Welcome to the third podcast in this series focused on business challenges facing today’s Energy & Materials (E&M) industry.
In this podcast, Dassault Systèmes business consultant Paras Trivedi offers his insights on the challenges companies face managing requirements during the construction phase of capital projects. This podcast discusses the challenge of requirements management, traceability and cross-discipline communications to ensure capital projects meet project and regulatory requirements.
Digitalized requirements…can reduce the time spent from months to days in building project specs.– Paras Trivedi
Enjoy the podcast with Paras Trivedi and Howie Markson
Digitally Transforming Capital Projects
Meet Requirements With Confidence
Be sure to listen into the other podcasts in this series and to learn more, please visit: https://ifwe.3ds.com/energy-materials
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Howie: Hi, welcome to Dassault Systèmes podcast series on digitally transforming capital projects in the Energy Process and Utilities industries. In this podcast entitled Meet Requirements with Confidence, we discuss the challenge of managing requirements during the construction phase of capital projects. I am your host, Howie Markson and with me is my colleague Paras Trivedi, a Dassault Systèmes business consultant. Paras, brings to this discussion over 20 years’ experience in the energy and process industries and his deep understanding of best practices in capital projects. Welcome Paras.
Howie: Let’s get started. Can you share with us how the different sources for requirements impacts different energy and process industry sectors?
Paras: In general, all energy and process industries sectors have the same set of the types of tech requirements. Energy, environmental requirements, production, commercial, and even customer expectations. So, they do share a common framework. But the details differ either in their nature or in the level of rigor. So for example, power, pharmaceutical and many chemical industries are much more regulated and so they have a much stronger emphasis on regulatory requirements. There’s a huge amount of rigor and due diligence that becomes a focal point for these types of requirements. Now, when it comes to construction, first and foremost, they have to meet the contractual requirements, those do cover in many ways the safety requirements, the environmental requirement, design constraints and customer expectations, and most importantly, all of these projects capital construction projects have to be operations ready. They have to be ready on time and be able to operate as they are expected to. That means they need to be validated against the operational requirements and they need to be tested against those requirements.
Howie: What are the consequences of failing to properly manage requirements?
Paras: So requirements management is truly focusing on not failing these requirements and the reasons behind that is becoming more and more crucial for this industry. Most organizations worry about safety, profitability, and lack of accounting for personnel and equipment safety is extremely important. It is critical because it becomes a financial liability and that’s what the companies want to avoid. Poor safety records not only impacts the owner operators getting the projects on time, but also it starts impacting the productivity of engineering and construction contractors and in turn down level, they don’t get to bid at all on new projects. Without a proper requirements program, it is difficult for managing construction and operating permits and that will mean loss of productivity in the ballpark of one to a few million dollars per day, for the owner operators. That doesn’t make them happy. On the technical front today, 60 to 70 percent of the projects and delayed and they have significant loss of profit margins simply due to the painstaking rework. This is stemming from the fact that they are not able to account for proper construction requirements or they’re not able to account for the changes that come along from the operators or from the different other factors that impact these requirements. Then more importantly, projects are not successful because they are not operations-ready. Recent survey has shown that 70 to 80 percent of the projects have simply failed because they have not accounted for the operational requirements or for the dynamic changes that come across in this operational requirements.
Howie: So how our requirements typically managed today?
Paras: As it is expected, the current approach is still very document centric. It involves electronic files, often hardcopies of scan from the standards or from the regulatory requirements that are exchanged emails that are still hard copy papers and traditional document management systems is the closest to what people believe is the modernization of this document management.
Howie: Hard to believe it’s still done in that manner. So what are some of the challenges in identifying and managing requirements with that approach?
Paras: First, we need to acknowledge that most capital facilities have multiple multidisciplinary projects in multiple phases that are being managed, globally at the same time, that’s enough complexity. So almost every asset in these facilities are being governed by a large variety of regulatory, industrial, disciplinary and business requirements. More often than not, there is a lack of 360 degree view of all of these requirements at one time. As these are sitting in disparate systems managed, by discreet business silos and they all don’t have the same standards of operation. Even though these projects are managed globally, the asset has to be managed within local regulatory requirements and that only adds to project risks. Often the projects, the local projects, are managed on a different site and you have to be aware of the changes in the regulatory requirements. Current approach in most organization, as I’ve mentioned before, is still document centric, so there is always a challenge in managing the asset with the right version of all the requirements. Searching, tracking and validating these requirements can consume a lot of time. What needs to be ready yesterday can take several weeks or months and when I talk about searching information, that’s about 30 to 40 percent of the productivity. Okay, so that starts to impact the overall productivity from the point of generating project specifications to executing tasks in compliance with them to validate deliverables against them and then ultimately delivering the entire project on time and on budget. Then again, prioritizing among these different requirements demands a standardized method for risk assessment. Some changes could really go ahead and impact the project in a very significant way, even though they are trivial in the beginning, but the impact analysis, if it is not done right, can translate into huge loss of profit margins.
