone Event Schedule are used to control and manage activities associated with the Integrated Management, Workscope Development and Closure Phases of each STO. Use the suggested parameters that are predefined in the management tools to manage the Management Checklist Assignment Matrix and create the Milestone Event Schedule. The suggested parameters can be modified based on the workscope and complexity of the STO if required. Planning and Scheduling Software is used to manage the Execution Phase of each STO and Milestone Schedules as separate projects. Learned Opportunities identified from previous STOs, e.g. The Contractors need additional radios should be included in the appropriate departmental plan and can be added to the Milestone Event Schedule if necessary. Use the activities on the Milestone Event Schedule as the agenda for STO Management Meetings to manage and status the completion of the assigned activities. 66 Shutdown Turnaround Outage & Reliability Asset Management

84 Section 7: Managing the Milestone Schedule Responsibilities Matrix FIG 7.1: The Responsibilities Matrix assigns the roles of each Core Team member to the Milestones for Pre-Planning. Shutdown Turnaround Outage & Reliability Asset Management 67

85 Section 7: Managing the Milestone Schedule Milestone Schedule FIG 7.2: The Milestone Schedule Project with Assigned Role and Timelines with a Must Finish Milestone of 06- Jun Shutdown Turnaround Outage & Reliability Asset Management

86 Section 7: Managing the Milestone Schedule Milestone List MILESTONE LIST Column 1 Number of weeks prior to feed-out Column 2 Duration in Weeks Column 3 Item List Compile Process Unit Items on Worklist Template Identify Process Unit Outage Inspection Worklist Development Maintenance Worklist Development Engineering Worklist Development Operations Worklist Development SHE Worklist Development Work Deferred from Previous Process Unit Outage Establish Management Team Hold Initial Worklist Review Meeting Establish Worklist Cut-Off Date Worklist Approval Process (Continuous) Prepare Meetings / Communication Plan Establish Mission Statement Define Goals and Objectives and KPI's Establish Budget Allocations Assign Leaders to Management Checklist Tasks Develop Milestone Events Schedule Develop Organization Chart / Job Descriptions Identify Additional Resources Define Planning Resources Assemble Management Information Binders Identify and Procure Long Lead Items Create Planned Job Package Assignment Matrix Prepare Contracting Plan Develop Planned Job Packages Implement Change Management Process Define Work Breakdown Structure Establish Planned Job Package Filing System Prepare STO Management Plan Integrate Continuous Improvement Recommendations Prepare Planning & Scheduling Plan Issue Contract Bid Packages Prepare Cost Collection and Control Plan Prepare Technical Plan Prepare Materials / Tools / Equipment Rental Plan Prepare Staffing and Workforce Administration Plan Prepare Training and Development Plan Prepare Logistics Plan Shutdown Turnaround Outage & Reliability Asset Management 69

87 Section 7: Managing the Milestone Schedule Milestone List (continued) MILESTONE LIST Column 1 Number of weeks prior to feed-out Column 2 Duration in Weeks Column 3 Item List Prepare Safety / Environmental Plan Prepare Audits and Corrective Action Plan Award Contracts Prepare Continuous Improvement Plan Develop Inspection Plan and Strategy Develop Operations Plan and Strategy Develop Process Engineering Plan and Strategy Develop Plant Engineering Plan and Strategy Develop Project Engineering Plan and Strategy Develop Maintenance Plan and Strategy Develop Rotating Equipment Plan and Strategy Develop Instrument Electrical Plan and Strategy Perform STO Readiness Assessment Worklist Cut-off Date Design Report Saved Sets Develop STO Information Handbooks Develop Work Execution Schedule Implement Logistics Plan Simulate Execution Phase Execute Pre-STO Scope of Work Orientate Workforce Post Bar Charts of Work Execution Schedule Baseline Snapshot of Work Execution Schedule Establish Control Budget Execute Shutdown Scope of Work Execute Maintenance Scope of Work Execute Startup Scope of Work Execute Post-STO Scope of Work Complete Turnover Forms Implement STO Closure Plan Hold STO Closure Meeting Conduct STO Critique Create Subsequent STO Assign Responsibility to Learned Opportunties Implement Continuous Improvement Plan Publish Results 70 Shutdown Turnaround Outage & Reliability Asset Management

88 Section 7: Managing the Milestone Schedule The STO Management Core Team Core Team A Core Team needs to be established at least 12 months prior to the Execution Phase of the STO. A representative from each stakeholder department should be on the team: Maintenance Operations Materials Management / Procurement Safety Environment Engineering Inspection / Technical Administration Contract Management / Supply Chain Planning The Core Team should be headed by a Project Manager or STO Coordinator / Planning Lead The Project Manager or STO Coordinator will work for the STO Leader and STO Sponsor (or Asset Team). Weekly Meeting A weekly STO Management meeting for the core team needs to be held to update progress of the Milestone Schedule. Suggest one hour duration each Thursday at 11:00am Facilitated by the Project Manager or STO Coordinator. Agenda: 5Min - Attendance / Agenda Review 30Min - Update Milestone Schedule Report Activities 15Min - Items to add to the Milestone Schedule 10Min - Core Team Issues and Concerns Round-table Core Team members are responsible for updating everyone in their department on the progress of the STO Planning. Core Team members are responsible for completed their assigned activities as outlined on the Milestone Schedule. Attendance is mandatory or you must send an Alternate. If you miss two meetings without sending an Alternate you are off the team. Shutdown Turnaround Outage & Reliability Asset Management 71

89 Section 7: Managing the Milestone Schedule Weekly Core Team Meeting Agenda Pre-STO Meeting Agenda Tuesday, September 25, :00-10:00 AM Mission Control Meeting called by: Type of meeting: Facilitator: Attendees who must attend / or alternate: Attendees who may attend: Ted Lister Pre-STO Status Meeting STO Coordinator Al, Glenna, George, Joanne, Tim, John, Ken, Brett, Jayme, Mike, Todd, Gord Brian, Norm, Janet, Tod, Doug, Chris Duration Agenda topics Responsibility 5 Min Attendance / Agenda Review Glenna 30 Min Update Milestone Schedule Report Activities STO Coordinator 15 Min Items to add to the Milestone Schedule STO Coordinator 10 Min Core Team Issues and Concerns Round-table Al 60 Min Note 1: Core team members must attend or send an alternate. If you are a member of the core team you must remember to bring your turnaround binder with you, and be prepared to provide an update of your assigned activities for the week if applicable. Note 2: This is not a problem solving meeting. Any issues will be addressed in a workshop format with those involved as applicable. 72 Shutdown Turnaround Outage & Reliability Asset Management

90 Notes Section 7: Managing the Milestone Schedule Managing the Milestone Schedule Shutdown Turnaround Outage & Reliability Asset Management 73

91 Section 7: Managing the Milestone Schedule 74 Shutdown Turnaround Outage & Reliability Asset Management

92 Section 8 Section 8: Establishing Contracts Establishing Contracts Objectives This section describes how to establish a strategy for creating contracts that align with the business need. You will learn to: Understand contract types Establish contract parameters Create contract definitions Key Terms Contract Types Contract Definitions Shutdown Turnaround Outage & Reliability Asset Management 75

93 Best-Practices Section 8: Establishing Contracts Establishing Contracts Best-Practices Once the decision is made to use contractors for a given service, determining the type of contract to be utilized is made more effective, if the organization has established a strategy for obtaining and managing these requirements. The strategy is established, understood, implemented and controlled with the use of strategy guidelines. The guidelines must be established within the STO Management Process and be sufficient as to be used for all shutdown, turnaround, capital projects and routine maintenance activities. Guidelines provide the Rules or Terms and Conditions so that each group may benefit from the partnership whether long or short term, fixed price or hourly reimbursement. This is particularly important for newly promoted individuals who are unfamiliar with the company s contracting strategy. Attachment A - provides a list of typical services that are required during a turnaround, what contract type may be appropriate, who typically issues the contract for services (Prime Contractor or Owner) and who should manage the day-to-day activities of the service provider. Attachment B - provides a list of facilities, utilities and equipment that are required for the turnaround and who typically is responsible to provide them. Lump sum prices and reimbursable cost fees quoted in competition; i.e., bidders must submit their best terms Contractor s proposed key personnel, contract terms, technical items, execution schemes and similar items are negotiable. Normally these factors are upgraded as necessary before contract award Selection of contract type should optimize project economics; balancing investment, completion date and plant operating value Incentives should be used, and should be implemented as soon as possible to motivate the Contractor toward optimum execution by rewarding above average performance Select best Bidders / Contractors based on previous project history feedback, market data and technical assessments ( total cost basis ) Maintain fair relationships with Contractors. This not only protects the Company image, but also in the long run yields best overall commercial terms and technical results Utilize a Contractor Assessment Program and incorporate the program into the STO Management Process 76 Shutdown Turnaround Outage & Reliability Asset Management

94 Best-Practices Section 8: Establishing Contracts Establishing Contracts Best-Practices (continued) Utilize a Contracting Plan that defines specific responsibilities relating to: Planning, Supervision, Payment, Time Sheets, Change Management, Field Change Order System and Cost Monitoring Determine which work items to contract out, who should issue the contract and who should manage the day-to-day activities Define who has the coordination role for Progressing Status Monitoring Performance, Quality, Cost and Safety Prepare Work Scope Definition Decide on contract type Cost Plus Fixed Price Target Price Reimbursable Unit Rate Service Contract Blanket Order Prepare Standard Terms and Conditions Integrate Contractor s Schedule with Overall STO Schedule Contract Types: Cost Plus - Payroll or Actual Cost Plus Fee Fee could be: overhead and fee overhead and sliding scale fee fixed overhead and fee overhead and fee tied to incentives Fixed Price - Lump sum for defined scope plus mechanism to deal with additions and deletions to scope Target Price / Reimbursable - Contractor agrees to control estimate, schedule, safety, milestones, etc. Contractor reimbursed for payroll or actual costs Fee based on estimate % or all of fee forfeited on target overruns % of incentive received on target underruns Unit Rate - Rate includes direct cost plus additions to cover overheads, fees, tools, supervision, clerical, etc Service Contracts - Rates, terms and conditions established on a Continuing Service Basis or Spot Basis over a long term Blanket Orders - Rates, terms and conditions established for materials and / or repair work for a fixed period of time. Quantity of service to be provided is undefined Shutdown Turnaround Outage & Reliability Asset Management 77

95 Section 8: Establishing Contracts Establishing Contracts Best-Practices (continued) Attachment A Service / Contract Identification Matrix The following contract services are identified by suggested contract type with supporting information on who typically issues the contract and who should manage the service. Comments are included as applicable. (Legend at end of table). Item No. Service Contract Type Contract Issued By Service Managed By 1 Vacuum Truck UR O P 2 High Pressure Wash UR O P 3 Chemical Cleaning UR O P 4 Tank Cleaning CP O S 5 Catalyst Change- Out FP O S Comments Prime Contractor provides interface support Catalyst Contractor manages execution of work, Prime Contractor provides interface support and possible reimbursable resources. 6 Sand Blasting CP O P Local Contractor rates 7 Pigging UR O S 8 Dynamite Blasting UR O S 9 On-Site Machining UR O S 10 Bolt Tensioning UR P / O P 11 Nitrogen Supply UR O O 12 Refractory CP P / O P 13 Heat Treatment UR P S 14 Exchanger Work FP / UR O S Prime Contractor can use existing Owner Contractor at Owner rates. Prime Contractor can use existing Owner Contractor at Owner rates. Prime Contractor can use existing Owner Contractor at Owner rates. Exchanger Contractor responsible to pull, clean, push bundles and isolate exchangers. Repairs at unit rates. 78 Shutdown Turnaround Outage & Reliability Asset Management

96 Section 8: Establishing Contracts Establishing Contracts (continued) Item No. Service Contract Type Contract Issued By Service Managed By 15 P.S.V. Repairs CP O S 16 Instrumentation CP O O 17 Rotating Equipment CP O O 18 Electrical CP O O 18a 18b 18c Construction power tie-in s to power source and distribution Temporary power / lighting STO specialty scope work CP O P CP O P CP O S 18d Electrical tracing CP O P Tower, Drum Work and Repairs Trailers, Janitorial, Water, Sewer CP O P CP O P 21 NDE CP O P 21a Visual QA CP P P 21b Specialty NDE CP O O 21c Generic NDE CP O P 22 Scaffolding UR P P 22a Materials UR O P 22b Labour UR P P 23 Insulation CP P P Comments Prime Contractor to remove, package, and deliver to the warehouse. Owner to ship to test shop for testing, return to warehouse for Prime Contractor to pick up and install Contractor to remove and reinstall in-line devices. Owner to service. Prime Contractor to blind equipment Owner to supply resources for Contractor management. Prime Contractor to interface with Owner regarding possible power outages Owner to supply, erect and disassemble trailers. Prime Contractor to manage the trailers and services while in use. Shutdown Turnaround Outage & Reliability Asset Management 79

97 Section 8: Establishing Contracts Establishing Contracts (continued) Item No. Service Contract Type Contract Issued By Service Managed By 24 Steam Tracing CP P P 25 25a 25b Mobile Equipment Cranes, rigging and mats Fork lifts, cherry pickers, manlifts etc. UR O P UR O P UR O P 25c Pick-up trucks UR P P Rental Tools and Equipment incl. tuggers, airhoses, air movers, etc. Hoses - Steam, N 2, H 2 O UR P / O P UR P / O P 28 Materials CP O P 29 29a Safety (Specialty Items) R-2 retractable tri-pods UR O P UR O P 29b Gas detectors UR O P 29c Life lines, harness, Heppa filters UR P P 30 Trade Labour UR P P Comments Prime Contractor to provide small tools as a part of the management fee. All other tools provided on a reimbursable basis. Prime Contractor to provide a materials coordinator. Prime Contractor to identify quantities and Owner to supply. Service P - Prime Contractor S - Specialty O - Owner Contract Type CP - Cost Plus FP - Fixed Price TP - Target Price SC - Service Contract BO - Blanket Order UR - Unit Rate 80 Shutdown Turnaround Outage & Reliability Asset Management

98 Section 8: Establishing Contracts Establishing Contracts (continued) Attachment B Assignment of Responsibility Matrix for Facilities, Utilities and Equipment The following facilities, utilities, tools, equipment and the like shall be supplied by either Contractor or Owner, or both, in accordance with the following table: Item No. Item Description Supplied by (1) Contractor (2) Owner Both (2) 1 Power X 2 Potable Water X 3 Fax Machine X 4a Phones - Hardware / installation X 4b Phones - Rental, long distance and fax charges 5a Copier paper and machines X 5b 6 All other office supplies / stationary, postage, typewriters, word processors and the like Office Space - Including maintenance and modifications 7 Office furniture X 8 Janitorial Services 8a Lunch Rooms X 8b Offices X 8c Craft areas / shops X 9 Comfort Stations X 10 Lunch Rooms 10a Furnishings X 10b Heating / power (incl. hookup) X 10c Maintenance X 11a First Aid Facilities X 11b Ambulance X 12 Computer Support Services (3) X X X X Shutdown Turnaround Outage & Reliability Asset Management 81

99 Section 8: Establishing Contracts Establishing Contracts (continued) Item No. Item Description Supplied by (1) Contractor (2) Owner Both (2) 13 Radios and Crystals X 14 Laydown Areas X 15 Storage Facilities X 16a Bussing - To and from site X 16b On site - Incl. drivers X 17 Vehicles - On and off site (4) X 18 Propane X 19a Fuels - Gasoline and diesel X 19b Truck(s) includes driver(s) X 20 Gases (e.g. oxygen, acetylene) X 21 Lubricants X 22a Camp accommodations X 22b Overtime Meal Tickets X 23 Housing X 24a Maintenance Facilities X 24b Janitorial / Maintenance of #24a X 25a Welder Testing Facilities X 25b Janitorial / Maintenance of #25a X 26 Scaffolding Material X 27 Small Tools & Consumables (5) X X 28 Rental Tools X 29 Rental Equipment X 30 Permanent Plant Material / Equipment 31 Welding Rod X 32 Instrumentation / Gauges for Testing (includes calibration) X X 82 Shutdown Turnaround Outage & Reliability Asset Management

100 Section 8: Establishing Contracts Establishing Contracts (continued) Notes 1. For details concerning those items supplied by the Owner or by both the Owner and the Contractor, as noted above, as well as the procedures to issue the said items, refer to Owner Supplied Items of this Attachment. All items / services provided by the Owner are at no cost to the Contractor. 2. Contractor is totally responsible for any items it supplies, including safety, security, maintenance, repair, replacement, operation, removal, disposal and overall management and all cost related thereto. Upon completion of this agreement, Contractor shall retain title to any such items that it has provided and retained ownership. 3. Any required telecommunication or other such equipment lines for Item No. 12 are Contractor s responsibility through the service provider directly. Contractor shall obtain the Owner s prior written approval for installation of such lines. 4. Contractor shall follow Owner s policies and practices on site with respect to the number of assignments and identification of the vehicles for Item No Small Tools and Consumables referred to in Item No. 27 shall mean any tool or consumable which has an actual purchase value less than or equal to a set amount, i.e., $ as per the terms and conditions of the contract. Contractor to provide listing of all tools and equipment considered above the set amount, i.e., $ complete with rental rates per Item No. 28 and 29. Tool room attendants are included in overheads. Owner Supplied Items Following are the details of items to be supplied by the Owner, pursuant to the above listed notes, including a brief description of procedures to be followed in order to obtain the issue of said items: Electrical Power (Item No. 1) Electrical power will be provided through the Owner s Central Services division, to the Contractor s permanent facilities. Electrical power availability in other areas will be reviewed on a job by job basis and detailed on the work permits. When the necessary power is not available, the Contractor and Owner will mutually agree on alternate methods. (e.g., use of portable generator on rental basis) Shutdown Turnaround Outage & Reliability Asset Management 83

101 Section 8: Establishing Contracts Establishing Contracts (continued) Potable Water (Item No. 2) Some buildings are provided with piped potable water, but others such as temporary trailers and craft shacks are not. If piped water is not available, the Contractor will be provided with access to potable water supply points. Contractor will be responsible for the required containers and hauling of same to various work areas. Under no circumstances may Contractor provide potable water to other than its own employees or subcontractors at the work site without Owner approval. Phones (Item No. 4a) The Owner should have sufficient phone lines available to Contractor. However, if the Contractor requests changes, additional lines or extensions, etc. they must be made in writing to the Owner s Data and Telecommunications division, who will review and make the necessary arrangements with the service provider where possible. It must be understood that the available lines may be spread out over the Site and only a maximum number of lines may be available in any one area. All line type access, restrictions, and set types will be governed by the Owner s practices and policies. Phones - Rental, long distance and fax charges (Item No. 4b) Owner s Data and Telecommunications division will pay Contractor s local and long distance charges for phone lines on Site, based on the service providers direct billings to the Owner. Contractor shall record all long distance calls and ensure that proper reviews and controls are in place in order to minimize phone costs. It should be noted that any long distance charges that are not related to business at or for the Owner will be back charged to the Contractor. Office Space (Item No. 6) Contractor will be provided with office space at the locations identified as Contractors Building. The Owner will be responsible for all renovations, modifications and maintenance. For any additions or deletions to office space, whether temporary trailers or permanent structures, the Contractor must provide written notification to the Owner s Manager of Facilities Administration, complete with justification for change. 84 Shutdown Turnaround Outage & Reliability Asset Management

102 Section 8: Establishing Contracts Establishing Contracts (continued) Office Furniture (Item No. 7) The Owner s Employee Services division will provide all required office furniture upon Contractor identifying office furnishings required for the administrative and field offices (office furniture is defined as: desks, tables, chairs, filing cabinets, storage cabinets and book shelves). All furniture distribution is subject to Owner s policies (e.g., executive desks for managers and up). In addition, the Owner will provide all maintenance and repairs or replacement of furniture items. Janitorial Services - Offices (Item No. 8) Janitorial services for Contractor s administrative office will be provided by the Owner s janitorial contractor on a regular 40 hour work week basis. The Owner s Site Services division shall be responsible for coordination of the janitorial contractor. Comfort Stations / Lunchrooms (Items No. 9 & 10) Comfort stations and lunchroom facilities for use by Contractor s personnel should exist at the various work locations. They are maintained and serviced by the Owner s Site Services division. Contractor shall notify Owner if and when additional facilities are required and Owner shall make the necessary arrangements. Heating / Power - Craft shacks (Item No. 10) Contractor must obtain the Owner s Site Services division written approval to locate a craft shack at any location on Site. The Owner will provide the hook-up of heating and power after approval of the location, and will be responsible to disconnect as required. If power / heat is not available at an agreed location, Contractor and Owner shall mutually agree to alternate methods. First Aid and Ambulance (Item No. 11) The Owner will provide a permanent first aid facility and maintain qualified staff to render first aid or medical aid, subject to a base agreement. The Owner shall transport injured / ill personnel to the Hospital by ambulance as deemed necessary by the Owner, subject to the base agreement. Shutdown Turnaround Outage & Reliability Asset Management 85

103 Section 8: Establishing Contracts Establishing Contracts (continued) Radios (Item No. 13) Contractor shall supply and maintain radios and crystals for his own communications based on the Owners specifications. Laydown Area (Item No. 14) Fenced area for Contractor s use will be provided by the Owner as detailed on a Site Plot Plan. Contactor must notify Owner s Site Services division if additional area is required and if approved, Owner will make all arrangements to facilitate the request. Contractor may also be provided with laydown areas at the various work locations as deemed necessary and mutually agreed by Contractor and Owner. Storage Facilities (Item No. 15) Some additional storage areas will be available at the various work locations via craft shacks, laydown areas, maintenance shops and tool cribs. Contractor shall identify his requirements to the Owner s Area Maintenance / Construction Manager for review and approval. Propane (Item No. 18) Cylinders - Contractor is responsible for identifying cylinder requirements to the Owners Material Control and Distribution division. Contractor must return and empty cylinder to obtain a full bottle of propane through a Stock Issue Ticket generated by the Owner. Contractor is responsible for pick-up and delivery to and from the various work areas. Bulk Deliveries - Owner s Site Services division will provide bulk propane delivery to Contractor, including coordination of al deliveries, hook-ups and removals of storage tanks. Under no circumstances shall Contractor hoop-up any propane tanks, cylinders or vessels without a permit from both the Owner and Regional Governing Authorities. 86 Shutdown Turnaround Outage & Reliability Asset Management

