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6-Oct-97 1
Value Improving Practices - Definition
6-Oct-97 2
CPDEP & VIPs - Impact of VIPS
RELATIVE CAPITAL COST AS A FUNCTION OF FEL
1.2
Original Benchmark
Position 1991
1.1
Relative Capital Cost
1994
1996 1992
FEL Improvement Only
1.0
Industry Average Cost = 1.0
199 2
199 3
199 5
4
199 6
199
0.9
Upstream
FEL Improvement plus VIPs Downstream
High
6-Oct-97 4
VALUE IMPROVING / BEST PRACTICES
for
CHEVRON PROJECT DEVELOPMENT AND EXECUTION PROCESS
Decision Analysis
PEP Workshop
Technology Selection Value Engineering Value Engineering Post Project Business Evaluation
-Process Simplification -Facility Optimization Assessment (GO-36)
Project Facility (IPA)
Objectives Design to Capacity Design to Capacity
-Levels for Equipment -Implement
$ $
D PFD D P&ID D A/R D D
EST EST
Legend: A/R = Appropriation Request GO-36 = A/R Form PEP = Project Execution Planning
D = Decision Point HES = Health, Environment, and Safety PFD = Process Flow Diagram
IPA = Independent Project Analysis, Inc. P&ID = Piping & Instrumentation Diagram
6-Oct-97 6
CPDEP & VIPs - VIP Definitions
Decision Analysis - DA and D&RA are processes to compare and decide among various alternatives by quantifying the
risks and uncertainties inherent in the financial outcomes (i.e., NPV, ROR) of the alternatives.
Project Execution Planning - A tool for strategic planning whose purpose is to maximize the probability of project
success. It facilitates alignment and decision-making, promotes team building, addresses who, what, why, when,
where and how, identifies issues and action items, assures communications, consistency, coordination and control, and
has a high impact on project outcome.
Technology Selection - Starting with the business driver, this process is used to select and evaluate alternative
technologies. Technologies may range from new processing types to equipment selection. Using a selection panel
and evaluation criteria aligned with the business driver, the various technologies are researched, developed and
evaluated .
Project Facilities Objectives - This tool is used to determine the type of facility that is to be designed and constructed.
There are nine evaluation characteristics. These characteristics range from capacity to expandability, and
maintainability to plant life. Each characteristic is placed into one of four categories ranging from category 1 (low
cost) to category 4 (high cost).
Value Engineering - Using a structured creative process, this tool uses functional analysis of the project components to
identify potential areas for improvements and suggests recommended improvement options.
Design to Capacity - This tool optimizes the capacity needed to meet the design conditions stated in the business
objectives. Equipment is identified as one of three levels ranging from level one (low cost) to level three (high cost).
Equipment & Material Alliances - Long-term and mutually beneficial relationship between owner and one supplier /
contractor based on performanc, trust, respect, and commitment. There is no competitive bidding.
6-Oct-97 7
CPDEP & VIPs - VIP Definitions
Project Standards - Industry standards are used as the starting point for standards. Then limited Chevron incremental
specifications are added as a supplement.
HES Optimization - The HES Risk Management process is used to identify, assess, and develop plans to maximize value
by managing significant risks. Four risk areas are included: personnel & public health/safety, environmental, financial
(due to HSE incidents), and public concern. Risk reduction measures (prevention or mitigation) are evaluated on a
cost benefit basis to ensure efficient resource allocation.
Energy Optimization - A methodology for optimizing capital cost, operating cost and operability of process unit, utility
system or manufacturing site by identifying the most economical levels of heat recovery and power generation by
integrating thermodynamic analysis, economics data, and conceptual design.
Constructability Review - This tool uses construction knowledge in the planning, design and construction of facilities.
Several formal reviews and checklists are used to ensure issues are identified early.
Process Hazards Analysis - Process Hazards Analysis addresses the various design and safety reviews performed by a
project team. These include the normal design/safety reviews and the design/safety reviews required by regulation.
The process defines a roadmap for performing the various analyses at the appropriate time.
Zero Injury Techniques - Techniques that produce excellent safety performance on construction projects: safety pre-
project / pre-task planning, safety training orientation, safety incentives, alcohol / substance abuse program, accident
and incident investigation.
Predictive Maintenance - Using advances in instrumentation and sensor technology to monitor machinery performance
and make repairs prior to failure. The characteristics monitored include: heat, lubrication, vibration, noise.
6-Oct-97 8
CPDEP & VIPs - VIP Definitions
Reliability Modeling - This tool uses computer modeling to simulate the reliability of a facility. The model required data
for mean failure times and repair times for equipment. Use of model canhelp predict operating factors and is used in
the selection of key equipment.
IPA Pre-A/R Assessment - An assessment of project progress and quality, performed in CPDEP Phase 3. Rates project
against IPA database of similar projects. The assessment establishes the FEL Index, recommends project contingency
based on known information, rates project cost estimates, and recommends schedule. The FEL Index is required for
GO-36 on projects over $25MM.
Post Project Assessment (IPA) - A collection of end-of-job data. It is conducted at the end of Phase 4 and i s performed by
IPA. The Downstream assessment uses the IBC data collection form while the Upstream assessment uses the new
IPA data collection form. Assessments help to improve estimates for future projects, and the cost ratios developed
help with Class 0 and 1 cost estimates for future projects.
Business Evaluation (GO-36) - An evaluation of achieved project success, measured against: original project objectives,
economic measures, realized economics, plant performance, and product/price forecasts vs. actual. The GO-36 form
defines the timing and objectives. Normally the first evaluation is in two years or at full production.
6-Oct-97 9
Decision Analysis
Decision Analysis
6-Oct-97 10
Decision Analysis - Definition
6-Oct-97 11
Decision Analysis - Abstract
DESCRIPTION: DA and D&RA are processes to compare and decide among various alternatives by quantifying the risks
and uncertainties inherent in the financial outcomes (i.e., NPV, ROR) of the alternatives.
APPLICATION: DA can be applied during any phase of CPDEP when a decision among one or more alternatives is
required. DA is often used during Phase 1 to study viability and identify economic drivers of a concept. Also, DA is
often used during Phase 2 to quantify the risks and select among the various alternatives.
DETAILS: A DA study involves a multi-discipline work team to analyze the problem and recommend a decision. A
decision review board periodically reviews the work team output and provides guidance. The DA process consists of
four key steps which include:
Framing the problem to assess the initial situation.
Sensitivity analysis to determine ranges of outcome for the alternatives.
Probabilistic analysis to determine ranges of outcome for alternatives.
Appraisal to evaluate the quality of the decision and the value of gathering additional information.
A DA study is typically led by an experienced facilitator.
COST & BENEFITS: Numerous DA studies have been conducted by all of the major Chevron opcos. The scope of the
decisions has ranged from small projects costing less than $1 MM, to large capital projects costing several hundred
million dollars overall. Typical duration and cost of DA range from less than one day and a few thousand dollars to
several months duration and exceeding $1 MM.
CONTACT:
M. T. (Mani) Vannan, (CTN) 842-8306, (e-mail: MTVA)
PRODUCTS AND SERVICES:
Decision Analysis Flowchart (SP-14)
ON-LINE RESOURCES:
CPDN Decision Analysis/Decision Quality Page
CPTC E&S Risk Management Page
External On-Line Resources
6-Oct-97 12
Project Execution Planning
6-Oct-97 13
Project Execution Planning - Definition
6-Oct-97 14
Project Execution Planning - Abstract
DESCRIPTION: PEP is a tool for strategic planning - a means to get all project stakeholders to work as
a team in order to plan and make decisions that will determine the project's path and success. It
facilitates communication and decision-making, defines issues and risks, and defines answers to the
classic questions of Who, What, Why, Where, and How.
