Case Study: The Simplification and Standardisation of Engineered Products
September 2018
Case Study: The Simplification and Standardisation of Engineered Products Page 2
Acknowledgments
In preparing and publishing this document, Oil & Gas UK gratefully acknowledges the contribution of
members of the work group, namely:
Neil Kirkbride, David Gallagher, Anthony Clarke (BEL Valves) & Ian Davidson (Score Group PLC)
Thanks also go to the review panel:
Mathew Barnett (Nexen), Scott Dillon (Maersk), Alex Robertson (Worley Parsons),
Keith Scott (Petrofac), Gavin Hedge & Brenda Ord (Subsea 7)
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professional advice and is not deemed to be exhaustive or prescriptive in nature. While every effort has
been made to ensure the accuracy of the information contained in this case study, neither Oil & Gas UK,
nor any of its members will assume liability for any use made thereof. In addition, this case study has
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applicable for other jurisdictions.
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Case Study: The Simplification and Standardisation of Engineered Products
September 2018
Page 3
Contents
1. Introduction 5
2. Inefficiency of Engineered Products 6
2.1 Complexity, Cost and Time – Potential Savings 6
3. Initial Study Scope 10
3.1 Strawman Exercise 10
3.1.1 Inventory & Repair 12
3.1.2 Use of Inventory 12
3.1.3 Refurbishment Vs New Supply 12
3.2 Results of Analysis 13
3.2.1 Strawman Application to Subsea Valves 13
3.2.2 Application to Topside Valves 15
3.3 Practical Application - Inventory 16
4. How to Reduce the Cost, Time & Complexity of Engineered Products
4.1 Applying Recommendations 18
4.2 Applying the Principles to Inventory 21
4.2.1 Refurbishment vs New Supply 22
Case Study: The Simplification and Standardisation of Engineered Products Page 4
List of Abbreviations
Abbreviations Definitions
API American Petroleum Institute
ASME American Society of Mechanical Engineers
ASTM American Society for Testing and Materials
ETF Efficiency Task Force (Oil & Gas UK)
FEA Finite Element Analysis
FPAL First Point Assessment Ltd
HNBR AED Hydrogenated Nitrile Butadiene Rubber Anti Explosive Decompression
HSR Hydraulic Spring Return
ISO International Standards Organisation
ITP Inspection and Test Plan
IVB Independent Verification Body
MDR Master Data Record
MPS Master Production Schedule
NORSOK Norwegian Shelf’s Competitive Position (Norwegian Shelf Petroleum Industry Standard)
OHSAS Occupational Health and Safety Management System
QHSE Quality, Health, Safety and Environment
RB Reduced Bore
RF Raised face
ROV Remote Operated Vehicle
SAR Safety Analysis Report
SIL Safety Integrity Level
SURF Subsea, Umbilicals, Risers and Flowlines
UKCS United Kingdom Continental Shelf
VDR Vendor Document Requirement
Case Study: The Simplification and Standardisation of Engineered Products Page 5
1. Introduction
There are a wide range of engineered products used for offshore projects. Valves were selected to
provide proof of concept for the simplification and standardisation approach given their use in large
numbers and across a range of developments. This work has demonstrated the substantial savings that
can be made through the standardisation and simplification of subsea valves and topside valves. It is
not unreasonable, then for the next step to further develop this approach so it can be applied to any
engineered product. Indeed, some of the work done previously as part of the Subsea standardisation
work pinpointed potential savings from the standardisation of subsea elements such as Christmas trees
and umbilicals - further information, such as the Subsea Standardisation Guideline is available through
Oil & Gas UK’s efficiency hub. The general methodology for simplification could also be applied to a
number of systems, products or services and realise significant savings.
Within this case study, engineered products are defined as:
Products that are supplied to meet a specific application whereby the process of supply requires
evaluation of the application, engineering design and analysis, procurement of materials, manufacture
and assembly and test.
The flow chart below can be applied to any product or service to identify potential areas of inefficiency.
