Asset Management Learning Academy

Shutdowns: Front-End Loading as an instrumental tool to success

Glenn Rebello, MBA, MBB, CSM® - Asset Management Principal at Work Management Solutions

Successful shutdowns are more than an effective end product. Additional factors that recognise success include completing these events in the shortest possible time without cost overruns, and notably without any safety incidents. Organisations can better predict these desirable outcomes by considering Front-End Loading (FEL) in shutdowns, allowing for appropriate opportunities to balance issues, risks, and value creation & retention.

Glenn Rebello, MBA, MBB, CSM® - Asset Management Principal at Work Management Solutions​ Tweet

Shutdowns are considered the most expensive of maintenance projects and generally constitute around 25% to 50% of the maintenance budget. The basic assumption is that they are time-consuming and directly influence the plant’s production in terms of loss of revenue, which ultimately impacts the company’s bottom-line profit.

In reality, shutdowns are not always about expenses alone. It’s almost a truism to say that they create value to the organisations by increasing the overall reliability of the plant and provide a better competitive advantage in terms of production cost leadership – all, which are critical for the long-term success of organisations. The pace of disruption arising from economic uncertainties these days, combined with a shortage of skillsets in the market, require that exclusive strategies are effectively implemented during the execution of such significant events.

Undoubtedly, these events and the associated processes are managed under the leadership of experienced personnel and possibly based on the proven systems and procedures. Despite it all, the complex dynamics of the shutdowns do increase the potential of delivering an unsuccessful one. In our experience, some of the critical challenges that attribute to the poor performance of shutdowns include:

  • The shutdown is not adequately scoped by using data, analysis, and risk assessments
  • Late scope development or additions
  • Trying to ‘fit in’ and execute ‘maintenance scope’ in shutdowns
  • Inadequate shutdown benchmarking, and therefore, insufficient target setting and subsequently inaccurate estimating
  • Unclear contracting and procurement strategies and implementation
  • Potential lack of alignment to, or adequate common framework to integrate shutdown processes
  • Insufficient capacity (and capability in some cases) within the organisation to develop and manage shutdowns effectively

The basic principles for managing shuts are mostly familiar and well-documented in most organisations; but, the application of these basic principles in real-time is a different matter. The challenges could be many. For example, in many companies, ownership of processes and information is fragmented. Some organisations have peculiarities in business models that do not support the principles. At times, roles are designed around expertise requirements that do not align with the required skills and capabilities for the shutdown. In some cases, there is a lack of clarity in the accountabilities and decision-making, and frequently, there are people in positions who have difficulty in delegating authority along with the responsibility. In other cases, the planning processes are inconsistent or the teams are inexperienced. Furthermore, expectations of wearing multiple hats have made people time-poor, and limited interactions within the organisation have fuelled these complexities further.

To reduce the vulnerability of such challenges, improving the information flow and the discipline of interactions within the shutdown operations is critical. Additionally, evaluating the decisions needed, the decision-making capacity and assigning appropriate responsibilities to develop actions for risks and opportunities have become more apparent to the overall shutdown effectiveness. Experience tells us that FEL helps reboot the information flow and decision-making as well as streamline appropriate levels of engagement and team involvement.

Front-End-Loading is a popular concept in the project management world. It involves project definition and pre-planning to enable correct and timely decisions, minimise risks and maximise the potential for project success. It emphasises on spending enough time and effort to plan and design the predictable outcomes during the early stages of the project’s lifecycle. The ability to accommodate changes to the project definition and preparation is relatively high. In contrast, the cost to make those changes is relatively low in comparison to later stages.

The exhibit summarises that the most significant step in value creation is made in the front-end development stage of the shutdown and is directly co-related to the influence curve. As the shutdown definition progresses, the influence over the shut’s outcome decreases.

Typical Value Model of a Shutdown Life-Cycle

Generally speaking, the FEL approach has strong intuitive components. It involves employees to engage with and support the overall business maintenance strategy. More specifically, it includes alignment of shutdown work, development of basic engineering criteria, completing a thorough scope definition, and having robust shutdown plans before the execution stage. It also helps to facilitate a comprehensive road map to highlight potential disruptions and working together to fully coordinate shutdown activities.

