VUCA

Volatility, Uncertainty, Complexity, Ambiguity

STOs (Shutdowns, Turnarounds, Outages) are VUCA Environments. So What?

About VUCA Environments

The acronym VUCA is based on the leadership theories of Warren Bennis and Burt Nanus. First used in 1987 to describe the Volatility, Uncertainty, Complexity and Ambiguity of general conditions and situations, it was adopted by the U.S. Army War College to describe what was perceived as the multilateral world resulting from the end of the Cold War. From 2002 onwards, it was adopted in military education and subsequently in emerging strategic leadership ideas relevant for many types of organizations.
Why is this relevant to organizations today? In What VUCA Really Means for You published in the Harvard Business Review back in 2014, the authors note that “… VUCA conflates four distinct types of challenges that demand four distinct types of responses.” Raising the question whether it is possible to prepare for a VUCA world, the article continues with a guide that defines the characteristics, provides an example and presents the approach to be adopted for each VUCA category, thereby ensuring the appropriate response.

STOs are VUCA Environments

STOs (Shutdowns, Turnarounds, Outages) are a consistent and vital integrated component of site maintenance programs, accounting for a large proportion of their annual budget. Since the origin of STOs, they have gradually grown in both size and complexity. Industry statistics state the STO market encounters a 90% failure rate, with 43% of STOs considered to be grossly exceeding schedule and budget. These statistics indicate that the age-old “tried and tested” project management methods and tools are no longer capable of delivering success.
STOs have unique project characteristics – particularly high complexity, pressure and intensity – with many variables and evolving challenges. These project characteristics differ to traditional projects, and are high-VUCA environments typified by:

Volatility

Rapid, frequent and large-scale changes

Uncertainty

The present is unclear; the future is uncertain

Complexity

Many different and diverse interconnected factors

Ambiguity

The situation can be interpreted in different ways

STO Success Factors

There are five main factors that determine the success of any STO:

Scope

Cost

Schedule

Quality

EHS

Scope

Direct impact on STO cost and schedule. With STO preparations often starting 1-2 years prior to the planned execution, the STO parameters used for determining the scope are only estimates, constantly changing and extremely volatile. During STO execution, as equipment is inspected, scope uncertainty becomes known and STO execution inevitably encounters scope growth. Decisions for inclusion or rejection of discovery scope are impacted by STO constraints – such as labor, materials, plant, schedule and budget – and the long-term effect on the facility and future maintenance program. This requires the STO management team to make rapid and informed decisions and understand the holistic impact, in order to maintain STO success and the long-term integrity and performance of their facility.

Cost

There is a strong correlation between STO cost and the STO scope, schedule and quality. But since cost estimating requires complete and holistic data, cost estimates are often uncertain and unfortunately only realized too late. Furthermore, the calculation and allocation of cost contingencies is a very important factor to determine accurate total STO cost. Such contingencies should be derived from risk analysis and allocated at the activity or work order level, rather than being a singular value calculated as a factor of the total known expenditure. 

Schedule

STO schedules are reliant on scope, constrained by resources, and can have a major impact on quality and cost. Since units are down and not producing products/revenue during an STO, quality schedules are essential to ensure minimum downtime. But STO schedules are highly complex and volatile, because of the sheer magnitude of data involved and the constant changes that require continuous reworking of the schedule and execution plan.

Quality

Quality has a major impact on STO scope and cost. Poor work quality typically requires rework, which in turn increases the scope of the STO and impacts the total cost. And if poor quality is not identified and corrected, it can have much more significant consequences, causing unpredicted downtime or worse.

EHS

EHS can have a major impact on STO cost and schedule. While the protection of personnel, equipment and the environment should always be the primary focus, as extreme VUCA environments STOs pose enormous challenges. At best, an EHS incident will shut down an STO, directly impacting the STO schedule and cost; at worst, it can result in death, damage or irreversible destruction, and involve associated penalties and ongoing reputational damage. Very similar to poor quality, poor EHS is typically the result of a poor schedule and/or inadequate resources, lack of sufficient supervision or adherence to work procedures.

The Impact of VUCA on STO Success Factors

Volatility

Uncertainty

Complexity

Ambiguity

Scope

Multiple stakeholders & found work drive change

Scope only fully understood after opening & inspecting equipment

Many tasks to complete in a very short timeframe, with competing priorities & constraints

Lack of unified view & transparency limit optimization of scope

Cost

Limited time & available data raise cost of inevitable changes

With multiple unknowns & changing scope, cost uncertainty is high

Inefficiencies associated with poor ability to manage complexity raise cost

Ambiguous scope & contractor unfamiliarity result in greater contingency and higher estimates

Schedule

Directly impacted by scope changes & limited ability to identify most effective use of resources

Lack of real-time visibility & poor agility related to re-scheduling decisions

Many interdependent tasks require harmonious operation of labor, material & equipment for successful execution

Delayed/absent field data & historical analysis result in outdated &/or inaccurate schedule, & reliance on historical estimates & excessive buffers

Quality

Quality is impacted by time and cost pressures, as well as contractor familiarity

Challenges enforcing accountability & lack of transparency reduce quality

Complex activities require multiple crafts & contractors, generating ownership & coordination issues that reduce overall quality

Poorly communicated quality standards and expectations result in highly variable results and rework

EHS

Rapidly changing work environments are inherently dangerous

Assumptions, poor controls & lack of accountability can create EHS risks

Time pressures, inadequate resources & craft-to-craft dependencies can lead to serious EHS incidents

Unfamiliarity & poorly documented processes & procedures generate reliance on “tribal knowledge” & risks

The Impact of VUCA on STO Success Factors

Scope

Volatility

Multiple stakeholders & found work drive change

Uncertainty

Scope only fully understood after opening & inspecting equipment

Complexity

Many tasks to complete in a very short timeframe, with competing priorities & constraints

Ambiguity

Lack of unified view & transparency limit optimization of scope

Cost

Volatility

Limited time & available data raise cost of inevitable changes

Uncertainty

With multiple unknowns & changing scope, cost uncertainty is high

Complexity

Inefficiencies associated with poor ability to manage complexity raise cost

Ambiguity

Ambiguous scope & contractor unfamiliarity result in greater contingency and higher estimates

Schedule

Volatility

Directly impacted by scope changes & limited ability to identify most effective use of resources

Uncertainty

Lack of real-time visibility & poor agility related to re-scheduling decisions

Complexity

Many interdependent tasks require harmonious operation of labor, material & equipment for successful execution

Ambiguity

Delayed/absent field data & historical analysis result in outdated &/or inaccurate schedule, & reliance on historical estimates & excessive buffers

Quality

Volatility

Quality is impacted by time and cost pressures, as well as contractor familiarity

Uncertainty

Challenges enforcing accountability & lack of transparency reduce quality

Complexity

Complex activities require multiple crafts & contractors, generating ownership & coordination issues that reduce overall quality

Ambiguity

Poorly communicated quality standards and expectations result in highly variable results and rework

EHS

Volatility

Rapidly changing work environments are inherently dangerous

Uncertainty

Assumptions, poor controls & lack of accountability can create EHS risks

Complexity

Time pressures, inadequate resources & craft-to-craft dependencies can lead to serious EHS incidents

Ambiguity

Unfamiliarity & poorly documented processes & procedures generate reliance on “tribal knowledge” & risks

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