It suggests key considerations which can be used to analyse customer requirements/impacts and
identify areas of inefficiency. These considerations fall in to two main categories as depicted below; the
green category relating to standardisation and the purple relating to simplification in execution.
Figure 1 – Potential Areas of Inefficiency
Case Study: The Simplification and Standardisation of Engineered Products Page 6
2. Inefficiency of Engineered Products
Following proof of concept through case studies, a strawman exercise was designed to explore and
determine the efficiency potential of adopting a new approach across industry. Specifically, to explore
and demonstrate the impact of varying operator preferential requirements on cost and schedule.
Further information on the strawman exercise can be found in the appendix.
2.1 Complexity, Cost and Time – Potential Savings
A previously completed project was selected and analysed based on the critical factors of complexity,
time and cost. Data was considered representative of a typical project scope and baseline was
considered to be the ‘as bid’ price and lead time.
Twelve metrics ranging from material requirements to QHSE Auditing were defined and grouped as
detailed below.
Table 1 - Metrics
Stan
dar
dis
atio
n
Pro
du
ct
Spec
ific
atio
n
Material Requirements
Specifications
Pro
du
ct
Test
ing
&
Qu
alif
icat
ion
Product & Component Testing
Qualifications
Sim
plif
icat
ion
Pro
ject
Exe
cuti
on
Bidding Process
Interface Management & Control
Reporting
Doc Requirements
Review Cycles
Inspection
Sub-Supplier & Sub-Contractor
QHSE Auditing
Case Study: The Simplification and Standardisation of Engineered Products Page 7
A scoring mechanism matrix was created to consider each of these twelve metrics against the five
ratings of:
Table 2– Rating Levels for Case Study Assessment
Rating Definition
Industry Maximum Highest level of complexity, specification & intervention experienced to date in terms of project execution requirements.
Actual Level the order was executed at.
As Bid Level understood the project would be executed at when project was bid and accepted
Potential Level suggested for this project could be executed at using the strawman learnings & respecting certain specification constraints
Industry Minimum Level that might be attainable in the future by removing the constraints
By measuring each of these metrics with a weighted number for "complexity", “time” & “cost” a score
could be generated against the baseline model. A chart was produced (3 dimensional) that provided a
measure of schedule impact on the y axis, cost impact on the x axis and the size of the ‘bubble’ indicating
the level of complexity.
Summary of findings from this analysis against each lead factor are as follows:-
Schedule - The ‘As bid’ position was taken as the baseline at 0% and results showed there was a 70%
increase on ‘As bid’ vs ‘Actual’ for schedule. It was identified there was still a potential 12% saving on
schedule from ‘As bid’ to ‘potential’ identified through strawman recommendations.
Complexity - The ‘As bid’ position was taken as the baseline at 100% and results showed there was a
53% increase on ‘As bid’ vs ‘Actual’ for complexity. It was identified there was still a potential 33% saving
on complexity from ‘As bid’ to ‘potential’ identified through strawman recommendations.
Cost – The ‘As bid’ position was taken as the baseline at 0%, and results showed there was a 18%
increase on ‘As bid’ vs ‘Actual’ for cost. It was identified there was still a potential 8% saving on cost
from ‘As bid’ to ‘potential’ identified through strawman recommendations.
Value – The results of the case study, using the rating categories above showed:
- The contract value as bid was £7.4m
- The saving at the potential standard was 8% of that i.e £590k
- The saving at the industry minimum standard was 10% i.e £740k
However, when measured against the actual level the order was executed at:
- The actual contract was £8.73m
- The saving at the potential standard was £1.92m
- The saving at the industry minimum standard was £2.07m
The strawman was created to challenge industry practices, behaviours & complexities (people & process)
that create project overruns in all essential areas (cost, schedule, complexity). If these overruns could
Case Study: The Simplification and Standardisation of Engineered Products Page 8
be removed / reduced and further lessons learned applied from the strawman, then the benefits can
be realised. The influence of these practices & behaviours on cost specifically could bring about far
greater savings than it appears as the actual project costs and lead times are often greater than originally
bid.
