How managing risk reduced an STO by 4 days
T.A Cook partnered with a North American refinery in the spring of 2020 to better manage their STO risks, enabling them to achieve their cost and duration targets. Utilizing our expertise in risk management, our team of consultants developed a risk management plan, that prioritized project risks though the impact of a combination of STO schedule duration, cost and lost production revenue (LPR). Our consultants then worked in partnership with our client’s team throughout the remaining duration of the STO preparation and execution phases to ensure that risks were eliminated or mitigated to within acceptable limits. The process allowed our client to surpass target expectations, as well as making better business decisions on proposed capital projects:
Through an analysis of the client’s risk management process, subsequent interviews with the STO functional group and a detailed deep dive of the risk register, the outcome was a risk management plan was developed based on our findings. The findings identified that the client’s risk management evaluation process did not allow for: probability of occurrence, or key consequences such as impact to schedule (increased execution days and resulting lost production revenue (LPR)), as well as increased STO execution costs from a longer than planned STO schedule duration. These shortcomings prevented STO risks from being risk ranked by their combined schedule, cost and LPR impact to the event. Improving the risk evaluation process allowed for the proper identification and ranking of risks. The top five ranked risks identified were: inadequate scope freeze model, non-integrated schedule, fluctuation of key STO preparation personnel, level of effort estimates for work packages varied amongst planners, an inadequate work permit system, and weather conditions not considered during planning.
Projected impact of the top five risks
Using the T.A. Cook risk simulation model, the total cost, schedule and lost production revenue impact from the top 5 risks occurring with a mean of $106.9 million
and a 90% confidence interval of $100.7 million to $133.5 million. The expected schedule delay from the top 5 risks is 1.8 days on average with a 90% confidence interval
of 0.1 to 5.2 days.
Actual mitigation results
Challenging the inadequate scope freeze model allowed the client to remove six capital projects that had been proposed after scope freeze due to their overall calculated schedule duration and dollar impact. The linking of previously separate schedules for pre-execution and execution work for both capital projects and maintenance identified pre-execution work slipping into execution. This issue was mitigated by assigning additional resources to complete pre-execution work prior to shutdown. Level of effort planning templates were jointly developed from time on tool studies for each equipment type and planners were trained on its application prior to the commencement of planning. Multiple electronic work permit issues were encountered during execution such that the site wanted to switch back to paper work permits during execution and consequently abandon the schedule as well. Rather, the site was advised by the T.A. Cook consultants to fix the multiple issues with the electronic work permit system and thereby continue to execute the work as per the schedule. Several weather events did occur and were allotted for in the overall event duration but, weather event durations themselves were not included in the actual schedule.
Development and implementation of a risk management plan during STO preparation and execution contributed to the refinery completing the STO for $97m ($3m under budget), 4-days ahead of the planned schedule duration, with a corresponding increase in production revenue of $4.5m.