Emersons

Project Execution Methodology

for the Refining Industry
A Project Approach To Optimize Time and Cost:
The Main Automation Contractor Model
 Agenda

1. The case for the Main Automation Contractor model

2. The MAC role in the project lifecycle
3. MAC Contracting options
4. MAC model conclusions

Slide 2
Agenda

1. The case for the Main Automation

Contractor MAC model

Slide 3
 Traditional Process Automation Project?
Mostly LSTK Bidding MAC

Typically only 3 to 5% of a capital expenditure is process automation

It is usually bid late in the project after other infrastructure elements
It is bid piecemeal: Instruments, Valves, DCS, SIS, APC, PI, etc.
Why Change From Traditional LSTK to MAC?
Although Process Automation represents just 3 - 5% of
the original capital expense, it is one of the most
important factors in successful plant operation.
Slide 4
LSTK Model often leads to scope creep
schedule delays and cost overruns
Process Automation specs must be generalized in
order to allow multiple bidders.
Extra time spent in spec writing making sure bases
are covered.
Bid evaluation time delays contractor engagement.
Without foreknowledge of winning bidders, it is
impossible to know if all vendors will integrate
seamlessly. They rarely do!
Extras abound as contractors look for ways to
increase scope of work.
The end product is of necessity a compromise.

Slide 5
The Construction Industry Institute
Recognized The Problem
CII studied the effect of early
involvement of strategic suppliers
The recommendation was to
modify the current EPC model:
PEpC approach
P: Procure strategic suppliers first
and early
E: Engineer (by contractor
partnered with strategic supplier)
p: Procure commodity items
C: Construct
In Automation terms - MAC

Slide 6
Findings of the CII Study
Using a sophisticated simulation model of the
classic EPC process, the research team
compared the impact of the PEpC approach to
the project execution with traditional EPC.
In both theoretical and field implementations,
the results indicated that PEpC could produce
savings in excess of 10% to 15% of the time
and 4% to 8% percent of the cost of the
traditional EPC process
* Quote from Edward M. Ruane, Head of CII Research Team, CII Research Summary 130-1; Page 5

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MAC Concept Definition

A highly qualified, large-project experienced, and well

resourced control systems specialist assigned to
manage, engineer, manufacture/procure and
deliver instrumentation, valves, control systems,
safety systems and associated interfaces for all
project components and facilities.
Assigned responsibilities are those the MAC is best
qualified to handle.
Risk for the entire automation scope implementation
is borne by the MAC.

Slide 8
 Motivation for MAC
Highly applicable to the downstream businesses.
Stewarding the execution of several grass-roots or
revamping projects simultaneously.
Capitalizing on standardized processes, highly-skilled
core resources and increased concept re-usability.
Equally successful in project locations throughout the
world with little or poor infra-structure.
Short project cycle time, high integrity of execution.
Early involvement in conceptual design and FEED
ensures uniformity and consistency throughout all
project execution stages.

Slide 9
The Main Automation Contractor Model
Old Way -
Emerson supplied automation equipment & services to an
Engineering, Procurement and Construction Contractor

Front End Execute

Concept Engineering
Operate

New Way - Emerson Product Bid to EPC

Emerson supplies Consulting, Engineering & Design and
Supply of Automation Equipment and Services to EPC/Owner

Front End
Concept Execute Operate
Engineering
Consulting FEED EMR Product Services

New role, Emerson partnering with EPC as Strategic Automation Supplier

Slide 10
Agenda

2. The MAC role in the Project

lifecycle

Slide 11
The Project Lifecycle

Phase 1 Phase 2 Phase 3 Phase 4 Phase 5

APPRAISE SELECT DEFINE EXECUTE OPERATE

CONSULTING
CONCEPT FEED
FEEDPHASE
PHASE
MAC SCOPE
Integrate the Select the
diverse preferred Finalize Manage Operator
groups of project project project with training
ideas and option(s) scope, cost, word class
possibilities & schedule excellence Asset
to evaluate Establish a Optimization
PlantWeb and award
the project contracts.
foundation Advanced
control
implementation

The MAC is critically important in 2 project phases

1. Front End Engineering Design
2. Project Execution
What is FEED ?
FEED covers the basic & conceptual engineering
done for the project prior to commencing the detailed
project execution.
Objective:
To provide the detail engineering disciplines with well-
defined engineering packages in order to minimize
changes and rework during project execution.

