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Case Study: The Simplification and Standardisation of Engineered Products

September 2018


Acknowledgments

In preparing and publishing this document, Oil & Gas UK gratefully acknowledges the contribution of

members of the work group, namely:

Neil Kirkbride, David Gallagher, Anthony Clarke (BEL Valves) & Ian Davidson (Score Group PLC)

Thanks also go to the review panel:

Mathew Barnett (Nexen), Scott Dillon (Maersk), Alex Robertson (Worley Parsons),

Keith Scott (Petrofac), Gavin Hedge & Brenda Ord (Subsea 7)

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without prior written permission of the publishers.

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professional advice and is not deemed to be exhaustive or prescriptive in nature. While every effort has

been made to ensure the accuracy of the information contained in this case study, neither Oil & Gas UK,

nor any of its members will assume liability for any use made thereof. In addition, this case study has

been prepared on the basis of practice within the UKCS and no guarantee is provided that it will be

applicable for other jurisdictions.

While the provision of data and information has been greatly appreciated, where reference is made to

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September 2018

Contents

1. Introduction 5

2. Inefficiency of Engineered Products 6

2.1 Complexity, Cost and Time – Potential Savings 6

3. Initial Study Scope 10

3.1 Strawman Exercise 10

3.1.1 Inventory & Repair 12

3.1.2 Use of Inventory 12

3.1.3 Refurbishment Vs New Supply 12

3.2 Results of Analysis 13

3.2.1 Strawman Application to Subsea Valves 13

3.2.2 Application to Topside Valves 15

3.3 Practical Application - Inventory 16

4. How to Reduce the Cost, Time & Complexity of Engineered Products

4.1 Applying Recommendations 18

4.2 Applying the Principles to Inventory 21

4.2.1 Refurbishment vs New Supply 22


List of Abbreviations

Abbreviations Definitions

API American Petroleum Institute

ASME American Society of Mechanical Engineers

ASTM American Society for Testing and Materials

ETF Efficiency Task Force (Oil & Gas UK)

FEA Finite Element Analysis

FPAL First Point Assessment Ltd

HNBR AED Hydrogenated Nitrile Butadiene Rubber Anti Explosive Decompression

HSR Hydraulic Spring Return

ISO International Standards Organisation

ITP Inspection and Test Plan

IVB Independent Verification Body

MDR Master Data Record

MPS Master Production Schedule

NORSOK Norwegian Shelf’s Competitive Position (Norwegian Shelf Petroleum Industry Standard)

OHSAS Occupational Health and Safety Management System

QHSE Quality, Health, Safety and Environment

RB Reduced Bore

RF Raised face

ROV Remote Operated Vehicle

SAR Safety Analysis Report

SIL Safety Integrity Level

SURF Subsea, Umbilicals, Risers and Flowlines

UKCS United Kingdom Continental Shelf

VDR Vendor Document Requirement


1. Introduction

There are a wide range of engineered products used for offshore projects. Valves were selected to

provide proof of concept for the simplification and standardisation approach given their use in large

numbers and across a range of developments. This work has demonstrated the substantial savings that

can be made through the standardisation and simplification of subsea valves and topside valves. It is

not unreasonable, then for the next step to further develop this approach so it can be applied to any

engineered product. Indeed, some of the work done previously as part of the Subsea standardisation

work pinpointed potential savings from the standardisation of subsea elements such as Christmas trees

and umbilicals - further information, such as the Subsea Standardisation Guideline is available through

Oil & Gas UK’s efficiency hub. The general methodology for simplification could also be applied to a

number of systems, products or services and realise significant savings.

Within this case study, engineered products are defined as:

Products that are supplied to meet a specific application whereby the process of supply requires

evaluation of the application, engineering design and analysis, procurement of materials, manufacture

and assembly and test.

The flow chart below can be applied to any product or service to identify potential areas of inefficiency.

It suggests key considerations which can be used to analyse customer requirements/impacts and

identify areas of inefficiency. These considerations fall in to two main categories as depicted below; the

green category relating to standardisation and the purple relating to simplification in execution.

Figure 1 – Potential Areas of Inefficiency


2. Inefficiency of Engineered Products

Following proof of concept through case studies, a strawman exercise was designed to explore and

determine the efficiency potential of adopting a new approach across industry. Specifically, to explore

and demonstrate the impact of varying operator preferential requirements on cost and schedule.