APPLICATION: The process creates active involvement of the key stakeholders and the project team in
project planning and alignment. PEP focuses on developing the project strategies that support the
Company's strategic, business, and project execution objectives.
DETAILS: A plan is first produced in the earliest stages of a project and then kept up-to-date, always
reflecting the latest developments and business conditions. It is a guide for everyone involved with
the project. PEP is done with input from everyone involved in the project. The PEP Workbook makes
it easy for a project team to implement a structured process to identify unresolved issues and develop
strategies to address these issues. The strategies then form the basis for the plan details.
COST & BENEFITS: For large projects, the process requires a series of three facilitated workshops.
Experience confirms that the time spent in strategic planning is well spent. Most of the causes of cost
overruns and schedule delays have their roots in issues that can be and should have been addressed
early.
This structured planning process enables the project team to capture these issues early in the planning
process and develop strategies to mitigate the consequences.
CONTACTS:
R. K. (Bob) Fujimoto, (CTN) 842-9298, (email: BFUJ)
N. J. Lavingia, (CTN) 842-9868, (email: NJLA)
PRODUCTS AND SERVICES:
Implementation Guide G-10: Project Execution Planning Workbook (G-10)
6-Oct-97 15
Project Execution Planning - Process
6-Oct-97 16
Project Execution Planning - Process
Business Objectives
Project Execution Objectives
Scope of Work
CPDEP Implementation Plan
6-Oct-97 17
Project Execution Planning - Process
6-Oct-97 18
Project Execution Planning - Process
3. Define the Plan for Execution & Control
Safety Management Plan
Quality Management Plan
Cost Management Plan
Schedule Management Plan
Information Management Plan
Design Management Plan
Material Management Plan
Drilling/Construction Plan
Start-up Management Plan
Security Management Plan
Special Factors Management Plan
6-Oct-97 19
Project Execution Planning - Process
1. FRAME THE PROJECT
A2 Project Execution A3 Scope of Work A4 CPDEP
A1 Business Objectives
Objectives Implementation Plan
B3 Milestone Sched
B4 Funding Plan
C4 Schedule Management
Plan C9 Startup Management Plan
6-Oct-97 20
Project Execution Planning - Process
A2 Project A4 CPDEP
A1 Business Execution Implementation
Objectives Objectives Plan
A3 Scope of
Work
6-Oct-97 21
Project Execution Planning - Process
B. Planning the Project
B3 Milestone
Schedule
B4 Funding
Plan
6-Oct-97 22
Project Execution Planning - Process
C. Planning the Execution Phase
C1 Safety C5 Infomation C6 Design C10 Security
Mgmt Plan Mgmt Plan Mgmt Plan Mgmt Plan
C2 Quality
C7 Materials C11 Special
Mgmt Plan
Mgmt Plan Factors Plan
C3 Cost
Mgmt Plan C8 Drilling /
Construction
C4 Schedule Mgmt Plan
Mgmt Plan
C9 Startup
Mgmt Plan
6-Oct-97 23
Technology Selection
Technology Selection
6-Oct-97 24
Technology Selection - Definition
6-Oct-97 25
Technology Selection - Definition
6-Oct-97 26
Technology Selection - Abstract
DESCRIPTION: This is a formal, systematic process by which a project searches for technology which
may be superior to that currently employed and improves our competitive advantage.
APPLICATION: Ideally, Technology Selection is started very early in Front-End Loading for process
selection. Technology selection can also be used for equipment and materials selection.
DETAILS: The 1994 Corporate Strategic Plan reinforces the importance of technology by stating that the
Corporation needs to "ensure that technology is used to our competitive advantage".
In Front-End Loading, decisions made can have a major impact on the financial success of the
project. Technology chosen without a well thought-out plan can lead to cost overruns, longer
schedules (especially start-up), and lost opportunities in the marketplace.
The basic process involves commissioning a technology selection team which goes through several
basic steps of information gathering, speculation, analysis, development, and presentation.
COST & BENEFITS: Technology selection is developed from discussions with benchmark companies
and internal teams that have used a technology selection process. Some projects have already used a
systematic selection process like the El Segundo Acid Plant or incorporated innovative outside
technology such as Tengizchevroil Demercaptanization.
CONTACTS:
G.W. (Gary) Fischer, (CTN) 842-5514, (e-mail: FISC)
P.C. (Peter) Schmidt, (CTN) 242-5161, (e-mail: PECS)
PRODUCTS AND SERVICES:
Implementation Guide G-18: Technology Selection (G-18)
6-Oct-97 27
Technology Selection - Ranking Criteria
TECHNOLOGY SELECTION
POTENTIAL RANKING CRITERIA
(Determined by Project Objectives)
6-Oct-97 28
Technology Selection - Selection Process
CPDEP
Identification
of Asset Needs
Deliver
Technology
Phase 1 Phase 2 Phase 3 Phase 4 Phase 5
Select
Identification of Acquire / Execute Operate &
Technology
Technology Develop Technology Measure
Acquisition
Opportunities Technology Plan
Alternative(s)
Plan
6-Oct-97 29
Technology Selection - Selection Process
DECISION
MAKERS
Identification
Identify Continue Select of New
Implement Continue
Opportunity Evaluation Alternative(s) Opportunities
Implementation
Develop
Opportunity Acquire / develop Assess
Technology
OPERATIONS Identification
Acquire Data
Plan Technology Against Targets
AND
Recommend Recommend
DELIVERABLES Evaluation Technology Implementation Implementable Operations
AT MAJOR & Scope Plan Plan Technology Review
REVIEWS
6-Oct-97 30
Technology Selection - Benefits
6-Oct-97 31
Project Facility Objectives
6-Oct-97 33
Project Facility Objectives - Abstract
DESCRIPTION: PFOs establish the characteristics of the facility needed to meet business goals. It sets
criteria for facility reliability, expandability, automation, life, expected stream factor, likelihood of
expansion, production rate changes with time, product quality, and product flexibility. PFO can be
used to set a project philosophy for marginal investment decision-making, design allowances,
redundancy, sparing philosophy, and room for expansion.
APPLICATION: PFOs should be used on projects of any size and initiated prior to "manning-up" the
project.
DETAILS: Overall objectives are set early based on information provided by the SBU funding the work.
Included in these can be conceptualized descriptions of the expected stream factor, facility life,
likelihood of expansion, projected production rate changes with time, product quality, product
demand, feedstock availability, feedstock type, degree of commercialization of the technology, etc.
These determine the redundancy/sparing philosophy, allowances for future expansion or changes,
etc., of facilities necessary to meet the business goals. This process establishes the Project Facility
Objectives. PFOs should be revisited during the latter stages of project development. They should
also be used to orient new members of the project team.
COST & BENEFITS: Initial use of this tool requires only a few hours. PFO help bring all members of
the project team into alignment through discussion and consensus. This helps keep the cost of the
project down by eliminating needless extra conservatism often designed into a project at lower levels.
CONTACTS:
R. K. (Bob) Fujimoto, (CTN) 842-9298, (email: BFUJ)
N. J. Lavingia, (CTN) 842-9868, (email: NJLA)
6-Oct-97 34
Project Facility Objectives
Communication tool
Should be revisited during subsequent quality/viability reviews.
Include input from all disciplines
Business, engineering manufacturing, technical, human resources,
transportation, safety, etc.
