How benchmarking improves LNG terminal asset management performance: A case study from Europe
Article by Dr Brad Wood, Executive Vice President, Juran Benchmarking, UK
A group of European LNG receiving terminal operators have been working together as a consortium on a recurring annual basis since 2012 to benchmark their asset management and operational performance and learn from leading practices. The consortium is facilitated by Juran Benchmarking, who have been providing tailored benchmarking services to the oil and gas industry since 1995. Since its inception, the consortium has worked together annually to collaborate under a mutual confidentiality agreement.
The group was established with the objective of developing a suite of KPIs that would provide them with the foundation to compare their performance in terms of operational efficiency and effectiveness. Working collaboratively under a mutual confidentiality agreement and facilitated by a third party, the participating terminal operators were able to share and analyse data and in so doing were able to identify and quantify gaps in their performance, understand their strengths and weaknesses compared to their peers and also learning from leading practices within the group.
The scope of the benchmarking included a highly detailed analysis of the efficiency (costs and manning levels) and effectiveness (quality of outputs including safety, reliability and integrity). Costs and manpower time for each terminal are analysed for each performance-driving area including:
- Functional Support Services
- Energy Consumption
Effectiveness is determined by a suite of KPIs reflecting the quality of outputs, including amongst others health, safety and environment, availability, reliability, integrity and maintenance management.
Ensuring like for like comparisons:
A unique innovative methodology was incorporated that enabled like for like comparisons of costs and manpower levels between terminals of differing size and design. The Juran Complexity Factor®, which is based upon the technical complexity of a terminal and the corresponding effort required to operate and maintain it. The Complexity Factor has an excellent correlation with both operational expenditure and manpower time and therefore provides a robust methodology for enabling like for like comparisons of different terminals.
More than just KPIs:
The activities of the group also extended far beyond standard comparisons of performance using KPIs, applying alternative approaches to examine difference in working practices, establishing a platform for sharing leading practices, and conducting targeted surveys to address, in real-time, current challenges being faced.
The participating terminals used the benchmarking to support them as they strive to rise to the increasing operating challenges. The comparative measurement of efficiency conducted in the benchmarking enabled the identification of cost gaps and savings potential for each participating terminal, should they improve their performance to match that of the leading companies. This resulted in a significant decrease in total operational expenditure of 11%.
The benchmarking indicated that expenditure on contractors at one terminal was particularly high. They were able to realise significant cost savings by negotiating lower hourly rates and increasing utilisation of their own staff wherever possible.
Another terminal discovered that the manpower time spent on Operations was well above many of the leading terminals. They identified more than 20 maintenance tasks that could be conducted by Operations staff which realised a cost saving and also more effective completion of the tasks.
A third terminal achieved a 14% improvement in manpower productivity over a 4 year period through the introduction of a totally revised maintenance strategy and organisation centred around and asset management philosophy.
The activities of this benchmarking consortium enabled the participating operators to rise to the challenges faced by realising significant improvements in performance through the delivery of innovations and leading practices.