Further information on the strawman exercise can be found in the appendix.

2.1 Complexity, Cost and Time – Potential Savings

A previously completed project was selected and analysed based on the critical factors of complexity,

time and cost. Data was considered representative of a typical project scope and baseline was

considered to be the ‘as bid’ price and lead time.

Twelve metrics ranging from material requirements to QHSE Auditing were defined and grouped as

detailed below.

Table 1 - Metrics

Stan

dar

dis

atio

n

Pro

du

ct

Spec

ific

atio

n

Material Requirements

Specifications

Pro

du

ct

Test

ing

&

Qu

alif

icat

ion

Product & Component Testing

Qualifications

Sim

plif

icat

ion

Pro

ject

Exe

cuti

on

Bidding Process

Interface Management & Control

Reporting

Doc Requirements

Review Cycles

Inspection

Sub-Supplier & Sub-Contractor

QHSE Auditing


A scoring mechanism matrix was created to consider each of these twelve metrics against the five

ratings of:

Table 2– Rating Levels for Case Study Assessment

Rating Definition

Industry Maximum Highest level of complexity, specification & intervention experienced to date in terms of project execution requirements.

Actual Level the order was executed at.

As Bid Level understood the project would be executed at when project was bid and accepted

Potential Level suggested for this project could be executed at using the strawman learnings & respecting certain specification constraints

Industry Minimum Level that might be attainable in the future by removing the constraints

By measuring each of these metrics with a weighted number for "complexity", “time” & “cost” a score

could be generated against the baseline model. A chart was produced (3 dimensional) that provided a

measure of schedule impact on the y axis, cost impact on the x axis and the size of the ‘bubble’ indicating

the level of complexity.

Summary of findings from this analysis against each lead factor are as follows:-

Schedule - The ‘As bid’ position was taken as the baseline at 0% and results showed there was a 70%

increase on ‘As bid’ vs ‘Actual’ for schedule. It was identified there was still a potential 12% saving on

schedule from ‘As bid’ to ‘potential’ identified through strawman recommendations.

Complexity - The ‘As bid’ position was taken as the baseline at 100% and results showed there was a

53% increase on ‘As bid’ vs ‘Actual’ for complexity. It was identified there was still a potential 33% saving

on complexity from ‘As bid’ to ‘potential’ identified through strawman recommendations.

Cost – The ‘As bid’ position was taken as the baseline at 0%, and results showed there was a 18%

increase on ‘As bid’ vs ‘Actual’ for cost. It was identified there was still a potential 8% saving on cost

from ‘As bid’ to ‘potential’ identified through strawman recommendations.

Value – The results of the case study, using the rating categories above showed:

- The contract value as bid was £7.4m

- The saving at the potential standard was 8% of that i.e £590k

- The saving at the industry minimum standard was 10% i.e £740k

However, when measured against the actual level the order was executed at:

- The actual contract was £8.73m

- The saving at the potential standard was £1.92m

- The saving at the industry minimum standard was £2.07m

The strawman was created to challenge industry practices, behaviours & complexities (people & process)

that create project overruns in all essential areas (cost, schedule, complexity). If these overruns could


be removed / reduced and further lessons learned applied from the strawman, then the benefits can

be realised. The influence of these practices & behaviours on cost specifically could bring about far

greater savings than it appears as the actual project costs and lead times are often greater than originally

bid.

It should be noted that, in this instance, the cost increases do not take account of the contractor or

operator costs. This is purely the supplier’s costs.

Figure 2 – Comparative relationships between complexity, cost, and time for case study

Potential SavingComplexity - 33%Schedule - 12%

Cost - 8%

As BidComplexity 100%

Schedule 0%Cost 0%

ActualComplexity 153%

Schedule 70%

Cost 18%

Industry MinimumComplexity - 28% Schedule - 11%

Cost - 10%

Industry Maximum

Complexity 223%Schedule 158%

Cost 25%

-125%

-75%

-25%

25%

75%

125%

175%

225%

-25% -15% -5% 5% 15% 25% 35%

% T

ime

% Cost


The table below depicts the constituent parts of the savings and relates to the metrics previously

described in section 3.3.1 and to those suggested in the process of applying the strawman technique

in section 4.2.