Four design categories
Range from low cost, relatively simple, short-lived plants to high
cost, complex units
6-Oct-97 36
Project Facility Objectives - Categories
RANGE from CATEGORY I TO CATEGORY IV
MARGINAL INVESTMENT Not considered even if high Could be less than project payout
CRITERIA payout
6-Oct-97 37
Project Facility Objectives - Table 1
TABLE I
PROJECT FACILITY OBJECTIVES - ONSHORE FACILITIES
PERFORMANCE CHARACTERISTICS OF VARIOUS DESIGN CATEGORIES
Category I Category II Category III Category IV
PROCESS
CHARACTERISTICS
Capacity Designed for a specific capacity with Designed for a specific capacity and Designed for multiple, but similar Designed for multiple feedstocks
one feedstock and one set of operating feedstock with allowances for different feedstocks at a given feedrate. and feedrates as well as start-of-
conditions. No capacity allowance for operating conditions and deterioration of Difficult to replace major equipment run and end-or-run conditions;
deterioration of mechanical integrity or mechanical integrity. If operated outside sized with overcapacity. hence overcapacity expected in
process performance over the life of the stated conditions, capacity may be most cases.
plant. impaired.
Product Quality Designed to meet product specifications Expect to meet product specifications Expect to meet product Designed with assurances that
at given set of conditions only. though when operating outside stated specifications. Difficult to replace product specifications will be met;
conditions may have to compromise on major equipment impacting quality; hence exceed quality requirements
rate or other parameter. No specification designed conservatively. at design conditions.
overcapacity provided.
Unplanned Flexibility No planned (or designed) flexibility to Only minimal flexibility to meet off Moderate flexibility and turndown. Broad flexibility and large
handle off design conditions. design conditions. Additional Additional expenditures necessary to turndown. Future expenditures
Additional expenditures likely as expenditures likely as process utilize full capacity of that probably minimal even to realize
experience gained. Very limited turn requirements change. equipment conservatively designed. most major equipment maximums.
down.
Marginal Investment Not normally considered even when Consider only for high payout. Not less than base project investment Limited by Corporate capital
Criteria high payout. criteria including consideration of "hurdle"; i.e., earning power could
usable plant life.. be less than that of base project.
Long plant life and/or early full
capacity needed.
PLANT
CHARACTERISTICS
Expandability Tight plot space with low first cost Tight, low first cost debottlenecking may Somewhat more open space to Open plot with provision to isolate
orientation. Debottlenecking and be difficult. Consideration may be given improve accessibility and permit sections for maintenance. Room
modifications to improve or change to potential future changes to improve modest changes for debottlenecking for process and capacity
performance may be difficult if possible performance. and product improvement. modifications.
at all.
6-Oct-97 38
Project Facility Objectives - Table 1
TABLE I
PROJECT FACILITY OBJECTIVES - ONSHORE FACILITIES
PERFORMANCE CHARACTERISTICS OF VARIOUS DESIGN CATEGORIES
Category I Category II Category III Category IV
Reliability Sparing limited to applications Sparing generally limited to applications Spares applied for orderly shut Spares, etc., applied in most
necessary for an orderly shutdown. necessary for orderly shutdown or where down, in services known to need applications to maintain basic
Stream factor is <80%. experience with similar services indicates frequent maintenance and requiring plant operations at or near design
frequent plant outages for repairs are plant outages, or necessary to keep conditions during component
likely. Consideration given to imposing the plant in a "ready" position while maintenance. Industry standard
special conditions on particular equipment repairs are made. Consideration equipment and minimal sparing
as an alternative to sparing, installing given to imposing special conditions applied to sections that are
bypasses, etc. Stream factor on particular equipment as an intended to optimize plant
85-90%. alternative to sparing, etc., or if the performance but do not impact
equipment is non-redundant and basic product out-turn. Stream
critical to the basic plant operation. factor 95+%.
Stream factor 90-95%.
Controls and Data Simple. Intended for operating at Simple. Intended for primarily operating Moderate number of control loops; Complex with sophisticated
Provisions design case only. Heavy reliance on at design conditions. Some recognition of reliance on operators reduced during systems. Less reliance on
operating personnel. No provision for needs for operating modestly outside normal operations. Sufficient operators especially out in the
specified turn down, optimization, or design case. Heavy reliance on operating equipment and data collection for field. Sufficient equipment for
troubleshooting. Minimal data personnel. Connections provided for troubleshooting and frequent continuous, or nearly continuous
collection. temporary hookups of instruments for optimization studies. Extent of this optimization and performance
trouble-shooting/optimization studies. equipment tempered by knowledge studies, including variations of
Minimal data collection. and experience with the process. process variables. Extensive data
collection, handling & retention.
Provision of or for computer
information and/or control.
Maintenance Minimal, if any, maintenance facilities Maintenance facilities installed only Maintenance facilities and Need for temporary maintenance
included in the original plant. where experience with this type of plant accessibility for mobile equipment facilities minimized and
Accessibility for mobile equipment may dictates. Accessibility for mobile provided where experience with this accessibility for wide use of
be limited. Major maintenance equipment may be limited. Major type of plant dictates. Space also mobile maintenance equipment
expenditures may be necessary if plant maintenance expenditures may be provided for difficult maintenance provided. Justifications for
is to continue operation more than 2-5 necessary if plant is to continue operation jobs during normal life of unit. facilities based on anticipation of
years. High maintenance costs. more than 4-6 years. a long plant life. Major
maintenance costs not
contemplated over a long plant
life.
6-Oct-97 39
Project Facility Objectives - Table 2
TABLE II
PROJECT FACILITY OBJECTIVES - OFFSHORE FACILITIES
PERFORMANCE CHARACTERISTICS OF VARIOUS DESIGN CATEGORIES
Category I Category II Category III Category IV
PROCESS
CHARACTERISTICS
Capacity Designed for a specific production Designed for a specific production curve Designed for multiple, but similar Designed for a various production
curve capacity with one reservoir capacity and reservoir stream with some production curve scenarios at a given curves and feedrates as well as
stream and one set of operating allowance for different operating feedrate. Difficult to replace major changing operating conditions;
conditions. No capacity allowance for conditions (i.e. changing GOR, API equipment sized with overcapacity. hence overcapacity expected in
deterioration of mechanical integrity or gravity, moisture) and deterioration of most cases.
process performance over the life of the mechanical integrity. If operated outside
plant. stated conditions, capacity may be
impaired.
Product Quality Designed to meet product specifications Expect to meet product specifications. Expect to meet product Designed with assurances that
(i.e. BS&W, Salt (PTB), H2S) at one However, when operating outside stated specifications. Difficult to replace product specifications will be met;
set of given conditions only (i.e. conditions may have to compromise on major equipment impacting quality; hence exceed quality requirements
pressure, temperature, flow). rate or other parameter. No specification designed conservatively at design conditions.
overcapacity provided.
Incremental Investment Not normally considered after Consider only for high payout items Payout is not less than base project Limited by Corporate capital
Criteria feasibility phase even when high payout before the appropriation request is investment criteria including "hurdle"; i.e., earning power could
since capital money is limited and submitted. consideration of usable plant life and be less than that of base project.
changes in project scope could as long as additional capital is This might be done when longer
negatively impact the schedule. available. plant life and/or early full capacity
is needed.
FACILITY
CHARACTERISTICS
Operating Flexibility No planned (or designed) flexibility to Only minimal flexibility to meet off- Moderate flexibility and turndown. Broad flexibility and large
handle off-design conditions (capacity design conditions. Additional Additional expenditures necessary to turndown. Future expenditures
or product quality). Additional expenditures likely as process utilize full capability of that probably minimal even to realize
expenditures likely as experience requirements change. equipment conservatively designed. most major equipment maximums.
gained. Very limited turn down.
