An Integrated Approach to Reducing Total Cost of Ownership
In today’s industrial operating environment, facility owners stay awake at night worrying about operating budgets, project schedules and timelines, cost overruns, critical path jobs and safety infractions. In turn, Veolia has been resolving to embrace these issues and create solutions. As a result, Veolia North America’s Industrial Business has honed its industrial cleaning and environmental management service portfolio to create solutions that improve the customer’s bottom line. The result? Veolia’s Total Cost of Ownership (TCO) approach for customers.
“In the past two years, we’ve aligned all of our industrial services,” said Steve Hopper, president and COO of Veolia North America’s Industrial Business. “We are now able to go onto a customer’s site and provide a true turnkey service, where we’re managing the site to ensure efficiency, employing the best available technologies and meeting the environmental sustainability goals of our customers.”
Managing Total Cost of Ownership
Every industrial facility relies on contractors to perform industrial cleaning and maintenance services on process equipment and manage the consequential waste materials. This work is done for a fee, but the price of the contractor’s service is only part of the total maintenance cost to the plant. There are related costs for the maintenance work, like crane support, scaffolding, PPE, waste transportation and waste disposal. But there are also significant unseen costs associated with downtime on that process equipment that deliver a big hit to the efficiency and production levels for the plant.
As a result, many plant operators will take a firm stance on working with low-cost providers to minimize the expense of maintenance work. But alternatively, some plants are finding great value in industrial service providers like Veolia that approach service agreements to help manage TCO. This is achieved by using technology, information management tools and continuous improvement programs to eliminate unnecessary costs for a facility owner and return more productivity and uptime to the plant.
“For us, the Total Cost of Ownership idea evolved from our customers,” said Glen Kelley, key account manager for Veolia North America. “We recognized refinery and chemical plant owners are not looking for a low-cost provider. Their sophisticated procurement groups look at the entire picture of what a potential supplier can bring to their plants, from the base service to the peripheral savings. We responded by developing a Total Cost of Ownership model and have continued to improve upon it over time.”
Applying Automated, Hands-Free Technology to Industrial Cleaning
Providing a customer value beyond the services provided comes in many forms, from improved safety and productivity to cost savings. Much of this is due to advances in equipment and shifting toward hands-free or automated technology for industrial cleaning. The majority of the hands-free tools Veolia develops are used for hydroblasting, but others include vacuum services in the area of vapor and emissions control as well as tank cleaning and chemical cleaning technology.
The advantages of implementing this technology for industrial cleaning are numerous. It provides a safer work environment by moving the worker outside the barricade and away from the line of fire. In fact, on jobsites where fully automated technologies have been utilized, Veolia is accident and injury free. It also eliminates the need to wear a slicker suit and avoids subjecting the worker to heat stress and fatigue.
In addition to safety, hands-free technology allows for a greater consistency of cleaning standards and a generally improved quality of work. Automation also increases the ability to plan the length of the job, improving turnaround schedule planning where cleaning is a critical path item. Savings on peripheral services such as crane costs, scaffolding costs and insulating costs also underscore the value provided through technology. Combined, these benefits add up to further value for the customer.
Kelley explained how these additional savings evolve: “We can clean an exchanger better with hands-free technology, period. For instance, in the past a customer had to clean an exchanger four times a year using manual methods. But because of new technology, we can reduce cleaning to three times a year. That one cleaning episode we eliminate helps save the customer money on scaffolding and crane costs plus avoided downtime. And we are delivering a higher level of consistent cleanliness to maximize heat transfer and productivity. Ultimately, we’re helping the customer save money in so many different areas.”
In real terms, utilizing hands-free technology can help save millions. Veolia implemented its signature Hands Free™ technology at one Gulf Coast chemical plant to more effectively clean furnace units in the plant’s hydrocarbon units. This more effective solution reduced the downtime required for furnace cleaning by 50 percent. For furnaces that require cleaning 11 times a year and generate approximately $35,000/hour in revenue for the customer, the impact delivered $4.6 million in operational savings in one year alone. Veolia’s Hands Free technology has been so well received that recently 56 percent of its U.S. customers have switched to hands-free technology.
Tracking Metrics for Improvement
In addition to implementing technology, the TCO model truly works when goals are set and measured against clear criteria. Veolia’s proprietary Performance Measurement Technology™ (PMT) platform is the information technology system used to measure and report operational performance. Kelley said the very first task is sharing everything that can be tracked or measured when it comes to industrial cleaning operations.
