Industrial plant projects
Elkem's business is based on a continuous focus on technological innovation and ambitious industrial establishments all over the world. Elkem's system for implementing investment projects in our industrial plants ensures predictable realization of tangible benefits without environmental, health or safety (EHS) incidents, at the agreed cost and within schedule.
Implementing major industrial plant or research projects is challenging. Projects are both capital intensive and technically demanding and may involve substantial EHS risks. Elkem has like many other large companies, therefore developed its own project execution model for industrial projects. This project execution model covers both new developments (Greenfield Projects) and redevelopments (Brownfield Projects).
When evaluating the profitability of a new project, two key considerations must be made:
- What capital costs and operating costs will the project require?
- How will the markets for factor input and end-products develop?
Additionally, there are mandatory permits and EHS conditions that are both given the highest priority for the entire lifecycle of the project.
Elkem’s Project Execution Model (EPEM)
Elkem's Project Execution Model (EPEM) for industrial investment projects is a so-called "stage gate" process in which each phase has a beginning, an end and a separate budget, and we never move to the next phase before the project owner has approved that this will be done.
EPEM allows for a development project to be split into five separate phases as shown in the illustration above. Each phase has its own deliverables with both a project owner and a project manager. Within each of the five phases, work will be implemented in accordance with a fixed template of work processes: Initiating, planning, implementation, controlling and closing. Each of the five except for the last phase, i.e. the Operation phase is completed with a decision as to whether or not to proceed.
The initial phase, Business Planning phase, is very important. Here it will be determined whether the project has potential in line with Elkem's long-term strategy. It is not necessarily enough for the project to be financially attractive if it also doesn’t fit with Elkem's strategic direction.
The Business Planning phase must consider the business concept and financing needs, an assessment of market conditions for products and factor input must be performed, the actual production process must be drafted and the basis for making a decision with regards to proceeding to the Scope Development phase must be prepared.
The Scope Development phase will take a closer look at the financial, market and technological directions determined during the Business Planning phase. The production process must be described and structural elements must be designed. For new developments the location will also be selected during this phase of the project. Assessments will also be performed in respect of EHS conditions and how the project can be implemented. The Scope and Development phase will form the basis for deciding whether to initiate the Project Planning phase.
The Project Planning phase will be used to establish detailed descriptions for the development and implementation of the construction project. For larger projects the Project Planning phase will often be performed in consultation with one or more engineering companies. The accuracy requirements in the cost estimate calculations must be narrowed down to -15/+25 percent for Greenfield investments and -10/+15 percent for Brownfield investments.
The accuracy requirements in the cost estimate calculations are based on definitions from AACE (Association for the Advancement of Cost Engineering) and will increase for each of the five phases as the project progresses.
The Detail Engineering and Construction phase is the next step. Before and during construction of any new or modified facilities it is important to establish dialogue with all affected parties. During the construction period contractors and others with varying experience of work in process plants may be employed and it is crucial that the planning and execution of this work adhere with Elkem’s corporate requirements, especially with respect to EHS. The project management will conduct ongoing supervision and deviation control during the construction phase.
When the new or modified facilities has been constructed it must be tested before it is formally taken over by the end user. This work forms part of the Detail Engineering and Construction phase and involves a gradual transition to full production.
The Operations phase is not defined as a separate project phase but covers the work to be performed by the project team in the closing work process. Project completion is pursued in parallel with ramp-up of the or modified facilities’ production by the operations organization and the establishment of stable operation. Project completion covers the administration of guarantees and support for safe ramp-up to full plant capacity.
After taking delivery of the new or modified facilities, the operations organization must operate it with qualified personnel and in accordance with predefined procedures and routines.
Training and measuring results
It is crucial that everyone contributing to a project is familiar with Elkem's methodology for project execution and understands what all the terms mean and applies them in the same way. Elkem therefore arranges several training courses each year, in which participants gain qualifications for work at various levels and for various aspects of our development projects.
Elkem benefits from having a common project execution model for all large industrial projects within the company. Elkem's methodology for project execution is one of the main reasons why most of Elkem's projects are implemented within budget, in accordance with the schedule, with the correct quality and with excellent EHS results.