It should be noted that, in this instance, the cost increases do not take account of the contractor or
operator costs. This is purely the supplier’s costs.
Figure 2 – Comparative relationships between complexity, cost, and time for case study
Potential SavingComplexity - 33%Schedule - 12%
Cost - 8%
As BidComplexity 100%
Schedule 0%Cost 0%
ActualComplexity 153%
Schedule 70%
Cost 18%
Industry MinimumComplexity - 28% Schedule - 11%
Cost - 10%
Industry Maximum
Complexity 223%Schedule 158%
Cost 25%
-125%
-75%
-25%
25%
75%
125%
175%
225%
-25% -15% -5% 5% 15% 25% 35%
% T
ime
% Cost
Case Study: The Simplification and Standardisation of Engineered Products Page 9
The table below depicts the constituent parts of the savings and relates to the metrics previously
described in section 3.3.1 and to those suggested in the process of applying the strawman technique
in section 4.2.
It should be noted that the “As Bid” score is centred on zero and that the movement up or down from
that start point is shown for the “Actual” and “Potential Savings”. The actual cost is the cost to the
industry as execution behaviours and practises can drive the cost up with additional complexity added
by, for example, more onerous reporting requirements, increased testing complexity or enhanced
material specification that can be applied post contract award.
It was recognised that companies who specify & procure valves may develop their own standards
internally to mitigate risk throughout the lifecycle of the valve. As such, these company specifications
increase “complexity” and may affect the “efficiency” of the procurement process
Table 3 – Potential Savings vs Actual Cost via metric
Potential Saving Actual
Cost Saving %
Schedule Saving %
Cost Saving % Schedule Saving %
Material Requirements -1.1% 0.0% 4.4% 20.8%
Specifications -0.6% 0.0% 2.1% 8.3%
Product & Component Testing -0.4% 0.0% 3.8% 8.3%
Qualifications -0.9% -3.1% 2.1% 12.5%
Bidding Process -0.6% 0.0% 0.1% 0.0%
Interface Control -0.5% 0.0% 0.1% 0.0%
Reporting -0.5% 0.0% 1.5% 0.0%
Doc Requirements -0.9% 0.0% 0.6% 8.3%
Review Cycles -1.1% -4.2% 0.8% 0.0%
Inspection -0.7% 0.0% 2.0% 8.3%
Sub Con Control -0.6% -4.2% 0.2% 4.2%
QHSE 0.0% 0.0% 0.0% 0.0%
Case Study: The Simplification and Standardisation of Engineered Products Page 10
3. Study Scope
Standardisation and simplification has been previously explored and addressed in relation to Subsea
design, installation and analysis. This resulted in the publication of Subsea Standardisation Guidelines
(Subsea Standardisation – Guidelines on Adopting a Simplified and Fit for Purpose Approach) in January
20171) which have now been applied to a number of real life projects and are in the process of realising
significant benefits for industry. The aim of this work is to further maximise their impact through further
development, so they can be applied to the wider remit of Engineered Products.
As part of the subsea standardisation work, a retrospective analysis of four case studies from previously
executed projects was undertaken. The aim of this analysis was to determine the savings potential of
the subsea standardisation approach, increase awareness of the potential application of the approach
and identify opportunities to test application in current and planned projects. The four case studies
looked at an FPSO riser system; subsea pipeline tieback; subsea manifold and bundle; and a subsea
pipeline tieback. Application of the subsea simplification methodology identified potential savings
ranging from 15 - 28%. Further information, including case studies where this methodology has been
applied and the Subsea Standardisation Guideline itself can be found on Oil & Gas UK’s efficiency hub
https://oilandgasuk.co.uk/efficiencyhub/#efficiency-hub+category:efficiency-task-force.
