Smart Retrofit Planning for a Hassle-Free Future

Issue 11 and Volume 109.

Major retrofit projects present an array of challenges that can jeopardize the delivery of an operationally sound unit once work is completed. Good planning and early participation by facility owners and management can ensure good results and prevent years of frustration.

By Steve Sanders and David Whitaker, ScottMadden Inc.

The power generation industry will likely be involved in a significant number of large construction projects in the next three to five years. Many of these projects will be complex retrofits involving hundreds of workers and millions of man-hours. Controlling these projects, in terms of schedule, cost, performance and safety, will be a much sought after skill.

Major retrofit projects present an array of challenges that can jeopardize the delivery of an operationally sound unit once work is completed. While plant management is typically not directly responsible for design or construction of the equipment, they should still work closely with the original equipment manufacturers and contractors to ensure good results and prevent years of future frustration.

Retrofit projects, as well as most engineering and construction projects, consist of four broad management tasks: safety; plant outage planning integration; equipment operation and maintenance; and testing, startup and system turnover. Each area offers challenges where plant management can effect a positive outcome through early leadership.


The potential for safety problems on major retrofit project sites is significant. Plant managers face work site congestion, as well as multiple contractors working on simultaneous projects using large equipment that often requires heavy lifts.

Ensuring a safe work site begins at the planning stage. It is important for the plant owner to clearly identify equipment storage, lay-down and staging areas, and create approval processes to gain access to those areas. Establishing storage and transfer areas for demolition material, construction debris and trash is also necessary.

To minimize the impact of multiple safety cultures, construction workers must be actively trained on plant safety. Key aspects should include lock-out/tag-out procedures, fire signals, emergency and all clear signals, and protocol to summon outside emergency services.

It isn’t feasible to continuously monitor contractors’ safety behaviors on large projects, but focusing on the interfaces of plant and contractor work areas can be quite beneficial. A periodic walk-down of areas where the construction site interfaces with operating areas will offer an opportunity to identify and rectify safety hazards.

Over the last decade, the link between a strong safety culture and work quality/productivity has been proven repeatedly. Implementing appropriate behavioral and leading indicator tracking processes at project inception will protect plant personnel as well as improve project quality.

Plant Outage Planning Integration

Among the most powerful tests of any plant’s outage planning process is scheduling planned outages to ensure all necessary maintenance activities are performed, as well as providing construction with the necessary windows to tie-in and test key systems. The outage plan should focus on key construction-operations interface points, such as equipment tie-ins, required equipment movements, setting procedures and testing procedures required for turnover, and performance guarantees. The use of modular construction techniques, which feature larger components to be maneuvered through the plant, accentuates the need for careful outage planning.

Minimizing restrictions and interruptions to daily equipment operations during construction can also be a challenge. A team approach is necessary in the planning stage to ensure maximum plant availability and reliability during construction, including provisions for reacting to forced outages.

Plant leadership is critical to the outage planning integration process – frequent project status reports and schedule adherence should be required. While project cost overruns may or may not directly affect a plant, schedule slippage may result in a plant’s late return to service. Weekly progress curves and earned value calculations (see sidebar) can ensure schedule compliance and prepare for contingencies.

Equipment Operation and Maintenance Planning

Environmental Stewardship

Environmental stewardship begins with input from all project stakeholders to prevent and control unauthorized spills or releases into air, land and water.

During construction planning and execution, all chemical liquids, solids and gases to be used during construction must be identified. While contractors are required to ensure chemicals are properly handled, stored and transported on the plant site, the owner’s plant personnel should look for possible reactions between these chemicals and others normally maintained on-site. The contractor is to provide copies of all Material Safety Data Sheets (MSDS), and keep them in an easily accessible area, such as the maintenance shop or control room.

Secondly, it is important to develop a spill prevention control and containment plan (SPCC), which outlines spill prevention practices, summarizes planned responses to unauthorized spills or releases, and trains contractors on the plan. The protocol should be discussed early with appropriate outside agencies – it will build a team relationship and a proactive environmental culture.

Maintenance Management

New systems and equipment maintenance requirements will certainly alter daily operations. An effective management system should focus on five highly integrated areas: staffing, procedures, maintenance planning, maintenance management system upgrades and tooling (Figure 1).

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Staffing: From day one, plant management should be prepared to assume responsibility for the new asset’s maintenance and upkeep. The first step is to determine additional staffing levels and skill set requirements for maintenance. Then a staffing strategy must be established using in-sourcing (full-time employees) and outsourcing (contractors) to build a staffing model that balances local labor costs, skill set requirements, and bargaining unit agreements associated with maintaining the new equipment. Tightening labor markets for skilled workers should be factored into staffing assumptions. Proactive development of locally based training resources can yield significant benefits in the future.