Expandability Tight deck area with low first cost Tight, low first cost oriented Somewhat more open to be able to Open deck area with provision to
orientation. Future debottlenecking debottlenecking may be difficult. improve future accessibility and isolate sections for maintenance.
and modifications to improve or change Consideration may be given to potential permit modest changes for Room for process and capacity
performance may be difficult if possible future changes to improve performance. debottlenecking and product modifications and still maintain
at all. improvement. Once these changes accessibility.
are made then accessibility could be
impaired.
6-Oct-97 40
Project Facility Objectives - Table 2
TABLE II
PROJECT FACILITY OBJECTIVES - OFFSHORE FACILITIES
PERFORMANCE CHARACTERISTICS OF VARIOUS DESIGN CATEGORIES
Controls and Data Simple. Few prealarms, and Simple with some rangeability. Intended Moderate number of I/O's tied to an Complex with sophisticated
Provisions instrumentation provided only for for primarily operating at design integrated sophisticated system; systems. Complete integration of
critical systems and safety. Heavy conditions. Some recognition of needs for reliance on operators in the field all functions to a central control
reliance on operating personnel (use operating modestly outside design case. reduced during normal operations. area (DCS). Minimum reliance
local control panels). No provision for Heavy reliance on operating personnel for Sufficient equipment and data on operators in the field.
optimization or troubleshooting. No straight forward tasks such as collection for troubleshooting and Sufficient equipment for
data collection. starting/stopping pumps manually. frequent optimization studies. continuous, or nearly continuous
Systems are less sophisticated to match Prealarms and PLC (programmable optimization and performance
level of expertise of personnel available. logic controllers) generally installed. studies, including variations of
Facility may not be manned. Connections Extent of this equipment tempered process variables. Extensive data
provided for temporary hookups of by knowledge and experience with collection, handling & retention.
instruments for trouble- the process
shooting/optimization studies. Minimal
data collection; some SCADA
applications; use exterior master control
panels.
6-Oct-97 41
Project Facility Objectives - Table 2
TABLE II
PROJECT FACILITY OBJECTIVES - OFFSHORE FACILITIES
PERFORMANCE CHARACTERISTICS OF VARIOUS DESIGN CATEGORIES
Compliance Compliance for retrofitted areas. Compliance for retrofitted areas and Compliance for all process Full compliance for entire facility.
Meets corporate (Policy 530) and opco environmental equipment. Implements equipment. Implements Safety in Implements API RP 14J and API
guidelines. API RP 14C. Designs guidelines in all areas. RP 75.
Constructability No formal constructability program. Some concepts used periodically or too Selected concepts applied regularly. All concepts consistently
late to be of use. Limited project support. considered, evaluated, and
implemented. Lessons learned
from previous projects are applied.
Full project support from field
personnel and design, operations,
and maintenance management.
6-Oct-97 42
Value Engineering
Value Engineering
6-Oct-97 43
Value Engineering - Definition
6-Oct-97 44
Value Engineering - Definition
or
6-Oct-97 45
Value Engineering - Definition
VE is not
Brainstorming
6-Oct-97 48
Value Engineering - Questioning Requirements
Value Engineering:
- Questions the project requirements
- Advises the project of the high cost of those requirements
- Proposes cost-saving alternatives
Value Engineering is a partnership
- Engineer and customer are partners in creative thinking
Value Engineering - Facilities Example
6-Oct-97 50
Value Engineering - Facilities Example
6-Oct-97 51
Value Engineering - Construction Example
6-Oct-97 52
Value Engineering - Construction Example
6-Oct-97 53
Value Engineering - Examples of VE Results
VALUE
WORK OF WORK POTENTIAL SAVINGS
PROJECT REVIEWED REVIEWED SAVINGS ACCEPTED COMMENTS
Mobile 863 Offshore Platform $85MM $5.1MM $1.0MM VE performed too late
Facility Topsides
6-Oct-97 54
Value Engineering - Study Types
1. Information
Understand project
Determine customers needs
Define basic function (Functional Analysis)
Define areas of opportunity (Cost model)
2. Idea Generation
Brainstorming (creative thinking)
Develop all alternatives
3. Narrowing
Brief elaboration of ideas
Disposition decision for each idea
6-Oct-97 56
Value Engineering - The 7 Step Process
6-Oct-97 57
Value Engineering - The 7 Step Process
5. Development
Prepare detailed design and estimate of best alternative
6. Decision
Present best alternative to decision-makers
Help make decision
Define basic function (Functional Analysis)
Define areas of opportunity (Cost model) } Updated
7. Implementation
Obtain commitment to implement best alternative
6-Oct-97 58
Step 1
Information
Questions Step 2
Idea Generation
What is it?
What does it do? Questions Steps 3 & 4
Steps of
What must it do?
What are the basic What else will do
Narrowing, Evaluation
& Selection Value Engineering
and secondary the job? (perform Questions Step 5
functions? the same basic Development
function)? What does each cost?
Will each perform the Questions Step 6
Techniques
basic function(s)? Will it work?
Decision
Techniques
Use good human Will it meet all the Step 7
relations Techniques Techniques
Use good human requirements? Implementation
Get all the facts relations What do I do now?
Get information from Eliminate! Use good human Make presentations
What is needed? Align with project
the best sources relations Who has to approve - Written proposals plans
Try everything
Obtain complete Put $ on each idea it? - Oral w/ illustrations Implementation
Over-simplify
information Evaluate by (Brief & pertinent)
Modify and refine What are the imple-
Define the function(s) Use creative comparison mentation problems? Explain before and
Perform function Refine ideas after
techniques What are the costs?
evaluation Use services of What are the savings? Explain advantages
(brainstorm)
experts and disadvantages
No negatives allowed Techniques
Use your own Present facts quickly,
judgment Use good human concisely & convinc-
relations ingly
Gather convincing Explain impleme-
facts mentation problems
Work on specifics, Suggest further meet-
not generalities ing follow-up!
Translate facts into Remove road blocks
meaningful actions Use good human
Prepare summary relations
proposal
Develop alt. plans
VALUE ENGINEERING PROCESS
IDEAS
DESIGN SUGGESTIONS IMPLEMENT
PROS
DROPPED IDEAS STUDY FURTHER
&
SPECULATE
CHOOSE
WINNERS
NARROW EVALUATE
6-Oct-97 60
Value Engineering - Paradigms
Cost
Value =
Worth
What is the Function of the Pencil?
Wooden
Pencil
CHEVRON
6-Oct-97 64
FAST Diagram - Pencil Example
Component Function(s) B S Cost
Pencil Rp400
Eraser Rp50
Band Rp30
Body Rp90
CHEVRON
Paint Rp30
Logo Rp20
Lead Rp180
Chalk Rp50
6-Oct-97
96-06-10 65 28
FAST Diagram - Definition
HOW WHY
DESIGN
CONSTRAINTS
CRITICAL
OUTPUT INPUT
BASIC SEQUENTIAL PATH
HIGHER FUNCTION FUNCTION LOWER
FUNCTION FUNCTION
CONCURRENT
OR
SAME
LATER PRIOR SUPPORTING
SCOPE TIME SCOPE
LIMIT FUNCTION LIMIT
& !
&
6-Oct-97 67
FAST Diagram - Definition
($ !