3.1 Strawman Exercise
Following proof of concept through the case studies, the next strawman exercise was designed to
explore and determine the efficiency potential of adopting the approach across industry. Specifically,
to explore and demonstrate the impact of varying operator preferential requirements on cost and
schedule.
The strawman project was undertaken by 10 of the 12 sub-groups involved in the subsea
standardisation and simplification work to identify a fit for purpose reference case for a typical but
hypothetical UKCS scope (i.e. the minimum specification to be fit for purpose without compromising on
safety).
A series of metrics was developed to create a score reflective of the retrospective complexity of the
client’s approach to the project. This score demonstrates the impact the preferential requirements
and/or project execution methods have in comparison to the reference case. Resulting scores were then
plotted on a time / cost / complexity diagram to show the range of impact and identify trends or lessons
to be learned.
The process was as follows:
(1) Define Strawman Scope (Typical UKCS scope)
Identification of UKCS scope relevant to the Subgroup (based on a previous project if possible or
hypothetical).
(2) Define Reference Case Scopes (UKCS fit for purpose approach)
1 Available at: http://oilandgasuk.co.uk/product/subsea-application-guidelines-january-2017-etf-be01/
Case Study: The Simplification and Standardisation of Engineered Products Page 11
Definition of the reference case which is:
• Developed from a ‘Fit for purpose’ approach for the UKCS;
• Excludes preferential requirements;
• Applies appropriate standards only.
(3) Define Applicable Metrics (For full project life - award to delivery).
Consideration given to:
• Preferential and project delivery requirements;
• Metrics including codes, standards and specifications; interface management;
documentation requirements; review cycles; inspection and front-end control; testing and
qualifications; material requirements.
(4) Produce Time/ Cost/ Complexity Diagram
Figure 3 - Strawman Theoretical Exercise – Overall Results2
2 Note: Aggregated result for the 10 of the sub groups in the subsea standardisation and simplification workgroup. Please note
the impact of duration on project development cycle is not reflected in costs.
90%
100%
110%
120%
130%
140%
150%
160%
170%
90% 100% 110% 120% 130% 140% 150%
% D
ura
tio
n
% Cost
Global Operators
UKCS Focused Operators
High
Medium
Low
Complexity
Reference Case
Case Study: The Simplification and Standardisation of Engineered Products Page 12
3.1.1 Inventory & Repair
In addition to simplification and standardisation of valves, a project was also carried out for topside
valves specifically focusing on the supply process and its association with existing materials. This is with
particular regard to accessing the cost savings associated with the re-use of inventory through repair
and refurbishment.
When operational and project risk matrices are compiled, valves are often categorised as high-risk
items. They are an integral part of piping and safety systems, can compromise performance and have a
major impact on costs, schedules and technical integrity as well as resultant safety and environmental
concerns.
Valves generally account for 10% of capex and 10% of opex of a typical operating plant’s costs for
‘engineered products’. In the capex environment, this spend mainly relates to engineering and
procurement of new valves and all associated parts. It also includes costs for any selected spare valves
if repairs are not possible on site to minimise downtime. Opex spend on the other hand, is focused on
maintenance type activities associated with the installed population (repairs, maintenance,
replacement, inventory management). These two separate but related factions rarely interface,
although they share similar issues which influence current and future budgets.
It is generally accepted that there is a degree of waste and duplication throughout the valves category
and two specific elements were identified as areas where sustained cost reduction and efficiency gains
were possible.
3.1.2 Use of Inventory
The operating community owns an extensive valve stock which has a large cost of ownership associated
with it. This inventory is a resource which is often not considered when replacement valves are required,
resulting in new valves being bought unnecessarily.
3.1.3 Refurbishment Vs New Supply
Complementary to the use of inventory initiative is management of the repair and refurbishment
process. Repair and refurbishment of existing valve and actuator equipment to the as new condition
can offer savings of 40% against the new buy price. Current estimates within the industry suggest that
the ratio of repair to new purchase resides at 25% to 75%. Improving this ratio would be challenging, as
mentioned earlier, equipment is bought instead of repaired to enable reduced downtimes, as risk is
minimised if an inventory of replacement parts is maintained, but such action would result in significant
savings to end users.
