I have been involved in a number of automation/instrumentation upgrade projects. The objectives of these projects are mainly twoard reducing manpower, safety and quality improvement.

It is all about Money!! I wonder with the costs of these projects, which are very high especially for petroleum industries applications, can these projects be benefitial for these plants? (I assuem it works for less than 50% of these projects)

I donno, but I never seen researches about this subject!!!

 

Hello aljuhani;

Normally, before any investment is ventured for a project, one of the most important studies required is ROI, or Return On Investment. Here is a pdf from Emerson that analyses ROI for an automation project.

http://www.emersonprocess.com/Solutions/services/aat/pub/Get_the_ROI_RightR1_07024.pdf

You are right, of course, it is all about money, and if your have the courage to read through this document (and others like it) you will see that investors and companies try to understand before they put money into an upgrade what impact it has on the final product quality, safety (costs) and
manpower (costs) before they put their money in. That is why they are in business, after all.

Hope this helps,
Daniel Chartier

 

It's worth it. issue is many projects in automation are run from cost reduction perspective only vs. thinking beyond the obvious benefits... like how they can enhance workflow automation, etc.

 

What makes you think that less than 50% of these project work? If automated properly, plants benefit from a safer, more reliable, more efficient system that is easier to interface with and more productive. Successful automation projects pay for themselves many times over. I'll look into finding studies on this for you.

----
Nathan Boeger
http://www.inductiveautomation.com
"Design Simplicity Cures Engineered Complexity"

 

> It is all about Money!! <

Of course.

> I wonder with the costs of these projects, which are very high especially for petroleum industries applications, can these projects be benefitial for these plants? <

Of course they can if they are done well.
Even 0.1% of a petroleum plants output is worth a lot.

(I assuem it works for less than 50% of these projects)

Sounds like you have had a bad experience. Perhaps you would like to tell us about it.

> I donno, but I never seen researches about this subject!!! <

Try
http://scholar.google.com/scholar?q=Plant+Automation+cost+benefit&hl=en&lr=&btnG=Search

 

Thanks Daniel for your response and the file,

But the concern I raised here is the "hidden-cost" including pre-commissioning, construction, commissioning, start-up and the cost of maintenance and required modifications...

Sometimes, during late stage of Automation projects, you face surprises and you have to do modifications or extra activities, which may increase the costs extremely. This is not applicable to all projects, but in many of them as I stated before.

The dilemma here is how to identify the really successful automation project from the beginning considering the risks of future hidden costs or operation disturbance?

 

Amit:
> It's worth it. issue is many projects in automation are run from cost reduction perspective only vs. thinking beyond the obvious benefits... like how they can enhance workflow automation, etc. <

Amit:

I think so... but the question is how to prove it (actually)?

Nathan Boeger:
> What makes you think that less than 50% of these project work? <

This is a personal opinion from my experience...

> Sounds like you have had a bad experience. Perhaps you would like to tell us about it <

not a bad experience, but a great one... all the projects I involved in, were successfully completed... but when I revised all the project costs, documents, efforts... I wonder if there is any practical value engineering can be done in automation and instrumentation projects??

I am sure the return was valuable for many projects... but I am sure too there are many lost projects (these might not be sensed or even considered as lost projects especially in big companies)...

The cost of instrument and automation (hardwares, installation and support) is increasing extremely every day... and this makes the return of these projects not attractive as it was before 10 years for example (unless we use the same old value considerations).

I think this needs a deep study covering different areas of automation projects.

 

Hello again;

There are always surprises. if they are as costly as you ssm to have experienced, I can presume it can be linked to bad preparation. All good companies have cost estimators and supervisors, project managers and contact administrators whose job is to planify, control and evaluate projects costs. A good estimator will always allow up to 15% for unexpected payments for a project; each subcontractor agrees to certains disbursments and activities, that have ordinarily been established by engineering. If all these people work together seamlessly, there should nt be any major setback. If there is one, the project should have some financial leeway to correct.

This is all conditional to correct planning, of course. Numerous companies do go bankrupt beacause of incorrect planning, inexperience or bad administration...

