aligning metrics to customer value creation for the maintenance of power generation asset

Aligning&metrics&to&customer&value&crea1on&&for&the&maintenance&of&&power&genera1on&assets&&Service&Opera1ons&Management&Forum,&22&September&2014&

Dr&Shaun&West&[email protected]&

Value&

The$challenge$of$defining$performance$metrics$

E  3&examples&with&3&different&challenges&&E  Vanilla&metrics&are&not&sufficient&E  Capture&the&pains&and&gains&and&match&them&with&service&capabili1es&

Service&Innova1on&|&Dr&Shaun&West&

&Iden1fy& &Create& &Deliver&

The$service$idea$derives$from$interviews$and$survey$

1.  Industrial&input&from&a&workshop&with&Roland&Berger&in&2013&2. Assessment&of&survey&data&and&insights&&

from&interviewees&responsible&for&service&


120131118_2330_RB Service study 30_Final document_E_PUBLIC VERSION.pptx

Zurich, November 2013

Service 3.0 Unraveling Value Pockets in the Service Business

INDUSTRY STUDY

Gains&

Pains&

Gains& Pains&

The$customer$value$proposi8on$as$a$useful$framework$


Have&we&become&complacent&with&&the&iden1fying&customer&value?&

The$use$of$metrics$from$three$industrial$examples$will$be$used$

E  3&case&studies&provide&bases&for&the&presenta1on&E  Lessons&learned&from&them&will&then&be&presented&

WIND TURBINE FARM Case&1&


Contractor$and$owner$have$conflic8ng$views$on$availability$

E  Availability&guarantee&of&92%&E  The&maintenance&company&hits&its&target&E  The&owner&is&unhappy&E  The&owner’s&pain&is&based&on&a&breakdown&

Seasonality$in$wind$speeds$has$a$major$impact$on$the$value$

E  Fixed&feedEin&tariff&E  System&takes&what&is&delivered&E  Price&is&fixed&

E  Agreed&availability&92%&E  Technical&availability&92%&E  Commercial&availability&of&78%&

There&was&no&considera1on&&of&the&value&of&availability&on&&a&monthly&basis.&&&

25

Checking for seasonal trends in the original wind speed 3.4.1.1.2 time series

The first step to identify a seasonal trend in the wind series is a purely visual evaluation of a plotted time series of one (or more years). Two such plots of a one year long time series are given in Figure 3-7. In both of the time series the presence of a ‘u’ shaped trend, with higher wind speeds in the start and the end of the year, is visible. This pattern is clearer in Figure 3-8 showing monthly averages for 7 years of the original data.

Figure 3-7: Original wind speed time series

Figure 3-8: Monthly averages for 7 years of original wind speed data

To investigate this further a box-plot of the wind speed per month is plotted for three years of data (2000- 2002). The box-plot shows the median value as a red line, the edges of the box is the 75th and 25th percentiles and the whiskers include the rest of the data not considered as being outliers, the latter is plotted as red crosses.

0 500 1000 15000

5

10

15

20

25Wind speed - (35N,-10E) - 2000

0 500 1000 15000

5

10

15

20

25

30Wind speed - (35N,-10E) - 2002

0 2 4 6 8 10 120

5

10

15

20

25

2000200120022003200420052006

Berg^ord,&2011&


Use$Excel$to$help$understand$the$customer$value$crea8on$


Revenue&at&92%&average&availability&&

Revenue&at&78%&commercial&availability&

Gains&

Pains&

Coopera8on$of$both$par8es$iden8fy$the$correct$measures$

•  Maximise&revenue&poten1al&•  Availability&during&‘windy’&period&

•  Unplanned&maintenance&during&‘windy’&periods&

•  No&planned&maintenance&in&‘windy’&periods&•  Rapid&response&to&unplanned&windy&periods&

•  Undertake&maintenance&in&‘calm’&periods&•  Openly&share&availability&on&a&regular&basis&


The$Contractor$was$driving$to$technical$availability$The$Owner$was$looking$for$commercial$availability$


Metrics&

•  Agreed&on&(technical)&availability&(92%)&•  Commercial&availability&not&discussed&

Performance&

•  Agreed&availability&has&been&achieved&•  Contractor&wanted&to&be&paid&

Cause&

•  No&discussions&on&key&revenue&periods&•  Contractor&was&not&sensi1ve&to&value&crea1on&

Learning&

•  Drive&discussions&about&value&crea1on&earlier&•  Agree&metrics&that&align&with&value&crea1on&

Availability&(technical)&&&&≠&&

Commercial&availability&&

GAS&TURBINE&POWER&ASSETS&Case&2&


An$O&M$company$proposes$improved$performance$metrics$

E  Opera1onal&for&0.5%&of&the&year&E  Maintenance&performance&was&measured&on&availability&E  Owner's&customer&was&the&grid&company&E  Difficult&discussions&over&‘availability’&


Owner’s$income$based$on$genera8on$and$capacity$payment$

E  ‘Strike&price’&set&to&120EUR/MWh&E  Generated&for&0.5%&of&a&year&E  50&starts&per&year&&E  44&hours&genera1on&