$
-,**
#%
#'
$(
#'
'
#' #'
)*** +,** ,**
#''
$''"
.****
6-Oct-97 68
Value Engineers Ask
PRIMARY
Can it be done differently?
SECONDARY: ESSENTIAL
Is it really needed?
Can it be done differently?
SECONDARY: NON-ESSENTIAL
Is is really needed?
Can we afford it?
Does it add value?
Can it be done differently?
FAST Diagram - Gravier HVAC Example
F.A.S.T. DIAGRAM
Gravier Street HVAC Project
HOW? WHY?
$2,600M
$1,600M $2,000M $510M $85M
Tenants Cool
Provide Distibute Transport Induce HVAC
Work Air
Heat Air Air Outside Needed
Air
$1,000M
$1,600M
Control $70M $40M $35M
$130M
$130M
Return
Pump Air
Chilled
Air
6-Oct-97 70
FAST Diagram - N. Nemba Example
F.A.S.T. Diagram
North Nemba Extension - Alternative 1
Profit Scope of Project Scope of Project Opportunity
Produce
Transport Pressurize Separate Cool Well
Ship Oil to North
Oil Oil Oil/Gas/Water Fluids
S. Nemba Nemba
$7000 $900 $890 $1300
Reservoir
Import Gas
Pipeline=$7000 Clean Prod
Scrubber=$87 Water
$190
Compress
Transport Compress Flare Gas
Dehydrate Gas Transport
Conserve Injection Gas Jacket=$
Gas IP=$8850 Well Fluids
Gas Gas HP=$16821 Tips=$260
$1880 LP=$500 $
$
Engineering
Generate Provide Provide House Support
$
Power Services Utilities Workers Topsides
$6590 $1860 $2616 $4000 $72,000
Company
Expense
$
Project Objectives:
Prod. Capacity = 40,000 BOPD, 145 mmscfd Project Costs:
Spare Capacity = about 25% Major Equipment Cost = $44 MM
Injection Capacity = 200 mmscfd @ 5500 psig Project Value Reviewed = $150 MM
10% safety factor on Production Curves Total Project Value = $350 MM
Reliability: Oil = >95%, Gas = >90%
Life = 10 to 20 years
Complete project in 27 months after AFE - Feb 2000 July16, 1997
Economics: 20% ROR,
6-Oct-97 71
FAST Diagram - Big Oil Example
F.A.S.T. DIAGRAM
BIG OIL PROJECT
How Why
MEET COLLECT
REMOVE STABALIZE SEPARATE
CRUDE PIPELINE WELL
MERCAPTANS CRUDE LIQUID/VAPOR
SPECIFICATIONS PRODUCTION
6%
DESALT COMPRESS
CRUDE VAPOR
TREAT
SWEETEN
PRODUCED
GAS 13%
WATER
DESIGN CRITERIA
PROJECT FACILITY
OBJECTIVES
DRY
9 ITEMS
GAS
K.I.S.S. 19%
FRACTIONATE
LIQUIDS
REUSE BOUGHT
EQUIPMENT
CLAUS - 22%
TREAT
SCOPE MEET NEW SCOT - 15% ACID GAS 38% SCOPE
LINE PIPELINE SCHEDULE SULFUR HANDLING - 1% LINE
6-Oct-97 72
FAST Diagram - Example
6-Oct-97 73
Value Engineering - Savings Opportunities
Process Opportunities
Heat then Cool
Pressurize then Depressure
Raise then Lower Elevation
Condense then Evaporate
Freeze then Thaw
Speed up then Slow Down
Store then Deliver
6-Oct-97 74
Value Engineering - Software Tools
2. MS Excel Spreadsheet
Simple to use
6-Oct-97 75
Design-to-Capacity
Design-to-Capacity
Design-to-Capacity - Definition
6-Oct-97 78
Design-to-Capacity
6-Oct-97 79
Design-to-Capacity
6-Oct-97
96-06-10 80 43
Design-to-Capacity
LEVEL OBJECTIVES/CHARACTERISTICS
The incentive to build this type of The incentive to spend the The incentive is that the excess
facility is the lower capital cost. It extra capital cost is to provide capacity will allow for quickly
is ideal for situations where the additional flexibility for future adapting to changing operating
operating conditions are well overcapacity or changing conditions. Excess capacity is
defined and not likely to change. conditions. planned for.
6-Oct-97 81
Design-to-Capacity - Overall Level Objectives
LEVEL 1 LEVEL 2 LEVEL 3
OBJECTIVE/ Build a facility that only needs to operate Build a facility with just enough Build a facility with additional flexibility that
CHARACTERISTICS at well defined, unchanging conditions flexibility to operate easily at nameplate can operate at the nameplate capacity required
over its total life. This tighter, but less capacity at most design cases; would at the limiting design case, plus future unknown
capital expensive design might take probably require minor debottlenecking to operating/feed/product requirements. There is
longer to startup or could require minor handle unforeseen variations in high assurance that the facility will meet
debottlenecking to reach nameplate feed/product specifications or to provide nameplate capacity, be easier to operate and
capacity. This facility could certainly minimal overcapacity. startup, but will require more capital.
have trouble handling unforeseen The incentive here to spend a little more The incentive here is that capacity requirements
processing conditions not considered in money initially is that some additional will be met quickly over varying process
the original design. flexibility can pay out, as in providing conditions and potential overcapacity is
The incentive to build this type of facility some future overcapacity which could be provided; however, this additional flexibility
is that it is less expensive and the risk is utilized. costs more initially.
low of not eventually making nameplate
capacity because processing conditions do
not change and are well defined.
CONSIDERATIONS: Range of feed stock variations does not Product rates are sensitive to feed stock Range of feed stock variations may have a
FEED STOCK/PRODUCT have significant impact on throughput and quality/yield or conversion. The likely significant impact on throughput and yield. The
QUALITY/ yield. Feed stock is available and not combinations are predictable and can be design basis can bracket the anticipated
YIELD/CONVERSION expected to change over the facility life. incorporated into the design. operating cases; however, there is sufficient
Or product quality/yield/ conversion is Alternatively, the products can be blended likelihood of additional cases that are not
secondary to throughput and does not or are processed further to meet product predictable at this time that have to be
significantly effect profitability. specs without the need for additional accommodated. This uncertainty warrants
process flexibility designed into the additional design conservatism in the form of
facility. larger design factors.
DEGREE OF
COMMERCIALIZATION Proven process. New Process
FINANCIAL Potential loss is low if capacity or product High potential loss if capacity objectives are not
quality is not met. met.
DESIGN GUIDELINE Design all major equipment with no Design all major equipment with modest Design all major equipment with liberal
additional capacity design factors to just capacity design factors (10%) to ensure capacity design factors (25%) to ensure that the
meet 100% of the process requirements. that the equipment operates at the limiting equipment operates over a broad range of likely
conditions and somewhat beyond. conditions and provides for future unknown
The design factors are intended to allow flexibility.
for some uncertainties in physical The design factors are intended to allow for
properties as well as process variations. large uncertainties in physical properties and
process variations.
6-Oct-97 82
Design-to-Capacity - Level Objectives for Equip.
Table to come.
6-Oct-97 83
Equipment & Material Alliances
6-Oct-97 84
Equipment & Material Alliances - Definition
Performance
Trust
Respect
Commitment
No Competitive Bidding!
6-Oct-97 85
Equipment & Material Alliances - Definition
6-Oct-97 86
Equipment & Material Alliances - Abstract
DESCRIPTION: "Equipment Supplier Alliances" (ESA) is defined as Chevron's project-specific, long-term,
mutually beneficial relationship with one qualified supplier of highly engineered equipment. With this process
the supplier is involved "up front," developing a long-term association based on performance, trust, respect, and
commitment.
