In this article, we will explore Shutdowns, Turnarounds, and Outages (STOs) among asset-intensive companies. Specifically, how the Best-in-Class view STOs as enterprise-wide events that must be managed quickly and efficiently to achieve success.
Traditionally, shutdowns, turnarounds, and outages (STOs) have been viewed as siloed events. But perhaps, a more realistic perspective recognizes that the impact and scope of STOs extend across an entire organization and command a large portion of budgets, as well as contingency funds. Poorly executed STOs can cost an organization millions of dollars in lost revenue, drive up operating costs, and cause permanent damage to the business.
Considering all the potential ramifications, well-executed STOs can represent a source of competitive advantage for an organization that has this process under control. Successful companies have become more proactive in how they approach this process in order to outperform their peers.
Asset-intensive companies face the harsh realities of operating in highly competitive markets, dealing with critical assets and equipment where each failure is disruptive and costly. At the same time, they must also adhere to stringent Environmental, Health, and Safety (EH&S) regulations. Operating in such an environment has caused companies to rethink their STO approach. These organizations have no choice but to work smarter and focus their attention on better control over the STO process.
Clearly, the asset intensive Best-in-Class companies are doing something right, nearly every one of their projects are delivered within budget with 90% on schedule or early. However, the industry average and laggards cannot say the same. One alarming finding is that the majority of projects for laggards result in overruns and for those that are late, there is a 39% increase in length. Every day of downtime for an asset-intensive industry can result in millions of dollars of lost production. In turn, this increases maintenance costs and leaves the company more susceptible to compliance concerns. All of this poor performance shows up on the bottom line for Laggards, as they report -6% operating margin vs. corporate plan.
With the nature of asset intensive industries and the environment they operate in, the first step every company should take is getting a full picture of all the risks across the enterprise. Best-in-Class companies understand this and have formal processes in place to assess, quantify, and prioritize their STO risks across the enterprise.
There are five main areas of focus for the Best-in-Class in outperforming their peers: risk management, scope definition, plan optimization, real-time execution, and controlling change. To learn more about each and how they can help your organization optimize its STO management, please read the full report.