What is Facility Standardization? Why would you apply it to your Oil or Gas Program?
Car manufacturing and shipbuilding industries have been utilizing facility standardization methods for years and have been successful in reducing cost and schedule as well as provide cost and schedule predictability. The oil and gas industries would benefit from utilizing similar standardization methods for repeatable facilities and equipment.
The oil and gas industries currently custom design and execute programs as a series of projects rather than a single program (with each design being slightly different). The custom design for each project increases the cost and construction timeline of the facilities. Although there may be slight production design differences, the facilities can be standardized by understanding the production design ranges. The key to optimizing facilities is to standardize the equipment and components within the facility and maximize the use of building blocks or modules.
What is Facility Standardization?
Facility standardization is the development and use of consistent designs and standards for repeatable projects within a program. There is a varying level of standardization that can be applied to a facility. The more standardization that is applied, the more the benefits will be realized.
Figure 1 illustrates the levels of standardization:
There is not a one type “fits all” approach and each program will need to review and apply the appropriate level of standardization that makes sense for the facility. The higher percentage of standardization, the greater the cost and schedule savings as well as other realized benefits.
Not only can the design can be standardized, but incorporating assembly line methods, applying just in time material supply, utilizing standardized equipment, materials and data and replication of work processes (robotics, work packages, etc.) will provide additional cost and savings benefits for your program.
Why Utilize Facility Standardization Methods?
If your oil or gas program has repeatable facilities or repeatable components in those facilities, then facility standardization will provide your program a variety of benefits. The following are some proven facility standardization benefits based on my experience of implementing facility standardization on six different well programs:
- Significantly reduced home office project management, engineering and procurement costs
- Reduces overall engineering and procurement schedule
- Minimizes engineering, material and fabrication from the critical path
- Allows for program procurement which reduces cost and overall material cycle time
- Allows for efficient fabrication reducing rework and overall cost
- Reduces the overall construction schedule
- Provides maintenance and operations with consistency for all pads with improved overall efficiency
- Provides overall program flexibility with the ability to fully standardize equipment, material and modules
- Provides cost and schedule certainty which reduces project risk
- Provides a focused change management system with the focus on the mindset of “No Change”
These programs were utilized complete facility standardization (only the civil works and piles were location specific), by standardizing all modules within the facility. The Construction Industry Institute (CII) research team UMM-01 published a report on facility standardization called “Standardization: Achieving Higher Levels in the Upstream, Midstream, and Mining (UMM) Commodity Market”. In their report, they stated benefits similar to what I have already seen plus a couple of additional benefits.
The following are some of the additional benefits realized:
- Construction materials management cost savings
- Commissioning and Startup learning curve benefits due to consistent designs
- Operations and maintenance materials management cost savings
- Reuse by relocation of existing assets
- Decommissioning cost savings
As there are many benefits to implement facility standardization, there are also some trade-offs that need to be considered when deciding if facility standardization is appropriate for your program. In most cases, the benefits out-weigh the trade-offs. The following are some trade-offs that need to be considered based on the CII RT UMM-01 research:
- Cost and time of assessing the market and establishing the scope (initial project)
- Cost of establishing the design standard (initial project)
- Sacrificed benefits from conventional execution (subsequent projects)
- Susceptible to changes in the market conditions
- Changes in environmental regulations / fiscal policies / community concerns
- Procurement disadvantages
If you have a program or project that have repeatable aspects to them, facility standardization should be considered.
If you would like to learn how to implement facility standardization and develop an optimum program, contact Dycat Solutions at firstname.lastname@example.org or visit our website at www.dycatsolutions.com for more information.
CII – Achieving Higher Levels of Facility Standardization in the Upstream, Midstream, and Mining (UMM) Com – FR-UMM-01