APPLICATION: Can be used for highly engineered equipment, larger orders of "like" equipment/materials, and
critical path equipment/material.
DETAILS: Most equipment is purchased by traditional methods, i.e., competitive bid. ESA is a relatively new way of
acquiring engineered equipment for a specific project. An expert team of Chevron personnel, suppliers, and
contractors produces a well-designed, well-scoped, and cost-effective specification. Working with suppliers
during the project's early planning stages translates into:
a) acquiring better equipment and systems design, b) meeting critical path equipment deliveries, and c) ensuring
quality fabrication and installation of equipment.
An innovative approach to the purchase of highly engineered equipment, ESA's roots lie in the common goal of
Chevron: continuous improvement.
COST & BENEFITS: There is some up-front effort to identify the equipment or materials where this process is
effective and the apply the ESA process. In all cases where this process has been used, there have been
significant savings that far outweigh the cost of implementation.
CONTACT:
G.W. (Gary) Fischer, (CTN) 842-5514, (e-mail FISC)
D. S. (Doug) Moore, (CTN) 842-9730, (e-mail: DSMO)
K. C. (Ken) Ettinger, Team Leader, CRTC Quality Assurance, (CTN) 242-3731, (email: KCET)
PRODUCTS AND SERVICES:
CSQIP Manual For a copy, contact W. L. (Bill) Desmond, CTN 894-1208, (email: BLDE)
Implementation Guide G-08: Equipment Supplier Alliances Manual (G-08)
6-Oct-97 87
Equipment & Material Alliances - Benefits
6-Oct-97 88
Total Cost of Ownership - Iceberg Model
More easily
Delivery
identified Engineering Costs
Procurement Costs
Construction Costs
Inspection and Testing
Permitting Costs/Fee
6-Oct-97 89
Equipment & Material Alliances - Process Steps
Perform Internal
Business Analysis
Assemble
Pre-Kickoff Data Orient The Team
And Information
Supplier
Selection
Phase
Perform Industry
Analysis
Negotiate And Evaluate
Establish Criteria
Award Agreement Suppliers
Process
Improvement Form Alliance Develop Detailed Measure And Report
Execute Plans
Phase Improvement Team Business Plans Progress
6-Oct-97 90
Project Standards
Project Standards
6-Oct-97 91
6-Oct-97 93
Project Standards
Manufacturing Efficiency
Product Quality
Operating Cost
Employee Safety
6-Oct-97 94
Project Standards
6-Oct-97 95
HES Optimization
HES Optimization
6-Oct-97 96
HES Optimization - Definition
6-Oct-97 97
HES Optimization - Abstract
DESCRIPTION: The HSE Risk Management process is used to identify, assess, and develop plans to maximize
value by managing significant risks. Four risk areas are included: personnel & public health/safety,
environmental, financial (due to HSE incidents) and public concern. Risk reduction measures (prevention or
mitigation) are evaluated on a cost benefit basis to ensure efficient resource allocation.
APPLICATION: HSE Risk Management is performed during process design and site selection to identify HSE risks at
a high level. Risks are screened and quantified for use in deciding between project alternatives. During front
end loading, Risk Management tools are used to further define and evaluate individual HSE risks.
Recommendations for risk reduction are prepared and evaluated using cost benefit analysis. During execution,
risk management is used to perform HSE evaluation of changes in the project.
DETAILS: HSE Risk Management is a suite of tools and processes that starts with Event Identification to allow
proactive, rather than reactive, risk reduction. Risks include air, waste, water, groundwater, ecological, safety,
fire and health. Tools include structured brainstorming (What If), checklists, design reviews and inherently safer
design criteria. Risk Assessment allows a project to screen out low risk events to concentrate resources on
those that are truly significant, based on event consequence and frequency. Risk screening matrices and
quantitative risk assessment guidelines are provided. Also included are HSE strategy tables help design teams
identify a range of risk reduction alternatives. Cost Benefit Analysis spreadsheets are used to quantify risk
reduction in order to obtain the greatest risk reduction for each dollar spent. Additional details and examples
can be found at http://www.hou281.chevron.com/CPTC/home/riskman/index.htm
COSTS & BENEFITS: Tools are available thru the Company intranet at no cost. Training courses and facilitators are
available. Use of these tools meets some of the requirements of Policy 530 - Safe Operations, Pollution
Prevention and Property Transfer as well as API RP 75 and 750. HSE Risk Identification exercises can vary
from day for a small project in the feasibility stage to many days for a large, integrated plant with well
developed P&IDs. Risk screening limits the number of risks the project must consider for reduction to the those
that are truly significant. Cost benefit analysis is used to compare risk reduction alternatives to maximize the risk
reduction per unit cost. Some applications have found that 80% of the risk reduction was achieved at 40-50% of
the total cost.
CONTACT: W. D. (Don) Couch (CTN) 242-3000, (WDCX)
6-Oct-97 98
HES Optimization - Definition
6-Oct-97 99
HES Optimization - Techniques
6-Oct-97 100
HES Optimization - Process
Identify Concerns
What-If brainstorming
Checklists
Review technologies and processes
Assess Risks
Assign qualitative risk scores to each event
Perform consequence/frequency modeling, if necessary
Identify Alternatives
Scope range of alternatives to prevent/mitgate risk events
Cost Benefit Analysis
Assign costs to risk reduction alternatives
Incorporate in economic analysis and compare design options
6-Oct-97 101
HES Optimization - Upstream HES Process
PHASE 1 PHASE 2 PHASE 3 PHASE 4 PHASE 5
Identify and Assess Select Alternative(s) Develop Alternative(s) Execute Operate and Evaluate
Opportunity
Deliverables
6-Oct-97 103
HES Optimization - Risks and Impacts
PERSONNEL/PUBLIC
SAFETY
Technical
- Reserves,
- Reservoir,
- Drilling Operations, ENVIRONMENT
- Well Completions,
- Facility Design,
- Facility Construction,
- Facility Transportation,
- Facility Installation,
- Operability, Maintainability
FINANCIAL
Business
- CAPEX
- OPEX
- Schedule
- Product Price
PUBLIC CONCERN
Figure 1-1
6-Oct-97 104
Energy Optimization
Energy Optimization
6-Oct-97 105
Energy Optimization - Definition
Thermodynamic Analysis
Economics Data
Conceptual Design
Energy Optimization - Abstract
DESCRIPTION: Energy Optimization is a way to identify, understand, and optimize energy use for the operating lifetime
of a project.
APPLICATION: Energy often represents the largest element of the ongoing operating costs once a project is completed.
With project lives at 30 years or beyond, energy operating costs must be an important project consideration, starting at
the early stages of project development. Energy Optimization provides a methodology for understanding and then
optimizing energy use.
DETAILS: Projects afford a unique opportunity to address and improve energy performance of the site and facility.
Energy considerations appear throughout CPDEP. Unlike some of the other VIPs, Energy Optimization can not be
conducted and completed in a three day workshop. Energy Optimization is not a stand alone process, instead it must
be woven into normal project activities such as objective setting, process design, equipment specification and
selection, detailed design, and operating philosophies and practices. Energy measurement and management systems
must be installed to track project performance against pre-established metrics. Tools such as Steam System Models,
Fuel System Models, Pinch Analysis, FEL Energy Checklist, etc. are utilized to properly size utility systems and
optimize process design . Early involvement of specialists (CXTC, local, contractors) can quickly lead to a cost
effective and reliable design. Specialists should also be used to assist in the development of specifications and the
purchase of large equipment such as gas turbines, boilers, compressors, pumps and furnaces.
