Knowledge power

Most people think of commodities markets as places where traders buy and sell many of the world's essential goods - wheat, cotton, oil, gold and so on. The majority of this trading is accomplished through 'futures' contracts, where there is an agreement to deliver given products at a set time in the future for a price established at the time of the agreement.

Drawing parallels with this, it could be argued that engineering, procurement and construction (EPC) companies and owner/operators also operate in a commodity market. EPC companies 'sell' engineering hours and are expected to deliver an efficient work product or bid on lump-sum projects by 'speculating' that they can complete a project on time and on budget, thus earning a profit. Owner/ operators have their own version, seeking to deliver their products to volatile markets while operating on narrow margins.

But by its nature, a commodity market is highly competitive and very risky - and the slightest problem can make the difference between success and failure. Such competitive pressures are driving companies to look for ways to improve use of existing assets, capitalise on new assets and optimise existing work processes to boost profitability and compete more effectively.

It doesn't take an MBA to know that profitability can be improved in two basic ways: increasing revenues and decreasing costs. However, in mature commodity markets — and our industries fall into that category - product or feedstock prices are often difficult to control, much less predict during profit forecasting.

This difficulty is the reason for the intense focus today on not only improving the return on physical assets, but also on the associated plant information assets, intellectual assets and company best practices. Leveraging plant information assets and work processes has been proved time and time again to provide significant, sustainable and cumulative gains in operational efficiency.

Effectively using corporate intellectual assets to improve operational efficiency, however, can be problematic. The process, power and offshore industries face a dilemma in attracting and keeping a talented work force.

The first part of the problem is losing the experience of an ageing work force. A recent industry report reveals that 'upstream oil and gas companies will lose more than 60 percent of their employees - with their experience and knowledge - by 2010'.

Technical, operational and management areas will all suffer. Industry research further shows that it can take seven years for a new employee to reach full productivity. As older workers retire, less-experienced personnel will increasingly replace them.

These newer workers will also be part of Generation Y, the under-25s. To them, technology - particularly the Internet and personal computers - is a part of their everyday lives. The web is their first information source of choice. This is where we see an enormous opportunity. While these younger workers will not, at first, have the plant knowledge of older counterparts, they bring a 'web-savvy' skill set. They will be able to take next-generation tools and innovate them for the next two decades.

Our challenge now is merging this new world of technological expectations and innovation with the industry knowledge of the old world. But how do we do this?An EPC company may use 2000 to 3000 different pieces of software and an owner/operator may have 10 000 or more, since many independent offices and 50 to 100 plant sites do not have a product standard. However, each will have its own engineering department and possibly use different applications of preference.

Integrating applications is not easy anyway, but when you factor in that kind of volume it becomes practically impossible.

One theory, perhaps based on history, is that the market actually creates de facto standards by selecting and adopting the best solutions. The owner/operator community must lead this effort. These best solutions are ones that bring the most value of profit to the user. By narrowing the number of applications down to a manageable list - say one to three - for tasks, integration across the supply chain can be viable.

Since plants have such a long life span the owner/operators need a way to manage their engineering knowledge assets - both intellectual and information-based - in much the same way they manage their physical plant assets. They also must be able to integrate their people with this management process.

A common misconception is that capturing and maintaining information is all that is needed. Having complete, up-to-date information is a significant step, but growing plant information into knowledge requires:

Merging lifecycle information with company work processes - applying your data and knowledge to what you do; <br>

Using a lifecycle information management platform to integrate applications, then applying and refining company best practices - allowing your people to access and use this information in the best way.<br>

And it is here where the two worlds mentioned earlier meet. The older plant design information is now accessible to the younger work force in ways the newer generation is comfortable with.

At Intergraph we are developing an approach called The Engineering Framework (TEF) integration platform where information can be captured, applications integrated and specific company processes applied - making it possible to create, manage and use plant engineering information (initial design and as-built) efficiently throughout the lifecycle.

Ben Eazzetta is the chief operating officer for Intergraph Process, Power & Offshore.