This article, “Transforming the Capital Asset Lifecycle – Part 2: A Lifecycle Approach”, is the 2nd part in a blog series by John Lusty, Siemens Digital Industries Software global marketing lead for Energy & Utilities, focusing on the need for greater efficiencies from today’s capital assets – the plants, facilities, factories, and critical infrastructure that are the foundation of an organization’s operations.
In my last blog, “Transforming the Capital Asset Lifecycle – Part 1”, I wrote about how inadequate information management and a lack of data interoperability was costing the global capital projects industry billions of non-budgeted dollars every year. But, with commodity prices headed higher and the capital project pipeline full, that was a problem that needed to be solved “another day”.
Welcome to “another day”.
Today, we’ll look at concepts that address leaky project work processes which, ultimately, erode company gross margins. There’s never been a better time to do so as we’re encountering new sources of commodity price sensitivity and market volatility – the root causes of which do not have short-term, or even medium-term solutions. If your company is going to be evaluated against its industry peers by shareholders, investors, and institutional lenders in their non-stop search for alpha, then top-line growth and eliminating erosion of bottom-line margin contribution will be essential to avoid being relegated to the penalty box of lower industry valuations.
If we look to more digitally mature industries (i.e. Heavy Equipment, Transportation) that have survived and thrived under intense competitive pressure for decades, we’ll see that they view the information supporting their programs, projects and assets differently than the Energy and Utility industry. They long ago recognized that the underlying information, or “digital twin”, that supported whatever they were producing held tremendous value. However, to be fully leveraged the digital twin needed to be both managed, maintained and made available to those who needed it in the pursuit of execution excellence.
No matter the industry or what is being produced, the processes that manage lifecycle information are largely the same. Each stakeholder along the lifecycle of the project still needs controlled access to complete, correct, consistent information where changes are managed, and processes are optimized to meet measured execution goals. That’s a tall order when you’re working in isolated software silos with complex engineering data, and your workers must use tens or hundreds of thousands of unmanaged and uncontrolled spreadsheets to artificially bring information together.
In the manufacturing industry, authored data is recognized to have an intrinsic value which increases exponentially if it is connected (related) to the lifecycle of the project so that others can be made aware of its existence and benefit from its content. This is true for business documentation, design planning, front-end and detailed design deliverables and related simulation output, as well as the fabrication, construction and commissioning planning that produce a physical instance aligned to its digital twin.
The challenge that took decades to mature was Product Lifecycle Management (“PLM”) technology that provided the capability to integrate all phases of manufacturing so that people working up and down the lifecycle had proper access to the information they needed to produce the best results.
The applicability of using a PLM approach to project and asset data management in the Energy & Utilities industry is now being recognized and the upside potential for the industry is substantial. Today, there are existing enterprise solutions that are broad, deep and highly configurable and have been rigorously used by industry leaders in highly competitive industries for many years.
One area where a lifecycle approach to data management can be applied is to that of capital assets and capital projects. A quick Google search will return a vast number of reports showing the challenges of capital projects in meeting their scope, schedule and cost objectives.Drilling deeper into the causes of such variations usually illuminates a disconnect in the lifecycle management of the project, which resulted in the wrong material being ordered, workers not able to perform their tasks, or an inability to respond quickly to a plant outage that led to costs penalties and downtime.
In the next blog, we’ll talk about why taking a lifecycle management approach for capital assets and projects has been a challenge, and then start to discuss new capabilities that are coming soon. These new capabilities will help to fill in the missing pieces of the “plant information management jigsaw puzzle” that has kept owner-operators from being able to see the complete picture.
About the author:
John Lusty is the global lead for Energy & Utilities Industry Marketing for Siemens Digital Industries Software and is based in Calgary, Canada. John has spent over 25 years working in, or in support of plants and facilities as well as the operators and professionals who are tasked with their ongoing operation. John is particularly interested in technologies and practices that improve the safety, efficiency, and overall sustainability of businesses operating in today’s challenging Energy & Utilities industry.