Hazenberg 20090527 Kennisdagen Presentatie Versie Final1 B

Selection and decision-making criteria for a Distributed Control

Systems in the process industry

Willem D. HazenbergWillem D. HazenbergSenior Process Control Consultant Stork Industry ServiceSenior Process Control Consultant Stork Industry Service

MBA Researcher Newport International UniversityMBA Researcher Newport International University

InhoudInhoud Intro & Framework Main objectives – Study and research questions Research project methodologieResearch project methodologie Customer Value PropositionCustomer Value Proposition Methodic: Multi attribute utility theoryMethodic: Multi attribute utility theory Main- and Sub sectionsMain- and Sub sections Big- Short- Final listBig- Short- Final list Business reasonBusiness reason Economic Profile (EP)Economic Profile (EP) Conclusions (Dutch)Conclusions (Dutch) More info – next stepsMore info – next steps

At Controls Manufacturing At Controls Manufacturing Community List Community List

Dear AllDear All Can anyone send me a single page comparison or Can anyone send me a single page comparison or

presentation on PLC Vs DCS as on today's date?presentation on PLC Vs DCS as on today's date? I shall be thankful for your kind inputs.I shall be thankful for your kind inputs. Thanking you,Thanking you, Regards,Regards,(Name removed) Control System Staff Engineer (Name removed) Control System Staff Engineer

Introduction To partial fulfillment of the requirements for

the degree of Master of Business Administration in Information Management at the Newport Business Academy and Newport International University, I decided to work out a thesis proposal with the title “Selection and decision-making criteria for a Distributed Control Systems” in the process industry.

The project framework (1) For the control of the chemical processes in the process

“chemical” industry Distributed Control systems (DCS) are applied. These systems are the heart- and nerve system within these factories.

The choice of DCS for a concern is a matter of strategic

importance. High demands are made to the availability of a DCS and

if the concern made a choice, she is committed to it for a lengthy time. Replacing a DCS is a very valuable matter because of the arisen production loss at a reconstruction for example.

The service costs of a DCS could be a multiple amount of

the initial investment during the life span.

The project framework (2) The process industry in the world for approximately

spends 65 billion dollar per year at the top 50 suppliers on

process control systems (included DCS). (2006 data) The expenses of these investments often amount to more

than 1 million Euro by per system. The selection process generally varies from 12 up to 24

months. At large DCS projects there sometimes are investments of

more than 45 millions Euro. The total expenses, which are involved with the selection

of one investment, amount more than 100,000 Euro per system. To earn an order, the marketing/ sale expenses generally are more than 50.000 Euro at a supplier.

The project framework (3)

Local employees of the establishments are involved frequently in the choice for a system. Because of the fact that this investment only takes place every 10-17 years, they are lacked from experience and methods to be able to take this kind of decisions. The consequence is that the choice for a certain system is not always univocal at this moment and the relation between a business case, a chosen solution, and the selection process isn’t always there. This study has to contribute that we make the choice of a system in a more univocal way and the decision-making becomes more

transparently.

Purchasing a DCS systemPurchasing a DCS system

PoliticPoliticss

ISO With First Draft Of Competency ModelISO With First Draft Of Competency Model

Main objectives

The goals of this research is:

The improvement of model-based consideration concerning a selection of a new distributed control system (DCS), by making an analysis of selected criteria within the “chemical” industry to choose a DCS and to establish an investment/ selection model with these insights/ ideas.

So that future investment can be bought faster and the decision-making will be more transparent.

Study Define the core selection criteria and their priorities

for the purchase of a Distributed Control system (DCS) in the chemical industry and a design a decision-making model so that the decision-making for new systems more balanced more consequent and faster can be carried out.

Interview employees who are involved in the purchase decision of DCS within large DCS using companies like Alcoa, Akzo Nobel, BP, Dow, Dupont, Exxon Mobil, DSM, Lyondell, P&G, Sabic, Shell etc.

Also account managers and marketing managers of the chosen DCS have to be involved in this research.