104 Section 8: Establishing Contracts Establishing Contracts (continued) Fuel (Item No. 19) Gasoline / Diesel - The Owner will provide gasoline and diesel, however, the Contractor will be required, following the Computrol Fuel System, to fuel his or her own equipment and that of its subcontractors as well as the Owner s equipment when requested. For these purposes, Contractor must provide a metered truck and log system suitable to the Owner. The Owner may request Contractor to fuel other Contractor s equipment during peak periods. The same log system shall apply. Gasses (Oxygen and Acetylene, and the like) (Item No. 20) Contractor shall orally notify the Owner s Material Control and Distribution division through the warehouse of oxygen / acetylene and other gas requirements and shall identify a desirable drop point on the Owner s Site with minimum / maximum quantities for each point. The Owner will coordinate the requirement with the delivery truck and drop at the points. Contractor must maintain a bottle rack for both empty and full cylinders and must return empty cylinders to obtain full ones. Contractor shall work with the Owner s Material Control and Distribution division to set up and maintain a central system for bottled gases. Camp Accommodations (Item No. 22a) Contractor shall notify Owners Camp Housing Office of expected arrivals, length of stay and other particulars required by the Housing Office. Contractor is expected to action any concerns raised by the Housing Office relevant to the Contractor s employees in accordance with published camp rules and regulations. Contractor shall advise the Housing Office on a daily basis the status on lay-offs, terminations and ensure personnel are checked out of camp. Contractor shall have a written procedure identifying how the above will be managed. Shutdown Turnaround Outage & Reliability Asset Management 87

105 Section 8: Establishing Contracts Establishing Contracts (continued) Overtime Meal Tickets (Item No. 22b) Resident of Owner s camp will be provided with all meals as required. Overtime meal tickets will be provided to Contractor on an as required basis pursuant to current labour agreements. Any such requirements shall be identified, in advance in accordance with the Owner s practices, to the applicable area Maintenance / Construction representative. Maintenance Facilities (Item No. 24) Owner shall be responsible for all building maintenance, modifications and renovations to the maintenance facilities. Contractor shall notify the Owner s Site Services Manager of all required renovations and modifications for prior review and approval. Owner shall also be responsible for all janitorial requirements for these facilities. Welding Test Facilities (Item No. 25) Contractor shall be responsible for all materials and equipment required for testing purposes. Contractor shall provide for prequalifying site test of welders, at a location of its own choosing, other than at the Owner s Site. (The Welders hiring point of origin is recommended). Contractor may upon written request to Owner s Quality Assurance division will be allowed access to the Owner s testing facilities for specialty tests. Scaffolding (Item No. 26) Contractor shall identify its scaffold material requests to the Owner s Maintenance or Project Supervisor / Planner. Owner shall obtain and issue material to Contractor. Contractor shall be responsible for loading, unloading and delivery to the area of work and back to the yard. Contractor shall report shortages on a regular basis. Rental Tools and Rental equipment (Items No. 28 and 29) The Owner will provide the following specified equipment, including associated fuel, lubricants, repair and maintenance requirements, upon Contractor identifying its schedule and quantity requirements. 88 Shutdown Turnaround Outage & Reliability Asset Management

106 Section 8: Establishing Contracts Establishing Contracts (continued) For any of the equipment requiring operators, Contractor shall ensure that said operators have been approved by the Owner s Mobile Equipment Services division. All other rental tools and equipment as defined under the contract terms and conditions. Trucks Compressors Cranes -1 ton and over-boom, flat decks, hyabs and fifth wheels included (for on-site use only) -Portable units, diesel and gas driven, 85 CFM and up, single or two stage units -Truck or rough terrain units, 5 ton capacity and up Generators -From 50 amp to 600 amp, 600 volt units Heaters -Kerosene, natural gas or propane, from 35,000 BTU to 2,000,000 BTU Light Plants Pumps Welders Manlifts -Portable -Centrifugal 1 inch and up, gas or diesel driven, submersible sump pumps, air or electric -From 300 to 600 amp, gas or diesel driven -46 feet and up The Contractor may be requested to provide the above items, in this case the contract rental rates shall apply. Permanent Plant Materials / Equipment (Item No. 30) Upon Contractor identifying its requirements the Owner will complete a Material Service Request or Stock Issue Ticket for approval by the Maintenance Area Manager or Project Manager, Owner will proceed with procurement or issue the item from its warehouse. Welding Rod (Item No. 31) The Owner will provide all welding rod types, except for those listed below, which shall be provided by the Contractor as per Small Tools and Consumables, of this attachment. a. E6010 b. E7018 Shutdown Turnaround Outage & Reliability Asset Management 89

107 Section 8: Establishing Contracts Contract Types and Definitions The contracting approach is normally based on using a competitive contracting strategy to select Contractors for handling specific turnaround work scopes, with specialty contracts awarded for associated work such as catalyst change-outs, bolt-tensioning, tank cleaning, etc. Schedule, local skills inventory, competition, in-house labour agreements, etc., will usually determine what type of contract is appropriate. The following information outlines the contract types and definitions typically encountered in the STO Management Process followed by an overview of how these contract types may be applied to the planning of a turnaround. Cost Plus Contractor performs services / work required to complete the turnaround - Owner reimburses Contractor actual costs and fee. Characteristics Fixed Price Lump Sum More Contractors willing to Bid - Minimum Effort / Cost and Risk in Bidding Ideal when Work Scope Definition is Incomplete STO Workscopes that Involve Sensitive and Confidential Information When risks are higher due to location, competitive labour market and type of turnaround work; i.e., Contractor willing to assume limited risk Suitable for larger turnarounds with shifting work priorities among units Contract in which the payment to the Contractor is for the performance of a specific amount of work; i.e., the contract price, is a fixed amount of money. Modified Lump Sum Contract in which some defined elements of work are for a fixed amount of money and other defined elements are not for a fixed amount of money; e.g., engineering and materials may be lump sum, with construction reimbursable. 90 Shutdown Turnaround Outage & Reliability Asset Management

108 Section 8: Establishing Contracts Contract Types and Definitions (continued) Characteristics Lump sum requires the following circumstances: The work must be completely definable at the time of bidding; specification must be complete, clear, and unambiguous. The Contractor s financial risks must be nominal, and acceptable, taking into account turnaround size, location, and escalation. The contract market must be favorable, so that qualified and competitive Contractors will bid. Long contract award period required must be justifiable, to permit time for completion of all design specifications and a longer period for bidding and bid review. Exposing business plans and technology to several Contractors must be acceptable. Target Price / Reimbursable Contract in which the Contractor agrees to work within the guidelines of an identified scope of work and budget estimate. Characteristics The fee is based on the budget estimate with the conditions that the Contractor agrees to work within the control estimate. If the original scope of work is performed within the guidelines established and is completed under budget, an agreed percentage of the cost savings is passed on to the Contractor. As well, if the work is performed within the guidelines established and runs over the estimated budget, the Contractor agrees to forfeit a percentage or all of his fee. Contractor is still reimbursed for all his direct incurred costs. Unit Price Contract in which payment to Contractor for performance of work; i.e., contract price, is comprised of the sum of fixed prices for the various elements of the work, each multiplied by the respective number of elements actually required. Unit price requires that units be expressed in terms of work output: e.g., cubic meter of earth fill, linear meter of pipe installed, number of exchanger tubes repaired, etc. Shutdown Turnaround Outage & Reliability Asset Management 91

109 Section 8: Establishing Contracts Contract Types and Definitions (continued) Characteristics Unit price contract are normally used when the general definition of facilities and site working condition are known at the time of bidding, but the precise quantities of work output are uncertain. They are similar to lump sum contracts and accordingly have similar advantages, disadvantages and prerequisites. Service Contracts Agreements for mechanical or preventive maintenance, NDE, Safety, etc., services. Agreements can be developed on a Continuing Service basis or Spot basis. Continuing Service Contracts Contracts with long-term expiration dates, (1-3 years normally), potentially covering multiple jobs, with defined technical scope and commercial terms / conditions. For most contracts, a requisition is required to release execution of service work. Spot Contracts Contracts for short duration covering a particular job with defined technical scope and commercials terms / conditions. Requisition authority is provided prior to contract award. Blanket Orders The document by which a Contractor and the company agree on the terms of executing an agreement for materials and / or repair work over a period of time, (usually one to three years). Blanket orders are alternatives to placing repetitive spot orders. Blanket orders are signed by the authorized representative of each party. 92 Shutdown Turnaround Outage & Reliability Asset Management

110 Notes Section 8: Establishing Contracts Establishing Contracts Shutdown Turnaround Outage & Reliability Asset Management 93

111 Section 8: Establishing Contracts 94 Shutdown Turnaround Outage & Reliability Asset Management

112 Workshop Workshop Exercise Planning and Estimating Workshop Exercise Planning and Estimating Objectives This Section describes the Field Planning and Estimating effort and tools that need to be implemented to effectively field plan all the activities steps and associated resources required to create an Activity Network for each Task (Work Order) as well as Best-Practice Planned Job Packages: Estimating Best-Practices Field Planning Tasks and Work Orders Activity Networks Planned Job Packages Benchmark Industry Standards and Productivity Factors Key Terms Field Planning Form Planned Job Package Activity Networks Estimating Shutdown Turnaround Outage & Reliability Asset Management 95

113 Best-Practices Workshop Exercise Planning and Estimating Best-Practices - Planning Purpose Understand how to effectively plan and estimate approved Worklist Items to decrease the risks associated with executing the work and increase worker efficiency. Best-Practices Work packages should include all the required manpower, services, materials, tools, rental equipment, special procedures and any related documentation. Develop detailed Equipment / Asset Network Libraries for all process unit equipment activities. Equipment networks should be developed within the STO scheduling software. Data is then exported to other maintenance management software (i.e., CMMS), if required. The Planning and Scheduling software should be dynamic and capable of reacting to changing conditions quickly. Interfaces should be designed and developed to upload or download only the specific information required. The Equipment / Asset Networks should include all the activities that can be performed on a specific piece of equipment, i.e., maintenance, operations and support activities, e.g., scaffolding, safety, etc. Assign qualified individuals to plan work packages. Use Critical Path Method (CPM) when developing Equipment / Asset Networks rather than Precedence Analysis (PA). Equipment network activities should be: No less than one hour duration No more than one shift duration New activity for change in key resource New activity for change in equipment component New activity for change in scheduling logic Work packages should be identified by a sequential number tied to the equipment identifier Develop one equipment network that contains all the work activities that must be executed on a piece of equipment. Networks must be equipment driven by Equipment / Asset Tag Number. Work Orders are only a mechanism to distribute costs. Assign sort codes at the equipment or activity level during work package development to facilitate filtering the data by a specific sort query. Operations must define the shutdown and startup activities that will be included in the STO plan. Execution Workbooks that contain Equipment / Asset Networks must be assembled and provided to each supervisor who is responsible for the execution of the activities as per the WBS and OBS. 96 Shutdown Turnaround Outage & Reliability Asset Management

114 Best-Practices Workshop Exercise Planning and Estimating Best-Practices - Planning (continued) Establish Planned Job Packages and Equipment Specific Network library files to limit the planning effort required for each STO. Establish a Planning Department and the required facilities to support the Planning Methodology. Ensure Planners are trained, certified and qualified to perform all Maintenance Planning functions, i.e., STO, Routine, Materials and Projects. Guideline a) Overview Each facility should establish a Planning Department that is responsible for managing the planning function required for STO and Routine Maintenance. The Planning Department Manager should report to the Maintenance Manager and must be independent from the Execution Manager. Personnel from the Planning Department should be assigned to specific Process Units 365 days per year. They are responsible for planning all Maintenance activities that will be conducted in their assigned Process Unit. The Planning Department will contain 3 or 4 levels of planning skill. The facility must also ensure that a suitable planning office and a controlled records storage room (Data Library) is used to file and store historical equipment information. Studies show that a minimum of 38% of the labour costs in a STO can be directly attributed to travel of one form or another, e.g. not identifying blind sizes, locations, gasket specifications, wrench sizes, etc. Identifying all the resource requirements in a Planned Job Package (PJP) can significantly reduce this percentage. Planning is the effort of developing detailed plans (PJP s) for executing work associated with the maintenance and upkeep of equipment assets. For STO related maintenance work, the development of Planned Job Packages and Equipment Specific Network library files will significantly improve the outcome of STO execution while reducing the future planning effort. The primary function of planning is the identification of all the resources and the duration that is required to execute the STO scope of work. Focus should be on accurate identification based on planning and estimating resources at the activity level of each Planned Job Package. Shutdown Turnaround Outage & Reliability Asset Management 97

115 Best-Practices Workshop Exercise Planning and Estimating Best-Practices - Planning (continued) b) Identification of Resources Establish descriptive standard codes across the Corporation for all resources, i.e. planning codes, materials codes, permit codes, trade codes, equipment codes, contractor codes, etc., to ensure consistent application (e.g. INST = Instrumentation). Establish sort codes, report queries and report structure to identify and control resource requirements during the execution phase. Use Planning and Scheduling software that is capable of identifying, compiling and reporting support resource / service requirements along with the manpower requirements on the Daily Shift Report. Human Resources Assign unique codes based on the corporate standard to identify all crafts, specialities and support personnel as follows: Work teams if the work activity requires a unique combination of craftspersons identify it in the plan (e.g. exchanger crew scaffolder, mechanic, rigger, crane operator) Individual craftsperson match the resource to the work, i.e. if the activity requires a special skill or physical characteristic, then identify it in the plan (e.g. speciality welder, confined space entry, training for breathing air, firewatch, manwatch) Supervision provide reports filtered in a manner that allows the Management Team to determine the correct level and quantity of supervision required to supervise and control the workforce (e.g. sorted by process area / unit, equipment type, craft, etc.) Direct Support Services stress relieving, x-ray, high pressure wash, etc. are direct support services that must be identified at the activity level of each Planned Job Package. Indirect Support Services based on the planned hours of direct labour a percentage of indirect hours will be required, i.e., orientation and training, small tools, safety equipment, cleaners Materials Identify all materials at the activity level using the identification codes specified in the corporate standard. Coding, material description, quantity and unit cost must be defined in sufficient detail to ensure that: Material can be ordered, expedited, delivered, stored, issued, returned and tracked for cost and quantity effectively during the Execution Phase The material description data entered into the Planning and Scheduling software and the Planned Job Packages must be correctly identified at the activity level, i.e., catalogue number, quantity required. 98 Shutdown Turnaround Outage & Reliability Asset Management

116 Best-Practices Workshop Exercise Planning and Estimating Best-Practices - Planning (continued) Equipment Major equipment such as cranes, bundle pullers, manlifts, vacuum trucks, highpressure washers, etc must be identified in the Planned Job Packages to optimize utilization and establish the quantities required. Description, size, quantity and rental rates must be specified at the activity level Specify major equipment as a Trade Code in the Resource Table of the Planning and Scheduling software Any special procedures, safe work plans or restricted access should be noted in the Planned Job Package at the activity level Tools Tools such as impact guns, sockets, wrenches, grinders, etc must be identified in the Planned Job Packages to optimize utilization and establish the quantities required. Description, size, quantity and type must be specified at the activity level All tools should be identified in the Tool Table of the Planning and Scheduling software Inspect and certify hoisting equipment cables, slings, hoses, etc. Develop a policy for on / off site delivery and storage Tool by equipment not workforce. Strategically place tool trailers and gang boxes to minimize travel and waiting time Ensure adequate supply of tool consumables, i.e., grinding disks. Off Site Services The activities that must be executed off-site by speciality services must be identified at the activity level of the Planned Job Packages. Assign a unique Sort or Trade code for each off-site service. This will ensure each work activity that is performed off-site is properly scheduled and managed by the Execution Forces. The Off-Site Service Contractor must supply a plan of the activities to be performed, as well as provide feedback on completed or partially completed activities. This will allow the Planner to update and manage the STO work schedule. In some cases, the Planner may have to provide the Off-Site Service Contractor with a Planned Job Package. When developing the Planned Job Package for off-site services, the Planner must consider: Preparation, removal, crating, shipping and receiving Delivery, pickup, equipment requirements; i.e., cranes, flatbeds, rail, WHMIS, safety procedures, etc. to allow efficient delivery and repair of the assets Safety warnings / tags and special procedures must accompany each asset requiring off-site service Shutdown Turnaround Outage & Reliability Asset Management 99

117 Best-Practices Workshop Exercise Planning and Estimating Best-Practices - Planning (continued) Permits When developing the Planned Job Package, the Planner must identify the permit requirements at the activity level of each Planned Job Package as follows: Assign Standard Corporate Permit Codes (e.g. Hot, Cold, Confined Space Entry, Excavation, Vehicle Entry, etc) Procedures When developing the Planned Job Package, the Planner must identify the procedures and supplemental information at the activity level of each Planned Job Package as follows: Procedures included in the Planned Job Package can be electronically attached at the activity or equipment level in the Planning and Scheduling Software, i.e., Safe Work Procedures, Job Hazard Analysis, etc. Work Instructions, Critical Lift Studies, etc. Drawings, sketches, specifications, procedures, etc. c) Planning Checklists by Equipment Type Planning checklists assist the Planner when developing the Planned Job Packages and Equipment Networks and identifying the resources required to effectively execute the Workscope by itemizing all the activities that must be considered when planning maintenance work activities for specific types of equipment. d) The Planning and Scheduling Plan The Senior Planner responsible for the Process Unit outage must develop the Planning and Scheduling Plan that considers the following issues: Planners Responsibilities Equipment Library Database Management STO File Management Labour and Cost Estimating Planned Job Package (PJP) Document Control Planned Job Package (PJP) Guidelines Routine Maintenance Work Integration Work Order Management Scheduling Methodology Report Methodology / Generation / Distribution 100 Shutdown Turnaround Outage & Reliability Asset Management

118 Best-Practices Workshop Exercise Planning and Estimating Best-Practices - Planning (continued) Planning Checklist Example Heat Exchangers Types of exchange bundles: a) Removable straight tube, b) Removable u-tube, c) Fixed tubesheet, d) Integral T.S. drilled, e) Removable straight tube with expansion joint tail pipe, f) Air cooler, g) Bundles with full face T.S. (drilled). Determine bundles to be re-tubed: a) Where to send bundles? b) Order replacement bundles where to ship? c) Determine ship out and receive dates? Determine the bundles that require sample tube removal and tube size. Order replacement tubes for samples. Determine bundles that require IRIS inspection. Fill out forms on gasket requirements. Order gaskets. Have test pumps checked and available for hydro-test of exchangers. Arrange for any high-pressure tests to be conducted. Arrange to have blind flanges and test blinds available for hydro-test of shells and bundles. Have condensate tank truck available for cleaning and hydro-test of stainless steel bundles and shells. If chemical cleaning of exchangers is required, locate suitable contractor. Have Technical Group involved to prepare procedure and discuss with contractor. Determine the site for pulling sample tubes from bundles and doing the IRIS inspection. Establish bundle washing area. Shutdown Turnaround Outage & Reliability Asset Management 101

119 Best-Practices Workshop Exercise Planning and Estimating Best-Practices - Estimating Purpose Establish a consistent methodology for preparing direct labour estimates that are used by the STO Planner to determine the man-hours, duration and work crew composition for each Planned Job Package. The estimated cost for direct labour, indirect labour, materials, rentals and other costs associated with the infrastructure that is necessary to support the planned work activities determines the Cost Estimate. The STO Management Team assesses the financial risks associated with executing the defined Workscope and applies a contingency allowance to the Cost Estimate. Establish the Control Budget that will be used to control the STO expenditures. Best-Practices The Corporation must establish a Glossary of Terms that contains standard definitions and terminology associated with Maintenance Planning, Estimating and Scheduling. The Corporation must establish a common reference manual of Standard Estimating Man-hour Units and a common Benchmarked Equipment Network Library for all direct and indirect work activities associated with maintenance repairs and project work throughout the corporation to enable benchmarking of cost and labour productivity. All Maintenance Planners should be trained to apply the Corporate Estimating Methodology, gain practical field experience in the strip-down and repair of process equipment and have a working knowledge of the construction methods used to dismantle and install equipment and asset class components. The Maintenance Planning Department must establish a set of standard checklists to assist the planners in preparing complete labour and cost estimates. The Maintenance Planning Department must establish a consistent method of estimating work activities based on the type of work involved, e.g. strip down / overhaul of equipment, dismantle / replace existing equipment or asset classifications (pipe, wiring, steel) and new installation of equipment / asset classifications. The estimating method should be based on a step by step procedure that uses the standard estimating units and / or the benchmarked standards to create a baseline estimate for direct labour activities. The baseline estimate should then be conditioned with the appropriate productivity factors to compensate for environmental, plant and geographical conditions to improve the accuracy and practicality of the man-hour estimate. 102 Shutdown Turnaround Outage & Reliability Asset Management

120 Best-Practices Workshop Exercise Planning and Estimating Best-Practices Estimating (continued) The Maintenance Department assisted by the Procurement and Contracts groups should prepare supplemental reference material to support the Maintenance Planner. The information is used to prepare accurate labour and cost estimates that must be updated regularly and should include the labour cost rates, labour agreement rules for overtime compensation, working conditions, shift premiums, material, consumables and rental unit costs, etc. In conjunction with the STO Cost Controller, the Maintenance Planner must periodically analyze all estimating allowances used to estimate the manhours and cost for indirect labour, material, tools, consumables, rental equipment and miscellaneous costs to ensure the allowances reflect actual historical performance. The STO Management Team should add a Contingency Allowance to the Cost to provide a financial buffer for unexpected or uncertain events that may occur during the Execution Phase. Shutdown Turnaround Outage & Reliability Asset Management 103

121 Best-Practices Workshop Exercise Planning and Estimating Best-Practices Estimating (continued) Guideline a) Overview The equipment logic network prepared as part of the Planned Job Package describes the activities to be executed for the Workscope in the STO. Benchmark standards or estimating units are applied to the work activities described in the equipment logic network to determine the man-hours and the cost of Direct Labour for each Planned Job Package. The quantity takeoff for materials and specialty services (Catalyst Loading, Stress Relieving, Repair Shops, O.E.M Rep s) extended by the unit price determines the cost for Purchase Orders and Stock items. Once the Direct Man-hours and Cost is determined for the Workscope, the manhours, cost of Indirect Labour and the Associated Costs are estimated using historical costs from similar STOs conducted at the Facility. The total man-hours and cost estimate broken down as per the Work Breakdown Structure, is used as the control estimate for measuring the cost and performance status and for projecting the cost and schedule trends. For the STO, the direct man-hours are the basis of the plan, schedule and progress status projection. Decisions on the duration of equipment and plant outages are based on simulations of cost, resources and duration and the production targets are then adjusted to accommodate the maintenance requirements that are defined by the schedule. Inaccurate or incomplete direct man-hour estimates will have a detrimental effect on cost, schedule, duration and performance regardless of whether the estimate was high or low. For these reasons, the STO Management and Cost Estimating Groups must provide the STO Planners and Estimators with concise guidelines and procedures for estimating the man-hours and cost of the STO. Personnel assigned the responsibility for preparing the labour and cost estimates must have the necessary experience and training to prepare a schedule and control estimate that is accurate and achievable. Labour and cost estimating is not an exact science and standards used to prepare man-hour estimates and factors for productivity, indirect and associated costs are not intended to be inflexible but rather to be used as a guide and adapted to suit the uniqueness of each STO. Understanding the many complex issues that contribute to labour productivity and how the baseline estimate that must be prepared using estimating standards that can be adjusted to suit the actual conditions separates the experienced estimator / planner from the clerical type estimator. 104 Shutdown Turnaround Outage & Reliability Asset Management