Howie: We hear about digital transformation in other industries. How can digital transformation help address some of these challenges?
Paras: So the very first thing that everyone is looking for during digitalization of requirements management, is simple, they want to break silence. The first and foremost advantage of a digital approach is ease of access. If we can save what I mentioned before is 30 to 50 percent of working time in searching and consolidating and validating all the requirements from different sources, then that is a huge change in the current approach. That kind of business transformation approach is what people are looking for and this is where you need a business platform type of technology and digital skin that goes across all the different disciplines and provide a single point of access from multiple sources throughout the lifecycle of the capital facilities, not just during the construction, but what we build in construction should be becoming accessible even down the road, supporting all the other projects on the same asset. The second area where we could think about is reliability. Yes, you can go ahead and digitalize, but capital projects can really reduce their risks if they are confident that they are engaging with most updated, or most relevant description of the requirements. That is the biggest challenge that they have in the document centric approach, but if you think of a digital platform technology, you can take advantage of the object oriented relationships. In turn, you will be able to utilize these relationships to have a full three 60 degree view of all the requirements before, during, and even after construction. If after construction is critically important because that’s where you are able to show that the projects are operations ready.
Howie: So digital transformation, it sounds like it helps with ease of access and helps with information reliability. What about reusability and traceability? Does digital transformation help with these as well?
Paras: The reusability is by far the strongest point that most of the capital projects are looking for. This is by far the strongest point for improving or increasing your productivity. Digitalized requirements, for example, can reduce the time spent from months to days in building project specs. You know that’s a key part of all the capital project contracts. They come at the beginning of the project. That is a fantastic change by itself, but a right business platform can go one step further. It allows you to continuously use them for validation of your engineering efforts, your procurement efforts, your construction efforts. When you have a good alignment between these three phases in capital projects, you automatically end up saving many of the costly handover problems. You are able to overcome them, and these kinds of problems are common in the energy and process and industry sectors. This is the reason why people are looking for digital transformation. What I would say is these exec sponsors in most of these companies are calling it out as business transformation because this is impacting the overall business. There’s one more point, Howie, that I’d like to make is digital traceability. This is another way of looking at reuse of information. This is how you can reduce the project risks, you are able to track all the changes and the changing agents as well. Items, identities, project tasks, all these are getting changed and all these have, in turn, as sort of a chicken and egg relationship with the requirements. You change that requirement, you change a certain task or if you are running it a certain material procurement, but you realize it’s not what you would expect that exist in the market that in turn changes the way you see your requirements. So this is, this is a cyclic process, but when you have something digitalized, it’s very easy to handle those dynamic changes and it’s very easy to manage the risks that are associated with them.
Howie: Okay. So Paras, do you have an example of a company that has digitally transformed in this industry?
Paras: In the energy and process sectors, there are global, owner operators in the oil and gas industry. They are transforming all of their industry requirements and standards and the best practices into digitalized project specs already. Items that are linked correctly to the taxonomy of the capital projects. This allows them to go ahead and build the project specs really in a very, very, very short amount of time in a few days rather than several months. This is a huge improvement in their productivity. They’re using this on the 3DEXPERIENCE platform and they want to go ahead and apply this down the road for validation of the projects during the handover from their contractors.
Howie: Thank you Paras, and thanks to everybody for listening to our podcast entitled Meet Requirements with Confidence. Remember, with effective and efficient requirements management, you can reduce complexity and risk in your capital projects. To find out more how Dassault Systèmes is helping Energy Process and Utilities companies digitally transform, go to ifwe.3ds.com/energy-process-utilities. Please enjoy listening to the other podcasts in our series on digitally transforming capital projects in the Energy Process and Utilities industries.