The forces present in the process can change how value chains work in the shutdown world. In fact, early adopter organisations have broadly benefited from value creation to value retention by paying more attention during the early phases of the events. It has helped propel granularity in defining the objectives, enabled frequent feedback and discussions, encouraged a forward-looking approach, and put a greater emphasis on teams than on individuals to help break down silos and boost cross-functional collaboration.

Below are some highlights of how large asset-intensive organisations continue to embrace the FEL approach to reduce the vulnerabilities and help create value in shutdowns.

Objectives, goals & strategies

Crystallise and communicate the shutdown objectives, goals and strategies to align with all internal and external stakeholders. Research attributed to the goal-setting theory (by Edward Locke and Gary Latham, 1990) suggests that objectives and goals are more likely to be achieved if people understand them and believe they can accomplish them. Actions should be directly linked to strategies for people to carry them out.

Alignment & integration

Align the business plan and priorities (including projects) with a good understanding of the trade-offs between efficiencies of fewer, but longer shutdowns vs more shutdowns with shorter durations and how integrating the production deliverables will minimise the duration and reduce costs.

Common framework

Establish a common framework to incorporate various plans (e.g., HSE plans, resourcing plans, communication plans, logistics plans, procurement and contracting plans, budgeting plans) and present to relevant stakeholders to help highlight each department’s deliverables expectations. This deliberate effort has had a trickle-down effect of goal alignment across multiple departments in the organisation.

Risk-based scope

Ensure the scope of work is well defined with understood risks and consequences. The scope is frozen at the right time to enable accurate assessment of the material, labour, specialised services, and other required resources. Integrate the shutdown scope with the (complete) list of project work with a timely review of the risks, uncertainties and production loss.

Planning & scheduling

Focus on good planning and scheduling to ensure the appropriate configuration of deliverables/milestones with maintenance and every department, including production, inspection, projects, procurement, contracting, and safety. It helps seamless management of shutdown activities and reduces out-of-service time.

Agile governance

Encourage agile governance to facilitate effective decision making by defining which decisions are best made in meetings, and which can be delegated to direct reports and people close to the day-to-day action. This facilitates real-time decision-making by people ‘who know better’ and forges a pathway for easy buy-in and compliance (to actions). This also promotes a sufficiently agile culture that is responsive to the changing circumstances, rather than wasting time and effort in endless meetings and presentations.

Shutdown preparation reviews

Conduct periodical reviews of the shut preparation status by an entity that is not directly a part of the shut preparation team (even better if the review is conducted by an entity that is not part of the parent organisation). It helps obtain an impartial view of the current status against good practices and deliver a factual message directly to leadership. Most leadership may already know the status of the event’s readiness; however, independent reviews help reinforce and reset priorities and provide external validation for re-alignment.

The FEL forms the basis for laying out the checkpoints and the schedule of commitments to keep the shut scope in alignment, and within the budget. Although it is the key, simply taking the FEL approach in itself will not guarantee its success. The obvious need to systematically implement the process cannot be over-emphasised. Done well, it will allow for integrated management, provide transparency on preparation targets, increase collaborative partnerships and significantly scale up the likelihood of success.

References:

Attou, A.K. & Ahmed, Q., Asset Management Practices at Qatargas, Qatargas Operating Company Limited, Ras Laffan, Qatar

Locke, E. & Latham, G., April 1991, A Theory of Goal Setting & Task Performance, The Academy of Management Review

Render, C., The Benefits of Good FEL (Front-End Loading), OTC Toolkits

Shlopak, M., Emblemsvag, J. & Oterhals, O., 2014, Front end loading as an integral part of the project execution model in lean shipbuilding

Sulda, T., Project Front End Loading, LATSA – Business Learning Services

The Asset Management Landscape, Global Forum on Maintenance & Asset Management, Second Edition, ISBN: 978-1-7774676-0-9

Read more about the author

Glenn Rebello

Asset Management Principal

MBA, MBB, CSM®