122 Best-Practices Workshop Exercise Planning and Estimating Best-Practices Estimating (continued) Preparing an accurate man-hour / cost estimate involves more than applying estimating units to a quantity takeoff or using historical data from previous STOs. There are many factors that will influence the quality and accuracy of the estimate and the team consisting of the Labour / Cost Estimator, Planner, Execution Supervisor and Engineer must review and agree to the technical requirements and execution strategy before the estimate is finalized. The Estimator must then consider the following variables that will influence productivity: Attitude of the workers (motivation, reward, incentive) Capability of the workers (skill, experience, training) Logistics (indoctrination, orientation, environment, resources, infrastructure) Management (vision, supervision, planning, scheduling) The ability of the STO Management Team to implement an effective STO Management Plan that considers all functional areas required to effectively manage the workforce and the resources required for any large project like a STO is the key to successful project management. Estimates prepared using Benchmark Standards or Standard Estimating Units assume the efficient management of planning / scheduling, logistics, labour relations, technical information, worker capabilities, training, support services, etc. The experienced estimator must consider all these variables in his estimate and work with the Planner and Management to set up a STO environment that will optimize workforce effectiveness. b) Definitions Order of Magnitude Estimate (+/- 40%) - this type of estimate is based on preliminary feed and recovery throughput rates, type of Process Unit and when available, block type flowsheets. Typically, this is all the information available at the conceptual stage of the STO and the degree of accuracy +/- 40% reflects the incomplete information available. Order of Magnitude Estimates are not used as part of the corporate STO Management Process for Planning / Scheduling because of the inherent inaccuracy in this type of estimate. Preliminary Estimate (+/-20%) A quantitative estimate based on all the Workscope items identified on the Initial Worklist. Typically, this estimate is based on historical records for the identified equipment or similar equipment repairs, vendor quotes and limited quantity takeoffs. To these costs are added estimates or factors to cover indirect and associated costs. Accuracy for this type of estimate is +/- 20%. The Preliminary Estimate is used to prepare the preliminary plan, outage duration and Initial Budget for the STO. The STO Management Team must add an allowance (40% to 50%) to the Initial Budget amount to allow for the lack of full and accurate information about the extent of the work on the identified assets and an incomplete Worklist. Shutdown Turnaround Outage & Reliability Asset Management 105

123 Best-Practices Workshop Exercise Planning and Estimating Best-Practices Estimating (continued) Definitive Estimate (+/- 5%) A quantitative estimate based on all the Workscope items identified on the Worklist at the Feed / Oil-out Date. Typically, this estimate is based on a fully defined Workscope, equipment logic networks, complete material specifications, detailed takeoffs of all material quantities and fixed vendor quotes. To these costs are added definitive estimates for all major equipment rentals, facilities, logistics and allowances for all Indirect and Associated Costs. A Definitive Estimate requires the most information and is the most accurate. It is the basis for the final plan, schedule and Cost Estimate. The STO Management Team must add a Contingency Allowance (20% to 25%) to the Working Budget amount that was established from the Cost Estimate to define the Control Budget. Lump Sum Estimate Comparison for Fixed Price Contracts A Lump Sum Estimate is an attempt to forecast the most likely cost of a defined Workscope within acceptable limits of risk. By adding to the Definitive Estimate, the risk allowance and the expected Contractor s Overhead and Profit (based on historical information or budget estimates solicited from contractors), a Lump Sum Estimate is prepared and used to evaluate the Fixed Price Bid of the Contractors. It is important that all Fixed Price Bids be evaluated against the Lump Sum Estimate. A variance of more the 5% to 10% between Fixed Price Bids and the Lump Sum Estimate is an indication of inherent problems in the bids submitted by the contractors and the reasons for this discrepancy must be determined and resolved before the Contract is awarded. The discrepancy is usually a result of errors or omissions by the contractor or the owner s Estimator or a misunderstanding of the Workscope. Failure to resolve this discrepancy prior to award will result in delays, claims and / or rework during the Execution Phase. Benchmarked Standards Equipment Logic Networks detailing each work activity with the historical information on trade composition, crew size and duration are compared to information obtained from other pacesetter facilities, which have similar processes and equipment. Over time, the Benchmark Standard for each equipment logic network will represent the best estimate of baseline man-hours required to execute the Workscope for that Process Unit under the conditions defined in the standard. Standard Estimating Units Man-hour units that combine predictable and described individual work elements constructed in a logical planned sequence into a standard operation. The time required to execute each element are developed using Methods Time Measurement (MTM), Time Study / Stopwatch Techniques and Work Sampling Studies. Standard Estimating Units are baseline units which represent the average time necessary for a qualified worker, working at a normal pace, under capable supervision and experiencing normal delays, to perform a defined amount of work of a specified quality, while following acceptable trade practices. 106 Shutdown Turnaround Outage & Reliability Asset Management

124 Best-Practices Workshop Exercise Planning and Estimating Best-Practices Estimating (continued) c) Instructions The Definitive Estimate is established based on the partitioning of the Workscope (WBS) and therefore can provide detailed information by Process Unit and Equipment Type which is used for the following: Developing the Execution Schedule, Controlling the Budget and the Cash Flow Projection, Defining the price breakdown required for Fixed Price Bids, Defining the Lump Sum Estimate which is compared to the Fixed Price Bids, Manpower and Resource planning, Performance and cost analysis / trending / forecasting. To be effective, the Definitive Estimate must be based on Benchmarked Standards or Standard Estimating Units. The Estimator must understand what the Baseline (location, time of year, process unit, etc.) is for the estimating units and how to adjust the estimate when the conditions are different than the baseline conditions. The Estimator must thoroughly understand the material and equipment specifications, strip down and overhaul procedures, maintenance and construction work techniques and standard work activity definitions used to describe the Benchmark Standards and Standard Estimating Units. Definitive man-hour and cost estimates can be prepared using either integrated computer software programs such as Primavera, Icaris, electronic spreadsheets (Excel) or manually using pre-printed forms. Regardless of what system or software is used, it is important that the Estimator / Planner understands what the basis for the man-hour units are and how the program functionality is controlled to prepare an accurate estimate. Shutdown Turnaround Outage & Reliability Asset Management 107

125 Best-Practices Workshop Exercise Planning and Estimating Best-Practices Estimating (continued) d) Definitive Estimating Method Regardless of what system is used, the estimating method consists of a number of steps that must be followed in a defined order to prepare the Definitive Estimate: 1. Direct (Planned Man-hours) Direct Man-hours are defined as the man-hours (wrench time) involved for physically installing, repairing or maintaining installed equipment. Estimating the Direct (planned) Man-hours requires the Estimator to breakdown the Workscope into separate logical work activities (equipment logic network). The equipment logic network consists of work activities sequenced in a logical manner with the required resources defined for labour, materials, tools, permits and supplemental information related to each activity (work instructions, specifications, procedures, etc.). The Planner must then identify the optimum trade mix (crew) and define the timeline (duration) of each work activity. Large or complex activities must be separated into the individual trades that are assigned to each activity. The Planner or Estimator prepares the Direct (planned) man-hour estimate for each PJP by using one of two techniques: The quantity takeoff from Issued for Construction (IFC) drawings for each work activity multiplied by the Standard Estimating Units equals the man-hours for the activity. By determining the optimum crew to effectively execute the work, the duration of the activity can be determined. There are many sources of industrial standard estimating units available today (Page & Nations, Richardson Rapid System, Jacobs Canada Ltd., Icaris). It is important for the corporation to adopt one system or a combination of systems as the corporate standard for Labour Estimating Units and prepare a procedure describing how and when the Estimating units are to be applied. All the Estimators / Planners across the corporation should be trained in the proper use of this Standard. Over time, this will allow the corporation to benchmark productivity across various units within each facility and across all facilities as well as measure the productivity of one contractor against their peers. Man-hours = Quantity Takeoff X Estimating Unit Prepare the Benchmarked Equipment Strip Down and Overhaul Logic Networks for the Worklist Items based on historical records, industry studies, Third Party Consultants, etc. The logical sequence of activities, optimum crew and duration for each network determines the man-hours. 108 Shutdown Turnaround Outage & Reliability Asset Management

126 Best-Practices Workshop Exercise Planning and Estimating Best-Practices Estimating (continued) There are sources of industrial benchmarked equipment networks available today that can be used as a reference, however, the corporation should prepare their own Benchmark Equipment Network Standards using a standard template for each type of equipment. The corporation should prepare a procedure describing how and when the Benchmark Standards are to be applied. All the Estimators / Planners across the corporation should be trained in the proper use of this Standard. Over time this will allow the corporation to benchmark productivity across various process units within each facility, across the corporation and compare the results with other companies as well as compare the productivity of one contractor against another. 2. Productivity Factors Man-hours = Crew X Duration When Benchmark Standards or Standard Estimating Units are used to prepare the Direct Man-hour Estimate, Labour Productivity Factors may have to be applied to the baseline estimate to suit local conditions that are different from the conditions under which the baseline estimating units were developed. Accurate Labour Productivity Factors are developed from a review of past performance conducted under similar conditions and consulting various sources such as: Historical data from previous work packages, The specific process unit where the work activities are conducted, The average height at which the work will occur, The time of year when the work will occur, The proposed execution strategy. Three types of productivity factors must be considered to accurately assemble a realistic direct man-hour estimate: A. Factors based on the average trade skill, training, motivation, etc (e.g. height, complexity, environment, weather, overtime, shifting, congestion). B. Factors that adjust the man-hours to account for local geography, manpower availability, local skill level, competition, etc. C. Factors that adjust the man-hours because of the type of process unit being worked on or company policies (e.g. metallurgy, safework procedures, operating pressures and temperatures). Shutdown Turnaround Outage & Reliability Asset Management 109

127 Best-Practices Workshop Exercise Planning and Estimating Best-Practices Estimating (continued) Productivity Factors defined as Type A are well documented and are applicable for any location and are not process unit specific and consist of two types of factors: Plant Environment Factors that deal with the scope of the work package, Productivity Loss Factors that deal with the execution strategy. Productivity Factors defined as Type B are more difficult to define and require historical information on local bidding practices and knowledge of the local labour market. Type B Factors must be monitored regularly since they will change as local market conditions change. Productivity Factors defined as Type C use historical information that was used to develop the man-hour estimate for the work packages and the company policies and procedures that existed at that time. Once established, these factors remain fairly constant unless there is a change in company policy, e.g. change in permit issue or technical specifications. When considering Productivity Factors, the Estimator should review each discipline (civil, piping, electrical, etc.) or equipment network separately. For example, it may be necessary to add a Productivity Factor to the Piping man-hours in the Crude Unit because of the height restrictions but all other work activities may not require a height factor. The Direct Man-hours for the Definitive Estimate are calculated by multiplying the baseline man-hours from Step 1 by the Productivity Factor calculated in Step 2 Direct Man-hour Estimate = Man-hours X (1+Productivity Factor) 3. Labour Cost Rates per Man-hour Trade Labour Rates including all payroll benefits, shift premiums, subsistence and travel costs are calculated in accordance with local labour collective agreements for each trade used in the STO. The estimating program must be capable of calculating the cost of the trade man-hours summarized at the Work Order level. There are many ways to calculate and apply the cost of trade labour that are appropriate. The important thing is to recognize all the various cost components that exist and must be included in the Direct Labour Cost calculation. 110 Shutdown Turnaround Outage & Reliability Asset Management

128 Best-Practices Workshop Exercise Planning and Estimating Best-Practices Estimating (continued) Unit Labour Rates solicited from a contractor include Trade Labour Costs and may also include certain cost categories such as Indirect, Associated, Material, Rental, Overhead, Profit and Risk Allowance Costs depending on the requirements of the bid document. Care must be taken if Unit Labour Rates are substituted for Trade Labour Rates in preparing the Definitive Estimate. The Estimator must review the costs that are included in the Unit Labour Rate so there is no duplication in costs when applying historical factors to calculate Indirect and Associated Costs. Cost of Direct Man-hours = Direct Man-hour X Cost / Man-hour Rate (per trade) 4. Indirect Man-hours Indirect Man-hours are defined as the man-hours that are not directly related to the physical installation, repair or maintenance of installed equipment but are required for the orderly completion of the work. Indirect (Support) Man-hours and Costs generally track very closely to the Direct Man-hours and Cost. For this reason, the best practice is to determine the Indirect Man-hours / Cost as a percentage of the Direct Man-hours. By assigning Indirect allowances as a percentage of the Direct Man-hours, the cost estimate for all indirect cost categories will be automatically calculated. The Indirect Man-hour Cost will automatically be calculated each time the Change Management Process is used to adjust the plan, schedule and cost forecast as a result of Added, Extra and Cancelled Work during the Execution Phase. Historical cost information for each Process Unit should be used as the basis for the percentage applied to the direct man-hours for each Indirect Cost Category. For each STO, this historical value should be reviewed and adjusted if the STO Management Plan or execution strategy is different from previous STOs. Indirect Man-hour Estimate (each Cost Category) = Direct Man-hours X % (for the Cost Category) Cost Estimate for Indirect Man-hours = Indirect Man-hour X Cost / Man-hour Rate (by Cost Category) Shutdown Turnaround Outage & Reliability Asset Management 111

129 Best-Practices Workshop Exercise Planning and Estimating Best-Practices Estimating (continued) 5. Associated Costs Associated Costs include all miscellaneous cost components related to the infrastructure required to support the Direct and Indirect man-hours. Associated Cost Categories can be calculated as a percentage of the total cost of the STO costs that include Direct, Indirect, Materials, Purchase Orders and Rentals. This method however can lead to discrepancies if the value of materials and Purchase Orders varies greatly from STO to STO because of changes in the Workscope. The recommended approach is to calculate Associated Costs as a percentage of Direct Labour only. Historical cost information compiled by Process Unit should be used as the basis for the percentage applied to the direct man-hours for each Associated Cost Category. For each STO, this historical value should be reviewed and adjusted if the STO Management Plan of execution strategy is different from previous STOs. Cost Estimate for Associated Costs = Direct Cost X % (for the Cost Category) 6. Material Costs Material Costs are calculated by multiplying the quantity takeoff from drawings, sketches, etc by the unit rate per component. There should be wastage factors applied to certain types of material because some materials come in standard units, e.g. ready mix concrete, pipe, conduit, etc. that require an increased material quantity from that shown on the drawings. Other items such as heavy or multi-conductor electrical cable must be very carefully estimated to allow for bends and terminations so that no field splice is required. Specialty items such as NDE Inspections, Fabricated Components, Nonstock materials, etc., required specifically for the Workscope are procured using Purchase Orders and must be identified separately in the STO Cost Estimate. Material / P.O. Cost = Quantity X Unit Price 7. Major Rental Equipment Major Equipment is calculated either by estimating the rental cost of the equipment for a specified duration or as a percentage of the direct Labour Cost based on historical records. Rental Cost = Unit Price X Duration + Mob / Demob Cost and / or Direct Labour Cost X % (Rental Cost Category) 112 Shutdown Turnaround Outage & Reliability Asset Management

130 Best-Practices Workshop Exercise Planning and Estimating Best-Practices Estimating (continued) 8. The Definitive Estimate is the sum of the man-hours and cost for the following categories: Direct Labour Indirect Labour Associated Costs Material Costs Rental Equipment Costs 9. Contractors Overheads The Contractor will include in his rates an amount to cover his Overhead and Profit regardless of the type of contract executed (fixed price, unit rate, cost plus). Current information on the local market conditions, historical information on the bidding strategy of various contractors and the requirements for corporate support specified in the bid documents are used by the Estimator to determine what percentage to include in the total cost estimate for Overheads. The Contractor s Overhead may consist of items such as: Project Overhead: Personal Protective Equipment Small Tools Consumables Site Facilities (Offices / Lunchrooms, etc.) Vehicles Supervision, Safety, QC, etc. Administration, Timekeeping, etc. Corporate Overhead: Financing Cost Insurance Cost Bonding Cost Courier, Telephones, Computer, etc. Facilities Specific Support Items Shutdown Turnaround Outage & Reliability Asset Management 113

131 Best-Practices Workshop Exercise Planning and Estimating Best-Practices Estimating (continued) 10. Contractors Profit The Profit the contractor will apply to his cost will vary depending on market conditions, his backlog of secured work and how motivated he is to secure the work. Current information on the local market conditions and historical information on the bidding strategy of various contractors will help the Estimator decide what percentage to apply to the total cost estimate for Profit. 11. Contractors Risk Allowance The contractor in preparing to bid either Unit Rate or Fixed Price Work will assess the financial risks that exist in executing the Workscope. Items the contractor will consider when determining the financial risk include: Cash flow problems, Need for excessive corporate involvement, Excessive tools and consumable required, The amount of unbillable overtime for staff, Poor workforce performance, Unclear Workscope definition, Inclement weather, Unbillable rework, Potential warranty claims. The estimator using techniques such as the Monte Carlo technique will determine a low and high cost range for the Lump Sum Estimate based on past experience. Through analysis, an assessment of the contractors risk and confidence levels can be evaluated and the resulting risk allowance determined. 12. The Lump Sum Estimate, which is an attempt to forecast the most likely cost of a defined Workscope that will be executed by a contractor under a unit rate or fixed price contract, is the sum of the: The Definitive Estimate The Contractors Overhead The Contractors Profit The Risk Allowance 13. After completing the man-hour and cost estimate, the Estimator must review the Cost Estimate for content, check for unrealistic quantities and record and file all backup data 114 Shutdown Turnaround Outage & Reliability Asset Management

132 Best-Practices Workshop Exercise Planning and Estimating Best-Practices Estimating (continued) 14. The Cost Estimate is the final estimate that is used to prepare the Working and Control Budget. The Cost Estimate may be a combination of definitive estimates for the part of the Workscope executed by in-plant personnel and lump sum estimates for the part of the Workscope executed by contractors using fixed price or unit rate contracts. Control Budget = Cost Estimate + Contingency Allowance Shutdown Turnaround Outage & Reliability Asset Management 115

133 Exchanger Workshop Exercise Planning and Estimating Equipment Network Logic (graphical) 116 Shutdown Turnaround Outage & Reliability Asset Management

134 Workshop Exercise Planning and Estimating Field Planning Form (example) FIG PE1: The Field Planning Form allows Planners to gather the data required to create activities in the Planning Layout of their Primavera project. Shutdown Turnaround Outage & Reliability Asset Management 117

135 Workshop Exercise Planning and Estimating Assigning Planners by Planned Job Package FIG PE2: The Worklist showing Planner assignment and Planned Job Package status 1. Once the Asset Team has approved a Worklist Item the Lead Planner will assign a Field Planner to plan and estimate the Task and develop the Planned Job Package. 2. The Field Planner will then completes the contents page of the Planned Job Package to determine what information needs to be included, i.e., Operations, Safety, Environment, Inspection, etc. 3. As the Planned Job Package is completed a C is selected under the appropriate stakeholder department and the package completion percentage is updated automatically When the Field Planning Form is completed it will be reviewed by the Lead Planner before being entered into the Primavera project. It will then be included in the Planned Job Package for reference. 118 Shutdown Turnaround Outage & Reliability Asset Management

136 Workshop Exercise Planning and Estimating Field Planning Workshop Exercise You can use digital photos to add value to your Field Planning Form and insert them in the Planned Job Package. Purpose Estimate the activities and associated resources, materials, tools, procedures and supporting documentation required to safety and efficiently execute the work required to complete the task with quality. Objective Plan a Task using the Field Planning Form. Develop a Planned Job Package. Create Activities in the Primavera project. Steps 1. Create an Activity Code Value under Activity Code Work Order as < OPN/CLN/INSP and CHEM WASH>. 2. Create an Activity Code Value under Activity Code Equipment as <HT A LEAN OIL / RICH OIL (TOP) EXCHANGER>. 3. Fill in the Header Section of the Field Planning Form with the following information: Shutdown Turnaround Outage & Reliability Asset Management 119

137 Workshop Exercise Planning and Estimating Field Planning Workshop Exercise (continued) Steps (continued) Date Mar Planner Your name PJP No. 01-HT A Page No. 1 Work Order No Task Description OPN/CLN/INSP and CHEM WASH Task Type Insp Equip No. - HT A Equip Description - LEAN OIL / RICH OIL (TOP) EXCHANGER Area 2 Unit Train 1 System Process Equip Type - EXCH 2. Fill in the Planning and Estimating Section of the Field Planning Form with the activities and related information required to execute the Work Order. 3. Enter the Planning and Estimating Activities and related information into Primavera Project using the Planning Layout. 4. Complete the following form to initiate the Planned Job Package and related contents. 120 Shutdown Turnaround Outage & Reliability Asset Management

138 Workshop Exercise Planning and Estimating Field Planning Workshop Exercise (continued) Use the Field Planning Form to create the plan of activities (Activity Network) to complete the Work Order Task. Shutdown Turnaround Outage & Reliability Asset Management 121

139 Workshop Exercise Planning and Estimating Field Planning Workshop Exercise (continued) Use the Field Planning Form to create the plan of activities (Activity Network) to complete the Work Order Task. 122 Shutdown Turnaround Outage & Reliability Asset Management

140 Workshop Exercise Planning and Estimating Planned Job Package Cover Sheet 1 2 EXERCISE: Check the appropriate boxes for the required Department. Steps 1. Check the appropriate Yes or No box to indicate required Department. 2. Add any comments required by Department. Shutdown Turnaround Outage & Reliability Asset Management 123

141 Workshop Exercise Planning and Estimating Planned Job Package File Contents Checklist 2 1 EXERCISE: Check the appropriate Planned Job Package contents requirements. Steps 1. Check the appropriate Included or N/A box to indicate content requirements. 2. Write in the number of Activities in the right-hand corner box. 124 Shutdown Turnaround Outage & Reliability Asset Management

142 Workshop Exercise Planning and Estimating Planned Job Package Inspection Plan Checklist 1 EXERCISE: Complete the Inspection Plan Checklist for Details Attached. Steps 1. Complete Details Attached on the Inspection Plan Checklist as required. Shutdown Turnaround Outage & Reliability Asset Management 125