It should be noted that the “As Bid” score is centred on zero and that the movement up or down from

that start point is shown for the “Actual” and “Potential Savings”. The actual cost is the cost to the

industry as execution behaviours and practises can drive the cost up with additional complexity added

by, for example, more onerous reporting requirements, increased testing complexity or enhanced

material specification that can be applied post contract award.

It was recognised that companies who specify & procure valves may develop their own standards

internally to mitigate risk throughout the lifecycle of the valve. As such, these company specifications

increase “complexity” and may affect the “efficiency” of the procurement process

Table 3 – Potential Savings vs Actual Cost via metric

Potential Saving Actual

Cost Saving %

Schedule Saving %

Cost Saving % Schedule Saving %

Material Requirements -1.1% 0.0% 4.4% 20.8%

Specifications -0.6% 0.0% 2.1% 8.3%

Product & Component Testing -0.4% 0.0% 3.8% 8.3%

Qualifications -0.9% -3.1% 2.1% 12.5%

Bidding Process -0.6% 0.0% 0.1% 0.0%

Interface Control -0.5% 0.0% 0.1% 0.0%

Reporting -0.5% 0.0% 1.5% 0.0%

Doc Requirements -0.9% 0.0% 0.6% 8.3%

Review Cycles -1.1% -4.2% 0.8% 0.0%

Inspection -0.7% 0.0% 2.0% 8.3%

Sub Con Control -0.6% -4.2% 0.2% 4.2%

QHSE 0.0% 0.0% 0.0% 0.0%


3. Study Scope

Standardisation and simplification has been previously explored and addressed in relation to Subsea

design, installation and analysis. This resulted in the publication of Subsea Standardisation Guidelines

(Subsea Standardisation – Guidelines on Adopting a Simplified and Fit for Purpose Approach) in January

20171) which have now been applied to a number of real life projects and are in the process of realising

significant benefits for industry. The aim of this work is to further maximise their impact through further

development, so they can be applied to the wider remit of Engineered Products.

As part of the subsea standardisation work, a retrospective analysis of four case studies from previously

executed projects was undertaken. The aim of this analysis was to determine the savings potential of

the subsea standardisation approach, increase awareness of the potential application of the approach

and identify opportunities to test application in current and planned projects. The four case studies

looked at an FPSO riser system; subsea pipeline tieback; subsea manifold and bundle; and a subsea

pipeline tieback. Application of the subsea simplification methodology identified potential savings

ranging from 15 - 28%. Further information, including case studies where this methodology has been

applied and the Subsea Standardisation Guideline itself can be found on Oil & Gas UK’s efficiency hub

https://oilandgasuk.co.uk/efficiencyhub/#efficiency-hub+category:efficiency-task-force.

3.1 Strawman Exercise

Following proof of concept through the case studies, the next strawman exercise was designed to

explore and determine the efficiency potential of adopting the approach across industry. Specifically,

to explore and demonstrate the impact of varying operator preferential requirements on cost and

schedule.

The strawman project was undertaken by 10 of the 12 sub-groups involved in the subsea

standardisation and simplification work to identify a fit for purpose reference case for a typical but

hypothetical UKCS scope (i.e. the minimum specification to be fit for purpose without compromising on

safety).

A series of metrics was developed to create a score reflective of the retrospective complexity of the

client’s approach to the project. This score demonstrates the impact the preferential requirements

and/or project execution methods have in comparison to the reference case. Resulting scores were then

plotted on a time / cost / complexity diagram to show the range of impact and identify trends or lessons

to be learned.

The process was as follows:

(1) Define Strawman Scope (Typical UKCS scope)

Identification of UKCS scope relevant to the Subgroup (based on a previous project if possible or

hypothetical).

(2) Define Reference Case Scopes (UKCS fit for purpose approach)

1 Available at: http://oilandgasuk.co.uk/product/subsea-application-guidelines-january-2017-etf-be01/

http://oilandgasuk.co.uk/product/subsea-application-guidelines-january-2017-etf-be01/


Definition of the reference case which is:

• Developed from a ‘Fit for purpose’ approach for the UKCS;

• Excludes preferential requirements;

• Applies appropriate standards only.

(3) Define Applicable Metrics (For full project life - award to delivery).

