Asset Performance Networks

LEADING INDICATORS OF TURNAROUND

PERFORMANCE OUTCOMES
By

Bobby Vichich
(Vice President Turnaround
Professional Services (2006))
Houston Office
18333 Egret Bay Blvd., Suite 640
Houston, TX 77058
Tel: +1 (281) 554-8181
Fax: +1 (281) 554-8585




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Executive Summary

Turnaround outcomes are impacted by numerous factors of varying degree of
controllability. Based on quantitative data collected from recent turnarounds, this
paper examines and presents the drivers (Leading Indicators) of turnaround
performance and quantifies their effect on turnaround outcomes. The paper
introduces turnaround risk and readiness indices (TRI) and their relationship to
turnaround outcomes, and the concept of a standardized turnaround scope
index. Finally, benchmarks of best turnaround practices are shared.

Introduction

Turnaround data indicate that turnaround safety, cost, schedule, and
operability problems are not random. Rather, these problems are predictable
months prior to any particular turnaround. Leading indicators - such as
turnaround characteristics and the level of definition and planning - have a
quantifiable effect on turnaround outcomes. There are varying degrees,
however, to which these leading indicators are controllable. This paper
examines these controllable and uncontrollable factors and their effect on
turnaround outcomes with specific focus on turnaround cost predictability and
competitiveness.

Although the turnaround organization does not have control over many
turnaround characteristics such as qualified labor availability, material condition
of the plant, equipment congestion, etc. the examination and understanding of
these characteristics enable the quantification of their effect on turnaround
outcomes. And, therefore, provide a gauge of the likelihood of meeting
turnaround targets. As importantly, effective risk management practices could
lessen the effect of these characteristics on turnaround outcomes; and, hence,
the negative impact that a protracted or costly turnaround may have on the
manufacturing business.

Scope definition and planning practices, are not only within the control of the
turnaround organization, but are also leading indicators of turnaround success.
The best turnaround systems effectively use a gated and phased approach to
turnaround definition, planning and execution. The best-of-the-best achieve
integration and organizational alignment around their objectives, scope, plans,
and execution strategies through the effective use of their gated and phased
turnaround work process and its alignment with their project development
process.





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Industry Dataset

This study is based on an industry dataset of recent (past four years)
turnarounds from industry. The dataset contains more than 400 refining and
chemical turnarounds. A subset (135 units) of the refining portion of the dataset
contains detailed turnaround scope data. Figure 1 provides a breakdown of the
turnaround database.


Figure 1

Quantitative Characterization of Turnaround Complexity

The data indicate that there are three turnaround characteristics that have the
most influence on turnaround predictability: 1) the size of the turnaround
measured in direct field labor hours; 2) the amount of capital work; and 3) the
turnaround interval. The first and the second factors obviously measure size and
difficulty, while the later factor is perhaps a proxy for the degree to which the
material condition of the unit is known, as well as the experience of the team with
the unit. The Turnaround Complexity Calculator

, as developed by Asset
Performance Networks combines these three factors together to produce a single
factor known as Turnaround Complexity which is a single indicator of
turnaround predictability. The data shown in Figure 2 reveals the significance of
Turnaround Complexity (High, Medium, and Low).



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Copyright 2003-2006 Asset Performance Networks, LLC. All rights reserved.
Turnaround Complexity
An Indicator of Turnaround Predictability
(20%)
Low Medium High
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High Complexity Turnarounds Are Unpredictable
Turnaround Complexity Turnaround Complexity

Figure 2
Controllable and Uncontrollable Factors driving Turnaround Outcomes

In addition to the indications offered by Turnaround Complexity, two larger
categories of leading indicators work together to drive turnaround predictability,
as outlined in Figure 3:

1. Inherent plant and turnaround characteristics that pose significant
challenges and difficulties which are uncontrollable by the turnaround
team.
2. Level of scope definition, planning, preparation and readiness to execute
the turnaround, all of which are well within the control of the turnaround
team.

Uncontrollable Leading Indicators

There are over 20 characteristics that influence turnaround safety, schedule,
cost, and operability outcomes. The following are just a few examples of these
characteristics:

Turnaround complexity



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Availability of skilled labor
Amount of piping work
Amount of I&E work
Changes to decontamination method and procedures
Equipment congestion

The level of control that the turnaround organization has over these
characteristics is very limited - for example, the outcomes of turnarounds with
highly dense work areas are less desirable than those performed on less
congested units. Turnaround organizations have no control over the plot plan or
the equipment layout within the various operating units; and, hence, unit
congestion is a given. Nevertheless, it has an impact on turnaround outcomes.

