Operational Readiness – The Pathway to A Successful Project
When discussing Operational Readiness (OR) it’s about building capability into a project to prepare for the transition to start-up. Whether it’s the construction of a dam, railway line, mine or hospital, the capability is broken into 3 areas with a supporting framework of elements for each area. The three areas of capability are:
- Capable systems and processes – the way an asset is operated
- Capable Equipment – the reliable assets used for the process or facility, and
- Capable People – the “who” within the process, the primary stakeholders of the asset, i.e., the operators/drivers/maintainers.
In short, the Operational Readiness process is there to create the smoothest start-up possible. This enables you to get the most out of your asset as early as possible, without delays, overruns, equipment or system failures. The stakeholders affected can include project teams, the asset owner, operations and maintenance personnel and the internal and external customers.
The value of Operational Readiness can be seen with the difference between the ramp up and the actual curves with respect to the losses to the business. This shows the effect on the asset owner, but also includes the potential losses for the construction contractor through contractual damages. The ramp up curve below shows the potential loss of the investment.
The team at EnterpriseIS have seen facilities into their 3rd year of operations that still had not reached nameplate capacity due to performance issues relating to not having carried out Operational Readiness.
Losses could stem from things like:
- Insufficient consideration was given to training or documentation, resulting in people lacking operational or maintenance familiarity with new equipment.
- Operational systems not set up correctly or people not familiar/trained with system.
- Maintenance systems aren’t set up to maintain so failures occur due to poor reliability, and critical spares not considered for timely repairs.
- Most importantly, the safety of employees can be compromised.
These losses can cause delays, increased operating costs, loss of revenue, customer dissatisfaction, and reputation loss.
Sidenote, In a report written on a study of Operational Readiness by Deloitte (2012) Deloitte reveals they found that by not doing Operational Readiness effectively or at all, projects risk losing 30% of their capital value. They also state that evidence suggests, in addition to the severe detrimental impact on capex and initial operational capacity, ongoing operations and maintenance costs over an asset’s lifecycle are typically 1 – 2% higher, year-on-year and for the entire life of the asset, where operational readiness was not sufficiently achieved at the outset.
On the other hand, the positive impacts of developing and implementing an effective Operational Readiness strategy will include:
- Improved Customer Satisfaction – Irrespective of the industry, prioritising customer satisfaction is paramount.
- Improved Reputation – a good reputation, can drive share price and effect revenue generation through customer choice.
- Improved revenue from operations and starting assets on time (as displayed in the OR curve) will positively impact the revenue stream and the return on investment.
- Improved safety –Within any sector if you plan out your risk mitigation strategies then then there is less chance of an incident occurring.
- By implementing continuous improvement practices and enhancing maintenance and operational efficiencies, the business achieves cost reductions in its operations.
Utilising a well-structured framework such as the EnterpriseIS Operational Readiness Framework outlined below can contribute to a successful Go-Live.
The Operational Readiness framework supports every phase of project delivery through clearly defined elements. We apply these elements proactively to develop and strengthen the capability of your people, equipment, and systems. For example, during the construction of a new asset, the work management process often requires focused attention to ensure effective implementation.
Some key components include:
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Creating documented process flowcharts for work management
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Setting up operating and maintenance systems
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Designing and delivering learning and development packages to train new recruits and upskill existing team members
Operational Readiness (OR) should be viewed as a critical investment, not an optional extra. It typically represents 1.5% to 3% of a project’s capital cost during construction. However, ignoring OR can lead to significant revenue losses once operations begin. As we’ve seen in many projects, insufficient readiness can increase annual operations and maintenance costs by 1% to 2% over the asset’s entire lifespan.
In short, Operational Readiness ensures your project goes live with:
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Capable Equipment
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Capable Processes and Systems
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Capable People
Ready to make Operational Readiness work for your project? Talk to the team at Enterprise Improvement Solutions. We’ll help define what success looks like and design a tailored solution to achieve your goals.