In many of the same ways that the COVID-19 pandemic has upended our daily lives and the way we work, the virus is having a dramatic effect on capital projects of all sizes, from megaprojects to smaller site-based projects. Lockdowns and social distancing measures are disrupting the fabric of business, project organizations, and contractor interactions that are essential to project planning, engineering, and field work. However, although much has been said and written in the past weeks about the postponement and cancellation of capital projects worldwide, we see much less attention being paid to how COVID-19 is impacting critical site and unit maintenance activities, especially turnarounds (TARs).
Under normal circumstances, TARs require a significant headcount on site. The labor increases required to bring production back online in a limited time frame obviously have profound implications for safety in the midst of a pandemic. In response, companies are delaying or changing project scopes, depending on the criticality of the planned work. Because turnarounds are critical and cannot be put off indefinitely, they give us an early look at how projects are coping with COVID-19-induced changes.
IPA has been checking in with its clients during these unprecedented times to understand how they are addressing the many challenges confronting project professionals during the COVID-19 pandemic. Through our discussions and surveys with turnaround professionals, we investigated what actions companies are taking to address the difficulties of working during a pandemic. We found that they have taken a range of actions, some with potentially long-term advantages for turnarounds as well as for larger projects. Below, we summarize our observations to date.
COVID-19 Considerations for Turnarounds
The COVID-19 pandemic means that decisions to move ahead with turnarounds must factor in social distancing measures imposed by various governmental authorities, the complexity and criticality of the turnaround itself, and the willingness and capabilities of the regulatory agencies to be flexible on timelines. Consequently, local decision makers have developed the response for most sites, in accordance with corporate guidelines and directions. Central project organization expertise is also often leveraged. The most common measures reported involve changes to the capital portfolio, modifications (usually reductions) to the turnaround scope, and execution approaches aimed at ensuring safe execution with minimal disruptions.
Portfolio Changes—Decisions around the turnaround portfolio are almost always developed in close coordination with regulators. To ensure the safety of all involved, sites must use appropriate practices, tools, and planning to put social distancing and hygiene measures in place. Although many sites report a close working relationship with regulators, site project personnel are almost always finding that regulatory agencies cannot respond as effectively as usual because they are overwhelmed with requests for changes.
Most site personnel surveyed reported that they are already dealing with significant turnaround delays and that they anticipate additional scope and execution approach changes in the coming months. The exceptions were outages requiring smaller crews to address critical maintenance that were in or near field execution. At a handful of sites located in regions with minimal or contained COVID-19 cases, work is expected to continue as planned, with the most substantive changes being made to safety practices. Under the best of circumstances, reprioritizing work in site portfolios is arduous; optimizing them during the pandemic is proving to be even more complicated as sites attempt to identify the most critical scope and the right timing for that work to be done.
Scope Modifications—Although the pandemic has affected engineering, most of the challenges are in the field. In the regions most affected by COVID-19, a common approach to managing turnarounds that cannot be delayed or deferred involves removing capital project scope from turnaround worklists and focusing on “mission critical” scope only. According to IPA’s survey respondents, cuts to scope range from 20 to 40 percent. Interestingly, these scope reductions do not always mean that there are associated reductions to the outage duration, as social distancing measures lead to lower labor densities. Even when the TARs are well planned, most sites are expecting poorer than normal labor productivity as well.
Execution Modifications—Most companies report modifying turnaround execution plans. Some reported planning for different scenarios to facilitate changes in execution strategies in the event that high probability and high effect risks materialize. These plans usually involve different work front arrangements, spreading labor over the available work area, and staggering work shifts. Some of the plans even involve deliberate learning opportunities to understand how these various execution plans actually affect the ability to do productive work.
An Eye on Safety
While some sites are simply extending established safety practices, others are developing whole new philosophies for approaching turnarounds during the crisis. Most of the safety-related focus is on physical distancing, site personnel told IPA. They cited visual aids and physical barriers to keep people safe distances apart, expansions of support facilities to create room for spacing out crews, and additional considerations to promote and facilitate good hygiene. IPA learned that full personal protective equipment is being considered in only a few extreme cases. Managing physical distancing is the most challenging during activities like moving crews between parking lots and work areas and from one work site to the next. Some organizations are reworking their plans to minimize crew switchovers and to minimize the number of interfaces between the different shifts. Of course, the regular sanitization of common areas and transportation is also common.
Weakened Supply Chains
Some sites are very concerned about their supply chains. Although locally sourced materials have not been an issue so far, sourcing from major vendors located overseas is perilous, as deliveries are delayed significantly—or even cancelled. In general, the longer the supply chain, the stronger the potential negative effects of the pandemic. The most common reaction has been to shorten the supply chain and re-source from a closer location to minimize the transportation and logistics risk. However, this is not always possible, as some of the critical materials can only be sourced from a few manufacturers. We are finding that companies are almost always addressing these high risk and long supply chain issues proactively rather than waiting for issues to surface.
A clear advantage for some of the surveyed sites was the availability of capital project personnel whose projects were put on hold. These professionals now find themselves in a position to provide support to turnarounds, particularly in the areas of safety planning and redeveloping schedules and execution plans to reflect current (and potential) circumstances.
As part of our discussions with sites, we also observed that companies with advanced digitalization efforts reported having an easier time coping with the disruptions and maintaining effective communication channels. Beyond conducting effective virtual meetings, tools developed specifically to communicate project-specific information between team members were of particular value, as they effectively replaced in-person interactions. These tools provide an advantage in transferring information between the crew in the field and functions located elsewhere, such as engineering, operations, and project controls. Some of the survey respondents also pointed to the use of digital tools as necessary to ensure hygiene and distancing standards because they replace the need for physical items, like forms, to be passed around.
What Lies Ahead?
Opinions varied on the cumulative effect of the COVID-19 pandemic on capital projects and turnarounds. About half of those we interviewed expect major coronavirus-related setbacks to be over by the fall of 2020; the other half is preparing to mitigate COVID-19-related issues into 2021. Most, however, indicated that if current conditions continue into the fall, they will have to make drastic changes to their overall approach, including extended plant-wide shutdowns. The resurgence of the pandemic (a “second wave”) is also considered a real possibility. Most companies report being “very concerned” about significant disruptions from a potential second wave of infections with some only being “somewhat concerned.” The respondents voiced a common concern that when circumstances return to normal, a large wave of deferred turnarounds will create a temporary heated market.
Industry still has a long way to go to figure out on the best way to cope with the disruptions caused by the pandemic, but it is clear that companies are already expending significant energy and effort on planning. Turnarounds that are currently in the field provide a unique opportunity to learn about human behavior, to figure out what works and what does not, and to reveal the main pain points that require more attention. Effectively collecting these learnings and transferring the knowledge to the overall organization will not only help the next wave of turnarounds, but will also benefit capital projects and other parts of the organization.