Copyright 2003-2006 Asset Performance Networks, LLC. All rights reserved.
Safety
Schedule
Cost
Operability
Size: # of labor hours
% capital projects
labor market
new technology
area congestion
material condition. etc.
team alignment
scope control
capital integration
contract strategies
planning practices
cost estimating. etc.
Leading Indicators Driving Performance
1- Inherent
Characteristics
(Uncontrollable)
2- Level of
Readiness
(Controllable)
Drivers of Turnaround Predictability

Figure 3
Figure 4 reveals the cost outcomes of a subset of turnarounds in our
database. It shows that those with high inherent risks overrun their cost estimate
by an average of 33%, while those with medium and low risks overrun by an
average of 19% and 9%, respectively. It is important to emphasize that, although
Turnaround Complexity is a significant factor in the Risk Calculation, the
reference here to high, average, and low risks are different than the
complexity categorization. The Risk Calculation accounts for more than 20
inherent factors, while complexity only reflects the most dominant three. For



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brevity, Figure 4 shows only the cost variability, however, these inherent risks
have a similar gradual impact (different percentages) on schedule outcomes.
Controllable Leading Indicators

Although each turnaround is characterized by a set of inherent, or
uncontrollable, factors that affect its outcome, the turnaround team regularly
deals with a myriad of factors that are controllable; and actually have a more
profound impact on turnaround predictability. At a high level, these are: team
alignment, scope definition and control, comprehensive planning, schedule
integration, and level of preparedness - collectively readiness. In the next
section, we describe the Readiness measurement methodology, and examine its
impact on the uncontrollable inherent risks described above.

Copyright 2003-2006 Asset Performance Networks, LLC. All rights reserved.
Cost Variance of 3 Levels of Inherent Risks
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Levels of Inherent Risks
High Average Low

Figure 4
Turnaround Readiness Pyramid

Asset Performance Networks has developed a Turnaround Readiness
Pyramid

tool to measure the level of Readiness of a turnaround of any

complexity at any point in time during the definition phase (i.e. the tool adjusts for
3 levels of turnaround complexities and for the time phases prior to the start of
the turnaround). The Pyramid

is a web-based tool that involves each

turnaround team member independently evaluating the teams status in the 21
components of the turnaround preparation process. The results are collectively
input into statistical algorithms and the status of each of the 21 elements is



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displayed in a traffic light fashion (red, yellow, and green). Additionally, the
Pyramid

calculates the level of alignment around the status of each of the 21

pyramid elements.
In the spirit of sharing with the industry-at-large, Figure 5 shows the
Readiness Pyramid

for the average industry turnaround of medium Complexity

in 2005. This pyramid shows the red, yellow and green light status for each of
the 21 pyramid elements. A similar Pyramid

(not shown) is produced detailing

the team alignment for each of the 21 Pyramid elements. The detail produced by
the status and alignment pyramids are then used by the turnaround team to
identify the more critical gaps, and ultimately prioritize resources.

Copyright 2003-2006 Asset Performance Networks, LLC. All rights reserved.
2005 Medium Complexity Turnarounds
Average Readiness
TRI
Avg
= 2.8
Planning Status
Avg
= 3.1

Figure 5
Surprising to most, team alignment is often a more influential driver of
turnaround outcomes than is status, especially on high Complexity
turnarounds. The most significant misalignment is usually contained within
the Capital Projects component. For turnarounds with a high percentage of
capital work, the engineering representatives consistently rate the status of
this element as close to best practical (engineering packages have been
reviewed and are being produced in a timely fashion); while the turnaround
team members consistently rate it as having significant gaps from Best
Practices (engineering packages are behind schedule). Misalignment
indicates an opportunity for improved communications, and possibly more.



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Turnaround Readiness Index

The Turnaround Readiness Index (TRI) is produced when the Status and
Alignment Pyramids are combined. TRI is used to indicate the ultimate level
of readiness of a turnaround at any point in time in the preparation phase.
TRI ranges between 1 (poorest) and 5 (strongest), with the optimal range
between 3.8 and 4. The best turnarounds are not only well-planned, but the
team is also well aligned. This is especially true for high Complexity
turnarounds.
Figure 6 simply breaks down the Figure 4 data into three levels of
Readiness - Poor, Average, and Strong (shown as Red, Yellow, and Green,
respectively). The chart shows that Readiness improvement correlates not
only to reduced variability, but also to lower average cost overruns.
Readiness, or TRI, is an extremely reliable indicator of cost predictability
and, similarly, schedule variation and average performance.

