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The 90s Are Over, Let’s Stop Basing Capital Cost Decisions on Lagging Indicators


The 90s Are Over, Let’s Stop Basing Capital Cost Decisions on Lagging Indicators Header

 

By Vista Projects

Remember the good old days of emerging digital technology?

Accessing information through a dial-up internet connection.

Saving data to floppy discs or CDs.

Sending emails to have them printed for storage.

Mobile connectivity was new, exciting, and… slow compared to what we have today.

In the energy sector, data access limitations influenced the structure of traditional execution workflows for capital projects. It was common – and still is – for project execution models to focus on document-based deliverables over raw data.

The inherent problem with a document-centric approach is that documents take time to produce. Let’s imagine the workflow for a technology evaluation study that:

  • begins with initial input from multiple departments
  • gets reviewed by 2-3 management layers on the project organizational chart
  • finally lands on the desk of a senior decision-maker

This process could easily take two weeks or longer. But what happens during those two weeks?

Work doesn’t get paused. The project continues to progress. The information initially collected for the study no longer represents current project conditions.

By the time it gets to the decision-maker, the study is a two-week-old lagging indicator.

A lot can change on a project in that amount of time. Execution workflows built around lagging indicators tend to:

  • lead to costly and unnecessary errors caused by decisions based on old information
  • stymie innovation with rigid and slow processes that limit experimentation

Innovative Solution: A Single Source of Truth

An innovative solution is a data-centric approach to project execution. One where all project stakeholders share a centralized data portal that provides on-demand access to a single source of truth (SSOT) about the project.

Instead of waiting two weeks for that study, the decision-maker can log in to the portal and review current project data in real-time.

In 2020, this data architecture technology exists. It’s also affordable to implement and leads to huge total cost of ownership (TCO) savings.

Asset Lifecycle Benefits

With a data-centric approach, the asset’s database isn’t archived in a warehouse after handover.

The data portal lives on as the asset advances from engineering through construction, commissioning, and operations. New vendors and project personnel are simply granted access to the digital project hub as required.

Let’s look at a couple of specific use cases to further highlight the benefits of a data-centric approach.

The following examples demonstrate how a SSOT execution model makes it easy to access Bill of Material (BoM) data that is consistently formatted in a centralized database. Having on-demand access to accurate, consistent, and verifiable data greatly accelerates engineering schedules and the estimate development process.

Scenario A

A project team needs to complete a feasibility study on a technology within a facility design. The recommendations in the study will help project leadership determine the correct course of action.

Traditional Model

In a traditional document-centric execution model, the steps would look something like this:

  • Complete engineering work
  • Generate a BoM
  • Develop a Class 5 Cost Estimate using the BoM

This execution model results in a long delay from study kick-off to when the estimate is finally reviewed as part of the funding decision process. During this lengthy development process, the probability of suboptimal engineering efficacy is high.

Data-Centric Approach

Working from the centralized data portal, the disciplines can complete their engineering work more efficiently and the estimating team can begin early estimate preparation work using the BoM schema and model data.

The study is completed faster, and the results allow the engineering team to quickly pivot and confidently make decisions based on accurate information. The shortened timeline enables the entire project team to become increasingly agile in its approach, both on work related to the study and the overall project. This agility fosters innovation.

The 90s Are Over, Let’s Stop Basing Capital Cost Decisions on Lagging Indicators 1

Figure 1 – Data-centric engineering results in faster, fact-based decisions

Scenario B

A large project schedules a monthly Key Material Quantity (KMQ) report to anticipate changes to the previous estimate.

Traditional Model

The KMQ reporting requires frequent BoM generation, which can take one to two days for each of the six engineering disciplines – a significant amount of the budgeted hours are spent on a reporting activity instead of on higher-value engineering tasks.

Data-Centric Approach

With all work being centralized in a database format, automated scripts generate KMQs nightly (or as frequently as required by the client). These KMQs can be viewed by engineers, project managers, and clients in easy-to-read data visualizations.

Rather than investing engineering hours to regularly generate BoMs, clients have direct access to the data portal and can track daily changes to KMQs. The project team can parse and subdivide data to understand near real-time changes to the KMQs and proactively monitor the model design status.

This is but one example of how a data-centric approach increases efficiency and gives clients full transparency into how a project is progressing.

Figures 2 and 3 represent data visualizations that have helped our clients keep their fingers on the pulse of the key project indicators without allocating costly engineering hours for reporting. Tracking the total pipe quantities and steel weights against previous estimates provides a high degree of certainty that the project will avoid unwanted surprises.

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Figure 2 – Data visualization indicating daily progression of modelled pipe (by length)

The 90s Are Over, Let’s Stop Basing Capital Cost Decisions on Lagging Indicators 3

Figure 3 – Data visualization indicating daily progression of modelled steel (by weight)

Thanks to the centralized data portal, our clients have 24/7 access to real-time project data. If someone needs a better understanding of specific project details, it’s there for them. No more waiting for a scheduled report to read weeks-old information.

Whether they need to know the total meters of 2” pipe required for their entire facility, or the weight of the handrails on a skid, the real-time data is easily accessible and readily parsed to suit their needs.

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Figure 4 – Readily accessible real-time piping lengths for the entire project

The 90s Are Over, Let’s Stop Basing Capital Cost Decisions on Lagging Indicators 5

Figure 5 – Readily accessible real-time handrail weights per skid

Back to the Future with an Experienced Implementation Partner

It’s common for companies to see the benefits of a data-centric execution model but not know exactly how to implement it.

Changing established processes in an organization is a legitimate challenge, especially when the digital workflows of yesteryear are entrenched in daily tasks.

There are also many moving parts. It’s not just about implementing the right technology or tools. A successful digital transformation requires proper processes and team buy-in.

At Vista Projects, an integrated engineering consulting and system integration firm, we’ve overcome these challenges for the last 7 years. Our hands-on experience includes developing our own internal workflows and helping to simplify the digital transformation of client assets.

Along the way, we developed customized reporting tools and digital work processes to facilitate project execution. Today, our client teams enjoy the benefits of on-demand access to real-time information about their projects.

Vista’s unique truth-based project execution model increases transparency, enhances collaboration, and improves overall quality. Our modern approach leverages single-source-of-truth data architecture to inform timely critical decisions.

In the energy industry’s current cost-driven environment, this level of access to high-quality data is an immense advantage to our clients.

Learn more and schedule a consultation at www.vistaprojects.com



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