CONSIDERATION OF FACTORS IN TURNAROUND REFINERY (TAR) PROJECT MANAGEMENT

CONSIDERATION OF FACTORS IN TURNAROUND REFINERY (TAR) PROJECT MANAGEMENT Fabić M. 1, Pavletić 2, D., Soković M. 3 1 Clinical Hospital Center Rijeka, Krešimirova 42, 51000 Rijeka, marko.fabic@gmail.com 2 University of Rijeka, Technical Faculty, Vukovarska 58, 51000 Rijeka, duskop@riteh.hr 3University of Ljubljana, Technical Faculty, Aškerčeva 6, Ljubljana Paper received: 18.01.2016.; Paper accepted: 24.02.2016 UDC:005.6; Abstract: Implementation of quality management systems within different business operations are supported by several models of quality management, business excellence, etc. The best known models are EFQM, MBNQA and IPMA, on which many other applicable models are based. Most models of quality management are generic and can be applicable to a wide array of business operations. In this paper, models of quality management will be analysed that, based on their characteristics, can be modified and successfully used in refinery turnaround (TAR) projects for the purpose of quality management. TAR projects are projects with very distinctive features and the proposed considerations will create the basis for defining the concept of an effective quality management model in projects of that type. Key Words: turnaround refinery (TAR), project quality, project success, project complexity, maintenance. 1. INTRODUCTION Turnaround is an important activity in the oil refinery business, significantly influencing business profitability, reliability of maintained systems (business property), meeting legal regulations, protection of environment and ensuring the health and safety of employees, all in the sense of creating new property of the company. A turnaround project requires longer production halt periods (4-6 weeks) and creates significant costs: costs of the turnaround itself as well as costs of production halt due to the plant being out of operation; therefore it is desired to carry out turnaround activities and finish the process as soon as possible. Refinery turnarounds are often classified as minor or major. Minor turnarounds include one or several refinery plants. For example, turnaround can be carried out on one part of the plant while on other parts work activities can be performed, mostly almost unobstructed. The number of people is limited in minor turnarounds, as well as the planned activities and other maintenance jobs. Major turnarounds (TAR projects) include the majority of refinery plants, or several groups of plants, and most often result in the entire refinery being out of operation for a longer period. Major turnarounds mostly include other projects as well, such as maintenance, investments etc. Turnaround is classified as a capital expenditure (capex) project and it is performed as a project task, in order to realize, as efficiently as possible, cooperation between different organizational units participating in turnaround in accordance with the maintenance strategy and regulations of the company. Setting up the project organization enables the establishment of functional relations between various organizational units of the company and its subsidiaries involved in the refinery turnaround. Several organizational units are included in carrying out refinery turnaround through the project task, which implies a high level of technical and organizational complexity. For example, according to the Consortium study carried out worldwide, on over 1200 turnaround projects, conclusions were drawn that more than 90% of turnarounds failed to fulfil their target purpose and goal and that 80% of turnarounds exceeded costs in the range from 10% to 40% [1]. Furthermore, it was concluded that 50% of turnarounds suffered failure due to the schedule of activities, and almost 90% of turnarounds reported that the scope of activities grew, ranging from 10% to 50%. The major part of turnarounds was influenced by the lack of qualified staff and their skills and, in 75% of cases, the schedule of planned activities was abandoned in the first week of turnaround. When considering quality as the third dimension of each project, then the success of the project depends on costs, duration and quality. The first two dimensions of the project are most frequently of highest importance, while quality management is often just formally established. In most cases, three levels are accepted in project management: Quality control, Quality assurance, and Total quality management [2]. Quality management systems are supported and carried out, in business applications, through different models of quality management. TAR projects are projects with very specific particularities, with expressed complexity in all phases of the project, which inevitably influences the success of the project itself. In accordance with such particularities, it is necessary to consider the basis for defining the 35

concept of an efficient model of quality management in projects of similar type. 2. THE MOST SIGNIFICANT MODELS OF QUALITY MANAGEMENT The majority of quality management models are generic in nature and aim at involving greater areas of quality in particular business organizations. However, the most recognized models are EFQM, MBNQA and IPMA which serve as a basis for many other applicable models for different business systems. Therefore, their characteristics needed for quality management in TAR projects will be presented further in this paper. 2.1 EFQM model The European Foundation for Quality Management (EFQM) model is based on the principles of Total Quality Management (Figure 1). It includes oriented results, focus on the buyer, leadership and purpose consistency, management on the basis of processes and facts, development and including people, continuous learning, innovations and improvements, partnership and social responsibility [3]. The EFQM model provides a framework based on nine criteria used for assessing excellence. Five criteria are enablers or factors (leadership, people, policy and strategy, partnership and resources, processes) and the remaining four are criteria referring to people results, customer results, society results and key performance results [3]. The whole purpose of the self-evaluation process is the analysis of unsatisfactory results and discovering fields where improvements can be carried out [4]. The EFQM model of business excellence is carried out from right to left in the process of selfassessment based on assumptions that there is causal connection between the enabler s criteria and results criteria [5]. According to Ghobadian & Woo the EFQM model strictly recognizes the quality of the final (end) results of integrated processes and provides an insight into organizational methods of quality management and the final result [6]. The model does not only provide an insight into final performance, i.e. result, but also measurement of organizational functioning. 