An era of lost progress
The collapse of Lehman Brothers on September 15, 2008 was the catalyst for more than a decade of lost progress for global infrastructure projects. Post GFC there was a recovery of sorts which saw oil prices spike 2010 through to 2014, and followed soon after with another economic crash. To compound this, the stalling of major economies like China and India saw lower commodity prices through the rest of the decade and then the final “nail in the coffin”, COVID-19.
Overall during this period, owners, operators and investors tempered plans for major projects and final investment decisions were paused. The construction sector was perhaps hardest hit. Employing about 7% of the global working-age population and with annual capital spend of about USD10 trillion, construction activities slowed dramatically.
The need for new infrastructure, however, has not waned, fueled by a growing world population and demand for higher standards of living. The last 13 years has created an immense backlog of requirements for energy, mining, transport and community based projects. Recent estimates indicate there are more than 3600 projects with a capital spend of more than USD1 billion announced – USD14 trillion in capital spend. This on top of the cost of modernizing existing infrastructure to keep pace.
Radical change – reduce costs and increase productivity
The problem now faced by asset owners is how to deliver projects more efficiently and with significant CAPEX/OPEX reductions. Using historical performance as an indicator does not however provide confidence. For example, McKinsey assessed over 500 major capital projects with a capital spend of more than USD 1 billion and determined that on average there is a typical cost overspend of about 37% and schedule overrun of 53%.
Radical changes are required to reduce costs and improve efficiency throughout the entire value chain from capital expenditures through to operations. Improvements are required in project planning, execution, commissioning, handover and operations – cradle to grave.
The challenge is hampered by a historical lack of productivity improvement in many engineering sectors. For example, over the last two decades the construction industry has registered virtually nil productivity improvement versus manufacturing which has grown steadily. One of the reasons attributed is the lack of digitization.
What is important about inspection?
The premium placed on a “higher standard of living” is why inspection is important. The need to ensure continuous supply, uninterrupted utilities, cheaper and higher quality products all drive the requirement for quality control, which is the essence of inspection. To understand the condition of an asset, parameterize its issues or defects, predict future performance and importantly “when will it fail?” These are the drivers of why we perform inspections.
From a major capital project perspective, inspection is critical throughout the life of the project with many participants and perspectives.
The EPC (“Engineer Procure Construct”) Perspective
EPC companies are responsible for the delivery of projects, with activities including design, procurement, construction to commissioning and then ultimately hand-over to the owner of the asset. Throughout this process verification takes a leading role with inspection teams performing a range of tasks to ensure the quality of build and adherence to the specification. The outcomes of the various inspection activities are compiled into turnover packages and handed over to the operator at project completion. For major capital projects, the volume of as-built data compiled is significant and the handover process complicated. EPCs rely on a range of systems to manage projects such as BIM platforms, lifecycle document repositories and completions management systems. In most cases, these systems are office based leaving a disconnect and paper-based “silo” to the field teams performing the actual tasks of verification. This is an example of a lack of digitalization with a direct impact on efficiency for inspection management.
The Service Provider Perspective
Engineering services companies provide expertise throughout all phases of projects. This includes provision of inspection teams for both quality assurance and compliance. Compliance inspections may be mandated by a standard, for example ensuring all electrical equipment in hazardous areas are safe and well maintained. The service provider will supply the expertise and an engineering framework for the 3rd party certification process and (similar to the EPC) hand over a paper trail of evidence to the operator. Service providers may need to work within the framework required by their end-client and imposing their own digital system may not be pragmatic, however the lack of digitalization is evident.
The Operator Perspective
The operator is typically the owner of the infrastructure. After handover from the EPC (contractor), operations commence whereby regular maintenance and inspection will begin and run for the lifetime of the asset. Preventative maintenance routines, compliance inspection, asset integrity, operator rounds and many other types of condition monitoring form part of a complicated schedule, typically managed by a Computerized Maintenance Management System (CMMS). The CMMS is a digital platform that is focused on the scheduling and resourcing of these tasks (work order management). They are normally poor systems for monitoring condition and inspection data, however. Furthermore in most cases the CMMS does not extend beyond the “office”. As per the EPC and the service provider, the lack of integrated digital systems connecting field teams is extremely common. Yet another example of a lack of digitalization.
The Regulator Perspective
Regulators are national bodies that provide independent and expert oversight for a range of issues such as health & safety, environment and asset integrity. Their role is to assess risk management plans, inspect and monitor compliance, investigate to verify and learn from non-compliances. They may also take enforcement action to correct and deter non-compliances. Predominantly they will review the outcomes of inspection performed by others, for example reviewing a hazardous area dossier to ensure the operator is managing ignition risk in a safe and compliant manner. In many cases, the actual inspection data to confirm compliance or to understand the resolution of faults is extremely hard to locate. This is a symptom of the lack of digitalization as noted in the perspectives above.
The case for digital inspection
Anyone who receives email marketing from the likes of BCG, McKinsey and Gartner will know that the drive to digitalization is gaining momentum. At Inspectivity we see that in demand for our solutions and given the “perspectives” above, we see this as critical to ensure that inspection aspects of projects can contribute to more successful outcomes.
Manual tasks associated with paper-based inspection protocols account for about 50 to 80% of the consumed man-hours. Pre-inspection effort is required to source previous inspection history, asset data, manufacturer certification, engineering specifications and drawings. This “data mining” exercise is normally across multiple repositories, some digital, others paper-based. There are also tasks to determine the correct type of inspection protocol to perform, determine the required tools and test equipment, and also to ensure the calibration requirements are met for any test equipment. In many cases documentation simply cannot be found which impacts the quality of the assessment that the inspector will make later with the inspection.