Hope this helps,
Daniel Chartier

 

There is risk in any project, whether automated or not. Good planning includes identifying the risks and finding ways to limit them. Minimising risks typicaly requires having (and taking) the time to plan the project in detail and *writing it down*. In the course of writing a detailed specification and plan for the project, you will often identify problems that were not apparent at first glance. Once you have identified the problems, you can research solutions for them and possibly conduct tests if necessary.

The project doesn't end when a new machine comes in the door. You also need to account for installation, acceptance trials, QA studies, training, health and safety approval, production ramp up, production schedules, ordering of raw material, etc. You need to have meetings with all the stake-holders so they can help you identify these issues and make sure that they are ready to participate. A successful project requires a team effort.

If you are trying to decide which of a number of possible projects have the best return on investment (including the man-hours that you put into it), you will just have to use estimates based on your knowledge and experience for these "extra" costs. A series of small projects with quick pay-backs could quite easily have a better return than a single large project.

 

I would suggest this.

Many projects are undertaken with poor understanding of the actual cost of the project. Here are just a few things that need to be included in the cost, but often are not:

- lost production due to down time. a $20,000 project that shuts down a line that nets the company $100,000 a day takes 5 years to break even just on the lost production side if you lose even one day of production.

- retraining. it may take months to retrain the operators, supervisors and maintenance people once the project is done. this can amount to hundreds or even thousands of manhours.

- changes in operations. you may well succeed in making a small part of the plant more productive, but make other areas less so.

- spare parts. if you change to a new PLC or DCS or instruments that you have no spares for, don't forget to include the price of adeqaute spares in the project cost.

 

Amit,

I agree that a thorough study would be interesting. Putting a dollar value on automation is tricky, but it's my opinion that a well implemented automation project will typically pay itself off quickly for an end user in efficiency. This obviously depends on how much the project runs and how well it is done. I also agree that hardware/software/labor costs tend to be increasing over time. So too should manufactures income - this is known as inflation. Automation costs could be growing faster than inflation - they are definately growing in complexity rapidly. Hopefully they're worth it for the end user.

----
Nathan Boeger
http://www.inductiveautomation.com
"Design Simplicity Cures Engineered Complexity"

 

I have many opinions on this, many of which agree with the general idea of Automation is ALWAYS for the better. If it was not, then we would not have the booming industry the we do. If you are looking for a true cost, you need to look at every thing case by case. What happens in a toothpaste plant, obviously has no reasonable comparison to a Refinery or Pipeline.

The only other item I would like to add. The spare parts is something that needs to be closely monitored. Many suppliers are now willing to enter into contracts where they carry the minimum stock. (With 24hr personel) This way you get the parts available, and they get to keep the business.

Aside from that it is all opinion until you can look at some numbers. I suggest looking at some of the bigger automation jobs completed by Emerson, Fisher, Honeywell and others. This can give you a good picture of just how valuble the control equipment really is.

Cheers

 

Many suppliers will "promise" to carry minimum stock, but few will actually do it if the item isn't turning over fast enough. When you do need the part they will tell you "we just shipped the last one this morning to one of our other customers who needed it in an emergency", and you will end up waiting for it to be shipped from the factory anyway.

Suppliers are under the same or even greater pressure to reduce inventory as their customers are. They also don't want to get stuck with an obsolete part that they can't sell if in fact you never do need it. They know that you aren't going to audit their sales and inventory records, so they have little to lose by making any sort of promise that you want to hear. It's really rather ridiculous to have your purchasing department squeezing suppliers for price cuts, and then demanding promises from them that you have no way to verify and no guarranty that you will properly compensate them for.

The solution is that if you have a choice between several different similar items, ask your supplier which ones he sells lots of to everyone else and then to use those. For rare or unusual items that you can't do without, stock one or more on your own shelf and consider it to be a form of "production insurance" rather than just routine "spare parts".

 

Let's consider in our case, a plant that is running ABB Advant. The HMIs are now over 10 years old, not supported very well by ABB, costly, and scarce as hen's teeth.

How about a company that can deliver up speed unix workstation replacements for the HMIs, provide parts and service for at least 5 years, and carries all the parts for the control racks, plus warranties and very fast service?

Would this be worth something???

Then look at http://www.workstationsexpress.com