At the 2013 Upstream Benchmarking Industry Consortium (UIBC), IPA Founder and President Ed Merrow offered up a beginner’s list of steps that the exploration and production (E&P) Industry can take to improve upstream asset outcomes.
However, one step was presented as a challenge to the Industry: “Get serious about standardization programs—I mean really serious as in ‘you absolutely cannot rework adequate designs!’”
The reasoning behind the challenge was clear. When planned properly, standardized facilities designs can lower project cost. Standardization can help address Industry’s growing problem with skyrocketing project costs by keeping costs in check, Merrow said.
Company business units should incorporate design goals for standardization into their project realization strategies early, according to IPA Senior Project Analyst David Rosenberg, who has led IPA studies involving standardized design in upstream projects. In a recent interview, Rosenberg said that standardized design considerations should be included in the opportunities identification process used to guide portfolio management decisions.
“Standardization programs require business and project teams to be disciplined and on the same page,” Rosenberg said, noting that facility designs cannot be changed without cost growth. “A stable environment and a stable process are necessary” for the execution of a repeatable design. Standardization systems tend to improve with repetition, “and standardization is mostly likely to succeed in portfolios that have a sequence of [many] similar opportunities,” Rosenberg added. However, business teams must recognize that standardization is not the right project development approach for all projects, particularly for big facilities.
Standardization can offer significant cost and schedule benefits. However, it must be pursued in a systematic and disciplined manner rather than opportunistically.