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Produced by: Cost Management Best Practices for STO Christen Bergerud EcoSys
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Introduction STO Cost Management Challenges Attributes of a STO Controls System Marathon Petroleum Turnaround Case Study STO Controls Systems – Other Examples and Screenshots Questions Agenda
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EcoSys Company Background Planning and Controls Software Vendor o Designers & Developers of original Primavera P6 o Current focus is EcoSys Enterprise Planning and Controls (EPC) Software Consulting Practice o Focuses on Implementing Processes and Systems for Planning and Controls of Capital Projects including Shutdowns, Turnarounds, Outages Partnerships with Oracle, SAP, Microsoft, & IBM
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EcoSys Enterprise Planning and Controls Software
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Over 200 Customers Globally Public & Private Sectors
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STO Cost Management Challenges Shutdowns, Turnarounds and Outages can have vast cost implications on a company Cost of Delay can be immense Lost Revenue, Lost Market Share, Regulatory Impacts Cost tends to be a Principal Way that Management Evaluates the Success of Turnarounds
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STO Cost Management Challenges Better STO Cost Management Has Many Benefits Confident cost analysis justifies further investments in improvements to STO processes Tom Lenahan provided example in keynote - $2.5 MM estimate was actually $10 MM true cost. This led to greater management engagement.
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STO Cost Management Challenges Better STO Cost Management Has Many Benefits Understanding of Cost allows fine-tuning of model for future STO events Monitor planned and actual against past performance Understand directs/indirects Understand performance by cost type, phase, contractor…
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STO Cost Management Challenges But Really, You Don’t Have Time to Track Cost during a Shutdown, Turnaround or Outage During a Turnaround it’s easy to conclude that what matters more is: Safety Regulatory Requirements Productivity Schedule
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STO Cost Management Challenges But Really, You Don’t Have Time to Track Cost during a Shutdown, Turnaround or Outage And if you focus on safety, productivity and schedule, your costs should stay in line… right?
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STO Cost Management Challenges STO Status Quo: Big contingencies Sometimes big enough to allow even poor cost performance to come in under budget Limited accuracy of cost performance reporting by: Direct / Indirect Cost Type Cost Breakdown Structure Asset
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STO Cost Management Challenges STO Status Quo: Lots of Manual Effort During and After a STO event to make sense out of the cost picture
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STO Cost Management Challenges Management Demanding More Picture of True Cost of a Shutdown, Turnaround, or Outage Understanding how STO costs interrelate with Capital Projects and Operations Planning and Budgeting based upon real understanding of Past Performance Better Control over Late and Emergent Work
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Schedules, ERPs, Timesheets Rarely Integrated If Integrated, don’t deliver easy to use, real-time tools for managing schedule, productivity and cost Excel = time consuming, error-prone manual entry Very short time windows to capture productivity between shifts “We have people in at 4 AM racing to compile productivity data in Excel before the next shift. We type in the actuals twice daily. Challenges for Cost Controls Systems Fall Short during a Turnaround “We create a bunch of change orders in SAP in advance, in anticipation of emergent work.
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Budgeting often based on blended rates Scheduling systems co-opted into budgeting systems Not a lot of controls over late work Challenges for Cost Controls Systems Fall Short before a Turnaround
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Lack of Integrated Systems makes visibility by KPI or cost attribute hard to achieve Very intensive efforts to reconcile cost reports with true cost “Well, then we re-type the data into our Japanese parent company’s general ledger system.” “The actuals in the schedule don’t tie out to the G/L or vendor invoices. We think maybe an activity got deleted.” Challenges for Cost Controls Systems Fall Short after a Turnaround “We may not see the real costs from SAP for months.”
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20% 16% 13% 12% 30% 6% 2% 1% Reconciling General Ledger Data Correcting Labor Coding Collating Internal & External Reports Manual Downloading Monitoring & Controlling Costs Change Management Forecasting & Trending Analyzing Budgets & Actuals 17 Source: Internal Study by EcoSys Customer Current Utilization Cost Analysts Spent 61% of Time on “wasteful” activities
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18 65% 25% 5% Analyzing Data Forecasting & Trending Running Reports Troubleshooting Source: Internal Study by EcoSys Customer Target Utilization Cost Analysts provide much greater value added
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Attributes of a STO Controls System
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Single, Integrated System to Track Hours, Productivity, Cost Consolidates Data from Multiple Systems: o Scheduling o G/L o Timesheets o Estimating Attributes of a STO Controls System
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Web-based Dashboards with Drill-down based on Role (Executive to Foreman) Variable Access Rights with Spreadsheets or Forms that Enforce Business Rules Attributes of a STO Controls System
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Ability to reclassify direct/indirect Structured change control and scenario analysis Rate Tables Multicurrency (if needed) Versioning and variance analysis Attributes of a STO Controls System
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What If Analysis Single Database manages STO and Capital Projects Visibility by Any Attribute and at Any Level Attributes of a STO Controls System
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Projects / WBS Schedule Dates Resource-loading (units & costs) - Baseline - Current - Remaining Activities Resources Codes (activity, resource, project) Percent Complete Timesheets Integrated Earned Value Management Consolidated Performance Reporting Budgets, Forecasts, Commitments Actual Costs Change Management Data Transformations Historical Snapshots Transaction/Audit Repository Projects/WBS Activity Networks Cost Elements Actual Costs Timesheets Commitments WBS & WBS Status Budget / Planned Costs Contractor & Other Timesheets Typical Integration Scenarios - Turnarounds
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Turnaround Case Study Marathon Petroleum
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6 Refineries in US Legacy Artemis reporting system integrated with P6, Time & Attendance Tried several tools to replace, none met functionality and performance requirements Successful pilot in 2010 Advantages seen in EcoSys: o Flexibility and speed of P6 Integration o Performance of integrations and reporting with large datasets o Flexibility of configuration and reporting to meet advanced best practices o Rapid software implementation o EcoSys certified SAP integration aligns with Marathon’s future plans Case Study: Marathon Marathon Petroleum
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Management of Contingency/Drawdown, Forecast, Earned, Expended, Estimates Daily/weekly time-phasing Daily integration with P6 for progress Daily integration with time & attendance/contractor billing Functionality Highlights Case Study: Marathon
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Preserve daily history of earned value (S Curve data) Define complex transformation rules in EcoSys (i.e. Craft ABC + Vendor 123 Indirect) Implemented all Marathon TA KPIs Extensive performance reporting: direct/indirect, vendor, unit, craft, work order, phase Integrate Changes/Growth into Performance Baselines Functionality Highlights Case Study: Marathon
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Any Questions? Thank you!
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Produced by: Christen Bergerud EcoSys cbergerud@ecosys.net
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