“We go through a series of questions with customers to better understand what their interest levels are and what has true meaning to them,” said Kelley. “This allows us to hone in on the right key performance indicators (KPIs) to track in our database and helps structure how we present the information back to them.”
Veolia always tracks the following three baselines: safety, duration of cleaning and cost of cleaning. While it takes only one day to measure the safety value that is delivered by introducing hands-free technology to a site — any time you get someone out of the line of fire from the high-pressure water is an immediate increase in safety value — it takes about 30 days of gathering metrics to see the impact of hands-free technology on productivity.
Generally, there are enough data points to measure productivity metrics after cleaning equipment once or twice with hands-free versus manual equipment. “We cleaned an exchanger manually last year, and it took 20 hours,” said Kelley. “This year, we switched to hands-free and cleaned it in 10 hours, so we had a 50-percent productivity increase.”
Preaching Continuous Improvement
One of Veolia’s current customers, The Dow Chemical Company, has fully embraced the TCO model. Tyler Bargas is Dow’s maintenance technology leader and contract administrator. He acknowledged at a minimum it takes complete buy-in from both companies to be successful.
“The supplier-customer partnership must be strong in order to achieve complete automation and get the benefits of the TCO model,” said Bargas. This includes a commitment from the supplier to adopt the hands-free philosophy and maintain routine audit and assessments of the established KPIs. “Only when we are all working together can we find long-term value in a supplier’s services,” he elaborated.
Bargas cited an example of working with Veolia where manual cleaning was substituted with automated cleaning. In this particular situation, the scope of work included cleaning 11 separate exchangers on a blast pad. Previous methods required using manual shotguns to clean the tube sheets and shell sides of the bundles, as well as semi-automated flex lances to clean the tubes.
“In order to comply with our hands-free methodology, Veolia utilized an automated ‘pad blaster’ type of equipment capable of cleaning the heads, tube interior, shell side and the tube sheets,” said Bargas. “The end result was a decrease in crew size from six to three operators, a decrease in the total job duration from 22 days to nine days, reduced costs by $20,000 and a significant reduction in safety exposure.
“Committing to hands-free technology, tracking our results and continually improving our training programs have helped us realize significant improvements in productivity, reliability and cost savings. By implementing these requirements into our cleaning services, we are achieving value beyond cost and are maintaining our operations safer, cleaner and faster than ever before.”
One of the ways Veolia has been able to manage all this data and provide continuous improvement is the introduction of continuous improvement engineers (CIEs) to jobsites. These engineers are responsible for an array of essential duties in making TCO a reality. Some of these include:
- Data collection, analysis and reporting
- Key process improvements — Identify, scope, define, execute, validate and sustain
- Developing customer presentations to show savings and improvements
- Implementing and promoting operational best practices
- Establishing relationships with engineering and maintenance personnel to drive continuous improvement
An Improved Turnaround Management Approach
Another contributing factor to delivering TCO for customers is improved turnaround management. For owners, turnaround management is a crucial component of maintaining ongoing, profitable operations. Veolia has implemented a project management model whereby upfront, detailed planning and ongoing, professional project management are the keys to helping customers realize a reduction in overall costs.
“Several years ago, we recognized our turnaround management process needed improvement,” said Bubba Hoffman, vice president of Specialty Services for Veolia North America and the lead architect of Veolia’s turnaround management best-practice model. “So our turnaround group began hiring individuals with specific project management skills. One of the key skills pursued was an in-depth knowledge of planning, which resulted in the creation of our turnaround planning process. Veolia’s process incorporates the fundamentals of project management recognized globally as best practices and includes steps on how to initiate, plan, execute, monitor and close a turnaround. Most importantly, it’s designed to align with, supplement and support the turnaround planning efforts that our customers go through as they prepare for major outages.”
With the turnaround management model firmly in place, Veolia’s professionals now go into the turnaround a little differently than they did in the past. “In the past, nobody really put a detailed plan together, so you didn’t actually know what your total costs were going to be,” explained Hoffman. “You knew what your contract rates were going to be, but you didn’t necessarily know how much equipment you’d have to buy or rent.”
The turnaround manager model, however, identifies what the exact costs will be versus expected revenue. In addition, the necessary manpower and equipment to complete the task within the necessary time is organized upfront, resulting in no surprises for the owner or Veolia.