143 Notes Workshop Exercise Planning and Estimating Workshop Exercise Planning and Estimating 126 Shutdown Turnaround Outage & Reliability Asset Management

144 Section 9 Section 9: Resources Resources Objectives This section refers to the resources required to execute activities identified in the plan. You will learn to: Understand Best-Practices for resource management Identify the differences between labour, non-labour, materials and equipment resources Key Terms Direct Wrench-Hours Indirects Shutdown Turnaround Outage & Reliability Asset Management 127

145 Best-Practices Section 9: Resources Resources Best-Practices Purpose Understand how to plan, schedule and manage resources to increase worker efficiency and wrench-time to first-quartile targets. Optimum utilization of all resources to complete the identified turnaround work must be a key goal of the turnaround team. Simply planning and estimating the type and number of resources required to perform a specific task does not always mean that the resources identified will be capable of performing the work effectively and efficiently. A computerized software application can schedule resources and determine a number of factors; i.e., number and type of resources required by day, shift, equipment or area / unit / process. However, the absence of procedures and guidelines for utilizing and controlling the resources through effective leadership, management and supervision can create a ineffective environment for planning and work execution. To assist with utilizing and controlling the resources for each turnaround consistently and effectively, procedures and guidelines must be developed within the STO Management Process. Manpower resources are trained individuals, qualified and experienced in one or more craft disciplines, all with unique abilities and preferences when it comes to performing turnaround work execution tasks. Recognizing these abilities and preferences will greatly enhance turnaround performance. It is important to recognize that controlling and managing resources requires supervision that is knowledgeable and capable of leading others. Procedures and guidelines should be established for matching the knowledge and experience of leaders, managers, coordinators, supervisors and foreman with the work execution teams. Each turnaround, regardless of size, will utilize significant resources and their associated costs. Labour cost alone could amount to 90% - 125% of the overall turnaround cost. Utilizing these resources effectively requires information and data that must be identified with enough lead time for the Planners, Schedulers and STO Managers Team to develop an effective STO Work Execution Schedule. The resource requirements should be kept to a minimum which allow for enhanced safety, quality and cost control. Information and data must be continually supplied to the individuals managing the turnaround throughout the Work Execution Phase of the turnaround to monitor schedule, cost tracking and compliance. 128 Shutdown Turnaround Outage & Reliability Asset Management

146 Best-Practices Section 9: Resources Resources Best-Practices (continued) Best-Practices Plan all resources required to perform the activities for each Work Order Task including: Craft and Crew Size Materials Tools Equipment Work Documents & Procedures Resources are classified as Direct (wrench-time) and Indirect (overhead) Direct Wrench-pullers (Craftspersons) Indirect Supervision Tools Materials Equipment Work Documents & Procedures The most common reasons for poor worker performance are: Lack of qualified supervision Lack of planning and estimating (workers are waiting or searching for tools, materials, permits, etc.) Use common standard craft codes when estimating and planning. Remember, a Pipefitter is a Pipefitter there is no such thing as a Contract Pipefitter or Pipefitter Flint. Assigning who will be the pipefitter is a scheduling and coordinating function. This is planning. Planning is planning, not scheduling or coordinating. Shutdown Turnaround Outage & Reliability Asset Management 129

147 Best-Practices Section 9: Resources Resources Best-Practices (continued) Best-Practices Tool Identification and Control Procedures and guidelines must be established within the STO Management Process to identify and control sufficient quantities of quality tools that are required to perform safe, quality work Planners must identify tool requirements for each work package A lack of quality and specific tools contributes to poor worker performance, re-work and recordable injuries Scheduling software should be capable of managing and identifying tool requirements by, work order, equipment type, area, day, shift, peak usage, etc. Access to vendor or rental company tool databases will enhance the identification and control of tools. Import functions within the scheduling software will reduce data entry and increase accuracy Tools and their associated consumables must be established to support the workforce: Consumables required to allow tools and equipment to function properly. Consumables required to outfit craftspersons in order that the work can be carried out safely, effectively and efficiently with regard to worker s comfort and hygiene. Craftspersons must be qualified, certified or trained in the proper use of tools and related equipment Tool locations, gang boxes, etc. must be strategically located in order to reduce travel time Pre-STO, assign tools by equipment I.D. where practical 130 Shutdown Turnaround Outage & Reliability Asset Management

148 Best-Practices Section 9: Resources Resources Best-Practices (continued) Best-Practices Managing Off-site Services Off-site service contractors should be contracted to perform specialized turnaround maintenance tasks when the owner does not have the full-time resources or skills available to conduct the work. Off-site service contractors should be notified well in advance of the upcoming turnaround work to be executed. STO Planners must identify the tasks and associated off-site service requirements during work package development. Off-site service contractors should be qualified with respect to past performance, safety records, quality of work, etc. Audit and qualifications systems should be in place to ensure the safety of off-site workers and assets, as well as the quality and quantity of work performed. All off-site work must be monitored and updates of activity completions must be provided to the STO Managers Team, allowing them to manage the turnaround work schedule. Consideration must be given to off-site service logistics for pre-turnaround work and scheduled turnaround work requirements such as; preparation, removal, crating, shipping, pickup, delivery, installations, etc. Shutdown Turnaround Outage & Reliability Asset Management 131

149 Best-Practices Section 9: Resources Resources Best-Practices (continued) Best-Practices Labour Planning Rate Loaded Rate A loaded rate can be defined as any and all direct costs associated with putting an employee to work. A company may decide to include the various cost items that typically make up this man-hour cost at different steps in the estimating process. For example, the cost of payroll burdens may be included in the loaded rate but a global allowance for shift differential may be included as part of the indirects. What is important, is to recognize that various cost components exist and include them somewhere in the estimating process. Scheduling programs typically allow multiple rate tables for labour that is used to build and track detailed cost estimates. For example, the program may define one rate for all straight time hours and two rates for different overtime hours as follows: REG-Regular Work Day - All hours worked that day O.T.-Overtime Work Day - All hours worked that day based on labour agreement PREM-Overtime Work Day - All hours worked that day based on labour agreement Each rate entered into the Trade Rate Table which is based on the labour agreement in place is a Loaded Rate Loaded Rates typically consist of allowances for any or all of the following: Direct wage rate Allowances for all government and / or labour agreement payroll burdens Allowances for pay rate differential for apprentices, foreman, subforemen, etc. Short term rate uplifts Overtime premium based on labour agreements Subsistence and travel Shift differential 132 Shutdown Turnaround Outage & Reliability Asset Management

150 Notes Section 9: Resources Resources Shutdown Turnaround Outage & Reliability Asset Management 133

151 Section 9: Resources 134 Shutdown Turnaround Outage & Reliability Asset Management

152 Section 10 Section 10: Developing Stakeholder Strategies and Plans Developing Stakeholder Strategies and Plans Objectives This Section demonstrates how to develop strategies and plans for each Stakeholder Department and Functional Area. You will learn to: Schedule Strategy Workshops Develop a Strategy Establish a Plan Communicate the Strategies and Plans Key Terms Strategy Workshop Strategies and Plans Shutdown Turnaround Outage & Reliability Asset Management 135

153 E x Best-Practices Section 10: Developing Stakeholder Strategies and Plans Developing Stakeholder Strategies and Plans Best-Practices Use a formalized process for developing Stakeholder and Functional Area strategies and plans Schedule Strategy Workshops to brainstorm and develop the strategies and plans Strategies and Plans must be developed for all Stakeholder Departments: Operations Shutdown/Start-up Permitting Blinding Cleaning/Catalyst/De-coke Maintenance Rotating E/I Stationary Inspection/Technical QA/QC/Corrosion/Erosion Testing Materials Management Contracting/Procurement Safety/Environment Engineering Administration Strategies and Plans must be developed for all Functional Areas: Logistics Mobilization/Demobilization Trailers/Janitorial/Garbage/Transportation/Plot Plans/Parking Communications Meetings Radios Stationary Execution Shift Schedules Consumables/Free Issue Planning/Scheduling Training Project Controls Cost Collection Time Keeping Security Leak Detection Developing Stakeholder Strategies and Plans Best-Practices 136 Shutdown Turnaround Outage & Reliability Asset Management

154 Section 10: Developing Stakeholder Strategies and Plans 14.2 Environment Strategy (Workshop) Key Deliverables: (What? Goals) 1 Zero environmental impact Objectives: (How to achieve the Key Deliverables) 1a Zero spills 1b Zero contraventions 1c Utilize disposal management procedures 1d Adhere to TLM guidelines 1e Comply to the Safety Management Plan 2a 2b 2c Strategies: (How to achieve the Objectives Established as Tasks) No Task Description Responsibility Target Date 1 Develop a disposal management procedure Dan Feb 28, 08 2 Conduct orientation and training Dan May 31, 08 3 Update Waste Disposal Matrix Veronica Feb 28, 08 4 Develop spill containment procedure Dan Feb 28, 08 5 Develop fugitive emission procedure Dan Feb 28, 08 6 Notify EUB, SRD and Alberta Boilers, AENV Jim May 24, 08 7 NORM s control procedure Dan May 24, 08 8 Onsite containment procedure Dan Feb 28, 08 9 Develop an Environmental Audit Checklist for execution Veronica May 24, Review Safety Management Plan Dan April 12, 08 Shutdown Turnaround Outage & Reliability Asset Management 137

155 Exercise Section 10: Developing Stakeholder Strategies and Plans Developing Stakeholder Strategies and Plans Best-Practices Establish the Safe Work Permit Strategy for a Process Outage STO 14.2 Safe Work Permits - Strategy (Workshop) Key Deliverables: (What? Goals) Objectives: (How to achieve the Key Deliverables) 1a 1b 1c 2a 2b 2c 2d 2e 3a 4a 4b Strategies: (How to achieve the Objectives Established as Tasks) No Task Description Responsibility Target Date Shutdown Turnaround Outage & Reliability Asset Management

156 Training Section 10: Developing Stakeholder Strategies and Plans Developing Stakeholder Strategies and Plans Best-Practices Orientation and Training Program Guide Table of Contents: Orientation Sessions: Mission STO Philosophy and Mission Statement (KPI s) Communication and Logistics Plan Safety Management Plan / ProAct / Performance Awards Execution Strategy (Plant) Execution Strategy (Field) Tools and Equipment Management Strategy Electrical / Instrumentation Camp / Accommodations Plan Safe Work Agreement Strategies and Procedures (Confined Space) Security / Transportation and Parking Training Sessions: Decommissioning / Commissioning Strategies and Procedures (Plant) Decommissioning / Commissioning Strategies and Procedures (Field) Materials Management Strategy and Procedures Blinding Strategies and Procedures Time Keeping and Administration Cleaning Strategies and Procedures (Plant) Cleaning Strategies and Procedures (Field) Resource Management Strategy and Schedule Management Work Packages and Work Order location Plot Plans and Procedures Orientation and Training Schedule Summary Attachments: a) Mission Statement / Key Performance Indicators and Targets b) Shift Schedules c) Meeting Schedules d) Scope of Work Document e) Master Schedule Milestones (execution timing) f) List of Contractors Shutdown Turnaround Outage & Reliability Asset Management 139

157 Section 10: Developing Stakeholder Strategies and Plans Developing Stakeholder Strategies and Plans Best-Practices Milestone Scheduling showing Strategy Workshop Schedule Strategy Workshops Prepare the attendance and agenda sheet Ensure the STO Manager / Coordinator or Project Manager facilitates each Strategy Workshop Conduct the Strategy Workshop Use the formalized Strategy Workshop Document and record all information Place any tasks identified during the Strategy Workshop on the Milestone Schedule Ensure each Strategy Workshop document is filed correctly Establish the Orientation and Training Program Guide to ensure everyone is provided with the information resulting from the Strategy Workshop 140 Shutdown Turnaround Outage & Reliability Asset Management

158 Notes Section 10: Developing Stakeholder Strategies and Plans Developing Stakeholder Strategies and Plans Shutdown Turnaround Outage & Reliability Asset Management 141

159 Section 10: Developing Stakeholder Strategies and Plans 142 Shutdown Turnaround Outage & Reliability Asset Management

160 Section 11 Section 11: Shutdown/Start-up Plans Shutdown/Start-up Plans Objectives This Section describes some of the best-practices to be considered when establishing the Shutdown/Start-up Strategies and Plans. You will learn to: Establish a realistic Shutdown Plan Establish a realistic Start-up Plan Establish the Shutdown/Start-up Strategy Determine Pre-STO Strategies and Plans Key Terms Shutdown Start-up Pre-STO Shutdown Turnaround Outage & Reliability Asset Management 143

161 Best-Practices Section 11: Shutdown/Start-up Plans Pre-STO Strategy Best-Practices It is essential that the Pre-STO Strategy maximizes the amount of work executed before the Feed / Oil-out / Shutdown Date in order to reduce the peak manpower required during the outage and minimize congestion in the Process Units. The STO Management Team must use the Pre-STO period to establish the infrastructure and logistics and mobilize the Contractors and Service Providers required to support the STO Execution Strategy. Procedures established to manage the schedule, progress / cost status, change management and control the execution work activities are initiated during the Pre-STO phase. Work activities such as pipe fabrication, scaffold installation, insulation removal, temporary piping, blind hanging, valve tagging, hot bolting and the majority of capital civil / structural work must be scheduled and executed using the established work management process. The STO Management Team must ensure all Pre-STO activities are completed prior to the Feed / Oil-out / Shutdown Date. The STO Team must maximize the amount of STO workscope activities that are executed Pre and Post STO (approximately 40% of STO workscope should be executed outside the outage). The Logistics Plan developed during the Workscope Development Phase must be implemented effectively during the Pre-STO Phase to ensure all resources, facilities, utilities and systems are ready by the Feed / Oil out / Shutdown date. The STO Management Process for the Execution Phase must be implemented for all pre-sto work activities including detailed daily scheduling (Daily Shift Reports), progress and cost status reporting and workscope change management. The mobilization of the workforce must be effectively controlled during pre- STO to ensure the required manpower is orientated, equipped with tools, PPE and training and ready to work as defined by the Daily Shift Schedule. All procedures, systems and processes related to Operations activities must be implemented and fully functional during pre-sto activities including update of Blind Boards / Tags, Permit Issue Facilities and Blind Bins / Racks The execution strategy for supplemental activities required to support the execution of the PJP workscope must be detailed in the equipment planning networks. The following Best-Practices must be incorporated into the pre- STO execution strategy. 144 Shutdown Turnaround Outage & Reliability Asset Management

162 Best-Practices Section 11: Shutdown/Start-up Plans Pre-STO Strategy Best-Practices (continued) Temporary Lines Installation of steam out and drain lines, etc. is a Pre-STO activity, Consider using a trailer for transporting temporary lines / fittings, etc. to a common laydown location, Temporary lines that are installed / removed frequently should be paint coded. Consider permanent installation like steam out swing elbows, Identify and tag paint code tie-in locations, Temporary line size and locations should be identified at the activity level in the Planned Work Packages, Develop process unit and equipment temporary line lists complete with tie-in locations identified, Re-use pre-fabricated temporary lines and fittings. When possible, identify by process area and equipment. Store in a dry location, Use temporary removable insulation for personnel protection around hot temporary lines, Removal of steam out and drain lines, etc. is a Post-STO activity. Blinding Consider blinding board or similar system and sign-off by Maintenance and Process after installation and removal, Identify, tag and locate blinds and gaskets at blind points, Consider color coding flanges and gasketing according to pressure rating and material specification, Consider utilization of transportable blinding trailer or common laydown location, Identify test / entry / battery limit blinds install the correct blind (i.e. test or entry) the first time, Insulation removal at blinding points is Pre-STO activities. Consider insulation clearance for stud bolting, When frequently installing or removing blinds at the same location, consider using spectacle blinds, Equipment blind locations should be identified at the activity level in the Planned Work Packages. Ensure wrench / socket sizes are identified, Develop process unit and equipment blind lists. Assign size, rating and location identification. Shutdown Turnaround Outage & Reliability Asset Management 145

163 Best-Practices Section 11: Shutdown/Start-up Plans Pre-STO Strategy Best-Practices (continued) Scaffolding Consider utilization of transportable scaffolding / fittings trailer or common laydown location, Where possible use frame scaffolding rather than tube and clamp scaffold, Installation of scaffolding is a Pre-STO activity depending on process restrictions in operating process units, Cut scaffold plank toe board requirements, etc. Pre-STO, Identify engineered scaffold requirements Pre-STO, Consider using scissor lifts or moveable platform scaffolding where practical, Scaffold locations should be identified at the activity level in the Planned Job Packages. Identity quantities / lifts required, removal of scaffolding that does not interfere with process or safety infringements is a Post-STO activity, Scaffolding wherever possible should be managed by the Prime Contractor. Insulation Removal of insulation is a Pre-STO activity where practical, For insulation removed / installed from equipment on a regular basis consider using portable blankets or similar, Develop insulation clean up and disposal procedure. Consider using disposal bucket, etc. Ensure permission received for disposal, Re-use insulation where practical. Consider costs, i.e. thermoglass, Develop and implement an asbestos handling policy and procedure. Obtain Disposal Permit, etc. Pre-STO, Use temporary insulation rather than delay STO start-up, Install insulation Post-STO where practical, Consider installing insulation metal wrap Post-STO, Encourage insulators to conduct their own clean up at time of insulation removal, Insulation wherever possible should be managed by the Prime Contractor. 146 Shutdown Turnaround Outage & Reliability Asset Management

164 Best-Practices Section 11: Shutdown/Start-up Plans Pre-STO Strategy Best-Practices (continued) Materials Bag and tag major material (not studs, nuts, etc.) by equipment or job number not by activity, Identify and reserve / order well in advance of STO. Verify requirements and identify max / min quantities, Free issue where practical, Use a Lazy Susan for screw pipe fitting, free issue, and located close to process unit, Store gaskets, etc. close to STO process areas, Consider utilization of transportable gasket trailer release main heat exchanger gaskets only when ready to push bundle, Establish pre-fabricated material laydown facilities, Ensure hydro testing and stress relieving of pre-fabricated piping, etc. is completed Pre-STO when possible, Material requirements should be identified at the activity level in the Planned Job Packages, Provide a common pickup area for all transportable materials consider dedicated truck / crew to deliver material, Materials that will be recycled should be identified Pre-STO and a handling procedure should be prepared, Develop and implement a hazardous waste policy and procedure. Tools Tool by major equipment, Hang air hoses / oilers / tuggers, etc. on columns and towers Pre-STO, Tool requirements should be identified at the activity level in the Planned Work Packages (ensure wrench / socket sizes are identified), Establish tool requirements list for Pre and Post-STO, Establish tool storage (gang boxes) by equipment. Assign responsibility at the foreman level, Use gate security checks to reduce theft because tool check out systems are uneconomical, Conduct Department of Labour hoisting cable / chainfall, etc. inspections Pre-STO, Build temporary work benches, etc. and place adjacent to the work area such as compressor platform, etc. Assign specialty tools to separate gang boxes, Lubricate and check that all permanently installed davits, monorails, pulleys, etc. are in good working condition. Shutdown Turnaround Outage & Reliability Asset Management 147

165 Best-Practices Section 11: Shutdown/Start-up Plans Pre-STO Strategy Best-Practices (continued) Major Equipment Rentals Identify equipment rental requirements Pre-STO, Establish major equipment site locations such as six pack welder, etc. Define major equipment access and clearances, etc., Monitor equipment rentals on and off site, and record costing, etc., Large turnarounds may require Logistics Coordinator for cranes heavy equipment, etc., Equipment rental requirements should be identified at the activity level in the Planned Job Packages, Develop engineered safe lifting studies and procedures Pre-STO, Develop fuelling and rental equipment maintenance schedule Pre- STO, Conduct Department of Labour hoisting cable / chain-fall, etc. inspections, Ensure permitting i.e. safe load transportation are in place Pre-STO, Notify Ministry of Transportation and Utilities of major equipment movement, etc. Pre-STO. 148 Shutdown Turnaround Outage & Reliability Asset Management

166 Best-Practices Section 11: Shutdown/Start-up Plans Shutdown/Start-up Plans Best-Practices The method used to effectively de-inventory and isolate the Process Units from other operating units, blind and clean / prepare equipment for inspection and maintenance has a significant impact on the STO schedule. The Shutdown Fed / Oil Out Phase represents a significant portion of the overall duration of the STO Execution Phase. Every shutdown activity must be reviewed in detail by Operations assisted by Technical and Maintenance to minimize the duration from Feed / Oil Out to the date when permits to begin the maintenance activities can be issued. The strategy to decommission, isolate, evacuate and decontaminate Process Units must consider and manage the following issues: Sequence all shutdown activities using a documented, systematic work breakdown structure to ensure all items are addressed and provide the structure for the job safety analysis, Prepare a written plan / schedule of all shutdown activities using critical path method (sequence, duration, resources) to provide Operations with the opportunity to develop and achieve reasonable schedule targets, Integrate the shutdown plan into the master plan and control the schedule using the Daily Shift Report, Define the communication method that will be used between Maintenance and Operations and for Operations turnover between shifts to eliminate any miscommunication, risk and hazards associated with these critical activities, Identify all activities requiring Maintenance support to Operations to ensure resources are allocated during mobilization planning without effecting other scheduled activities. The Shutdown Feed / Oil Out Plan must identify: The process system that is being prepared, The Area and Unit where the process system exists, Any sub-system(s), The Equipment related to the system, The activities required to prepare the process system for inspection and maintenance activities, All tools and related materials required to perform the activities, All Maintenance support manpower requirements, All support services i.e. nitrogen trucks, vacuum trucks, etc. Shutdown Turnaround Outage & Reliability Asset Management 149

167 Best-Practices Section 11: Shutdown/Start-up Plans Shutdown/Start-up Plans Best-Practices (continued) PURPOSE. The method used to effectively leak test, deblind, purge, pressurize, verify system integrity and introduce feed has a significant impact on the STO schedule. The Startup Feed / Oil In Phase represents a significant portion of the overall duration of the STO Execution Phase. Startup is more critical than shutdown since there exists a risk for leakage during startup and any physical alterations that have been completed may affect the operating characteristics of the Process Unit. Every startup activity must be reviewed in detail by Operations assisted by Technical and Maintenance to minimize the duration from Feed / Oil In to the date when the Process Unit is stabilized and normal Operations are established. The strategy to deblind, purge, pressurize, verify system integrity and commission Process Units must consider and manage the following issues: Sequence all startup activities using a documented, systematic work breakdown structure to ensure all items are addressed and provide the structure for the job safety analysis, Prepare a written plan / schedule of all startup activities using critical path method (sequence, duration, resources) to provide Operations with the opportunity to develop and achieve reasonable schedule targets, Integrate the startup plan into the master plan and control the schedule using the Daily Shift Report, Define the communication method that will be used between Maintenance and Operations and for Operations turnover between shifts to eliminate any miscommunication, risk and hazards associated with these critical activities, Identify all activities requiring Maintenance support to Operations to ensure resources are allocated during demobilization planning without effecting other scheduled activities. The Startup Feed / Oil In Plan must identify: The process system that is being prepared, The Area and Unit where the process system exists, Any sub-system(s), The Equipment related to the system, The activities required to prepare the process system for commissioning and startup, All tools and related materials required to perform the activities, All Maintenance support manpower requirements, All support services i.e. nitrogen trucks, pre-sulphiding, passivation, etc. 150 Shutdown Turnaround Outage & Reliability Asset Management