Consideration given to:

• Preferential and project delivery requirements;

• Metrics including codes, standards and specifications; interface management;

documentation requirements; review cycles; inspection and front-end control; testing and

qualifications; material requirements.

(4) Produce Time/ Cost/ Complexity Diagram

Figure 3 - Strawman Theoretical Exercise – Overall Results2

2 Note: Aggregated result for the 10 of the sub groups in the subsea standardisation and simplification workgroup. Please note

the impact of duration on project development cycle is not reflected in costs.

90%

100%

110%

120%

130%

140%

150%

160%

170%

90% 100% 110% 120% 130% 140% 150%

% D

ura

tio

n

% Cost

Global Operators

UKCS Focused Operators

High

Medium

Low

Complexity

Reference Case


3.1.1 Inventory & Repair

In addition to simplification and standardisation of valves, a project was also carried out for topside

valves specifically focusing on the supply process and its association with existing materials. This is with

particular regard to accessing the cost savings associated with the re-use of inventory through repair

and refurbishment.

When operational and project risk matrices are compiled, valves are often categorised as high-risk

items. They are an integral part of piping and safety systems, can compromise performance and have a

major impact on costs, schedules and technical integrity as well as resultant safety and environmental

concerns.

Valves generally account for 10% of capex and 10% of opex of a typical operating plant’s costs for

‘engineered products’. In the capex environment, this spend mainly relates to engineering and

procurement of new valves and all associated parts. It also includes costs for any selected spare valves

if repairs are not possible on site to minimise downtime. Opex spend on the other hand, is focused on

maintenance type activities associated with the installed population (repairs, maintenance,

replacement, inventory management). These two separate but related factions rarely interface,

although they share similar issues which influence current and future budgets.

It is generally accepted that there is a degree of waste and duplication throughout the valves category

and two specific elements were identified as areas where sustained cost reduction and efficiency gains

were possible.

3.1.2 Use of Inventory

The operating community owns an extensive valve stock which has a large cost of ownership associated

with it. This inventory is a resource which is often not considered when replacement valves are required,

resulting in new valves being bought unnecessarily.

3.1.3 Refurbishment Vs New Supply

Complementary to the use of inventory initiative is management of the repair and refurbishment

process. Repair and refurbishment of existing valve and actuator equipment to the as new condition

can offer savings of 40% against the new buy price. Current estimates within the industry suggest that

the ratio of repair to new purchase resides at 25% to 75%. Improving this ratio would be challenging, as

mentioned earlier, equipment is bought instead of repaired to enable reduced downtimes, as risk is

minimised if an inventory of replacement parts is maintained, but such action would result in significant

savings to end users.


3.2 Results of Analysis

3.2.1 Strawman Application to Subsea Valves

Application of the strawman approach to Subsea Valves began with establishing a relatively simple yet

typical scope of work as a basis for the comparative analysis on the lead factors of complexity, cost and

time. In that regard, the baseline for strawman for subsea valves was chosen as below. The valves scope

for this exercise was based on 2”-8” ball and gate valves plus some small-bore valves and covered a

variety of production, water injection and gas lift services. This is considered to be representative of

typical past subsea valve projects and therefore offers good historical data as a basis for the

establishment of the most cost-efficient model.

Table 4 – Valve Listing for Typical Subsea Manifold

Valve Service Qty

8" Ball Valve - HSR Production 1

8" Ball Valve - ROV Production 1

6" Gate Valve - HSR Production 6

6" Gate Valve - ROV Production 6

8" Ball Valve - HSR Water Injection 1

8" Ball Valve - ROV Water Injection 1

6" Gate Valve - HSR Water Injection 3

6" Gate Valve - ROV Water Injection 3

4" Ball Valve - HSR Gas Lift 1

4" Ball Valve - ROV Gas Lift 1

2" Gate Valve - HSR Gas Lift 3

2" Gate Valve - ROV Gas Lift 3

Small Bore Valves Service 10

Rating: API 5000

Materials (Body / Bonnet): Carbon Steel (Part Clad) or Cast Duplex

Materials (Trim): Duplex

To determine the simplest means of producing these products, when considering the general

requirements traditionally associated with this type of subsea valve package, a matrix of metrics was

established to measure the impact of complexity, cost and schedule.

