Strategies for modern management

Ken Huskisson, CEO, Engica Technology Systems International, Martin Sedgwick, Power Plant Manager, Saltend Cogeneration

Computerized maintenance management systems can bring many benefits for power plant operators facing competition. The capital expenditure must be justified by effective implementation and successful results.

The modern power facility has to recognise that commercial viability is all important in a competitive environment. Any expenditure needs to be justified by business drivers in the form of anticipated projected savings, a well-established corporate policy or both. A key element of this approach is achieving a return on investment (ROI), closely linked to a project implementation model.

The objectives of a management system investment programme must be clearly specified. A systematic approach is required to determine current performance levels and to define potential performance improvements. The key question is, “How can a ROI be established?” Engica Technology’s wide experience can help to define and create the processes that deliver improvements and create an optimal ROI. The company’s recently completed project at the Saltend cogeneration plant in the UK demonstrates such results.

A realistic approach

The business case for computerized maintenance management systems (CMMS) requires purposeful figures, supported and backed by a detailed explanation. Drive the point home for the necessary investment, or at least match capability expectations to a proposed lower investment. This does not mean an excessive investment; it means realistic values to secure the necessary internal and external resources.

It is necessary to be realistic on the return assumptions and be prepared to invest sufficient resources to get the system working well. Unrealistic high returns are often projected against insufficient investment, so a realistic approach is paramount. False expectations will generally lead to failure.

The ROI presented here is based upon a new site and includes the overall cost of data collection. However, many parallels can be drawn for a data transfer implementation.

The figures shown in the investment and return graphs are based on ratios rather than money. This is to allow calculations to be made across projects of varying size and scope. Variations need to be considered for specific plants and operational parameters. The figures are biased to implementations involving medium sized plant (say 200 to 1200 MW fossil or gas fired plant) requiring a dynamic management approach. Nuclear plant and small plant would follow similar principles and curve patterns but ratios are likely to be inaccurate to their scale and scope.

The implementation cost ratio (Table 1) attempts to break down the ratio of cost distribution across the entire investment including hardware and platform infrastructure. The table covers consideration, purchase, implementation and running cost ratios. Approximately 80 per cent is consumed by set-up costs, with the remaining 20 per cent utilized to familiarize and train users. The most significant ratio is data mapping, collection and entry, which is essential to system launch, when users become familiarized with and experience the benefits of the system.

The percentage performance improvements (Table 2) shows a high level view of potential benefits. Tangible entries have been given values. Intangible entries are difficult to quantify and have not been given values (although these have good potential to bring savings). The given percentage values can be used to calculate potential savings in monetary terms against your internal costs. Care has been taken to make the minimum values ‘real potentials’, especially the availability value of 0.1 per cent. The ‘possible’ column figures are realistic for either a new plant or a badly run plant.

As is normal in a typical viable initiative, the need to invest to accrue is essential. The typical investment and return time (Figure 1) shows a period of approximately one year to get the system up and running. As shown, the initial returns start to kick-in a year and a half after delivery.

Be prepared to select a vendor that has a proven track record of success and one that specializes in the power industry. Vendors can provide system and power plant management skills with a clear understanding of goals together with template systems that accelerate progress and reduce the risk of failure.

The ratios represent the integral area under each curve and respective annual period. To explain this versatile approach, take the investment values of -26 in year one and -10 in year two. When added the -36 represents the total infrastructure purchase costs (including systems, computers and network) as well as the implementation (including internal and external labour resources) cost. In other words 76 per cent in year one and 24 per cent in year two of the total investment cost. To establish money values of the various stages, reverse engineer the investment money budget, or calculate return values e.g. calculate 2.5 per cent saving of annual material purchases.

The values and time scales presented are calculated as best estimates. They should be treated as guides; individual plant and organization performance need individual assessment. Note that only minor returns are likely in the early stage. It takes about two and half years to see returns to a reasonable level and about three years to break even on the project. Some would argue less – and in some cases it will be less. However, it is worth noting that the figures presented are taken from actual statistical experience.

Successful implementation

Choosing a successful system is as much about choosing a vendor approach as it is the particular type of software package. A mistake made by many companies is to buy a boxed maintenance management product, install the software and then try to achieve all engineering and management objectives at the same time. Experience shows that CMMS implementations should follow a common route, demand a certain level of supplier support and that the next stage should not start until the previous one has been completed.

A two month selection process is indicated in Figure 2, although specific goals and objectives would usually be established many months prior to implementation. The selection process should be used to evaluate how different vendors can deliver solutions that will bring real business and economic benefits. The purchase phase will involve a relatively high level of expenditure and covers the installation of computer equipment, networks, software and application set-up.

Two generic types of system can be used to provide the management system elements. An ‘all encompassing’ single source product (normally financial lead) or selective integrated ‘best of breed’ products. Selection is made on cost, functionality and implementation risk. The trend for many organizations is swinging towards ‘best of breed’. This is because users can normally get better mapping of required functionality, implementation is quicker and costs are lower. In addition, ‘best of breed’ suppliers can normally offer pre-integrated systems that in essence result in an all-encompassing system.

During the initial set-up phase it is better if the majority of end-users do not become deeply involved in the process so a high positive roll out position can be established at a later stage. By then, management will understand the real value of the specific process, which they expect their staff to follow and use.