2.2 MBNQA model Malcom Baldrige National Awards (MBNQA) is a model which represents a national award for quality in the USA. The model was implemented in 1987 with the aim of providing a framework for complete quality auditing. The award is given annually to the best company in the field with a successfully implemented system for quality management. The award is implemented through three major criteria: for development of award, self-assessment of organization, and receiving feedback from the applicant of an award request [7]. Furthermore, criteria are based on the following concepts, including: visionary leadership, excellence management initiated by Buyer's needs, organizational and personal development, valorisation of employees and partners, focusing on the future, management based on innovations, management based on facts, social responsibility, focusing on creating a perspective system and value of results (Figure 2). Figure 1. European Foundation for Quality Management - EFQM Many authors have concluded that the influence of quality in project management also influences key project results. For example, Anderson and Jerman [8] analysed in their work the influence of quality management on logistic performance. Measurement of quality was defined through factors of quality management. The measurement was based on 36 MBNQA quality criteria, and nine constructs were created for analysing their logistic network which proved the influence of quality on key project results in the logistic industry.

2.3 IPMA model The International Project Management Association (IPMA) developed its own model of excellence in project management. The model is used for best practice assessment for project management. The model has elements and a database founded on the EFQM model of business excellence in many aspects. It is comprised of two groups of criteria, the first being project management (in EFQM-enablers), whereas the second comprises of results (EFQM also comprises of results), Figure 3. The first group, project management, includes: objectives, leadership, people, resources and processes. The second group, results, includes: people results, customer results, results of other parties, key performance and project results. Figure 2. Malcom Baldrige National Awards - MBNQA The IPMA model of excellence also emphasizes a feedback connection called innovations and learning. Information gained through the feedback connection after project completion is of great significance as an input parameter for similar projects. According to elements of the IPMA model, it is concluded that the left side of the model, project management, is responsible for the success of project results. Therefore, improvement of criteria, through the project management variable, influences the improvement of the project itself in the phase of execution. IPMA recognizes and presents awards solely to the project team that achieved the best results, making them the most successful representatives of the project management. Evaluation criteria indicate that it is not possible to achieve excellence in project management relying solely on project results [9]. Figure 3. International Project Management Association - IPMA 37

2. QUALITY MANAGEMENT OF TAR PROJECTS The most significant of the previously mentioned models of quality control are generic in nature and it is attempted to encompass a greater area of quality business organization and project business organisation. It is definitely necessary to analyse each of the most significant models of quality control in order to define factors of quality in the management process. The main difference between MBNQA and EFQM with regard to the IPMA model is the fact that IPMA among initiators of project management, i.e. exciters, sets variable targets and only after that leadership, people, resources and processes, while MBNQA and EFQA are primarily directed towards leadership and by doing so emphasize the effect on other model variables. Important current models actually represent the base for defining the most significant quality factors for specific projects such as TAR projects. 3.1 Basic premises The purpose of project quality management is to fulfil all the requirements of the project as per plan which was set in advance in accordance with aims and responsibilities as well as the quality policy, i.e. pursuant to the requirements of norm ISO 9001, for the case when companies are certified in accordance with that norm, but also with other approaches to quality control such Juran, Deming, TQM, etc. [10]. According to PMBOK quality control of a project includes the processes and activities of the organisation that implements the project. A review of quality control comprises of three levels [10]: 1. Quality Planning level of processing, in which quality requirements for the project and product (services) are defined, 2. Quality Assurance process level of revision of quality requirements as well as results from quality control measurements. The aim of quality assurance is assurance as per achievement by use of corresponding or set quality standards, as well as operative definitions, and 3. Quality Control process level and measuring the results of effected control measuring, with the aim of evaluation of effectiveness. The guidelines of norm ISO 10006: Quality Management Systems Guidelines for Quality Management in Projects specifies eleven process groups according to their mutual correlation. ISO 10006:2003 provides guidelines for quality requirements which directly affect the project. Guidelines are conceived so as to be applicable to completely different projects with the aim of implementation and continuous improvement of quality in projects related to products as well as services, and especially complex projects. Complex projects require traceability and control of each