168 Notes Section 11: Shutdown/Start-up Plans Shutdown/Start-up Plans Shutdown Turnaround Outage & Reliability Asset Management 151

169 Section 11: Shutdown/Start-up Plans 152 Shutdown Turnaround Outage & Reliability Asset Management

170 Section 12 Section 12: Blinding Blinding Objectives This Section describes how process blinding and lockout/tagout processes must be established with supporting policies, procedures and tools. You will learn to: Establish and effective Blinding Process Determine where to blind, what to blind, and blind types How to establish zero-energy and control the work environment How to prepare for the blinding activity to ensure efficiency Key Terms LOTO Blind List Blind Tag Zero-Energy Shutdown Turnaround Outage & Reliability Asset Management 153

171 Best-Practices Section 12: Blinding Blinding Best-Practices etc. A formalized process for process islolation and zero-energy supported by policies, procedures and management tools must be established and implemented thourougly to ensure a safe work environment. The blinding phase is a high-risk phase than can impact safety, environment, schedule and cost Establish a formalized process for LOTO management and control Know the policies and regulations regarding Close Vessel Blinding Prepare blind locations by stripping insulation, removing and cleaning studs, hanging blinds, hanging gaskets, erecting scaffolding Educate everyone on the policies and procedures for blinding, lock-outs, seals and de-blinding Ensure consistent use of the blind system across all work types, i.e., maintenance, turnaround, projects, Each area is responsible for controlling and tracking the blinding process Establish blinding as part of the Planned Job Package Determine which type of blinds are required, i.e., isolation, pressure, testing, etc. Conduct an inventory of blinds on-hand Build unit specific blind racks to store blinds Establish the LOTO strategy, policy and procedure early and ensure sufficient locks and chains are ordered 154 Shutdown Turnaround Outage & Reliability Asset Management

172 Notes Section 12: Blinding Blinding Shutdown Turnaround Outage & Reliability Asset Management 155

173 Section 12: Blinding 156 Shutdown Turnaround Outage & Reliability Asset Management

174 Section 13 Section 13: Performance Reporting Performance Reporting Objectives This Section describes how to establish performance reporting, Key Performance Indicator status, trending and data display. You must understand how to: Establish performance reports Capture real-time data Trend data Establish a performance reporting process Establish corrective action Key Terms Performance Reports Performance Factors Trending Performance Measures Shutdown Turnaround Outage & Reliability Asset Management 157

175 Best-Practices Section 13: Performance Reporting Performance Reporting Best-Practices Accurate performance reporting is critical to the overall success of the turnaround. If you don t know where you are, compared to where you thought you d be, you re basically lost, or out of control. Use the Milestone Schedule to report performance (Readiness) each week at the Core Team Meeting Report performance every 24 hours during Execution Phase Schedule a daily performance review meeting with Core Team during the Execution Phase Based on the status of each Key Performance Indicator Try to keep all data displayed as visual charts with tabular backup Try to keep all data displayed on one hand-out Save a copy each day for trending Establish trending analysis and run what-if scenarios to determine the best solution to poor performance Increase work hours Decrease work Extend duration SWAT Team Add equipment / resources Use Earned Values to track schedule progress Use Actual Values to track cost and resource utilization Ensure data update from the field are accurate Only use data updates from the field when they are brought in from the Three Amigos on the Daily Shift Schedule and Daily Shift Timesheets 158 Shutdown Turnaround Outage & Reliability Asset Management

176 Best-Practices Section 13: Performance Reporting Performance S-Curves Use a combination S-Curve Performance Graph to demonstrate real-time status of cost and schedule. Shutdown Turnaround Outage & Reliability Asset Management 159

177 Best-Practices 09/06/ /06/ /06/ /06/ /06/ /06/ /06/ /06/ /06/ /06/ /06/ /06/ /06/ /06/ /06/2006 $M 09/06/ /06/ /06/ /06/ /06/ /06/ /06/ /06/ /06/ /06/ /06/ /06/ /06/ /06/ /06/2006 Wrench Hours Section 13: Performance Reporting One Page Performance Report Use a One Page Performance Report for your Daily Management Meeting during the Execution Phase of the STO. Project Status Graph Planned Wrench Hours Earned Wrench Hours Found Work Date Turnaround Statistics 19/04/2008 To Date Resources People on Site 341 N/A Contractors on Site 57 N/A Total Loss Management (refer to note 1) Green Cards Safety Incidents 2 11 Safety Accidents 0 1 Lost Time Accidents 0 1 Spills 0 12 Recordable Spills (spills Found Work (refer to note 2) 0 4 Refractory Valves/Rotating/Other Tray Repairs Vessel Repairs Total 52 Cost Status Graph Critical Work Risk Impact on Schedule Reason Response Reactor Isolation #2 Regenerator Repairs No. 2 Sulfreen Reactor Med High High None 1 Day Unknown Timing Tray Damage N2 Freeze / Cracking Double Crews Hotshot Trays Isolate Vessel Slug Tank Buner Management System Med Med None None Damaged Tank Shop Repair Delivery Isolate - Decom Sheila will push Delays Process Decommissioning (Liquids / High LEL's) Resource Utilization (Inexperience / Scheduling / Safety Management / Process Restrictions) Weather (Rain / Lightening) Contract Services (Ceda Chemical could only supply one crew) Note: 1 Incidents include: Hazards, Near Misses, and First Aid - Accidents include: Events, i.e., MVA's Note: 2 Found work affects the budget as no found work contingency was estimated in the original budget Note: 3 Actual costs are not accurate - delays in receiving timesheets and invoices is being addressed Control Budget Actual Cost Revised Budget Date 160 Shutdown Turnaround Outage & Reliability Asset Management

178 Notes Section 13: Performance Reporting Performance Reporting Shutdown Turnaround Outage & Reliability Asset Management 161

179 Section 13: Performance Reporting 162 Shutdown Turnaround Outage & Reliability Asset Management

180 Section 14 Section 14: Reliability Asset Management Reliability Asset Management Objectives This Section provides the participant with an understanding of the Reliability Asset Management Program (RAMP). You will understand: The RAMP Model Design & Engineering Asset Management Strategies Work Management Resource Management Performance Management Key Terms Process Availability Equipment Reliability Key Performance Indicators Reliability Centered Maintenance Shutdown Turnaround Outage & Reliability Asset Management 163

181 Best-Practices Section 14: Reliability Asset Management Reliability Asset Management PURPOSE This guideline outlines the methodology that must be followed to ensure an effective Reliability Asset Management Program is utilized at each Facility. The Reliability Asset Management Program is a comprehensive approach to managing physical assets for maximum sustainable reliability at the minimum cost. The prize for an effective Reliability Asset Management Program is Operational Reliability that not only relies on Asset Reliability / Maintainability, but also on Process Availability and the capability of personnel to consistently perform their functions effectively and efficiently (Human Reliability). BEST PRACTICES The Reliability Asset Management Program for each Facility is a critical component of the Asset Management Process. Ensure Corporate Management understand the content of each Facility s Reliability Asset Management Program and agree to the expected outcome in terms of Operational Availability and the cost. The Reliability Asset Management Program is managed by the Reliability Engineering Group but actively supported and reinforced by the major stakeholders in the Asset Management Process - Operations, Technical and Maintenance Groups (OTM)). Ensure the Asset Management Process, Statutory, Regulatory; Corporate Standards and accurate asset historical records enable competent, qualified personnel to develop an effective Reliability Asset Management Program. Ensure all asset items are ranked according to criticality before determining the most appropriate strategies for Asset Maintenance, Turnaround Intervals, Spare Parts Inventory, Training and Process Operations and the appropriate priority for Work Orders. The Reliability Asset Management Program requires an effective CMMS to manage the Asset Register; The Asset Register must be capable of interfacing with the Materials Management, Work Management and Technical modules (RBI Inspection Program, Failure Analysis, etc.). Ensure techniques such as RCM (Reliability Centred Maintenance), FMEA (Failure Modes and Effects Analysis), RBI (Risk Based Inspection), TPM (Total Productive Maintenance) and PSM (Process Safety Maintenance) are well understood and effectively applied. All OTM personnel should be trained in the basic concept of the Asset Management Process and understand how the activities and programs that form the Asset Maintenance Strategy are designed to ensure asset reliability and availability. Use the Long Range Maintenance Program schedule and cost information to determine the Long Range Asset Management Budget. 164 Shutdown Turnaround Outage & Reliability Asset Management

182 Best-Practices Section 14: Reliability Asset Management Reliability Asset Management cont d GUIDELINE There are five interdependent elements that combine to make the Reliability Asset Management Program (RAMP) effective: Design and Construction Process Asset Maintenance Strategy Selection Process Operate and Maintain Processes Defect Elimination Process Optimization Strategy Process This guideline will briefly describe each of the five key elements that contribute to the effectiveness of the RAMP. Design and Construction The reliability of an asset is often pre-determined by the decisions made in the design and construction phase. The Design Review utilizes Life Cycle Costing to optimize the project, i.e. meet the business need and process availability while ensuring asset reliability. Reliability is integrated into the design through the processes of reliability modelling, reliability review, and Failure Mode and Effect Analysis. Such things as: asset target run-life, desired process unit or asset uptimes, expected unit Turnaround intervals, asset criticality, risk based inspection, etc. should be defined and the design developed to meet the overall long term process unit and plant throughput goals. By considering what Asset Maintenance Strategy is required, designers have the option of modifying the design of the Process to reduce the asset criticality. Reducing the criticality will impact the Maintenance Strategy that is required. (Maintainability Analysis) Procurement secures the materials and assets for construction in the most cost effective manner while not sacrificing asset specifications, material integrity or life cycle cost considerations. To minimize failures, reliability concepts must be incorporated into construction practices or standards, e.g. maximum asset vibration levels, piping to equipment alignment tolerances, vessel / exchanger stud torquing, rotating equipment alignment criteria, sheaves alignment and belt tightness criteria, grouting practices, pipe stress standards, etc. Specify what asset commissioning tasks must be performed prior to operational service e.g. flushing piping, installing start up screens, solo-run equipment, refractory curing, proper equipment labelling etc. Develop specific asset start-up / shutdown procedures and ensure adequate and effective training is provided. Shutdown Turnaround Outage & Reliability Asset Management 165

183 Best-Practices Section 14: Reliability Asset Management Reliability Asset Management cont d Asset Maintenance Strategy Selection Process This process involves understanding how and why an asset fails to perform as specified and determining which proactive asset reliability strategies will cost effectively detect, reduce or eliminate the probability and consequence of failure. Criticality Analysis is conducted to identify and rank the assets that are critical to the business and to ensure the optimum level of maintenance is conducted on the assets that have the most direct impact on the business. Ranking each asset into one of three Criticality Levels is the first step in defining the Asset Maintenance Strategy. The Guideline Asset Criticality Ranking (FMEA) explains the method used to determine the level of criticality for each asset. The criticality is defined by ranking the consequence of failure for four factors (Production Loss, Cost, Environmental and Safety Implications) against the probability of failure during a specified time interval). The criticality ranking assigned to each asset is also used during the Work Request Validation Process as a guide when defining Work Order Priority The Asset Maintenance Strategy applied to static assets is called Risk Based Inspection (RBI). Conducting RBI evaluates the condition of the pressure boundary for each asset and recommends the inspection and maintenance levels required to ensure mechanical integrity. The RBI program analysis takes into account the following type of factors to develop risk based inspection plans and inspection intervals: code of construction, process operating conditions, corrosive / erosive elements and concentrations, deterioration mechanism(s), years in service, original thickness, corrosion / erosion rates, and historical inspection frequency and results. Based on these factors the consequence and probability of failure is calculated to determine the total risk. Based on analyzing the degree of risk associated with the asset, an Asset Maintenance Strategy and the required level of inspection and inspection frequencies are determined for the asset. The level of inspection and maintenance activities may require the asset to be removed from operational service (Turnaround). The information is then used to determine the long range Turnaround outage plans and schedules for the Process Unit. The Asset Maintenance Strategy applied to dynamic assets is called the Equipment Strategy Analysis Process (ESP). Conducting an effective analysis requires applying traditional Reliability Centered Maintenance concepts including identifying functional definitions for equipment, functional failures, failure modes and causes and the expected functional life (Failure Modes and Effects Analysis FMEA). For each function, FMEA analysis involves examining the ways that the asset can fail to deliver its expected functions for the business and then to develop methods to predict, reduce or eliminate these failures. For example, the expected functions of most pumps are to deliver a defined quantity of liquid at the pump's discharge within established pressure limits, and to do so without leaking any of the pumped liquid into the environment. If the pump does not meet any of these functions, a functional failure occurs. Once the functions are established, the ways that failures of these functions can occur are listed. Some ways that a pump can fail would be a leaking seal, internal wear of components, lack of lubrication of moving surfaces, etc. 166 Shutdown Turnaround Outage & Reliability Asset Management

184 Best-Practices Section 14: Reliability Asset Management Reliability Asset Management cont d After the RBI and FMEA analysis have been completed the asset is assigned a criticality ranking, based on the criticality assigned, a Maintenance Strategy is selected that will predict, reduce, eliminate or accept failures. There are numerous strategies that must be considered: Maintenance Strategy On-Stream This strategy involves performing specific activities, which will assist in achieving optimum asset life. These activities, designed to mitigate the identified failure modes identified in the RBI and ESP analysis include Preventive Maintenance (PM), Predictive Maintenance (PdM), Corrective Maintenance (UCM / SCM) and in some cases Plant Change (PC) Refer to Section 16 Reliability Management Practices. For A critical assets, conducting a RBI / FMEA Analysis will dictate which strategies and plans are used to establish the Planned Maintenance Program for the asset. For other levels of criticality, the strategies and plans are established based on the manufacturer s recommendations and regulatory requirements. Procedures and practices to ensure the workforce performs these activities efficiently must also be developed Refer to Section 17 Planning Practices and Work Procedures. Turnaround Strategy Off-Stream The Asset Maintenance Strategy and Risk Based Inspection Program (RBI) and other programs such as Risk / Cost Benefit Analysis and Turnaround Interval Optimization are used to establish the optimum schedules for conducting the outage intervals for individual assets and Process Unit Turnarounds without compromising mechanical integrity or safety. The schedules are then used to establish the Reliability Asset Management Program and Long Range Asset Management Budgets for the Facility. Spare Parts Strategy The Spare Parts Strategy is used to define the stock levels for asset spare parts and is based on asset criticality, standardization, interchangeability, days to deliver parts, carrying costs, max / min quantities, etc. The strategy must consider future asset degradation factors that are identified in the Long Range Risk Based Inspection Program (RBI) and the Equipment Strategy Analysis Process (ESP). Critical components and materials that are difficult to procure must be considered when deciding the spare part stocking levels. Unique stock codes are assigned to the components and documented in the asset s Bill of Materials filed in the Computerized Maintenance Management System. CMMS). The CMMS is then used to determine interchangeability across the various components before maximum (max) and minimum (min) stock levels are established. The CMMS material module continuously monitors the component usage and the stocking levels are adjusted (at least annually) Shutdown Turnaround Outage & Reliability Asset Management 167

185 Best-Practices Section 14: Reliability Asset Management Reliability Asset Management cont d Training Strategy The training strategy must be effective for operations, maintenance, and technical personnel to enable certification and qualification of the individuals. The training strategy defines the training and orientation programs that are required for specific and general repair procedures and the application of preventive / predictive maintenance techniques. The maintenance personnel should be trained in specific functionality and failure modes for the A critical assets. For B & C critical assets, the training is based on generic maintenance procedures and techniques. Operator training must focus on the normal Process Unit and individual asset design and operating parameters with emphasis on the specific upper / lower operating limits and the start-up / shutdown procedures. Operational Strategies For A & B critical assets, specific equipment operating parameters with specific upper / lower limits must be established. Instrumentation is typically installed to control / monitor, alarm and shutdown the assets when the operating parameters are exceeded. Specific start-up / shutdown and operating procedures must be developed for these assets. For C critical assets, general operating procedures are utilized. Based on the Maintenance Strategy selected, a specific Planned Maintenance Program (PMP) is established for each asset item. These PMP s are input into the Computerized Maintenance Management System (CMMS) and other Asset Care Programs (e.g. Vibration Monitoring Program, Ultra-pipe, etc.) to enable activities to be scheduled and executed through the Work Order Management process. The CMMS will automatically schedule the planned maintenance activities that are designated PM and PdM as part of the 52 Week Planned Maintenance Schedule (Date / Cycle Time). The CMMS will automatically schedule the planned maintenance activities that are designated SCM based on the priority assigned to any Work Order associated with the asset. Identified work activities on Assets that are candidates for Plant Change are forwarded to the Technical Department for consideration. Identified work activities on assets that require a Process Unit Outage are compiled on the Worklist for the next Process Unit Turnaround. A Planned Maintenance Program for an asset may also include many visual maintenance inspection activities that are managed as part of daily or weekly routines controlled by Standing Work Orders. It is important that any defects or abnormalities identified when executing maintenance activities on an asset are reported as part of the Work Order Closure process. The maintenance strategy for the asset is updated as new performance data and defect elimination findings are recorded during Work Order Closure and analyzed during the Performance Analysis Phase 168 Shutdown Turnaround Outage & Reliability Asset Management

186 Best-Practices Section 14: Reliability Asset Management Reliability Asset Management cont d The criticality levels that are assigned to assets should be reviewed annually for A Critical assets and every 2 years for B & C Critical assets. Business Process Optimization changes such as adding a new field, new production rates, change parameters, etc. that would operate the asset outside of the normal target operating window or a revised asset strategy, should also trigger a Criticality review. Operate and Maintain Process The Criticality assigned to an individual asset is used to determine an effective Asset Maintenance Strategy that establishes the Planned Maintenance Program for the asset. Applying the same methodology to all the assets will establish the Reliability Asset Management Program for the facility. The day-today operational requirements for the assets are automatically influenced by the criticality and maintenance strategy determined for the asset in the Reliability Asset Management Program. Operating procedures are developed that ensure safe and reliable operation within the specific equipment operating parameters for each asset. Turnaround schedules are optimized to minimize production losses and maximize asset reliability / availability. There should be a continuous flow of information and data between Operations, Technical and Maintenance (OTM) on Asset Performance Data. This data assists in the daily decisions that are made by all three groups. The Work Management Process for both Daily Maintenance and Turnarounds are designed to efficiently manage maintenance activities to: Prioritize the work, Plan the work, Schedule the work, Execute the work and Document the results. The Work Management Process is used in conjunction with other elements of the Asset Management Process to promote asset management based on proactive practices that focus on Asset Reliability and Process Availability. Defect Elimination Asset Reliability Performance Analysis is periodically conducted to measure and verify production capacity; and ensure product quality and asset performance is consistent with the established goals and objectives for the Process Unit. The elimination of defects improves the performance of assets that the analysis determined are not meeting the established performance targets in terms of reliability, availability, cost, life expectancy and / or safety and environmental performance. Defect Elimination begins by conducting a review of current asset performance during the development of the Reliability Asset Management Program. Shutdown Turnaround Outage & Reliability Asset Management 169

187 Best-Practices Section 14: Reliability Asset Management Reliability Asset Management cont d Optimization Strategies The Optimization Strategies influence the decisions that are made in three distinct areas: Design and Construction, Asset Maintenance Strategy Analysis, and Operate and Maintain Process. The Optimization Strategy attempts to strike a balance between operating parameters designed to maximize throughput and quality; and the Asset Management Plan designed for maximum Asset Reliability and Process Availability Various factors can affect the operational parameters and reliability / availability of a given asset and must be considered in the Optimization Strategy. These factors include: which fields are developed for production, current market prices, performance variables, throughput or rate limitations in the process units, asset operating constraints, long term / short term asset corrosion / erosion rates, unstable operating parameters, life expectancies based on the operating targets, etc. The Reliability Asset Management Model 170 Shutdown Turnaround Outage & Reliability Asset Management

188 Notes Section 14: Reliability Asset Management Reliability Asset Management Shutdown Turnaround Outage & Reliability Asset Management 171

189 Section 14: Reliability Asset Management 172 Shutdown Turnaround Outage & Reliability Asset Management

190 Section 15 Section 15: Criticality Analysis (FMEA/CA) Criticality Analysis (FMEA/CA) Objectives This Section provides the participant with an understanding of Equipment Criticality Analysis using Risk Management and Failure Modes & Effects Analysis (FMEA/CA to effectively determine What to work on? during a STO project, or during day-do-day business. You will understand: Asset Risk Management Process Criticality Analysis (CA) Failure Modes & Effects Analysis (FMEA) Reliability Asset Management Team Responsibilities FMEA Question Work Flow Diagram Key Terms Risk Matrix Criticality of Failure Events Consequence of Failure Reliability Asset Management Team Shutdown Turnaround Outage & Reliability Asset Management 173

191 Best-Practices Section 15: Criticality Analysis (FMEA/CA) Criticality Analysis Best-Practices PURPOSE This guideline provides a systematic approach for evaluating the relative criticality of each asset in the facility. Criticality Analysis ranks the assets according to which failure mode has the highest potential impact on the business goals of the company. Criticality Ranking is used for determining the scope and frequency of maintenance work activities that must be conducted on the asset, as well as providing a guideline for prioritizing the work activities that are required to maintain asset integrity and availability. Criticality Analysis enables the stakeholders to better understand the asset s operating characteristics before failure occurs and implement proactive asset reliability strategies to cost effectively eliminate the likelihood and consequence of failure. The ultimate purpose of asset criticality ranking is to maintain or improve asset reliability and process availability while reducing the cost of ownership in an environment where the only accepted reason for the failure of an asset is due to predictable wear-out. BEST PRACTICES Ensure a formal process exists to categorize assets based on the impact that failures would have on the safety, production, cost and / or environmental integrity in the Facility. Although an Asset Criticality Ranking can be applied to any level of the Asset Hierarchy, i.e. Process Unit / Process System / System Asset / Component, for practical purposes: Criticality Ranking must be applied at the System Asset Level and all components associated with the asset assume a criticality relative to the asset. All Process Systems are considered critical to the integrity of the Process Unit so relative criticality at the Process System is not used. The importance of each Process Unit to the overall business goals may change periodically depending on the phase of the business cycle, e.g. customer demand, time of year, etc., therefore relative criticality at the Process Unit level is not used. Assets are ranked according to Criticality A, B or C by considering the consequences of the various failure modes and the probability that each failure mode would occur. The Asset Criticality Ranking is used to determine the Maintenance Strategy (scope and frequency of monitoring, inspection and maintenance activities to be applied to an asset) and the priority that is assigned to maintenance Work Order activities that are required on the asset. A Criticality is assigned to assets with identified failure modes that will result in a severe loss of Process Unit production and / or a major SHA condition. There must also be a significant probability of the failure modes occurring repeatedly without warning. During normal operations, A Critical Asset Maintenance Work Orders / Requests are assigned Shutdown Turnaround Outage & Reliability Asset Management