Case Study: The Simplification and Standardisation of Engineered Products Page 13
3.2 Results of Analysis
3.2.1 Strawman Application to Subsea Valves
Application of the strawman approach to Subsea Valves began with establishing a relatively simple yet
typical scope of work as a basis for the comparative analysis on the lead factors of complexity, cost and
time. In that regard, the baseline for strawman for subsea valves was chosen as below. The valves scope
for this exercise was based on 2”-8” ball and gate valves plus some small-bore valves and covered a
variety of production, water injection and gas lift services. This is considered to be representative of
typical past subsea valve projects and therefore offers good historical data as a basis for the
establishment of the most cost-efficient model.
Table 4 – Valve Listing for Typical Subsea Manifold
Valve Service Qty
8" Ball Valve - HSR Production 1
8" Ball Valve - ROV Production 1
6" Gate Valve - HSR Production 6
6" Gate Valve - ROV Production 6
8" Ball Valve - HSR Water Injection 1
8" Ball Valve - ROV Water Injection 1
6" Gate Valve - HSR Water Injection 3
6" Gate Valve - ROV Water Injection 3
4" Ball Valve - HSR Gas Lift 1
4" Ball Valve - ROV Gas Lift 1
2" Gate Valve - HSR Gas Lift 3
2" Gate Valve - ROV Gas Lift 3
Small Bore Valves Service 10
Rating: API 5000
Materials (Body / Bonnet): Carbon Steel (Part Clad) or Cast Duplex
Materials (Trim): Duplex
To determine the simplest means of producing these products, when considering the general
requirements traditionally associated with this type of subsea valve package, a matrix of metrics was
established to measure the impact of complexity, cost and schedule.
Ultimately, it is the end user (usually the operator) who determines what is appropriate and fit for
purpose, and not the supplier’s responsibility, therefore the group making the assessment had previous
working experience of executing contracts for the nominated operators and judged where each would
be graded in each metric using their understanding and experience of the operator’s specifications. By
scoring each low, medium or high on each metric it was possible to establish the operator’s individual
score for complexity, cost and schedule.
Case Study: The Simplification and Standardisation of Engineered Products Page 14
Using historical costing information and supply chain knowledge a baseline cost was established for the
subsea valve strawman. (Note: this baseline model assumed fit-for-purpose industry standard solutions
removing any influence of any client specific requirements).
This approach allowed for the percentage increases to be calculated for each operator compared to the
baseline and therefore allowed the comparison of the relative impact of the different customer
requirements.
Figure 4 – Strawman Assessment for Subsea Valves only
The graph provides a visual representation of the comparative relationships between complexity, cost,
and time across various client specifications. The baseline model can be assumed to be the most
expedient and cost-effective means by which to fabricate the subsea valves project scope.
The x-axis shows the relative percentage cost increase from the baseline. These range in value from the
baseline at 100% up to 160% when additional requirements are considered.
Similarly, the relative time differences taken to deliver the completed strawman scope is plotted along
the y-axis of our graph, ranging from the baseline at 100%, up to 220% with other considerations.
Complexity has also been assessed and is illustrated by the relative size of the circles shown; the larger
the circle the greater the complexity.
The strawman is based solely on the supplier costs and does not consider broader project costs such as
those encountered by the operator. A metric to enable estimation of the contractor and operator costs
to manage the supplier was developed (at the metric levels previously defined). This estimation
considered product specification, product testing and qualification and well as project execution costs.
90%
110%
130%
150%
170%
190%
210%
230%
250%
90% 110% 130% 150% 170%
% D
ura
tio
n
% Cost
Global Operators
UKCS Focused Operators
High
Medium
Low
Complexity
Reference Case
Case Study: The Simplification and Standardisation of Engineered Products Page 15
The subsea standardisation and simplification work identified that, for a typical subsea development,
an independent operator adds 16% on to the baseline cost for valve/valve supplier costs. It is then
estimated that the independent operator adds an additional 5% to their own costs over and above the
supplier’s costs. Similarly, a typical major operator adds 53% on to the baseline cost for valve / valve
supplier cost and an additional 31% to their own order execution cost.
