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Can high costs be blamed on engineers linear thinking?

Thursday, November 12, 2015

One possible target to blame for high costs in the oil and gas industry is engineers' linear thinking, suggests David Delvin, ?Vice President, EMEA Energy Mining & Metals Industries, with Hitachi Consulting.

Everyone is talking about the high costs in the oil and gas industry and how to reduce them.

One possible target of blame is engineers' 'linear thinking,' says David Delvin, ?Vice President, EMEA Energy Mining & Metals Industries with Hitachi Consulting.

By this, he means that oil and gas engineers think things should happen in a linear type way (one thing leads to another thing).

It would be better if people could work in a more responsive and collaborative way, he said.

Linear thinking can lead to unnecessary complexity, which leads to increasing costs and lower productivity.

It is not hard to find examples of escalating costs in the North Sea.

One client noticed that the cost of his compressors had risen three fold between 2000 and 2014.

Overall lifting costs (the costs of oil and gas production) have been rising 12 per cent a year. 'There's no other industry that can get away with that cost inflation,' he says.

Of course, changing the way people work is difficult. Engineers don't like to be told about how to change culture and behaviour, because it is seen as 'too tree hugging', he says. 'So we talk about process driven behavioural change.'

'If you aim to change behaviours though looking at processes and making them much more efficient, you get people's attention better.'

It is also possible to look at how the aerospace and automotive industries have successfully managed to remove complexity, he says.

Wrench time

As an example of processes which can be improved, consider that 'wrench time', the time which offshore workers spend actually doing maintenance tasks (or other tasks which require a wrench) can be as little as 40 cent, Mr Delvin says.

An offshore worker's typical 12 hour working shift includes 29 per cent of time doing maintenance tasks, 8 per cent on official breaks, 8 per cent on unofficial breaks, 8 per cent waiting for other people, 17 per cent meetings, 9 per cent planning, 13 per cent administration and 8 per cent other.

One of the biggest causes for low wrench time is poor planning. People don't allow time for reactive tasks (maintenance personnel also need to fix things that break), and they don't recognise how much poor planning can set off a chain of events, disrupting jobs elsewhere, he says.

There is often insufficient understanding of the task, what resources are needed and inadequate time allowance for preparation at the job site, he says.

Operators also often don't spend enough time making contingency plans to follow after disruptions.

'This can lead to technicians waiting for the next task,' he says.

Productivity can be an emotive subject, particularly if there is any suggestion that individuals aren't pulling their weight.

'People will quickly make assumptions about what is causing poor productivity,' he says. You should 'listen to what people have to say but always validate assumptions.'

Hands on approach

Hitachi takes what he calls a 'very hands on' approach with its consulting, often with consulting staff going offshore.

'I would love to say that you can do it [consulting] from the board room.
But it doesn't help your classical operations guy, you've got to be there where the decision are taken. So we end up working in places like gas plants in Qatar and compounds in Nigeria.'

Hitachi's consulting process starts with a comprehensive analysis of the company's processes, to try to understand where the gaps are, and to make sure people who need to change how they work can also see the gaps.

'If you're not able to prove to people that there are gaps, pressure points and strains, it is quite difficult to get staff mobilised and engaged in the process [of fixing them],' he says.

You need to 'establish that there's a need, there's a gap, that it's possible to make the change required.

The next step is 'a complex tactical process - of bringing people through the change curve.'

Hitachi Consulting is typically asked to achieve technical improvements, and process improvements, see if stakeholders are aligned, and look at collaboration between offshore and onshore environment.

'We tend to work alongside business units or asset groups,' he says. They may have identified a number of assets that are underperforming or over performing.'

'We typically focus on integrated asset planning, logistics efficiency, maintenance effectiveness,' he says. 'There's a lot of data involved.'

'We utilise technology and its information flows, to achieve better data management and better decision making, based on more visible views on how assets are performing.'

Associated Companies
» Hitachi Consulting
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