192 Best-Practices Section 15: Criticality Analysis (FMEA/CA) Criticality Analysis Best-Practices cont d Priority Code 1 Critical with the associated work management rules for immediate execution. B Criticality is assigned to assets with identified failure modes that will result in a minor loss of Process Unit production and / or a serious SHA condition. There must also be a reasonable probability of the failure modes occurring occasionally without warning. During normal operations, B Critical Asset Maintenance Work Orders / Work Requests are assigned Priority Code 2 Urgent with the associated work management rules for execution when scheduled resources become available. C Criticality is assigned to assets with identified failure modes that will result in no immediate loss of Process Unit production and / or no serious SHA condition. During normal operations, C Critical Asset Maintenance Work Orders / Requests are assigned Priority Code 3 Normal with the associated work management rules for execution and are scheduled as part of backlog management. The Computerized Maintenance Management System allows the assignment of the Asset Criticality Ranking to the Asset Tag in the Asset Register. GUIDELINE Overview Risk Based Management can be described as a systematic approach for utilizing finite or limited resources on those activities with the greatest potential for reducing risk. While risk cannot be completely eliminated, it can be managed. The term risk is defined as the frequency or likelihood of an event, combined with the severity or consequence of the event. The basic formula is: Risk = Failure Frequency x Consequence of Failure The Risk Management Process entails four key steps: 1. Hazard identification; 2. Risk assessment; 3. Planning and implementation of preventive actions (i.e. Risk Mitigation); 4. Documenting the results and conducting continuous improvement initiatives. The primary goal of the Asset Management Plan is the prevention of major incidents which would have a significant adverse affect on public safety, the environment or production. An effective Risk Management Process for asset management therefore should help the stakeholders to: 1. Understand the relative risk of major incidents occurring on assets within the process unit and process systems. 2. Implement cost effective risk control actions to minimize the risk of occurrence and consequences. Shutdown Turnaround Outage & Reliability Asset Management 175

193 Best-Practices Section 15: Criticality Analysis (FMEA/CA) Asset Risk Management Process The Asset Risk Management Process is illustrated as follows: The scope of this guideline is to define an Asset Risk Management Process for establishing Asset Criticality and how to establish and conduct formal Risk Assessment Analysis and document the Asset Failure Modes and Effects (FMEA) that are used to establish the Planned Maintenance Program for each asset. The Reliability Engineering Group is responsible for administrating the Asset Risk Management Process. The process utilizes a meeting review format involving participants from reliability, maintenance, operations, inspection, and engineering. To complete the Asset Criticality Ranking Process in a timely manner, it is recommended that full time team members be dedicated to this task until it is completed. Effective assessment requires that all relevant resources are present at each meeting. Conflicting priorities that prevent team members from full time attendance will reduce the quality and completeness of the analysis. The Asset Criticality Ranking is subsequently utilized to develop asset specific maintenance strategies. These strategies are documented and maintained by each facility as part of their Planned Maintenance Program. Each facility is responsible for implementing the complete Asset Management Plan at their respective site in a manner consistent with the intent of this process. 176 Shutdown Turnaround Outage & Reliability Asset Management

194 Section 15: Criticality Analysis (FMEA/CA) Instructions STEP 1 - Develop a risk matrix for the facility Prior to developing the Risk Matrix, decide whether it is feasible to define Risk in terms of the Facility (one major Process Stream and Production Target) or in terms of multiple Process Units within the facility (more than one Process Stream and multiple Production Targets). The Risk Matrix or Risk Matrices developed are used as described in Step 3 as appropriate for the Process Unit or Facility under review. The process for developing a risk matrix is described in Attachment 15.3.A. A sample matrix that should be modified as appropriate for the Process Unit or Facility under review is provided in Attachment 15.3.B. One risk matrix is developed specific to each Process Unit or Facility under review. The Risk Matrix is the fundamental tool utilized to conduct a Risk Assessment and assign the Asset Criticality Ranking to all physical assets within the facility. The same format should be utilized for all facilities. The Risk Matrix provides the definitions to be used for each level of Probability and each level of Consequence or business impact of the defined failure events. Similar levels of risk are grouped together as Criticalities. The three levels of Asset Criticality Ranking are: High (A), Medium (B) and Low (C). STEP 2 Prioritize the Process Units within the Facility. The next step is to prioritize the Process Units, i.e. 1, 2, 3, etc. This step focuses the analysis on the Process Units within the Facility with the highest production value to the business. Once the Process Units are prioritized, the criticality assessment is conducted on each Process Unit based on the highest priority. STEP 3 Conduct a Preliminary Criticality Ranking. Assign a Preliminary Criticality Ranking A, B or C to each Asset contained in the Process Systems for the specific Process Unit selected for analysis. The Asset Register and P&ID s for the specific Process System should be used to ensure that all the assets in the Process System are analysed. This Preliminary Criticality Ranking is based on an evaluation of which Process System assets have the potential to reduce Process Unit production if an asset failure occurs. During the initial review of each major asset, the review team asks the question If the asset fails, does it reduce production of the daily Process Unit or Facility production target and / or create a serious SHA condition? If the answer is YES! then the Asset is assigned A Criticality. If the answer is NO! then one further question is asked. Is there a potential loss of production or the potential for a SHA condition if the Asset fails? If the answer is YES! then the Asset is assigned B Criticality. If the answer is NO! then the Asset is assigned C Criticality. Only Assets ranked as A Criticality are selected for the formal FMEA Analysis described in Step 4. The maintenance strategy and Planned Maintenance Program for assets assigned Criticality B or C is based on the manufacturer s recommendations, regulatory requirements and industry maintenance best practices. Because the Preliminary Criticality is completed without conducting FMEA Analysis, the B and C Critical Assets should be reviewed using FMEA when time permits. STEP 4 Rank the Asset in terms of Risk (FMEA) For assets designated as A Criticality a formal FMEA and Criticality Analysis of all the individual Process System assets is conducted using the Risk Matrix. The individual Process System Flow Diagrams are used to ensure that each major asset within each Process System is evaluated. From the P & ID, the instrumentation, valves, control valves, pressure safety valves (PSV s), and shutdown devices (LSHH, PSHH etc.) associated with the main asset under review should be Shutdown Turnaround Outage & Reliability Asset Management 177

195 Section 15: Criticality Analysis (FMEA/CA) included in the analysis of the functional failure modes and mechanisms. All assets must be reviewed as part of the functional system. Once the FMEA Analysis is completed, the Asset Criticality for each asset in the Process System is assigned and recorded in the Master Asset Register. One of the important objectives of Step 4 is to confirm that the Preliminary Criticality A assigned to the Assets in Step 3 is correct and to determine if the associated Asset Risk can be downgraded to Criticality B or C. FMEA and Criticality Analysis Process The process utilizes a meeting review format that must meet the following criteria: A. Preparation for FMEA Analysis Responsibility Mgt Team Facilitator Facilitator Action B. Conducting the FMEA Analysis Responsibility Facilitator Assign a person as the Facilitator to conduct the Asset Criticality Analysis. This individual is typically the Reliability Engineer that is responsible for the Process Unit assets that will be analysed. Schedule the meeting room for conducting the review, and send meeting invitations to the following resources: Reliability Engineer (mandatory attendance) Appropriate Engineers. i.e. Process, Materials, (mandatory) Operations Representative(s) (mandatory) Inspection Representative(s) (mandatory fixed equipment) Maintenance Planning Group (mandatory) Maintenance Specialists (mandatory) Experts (Internal or external as necessary) Scribe (mandatory suggest using a clerk) The responsibilities of the team members are outlined in Refer to: Attachment 15.3.C. - Criticality Analysis Team Responsibilities. Ensure the representative Contact resources assemble the following information on the Process Systems to be evaluated: (resource identified in parentheses) Process Flow Diagram (Process Engineer) Piping and Instrumentation Diagram (Reliability Engineer) Maintenance Data (Maintenance Planning Group) Inspection History (Technical Department) Risk Based Inspection Data (Technical Department Inspection Group) Past Failure Modes and Effects Analysis Reports (Reliability Department) Supplemental asset technical information and criteria that has been identified (Other Resources) Action Open the meeting, define the purpose and objectives of the meeting, explain the process, and describe an overview of how the FMEA results will be used. Reliability Team The analysis will utilize the Process Unit Flow Diagrams to ensure that all assets are evaluated. From the P & ID the instrumentation, valves, control 178 Shutdown Turnaround Outage & Reliability Asset Management

196 Section 15: Criticality Analysis (FMEA/CA) valves, Pressure Safety Valves (PSV s), and critical shutdown devices (LSHH, PSHH etc.) associated with the main asset(s) under review should be included in the analysis. All the Process System assets should be analyzed as a functional system. Evaluate each asset by considering all the probable failure modes of the asset, including the expected consequences and probability of occurrence. Utilize the questions displayed in Attachment 15.3.D. FMEA Question Workflow Diagram to guide the evaluation. Conduct a rigorous analysis on what could cause a failure and the probability of occurrence. Guideline 15.5 Planned Maintenance Program describes the method used to define the asset maintenance strategies for all assets and how to develop plans for eliminating or managing the identified failure modes for A Critical Assets. The FMEA Process is used to facilitate the development of a specific Planned Maintenance Program for each asset. How comprehensive a Maintenance Program is required for each asset is determined by the relative criticality of the asset. Attachment 15.3.E Sample FMEA Analysis Worksheet provides an example template used to assess the failure modes and effects and record the follow-up actions required. The following steps must be included in an FMEA Analysis: A. Define the Performance Standards for the Asset (flow rate, temperature, pressure, etc.). This must include the design standards as well as the normal operating parameters. B. Define the Functions of the asset (i.e., what functions is this asset designed to provide?) For an example of functionality, an heat exchanger provides three functions: Heat transfer. Prevention of internal cross contamination. Pressure containment. A pump provides three functions: Deliver flow at the required flow rate. Deliver the required pressure. Containment of the fluid being handled. C. Define the failure mechanism(s) for each function. D. Define the failure modes that can prevent the asset from performing its designed function. E. Define what causes each functional failure (failure modes and mechanisms). - For fixed or rotating assets. Establish the materials degradation profile for the asset. Notes: 1 Determine what materials degradation mechanisms are possible, what variables impact them, and where they are likely to occur. Inspection and asset records for similar assets in existing facilities along with expert opinion should be used to establish this information. 2 Failure modes such as fouling, vibration, flange leaks, or other similar mechanisms will typically be chronic problems that operations or Shutdown Turnaround Outage & Reliability Asset Management 179

197 Section 15: Criticality Analysis (FMEA/CA) Scribe Facilitator maintenance personnel will be aware of but may not be formally documented. 3 An estimate of predicted life should be determined for each failure mode. This estimate will assist in defining inspection / maintenance intervals (below) and will help in defining the Turnaround Worklists. There are some mechanisms, such as chloride stress corrosion cracking, where a predicted life cannot be reasonably estimated. Assets may need to be disassembled to inspect for wear or deterioration that cannot be detected by condition monitoring. 4 Any Safety Critical Components should be noted on the worksheet. Safety Critical Component means any piece of process equipment or protection device that, if it failed, could lead to a severe safety, health, or environmental risk. They include pressure vessels, storage tanks, piping systems, relief systems, emergency shutdown systems, process controls, rotating equipment, electrical systems, fire protection systems, H2S, and combustible gas detection systems. F. Define what happens when each failure occurs (failure effects). Note: When reviewing spared assets, if the reliability of the spare is in doubt then the asset should be reviewed as if it were stand-alone. Intermediate storage can delay the business impact of process interruption for the associated process streams within the facility. The effect of intermediate storage must be considered when assessing the overall impact on facility production. G. Document the information on the FMEA Worksheet. H. Determine and assign the criticality ranking for each asset by plotting the Potential Severity versus the Probability on the Risk Matrix I. From the data inputted into the FMEA Worksheets, the "worst case" or highest criticality assigned to the failure modes for each asset determines the Asset Criticality. For identical criticalities, report the failure mode that occurs most frequently. The completed worksheets will provide summary information that defines the relative ranking (Asset Criticality Ranking) for all assets in that specific Process Unit. J. Confirm or modify the initial Criticality assigned to each asset in Step 3. C. Implementation (follow up on FMEA Analysis) Responsibility Action 180 Reliability Team Apply the method described in Guideline 15.5 Planned (Include others Maintenance Program to determine the optimum maintenance If necessary) strategy for each asset based on its respective criticality ranking to: Develop Preventive, Predictive and Corrective Maintenance Task Lists, Develop Operating Standards / Procedures and Maintenance Procedures, Modify Spare Parts Management Practices, Shutdown Turnaround Outage & Reliability Asset Management

198 Section 15: Criticality Analysis (FMEA/CA) Supporting Documentation Conduct asset specific reliability studies for higher critical assets and implement the recommendations, For fixed assets that ranked Low Criticality (due to lack of history or lack of consequence, utilize guidance from the Risk Based Inspection (RBI) Program. Attachment 15.3.A. Developing a Facility Risk Matrix Attachment 15.3.B. Sample Risk Matrix Attachment 15.3.C. Risk Matrix (blank form) Attachment 15.3.D. FMEA/CA - Team Responsibilities Attachment 15.3.E. FMEA Question Workflow Diagram Attachment 15.3.F. Sample FMEA / Criticality Assessment Worksheet Attachment 15.3.A Developing a Facility Risk Matrix 1. Purpose This attachment defines the criteria used to assess Asset Criticality. These criteria will be documented in a Risk Matrix. The Risk Matrix is utilized to identify the assets whose failure has the highest potential impact on the business goals of the company. Definitions for the Risk Criteria associated with Safety, Environmental, Production and Cost are given in the following sections. 2. Responsibilities A team of people, with the requisite skills and experience, are required to develop an effective risk matrix. Depending on the application, some of the disciplines listed below may be combined in one person or may not be required. Team Leader - The Reliability Engineer is the process owner and is responsible for developing and maintaining the risk matrix. Process Engineer - The Process Engineer is responsible for providing production capability information, e.g. he would provide information on the storage capacity throughout the facility that offsets the affect of loss of raw and intermediate process streams. Operations and Maintenance Personnel - These people are responsible for verifying that the process unit / system / asset is being operated within the parameters set out in the process operation envelope. Environmental and Safety Personnel - This person(s) is responsible for providing data on environmental and safety systems and regulations. Financial /Business Personnel - This person(s) is responsible for providing data on the cost of the process unit / system / asset being analyzed. The cost would relate to the financial impact of having individual assets / systems / process unit within the facility shutdown, e.g. he would provide the relative values of the intermediate and product streams in the facility. Management - Management's role is to provide sponsorship and resources (personnel and funding) for the Asset Criticality Analysis as well as the follow-up system to implement risk mitigation decisions. Management is accountable for approving the Facility Risk Matrix. 3. Definitions Risk The term risk is defined as the frequency or likelihood of an event, combined with the severity or consequence of the event. Risk is ranked according to three criticalities: high or A Criticality, medium or B Criticality and low or C Criticality. The formula is: Shutdown Turnaround Outage & Reliability Asset Management 181

199 Section 15: Criticality Analysis (FMEA/CA) Risk = Failure Frequency x Consequence of Failure Frequency of Failure Frequency of failure is classified according to Table 1: Table 1: Frequency of Failure Frequency of Failure Assessment Annual Number of Events Probability of Occurrence Very High More than 1 One or more occurrences per year Possibility of repeated incidents Happens several times a year at each facility High Between 0.1 and 1 One occurrence every five years Possibility of isolated incidents Medium Between 0.01 and 0.1 Has happened within industry but not often (for example, once every 20 years) Possibility of occurring sometime Low Less than 0.01 Possible but very rare (for example, has happened within industry but unlikely to occur at the facility) Not likely to occur Consequence of failure Consequences are classified according to the following types: Safety / Environmental Production Cost The Consequences of Failure can be grouped under the following categories: A Safety / Environmental Consequences and / or B Economic Consequences From the viewpoint of the severity, consequences are classified as: Low: consequences that are acceptable unless they are very frequent. A physical asset that generates only minor consequences is not considered a critical asset. Medium: Depending on the frequency, a physical asset with medium consequences could be classified as ALARP (As Low As Reasonably Practical) High: Severe consequences with high frequency are not sustainable and must be mitigated. Very High: Catastrophic 182 Shutdown Turnaround Outage & Reliability Asset Management

200 Section 15: Criticality Analysis (FMEA/CA) A - Safety and Environmental Consequences The consequences for safety and environmental are classified according to Table 2: Table 2: Safety and Environmental Consequences. Safety / Environmental Assessment Expected number of Incidents Consequence (type of incident) Very High More than 1 Fatality / Harm to public sector Major Toxic Release Off - Site High Between 0.1 and 1 Lost time / Threat to public sector Recordable Toxic Release Off - Site Medium Between 0.01 and 0.1 Medical treatment or restricted duty Recordable Toxic Release On-Site Low Less than 0.01 Minor injury, no threat to public B - Economic Consequences Economic consequences could arise from Expenditure to treat injuries Expenditure for human lives loss. Expenditure to mitigate environmental impact. Expenditure to repair / refurbish assets. Expenditure for third party damages. Loss of Production Opportunity (volume) Loss of Production Specification (quality) Non Recordable Toxic Release Economic consequential severity is described as a percentage of the annual production target for the Facility. See the examples shown in Tables 3 and 4. The final definition of these limits is an important component of every Asset Management Plan. For a specific Facility, if a high risk incident that affects the entire plant capacity cannot be defined, then it is recommended to utilize the production time target of the largest business / process unit within the facility. For example suppose that the field production is 100,000 bbl/day but no high risk incident can be defined which will affect the entire production capacity of the field. The largest business unit or production platform within the field that can be assigned a high risk incident is 25,000 bbl/day. Use this production target rate to determine the production losses criteria assigned to the risk matrix. Shutdown Turnaround Outage & Reliability Asset Management 183

201 Section 15: Criticality Analysis (FMEA/CA) Table 3 and 4 provide a range of economic consequences in terms of production losses. Table 4 should be utilized for the risk assessment criteria if Production Availability is the Key Business Economic Goal. Table 3: Economic Consequences. (Relatively high production loss acceptance) Economic Consequences Assessment Annual Production Loss Production Availability Loss Very High More than 1% More than 4 Days High From 0.1% to 1% Between 9 Hours and 4 Days Medium From 0.01% to 0.1% Between 1 and 9 Hours Low Less than 0.01% Less than 1 Hour Table 4: Economic Consequences. (Relatively low production loss acceptance) Economic Consequences Assessment Annual Production Loss Production Availability Loss Very High More than 0.25% More than 24 Hours High From 0.025% to 0.25% Between 2 and 24 hours Medium From 0.01% to 0.025% Between 0.5 and 2 hours Low Less than 0.01% Less than 0.5 hours Note: Economic Consequences utilizes the equivalent USD of the lost production for the Cost criteria. The assistance of the Financial / Marketing / Production Planning groups and Process Engineering will be required to evaluate the value for facilities with multiple final products. The economic value of the final Process Units / Process Systems should be presented in a simple table. This will ease the preparation of the Risk Matrix when assessing the business impact of multiple Process Units within the facility and ensure consistency in a risk assessment. Product Production (equivalent to 1 bbl crude) Cost (per unit) Crude Oil 1 bbl $30 USD/bbl Methane 6 MMSCFD $4.50 USD/MMSCFD Butane Etc. Naphtha 184 Shutdown Turnaround Outage & Reliability Asset Management

202 Section 15: Criticality Analysis (FMEA/CA) Criticality of Failure Events Based on the frequency and consequence combination shown in Table 6, every failure event can be classified as: A: High Risk B: Medium Risk C: Low Risk Table 6: Failure Event Criticality RISK MATRIX 4. Very High C B A A Frequency 3. High C B B A 2. Medium C C B B 4. Procedure A. Preparation Responsibility Mgt Team Facilitator Facilitator Action 1. Low C C C C 1. Low 2. Medium 3. High 4. Very High Consequence Assign a person as the Facilitator to conduct the Criticality Risk Matrix meeting. This is normally the Process Unit Reliability Engineer. Schedule the room to conduct the meeting, including invitations for the following resources: B. Conducting the meeting Reliability Engineer (mandatory) Process Engineer (mandatory) Operations Mgt. Representative(s) (mandatory) Maintenance Mgt. Representative(s) (mandatory) SHA Mgt. Representative (mandatory) Technical Mgt Representative (mandatory) Financial / Business Personnel (mandatory) Scribe (required suggest using a clerk) Contact resources to gather the following information for the Facility to be evaluated: (resource identified in parentheses) Process Flow Diagram(s) (Process Engineer) Piping and Instrumentation(s) Diagram (Reliability Engineer) Environmental and safety systems and regulations (SHA representative) Data on the cost of the facility / assets being analyzed and the financial impact of having individual assets or the facility shutdown (Financial / Business representative). Supplemental information or input that may be required (Other Resources) Shutdown Turnaround Outage & Reliability Asset Management 185