3.2.2 Application to Topside Valves
An analogous approach to the subsea valves analysis was taken to produce a topside valves strawman,
drawing from the subsea standardisation and simplification data set, as similar to the strawman above.
Whilst analogous, the list below represents a typical, simple valves scope for a brownfield development,
which can differ widely depending on the task being undertaken, hence the following strawman should
be taken objectively.
Table 5 – Typical valve list for Surface Brownfield Project
Ball Valve Service Qty
4" RB 300 HC Process Line 1
2" RB 2500 HC Process Line 2
6" RB 2500 HC Process Line 1
2" RB 600 HC Process Line 1
8" RF 150 HC Process Line 2
Service
Rating: API 150 to 2500
Materials (Body / Bonnet): Carbon Steel
Materials (Trim): Super Duplex
Seat Material Soft or Metal Seated
Seals HNBR AED
Case Study: The Simplification and Standardisation of Engineered Products Page 16
Figure 5 – Strawman Approach to Topside Valves only
The graph provides a visual representation of the comparative relationships between complexity, cost,
and time, across various client specifications for topside valves. The baseline model can be assumed to
be the most expedient, and cost-effective means by which to produce the topside valves strawman
project scope.
As previously, the x-axis shows the relative percentage cost increase from the baseline. These range in
value from the baseline at 100% up to 150% when additional requirements are considered. Similarly,
the relative time differences taken to deliver the completed strawman scope is plotted along the y-axis
of our graph, ranging from the baseline at 100%, up to 220% with other considerations.
Complexity has also been assessed and is illustrated by the relative size of the circles shown; the larger
the circle the greater the complexity.
The trend for both the subsea and topside valve analyses can be seen to be broadly similar
3.3 Practical Application - Inventory
A case study was carried out to assess the potential savings achievable from changes to current
inventory management and refurbishment practices. Existing practices were challenged and
incremental changes were made, targeting the removal of waste and maximising the resources and
equipment which was already owned by the operator.
Efficiency targets were set and specific criteria established to quantify and record the savings achieved.
The actual efficiency savings achieved from these two categories was just under 19 percent contributing
to overall savings of 35 percent as part of a wider bundle of measures, against the total spend.
90%
110%
130%
150%
170%
190%
210%
230%
250%
90% 110% 130% 150% 170%
% T
ime
% Cost
Global Operators
UKCS Focused Operators
High
Medium
Low
Complexity
Reference Case
Case Study: The Simplification and Standardisation of Engineered Products Page 17
In summary, this initiative:
• Cut out duplication of effort by making earlier decisions during the repair process.
• Actively promoted the use of existing inventory and refurbished valves when the requirement for a
new or replacement valve was required.
• Accessed expertise to maximise the use of the existing inventory.
• Had the courage to scrap off dead stock.
• Delivered initial savings of 35% during the reporting period. Hope is that this would be sustained,
but for this to occur, a continued focus and scrutiny on the above would have to be maintained.
Case Study: The Simplification and Standardisation of Engineered Products Page 18
4. How to Reduce the Cost, Time & Complexity of Engineered Products
4.1 Applying Recommendations
The aim of this section is to explain how the valves strawman can be further developed for application
to the wider scope of Engineered Products. Please note that, in addition to the considerations presented
below, the individual drivers for costs/schedules for each product or company may differ. This guidance
is generic and intended as a starting point, there may be more specific issues that are not covered.
The table below recommends a rating scale to be considered for each Engineered Product.
Table 6 - Material Requirements, Specifications, Product & Component Testing, and Qualifications
Metric
Standardisation
Product Specification Product Testing & Qualification
Material Requirements
Specifications Product &
Component Testing
Qualifications
Low
Materials to standard ASTM satisfying national standards e.g. ASTM, ISO etc.