FEED offers the greatest opportunity for project

definition, pre-planning and optimization, to lower
lifecycle cost and influence successful completion.

Slide 13
Why is FEED critically important?

The two main causes of cost overruns & schedule delays:

Poor definition of scope in FEED &
Loss of control of scope during project execution

FEED and early project planning can

reduce project cost with 20%

Slide 14
Emersons approach to FEED
FEED is the first opportunity to positively influence
the project success with the application of value
improvement work processes.
Review/update customer engineering standards.
Define detailed field equipment, DCS and SIS
specifications.
Standardize systems interfaces and ensure
consistency across all 3rd party packages.
Coordinate engineering standardization across
multiple projects or contractors.
Define project execution strategy & schedule.

Slide 15
Considerations during FEED
Clear project objectives
Scope definition & FEED deliverables
Project execution plan
Budget estimate
FEED & detailed project execution schedules
Project team organization
Lessons learned from previous projects
Life cycle cost optimization

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 Project Execution - Engineering
Design Specifications for field instruments and valves, analytical, field packages
(metering systems, tank management systems, BMS, gantry automation, etc).
Foundation Fieldbus basic segment design
Asset Management System Specification
Specification of Machinery Health Monitoring systems
Define major third party interfaces and common communications standard
DeltaV & DeltaV SIS System architecture
Create/update I/O database and data exchange mechanism (INtools)
FDS of Control Application / Safety Application
Specification of advanced control applications
Hardware specification and Control loop design
Generation of C&E diagrams and Control narratives
Issue system HW + SW testing and integrated testing specifications
Operator Training System Specification

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Project Execution Project Management
Establish project execution strategy fully aligned with customers requirements.
Develop project schedule (engineering, procurement, construction,
commissioning)
Develop budget.
Issue Project Execution Plan and Quality Plan.
Define Design Freeze points, Change control and change management.
Plan transition from FEED to next project phases.
Assign specialists to key positions, manage project team.
Plan strategic procurement. Leverage benefits of alliances and best cost
centres.
Establish responsibilities matrix. Assume lead role in coordinating 3rd parties.
Preliminary plan the site support organization.
Actively apply integrated project management to optimize project cost and
schedule.

Slide 18
Project Execution Approaches
Traditional Approach (characterized by multiple contractors/suppliers): Contractors
Multiple Engineering Contractors provide all instrumentation and controls engineering. 2+
Design practices, databases, and documentation vary by contractor.
Various control systems suppliers provide vendor data to the EC's and equipment to 3+
the installation contractors.
Control system integrator configures and programs the main control systems. 1-2
Installation contractors install the field instruments and control systems. 1-2
Commissioning contractor commissions the instrument and control systems. Included
Various equipment suppliers provide training and after-market support Numerous
TOTAL 8+

MAC Approach (characterized by a single point resource):

MAC provides most instrument and control engineering 1

MAC supplies core instrumentation and controls systems and assists with the Included
procurement of other instrumentation.
MAC integrates and programs all control systems (except packaged systems) Included
MAC supervises the installation of the instrumentation and control systems. Included
MAC supports the commissioning of the instrument and control systems. Included
MAC provides necessary training and training tools for the instrument and control Included
systems and all after-market services.
TOTAL 1

Slide 19
MAC Savings Are Threefold
Lower Project Costs Faster / Seamless
Startup

100
Extras

Operational Efficiency
Traditional

80
Traditional

60
MAC
MAC

40

Cap
20 Ex
Engr.
0
Traditional Early Involvement

Long term operational

Start-Up Time
Engineering savings 8 10%
Capital savings 25%
Fewer extras 10%
* Excerpt of Shell MAC analysis
savings ~10%
Agenda

3. MAC - Contracting Options

Slide 21
MAC Contracting Options

MAC directly contracted by Owner, utilizing an

optimum combination of reimbursable and lump
sum compensations
MAC selected by Owner and sub-contracted by
a single EPC for the entire project scope
MAC selected by Owner and sub-contracted
separately by each EPC Contractor