203 Section 15: Criticality Analysis (FMEA/CA) Responsibility Facilitator Action Open the meeting, define the purpose / objectives of the meeting, explain the process, and describe an overview of how the results will be used. Review each of the consequence categories for Safety, Environmental, Production and Cost and present a sample risk matrix for consideration. Obtain agreement for the criteria to be utilized for each level of consequence within the risk matrix. Utilize the criteria presented in Attachment 15.3.A. - Developing a Facility Risk Matrix to guide the discussions. Note: The Risk Matrix will also be utilized to define the asset maintenance strategies and work priorities. The Risk Matrix must be representative of the Facility s mission and goals for the Process Unit. The Risk Matrix should be reviewed and modified if long term business conditions or management expectations for the Process Unit or Facility change. Attachment 15.3.B Sample Risk Matrix Assumptions - a 100,000 bbl/day Crude Production - Crude price 30 USD/bbl CONSEQUENCE FREQUENCY 1. Low 2. Medium 3. High 4. Very High 4. Very high C B A A 3. High C B B A 2. Medium C C B B 1. Low C C C C CRITICALITY: A: High Risk B: Medium Risk C: Low Risk LOSS Category Low Medium High Very High Frequency (Probability) Possible but very rare (for example, once in the life of the facility) Not likely to occur Has happened within industry but not often (for example, once every 20 years) Possibility of occurring sometime One occurrence every five years Possibility of isolated incidents One or more occurrences per year Possibility of repeated incidents Consequence (Consider MTBF / MTTR for the Asset) Minor injury Non Reportable / minor on-site release Minor cost impact <$ 75 K USD Production Loss < 2,500 bbl Medical treatment / restricted duty Reportable / major on-site release Cost impact <$ 300 K USD Production Loss < 10,000 bbl Lost time injury Reportable off-site release Major cost impact <$ 3MM USD Production Loss <100,000 bbl Fatality, or harm to public sector Major off-site release Extensive cost impact >$ 3 MM USD Production Loss >100,000 bbl 186 Shutdown Turnaround Outage & Reliability Asset Management

204 Section 15: Criticality Analysis (FMEA/CA) Attachment 15.3.C Risk Matrix (blank form) Assumptions - a 100,000 bbl/day Crude Production - Crude price 30 USD/bbl CONSEQUENCE FREQUENCY 1. Low 2. Medium 3. High 4. Very High 4. Very high C B A A 3. High C B B A 2. Medium C C B B 1. Low C C C C CRITICALITY: A: High Risk B: Medium Risk C: Low Risk LOSS Category Low Medium High Very High Frequency (Probability) Possible but very rare (for example, once in the life of the facility) Not likely to occur Has happened within industry but not often (for example, once every 20 years) Possibility of occurring sometime One occurrence every five years Possibility of isolated incidents One or more occurrences per year Possibility of repeated incidents Consequence (Consider MTBF / MTTR for the Asset) (Safety) (Environmental) (Cost) Minor impact <$ USD Production Loss < bbl (Safety) (Environmental) (Cost) impact <$ USD Production Loss < bbl (Safety) (Environmental) (Cost) Major impact <$ USD Production Loss < bbl (Safety) (Environmental) (Cost) Extensive impact >$ USD Production Loss > bbl Attachment 15.3.D FMEA/CA- Team Responsibilities To be effective, Failure Modes and Effects Analysis and Criticality Assessments must follow a defined methodology that requires specialized skills including data gathering from many sources and formal techniques for analysis, risk management and decision-making. Generally, one individual does not have the background or skills to single-handedly conduct the entire review process and a team of dedicated people, with the requisite skills and background, is needed to conduct an effective FMEA Analysis / Criticality Assessment. Depending on the application, some of the disciplines listed below may not be required and some team members may be part-time due to limited input needs. It is also possible that not all the team members listed may be required if other team members have the required skill and knowledge of multiple disciplines. Shutdown Turnaround Outage & Reliability Asset Management 187

205 Section 15: Criticality Analysis (FMEA/CA) Team Leader - The Process Unit Reliability Engineer is the program owner and is responsible for development and maintenance of this process. The team leader typically is responsible for: Formation of the team and verifying that the team members have the necessary skills and knowledge. Ensuring that the study is conducted correctly. Documenting the FMEA Analysis and Criticality Assessment for the specific asset and distributing it to the appropriate personnel whom are either responsible for decisions on managing risks or responsible for implementing actions to mitigate the risks. Following up to assure that the appropriate risk mitigation actions have been implemented. Defining the data required from other team members. Defining accuracy levels for the data. Verifying the quality and integrity of the data and assumptions. Inputting (transferring) data into the asset database. Quality control of data input / output. Ensure the Analysis Information is clear, effective and easily understood by all stakeholders. Prepare and distribute the appropriate analysis reports and information. Asset Inspector - The Asset Inspector is generally responsible for gathering data on the condition and history of the static assets involved in the study. The Asset Inspector is usually responsible for implementing the recommended inspection plan derived from the RBI study. Materials and Corrosion Specialist - The materials and corrosion specialist is responsible for assessing the types of deterioration mechanisms and their applicability and severity to the asset considering the process conditions, environment, metallurgy, age, etc., of the asset. Process-Specialist - The process specialist is responsible for the provision of process condition information. The process specialist should evaluate / recommend methods of risk mitigation (probability or consequence) through changes to process operating parameters. Operations and Maintenance Personnel - Are responsible for verifying that the facility / asset is being operated within the parameters set out in the process operation envelope. Operations and maintenance are responsible for performing the recommended process or asset modifications and monitoring the results. Dynamic assets are analyzed utilizing FMEA techniques. Static assets are analyzed utilizing RBI techniques Management - Management's role is to provide sponsorship and resources (personnel and funding) for the FMEA Analysis / Criticality Assessment as well as ensuring the implementation of risk mitigation recommendations. Environmental and Safety Personnel - Are responsible for providing data on environmental and safety systems and regulations. They also are responsible for assessing / recommending ways to mitigate the consequence of failures. Financial / Business Personnel Are responsible for providing data on the cost of the facility / assets being analyzed and the financial impact of having individual assets or the facility shutdown. They also should recommend methods for mitigating the financial consequence of failure. 188 Shutdown Turnaround Outage & Reliability Asset Management

206 Section 15: Criticality Analysis (FMEA/CA) Attachment 15.3.E FMEA Question Workflow Diagram Shutdown Turnaround Outage & Reliability Asset Management 189

207 Example Section 15: Criticality Analysis (FMEA/CA) Attachment 15.3.F Sample FMEA / Criticality Assesment Worksheet 190 Shutdown Turnaround Outage & Reliability Asset Management

208 Notes Section 15: Criticality Analysis (FMEA/CA) Criticality Analysis (FMEA/CA) Shutdown Turnaround Outage & Reliability Asset Management 191

209 Section 15: Criticality Analysis (FMEA/CA) 192 Shutdown Turnaround Outage & Reliability Asset Management

210 Section 16 Section 16: Risk Based Inspection (RBI) Program Risk Based Inspection (RBI) Program Objectives This Section provides the participant with an understanding of establishing a Long Range Risk Based Inspection (RBI) Program for Static Equipment Assets. You will understand: RBI Assessment RBI Implementation RBI Inspection Types RBI Inspection Classes Key Terms Asset Integrity Corrosion / Erosion Quality Assurance/Quality Control Owner s Inspection Program (OIP) Shutdown Turnaround Outage & Reliability Asset Management 193

211 Best-Practices Section 16: Risk Based Inspection (RBI) Program Risk Based Inspection (RBI) Best-Practices PURPOSE This guideline outlines the standard for developing the Long Range Risk Based Inspection Program (RBI) for static assets. The RBI Program is an integral part of the Asset Management Plan and is used to determine the Maintenance Strategy and the most appropriate Planned Maintenance Program for each static asset. The Inspection Group must constantly evaluate the requirements of the business need against the risk and potential impact of delaying remedial activities until a later date. BEST PRACTICES Establish and sustain a documented Inspection Code of Practice. The Code of Practice must be constantly updated to reflect the latest technological information and practices. The Inspection Group is responsible for ensuring that the maximum numbers of the facility s assets are monitored and remaining life analyzed using noninvasive techniques. The Inspection Group is responsible for justifying which static assets are to be removed from operational service (Turnaround Worklist) to facilitate conducting remedial activities. The Inspection Group must establish the Long Range Asset Inspection Plan (7 to 10 Years) for all the Facility s static assets. The Inspection Group is responsible for identifying the remedial activities associated with the static assets. The Technical Group is responsible for developing / approving the Standard Work Procedures for all remedial activities associated with the static assets. The Inspection Group is responsible for updating and maintaining all Static Asset Historical Records. The Inspection Group is responsible for witnessing all testing related to pressure containment components after mechanical completion. The Inspection Group must be integrated with the group responsible for Quality Control to ensure all identified repairs are completed as per specification. The Inspection Group is responsible for ensuring that all maintenance support services are identified on the PdM s developed for static asset inspections. The Inspection Group are responsible for ensuring all PdM s are scheduled and executed per the Planned Maintenance Program. 194 Shutdown Turnaround Outage & Reliability Asset Management

212 Section 16: Risk Based Inspection (RBI) Program Guideline Overview RBI evaluates the condition of the pressure boundary for each asset and recommends the inspection and maintenance levels required to ensure mechanical integrity. This guideline provides a brief description of the application of RBI as defined in API 581 using the expertise and experience of personnel to analyze the plant's operational, inspection and maintenance data to ensure process and asset integrity. The RBI Program must consider the impact to: Process Unit Availability and Asset Integrity Health and safety of personnel The environment - off-site risk to the community The RBI Program can consider any combination of the identified risks to be factored into decisions concerning when, where, and how to inspect a process plant, or in establishing the design criteria required to provide the specified integrity for the life cycle of the asset. Risk Based Inspection analysis is focused on stationary or fixed assets. The analysis must consider the following factors when developing the risk-based inspection plans and inspection intervals: Code of construction, Process operating conditions, Corrosive / erosive elements and concentrations, Deterioration mechanism(s), Years in service, Original wall thickness, Corrosion / erosion rates, Historical inspection frequency and results. Based on these factors the consequence and probability of degradation is calculated to determine the total risk. Based on the degree of risk associated with each asset, the Planned Maintenance Program is developed and includes the necessary information that is used to determine the Planned Maintenance and Inspection Outage Schedule for the Process Unit. Responsibilities RBI Assessment Conducting a Risk Based Inspection Assessment requires collecting and assembling data from many sources followed by specialized analysis that identifies the risks to the asset. Based on the identified risks, the appropriate maintenance strategy is developed. A team of people with the requisite skills and background is established to conduct the RBI Assessment for the Facility. A brief description of the functions required to conduct an effective RBI Assessment are listed here (refer to API 580 for more detailed descriptions of roles and responsibilities). Team Leader The team leader may be selected from any one of the team members mentioned below. The team leader should be involved full-time for the duration of the assessment and should be an individual familiar with the operation of the asset. The team leader is responsible for: a. Formation of the team and verifying that the team members have the necessary skills and knowledge. Shutdown Turnaround Outage & Reliability Asset Management 195

213 Section 16: Risk Based Inspection (RBI) Program b. Ensuring that the study is conducted properly. c. Preparing a report on the RBI Assessment and distributing it to the appropriate personnel whom are either responsible for decisions on managing risks or responsible for implementing strategies to mitigate the risks. d. Following up to ensure that the appropriate risk mitigation strategies have been implemented. Asset Inspection Asset Inspection is responsible for collecting the data on the condition and history of the assets identified in the study. This person is usually responsible for implementing the recommended Inspection Plan established as a result of the RBI Assessment. Materials and Corrosion / Erosion Evaluation Responsible for assessing what deterioration mechanisms exist and their applicability and severity to the asset considering the process conditions, environment, metallurgy, age, etc., of the asset. Process Engineering Process Engineering is responsible for providing process condition information. This person should evaluate and recommend possible methods of risk mitigation (probability and / or consequence) through changes in process conditions. Operations and Maintenance Operations are responsible for verifying that the facility / asset is being operated within the parameters set out in the process operation envelope. Both Operations and Maintenance are responsible for implementing the recommendations that result from the RBI Assessment that pertain to either process or asset modifications or monitoring requirements. Management Management provide sponsorship and resources (personnel and funding) for the RBI Assessment as well as the follow-up support to implement the risk mitigation decisions that result from the Assessment. Risk Assessment Process Management Risk Assessment Process Management is responsible for assembling all of the data and carrying out the RBI analysis. This person(s) is responsible for: Defining data required from other team members. Defining accuracy levels for the data. Verifying through quality checks the soundness of data and assumptions. Inputting (transferring) data into the API RBI database. Quality control of data input / output. Displaying the results in an understandable way and preparing appropriate reports on the RBI analysis. Environment and Safety Environment and Safety are responsible for providing data on environmental and safety systems and regulations. Also are responsible for assessing / recommending ways to mitigate the consequence of failures. Financial / Business 196 Shutdown Turnaround Outage & Reliability Asset Management

214 Section 16: Risk Based Inspection (RBI) Program RBI Implementation Financial / Business Is responsible for providing data on the cost of the facility / asset being analyzed and the financial impact of having specific assets or the facility out of operational service. Also should recommend methods for mitigating the financial consequence of failure. To manage the integrity of static assets, the Inspection Group conducts on-stream and out of service Risk Based Inspections (RBI) and recommends repairs to: Ensure mechanical and operational integrity, Maximize asset reliability, Support maintenance cost effectiveness The Inspection Group maintains a file for all assets that contains: The condition of the asset and it s performance classification, Corrosion, erosion and deterioration levels, Forecast remaining life of the asset, assuming normal levels of operation and maintenance, All Intermediate and Major Inspection dates. The Inspection Group works with Maintenance to: Accurately identify (quantify) the deficiencies associated with all static assets including attachments, structural components, insulation, paintwork etc. Support execution and monitoring of work identified on the Maintenance Daily Work Schedule, Recommend on-stream inspections in order to shorten the duration of Turnarounds, Proactively establish Turnaround Worklists and progress the development of Planned Job Packages with Checklists and Inspection / Test Plans (ITP s), Verify Positive Material Identification (PMI) and Material Test Reports (MTR s) for maintenance materials, The Inspection Group works with Operations to: Instructions Document the level of fouling in the assets at each inspection interval, The Inspection Group works with other Engineering groups to: Establish asset repair / upgrade procedures, Develop new welding procedures, Manage the Quality Assurance / Quality Control Program within the Facility. Define asset retirement limits, Confirm asset pressure-testing requirements. The Risk Based Inspection Program uses basic guidelines for performing the inspections and managing documentation for static assets. GENERAL PdM inspection surveys define the majority of the effort required for the Asset Maintenance Strategy of static assets. These Predictive Maintenance activities commence with the initial commissioning of the asset and progress through the life cycle of the asset both on-stream and during asset / process unit outages. Risk Based Inspection is based on the following concepts: Assets must be inspected at predetermined intervals to ensure asset and process integrity. Shutdown Turnaround Outage & Reliability Asset Management 197

215 Section 16: Risk Based Inspection (RBI) Program 198 Factors that influence the rate of deterioration of the asset must be monitored in order to determine effective and proactive inspection procedures and inspection intervals. The combination of major inspection intervals with appropriate on-stream monitoring activities constitutes the basis for an effective inspection program. INSPECTION TYPES Special inspections are associated with the construction of new equipment, structural surveys of existing installations or safety audits. However, the most significant Inspection Group activities are conducted on assets such as pressure vessels, storage vessels, and piping systems. For these types of assets, the following classifications exist: A - Initial Major This Inspection Type refers to the first comprehensive inspection of an asset after it has been commissioned. This first survey provides an initial performance profile for the determination of subsequent inspections and identifies any adverse wastage patterns. B - Major Inspection A Major Inspection is an extensive review providing an accurate snapshot of the condition of an asset. For vessels, it generally includes a comprehensive visual examination internally and externally accompanied by Non Destructive Testing (NDT) evaluations. When defects are noted in a particular section, the degree and method of inspection may be increased. For piping, a Major Inspection may include some internal examination, although commonly, this classification utilizes extensive UT (ultrasonic testing) and / or RT (radiographic testing). C - Intermediate Inspection Sometimes it is desirable to carry out only a partial review of certain assets. The Intermediate Inspection may serve to: Provide a fast review of asset performance. Identify progress on previously noted deterioration. Review corrosion levels at specific locations such as chemical injection points. MAJOR INSPECTION - CLASSES Within the Major Inspection category, there are three classes that serve to determine the inspection interval based on asset service and established asset performance history. CLASS 1 CLASS 2 CLASS 3 Corrosion / erosion rates are unknown or unpredictable. Fouling or replacement of internals such as filters or chemicals normally requires the opening of the asset. Corrosion / erosion rates are known and are predictable. During the intervals between internal inspections, the available corrosion allowance will not be reduced by more than 50%. Past history has proven corrosion / erosion to be absent in this service or of a very low order. INSPECTION INTERVALS Shutdown Turnaround Outage & Reliability Asset Management

216 Section 16: Risk Based Inspection (RBI) Program All static assets shall be reviewed and assigned an appropriate Inspection Interval (the maximum time that may elapse between various classes of inspection), depending on its criticality, current condition and performance history. The recommended intervals are reviewed and approved by the Reliability Engineer and Process Engineering. In cases where a scheduled inspection date cannot be met, an extension can only be granted subject to written management approval. Document the reason and the name of the person approving the deferral. When establishing the inspection frequency, the following are typical points to consider: Is the asset new? What is the severity of service and the consequence of possible failure? What is the reliability factor for a typical asset within a defined product service (the history of similar assets in similar service)? Are the original design standards still valid? Is there a change in service conditions that may prove detrimental? Based on historical performance, the Inspection Interval is assigned for each asset. The recommended Maximum Inspection Interval for vessels, piping, safety relief valves, and structural components are summarized in Attachment 15.6.A. Maximum Inspection Intervals Intervals for Lifting Appliances are described under a separate Section. RANDOM INSPECTIONS Where assets are similar in design and construction, and subjected to similar service conditions, it is acceptable to select a minimum number of assets for Major Inspections on the basis described in the chart below. Random sample Inspections reduce repetitive outages of assets in situations where deterioration is near negligible and very predictable. NOTE: In the event that inspection of the sample indicates an unsatisfactory condition, major inspection must be conducted on further similar assets as considered appropriate. Radom Inspection Guidelines NUMBER OF SIMILAR ITEMS IN THE GROUP MINIMUM NUMBER OF SAMPLES Shutdown Turnaround Outage & Reliability Asset Management 199

217 Reference Section 16: Risk Based Inspection (RBI) Program Reference 16.1.A Maximum Inspection Intervals 200 Shutdown Turnaround Outage & Reliability Asset Management

218 Notes Section 16: Risk Based Inspection (RBI) Program Risk Based Inspection (RBI) Program Shutdown Turnaround Outage & Reliability Asset Management 201

219 Section 16: Risk Based Inspection (RBI) Program 202 Shutdown Turnaround Outage & Reliability Asset Management

220 Section 17 Section 16: Risk Based Inspection (RBI) Program Defect Elimination Objectives This Section provides the participant with an understanding of establishing a Performance Management Program for Defect Elimination. You will understand: Defect Elimination Work Process Root Cause Failure Analysis Root Cause Analysis Action Plans Key Terms Sporadic Failures Chronic Failures Root Cause Failure Analysis (RCFA) Shutdown Turnaround Outage & Reliability Asset Management 203

221 Best-Practices Section 17: Defect Elimination Defect Elimination Best-Practices PURPOSE Defect Elimination is an integral part of the Reliability Asset Management Program (RAMP). The purpose of this document is to define the process for eliminating defects and to also integrate Defect Elimination into the RAMP. BEST PRACTICES There is a management system in place that ensures the avoidance of repeat failures The Asset Management Plan includes the development of reliability in design forms. A training plan has been established that includes the training requirements for failure avoidance and reliability concepts Availability and reliability are tracked at the asset unit level to identify bad actor lists. Bad actors are analyzed using the appropriate level of Root Cause Failure Analysis (RCFA) methods to cost effectively remove defects. There is an analysis tool that routinely gathers performance data and processes it so that decisions are made based upon facts. A system is in place to ensure failure analysis results input into all aspects of the RAMP to continuously improve all phases of the life cycle of an asset. The results of failure analysis are tracked to demonstrate results such as reduced environmental excursions, Safety, Health & Environment incidents and improved asset [equipment] reliability. Guideline Overview The Defect Elimination Work Process applies to plant safety and to plant equipment: fixed, rotating, electrical, instrumentation; and operational processes and procedures that have been identified for examination for both: Sporadic failures and, Chronic failures. The role of a RCFA Team is to identify defects in mechanical and operational systems, processes, and procedures. This role directly reduces employee exposure to risk as defects are eliminated. Fewer defects also reduce unplanned releases and improve profitability, the environment, and safety. The Defect Elimination process improves the performance of equipment that does not meet the target mission life, safety, or environmental performance. It is also used to extend the mission life to maximize production and minimize maintenance costs. The following briefly describes the Defect Elimination process. 204 Shutdown Turnaround Outage & Reliability Asset Management

222 Section 17: Defect Elimination Analyze Performance Data The data analysis process analyzes and determines what business impacts (Production Loss, Cost, Safety, and Environmental) the equipment problems are creating. There often are many problems or perceptions of problems in any facility, and a successful business must have an analysis tool that routinely gathers performance data and processes it so that decisions are made based upon facts. Data becomes the foundation for understanding the systematic causes and identifying the right problems, which have the biggest impact to the business. In this analysis, the equipment data is separated into four main categories dependent on the business impact: safety, environmental, production, and cost. The determination must then be made whether the events are chronic or sporadic type of events, where chronic is defined as failures that occur multiple times within a defined period and sporadic is failures that are sudden and significant in impact. Prioritize Based On Business Impact This step prioritizes the defects by category of business impact. Using business and site triggers, Pareto diagrams are created for each category identifying large and small impacts. A Pareto is also created for potential risks based on a site Risk Ranking Process, Criticality level and FMEA data. Select What to Work On: This step utilizes the Pareto s based on business impact and develops potential Root Cause Failure Analysis and Cause & Effect Analysis lists. The process then balances the people resources with the highest priority problems for analysis so that the time investment yields a maximum return to the business. These lists with assigned resources should be communicated to the site. Conduct Failure Analysis (FA) The FA process step investigates asset problems to determine why they failed. Different levels of FA are performed depending upon the severity of the problem. These different levels are Cause & Effect Analysis or Root Cause Failure Analysis. A Cause & Effect Analysis (mini Root Cause Failure Analysis) will only analyze the failure mechanism to the physical cause. This involves conducting a comprehensive analysis down to all of the root causes (physical, human and latent), but connotes analysis on mechanical items only. The mini Root Cause Failure Analysis will focus on latent causes: the underlying systemic causes of the failure associated with the physical causes. Depending on the type of failure this investigation may be led by Process Engineering, Reliability Engineering or Craftsmen. This type of failure analysis is incorporated into incident analysis, PHA analysis and equipment failures which do not trigger a formal RCFA. A formal Root Cause Failure Analysis will focus on latent causes: the underlying systemic causes of the failure. This is a full-blown analysis that identifies the Physical, Human and Latent Root Causes of HOW any undesirable event occurred. Failure has been broadened to include such non-mechanical events like safety and environmental incidents, quality defects, administrative problems (i.e. - delayed shutdowns) and similar events. Given the manpower and time required conducting a formal RCFA it will be targeted on incidents that exceed triggers established at the facility. Either analysis will produce recommendations to eliminate the defect, which will be tracked and implemented. The analysis will also develop criteria to evaluate the effectiveness of the recommendations. Shutdown Turnaround Outage & Reliability Asset Management 205