In accordance with Product codes such as API, NORSOK etc + Specification with Product Data Sheets
+ Client defined requirements (e.g. Painting, Packing and Preservation)
In accordance with industry product codes and standards
PRODUCT - Industry product codes with supplier’s interpretation of substantive changes. WELDING - Use of existing weld qualifications which satisfy industry codes e.g. ASME IX MATERIALS - No qualification PAINTING - No qualification required
Medium
Materials to standard ASTM satisfying national standards e.g. ASTM, ISO etc. –
+ Additional Certification
Clearly defined industry product codes supported by focused client product specifications and data sheets
+ Client defined auxiliary requirements (e.g. Painting, Packing and Preservation)
In accordance with industry product codes and standards
+ Client modifications / additions
PRODUCT - Industry product codes with supplier’s interpretation of substantive changes. Extended Testing WELDING - Existing weld qualification and supplementary testing MATERIALS - Additional Testing PAINTING - Verification by Documentation
High
Customer specific materials that satisfy customer specific requirements + Additional Certification
+ Customer Witness for Material Activities
Multiple industry product codes to review Multiple Project Specifications
+ Client defined requirements for auxiliary requirements such as (e.g. Painting, Packing and Preservation)
Client specific requirements
PRODUCT - Industry product codes with supplier’s interpretation of substantive changes. Extended Testing Additional requirements WELDING - Full qualification Extensive testing, Project/ customer specific additional testing MATERIALS - Sacrificial testing Additional qualification testing. Supply restricted by qualification or country of origin PAINTING - Verification by documentation
Case Study: The Simplification and Standardisation of Engineered Products Page 19
The table below then details the considerations for each stage throughout execution of the process to
identify potential areas for simplification to realise efficiency savings.
Table 7 - Project Execution: Bidding, Interface Management & Reporting
Metric
Simplification
Project Execution
Bidding Process Interface Management &
Control Reporting
Low
• Agreed T&Cs requiring no discussion / clarification
• Industry product codes e.g. API, NORSOK
• Materials / product data sheets
• Bid content: Price, Delivery, Technical. Description and commercial summary only
• x1 bid submittal
• No pre-meeting requirements
• Certificate of conformity
• Meets minimum regulatory, technical & safety requirements
• Certificate of conformity (CoC)
• Reporting by exception
Medium
• Agreed T&C’s requiring no discussion / clarification
• Multiple industry codes to adhere to
• Materials / product data sheets
• Bid content: Price, Delivery, Technical. Description and commercial summary + technical and commercial clarifications + minimal supporting data
• x2 bid submittals (i.e. re-bids)
• No pre-bid meeting requirements
• Additional client input to review product to include but not limited to e.g. Materials, Yield strengths, operating loads. Sizing factors
• Project schedule & status report Monthly schedule Basic status reporting
High
• New / special T&Cs
• Multiple industry product codes apply
• Multiple options
• Bid content: special format and extensive supporting data
• x4-10 bid submittals (i.e. re-bids)
• Pre-bid meeting(s) required + extensive clarifications
• Additional client input to review but not limited to (materials, yield strengths, operating loads, sizing factors)
• Independent verification (IVB) & client reviews to include but not limited to: Design specifications, drawings calcs, essential safety, requirements, operating instructions
• Weekly schedule & detailed report Client physical attendance for milestone events & expediting
Case Study: The Simplification and Standardisation of Engineered Products Page 20
Table 8 - Project Execution: Document Requirements, Review Cycles, Inspections, Sub
Supplier/Contractor, and QHSE
Metric
Simplification
Project Execution
Document Requirements
Review Cycles Inspections Sub Supplier &
Sub Contractor
QHSE
Low
• Inspection test plan (ITP) with surveillance points & inspection criteria
• Installation operating manual (IOM) with operating parameters complete with lifting plans
• CofC demonstrating product meets specific technical & safety requirements
• 2-week turnaround
• 1 comment cycle
• Supplier fully ISO compliant