Copyright 2003-2006 Asset Performance Networks, LLC. All rights reserved.
Readiness Improves Cost Predictability Outcomes
Poor, Average, and Strong Readiness Shown
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TRI Scale

Figure 6







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One additional Semi-controllable Factor also Drives Performance

As we continue to examine the controllable and uncontrollable factors driving
turnaround performance, it is evident that Inherent factors and Readiness provide
a very convincing indication around turnaround outcomes. And although both of
these factors impact turnaround competitiveness; there is one additional and
much more significant factor behind turnaround competitiveness i.e. answering
the following question: Although my FCC turnaround overran its budget by 18
percent, how come its cost is still 20 percent under another FCC within my
company which is of similar technology, size, and vintage and runs a similar
product slate? After adjusting for Inherent Risks and Readiness, the short
answer is the amount of work scope. Hence, a Scope Index for each type of unit
is required to be able to compare the amount of work scope for turnarounds on
like units.

Figure 7 shows the total picture of how inherent characteristics, turnaround
readiness and the amount of scope can work together to deliver turnarounds that
are predictable and competitive. And, when these fundamentals are
complimented with the right benchmarks, competitive targets can be set and
ultimately achieved.

It is important to emphasize that scope comparisons should be done on an
apples-to-apples basis. In the past two years, we have extended our database
to include detailed planned and actual scope data on six types of refinery units.
Our scope database currently numbers 135 units; and there is always room for
more data and benchmark participants. We are in the process of developing a
Turnaround Scope Index (TSI), which will be the third Leading Indicator of
turnaround performance with a strong impact on cost and schedule
competitiveness.




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Copyright 2003-2006 Asset Performance Networks, LLC. All rights reserved.
Safety
Schedule
Cost
Operability
Leading Indicators Driving Performance
1- Inherent
Characteristics
(Uncontrollable)
2- Level of
Readiness
(Controllable)
Drivers of Turnaround Predictability & Competitiveness
3- Amount of
Scope
(Semi-controllable)
Risk
Index
Readiness
Index
Scope
Index
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Figure 7
Conclusion

Not all turnaround disasters can be avoided. However, through strong
team integration, thorough scope definition, risk identification and mitigation,
robust planning and scheduling practices, and diagnostics and monitoring tools
risks can be significantly minimized. As a result, the best turnaround teams plan
and execute the right turnaround right by following their phased and gated
turnaround work process. This means starting with strategic decisions that lead
to well defined tactical planning, which, ultimately, end up as a series of
comprehensive integrated execution plans. Identifying, defining and freezing
scope; completing planning early; managing risks; achieving team alignment and
all along measuring Readiness relative to world-class performers are the
fundamental building blocks to achieve turnaround competitiveness and overall
success.

About the Author

Bobby Vichich is Vice President of Turnaround Professional Services at AP
Networks - a project and turnaround solutions implementation firm based in
Bethesda, Maryland, USA. Bobby joined AP Networks executive management
team after 16 years in the petrochemical industry with ExxonMobil and Lyondell
Equistar Chemical. Throughout his career, Bobby's focus has been work
process design and measurement and optimization of turnarounds. He has



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served in various planning, scheduling, controls and execution management
roles of major turnarounds on many of ExxonMobil Chemicals' business lines. He
also led a corporate benchmarking study chartered to define the next generation
turnaround breakthrough performance metrics. Bobby has earned a recognized
standing in the turnaround industry and has participated and chaired industry
conferences on turnarounds. Bobby holds a Bachelor degree in Engineering from
Virginia Tech.
About Asset Performance Networks, LLC
Asset Performance Networks, LLC (also known in the industry as AP Networks
or APN) is a consulting and solutions development company with offices in
Bethesda, MD, Houston, TX and the Netherlands. Our mission is to develop and
implement innovative tools and solutions to enable breakthrough performance in
plant turnarounds and capital projects in the oils, energy and chemicals
industries. Browse the following portals for company information: ap-
networks.com & turnaroundnetwork.com.