This is the first and most critical of the project managed stages, where a resource factor of around 48 per cent needs to be applied. Some would argue that if information exists in an electronic format, this process is likely to require less user input. However, this is only true if the information satisfies the required level of integrity. The potential level of user input and involvement at this stage should not be underestimated.

The implementation curve could be substantially flattened to match budgetary constraints, although the cumulative effect of this would be to increase the overall time line. From a ROI perspective it is important to note that the quicker the data phase is completed the faster the payback and benefits.

Training and roll out is the most high profile and visible stage of the project. In this phase, users are trained and assessed, help desks set-up and management projections for future operation established. During the vital pilot phase, processes are tested for the first time on actual plant. Approaching roll out of the finalized system, an internal ‘ceremony’ can be held to communicate the positive effects of the system to the organization and its staff.

Once the system is live, users will still need help and ongoing support to keep the system in effective use. Experience indicates that it takes approximately seven months for users to feel totally comfortable with the system prior to reaching the embodied stage of the project where implementation aims will have been achieved.

Ongoing support is a vital element of the implementation process. Systems need to constantly evolve to match new business processes and keep pace with technological advancement.

The Saltend experience

Saltend Cogeneration Company is 100 per cent owned by Entergy, the US-based power company. The Saltend plant itself was developed with the backing of a $1.2 billion loan secured from the Union Bank of Switzerland in December 1997. It is the largest merchant plant to be built in the UK. Planned to be commercially operable from early 2000, the plant comprises three 400 MWe combined cycle gas turbine modules in a single shaft configuration, giving a total output of 1200 MWe, including

100 MWe supplied to BP Amoco Chemicals. The facility also provides 120 t/h of process steam to BP Amoco Chemicals.

Many companies have adopted quality management programs throughout their organization, but these are normally applied to discreet programs rather than overall systems. For Saltend, a key driver towards business excellence is the operation and development of the computerized integrated business system (CIBS), a total approach to management control.

Before the development of the CIBS, a vision was established of how the concept was to roll out for present and future needs. By contrasting existing arrangements and standard practices for operational management with this vision of the future, the advantages of integration were more completely understood.

The reward for full integration of quality, safety and environmental management systems is reduced cost of operation and more effective programmes. The lower cost of delivery is achievable by developing management processes with fewer steps and no duplication of effort. Programme effectiveness is improved by adopting best practice in all areas of the business. Final programmes designed using quality management approaches respond faster, at less cost and more effectively to new demands.

A key concept for integration at Saltend was the requirement to build the culture of the organization into the system and to integrate with all parties involved in the process. To encourage ownership, staff are fully empowered in the use and development aspects of the system. The involvement of suppliers and customers as partners in the development process as part of a ‘shared values’ programme, has helped to ensure success in all areas, as well as providing continuous improvement and benchmarking opportunities.

At Saltend, the integrated approach was developed from day one, with the business plans including the basic conceptual design. Even during the staff recruitment process these principles were included to ensure personnel were totally committed to the achievement of core objectives from day one. From this stage, detailed implementation plans were developed and a cycle of ongoing implementation, review and change introduced. This process is driving the business in all areas as part of a ‘continuous improvement culture’.

The key elements of an integrated business system for a power facility include financial control, plant operations and maintenance management. From a maintenance perspective, it was important for Saltend to select a computerized maintenance management system (CMMS) supplier who could conform to the inclusive approach to site projects and the CIBS concept. ROI was important to Saltend but represented just one business driver of the overall project, where corporate objectives were deemed equally as important.

Entergy selected Engica Technology’s Q4 Power CMMS. Following the selection process, initial discussions revolved around detailed process mapping exercises, paving the way for the transfer of the business model to the Q4 environment.

A key milestone was the integration of Q4 Power with the Sun Financials accounts system. The final phase has seen completion of additional linkages and processes towards the overall goal of business and maintenance system integration.

“Successful development and implementation has relied upon an integrated project management approach of the two companies in line with the implementation of the Integrated Business System,” said Martin Sedgwick, power plant manager at Saltend.

Integration was a key theme running throughout the project. Q4 based on open architecture design, provides a seamless interface to other business software systems. Other Q4 components selected for the Saltend system, in addition to the Q4 Power CMMS include Q4 Calib; Q4 Safety; Q4 Tools; and Q4 RCM. As well as Sun Financials, the system also integrates with the Apacs distributed control systems (DCS).

Entergy recognises that personnel demand different types of information from a maintenance management system. The integration elements allow them to use their own computer systems for access and manipulation of data, thereby enhancing their job function.

Completion of the system prior to commercial operation has enabled Saltend to optimize its maintenance routines and realise the benefits of integration from the very start.

Maintenance management

The new IT technologies of today certainly make the task of data manipulation easier but to gain the maximum benefits, several points should be remembered:

  • Data collection takes a significant proportion of our daily work time
  • Data collection should be reviewed for need and frequency throughout the whole of the organization
  • Creation of an effective data model can save substantial time and significantly improve data classification
  • In most cases data must have the ability to flow to be of use
  • Consider approaches to efficient collection and registration
  • Bring the data collectors into the loop of understanding.

The need for information is growing on a daily basis. Against this background, the question is not so much one of whether we can afford to develop and keep records, but rather whether one can afford not to.

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