Procedures: The second major step involves developing maintenance procedures that address preventive, predictive and corrective activities. As previously stated, procedures are critical in the early stages because they serve as the basis for skill-set identification and training. Plant management should be instrumental in the process of identifying, developing and planning the delivery of required procedures training.

Planning: Maintenance planning involves both short- and long-term planning. Short-term planning is addressed by developing preventive maintenance (PM) and predictive maintenance (PdM) activities. PM tasks can include lubrication, adjustment, inspections, calibration, filter changes and cleanings. PdM tasks can include vibration monitoring, thermographic scans, performance testing, oil analysis and acoustical emissions monitoring. The basis for PM and PdM maintenance tasks typically originate from manufacturer recommendations that are modified by plant personnel based on specific equipment applications, projected duty cycles and previous experience.

Long-term plans should include a 10- to 20-year maintenance plan that addresses anticipated, planned or structured shutdowns/outages to correct performance degradations and replace critical components that cannot be accomplished with the equipment in service or on hot stand-by.

Information Management System Upgrades: The PM, PdM and long-term tasks are documented in the plant’s automated maintenance management system (MMS) or work management system in the form of routes. Routes may be established based on performing all PM tasks associated with a piece of equipment at a given time or performing a single PM task on multiple pieces of equipment sequentially. Advantages and disadvantages exist in either approach, so the accepted approach is typically a plant preference.

From an information management system perspective, maintenance personnel should revise the MMS to reflect new systems and equipment by adding new equipment codes/designations, equipment nomenclature codes, work breakdown structures, and equipment charge capture codes or account numbers. This step should be addressed early in the project to ensure it isn’t short-changed or skipped because it can result in significantly higher costs to implement later.

Tooling: Finally, any specialized tools required to perform new maintenance tasks should be requisitioned early so the plant’s maintenance program can assume full responsibility for new equipment and systems.

Materials Management

Closely linked to maintenance management is materials management, which includes inventory management and warehouse management.

Successful inventory management ensures that adequate spare parts, consumable goods and key spares are available to support the new systems’ maintenance and operation. To accomplish this, the owner’s maintenance and materials management groups should work closely with the design organization to determine appropriate target inventory levels to support the new systems. The same team should also identify equipment and systems to be removed from service and determine what obsolete parts and materials may be removed for salvage and write-off, revising the inventory database accordingly.

Working with the equipment manufacturers, the team should review new spare parts requirement recommendations and establish stocking levels based on specific equipment application, projected duty cycles and previous experience. Maintenance and materials management organizations should assign responsibility for funding and requisitioning necessary inventory well in advance of operations. They also should revise the materials database accordingly and develop a bill of materials (BOM) that links the work management system to the materials management system.

Warehouse management involves the day-to-day operation of storerooms and facilities. Sometimes new equipment requires more support personnel. If so, a staffing strategy is needed.

Storage is a second consideration. If adequate space is not available to ensure safe and timely retrieval of spare parts, additional space or vertical storage racks may be needed. Personnel also must apply proper storage techniques to protect material integrity and functionality. These preservation activities, however, are traditionally incorporated into preventive maintenance tasks performed by storeroom maintenance.

In multi-unit fleets, the opportunity to share inventory presents a genuine opportunity to control costs if the materials and warehouse management systems and processes are up to the task.


Plant operations staff will face issues similar to those of the maintenance organization, including increased staffing, training, procedure development and recurring tasks, such as those performed during routine operator walk-down and equipment surveillance (or operator rounds).

The plant organization must prepare to fully operate the new systems at turnover. Like maintenance, the operations department must determine the staffing levels required to perform additional operations. Unlike maintenance, however, any additional positions are likely to be full-time, permanent employees based on a total plant staffing strategy.

Due to the nature of rotational assignments, operational training must be developed for and delivered to the entire operations organization. This training should be based on operating procedures developed specifically for the new assets and it should address specific equipment start-up and shutdown cycles, including equipment operation integration during plant start-up, shutdown and key excursion events.

Operating procedures must be developed, outlining the start-up and shutdown process and system cycles including checklists to clarify expectations and provide a means to compare shift-to-shift surveillances and operating practices. The procedures and checklists will also serve – like in other areas – for training development.

A key responsibility of most operating organizations is equipment protection and clearance through lockout/tagout procedures, also known as LOTO. As such, operations management should update its procedures to reflect the additional equipment. In recent years, many generating plants have installed automated or computerized LOTO systems. The equipment databases in these systems will need to include new equipment names and nomenclature, location of locking/tagging points and a revised LOTO request standard.

