ONGOING
PROCESS
Process & Power Industry Headaches, Trends & Observations
Owner/Operator Plant Creation Software Investments
Doubled Since 1998
By Tim Hickey
Owner/operators and EPCs in all industries face mountains
of difficulty in their engineering departments. Whether it be in oil and
gas, chemical, power, or pharmaceutical industry, issues of data migration,
operations and maintenance integration, and data hand-off continue to vex
even the most forward thinking corporations. To combat some of these problems,
owner/operators are taking matters into their own hands by investing more
in plant creation software. EPCs meanwhile, generally welcome this greater
technology adoption as a sign of potentially smoother collaboration and partnership.
Both agree technology providers could do more to facilitate their projects.
Daratech conducted a series of interviews with leading owner/operator and
EPC organizations to get their take on today’s biggest challenges.
Here is what we found:
Death, taxes, technology upgrades:
The inevitability of upgrades and data migration
When the life of a plant exceeds not years but decades
as most are proven to do, issues of technology upgrades and data migration
are inevitable. But that does not mean they need to be an endless source
of project pain and sunken investment. The old saying that no one wants to
migrate unless it is away from war, disease or famine rings true here. Owner/operators
and EPCs grow accustomed to certain tools and the processes these tools afford,
but most acknowledge the reality that software evolves and so too must the
way they use it.
But upgrading existing software can wreak havoc in engineering departments.
Sometimes products aren’t even backward compatible with themselves
let alone other systems. When new versions of particular software comes out,
it may have added functionality, but does it do certain things differently
than in previous versions? Do teams need to be trained or retained? If integration
has been established with 100s of other applications, are they now to be
broken and new ones formed?
Owner/operators and EPCs both say that if they could get more cooperation
from their software suppliers these transitions could be much smoother. Software
suppliers, on the other hand, believe they must spend the bulk of their resources
on new research and development. But by allocating less and less to older
systems, and in many instances, discontinuing support altogether for some
software, these companies run the risk of alienating their customer base.
Vendors must walk a fine line between securing their short-term financial
interests and wearing out the patience of their customers in the longer term.
Daratech believes that the most customer-centric suppliers will be the ones
who find the highest level of success in the future, particularly in this
environment of dwindling capital projects and cost cutting, where, outside
the oil and gas sector, most owner/operators are concentrating on upgrading
or optimizing existing facilities, where the employ of old data is a must.
You created this in what? Operations
and maintenance and data hand-off headaches
Without question, data hand-off is the source of some
of today’s most significant owner/operator pain, not only at project
inception but down the road in operations and maintenance. Why can’t
owner/operators and EPCs just work more closely to facilitate smoother data
hand-off, ensuring more efficient operation and maintenance work? Owner/operators
say EPCs handle data in a way that suits EPCs’ needs. EPCs respond
that owner/operators aren’t willing to pay EPCs to put data in a form
that owner/operators can use. However, both owner/operators and EPCs alike
can agree on the fact that solutions providers are not doing enough to address
the problem. One owner/operator put it this way: “The vendors talk
about supporting the lifecycle of the plant, but we don’t see that
they’ve made any investment in understanding the needs of operating
and maintaining plants.”
This owner/operator, and many others we spoke with, believe
that the software suppliers are primarily focused on software and processes
that support engineering, construction and turnover, but that they have shown
much less interest in operations and maintenance. Therefore owner/operators
and EPCs must use different methods to address the various data complexities
involved in O&M and in upgrades and revamps.
With multiple projects of all sizes occurring concurrently,
owner/operators are always planning for the eventual changes that must take
place at their facilities. They do this by anticipating the changes they’ll
need in the future and begin working on that engineering now, as a way to
stay ahead of the game. The total number and degree of change that a plant
undergoes varies from owner to owner; some make changes frequently while
others do not. Of course projects stay in progress for various lengths of
time—some engineering projects go on for months, others years—before
any changes are actually made to the plant. Regardless, change is a constant
for owner/operators, and the handling of data is a central component.
Here’s why: owner/operators must maintain the as-built
model of the plant to help design the changes. Depending on the project,
this could involve a full or partial model of the plant. After construction,
new as-built data needs to be collected and merged back into that original
“whole” plant model. Often, changes are made to a plant many
years after it was first built. Consequently, it is often the case that the
plant was created in one version of software and the update is created in
another version or another system entirely, depending on what tool the EPC
might have used. So how do you feed all these changes and final results back
into the as-built model? Answer: not very easily.
Taking the bull by the horns
Daratech research has learned that owner/operators are
investing more in plant creation software than ever before. While this trend
in no way automatically assures smoother data hand-off between owner/operator
and EPC, it is a promising trend because it points to owner/operators taking
more of an active role in technology selection and direction.
The portion of plant creation software sales to O/Os has nearly doubled
since 1998, from approximately 22% then to 39% in 2003.
While plant creation software sales to EPCs continue to make up the majority
of plant creation spending, the portion of sales to owner/operators has nearly
doubled since 1998, going from approximately 22% then to 39% of total spending
in 2003. [See chart—Ed.] In addition, sales to owner/operators
are growing 3X the rate of EPC sales—approximately 21% for owner/operators
versus 7% for EPCs—and at about 2X the rate of the overall market.
We believe one of the main factors driving this growth is that the concept
of asset lifecycle management is taking hold in all corners of the process
and power industries. Indeed, owner/operators are exploring the merits of
asset lifecycle management strategies in their ongoing efforts to compress
schedules, reduce costs and enhance quality. While the current economic spending
conditions are not ideal, owner/operators are seeing the benefit of investing
in technologies that give greater data transparency throughout the lifecycle
of the plant.
Typically, owner/operators have not wanted to invest large amounts of money
in IT systems, but they need to ensure data coming out of the EPC’s
design tools are readable, translatable, and ultimately usable without the
need for re-creation. Owner/operators are increasingly realizing that a more
sophisticated IT architecture can pay dividends throughout the asset lifecycle,
particularly in the areas of operations and maintenance, as well as in future
revamp, optimization and expansion projects and decommissioning.
But something else is at work here too: since projects
are smaller, owner/operators are taking more of the work in-house. In fact,
some are organizing their engineering departments into wholly owned subsidiaries
to compete with outside EPCs, in an effort to make their engineering departments
more efficient, gain better control of the process, and probably more importantly,
to keep costs down. Through these efforts, the investment in plant creation
software is steadily rising to accommodate these reengineered engineering
departments. [It should be stated that a healthy portion of owner/operator
plant creation software investments are coming from the oil and gas sector—Ed.]
And when owner/operators are not making new investments, they are working
to optimize and get the most out of their existing systems, seeking a greater
return on technology investments as man-power dwindles, a smart albeit necessary
strategy.
Owner/Operator interest and investment in asset lifecycle
technology is also reflected in this year’s attendance numbers at daratechPLANT2004,
where owner/operator participation is at its highest in the conference’s
ten-year history. Alstom Power, Anheuser-Busch, Bayer, Dow Chemical, Dow Design
& Construction, DSM, Duke Energy, Eastman Chemical, Merck, Procter &
Gamble, Rohm and Haas, Shell, Westinghouse Savannah River Company, and many
others will be on hand.
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