A project’s business case approval typically comes down to achieving an acceptable net present value (NPV). This may vary in view of financing costs and the business drivers behind the project—whether strategic, value creating, business sustaining, or another driver. No matter what the NPV may be, however, when the project is given the green light for development to continue, it translates into a set of key objectives. Regardless of sector, these objectives broadly align with achieving target throughput at the expected quality, within the defined operating and capital costs, and the planned time to reach full rate. Hand in hand with the underpinning requirement for safety performance, these become the project targets.
Due to its size, capital cost has historically become the dominant area of focus for project teams. Upon approval to proceed through each development stage gate, the team works on design, procurement, and construction activities, progressively developing and tightening the accuracy of the capital cost and the class of estimate. Although the capital cost is very important, it is not, however, the only influencer on NPV. Market pricing of the saleable product, capacity delivered over time, and cost of operation over the life of the asset all affect NPV. These aspects are often understated or overlooked yet are critical to successfully achieving the business case.
In more recent times, a global trend has emerged. Projects are not performing in operation as planned. The singular focus by project teams on building the asset is putting business cases at risk. Deviations during ramp-up and/or commissioning significantly impact the ability to realize value for the organization’s broader financial health. The challenge can be compounded by complex and aggressive ramp-up profiles. Production challenges and higher burdened cost of operation are leading to financial and potentially reputational impacts on owners and operators. We are committed to seeing this change.
As an organization, we understand that reaching the operational outcomes of a project as planned is fundamentally important. Our commissioning, operational readiness, and ramp-up excellence (CORE) practice was established for just this reason—to help our clients successfully transition into operation, and ramp-up to full capacity.
The keys to success? Projects must be executed with an operational mindset, not a build and walk away mindset. Organizational integration must be seen to be as critical as physical integration. And high performing teams must practice and be adequately supported for their success. Our approach centers around these principles.
We recognize that a project consists of three concurrent workstreams. Of course, there is the familiar engineering and construction workstream. But for project success, this must be accompanied by the operational readiness, commissioning, and ramp-up workstreams. Each stream matures side by side through all phases of project development, with the data and knowledge requirements of each interwoven. Our approach overlays these streams with operational thinking to expressly generate value. How? By enabling value-adding, fostering value protection, and initiating value realization. The complementary benefit of this holistic and inclusive view of project delivery naturally de-risks outcomes.
With project outcomes increasingly at risk, industry is shifting. The opportunity to respond with foresight and thoughtfulness is right in front of us. While the rate of change differs across industries, the challenges remain the same. It doesn’t matter how well you build an asset if it doesn’t perform in operation.
As such, we prepare with the end in mind and create a smoother pathway to value realization during commissioning, start-up, and ramp-up phases. Establishing and managing properly structured commissioning, operational readiness, and ramp-up programs, and managing them through to completion is key for successfully transitioning into operation.
Our founder Gerry Hatch often said, “We’re not just design, build, and goodbye.” Caring about performance in operation is steeped in our history and reminds us to act like project owners and behave as partners.
Assisting projects to reach operational outcomes in partnership with our clients is the primary focus of our CORE team. We are passionate about operations and have a deep understanding of projects. We bring operational thinking to design and execution, aligning operational readiness, construction, and commissioning, right through to ramp-up and operations.
