Increasing globalisation, ESG pressures and a drive towards greater end-product specialisation are making capital project delivery more complex than ever before. To meet these challenges, there is one thing nearly every industrial owner operator and engineering, procurement, and construction (EPC) company is doubling down on, and that is digital transformation.
Digitalisation and innovation have been key enablers for many disruptive changes over the past year. But despite rapid adoption of new digital solutions—like the Cloud—to foster collaboration previously done in person, the capital projects industry still lags digital maturity compared with other industry segments such as manufacturing, and even further behind consumer industries such as banking and retail. To continue to execute viable projects and compete globally long term, the capital projects industry must continue to accelerate its digitalisation curve.
Lean, green and everything in between
The imperative to execute capital projects more efficiently and cost-effectively will not suddenly become secondary, given the urgent need to focus on incorporating sustainable practices. In fact, executing on time and on budget is more important than ever before. According to US consultancy McKinsey, there is a direct, two-way correlation between executing lean and executing green.
Capital projects have been plagued for many years with inefficient, disconnected processes that cause unnecessary waste and value leakage. Change is common at all stages of capital projects and can have massive downstream effects on costs, schedules and environmental impact.
For example, if a change to pipe thickness is made after the original pipe and adjacent components are ordered, shipped and installed, the overages—to both cost and carbon impact—will be much higher than if the change was made in the engineering phase, before the procurement of the incorrect items.
Standalone and otherwise disconnected systems suffer from widespread data loss, and this approach only flags problems when an issue falls fully within the purview of an individual solution. However, by taking an integrated approach to your capital projects technology stack—from engineering and design through to procurement, fabrication and construction—you can trust your data to flag up any potential downstream effects of changes instantaneously, before they take place.
An integrated, single-platform approach from engineering through to handover provides the necessary insights that drive efficiency and sustainability initiatives forward, simultaneously.
Three strategies to reduce your capital projects footprint:
- Leverage data-driven insights to support decisions that drive sustainability
Ensure the data between EPC and handover are aligned and validated, ideally in one location, to allow for connected decision-making supported by insights that can be trusted. Connect your vendor information, requisitioning and expediting the site material in a centrally controlled location. And integrate construction management with engineering to ensure the impact of all changes are managed in the most sustainable way possible.
- Tighten procurement and construction planning to reduce waste and optimise materials usage
Implement systems that help you purchase the right materials at the right price and at the right times to minimise stockholding, waste and surplus throughout the course of the project, allowing you to execute in the most cost-effective, sustainable way. Optimising planning is good business, but the benefits stretch far beyond costs, schedules or risk simply by looking at the same data differently:
- Streamline planning to optimise resources, reduce bottlenecks and manage change effectively to further minimise material and shipping waste
- Source materials with visibility and consideration of their manufacturing and logistics (shipping distance and method, decommissioning, etc) footprint
- Consider material reuse and circularity options and procure accordingly
- Consider modernising old assets versus building new
Consider digitalisation of brownfield assets to limit environmental impact of greenfield sites, support retrofitting needs for greener outputs or to meet regulatory requirements, and improve operational efficiencies of legacy assets. No matter the driver, digital insights can expose opportunities for greater efficiency and sustainability simultaneously, and the cost to do so is just a fraction of building new.
Digital transformation as a driver for sustainability
Project funding is scarce, and on-time budget execution is still a pressing challenge. But the Earth’s needs cannot wait. Future-focused, innovative companies such as Tennessee-based Eastman Chemicals are finding ways to focus on these imperatives simultaneously by leveraging savings from efficiency gains in capital projects, freeing up capital to reinvest into critical sustainability initiatives that would otherwise lack funding. Find out more about how the firm is using project savings to drive circularity in operations and digitalise brownfield facilities to expose inefficiencies here.
To learn more about how unified, digital solutions can reduce project risk and minimise wasted resources, read our whitepaper, “Protect your projects: A guide to CAPEX risk management”.
Lee Tedstone is global vice president, procurement and construction, at AVEVA