Faster digitalisation helps firms improve operations and diversify revenues
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The acceleration of digital initiatives within the engineering sector as a consequence of the Covid-19 pandemic means assets will run faster, greener, more safely and for longer.
Engineering, procurement and construction firms are doing all they can to rebound rapidly amid the uncertainty created by the coronavirus pandemic. But while many EPCs view cost savings as an effective short-term response, longer-term adverse trends demand a more strategic view and the acceleration of digitalisation. Even before Covid-19 emerged, companies faced the commoditisation of their services, regular cost and schedule overruns, risk-laden lump-sum projects and net margins of less than two per cent on average.
Digitalisation can not only help EPCs overcome these long-term challenges, but can also lay the groundwork for improved profitability and new sources of revenue. Fortunately, there are already signs that digitalisation will pick up speed. Two-thirds of construction industry respondents to a recent survey from McKinsey, ‘The Next Normal in Construction’ [PDF], believe that the Covid-19 crisis will accelerate industry transformation, and half have already raised investment in line with the shifts.
Common elements of an EPC firm’s digitalisation initiatives can be divided into four key areas: data centricity, technology consolidation, automation of data flows, and enablement of digital twin services. In terms of data centricity, there is a move from document to data-centric workflows for the creation, management and sharing of engineering data. As well as less reliance on documents to store and share information, this means breaking down common deliverables into the data contained in those documents and making it more generally available for review and use. In addition, managing changes and handing off to downstream participants is easier and faster.
The second key area is technology consolidation. The driver here is a push to consolidate and simplify technology platforms, apps and software to reduce complexity and eliminate redundancy. Most engineering departments have more than 150 unique pieces of software and technology in use. From solution-level applications to tier-one suppliers to homegrown applications and small niche tools, it’s often a bird’s nest of technology with little hope of connecting applications and automating data flows.
By standardising and strategic reliance on key tier one software providers, eliminating redundancies, and using stricter criteria for support of smaller, niche apps, CIOs and heads of engineering can simplify the landscape of software they rely on.
Automation and re-use of data comprise the third area of focus. There is an opportunity here for EPCs to connect applications and data sources; automate information flows and re-use data across the EPC process phases. Once the portfolio of software is rationalised and consolidated, the work of integrating the remaining apps gets under way.
The fourth priority area is leveraging digital information for additional value-added services from creation and maintenance of digital twins. EPCs should be looking at leveraging digital engineering and operating data to provide value-adding digital twin-based services during operations. The same engineering data used to design and build a plant can also enhance start-up, training and operations, while providing needed additional and diverse revenues.
In a sense, a digital twin is an evolving digital profile of the historical, current and future behaviour of a physical object or process that helps optimise business performance. It can be viewed through three lenses.
The plant digital twin provides equipment and process models of the plant, along with relevant costing data. It is typically used for plant design, removing bottlenecks, and revamping, as well as tuning operation of the asset during operations and maintenance. It is deployed offline and online and calibrated to plant operating conditions through autonomous model tuning.
The operational excellence digital twin supports plant operations, from business level to a control level. These digital twins inform business decisions such as crude selections and products trading, as well as technical decision-making and optimisation of quality, throughput, energy use, emissions compliance and safety.
Finally, the operational integrity digital twin provides guidance on decisions around prescriptive maintenance, offering real-time recommendations to maximise uptime, adjust production to minimise environmental impacts, mitigate production losses and prioritise safety. In addition, quality and risk assessments provide a future view of equipment and asset health, risk profiles and root causes of failures to improve uptime and operational integrity.
The majority of EPCs had already commenced digitalisation of certain operations before the pandemic began to cause disruption in 2020. As market uncertainties continue, however, digitalisation initiatives are accelerating. They are likely to change many aspects of business, from the way EPCs bid and execute project work, to how they hand over projects to their customers and continue support throughout the lifespan of the project. Digitalisation also facilitates closer collaboration with owners that creates new value for the ecosystem while enhancing the asset’s quality and sustainability. Assets will run faster, greener, more safely and for longer.
Paul Donnelly is EPC industry director with Aspen Technology.
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