July 2021

Special Focus: Plant Design, Engineering and Construction

Why EPC firms are accelerating digitalization

Even before the challenges of the COVID-19 pandemic emerged, engineering, procurement and construction (EPC) firms were already under considerable stress.

Donnelly, P., AspenTech

Even before the challenges of the COVID-19 pandemic emerged, engineering, procurement and construction (EPC) firms were already under considerable stress. Combining low net margins with the burden of carrying much of the project risk was resulting in general underperformance by the sector. When plant owner-operators announced capital spending cuts in the range of 20%–50%, it looked like engineering firms were about to enter another cyclical downturn. Interestingly, the management of these firms, with the hard-won wisdom gained in previous downturns, did not act as one might have predicted. Instead of immediate deep cuts to personnel, engineering firms looked for alternative ways to pare costs, such as cutting dividends, reducing bonuses and eliminating certain non-employee contractors.

While layoffs have not been completely avoided, these actions have mitigated the deeper reductions in the workforce that were seen in 2014–2015 and have also better positioned these firms to capitalize as a recovery slowly emerges. It is also worthy to note that, in addition to carefully managing cost reductions, certain investments have continued and even accelerated—most notably in digitalization. According to McKinsey & Company’s 2020 report The Next Normal in Construction, two-thirds of the 400 surveyed EPC executives were accelerating their investments in digitalization. These managers and executives understand that smart investments in digitalization will help preserve core competencies and personnel, and, over the long term, protect their ability to compete as business conditions improve.

Often, the objectives of digitalization investments include streamlining software and technology portfolios, along with automating the flow of project data. This enhances collaboration internally and externally, while making data available for reuse across disciplines and project phases. In addition, many firms are now seeking to continue leveraging project engineering data to provide value-adding services in operations and maintenance. This can increase customer intimacy, while adding necessary and more stable revenues based on operating budgets. The digitalization of project data is a key enabler of these digital-twin-based services, which will be enhanced through a digital handover.

Four key challenge areas for EPC firms

Many EPC firms are well underway on their digital journey, while others are still in the planning phase. However, where are these investments going? Common digital initiatives can be categorized into four key areas. These include:

  1. Data management: Digital technologies can play a hugely important role in helping EPC firms manage and move massive amounts of data more efficiently. This means a reduced reliance on physical documents to store and share information and making that information more available for review and use by others, as well as making it faster and easier to hand off to other disciplines, partners, vendors, owner-operators, regulators and other parties in the project ecosystem.
  2. Technology consolidation: Many EPC firms have dozens (if not hundreds) of unique software solutions in the engineering department. Comprised of Tier 1 providers, niche commercial applications and engineers’ homegrown applications, these types of solutions create a bird’s nest of technology that prevents any real progress toward digitalization. By standardizing and reducing the overall number of software providers, eliminating redundancies, and using stricter criteria for the support of smaller niche apps, chief information officers (CIOs) and heads of engineering departments can simplify the landscape of the software that they rely on, while creating the conditions required for automating the flow of data.
  3. Apps and data integration: Once the software portfolio is rationalized and consolidated, the work of integrating the remaining applications should start. Connecting the remaining apps with the intent of automating flow and reusing data should be the priority.
  4. Expansion of digital-twin-based services: The engineering data used to design and build the plant can also be used to enhance startup, training and operations, while providing additional and diverse revenues for EPC firms. Examples might include the use of engineering tools to ensure that the models used for running the plant are accurate and up to date; that dynamic models and operator training tools ensure safe, profitable operations; and that predictive maintenance services maximize asset uptime.

Digital twins of the physical asset and its operating conditions are a marriage of the digital representation of the physical plant (e.g., equipment data) and the information about the process occurring within that physical equipment.

A digital twin can be viewed in three ways. The first is the plant digital twin, which provides equipment and process models of the plant, along with relevant cost data. These types of digital twins are typically used for plant design, debottlenecking and revamping, as well as for tuning of the asset during operations and maintenance. Plant digital twins can be deployed offline and online and can be calibrated to plant operating conditions through autonomous model tuning. Used for equipment monitoring, operator open-loop advice or autonomous optimization, their scope may range from a single piece of equipment to an entire unit’s operations (e.g., catalytic cracking), and to plant-wide (e.g., energy and utility systems) or enterprise-wide (e.g., risk models encompassing multiple plants and sites). They can be simulated dynamically to provide operator training.

The second type is the operational digital twin. This provides plant operations—from a business level all the way to the control level—that are modeled and virtually viewed as planning, scheduling, control and utility models. These twins inform business decisions such as crude selections and products trading. They also inform technical decision making, like optimizing quality, throughput, energy use, emissions compliance and safety.

The third type is the operational-integrity digital twin. This twin provides guidance on both tactical and strategic decisions around prescriptive maintenance, offering real-time recommendations to maximize uptime, adjust production to deal with failing equipment, minimize environmental impacts, mitigate production losses and prioritize safety. EPC firms can also assist the owner-operator in obtaining a future view of equipment and asset health, as well as risk profiles and root causes of failures, to improve overall uptime and operational integrity.

Increasingly, EPC firms are seeking to deliver digital twin-based services to their clients. Creating, delivering and maintaining these three types of twins make good use of engineering talent and resources, while adding considerable value to plant owners. They can enhance staff utilization and billings while increasing customer intimacy, which aids business development for new projects.

Digitalization successes

While some may be just beginning their digital journey, many firms have already seen notable successes with leveraging this digital engineering data. The following are a few examples.

Worley’s digital platforma initiative is designed for speed without compromising the quality of the engineering work. It relies on digital information from concept and front-end engineering design (FEED) to inform a digital estimating platform that helps clients reach a final investment decision (FID) up to 50% faster. Benefits include expedited evaluation of concepts through process simulation software, automated artificial intelligence-driven 3D plant layout and piping designs, and coordinated estimates tied to the engineering information.

Hargrove Engineers + Constructors provides digital twin-based services that improve plant operations, profitability and reliability. The company provides digital twins that represent a virtualized copy of the historical, current and future behavior of the physical plant asset, along with the physical and chemical processes occurring within that plant, so their customers can improve throughput and quality, lower operating costs and increase equipment uptime.

Leveraging digital design and engineering tools, Burns & McDonnell created a digital representation of a conceptual plant design to quickly redesign a column from traditional design specifications to a more efficient divided wall column. The redesign was accomplished in a matter of hours instead of the normal weeks-long effort. This was only possible because the multidisciplinary team could collaborate around digital project information.

Takeaway

Prior to 2020, the majority of EPC firms were already embracing initiatives to digitalize areas of their businesses. With uncertain market conditions likely to continue into the foreseeable future, digitalization is accelerating and will fundamentally change the way EPC firms bid and execute project work, hand over projects to customers, and support projects throughout their operating lifespan. Digitalization also enables closer collaboration with owner-operators, which can drive significant new value for the entire ecosystem, while enhancing the quality and sustainability of the asset. HP

NOTES

      a Worley’s SpeedFEED

The Author

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