Process Optimisation at a European Oil Refinery

Background
A European refinery wished to improve upon its Solomon rating and, following previous internal improvement programmes which had only yielded modest improvement, decided to engage external help.

Maintenance and Engineering had been gradually outsourced with significant white collar responsibilities and a majority of blue collar jobs now employed by “embedded” contractors. The contractors had been integrated into the organisation and expected to act in the best interests of the client as if they were company employees.

Task
With its extensive experience and expertise in business improvement in the refinery environment, T.A. Cook was invited to undertake a 12-week analysis of the existing organisation, processes and management systems within the Maintenance, Engineering and Stores areas.

Following initial investigations and discussions relating to relative strengths and weaknesses and by taking into account the preparation for an upcoming shutdown and turnaround (TAR), the consultant team decided to focus on the following areas:
• Work order management: Planning, scheduling and execution of the job
• Contractor management and organisation and structure
• Procurement, suppliers and material management
• Permit and work order planning, preparation and issuing

Approach
Due to some historic sensitivities and a desire to secure greater buy-in, the exercise was conceived and conducted by a joint team of internal clients and T.A. Cook Consultants. They looked at both the theoretical and practical aspects of the main organisation, processes and practices to quantify improvement opportunities and define actions and responsibilities for an internal implementation plan.

The team conducted a number of best-practice audits, in-depth interviews, process mapping exercises and observations across the site. Wherever possible, use was made of existing studies and previouslyidentified solutions were re-evaluated to re-ignite interest and assist with buy-in.

Findings
The key findings arose out of a detailed examination and comparison of roles, responsibilities and organisational structures of both the core client and contractor maintenance, engineering and contractor management teams.

Poor definition of some key requirements and duplication of numerous mid and low level supervisory, planning, prioritisation and scheduling tasks led to poor overall co-ordination of site support services, an over-reliance on contractors’ own estimates and scheduling as well as inadequate stores management. This contributed to low overall value-added time and higher-than-necessary costs.

Contractor management was also found to be inconsistent with some external contractors incentivised proactively and others largely left to fill their day. Supposed fixed rates for jobs in some areas were rarely achieved in practice because poor or infrequent cross-checks on estimating assumptions were compounded by insufficiently documented variances. This led to habitual 5% to 20% increases on expected invoices.

Although progress had been made on ensuring that maintenance work packs were usually pre-prepared, contractors were still observed to be waiting too long for permits and not using their time efficiently. This was exacerbated by ill-defined expectations relating to job start and finish times, little systematic management of permit prioritisation and poor co-ordination of, for instance, gas testing.

The outsourced stores and parts management processes functioned erratically – mostly due to low data integrity and poor adherence on both sides to pre-agreed processes and service levels.

Additionally, it was found that the poor planning and scheduling behaviours resulted in the provision and support of too many vehicles – also with high cost and road traffic HSE implications.

Solution and targeted benefits
A plan of short, medium and long term actions was created within a project environment to be run entirely by the client staff. Whilst the analysis highlighted significant opportunity, with the exception of a 10% reduction in the main contractor charge, the nature and intensity of project, actions and targets were softened to reflect the desired slow-burn approach to change management. These included:
• Achieve second quartile Solomon cost rating
• Long-term, optimise the scope of the fixed maintenance contract to achieve 25% cost reductions
• Introduce consistent and cost effective incentivised contractor management
• Achieve 98% of material availability at all times and 5% saving on material spend

For more information contact:
Rupert Clark
Marketing Manager
Direct: +44 (0) 1183 260 229
Mobile: +44 (0) 7792 926 696
r.clark@tacook.com