Slide 22
MAC Directly Contracted by Owner
EPC-1

EPC-2
Project Management
Owner Contractor
EPC-3

EPC-4

MAC

MAC Manages: EPC Relationship

ICSS design and implementation
Systems interface design
Third party systems interface
specification
Consistency - hardware and
software devices
Equivalent standing
Separate but equal contracts
Required interfacing
Deliverables as specified by Owner
Scope boundaries obeyed

Slide 23
MAC Selected By Owner and
sub-contracted by EPC
EPC-1

EPC-2
Owner Project Management
Contractor MAC
EPC-3

EPC-4

MAC Manages: EPC Relationship:

ICSS design and implementation
Systems interface design
Third party systems interface
specification
Consistency - hardware and
software devices
MAC subservient to EPC
MAC scope varies by EPC
interpretation
Scope boundaries grayed
Consistency difficult to manage

Slide 24
MAC Scope and Contract Compensation
Compensation
TRAINING Reimbursable Rates
MAC Scope Difficult to define total requirements and/or
START-UP Contractor not in control of schedule,
sequence & highly dependent on other
CONSTRUCTION
contractor activities

Training
Lump Sum
Provisional lump sum for major portion of
Commissioning & contract
Startup Support Contractors will bid on a model system
configuration as defined in ITT
Model approach keeps all bidders on equal
Construction and competitive basis
DETAIL DESIGN
Supervision & Model will be adjusted to actual system
HARDWARE configuration at end of FEED; there will be
SUPPLY
Detailed Design additions and deletions as technical definition
& Hardware improves
Supply Additions and deletions will be incorporated
into lump sum based on firm-bid schedule of
FEED rates and unit costs
Engineering

Reimbursable Rates
Difficult to define total requirements before
FEED
Operations FEED MAC must work with multiple contractors
Support without control over interfaces, response
(Lifecycle) time, and changing requirements

Slide 25
MAC Contracting Measures
Steps Taken to Mitigate MAC Impacts to EPC Contracts
Under a Direct Contract:
Owner I&C Engineer assigned to manage the MAC/EPC
interfaces.
Detailed assignment of roles and responsibilities
established for the MAC and the EPCs.
MAC personnel assigned to each EPC Team.
All field construction drawings are produced by the EPC.
All field construction activities are assigned to the EPCs.
MAC only provides assistance and support.
Commissioning and start-up are under EPC control.

Slide 26
Agenda

4. MAC model conclusions

Slide 27
MAC impact on Life Cycle Cost
Life Cycle Cost = total cost from inception to decommissioning
LCC = acquisition cost + sustaining cost

FEED Operations
Detail engineering Maintenance
Facilities & equipment Replacement
Construction & startup Facility usage
Support facilities Energy

We focus on identifying cost drivers, evaluating alternatives,

applying best practices and selecting the most efficient concept.
We look beyond initial capital costs, take into account and
optimize all components of operations and maintenance.

Slide 28
Emerson focus on Life Cycle Cost
Acquisition cost components:

Project management and engineering

Equipment & Applications instruments, valves,
analytical, metering, tank gauging, FF, DCS, SIS,
AMS, condition monitoring, OTS, APC, Guardian.
Construction and commissioning services

Slide 29
Emerson focus on Life Cycle Cost
Sustaining cost components:

Effectiveness: robust, reliable systems, applications

engineered for optimized, agile process control.
Operations: highly intuitive and efficient systems
and applications, integrated DCS & SIS, PlantWeb,
embedded APC
Maintenance: intelligent field, FF, PlantWeb, AMS
Slide 30
MAC Model Conclusions
Adoption of the MAC concept will result in:
Best available technology with lowest lifecycle costs.
Improved EPC performance & lower project costs.
Improved management of scope and schedule.
Lowest risk of scope expansion and resulting impacts.

The MAC concept has been:

Proven through numerous completed projects.
Developed as a service by Emerson.
Accepted by the EPC community to reduce overall risk.
Adopted by several customers as their standard practice.

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