individual process through the phases of the project life span. The system is designed with a series of different processes. Processes should be presented and logically connected within a system in order to manage that system [11]. It is possible that the quality of project process management will significantly affect the performance of the project, i.e. execution. This statement is based on the argument that the increase of level of quality in the management process will have an effect on the performance of the project, i.e. implementation. The observation is based on arguments that by increasing the level of quality in the management processes the chances of better performance pf the project are also increased [12]. The quality control processes in projects mutually interact with other project areas. It is necessary to differentiate between quality management in generic projects and quality management in TAR projects. Quality management in generic projects often satisfies only a specified organisational quality minimum. It is important to focus on the quality of management. This research indicates the importance of quality in the management process in order for same to have an influence on the overall successfulness of a TAR project. Authors who are conducting research on TAR projects significantly do not emphasise quality management as a critical factor of success. In most cases they mention business requirements and implementation of those same requirements with appropriate technical specifications which can be qualified in the phase of implementation of the turnaround refinery. The quality of management processes of TAR projects is reduced to quality management, which is implemented within the company, and most often it relates to the ISO 9001 requirements, which ultimately resulted in poor results for TAR success. Each TAR project ends with the fact that it did not satisfy the criterion of success, and is often accepted that an increase in the scope of work of 20% is acceptable, as well as exceeding the budget by up to 10% and exceeding the duration by 20% is acceptable. Defining the factors and their mutual correlation is fundamental for understanding the relation between them within a TAR project and with better relational understanding of their relationship such excesses must be decreased. 3.2 Success with TAR projects The successfulness of project management is one of the most addressed topics, and very often at the completion of the project the question of whether the project was successful or not arises. The success of a TAR project can be monitored through several dimensions because it is almost impossible to describe its success with one dimension in such a complex project. The most frequent approach to defining the success of projects is based on targets which include predefined: duration, financial resources, scope of work, as well as desired level of quality [13]. According to Baccarini [14], the success of the project may be monitored on two levels. The first level is 38

represented by the success of project management while the other is defined by the results of the project, i.e. product of the project. The success could be understood at best if observed through structural organisation, interest groups, priorities and perceptions [15]. Each project due to its specific features has critical factors which actually makes it successful. Very often in projects the measure of success of the project such as the duration, money and scope of work is not sufficient [16]. In order for the success of the project to be appropriately defined and measured it is important to note significant factors which form the overall successfulness of the project and in which direction should one aim at sole management of the project. For example the question arises: is a TAR project considered successful if project standard limitations such as duration, budget and quality are satisfied while releasing several tonnes of raw oil in the Kvarner bay? We are led to the conclusion that beside classical limitations as measures of success for a TAR project it is also necessary to include the ecological aspect, as well as safety and health of people who in refineries are at increased risk. In order to successfully define the project task it is necessary to separate and define works which are in fact the most important, most critical, and works that can be performed only during the time of cessation of the work of the refinery. To choose only relevant jobs for a turnaround refinery is not an easy task if it is hoping to achieve success in the turnaround, taking into consideration the limiting factors. To date a model which would describe the management process of turnaround has not been defined in the literature and which is based on statistical analysis and which would actually help to establish the reason for the lower performance of a TAR project. Many authors are of the opinion that successful project management will have a direct influence on the success of the project [17]. Project management, especially management of large projects, emphasises the importance of other factors which, for successful management of the project, should be taken into account and which will ultimately influence the success of the project itself. 3.3 Examination of factors of quality management in a TAR project Research which encompasses quality management is not always simple since there is no standard criterion for measuring quality. Due to the nature of quality it is not possible to measure it directly, therefore suitable factors should be used and adapted to the project environment in order to enable measurement of the effect of quality. TAR projects include such specific project performances which may influence the success of the project. Same have many unique characteristics which may suggest diversity from generic projects. According to this, there should be a different approach when evaluating the complexity and success as well as other significant factors. An approach to TAR projects using the methodology of generic project management gives unfavourable measures of success of the project which will have a negative influence on the quality of the project and ultimately on the success of the project itself. During the execution of the turnaround project some of the specificities of the project may be seen such as the lack of