- Limited to no inspection
• No intervention
• No limitation. No restrictions on sub-vendor choice
• ISO approvals
• Acceptance of existing approvals e.g. ISO 9001, ISO 14001, OHSAS 18001 etc
Medium
• Basic project documentation status (MDR, VDR etc)
• No of docs upwards of 5 reaching 15-20 max
• Final data book produced
• Document cycles can vary dependant on client and no of returns
• 4-week turnaround
• 2 comment cycles
• Product test witness only
• Supplier approved vendors
• Monitor process
• ITP only major components / docs
• ISO approvals & FPAL, ISO 9001, ISO 14001, OHSAS 18001 + FPAL
High
• Full document status (VDS/MDR etc). Includes basic docs but also more complex docs such as FEA / qualification / SIL documentation
• Upwards of 20+
• Document cycle times can be protracted up to 30 days
• Numbers of document submissions can be 6+
• 6-week turnaround
• 4-12 comment cycles
• Component layout inspection (pre-assembly inspection)
• Hold & witness points including notifications, for inspections
• Inspection through full order execution
• Sub supplier ITP/MPS required
• Sub-supplier/contract visits and meetings
• Restricted sub-contractor, sub supplier as defined by project specifications. Restricted countries
• Full sub-contractor, sub supplier docs
• Customer specific annual & project specific. In addition to ISO approvals, customer requires annual and project specific audits to be performed
As a reminder, the above tables are example metrics and ratings only. They may be applicable in certain
ways to other products or services, however specific metrics and ratings need to be created for specific
products and services to analyse that market meanigfully.
Case Study: The Simplification and Standardisation of Engineered Products Page 21
4.2 Applying the Principles to Inventory
The operating community owns a substantial valve stock which has a large cost of ownership associated
with it. This inventory is a resource which is often not considered when replacement valves are required,
resulting in new valves being bought unnecessarily.
Historically, operator stock management has been limited, so even when stock did exist it could not
easily be found, often resulting in the purchase of items for which stock already existed. The same valve
could also have multiple stock numbers assigned to it leading to duplication. In these circumstances the
stock becomes passive, generating only cost.
The driver in this initiative is to reduce inventory and to realise the associated cost benefits. The target
areas identified to achieve this goal are:
• Maximised use on existing operational activities.
• Maximised use on operator capital projects (minor and major).
• Identification of surplus materials suitable for 3rd party sale.
• Identification of materials that should be scrapped.
Analysis of company processes show existing stock is most commonly categorised as the below, in
accordance with the Process Map Figure 6:
Cat 1 – Critical/Insurance Spares.
Cat 2 – Shutdown/TAR reservation.
Cat 3 – General operational spare.
Cat 4 – Surplus stock for resale.
Cat 5 - Scrap
Case Study: The Simplification and Standardisation of Engineered Products Page 22
Figure 6 – Example of a Stock Evaluation Process Map
4.2.1 Refurbishment vs New Supply
Complementary to the use of inventory initiative is management of the repair and refurbishment
process. Repair and refurbishment of existing valve and actuator equipment to the as new condition
can offer savings of 40% against the new buy price. Current estimates within the industry suggest that
the ratio of repair to new purchase resides at 25% to 75%. Improving this ratio would be challenging, as
mentioned earlier, equipment is bought instead of repaired to enable reduced downtimes, as risk is
minimised if an inventory of replacement parts is maintained, but such action would result in significant
savings to end users.
In this context, the equipment available for repair requires to be provided with a condition code. Each
time a requisition is raised then the option for repair should also be considered as part of the wider
inventory pool on every occasion. This integrated process would operate on the basis of the process
map outlined below.
Case Study: The Simplification and Standardisation of Engineered Products Page 23
Figure 7 - Inventory and Repair Efficiencies
Case Study: The Simplification and Standardisation of Engineered Products Page 24
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