Ultimately, it is the end user (usually the operator) who determines what is appropriate and fit for

purpose, and not the supplier’s responsibility, therefore the group making the assessment had previous

working experience of executing contracts for the nominated operators and judged where each would

be graded in each metric using their understanding and experience of the operator’s specifications. By

scoring each low, medium or high on each metric it was possible to establish the operator’s individual

score for complexity, cost and schedule.


Using historical costing information and supply chain knowledge a baseline cost was established for the

subsea valve strawman. (Note: this baseline model assumed fit-for-purpose industry standard solutions

removing any influence of any client specific requirements).

This approach allowed for the percentage increases to be calculated for each operator compared to the

baseline and therefore allowed the comparison of the relative impact of the different customer

requirements.

Figure 4 – Strawman Assessment for Subsea Valves only

The graph provides a visual representation of the comparative relationships between complexity, cost,

and time across various client specifications. The baseline model can be assumed to be the most

expedient and cost-effective means by which to fabricate the subsea valves project scope.

The x-axis shows the relative percentage cost increase from the baseline. These range in value from the

baseline at 100% up to 160% when additional requirements are considered.

Similarly, the relative time differences taken to deliver the completed strawman scope is plotted along

the y-axis of our graph, ranging from the baseline at 100%, up to 220% with other considerations.

Complexity has also been assessed and is illustrated by the relative size of the circles shown; the larger

the circle the greater the complexity.

The strawman is based solely on the supplier costs and does not consider broader project costs such as

those encountered by the operator. A metric to enable estimation of the contractor and operator costs

to manage the supplier was developed (at the metric levels previously defined). This estimation

considered product specification, product testing and qualification and well as project execution costs.

90%

110%

130%

150%

170%

190%

210%

230%

250%

90% 110% 130% 150% 170%

% D

ura

tio

n

% Cost

Global Operators


High

Medium

Low

Complexity

Reference Case


The subsea standardisation and simplification work identified that, for a typical subsea development,

an independent operator adds 16% on to the baseline cost for valve/valve supplier costs. It is then

estimated that the independent operator adds an additional 5% to their own costs over and above the

supplier’s costs. Similarly, a typical major operator adds 53% on to the baseline cost for valve / valve

supplier cost and an additional 31% to their own order execution cost.

3.2.2 Application to Topside Valves

An analogous approach to the subsea valves analysis was taken to produce a topside valves strawman,

drawing from the subsea standardisation and simplification data set, as similar to the strawman above.

Whilst analogous, the list below represents a typical, simple valves scope for a brownfield development,

which can differ widely depending on the task being undertaken, hence the following strawman should

be taken objectively.

Table 5 – Typical valve list for Surface Brownfield Project

Ball Valve Service Qty

4" RB 300 HC Process Line 1




8" RF 150 HC Process Line 2

Service

Rating: API 150 to 2500

Materials (Body / Bonnet): Carbon Steel

Materials (Trim): Super Duplex

Seat Material Soft or Metal Seated

Seals HNBR AED


Figure 5 – Strawman Approach to Topside Valves only

The graph provides a visual representation of the comparative relationships between complexity, cost,

and time, across various client specifications for topside valves. The baseline model can be assumed to

be the most expedient, and cost-effective means by which to produce the topside valves strawman

project scope.

As previously, the x-axis shows the relative percentage cost increase from the baseline. These range in

value from the baseline at 100% up to 150% when additional requirements are considered. Similarly,

the relative time differences taken to deliver the completed strawman scope is plotted along the y-axis

of our graph, ranging from the baseline at 100%, up to 220% with other considerations.

Complexity has also been assessed and is illustrated by the relative size of the circles shown; the larger

the circle the greater the complexity.

The trend for both the subsea and topside valve analyses can be seen to be broadly similar

3.3 Practical Application - Inventory

A case study was carried out to assess the potential savings achievable from changes to current

inventory management and refurbishment practices. Existing practices were challenged and

incremental changes were made, targeting the removal of waste and maximising the resources and

equipment which was already owned by the operator.

Efficiency targets were set and specific criteria established to quantify and record the savings achieved.

The actual efficiency savings achieved from these two categories was just under 19 percent contributing

to overall savings of 35 percent as part of a wider bundle of measures, against the total spend.