The areas of the study (1)

1. What is the business case of your investment in a new DCS system?

2. What is the reason for this investment (migration, replacement or a new installation) and what are consequences of the choice of system?

3. Which DCS supplier knows the person who is concerned in the company purchase of a new system?

4. What decides whether the DCS supplier comes on the Big List for further evaluation?

5. What decides whether the DCS supplier comes on the Short List for further evaluation?

The areas of the study (2) Which staff functions are involved in the

selection? At which components do these people pay

attention and which priority do they give to the different components?

Is there a difference between the ideas of DCS suppliers and users concerning these criteria?

Research project Research project methodologiemethodologie

•Documents review more then 1000. •Online research (WWW.DCSSELECT.EU)• 167 respondents: End Users Engineers, Purchasing, line management and DCS vendors VP, Service – Account- marketing managers and Business consultants • Across industries in 39 different countries: EMEA, Australia,

America, Far east• Working for organizations ranging from: End Users – SI, Engineers Company’s, DCS vendors• Various industries:

Return Received survey documents End users

Involved OthersInvolved Others

Input up to 23 mei 2009

Organization relation to DCS

End User industry segment

Organization relation to DCS

Job Title respondentJob Title respondent

Reason last DCS projectReason last DCS project

Project Project sizesize

Is your company a Technology trendsetter or Is your company a Technology trendsetter or more a follower?more a follower?

When you buy hardware or software for a When you buy hardware or software for a DCS system you will buy it at?DCS system you will buy it at?

Best Time/Cost

Best Product at Best

Time/Cost C 45,3% / V 36,0%

Best Time/CostPlus High Touch C 4,7% / V 16,0%

Operational Efficiency C 24,4% V 12,0%

CustomerIntimacy C 1,2% / V = 4,0

High Touch and Best Product C

12,8% / 28,0%

BestProduct

EnterpriseResourceTrade-Off

Product Superiority

C 11,6% / V = 4,0%

BestHigh Touch

DCS Customer Value DCS Customer Value PropositionsPropositions

C = End user

V = DCS vendor

AHP-Maut (Analytical Hierarchy Process AHP-Maut (Analytical Hierarchy Process en Multi attribute utility theory) Methodicen Multi attribute utility theory) Methodic

Bron Schmitt D, THE MAUT MACHINE : An Adaptive Recommender System

Result = Score * Weights of importance

•Global variable 1

•Local variable 1

•Local variable 2

•Sub variable 1

•Sub variable 2

•Local Variable 3

De AHP procedureDe AHP procedureStap 1 Constructie van de hiërarchische structuur

Bepaal business - projectdoel•Stel een besluitvormingscommissie samen (DMU)Bepaal de selectiecriteriaBepaal de selectie alternatieven (leveranciers)

Stap 2 Individuele evaluatie van de criteriaDoormiddel van paarsgewijze vergelijking

Stap 3 Individuele evaluatie van de alternatievenDoormiddel van paarsgewijze vergelijking

Stap 4 Integratie van de individuele analyse resultatenDe uitkomst van deze methode is een rangorde van de alternatieven.

DCS Selection main DCS Selection main groupsgroups

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AVG Score main items DCS SelectionAVG Score main items DCS Selection