knowledge regarding the state of equipment to the moment of opening of same. For example: on scheduled works for the replacement of structured packings, in the process column cokes should not have been present, however the column had significant process deficiencies of which there were no indications when planning the turnaround. The cleaning of cokes has extended the duration time of work to 7 days. When opening the equipment very often one comes across so called additional works in the project which very often have a significant effect on some of the indicators of success. All factors of Quality Assurance in the process of TAR project management should be defined on the basis of the existing quality control management, especially EFQM models, and on arguments which sufficiently well test, i.e. confirm, the strength of variables. The most important when monitoring the quality management of a TAR project are: leadership, team, policy and strategy, partnership and resources, processes, project's key results as well as complexity. It is important to mention that the authors of this work, by introducing a new factor complexity, make an important contribution to the solving of issues related to quality control management of TAR projects. Complexity in a TAR project is an indispensable component and it is therefore necessary to examine the effect of complexity on the overall success of TAR projects (which is not the subject of this work). The complexity of TAR projects derives from the aforementioned specifies which differentiate them from generic projects. For example, not being familiar with the real state of equipment up to the moment then the plant is suspended makes the project complex. Also, the main arguments which constitute the complexity of TAR projects are exactly this uncertainty and interdependence of elements, activities, professional field and similar which are occurring at the time of planning and execution. Many authors have noted the lack of implementation of EFQM models of business excellence in the area of project management. For example, Westerveld [17] and Bryde [18] have come to the conclusion that the EFQM model of excellence is unsuitable for application in the area of project management, therefore a new model has been developed. Exactly those arguments as well as the poor results of TAR projects lead us to the conclusion that generic models do not describe well enough the relationship between the factors with which the TAR project has tried to be managed. Also, Zulu & Brown [19] have created a model of business excellence which is focused on defining the 39

factors for measuring quality in the project management processes. Each model of business excellence is focused on the business environment when managing projects, but empirically these are not sufficiently researched and tested. There is a degree of consensus among a certain group of researchers that the EFQM model, which is based on TQM philosophy, makes an efficient evaluation of the performance of the model [20]. The relation of factors for a TAR project and their interrelationship, i.e. their relation, is unknown especially in the phase of management. The complexity of a TAR project is present from the beginning to the completion of the project and among leadership and teams there is a realization of its presence. However, their understanding of complexity is very often based on experience rather than by specific arguments, which thus makes the TAR project a complex one with the degree of complexity affecting the outcome, i.e. the success of the TAR project itself. 3. CONCLUSION It is certainly difficult, if not impossible, to completely change the generic models of business excellence in all business organisations, especially for business organisations based on project management. Quality project management means quality management of the project processes as well as their results, i.e. with products or services of the project, and this refers to all projects independently of the nature of their products or services. With complex projects such as, for example, TAR projects, it is not sufficient to apply generic project management as well as generic models of business excellence for project management. It is necessary to define a quality assurance model closely connected with projects related to the oil industry, which has the stated factors based on existing quality management models. The defining of factors which are a constituent part of the model for quality management of the TAR project in which all the specificities of such a project are included requires a good theoretical, and especially practical, foundation. The concept of a quality management model for the TAR project should be tested by an adequate statistical method in order for the hypothesis of the model to be confirmed. Certainly it is necessary to define the role of factors of complexity on other parameters of the model as well as on the success of the TAR project itself. Experience gained in TAR projects indicates that it is complexity that actually decreases the successfulness of a TAR project. The introduction and defining of complexity factors is considered a significant contribution for the understanding of a TAR project. Previous studies, for example EFQM models in the area of project management, present different statistical analyses. Each analysis shows whether the model variables are positive or negative, significant or insignificant, while analysis do not show the numerical degree of strength of the relationship. The analysis that may define, besides the relationship and significance, the numerical value of the strength of the relationship is a logistic regression. It is exactly this analysis that can define the strength of the relationship and the influence of quality management processes of the project on key results of the project i.e. successfulness of the project itself. REFERENCE [1] IDC Technologies Pty Ltd, Practical Shutdown and Turnaround Management for Engineers and Managers, PO Box 1093, West Perth, Western Australia 6872, 2008. [2] Dale, B., Managing Quality, 4rd edition, Blackwell Publishing Ltd., Oxford, 2008. [3] EFQM, the European Foundation for Quality Management, Introducing Excellence, 2003. [4] Oakland, J., Total Quality Management 2nd Edition, Butterworth Heinemann, 1999. 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