An example of Veolia’s best-practice turnaround management process was put into action recently at a chemical plant customer site in Freeport, Texas. Veolia was providing annual turnaround outages for the customer’s oxygenated solvents (oxy) and vinyl units for several years. In 2014, there were issues with service quality, equipment, staffing and communication that resulted in delays and added expense for the customer.
“The customer was dissatisfied, but as a result of our longstanding relationship, it offered our team one more opportunity to do the work in 2015,” said Hoffman. Veolia’s site based management team immediately began putting a plan into place that would exceed the customer’s expectations and restore confidence.
The team executed a thorough review of its preparation and execution, and compared it against the company’s best practices. Shortcomings were identified, and action plans were developed. An improvement plan was created in partnership with the customer to ensure its buy-in and improved satisfaction throughout the entire process. The scope of improvements implemented included: a new customer communications strategy, process and procedure improvements to address concerns for contingency equipment and labor timeliness, personnel changes, enhanced risk and safety assessments, and a more formal and structured planning process for the 2015 turnaround.
“As a result of our best-practice turnaround management process for the 2015 oxy and vinyl turnarounds, service quality and communication issues were totally mitigated compared to prior years, and our extensive preparation and best-practice approach resulted in a very effective turnaround with zero safety issues, no delays and seamless communication and coordination with the customer,” said Hoffman.
More Than Waste Services
Another component of Veolia’s integrated approach to reducing TCO comes through its waste management services. The core focus is on hazardous and regulated waste, but the company has developed capabilities beyond that to include site management services, recycling services and total environmental management services.
“Our expanded capabilities give us insights into the overall environmental management of the site,” said Bob Cappadona, senior vice president of Operations for Veolia North America. “If we’re interacting with the environmental engineer, we’ll talk about the sustainability goals of the company. If we’re in front of the plant or facility manager, we can discuss costs, schedules and how it impacts his production. By having a true industrial solution, what we are able to do is meet the needs of the environmental group, the facility manager and the overall business requirements of the site.”
By its nature, waste management capabilities integrate seamlessly into turnarounds and industrial cleaning jobs. “Before a project gets started, there is a focus on what we can do from beginning to end, and the waste management portion of the project becomes part of the overall integrated solution,” explained Cappadona.
From his perspective, that communication is key; it allows Veolia the opportunity to manage the waste generated by cleaning or maintenance activities, but the customer also benefits from knowing up front he has a one-stop solution.
Cappadona provides an example of how this benefits the customer: “When you start generating waste on large turnaround jobs, you could have 50, 75, 100 roll-off containers that you need to put somewhere. And if you haven’t set up a waste management solution that aligns with your cleaning schedule, you’re paying rentals on all that equipment and losing efficiencies on your site.” Veolia’s goal is to streamline this and reduce unnecessary costs for its customers. “We can set a schedule to manage what waste is being generated by cleaning activities in order to facilitate the most effective disposal of it,” said Cappadona
Take Veolia’s contract with a large utility in the Northeast, where waste services are combined with general industrial services. “From a cost of ownership perspective, this means the customer only has to manage one supplier but gets the benefit of both our Industrial Business operating areas,” stated Cappadona. “The customer clearly sees Veolia has the capability to do virtually anything environmental, whether that’s emergency response or tank cleaning or waste disposal.”
Having front-end and back-end connected services provides a total value to the customer. “Where oftentimes a customer would want to generate the waste, know exactly what he has and then put out a bid to get the lowest cost, he is not factoring in all the equipment he’s renting, the downtime he has as a result of storing the waste on-site or any compliance issues it may cause,” said Cappadona. “Having all components of a turnaround integrated into one solution can provide efficiency to the site management and ultimately drive costs down for the operator.”
Veolia’s model to help customers reduce overall costs of ownership continues to pay off for Veolia and its customers. “In today’s competitive marketplace, you must create a differentiator for your company, your brand,” stated Hopper. “We’ve chosen to find ways that add value for our customers and created best practices that improve a number of factors, from hands-free technologies and cost reduction to safety and training. This allows us to deliver on total cost of ownership reduction for our customers, provides opportunities for our people and builds our relationship as a trusted partner and innovator.”
*For more information, visit www.veolianorthamerica.com or call (888) 9Veolia [983-6542].