During the field work, the inspector is disconnected from digital systems, with no real time access to background information. The inspector is required to make an engineering assessment whilst typically logging results and recording media in an unstructured (paper-based) way. This is slow and will require double handling of the data. The lack of historical record available to them at the point of an inspection also can lead to a poorer assessment being made.
The average CMMS is not well equipped for managing asset condition information. When we talk to inspection teams about the “source of truth” for asset, inspection and fault data, the ERP system is normally identified. But upon digging further, it becomes apparent that it is just a façade with links to volumes of PDF inspection documentation which is simply not parse-able. The expended man-hours by operators to assess, report and identify actionable insights is very significant indeed, if possible at all.
Data is the foundation for automation, trending and prediction. Risk based inspection (RBI) systems such as GE’s APM platform offer excellent solutions to support planning of future maintenance routines however they are reliant on obtaining field inspection data. We often see these systems underpinned by paper-based inspection reporting using subjective approaches. The net result is that the RBI predictions are not as accurate as they should be and the effort to “double handle” data into these systems is intensive. The RBI system should incorporate mobility components in order to be an effective source of truth for asset integrity and maintenance.
As we move into a “new normal” and (hopefully) exit a state of pandemic, companies have been forced to adapt to working remotely and improving their approach to collaboration. In many cases this has been leveraged with the use of cloud computing and of course productivity tools.
Inspection projects are quite often challenged by remote locations, global teams and project phases that often occur in different locations. For example, engineering teams based in one place, EPCs developing the modules for mega projects in a range of different countries, vendors from all over the world etc. Offshore operators also often face limitations on offshore site team sizes and from a safety perspective, keeping site teams to a minimum is preferred. With traditional approaches to inspection it is difficult to collaborate well and maintain project momentum. The process of reviews, clarifications, planning and scheduling is hard to imagine without cloud computing and productivity tools.
The safety imperative follows on from the need for collaborative workflows. If an inspector performing a reticulation survey for a gas utility company discovers a leak, they must alert the safety officer without delay and provide all the information, location photos (ie. where is the meter), “when and by whom” etc. all without delay. With a paper inspection process this means halting the survey, telephoning the company’s “leaks hotline” and then capturing the paper documentation for later (read “end of day”) submission. Meanwhile the “leaks” team, responsible for the resolution of the issue do not have the full picture until paper reports are submitted. Whilst safety issues can still be prevented, the slow closure of the problem means services likely remain impacted.
One of Inspectivity’s Australian clients is a large blue-chip operator with multiple business units across chemical manufacture, farming services and natural gas distribution sectors. They are a multi-disciplinary engineering operation managing critical infrastructure. With this engagement the client was seeking a standardized approach to inspection across all disciplines. Prior to the digital transition, each business unit and / or discrete team was a separate paper-based silo, working to a shared CMMS. Work order management was consistent but the approach to inspection data management not at all. The implementation of an integrated digital inspection platform ensured a disciplined and uniform approach to inspection regardless of whether the inspector was assessing an electrical item, walking a piping loop, assessing corroded handrails and ladders, or doing an operator round. One collaborative system for all teams yet bespoke forms for each niche use case.
Implementation Best Practices and Considerations
In general, moving to digital adoption is a straightforward business case and this will improve the bottom line for most companies. There are, however, challenges that need to be addressed to ensure success.
So how can companies accelerate their digital transformation to supercharge inspection outcomes?
- Strategy and leadership commitment – A successful digital transformation requires senior leadership engagement and alignment. On top of that, clear communication to often-overlooked middle-management tiers. It is essential to get the buy-in and support to those directly engaging with digital solution end-users.
- High caliber implementation team – Ensure you create a digital transformation team with the talent and resources to drive the program forward. Bring in engineering resources with a close understanding of the data requirements and field activities, business process specialists to design successful systems integration and of course vendor representation to drive best practice implementation of the productivity tools.
- Low-hanging fruit – Companies should identify, prioritize, and implement important use cases but also target “low hanging fruit”. This lets clients create value quickly while demonstrating what digital technologies and ways of working can do for the business.
- Agile processes – Digital inspection innovation is feedback driven. You start with a proof of concept (form and asset hierarchy) and validate the general approach (workflows), launch in production with a minimum viable product (MVP) and test. Engage the team frequently and push for high quality feedback so that the process, forms and data can “evolve” quickly.
- MVP first and integrate second – We encourage our clients to validate a digital inspection use case first and then integrate work order and corrective actions second. Integration requires a strong set of business requirements before we can “couple” systems. Requirements need to be built on the foundation of engaged feedback from users.
- Plan for change – Digital inspection formalizes the approach and brings discipline and control to previously ad hoc processes. With this you need to plan for change. This includes how to communicate the message of digital transformation, the management of operational aspects such as user administration and also how use case change requests are work-flowed. Training needs to be a balance or “just in time” and certification style, and at the outset, start to position champions throughout business units.
There will be bumps along the journey but we feel there is an urgency to transform engineering inspection as part of overall digital transformation in engineering companies. We need to ensure companies can support the wave of infrastructure demand that is coming.
About the Author
Paul Eddison is a civil engineer, software specialist and Co-Founder of Inspectivity, a SaaS B2B provider of web and mobile inspection management software.