John Dolenc, a principal consulting engineer in Emerson’s advanced applied technology organization whom you may recall from earlier posts, presented Estimating Benefits from Process Automation at the Emerson Exchange.
John began by discussing what types of activities are performed during a process automation modernization feasibility study. Project justification is one of the most difficult steps to complete.
Start with looking at the plant as a financial asset. Perform a financial balance across a process unit in the same manner as performing a material and energy balance. Capital enters a process unit in the raw materials, net utilities, operating expenses, and maintenance expenses. Value is added within the process unit. Capital flows out in primary and secondary products as well as the waste streams. After identifying the financial streams, identify areas that need improvement and determine whether better process automation can help.
Capital projects are justified by either increasing the revenue of the plant or by reducing the costs to manufacture the products. Revenue may be increased through increasing production capacity (if additional product can be sold), and increasing the yield of more profitable products while reducing lower grade product and waste streams. Look for capacity increases through being able to run closer to constraints by reduced process variability. Can you reduce unproductive time such as grade changeovers, off-spec blending and downtime for cleaning through better process control? Can you reduce cycle time for batch processes by better control of reaction conditions and eliminating wait time for operator actions?
Another method of increasing plant profitability is by working with the marketing and sales force to understand what your customers’ value about your product. Can price be slightly increased if the product consistently meets specification and delivery schedules and emergency production is provided when needed?
Reducing costs are a big area of value creation. Some areas to look for cost reduction opportunities include increasing feedstock yield, reducing energy consumption, better use of direct and indirect labor, and limiting off-spec material, abnormal events, demurrage and maintenance.
These are the opportunities for automation project financial justification. So what are some benefit estimation methods you can employ? John mentioned the best operator method, data reduction method, and percent limit violation as three methods of estimation. The best operator method considers historically identifying key performance indicators at their optimum point. What are the “best operators” doing to make this happen? The key is to look for how to automate these best practices. Your project justification is the difference between operating at the “best operator” condition versus the historical average condition.
John went through an example of looking at batch cycle times, throwing out outliers caused by extenuating circumstances, and digging into the process automation that can be done to move from the average cycle time to the best cycle time.
He discussed the other methods, data reduction method and limit violation methods. With the latter, conceptually the results of the automation project are to reduce overall variability. This means you can run closer to your process or specification limit. This means operating set points can be set closer to these limits, thus reducing costs such as product giveaways and excess energy usage. The presentation includes some of the statistical methods to build your financial justification. John offered a rule of thumb that you would reduce standard deviation by at least 50% by improving overall control performance.
John summarized his presentation with these key points:
- Justification is difficult, but necessary to receive approval for automation projects
- Historical data collection is vital
- Build a base case
- Some “prediction” of results is necessary
