Key points
The economic uncertainty brought about by COVID-19 is stressing an already beleaguered engineering, procurement and construction (EPC) industry. Pre-COVID, EPCs were already confronting a number of big challenges, including a perceived commoditisation of their services, regular cost and schedule overruns, risky lump sum projects and average net margins of less than two percent.
Although EPC firms are already cutting costs to rebound from the pandemic, if they are to overcome these longer-term adverse trends, they must accelerate digitalisation. Get this right and they will have the opportunity to drive up profitability and move into new service areas.
Putting a plan in place
Today, we can see signs that digitalisation will pick up speed. Two-thirds of construction industry respondents to a recent survey from McKinsey, The Next Normal in Construction, believe that the COVID-19 crisis will accelerate industry transformation, and half have already raised investment in line with the shifts.
Common elements of an EPC firm’s digitalisation initiatives can be divided into four key areas: data centricity, technology consolidation, automation of data flows, and enablement of digital twin services. In terms of data centricity, there is a move from document to data-centric workflows for the creation, management and sharing of engineering data.
This means less reliance on documents to store and share information. It means breaking down common deliverables into the data contained in those documents and making it more generally available for review and use. In addition, managing changes and handing off to downstream participants is easier and faster.
The second key area is technology consolidation. The driver here is a push to consolidate and simplify technology platforms, apps, and software to reduce complexity and eliminate redundancy. Most engineering departments have over 150 unique pieces of software and technology in use. From solution-level applications to tier one suppliers to homegrown applications and small niche tools, it’s often a “bird’s nest” of technology with little hope of connecting applications and automating data flows.
By standardising and strategic reliance on key tier one software providers, eliminating redundancies, and using stricter criteria for support of smaller, niche apps, CIOs and heads of engineering can simplify the landscape of software they rely on.
Automation and re-use of data comprise the third area of focus. There is an opportunity here for EPCs to connect applications and data sources; automate information flows and re-use data across the EPC process phases. Once the portfolio of software is rationalised and consolidated, the work of integrating the remaining apps gets underway.
The fourth priority area is leveraging digital information for additional value-added services from creation and maintenance of digital twins. EPCs should be looking at leveraging digital engineering and operating data to provide value-adding digital twin-based services during operations. The same engineering data used to design and build the plant can be used to enhance start-up, training and operations as well, while providing needed additional and diverse revenues for EPCs.
The Digital Twin
Digital project information enables the creation and delivery of true digital twins that can be used to support delivery of these new services. Digital twins of the physical asset and its operating conditions asset are a marriage of digital representation of physical equipment data and the information about the processes occurring within that physical equipment.
In a sense, a digital twin is an evolving digital profile of the historical, current, and future behaviour of a physical object or process that helps optimise business performance. The digital twin can be viewed through three lenses.
The Plant Digital Twin provides equipment and process models of the plant, along with relevant costing data. It is typically used for plant design, debottlenecking, and revamping, as well as tuning operation of the asset during operations and maintenance. It is deployed offline and online and calibrated to plant operating conditions through autonomous model tuning.
The Operational Excellence Digital Twin supports plant operations, from a business level to a control level. These digital twins inform business decisions such as crude selections and products trading, as well as technical decision-making and optimisation of quality, throughput, energy use, emissions compliance and safety.
Finally, the Operational Integrity Digital Twin provides guidance on decisions around prescriptive maintenance, offering real-time recommendations to maximise uptime, adjust production to minimise environmental impacts, mitigate production losses, and prioritise safety. In addition, quality and risk assessments provide a future view of equipment and asset health, risk profiles and root causes of failures to improve uptime and operational integrity.
Digitalisation Drives Long-Term Benefits
Prior to 2020, most EPCs were already embracing initiatives to digitalise areas of their businesses. With uncertain market conditions likely to continue, digitalisation initiatives are accelerating and will change the way EPCs bid and execute project work; handover projects to their customers and continue to support those projects during their operating lifespan. Digitalisation also enables closer collaboration with owners that can drive new value for the ecosystem while enhancing the quality and sustainability of the asset.
The acceleration of digitalisation initiatives will fundamentally change the way EPCs bid and execute project work – and ultimately the way they hand over and then continue to offer support throughout each project’s lifespan, providing assets that run faster, greener, more safely and for longer.