Appendix 1:
Brief Description of the 21 Readiness Components

Long Range Plan Long range planning is the process for establishing Turnarounds based on Reliability Issues, Capital Planning, and
Economic Decision Models. Effective Long Range Planning permits sound management of Capital Projects together with
Operational and Reliability Issues and permits an organization to better allocate its Human and financial resources.
Turnaround Team The Management of a Turnaround from conceptual stage to completion is a team effort. Team members must
clearly understand their Roles and Responsibilities and work in an effective manner. Key practices include the organization, the
leadership or steering team, and the team building process.
Lessons Learned A systematic study of critiques of previous Turnarounds and large capital projects is an important element in the
preparation for a successful Turnaround. Key part of this process is to understand previously encountered issues with
improvement action items assigned to individuals with deadline dates for completion.
Scope of Work The scope of work for the turnaround refers to all the activities that need to be planned and executed during the
shutdown, execution, and startup phases. The scope includes all types of activities, including maintenance, inspections, and
capital projects. Key practices include scope development, growth control, and analysis, prioritization, and evaluation.
Inspection The Inspection findings from previous Turnarounds and any in-process inspections must be accommodated in the work
scope. During the Turnaround a key reliability process to assure mechanical integrity is an inspection plan to find any issues, and
Risked Based Inspection techniques is being increasingly used by many organizations to effectively focus the Inspection effort.
Capital Projects Capital Projects are typically performed during the Turnaround of a Process Plant. Key elements include the
project team, the engineering packages status, and integration of the activities. Another key practices is the coordination of the
capital effort during the period immediately before and during the Turnaround window.
Planning Practices Planning is the process of analyzing the work scope to determine how it most effectively could be performed in
the field. The Planning Process considers logistical issues to optimize the work and to assure that all advanced preparations are
complete. In addition, plant shutdown and startup sequencing is often performed in this preparatory phase of the Turnaround.
Scheduling Practices The Process to sequence the work in the most effective manner is part of the scheduling phase of the work
process. During this phase the critical path and the manpower resources required to perform the work are typically determined.
The schedule must be able to be progressed in the field to establish proper control of the workflow. For a large Turnaround the
scheduling is typically performed with a computerized Scheduling Program that allows What If type analysis.
Cost Estimating The cost estimating process is performed sequentially with more definitive estimates available as the detail planning
progresses. Typically the cost is categorized into direct, indirect and overhead costs, each of these cost is tracked as part of the
overall cost control effort. A good estimating method permits cost tracking and control during execution.
Contractors Contractors play a critical role in the planning and execution of a Turnaround, and this component relates to the owners
contracting strategy and process for selecting contractors.
Detailed Planning During this phase of the Planning Process the work scope is broken down into job packages which provide all the
information to perform the work in the field including trade allocation, drawings, procedures tools, equipment and materials. Job
walk downs with contractors are also performed during this phase of the planning process.
Resource Planning Resource Planning involves the determination of skilled craft requirements and the staffing needs of the
Turnaround management organization. Logistical issues and shift schedules are also addressed during this phase of the process.



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Safety Planning Planning is an essential tool to obtain excellent safety performance in the Turnaround. This involves the
development of site wide safety guidelines and training requirements and training packages for the workers to be brought on site.
During this phase job level safety analysis is performed to establish appropriate safety procedures such as Lock- Out / Tag- Out
and Personal Protective Equipment are determined.
Pre-Shutdown Planning All work scope opportunities that can be performed before the Turnaround are planned and scheduled.
Appropriate manpower planning is completed and used as an opportunity to mobilize and train the turnaround work force.
Materials Management During this Phase Materials are ordered and / or allocated and usually by equipment or project number with
the computerized maintenance system. At this phase the plan to control and distribute and stage the material is established.
Contracts with all execution contractors and shops for component overhaul area also completed.
Training A Training Plan for all necessary training including how and who will perform the Training is established. This involves
site specific safely training for all the workers as they are mobilized on site. Operational and Maintenance training for new
equipment or processes is also completed during this phase of the preparation process.
Contingency Planning During this phase all potential risks that threaten the turnaround execution goals are assessed on a basis of
Likelihood and Consequence of Occurrence. For all high risk items contingency plans to appropriately deal with the risk should
be established.
Procedure Status Comprehensive review and revision of all procedures used during the Turnaround is performed. This phase also
includes the establishment of training packages for any new or revised procedures, which are identified.
Execution Control This phase of the planning process is related to the methods for controlling cost, schedule, and percent work
completion during the turnaround execution. In addition, such issues as the handling of mischarges and monitoring fieldwork
progress are also identified.
Communications The appropriate communication of turnaround goals and progress to achieving these goals is essential to the
success of Turnaround. Daily and weekly meetings to establish priorities and resolve issues must be well planned and disciplined
to be effective. Communication between shifts and units that must be worked together are also important.
Startup Readiness Startup plans refer to the specific pre-commissioning, commissioning, and start-up plans and procedures for each
of these stages as part of the transfer from the turnaround team to operations. The handover and acceptance process is also
included as part of this topic.