Plant operations staff must also assume responsibility for the identification, inventory management, procurement and funding for chemicals, reagents and consumable supplies associated with the new equipment’s process operations. They also must assume responsibility for procurement and funding to handle, store, reclaim, process and transport by-products such as fly ash, bottom ash and gypsum.

Equipment Start-up Testing and Turnovers

It is important to plan and schedule equipment start-up testing and turnover programs during preconstruction to ensure they are safe, effective and efficient. Program development, review and approval should be identified as key deliverables in the preconstruction milestone schedule. Start-up testing schedules and required resources should be aligned with construction schedules, turnover dates and plant operations. The staff also should consider coordinating the schedules with power trading operations to ensure the most economic use of fuel and generated power.

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Start-up testing typically involves a five-step process: equipment pre-testing, system functional testing, integrated system functional testing, performance testing, and system turnover (Figure 2). It’s particularly important for plant personnel to be intimately involved in the final three steps. The owner’s plant personnel should perform the functional testing by introducing liquids, gases, steam and electricity into the new equipment. Start-up testing may require permits, operating variances and special considerations from regulatory agencies and jurisdictional boards.

Plant personnel are best qualified to serve as liaisons between the construction department and these outside agencies. They should ensure that testing procedures define testing protocol, roles and responsibilities (between themselves and construction personnel), and the acceptance criteria. In addition, the plant should monitor maintenance, tracking, control and prioritization of open issues or punch-list items that could affect long-term, reliable generating unit operations.

Managing the warranty programs for the new equipment is related to performance guarantee testing. A significant risk management opportunity, the orderly and complete turnover of drawings, equipment manuals and acceptance records should be part of the integrated project plan. Similarly, the work management system should be loaded with key inspection and testing dates to take full advantage of equipment warranty provisions.


Steve Sanders is a principal with ScottMadden Inc. in Atlanta, Ga. David Whitaker is a director with ScottMadden Inc. in Raleigh, N.C.

Earned Value

As construction proceeds and plant staffs work to integrate equipment into their work management systems and plan for turnover and operations, they may encounter the term “earned value” when reviewing project status. In a nutshell, earned value calculations relate planned and actual project progress to planned and actual spending. Earned value is an answer to the question, “Up to this point, has the project made the planned progress for the money that has been spent?”

To calculate earned value, two components are required. While the components may have different names depending on the procedure used to calculate the values, they are conceptually identical:

  • Work Breakdown Structure (WBS) – The WBS represents a complete project scope divided into discrete work packages that can be scheduled and assigned dollar values for the work to be performed.
  • Master Project Schedule – The Master Project Schedule includes all activities and resources (budgeted cost) required to implement the work outlined in the WBS.

As work is performed, it is tracked against the WBS by both the amount of work completed by the WBS component and the cost to complete the work by the WBS component. Comparisons can then be made between the budgeted and actual cost to perform work in the WBS. In addition, at any point in the schedule, comparisons can be made between the actual cumulative cost incurred to perform the work and the planned cumulative cost to perform the work.

Based on this information, a wide variety of calculations can be made to assess various aspects of project progress. In the following example, two of those calculations are reviewed: the schedule performance index (SPI) and the cost performance index (CPI). With these two values, plant management can quickly assess the project’s budget and schedule performance and potential for cost and/or schedule overrun.

Assume a project with a WBS that represents $5 million of work to be performed and a schedule of 20 weeks. For simplicity, assume the WBS spreads the budgeted value of the work evenly over the schedule.

At the conclusion of week seven, an earned value calculation is made with the following values:

  • Total planned value of the work: $5 million (the budget)
  • Total schedule duration: 20 weeks (the length of the schedule)
  • Number of weeks into the planned schedule: seven (the schedule “burn”)
  • Planned value of work scheduled: $5 million/20 x 7 = $1.75 million (the budgeted value of the work that was planned to be completed through week seven)
  • Planned value of actual work performed: $1.25 million (the budgeted value of the work that was actually performed through week seven)
  • Actual cost of actual work performed: $1.5 million (the actual cost of the actual work performed through week seven)

The table puts it all together.

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Based on industry experience with earned value and beginning at about 20 percent of planned project completion, the high and low final cost requirements provide statistically significant estimates of final project costs. Where costs are significantly exceeding budgets, plant management needs to pay careful attention to schedule performance to ensure an on-time project completion despite the budget challenges.

Further information about earned value is available in Earned Value Project Management, 2nd ed., Q. W. Fleming and J. M. Koppelman, Project Management Institute, 2000. Essentials of Project Control, J. K. Pinto and J. W. Trailer, eds., Project Management Institute, 1999.