223 Section 17: Defect Elimination Leverage Learning s Instructions This step is the sharing of FA findings across multiple sites so that they can each check their equipment and their management systems to address or avoid the same problems happening at their site. Examples of tools and methods to leverage learning s are Phone Calls, Networks, , Intranet and the Knowledge Base process and tool. The system failures and latent causes should be categorized to identify commonality at/and between sites. The value of identifying and categorizing the causes is determining adverse trends, discerning the vulnerabilities and unforeseen side-effects of new installations and technologies, identifying problems with aging equipment and systems, and assessing the shortfalls of management systems and processes in general. Responsibilities Accountabilities Preparations Root Cause Failure Analysis Team Consist of the representative(s) from the following disciplines: Area Reliability Engineer, Operations, Maintenance, Process, Safety and Environmental (SHA), and other maintenance crafts and inspection as needed. Sponsor Accountable for the implementation of the corrective actions that address the RCFA Team findings. The Sponsor is responsible for removing barriers or getting upper management to support removal of barriers identified by the RCFA Team. Principal Investigator (PI) Accountable for the formal RCFA work process. The PI is responsible for the leadership of the formal RCFA Team, documentation of the results and sharing of the lessons learned. This is normally the Area Reliability Engineer. RCFA Team Members Accountable for the results of the investigation and for the collection and analysis of the physical, paper, and people data. The RCFA Team Members should have attended one of the recommended RCFA training courses prior to joining a RCFA investigation. If all of the RCFA Team Members have not attended an approved RCFA training course, then the PI should provide some basic RCFA training before or soon after the first RCFA team meeting. The PI reviews the RCFA charter with the RCFA Team and collects comments/upgrades to discuss with the sponsor. The RCFA Team then follows the RCFA investigation work process: 1. Collect the Physical, paper, and people evidence. 2. Organize the data (timeline, sequence of events, etc). 3. Order the data. 4. Present RCFA Team findings (causes). 5. Communicate Physical and Systems Causes (shared lessons learned). 206 Shutdown Turnaround Outage & Reliability Asset Management

224 Section 17: Defect Elimination A brief description of how to conduct the two levels of RCFA follows: Mini-RCFA (Cause & Effect) Work Process Analysis to determine chronic issues Data Tank (Examples) SAP Work orders dollars Notification Event Codes Criticality Assessment / RAP RCFA findings Network sharing Define the defects (Examples) Failure Modes and Effects Analysis (FMEA) Prioritize based on risk Safety Environmental Production Impacts Costs Determine Physical Cause based on evidence Why tree Determine the System(s) that failed For example: Communications Training Procedures QA/QC Management of Change (MOC) Work Processes Human Factors Develop action items to resolve defect(s) Document in a work request that assigns responsibility and a target date Eliminate Defect Plan Schedule Do Audit for Results/Improvements Results Improvements Feedback Leverage Learning s To other areas/divisions To other business units To RAMP networks Shutdown Turnaround Outage & Reliability Asset Management 207

225 Section 17: Defect Elimination Formal RCFA Work Process Does Sporadic Event or Chronic Problem Exceed Triggers? Safety Trigger Environmental Trigger Production (LPO) Trigger Maintenance Trigger Cost Trigger RCFA Sponsor Selects Principal Investigator (PI) Business Unit List of Trained PI's Availability of PI PI and Sponsor develop a written charter for the RCFA Principal Investigator Selects Formal RCFA Team RCFA Team Members have supervisor s support to allocate significant time to investigation. The RCFA Team Members should have had RCFA training (or 1/2 day introduction) prior to participating in RCFA. Begin Formal RCFA Work Process Collect Physical Evidence (Parts & Position) Collect People Evidence (Interviews) Collect Paper Evidence (Documents, Computer files, etc.) Individual Evidence Summary Combined Evidence Summary Develop Exploratory "WHY Tree" Review Progress with Sponsor Identify Physical Cause(s) Identify Inappropriate Human Intervention Identify Systems (Management Systems) Causes Develop Explanatory "WHY Tree" Review Progress with Sponsor Decide if a Latency Probe is required Draft RCFA Final Report Review with Sponsor (and other affected business groups) Final Report agreed by all RCFA Team Members Issue RCFA Final Report (the "Findings) Leverage Learning s to other units, sites, DELT, etc. Sponsor/Business Unit Develop Action Plans Sponsor is accountable for acting upon the RCFA Findings. Sponsor is responsible for assessing the priority and path forward. Sponsor is accountable for acting upon the RCFA Findings. Sponsor is responsible for assessing the priority and path forward. A separate team (including some of the RCFA Team Members) can be assembled to develop path forward action items. 208 Shutdown Turnaround Outage & Reliability Asset Management

226 Notes Section 17: Defect Elimination Defect Elimination Shutdown Turnaround Outage & Reliability Asset Management 209

227 Section 17: Defect Elimination 210 Shutdown Turnaround Outage & Reliability Asset Management

228 Section 18 Section 18: Predictive Maintenance (PdM) Predictive Maintenance (PdM) Objectives This Section provides the participant with an understanding of Predictive Maintenance (PdM) in relation to Condition Monitoring of production assets and how this information can assist with development of the STO Workscope. You will understand: PdM Tools and Techniques PdM Task List Development PdM Close-out Review Inspection Techniques Key Terms Non-Destructive Examination 52 Week Planned Maintenance Standard Job Plan Shutdown Turnaround Outage & Reliability Asset Management 211

229 Best-Practices Section 18: Predictive Maintenance (PdM) Predictive Maintenance (PdM) Best-Practices PURPOSE Predictive Maintenance (PdM) refers to the techniques, tasks and activities typically performed by Maintenance, Operations and Technical, a.k.a., Reliability Asset Management Team, to ascertain the current condition of the facility s assets [equipment]. The current conditions are then compared with the Original Base Line Signature for Dynamic Assets and the Original Design Specifications for Static Assets. The delta between the original conditions and the current conditions are documented for further analysis. Trend Analysis is then conducted to forecast the remaining life of the Asset (Failure Detection). This guideline outlines the standard for developing Predictive Maintenance Task Lists that are incorporated into Standard Job Plans and added to the 52 Week Planned Maintenance Program. Conducting Predictive Maintenance activities on the Facility Assets will minimize unscheduled breakdowns, prevent deterioration, extend the useful life of the assets and ensure maintenance and inspection activities are performed proactively to optimize Equipment Reliability and Process Availability. BEST-PRACTICES The Inspection Group establish a Long Range Asset Inspection Plan (7 10 years) for all the facility s Static Assets. The Inspection Group is responsible for justifying which Static Assets are to be removed from operational service (Turnaround Worklist) to facilitate conducting the PdM activities. The Inspection Group is responsible for ensuring that the maximum numbers of the Facility s Assets are monitored and remaining life analysed using Non Invasive Inspection Techniques. The Inspection Group is responsible for justifying, developing, and defining the schedule intervals for all PdM surveys conducted on the facility s Static Assets. The Inspection Group is responsible for developing the Standard Work Procedures for the PdM activities associated with the Static Assets. The Reliability Group is responsible for justifying which Dynamic Assets are to be removed from operational service (Turnaround Worklist) to facilitate conducting the PdM activities. The Reliability Group is responsible for identifying, which Dynamic Assets (Critical) will be monitored continuously using in service Condition Monitoring Equipment. The Reliability Group is responsible for developing the Standard Work Procedures for the PdM activities associated with the Dynamic Assets. Prior to implementing PdM technologies, ensure that sufficient training is provided. Consider hiring a competent PdM Maintenance Contractor to establish benchmark readings and reports and provide training to in-house staff in diagnosis and analysis techniques. Selecting the appropriate PdM technology and establishing the correct PdM program can result in significant reductions in the cost of maintenance. The effectiveness of PdM s executed, as part of the 52-Week Planned Maintenance Schedule should be reviewed as part of an annual Re-evaluation Process. 212 Shutdown Turnaround Outage & Reliability Asset Management

230 Section 18: Predictive Maintenance (PdM) Guideline Overview Examples of Predictive Maintenance (Pdm) are NDE (Non-Destructive Examination), historical trending, vibration analysis, oil analysis, thermography, ultrasonic testing, glycol analysis, etc. Predictive Maintenance Plans typically cover the following types of assets: Static equipment, i.e. vessels, piping, heaters, exchangers, etc., Rotating equipment, i.e. pumps, motors, drivers, compressors, etc., Electrical Systems, i.e. switch gear, transformers, instruments, analyzers, etc., Predictive Maintenance has the following characteristics: Generally performed when equipment is on-stream, Developed and implemented as part of the 52 Week Planned Maintenance Schedule Automatically scheduled on the Due Date intervals by the CMMS Executed using Standard Job Plans (SJP s), Program is in place to strictly control the qualification, training and competence of personnel responsible for conducting on-stream monitoring, Program is in place to ensure the effectiveness of the data collection and recording process, trend analysis and recommendations for corrective action resulting from the Condition Monitoring Program Value Added to the Asset Management Strategy, i.e. the PdM activity predicts the pending failure in time to schedule Corrective Maintenance and prevent a catastrophic failure. The changing condition of the asset can be determined by installing continuous Condition Monitoring Equipment, applying Statistical Process Control techniques that continuously monitor Asset operating performance, or through the use of the Human Senses. Predictive Maintenance (PdM) is generally performed on operating assets. Most asset failures usually provide a warning that they are going to occur. These warnings are referred to as potential failures, are defined as identifiable physical conditions which indicate that a functional failure is going to occur or is in the process of occurring. The Reliability Engineer establishes upper and lower range limits for the various failure modes on the Dynamic Assets and the Inspection Group establishes the range limits for the Static Assets. The normal asset operating condition is monitored within the allowable range; if the asset condition reaches the upper or lower deviation limit the monitoring equipment initiates an Alarm or Shutdown of the asset. When a potential asset failure is detected, the type of failure and the consequences of the failure are analysed immediately to determine when the asset will be removed from operating service to perform corrective maintenance. Depending on the type of failure and its potential impact on production, safety, the environment or catastrophic damage to the asset, Corrective Maintenance is performed on the asset Immediately (Un-Scheduled) or the Corrective Maintenance is planned and performed at a later date (Scheduled). Effective Predictive Maintenance techniques require the analysis of technical data, diagnostic results, process operating data, maintenance histories and design / performance data. The implementation of effective Predictive Maintenance will produce the following results; Fewer Failures / Emergencies Inspections identify asset problems before they cause failure, Extend Asset Life, Optimize the maintenance resources (increased planned work), Shutdown Turnaround Outage & Reliability Asset Management 213

231 Section 18: Predictive Maintenance (PdM) Safer working environment. PdM Tools and Techniques Several tools and techniques are available for Condition Monitoring and performing diagnostic evaluation on assets. Inspection Techniques Performed by Maintenance Personnel Fault Code Analysis Common Use Trend and Analyze Repetitive Repairs Fault Code Analysis requires a Work Order Management System (CMMS) that files historical Work Order information in a structured format (Failure Codes Failure Mode, Failure Cause and Repair Performed) on each asset. The historical data for an asset can be sorted by the CMMS based on specific requested queries (e.g. detect the existence of cyclic failures). The Reliability Engineer can quickly research previous asset failures to determine if the failures are random or cyclical in nature. With cyclical failures, the intervals between failures may be extrapolated, analyzed and graphed to predict the occurrence of future failures. Conducting a detailed analysis of each individual failure mode is used to help determine the root cause of that particular failure. Vibration Analysis Common Use Analyze and Trend Vibration caused by Wear, Mechanical Looseness and Bad Alignment. Testing is normally performed on rotating equipment in order to measure problems evidenced through equipment component vibration (oscillation about its position of rest). The nature and characteristics of the vibration are measured, analysed and trended against the original base line signature. Nature of vibration may refer to axial, vertical or horizontal directions and the characteristics of vibration may be viewed through frequency, velocity, displacement or acceleration. When on-line vibration monitoring equipment is installed on a dynamic asset, the vibration measurements are charted automatically and continuously compared with the pre-established critical vibration alarm or shutdown limits. Wear Particle Analysis Common Use Analysis of lubricants in Lubrication Consoles, Oil Mist Systems, Gearboxes, etc. for Contamination and Lubricant Breakdown Conduct the analysis on in service oil samples to determine the level of contamination sustained as a result of mechanical wear on machinery components. The analysis is performed in a Laboratory using ferrography (physical separation) and spectrometry in order to determine the presence and degree of wear metal particulate. The presence of water, glycol and fuel in the lubricating oil provides evidence of contamination problems. Infrared Thermography Common Use Hot Spot Detection of Electrical Shorts, Overheating and Insulation Breakdown All molecular objects emit infrared radiation with a temperature above absolute zero. The degree of radiation can be effectively measured using an infrared camera that displays the temperature gradient through a CRT viewer. Asset components can easily be surveyed to reveal excessive temperature deviation or hotspots. This technique is suitable for determining the temperatures on furnace and boiler skins, heat exchangers, electrical switchgear, stack ducting, roofing etc. Ultrasonic Detection Common Use Leak Detection of Compressed Air Systems, Steam and Other Process Systems Any sound with a frequency above 20kHz (the limit of human hearing), is considered ultrasound. Hand held ultrasonic leak detectors are listening devices capable of detecting frequency ranges between 20 khz to 100 khz. When gasses or liquids escape through small openings they produce ultrasound. The ultrasound detector transposes the ultrasound to an audible range for the operator. 214 Shutdown Turnaround Outage & Reliability Asset Management

232 Section 18: Predictive Maintenance (PdM) Detection can be performed by contact or scanning modes. Ultrasonic Detectors are useful for identifying gas leaks and high-pressure steam leaks etc. Laser Alignment Common Use Verification of Alignment of Mechanically Coupled Drive Trains Shaft mis-alignment accounts for a significant portion of all coupled rotating equipment failures. Low emission industrial lasers (with no measurable un-straightness) are capable of performing accurate alignment over much greater distances and performing alignment on uncoupled installations. Laser optics are interfaced to the microcomputer to produce the computer-aided optical alignment (CALOA) system. Inspection Techniques Performed by Operations Personnel Performance Monitoring Common Use Monitor and Trend Degrading Asset Condition The original equipment manufacturer (OEM) and the Process Engineering Group are responsible for providing the correct operating levels. Readings (dial, gauge or chart representations for temperature, pressure, throughput and quality) are used to monitor asset-operating conditions and are charted against normal operating ranges to trend deterioration, fouling and contamination etc. Continuously monitoring and documenting the deterioration in the asset operating condition enables the operator to recognize a failure situation, monitor its acceleration closely and provide the Reliability Engineer with information that is required to conduct effective failure analysis. Visual Inspection Techniques Common Use Passive Verification of Operating Parameters Passive techniques (no intervention or articulation) can be used to monitor and assess asset performance conditions. Some simple techniques include air streamers placed at air-out vents to indicate proper discharge flow; reservoir level glass markers to indicate liquid fill levels, temperature crayon indicators, alignment paint lines etc. Inspection Techniques Performed by Technical Personnel The Technical Department (Inspection Group) are responsible for assuring the integrity of the static assets based on corporate codes of practice and statutory engineering compliance. The majority of the monitoring techniques used by the Inspection Group are non-destructive and non-invasive. There is a significant cost differential between conducting Inspections on the assets when they are in operational service compared to out of operational service (Turnaround), therefore the Inspection Group must maximize the amount of inspection that is conducted while the assets are still in service. Asset inspections should be conducted on-stream (as Intermediate Inspections) to follow-up on previously noted irregularities or complement historical data in order to predict the need for future rehabilitative action or equipment retirement. The Inspection Group is responsible for justifying (Cost Benefit Analysis) the removing of operating assets from service (Turnaround Worklist) to conduct inspections or execute remedial maintenance activities. Ultrasonic Thickness Testing Common Use Wall Thickness Measurement High frequency sound waves are used to determine the thickness of metals on various assets as a means of assessing wastage not evidenced from external surfaces. Probes called transducers (in contact with the test material) continuously transmit and receive ultrasound. The material thickness (measured accurately to ) is determined by the time taken for the sound to penetrate the metal and return to the probe. Ultrasonic Thickness Testing surveys are conducted on Assets and Piping at selected points according to pre-established intervals based on the asset service conditions and performance. The historical corrosion readings are compared with the new survey readings to determine the average corrosion rates for the asset. The average corrosion rates are then compared to retirement thickness and extrapolated over time to determine remaining life and schedule for repair or replacement. Ultrasonic Flaw Detection Common Use Identify Cracks and Imperfections in Materials Shutdown Turnaround Outage & Reliability Asset Management 215

233 Section 18: Predictive Maintenance (PdM) Previously detected equipment material flaws such as cracks or lamination can be accurately plotted in an effort to determine the level of propagation. Shear wave or angle probes used in conjunction with a CRT display are capable of charting a three dimensional image of the flaw or defect. Subsequent testing is capable of measuring defect propagation. Surface Flaw Detection Common Use Identify Surface Flaws on Welded Components Two common methods of performing surface flaw detection are Dye Penetrant Inspection and Magnetic Particle Inspection. They are able to accentuate flaws so they are readily visible and defined. Dye penetrant is sprayed on the test surface and the dye penetrates any flaws, the surface is cleaned to remove any remaining dye and then sprayed with a developer in order to draw dye from the flaws. Red dye is defined in the white developer surface, if fluorescent dye is used, the surface is examined with a black (ultraviolet) light. With magnetic particle inspection, a magnetic field is applied to the metal surfaces using large hand held magnets. When metal powder is sprinkled over the test surface, the magnetic field draws the iron powder into flaw areas such as cracks, which are very easy to see with the naked eye. Radiography Common Use Subsurface Flaw Detection In Materials Radiography is employed using X-ray tube emissions or gamma rays produced by radioactive sources such as Iridium 192 and Cobalt 60. Radiography is used to define subsurface flaws in metal components. Typically used to verify the quality of a weld attaching two separate components together and for confirming wall thickness contours on piping where Ultrasonic Thickness Testing has uncovered significant irregularities. Radiography is also used extensively as part of pressure containment verification in process welding quality control. Scoping Systems Common Use Visual Inspection of Internal Closed System Surfaces Internal inspection of components can also be performed by borescope (a rigid tube which may be up to 150 ft in length) that allows internal inspections with the help of light and magnification to transmit a picture to a video monitor. Inspections can be performed within curved contours using flexible scopes and fibre-optic technology (fibrescopes). Strain Gauging Common Use Measure Mechanical Deflection in Structural Components Mechanical deflections in structural components can be measured and monitored using various types of strain gauges i.e. wire resistance, elastic elongation, coatings etc. Plastic deformation of the test materials or structures is monitored in an effort to forecast when calculated critical limits will be encountered. Acoustic Emission Common Use Flaw Detection In Structures Under Dynamic Loading Conditions All materials subject to load emit audible stress waves resulting in changes in their crystallographic form. Placing a transducer on materials subjected to load senses acoustic emissions. Fatigue, stress and wear all combine to change the physical make-up of the structure or material that could result in plastic deformation and the formation of cracks. Although defect propagation becomes audible, it is difficult to ascertain the nature or severity of the defect. PdM Task List Development When developing the PdM Task List and frequency consider the following criteria: Make sure the assigned PdM tasks are consistent with the strategies defined by the Asset Management Plan, 216 Shutdown Turnaround Outage & Reliability Asset Management

234 Section 18: Predictive Maintenance (PdM) Where the task requires an inspection, test or calibration check, ensure that the Work Instruction associated with the task is clearly specified and describe the action to be taken if the item fails the inspection / test or is outside tolerance, Use consistent terminology, words and phrases, Make sure task descriptions are concise and clearly defined, Use detail that is consistent with the skill levels of the personnel who will perform the task. Assign standardized time intervals when assigning the frequency, i.e. daily, weekly, monthly, quarterly, semi-annual and annual. The PdM activities should be supported with reference information if applicable that details the Standard Conditions for the Asset, e.g. acceptable tolerances, corrosion and erosion rejection limits, etc. Define the upper and lower deviation limits that will be compared to normal running condition or design criteria, Define the Training / Qualification / Certification Requirements for the person using the PdM Technology and Tools. Define the Standard Work Procedure that must be adhered to by the individual conducting the PdM activity. PdM Close-out Review The first time a new Standard Job Plan or PdM is executed in the field, it is important to scrutinize its suitability by: Verifying the validity and accuracy of all the activities, Ensure that the correct material, parts and equipment are correctly identified, The scheduled resources and durations required to execute the activities are correct. Additionally, when closing the PdM Work Order, it should be determined whether the frequency interval can be adjusted based on the current Asset condition and performance. The Reliability and Technical Department (Inspection Group) must conduct an Annual PdM Review. The purpose of this Review is to ensure that: All approved PdM s have been included in the 52-Week Planned Maintenance Schedule. PdM records have been properly managed and scheduled by the CMMS Verification that PdM s have been added, amended and deleted in the SJP Library which is used for gathering historical information. Asset performance measured against target Key Performance Indicators is assessed and corrective action is taken to address negative deviations. Define the reporting requirements for the PdM activity results (format, analysis, conclusions, recommendations, distribution, follow-up, etc). Shutdown Turnaround Outage & Reliability Asset Management 217

235 Notes Section 18: Predictive Maintenance (PdM) Predictive Maintenance (PdM) 218 Shutdown Turnaround Outage & Reliability Asset Management

236 Ej Lister Note from the Author Note from the Author Ej Lister There are two things in life that I am very passionate about: travel and training. As fortune would have it I ve been able to combine my passions to do what I love best: Knowledge Transfer through training and coaching. After many years of acquiring knowledge and gaining experience I m now at the point in my life where it s time to give back; time to enjoy a life of semi-retirement while still having purpose and value. I may never fully retire, since knowledge transfer is something I can do until I m too old to travel, which, willin, will be 100 years or more (believe me, I have enough materials and stories to edu-tain people for that many years). STOnavigator inc. certification and qualification Certification (knowledge) is acquired by formal training. Qualification is gained by experience through coaching, e.g., I can teach you in the classroom how to plan a job, and how to assemble a Planned Job Package, but if I work with you in the field and coach you in the best-practices you ll learn-by-doing. Then, as you become more confident and qualified you can transfer your knowledge and experience with others through coaching and mentoring. Programs: (all programs are customizable) Primavera P6 for Shutdowns, Turnarounds and Outages (DSM) Shutdown, Turnaround and Outage Best-Practices Reliability Asset Management Maintenance Planning and Scheduling Offshore Platform Logistics and Safety Management Contact me for more information on in-house training and coaching. You ll be glad you did: ejlister@stonavigator.com Shutdown Turnaround Outage & Reliability Asset Management 219