90%

110%

130%

150%

170%

190%

210%

230%

250%

90% 110% 130% 150% 170%

% T

ime

% Cost

Global Operators


High

Medium

Low

Complexity

Reference Case


In summary, this initiative:

• Cut out duplication of effort by making earlier decisions during the repair process.

• Actively promoted the use of existing inventory and refurbished valves when the requirement for a

new or replacement valve was required.

• Accessed expertise to maximise the use of the existing inventory.

• Had the courage to scrap off dead stock.

• Delivered initial savings of 35% during the reporting period. Hope is that this would be sustained,

but for this to occur, a continued focus and scrutiny on the above would have to be maintained.


4. How to Reduce the Cost, Time & Complexity of Engineered Products

4.1 Applying Recommendations

The aim of this section is to explain how the valves strawman can be further developed for application

to the wider scope of Engineered Products. Please note that, in addition to the considerations presented

below, the individual drivers for costs/schedules for each product or company may differ. This guidance

is generic and intended as a starting point, there may be more specific issues that are not covered.

The table below recommends a rating scale to be considered for each Engineered Product.

Table 6 - Material Requirements, Specifications, Product & Component Testing, and Qualifications

Metric

Standardisation

Product Specification Product Testing & Qualification

Material Requirements

Specifications Product &

Component Testing

Qualifications

Low

Materials to standard ASTM satisfying national standards e.g. ASTM, ISO etc.

In accordance with Product codes such as API, NORSOK etc + Specification with Product Data Sheets

+ Client defined requirements (e.g. Painting, Packing and Preservation)

In accordance with industry product codes and standards

PRODUCT - Industry product codes with supplier’s interpretation of substantive changes. WELDING - Use of existing weld qualifications which satisfy industry codes e.g. ASME IX MATERIALS - No qualification PAINTING - No qualification required

Medium

Materials to standard ASTM satisfying national standards e.g. ASTM, ISO etc. –

+ Additional Certification

Clearly defined industry product codes supported by focused client product specifications and data sheets

+ Client defined auxiliary requirements (e.g. Painting, Packing and Preservation)

In accordance with industry product codes and standards

+ Client modifications / additions

PRODUCT - Industry product codes with supplier’s interpretation of substantive changes. Extended Testing WELDING - Existing weld qualification and supplementary testing MATERIALS - Additional Testing PAINTING - Verification by Documentation

High

Customer specific materials that satisfy customer specific requirements + Additional Certification

+ Customer Witness for Material Activities

Multiple industry product codes to review Multiple Project Specifications

+ Client defined requirements for auxiliary requirements such as (e.g. Painting, Packing and Preservation)

Client specific requirements

PRODUCT - Industry product codes with supplier’s interpretation of substantive changes. Extended Testing Additional requirements WELDING - Full qualification Extensive testing, Project/ customer specific additional testing MATERIALS - Sacrificial testing Additional qualification testing. Supply restricted by qualification or country of origin PAINTING - Verification by documentation


The table below then details the considerations for each stage throughout execution of the process to

identify potential areas for simplification to realise efficiency savings.

Table 7 - Project Execution: Bidding, Interface Management & Reporting

Metric

Simplification

Project Execution

Bidding Process Interface Management &

Control Reporting

Low

• Agreed T&Cs requiring no discussion / clarification

• Industry product codes e.g. API, NORSOK

• Materials / product data sheets

• Bid content: Price, Delivery, Technical. Description and commercial summary only

• x1 bid submittal

• No pre-meeting requirements

• Certificate of conformity

• Meets minimum regulatory, technical & safety requirements

• Certificate of conformity (CoC)

• Reporting by exception

Medium

• Agreed T&C’s requiring no discussion / clarification

• Multiple industry codes to adhere to

• Materials / product data sheets

• Bid content: Price, Delivery, Technical. Description and commercial summary + technical and commercial clarifications + minimal supporting data

• x2 bid submittals (i.e. re-bids)

• No pre-bid meeting requirements

• Additional client input to review product to include but not limited to e.g. Materials, Yield strengths, operating loads. Sizing factors

• Project schedule & status report Monthly schedule Basic status reporting

High

• New / special T&Cs

• Multiple industry product codes apply

• Multiple options

• Bid content: special format and extensive supporting data

• x4-10 bid submittals (i.e. re-bids)

• Pre-bid meeting(s) required + extensive clarifications

• Additional client input to review but not limited to (materials, yield strengths, operating loads, sizing factors)