COST & BENEFITS: Integrating Energy Optimization into the process design, selecting the best alternatives, and using
proven tools will optimize the capital and energy costs over the entire operating life of the project.
CONTACTS:
Nick Brancaccio, NGBR (CTN) 242-2350
Lee Larson, LLRS (CTN) 842-9084
Jerry Moffitt, GMOF (CTN) 894-0792
Rick Johnson, DEJO (CTN) 842-8135
Gerald Sing, GLSI (CTN) 842-8706
PRODUCTS AND SERVICES:
Implementation Guide G-xxx
6-Oct-97 107
Energy Optimization - Energy Tools
6-Oct-97 108
Energy Optimization - Energy Tools
6-Oct-97 109
Constructability Review
Constructability Review
6-Oct-97 110
Constructability Review - Definition
6-Oct-97 111
Constructability Review - Abstract
DESCRIPTION: Construction Industry Institute (CII) defines "constructability" as "the optimum use of
construction knowledge and experience in planning, design, procurement, and field operations to
achieve overall project objectives".
APPLICATION: The concept of "constructability" should be implemented on all projects.
DETAILS: "Constructability" drives the project to excellence in design and execution. Critical to project
success, implementation begins in Front-End Loading with a focus on assessing construction
viability, cost variance from the ideal and identification of costly or fatal flaws due to regulatory,
environment, site, or infrastructure restrictions.
Prior to funding, the Construction Manager is brought on the project team to champion
constructability and to participate in final scope development. A project-specific constructability
process is developed and integrated into the Project Execution Plan.
COST & BENEFITS: The cost for implementing a constructability process on a large project will vary.
The cost could range between $50,000-$150,000 depending on the resources available and the
uniqueness of the project. Constructability can be implemented in a small projects group similarly.
The return on the time spent ranges from 5-20% of total project cost. A major benefit is elimination
of rework and delay in the construction and start-up schedules.
CONTACTS:
Jay MacDonald, (CTN) 842-8197, (email: MJOJ)
P.E. (Paul) Redden, (CTN) 842-5056, (email: PERE)
PRODUCTS AND SERVICES:
Lesson Learned No. 42: "Constructability Resources - What's Available"
Constructability Study
6-Oct-97 112
Constructability Review - What, When, Who
6-Oct-97
96-06-10 113 52
Constructability Review - Things to Review
6-Oct-97
96-06-10 114 53
Process Hazards Analysis
6-Oct-97
96-06-10 116 57
Process Hazards Analysis - Abstract
DESCRIPTION: PHA serves as a roadmap to plan appropriate hazards reviews at a time that optimizes
contribution and impact to the project. By coupling the normal design reviews with mandated
reviews, the projects are able to avoid unnecessary duplication and comply with regulations (OSHA
1910).
APPLICATION: PHA is intended to provide sufficient background information to permit a project team
to identify, assess, and plan activities related to a Process Hazard Analysis.
DETAILS: OSHA's Process Safety Management Rule (29 CFR 1910.119) mandates minimum criteria
for review of a project during project development and for the review of changes to the design that
might affect the safe operation of a facility. The rule is performance-based and charges the owner and
designer with the responsibility of performing the quality and quantity of reviews appropriate to
determine and evaluate the hazards of the process being reviewed. PHA provides a roadmap that
assists the project team in planning PHA-related reviews, the purpose of each review, the data
required to perform the review, the resources required, the expected results, and a suggested timing
for the reviews.
COST & BENEFITS: By coupling the normal design reviews with mandated reviews, projects are able
to avoid unnecessary duplication and comply with the regulations.
CONTACT:
G.W. (Gary) Fischer, (CTN) 842-5514, (email: FISC)
R. K. Fujimoto, (CTN) 842-9298, (email: BFUJ)
PRODUCTS AND SERVICES:
Implementation Guide G-15: Guide for Integrating Process Hazard Analysis into Facility Type
Projects (G-15)
6-Oct-97 117
Process Hazards Analysis - Definition
6-Oct-97 119
Process Hazards Analysis
REVIEW/ANALYSIS PURPOSE
6-Oct-97 120
Process Hazards Analysis
REVIEW/ANALYSIS PURPOSE
Relief System Review Review of new and/or existing relief systems to determine that
the design basis provides for maximum credible scenarios.
Insurance/Fire Protection Audit design to ensure the design provides cost effective fire
Review protection to meet Chevron and Insurance carrier standards.
6-Oct-97 121
Process Hazards Analysis
REVIEW/ANALYSIS PURPOSE
Management of Change Ensure changes made to the process after the formal process
hazards analysis do not introduce new uncontrolled hazards.
Alarm Objective Analysis Rigorous review of alarm system to finalize set points and
alarm priorities.
Pre Start-Up Safety Review A formal audit to ensure that all PSM documentation and
elements are in place/completed.
6-Oct-97 122
Zero Injury Techniques
6-Oct-97 123
Zero Injury Techniques - Definition
6-Oct-97 124
Zero Injury Techniques - Abstract
6-Oct-97 125
Predictive Maintenance
Predictive Maintenance
6-Oct-97 126
Predictive Maintenance - Definition
Characteristics monitored:
Heat
Lubrication
Vibration
Cracking
Noise
6-Oct-97 127
Predictive Maintenance - Benefits
6-Oct-97 128
Reliability Modeling
Reliability Modeling
6-Oct-97 129
Reliability Modeling - Definition
Product Quality
Yield / Capacity
Production Transitions
Maintenance Practices
Safety / Environmental
6-Oct-97 130
Reliability Modeling - Abstract
DESCRIPTION: Reliability Modeling is the use of computer simulation to explore the relationships between the
maximum production rates and design and operational factors such as quality, yield, production transitions,
maintenance practices and requirements, capacity, and safety and environmental concerns. This tool can help
determine the value of sparing, bypass, and alternative operating modes contemplated in the design and factor it into
the Life Cycle Cost.
APPLICATION: Most applications will be FEL. It can also be used during operations to evaluate and influence
maintenance practices on production availability. It is often done by a third party, such as IPA, and may employ the
MAROS software.
DETAILS: The Reliability Modeling Process has five distinct steps:
1. Understand the facility under consideration.
2. Data collection on facility, equipment, and failure rates.
3. Data analysis and computer modeling.
4. Case runs and review.
5. Discussion of results.
The information needed includes:
Process description
PFDs with major equipment identified
Equipment list with sizes, capacities, and vendor/ supplier information including the make and model numbers
COST & BENEFITS: The cost of a reliability modeling study will range from $25-50M depending on the complexity of
the facility/process being reviewed. Cost is a function of data collection efficiency and the number of cases or
alternatives to review. A 10:1 return on investment is not uncommon.
CONTACTS:
G.W. (Gary) Fischer, (CTN) 842-5514, (email: FISC)
J. E. (Joan) Ranallo, 842-8368, (email: JERA)
PRODUCTS AND SERVICES:
Implementation Guide G-17: Reliability Modeling (G-17)
6-Oct-97 131
Reliability Modeling
System Availability
Generalized Evaluator
(S.A.G.E.)