E  Income&based&on&genera1on&and&capacity&payment&&

Swiss&spot&electricity&prices,&2013&


Working&with&data&&iden1fies&value&&&&

Gains&

Pains&

Start$reliability$is$the$KPI$that$the$Owner$reported$

•  Predicable&start&reliability&

•  Failure&to&start&•  Unit&efficiency&•  Unit&capacity&

•  Knowledge&of&startElikelihood&•  Machine&heath&check&provides&capacity&info&

•  Start&log&(all&failures&create&Kaizan&item)&•  start&planning&with&predic1ve&monitoring&


The$Contractor$was$driving$to$availability$$The$Owner$was$looking$for$start$reliability$


Metrics&

• The&contractor&was&&measured&on&availability&

Performance&

• The&Owner&was&paid&on&&start&reliability&and&capacity&

Cause&

• There&were&no&reliability&&and&capacity&metrics&

Learning&

• Measure&the&contractors&&impact&on&owner’s&value&crea1on&

Availability&≠&&

Start&reliability&

OUTSOURCING&O&M&IN&O&G&Case&3&

O&G$outsourced$O&M$to$a$service$company$$to$drive$costs$out$of$business$

E  Procurement&bought&on&T&M&basis&and&driven&out&cost&E  Ini1al&cost&reduc1on&plan&had&not&worked&E  Early&equipment&failures&and&reduced&produc1on&(bbl&of&oil&lined)&E  Conflict&between&focus&on&maintaining&vs&running&the&equipment&


The$contractor$was$a$core$part$of$the$O&G$company’s$processes$yet$was$separated$from$the$opera8ons$

E  Equipment&supported&E  17&gas&turbines&E  40&compressors&E  Numerous&pumps&

E  Contractor&profits&&from&breakdowns&

E  Site&safety&performance&&a&major&issues&safety&&

To: Maintenance

From: Production

Site Performance report

Budget…has for a furthe

r year been 15% above

budget.

Plant performance

…has for poor, availability was 5%

below

expectation and there were too man

y

unplanned breakdowns.

HSE performance…there have been

too many accidents…


Gains&

Pains&

Owner$moved$from$T&M$based$contract$to$payment$based$on$bbl$

•  Revenue&the&more&oil&is&lined&

•  Breakdown&payments&•  HSE&repor1ng&weak&

•  Reduced&income&when&oil&not&lined&•  Integra1on&into&Owner’s&site&processes&•  Customer&feedback&from&several&func1ons&

•  Payment&per&bbl&lined&


Value$was$iden8fied,$created$and$delivered$in$each$phase$


Metrics&

•  The&contractor&was&measured&on&cost&•  The&contractor&made&money&when&&equipment&needed&repairs&

Performance&

•  There&was&poor&equipment&reliability&•  The&Owner&was&paid&on&bbl&lined&

Cause&

•  There&was&no&focus&on&the&impact&&of&the&poor&service&delivery&

Learning&

•  Both&par1es&needed&to&understand&&the&impact&of&their&behavior&

Low&cost&maintenance&&≠&&

High&reliability&

The$owner$and$the$contractor$worked$together$to$align$drivers$


Listening&to&the&customer&(eg&NPS&or&other&tools)&&helps&you&learn&about&their&pains&and&gains!&

Mobiliza1on&

•  Learn&to&work&as&as&a&team&•  Understand&the&cost&drivers&•  Iden1fy&areas&of&poor&performance&

Stabiliza1on&

•  Stabilized&the&costs&to&the&owner&•  Improve&availability&•  Target&maintenance&costs&

&&Risk&&&&&&&&&&&Reward&

•  Bonus/damages&system&&•  Target&maintenance&costs&•  HSE&performance&

&Payment&&&&&&by&results&

•  Payment&based&on&O&G&pumped&•  Tough&reliability&targets&•  HSE&performance&

THREE&LESSONS&LEARNT&


Lessons$learnt$from$the$case$studies$can$help$us$to$become$beNer$


Availability&≠&commercial&availability&

Availability&≠&start&reliability&

Low&cost&maintenance&≠&high&reliability&

Maintenance&metrics&&must&align&with&the&customer's&value!&Other&pains&and&gains&(eg&NPS,&accidents)&

Lessons$from$the$cases$that$are$oOen$forgoNen$in$daily$business$

Iden1fy&value&

Create&value&

Deliver&Value&

Find&out&what&the&customer&values&(based&on&job&to&be&done)&

Design&a&system&to&maximise&the&gains&and&minimise&the&pains&

Measure&and&discuss&gains&and&pains&&

(Figure&based&on&Anderson,&2009)&Service&Innova1on&|&Dr&Shaun&West&


Any&ques1ons?&

&

Dr&Shaun&West&[email protected]&

aligning metrics to customer value creation for the maintenance of power generation asset

Education

e equipmentsupported

e technicalavailability92

gasturbines e

ofayear e

e commercialavailabilityof78

e availabilityguaranteeof92

e opera1onalfor0

gains pains owner