• Independent verification (IVB) & client reviews to include but not limited to: Design specifications, drawings calcs, essential safety, requirements, operating instructions

• Weekly schedule & detailed report Client physical attendance for milestone events & expediting


Table 8 - Project Execution: Document Requirements, Review Cycles, Inspections, Sub

Supplier/Contractor, and QHSE

Metric

Simplification

Project Execution

Document Requirements

Review Cycles Inspections Sub Supplier &

Sub Contractor

QHSE

Low

• Inspection test plan (ITP) with surveillance points & inspection criteria

• Installation operating manual (IOM) with operating parameters complete with lifting plans

• CofC demonstrating product meets specific technical & safety requirements

• 2-week turnaround

• 1 comment cycle

• Supplier fully ISO compliant

- Limited to no inspection

• No intervention

• No limitation. No restrictions on sub-vendor choice

• ISO approvals

• Acceptance of existing approvals e.g. ISO 9001, ISO 14001, OHSAS 18001 etc

Medium

• Basic project documentation status (MDR, VDR etc)

• No of docs upwards of 5 reaching 15-20 max

• Final data book produced

• Document cycles can vary dependant on client and no of returns


• 2 comment cycles

• Product test witness only

• Supplier approved vendors

• Monitor process

• ITP only major components / docs

• ISO approvals & FPAL, ISO 9001, ISO 14001, OHSAS 18001 + FPAL

High

• Full document status (VDS/MDR etc). Includes basic docs but also more complex docs such as FEA / qualification / SIL documentation

• Upwards of 20+

• Document cycle times can be protracted up to 30 days

• Numbers of document submissions can be 6+


• 4-12 comment cycles

• Component layout inspection (pre-assembly inspection)

• Hold & witness points including notifications, for inspections

• Inspection through full order execution

• Sub supplier ITP/MPS required

• Sub-supplier/contract visits and meetings

• Restricted sub-contractor, sub supplier as defined by project specifications. Restricted countries

• Full sub-contractor, sub supplier docs

• Customer specific annual & project specific. In addition to ISO approvals, customer requires annual and project specific audits to be performed

As a reminder, the above tables are example metrics and ratings only. They may be applicable in certain

ways to other products or services, however specific metrics and ratings need to be created for specific

products and services to analyse that market meanigfully.


4.2 Applying the Principles to Inventory

The operating community owns a substantial valve stock which has a large cost of ownership associated

with it. This inventory is a resource which is often not considered when replacement valves are required,

resulting in new valves being bought unnecessarily.

Historically, operator stock management has been limited, so even when stock did exist it could not

easily be found, often resulting in the purchase of items for which stock already existed. The same valve

could also have multiple stock numbers assigned to it leading to duplication. In these circumstances the

stock becomes passive, generating only cost.

The driver in this initiative is to reduce inventory and to realise the associated cost benefits. The target

areas identified to achieve this goal are:

• Maximised use on existing operational activities.

• Maximised use on operator capital projects (minor and major).

• Identification of surplus materials suitable for 3rd party sale.

• Identification of materials that should be scrapped.

Analysis of company processes show existing stock is most commonly categorised as the below, in

accordance with the Process Map Figure 6:

Cat 1 – Critical/Insurance Spares.

Cat 2 – Shutdown/TAR reservation.

Cat 3 – General operational spare.

Cat 4 – Surplus stock for resale.

Cat 5 - Scrap


Figure 6 – Example of a Stock Evaluation Process Map

4.2.1 Refurbishment vs New Supply

Complementary to the use of inventory initiative is management of the repair and refurbishment

process. Repair and refurbishment of existing valve and actuator equipment to the as new condition

can offer savings of 40% against the new buy price. Current estimates within the industry suggest that

the ratio of repair to new purchase resides at 25% to 75%. Improving this ratio would be challenging, as

mentioned earlier, equipment is bought instead of repaired to enable reduced downtimes, as risk is

minimised if an inventory of replacement parts is maintained, but such action would result in significant

savings to end users.

In this context, the equipment available for repair requires to be provided with a condition code. Each

time a requisition is raised then the option for repair should also be considered as part of the wider

inventory pool on every occasion. This integrated process would operate on the basis of the process

map outlined below.


Figure 7 - Inventory and Repair Efficiencies


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