Benefits:
Quantifies Operating Factor
Provides a Tool for What if Cases
Provides data to justify Capital Expenditures
Identifies areas for Reliability Centered Maintenance
(RCM)
Reliability Modeling - Applications
6-Oct-97 138
Reliability Modeling - MAROS Studies
Alba
Britannia
Green Canyon 205
Gorgon
Cabinda Oil Storage, Pumping, and Loading System
Escravos Tank Farm
6-Oct-97 139
Reliability Modeling - Impacts
6-Oct-97 140
IPA Pre-A/R Assessment
6-Oct-97 141
IPA Pre-A/R Assessment - Definition
6-Oct-97 142
IPA Assessment - Pacesetter Performance
Pacesetter Performance
is achieved with
State-of-the-Art FEL
6-Oct-97 143
IPA Assessment - Front-End Loading
Who
What
Where
When
Why
How
6-Oct-97 144
IPA Assessment - Components of FEL
(Refining and Chemicals)
Project FEL
Site Engineering Execution
Factors Definition Plan
Index
Cost/schedule controls
6-Oct-97 145
IPA Assessment - Components of FEL
(Pipeline Projects)
Site Engineering
Project FEL
Execution
Factors Definition Plan Index
6-Oct-97 146
IPA Assessment - Components of FEL
(Upstream Projects)
Permits/
Reservoir
Definition
Regulatory
Reviews
Design
Status
+ Project
Execution Plan
FEL Status
6-Oct-97 147
IPA Assessment - FEL Index Calculation
Plot Plans/ Equipment
Configuration
Soils &
Hydrology
Site
Factors
Sum 4 = ___
Environmental
Requirements
Health and
Safety
Project Execution
Planning
Engineering
Definition
FEL Index
6-Oct-97 148
IPA Assessment - FEL Index
3.0
3.5
Over Commitment
4.0
Best Practical
4.5
5.0
4
Good
5.5
6.0
Fair
6.5
2
7.0
Poor
7.5
1
8.0
8.5
Screening
0
1
9.0
6-Oct-97 149
IPA Assessment - FEL Improvement
1.1
0.9
FEL Rating
6-Oct-97 150
IPA Assessment - Best Practical FEL Index
FEL SCALE VALUE=4 SCALE VALUE=1
CATEGORY SCALE VALUE=3 SCALE VALUE=2
COMPONENT (LEAST WELL-DEFINED) (MOST WELL-DEFINED)
Plot Plans Block layout not considered Block layout of major Detailed layout of major equipment Definitive (final) layout of all
Equipment in developing cost estimate equipment. Space reqmts. and large piping. Based on: (a) equipment (major & minor) &
Configurations derived from factors for equipment dimensions derived large piping; one-line drawings
analogous processes. from analyses of H&M balances; for smaller piping. Based on (a)
and (b) access reqmts. & specific equipment dimensions derived
placements worked out in from analyses of H&M balances:
conjunction with plant & (b) access reqmts. & specific
operations/maintenance. placements worked out in
conjunction with plant
operations/maintenance.
Soils & Hydrology Site-specific soils & Site-specific soils & Data from a small set of site Soil borings are complete &
Data hydrology data not explicitly hydrology data not borings (or nearby borings if it is results known & accounted for in
considered in estimate available, but general area known that site conditions change cost estimate for exact site
preparation. conditions are known & very slowly) is available & locations where equipment will
information has been information has been accounted be placed.
accounted for in developing for in developing cost estimate.
cost estimate.
SITE
FACTORS
Environmental Environmental requirements Site-specific regulations Site-specific regulations identified All necessary permits have been
Requirements not explicitly considered in identified & incorporated & incorporated into design; issued; or, permits have been
estimate preparation. into design but limited appropriate agencies have been applied for and relevant agencies
contact with appropriate kept informed; permit applications have indicated that they are
agencies. have been filed. satisfied that all criteria have
been satisfied (i.e., issuing of
permits is pro forma); or, it has
been incontrovertibly established
that the project does not need
permits.
Health & Safety Health & safety issues not No formal reviews but Limited HAZOPS review has been Detailed HAZOPS review (based
Requirements explicitly considered in generic health & safety conducted (perhaps by the project on final or near-final P&IDs and
estimate preparation. standards for site & team in consultation with plant detailed equipment layouts) have
technology identified & operations) & site- been conducted & the
incorporated into design. specific/technology-specific recommendations addressed in
standards identified & incorporated the design & cost estimate.
into the design.
6-Oct-97 151
IPA Assessment - Measuring FEL
Guidance for Measuring Front-End Loading (continued)
Project Execution Plan Core project team Core project team in Core project team in place;
PROJECT None exists in place; contracting place; contracting strategies contracting strategies identified;
EXECUTION strategies identified; identified; major task detailed & integrated schedule
PLANNING major milestones sequencing established & established which incorporates
established. critical path items identified. equipment delivery dates,
interferences, & resource
loadings
User/Plant No involvement Little plant Even though plant input is only on Plant operations is deeply
ENGINEERING Input other than expressed involvement other than an as-needed basis, a thorough involved, normally on a day-to-
DEFINITION general interest review of conceptual review of the process design & day basis, including conducting a
design. detailed layout has been conducted. thorough review of the process
design & detailed layout.
Types of Engineering General location & site Prelim. process design Completed process design Approved P&IDs
Tasks Completed conditions Prelim. P&IDs Complete P&IDs Plot plans issued for
Block flow diagram Prelim. major equipment construction
sizing One-line electrical diagrams
Prelim. major equipment list Completed engineering data
Prelim. layout of on-plot Detailed plot plans
Facility capacity equipment sheets
Economic analysis (on-and-off-plot)
Off-plot description
6-Oct-97 152
IPA Assessment - Overall FEL Index
Chevron Chevron
1996 Benchmark
Best Industry
Class A
Practical Average
6-Oct-97 153
IPA Assessment - Downstream & Upstream
Chevron
Chevron
Downstream
Downstream
Benchmark
1996
1991
Chevron Chevron
Best Practical Class A Upstream Upstream
1996 Benchmark
6-Oct-97 154
Post Project Assessment (IPA)
6-Oct-97 155
Post Project Assessment - Definition
6-Oct-97 156
Post Project Assessment - Data Collected
Materials costs
Fabrication costs
Transporation costs
Company expenses
Contractor expenses
Actual schedule
Safety performance
Lessons learned
6-Oct-97 157
Business Evaluation (GO-36)
6-Oct-97 158
Business Evaluation - Definition
6-Oct-97 159
Business Evaluation - Primary Objectives
The primary objectives of the Project Business Evaluation Review are to:
The Project Business Evaluation Review is conducted after one or two years of
operating data are available, or as soon as appropriate production and market
response are realized. A multifunctional team with third party participation is
recommended to conduct the review and enhance learning and sharing.
Subsequent reviews should become part of the normal business planning
process.
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Business Evaluation - Team
Project management
Multifunctional team
3rd Parties
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Business Evaluation - Project Data
AR Estimate
Values from the original AR based on the expected case.
Typical Values to Date
Values that are typical of recent operation or an average of results
since start-up, whichever best represents the general business.
% Change from Expected Value
The ratio of typical value divided by the expected value in the AR.
Updated Estimate
If the % change from the expected value is significant, an updated
estimate should be prepared.
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Business Evaluation - Project Performance to Date
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Business Evaluation - D&RA Review
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Summary - CPDEP and VIPs/BPs
Faster
Cheaper
Better
Safer
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CPDEP and VIPs/BPs - Exercise
Exercise 1:
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CPDEP and VIPs/BPs - Exercise
Exercise 2:
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CPDEP and VIPs/BPs - Exercise
Exercise 3:
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CPDEP and VIPs/BPs - Exercise
Exercise 4:
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CPDEP and VIPs/BPs - Exercise
Exercise 5:
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CPDEP and VIPs/BPs - Exercise
Exercise 6:
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