Business reason Big list selection Business reason Big list selection 20092009

Knock – out criteria Knock – out criteria 40,3%40,3%

Knock – out criteria 12,8%Knock – out criteria 12,8%



Knock – out criteria 13%Knock – out criteria 13%

Knock – out criteria 21%Knock – out criteria 21%



Knock – out criteria> 10% Knock – out criteria> 10% shownshown

…………………………………………………………Knock – out criteria Knock – out criteria 12%12%




Business reason Final selection 2009Business reason Final selection 2009

Knock – out criteria> 10% Knock – out criteria> 10% shownshown

Business case reason Business case reason MigrationMigration

Big listBig list 56,4% Could not maintain old system;56,4% Could not maintain old system; 43,6% Replace obsolete system;43,6% Replace obsolete system; 23,1% Create a more cost-effective process;23,1% Create a more cost-effective process; 23,1% Reduction in Equipment maintenance;23,1% Reduction in Equipment maintenance; 20,5% Removed of manual processes.20,5% Removed of manual processes. Short listShort list 30,8% Could not maintain old system;30,8% Could not maintain old system; 25,6% Replace obsolete system;25,6% Replace obsolete system; 25,6% Efficient workflow;25,6% Efficient workflow; 23,1% Use of advanced control algorithms.23,1% Use of advanced control algorithms. Final listFinal list 33,3% Could not maintain old system;33,3% Could not maintain old system; 25,6% Higher production;25,6% Higher production; 23,1% Improved product Yield;23,1% Improved product Yield; 23,1% Improve loop control;23,1% Improve loop control; 20,5 Replace obsolete system;20,5 Replace obsolete system; 20,5% Use of advanced control algorithms.20,5% Use of advanced control algorithms.

Conclusie: De belangrijkste businesscase redenen is en blijft een obsolete Conclusie: De belangrijkste businesscase redenen is en blijft een obsolete systeem.systeem.

Business case reason new Business case reason new systemsystem

Big listBig list 41,7% Improved automation;41,7% Improved automation; 33,3 % Business information to the plant floor;33,3 % Business information to the plant floor; 33,3% Higher production.33,3% Higher production. Short listShort list 33,3% improved automation;33,3% improved automation; 27,1% Increase real-time decision making;27,1% Increase real-time decision making; 25,0% Use of advanced control algorithms;25,0% Use of advanced control algorithms; 14,6 % Business information to the plant floor;14,6 % Business information to the plant floor; 14,6% Higher production.14,6% Higher production. Final ListFinal List 33,3% Improved automation;33,3% Improved automation; 27,1% Increase real-time decision making;27,1% Increase real-time decision making; 25,0% Use of advanced control algorithms;25,0% Use of advanced control algorithms; 14,6 % Business information to the plant floor;14,6 % Business information to the plant floor; 14,6% Higher production14,6% Higher production..

Conclusie: De belangrijkste businesscase redenen variëren dus Conclusie: De belangrijkste businesscase redenen variëren dus per fase.per fase.

Selection criteria in PhaseSelection criteria in PhaseImportant in phase

0% 20% 40% 60% 80% 100%

Viability

Business case

Vision

Exit cost

Functionality

Interoperability

Technology

Services and Support

Training

Documentation

Initial cost

Implementation process

User experience

On Going cost

Biglist

Shortlist

final list

Most important at biglistMost important at biglistBig listJob - function

Viability

Main Selection item

Barriers to exit costs

Business case guaranty from DCS vendor

Most important at short listMost important at short listShort listJob- function

Main Selection item

User Experion

Implementation process

Functionality

Technology

Interoperability

Vision DCS vendor

Most important at Final listMost important at Final list

Final list

Initial costs

Job - function

Ongoing cost

Main Selection item

Services

Training

Documentation

0% 20% 40% 60% 80% 100%

% end users response

Impor tance of :

Could not maintain old system

Replace obsolete systems

Impr oved Automation

Use of advanced contr ol algor i thms

Impr ove loop contr ol

Impr ovement of pr oduct Qual i ty

Cr eate a mor e cost-eff ective pr ocess

Automatic star t-up and shutdown r outines

Higher pr oduction

Reduction in E quipment Maintenance

Impr oved pr oduct Y ield

Removal of manual pr ocesses

Impr ove r epor ting

Incr ease r eal -time decision making

Need f or a ease to use system

Incr ease in pr ocess knowledge

E ffi cient wor kfl ow

Impr oved use of Raw Mater ials

Incr easing inf or mation f or the wor kf or ce

Impr oved engineer ing data

Reduce wor kf or ce

Reduce complains of customer s

Removal of r edundant pr ocesses

Regulator y r equir ements

business inf or mation to the plant fl oor

Impr ove accounting data

Lar ger pr oduction mix

Mor e people thinking in the big pictur e

Imp

ort

ance

of

Importance for business case

Extreme important

Very important

Important

Somewhat important

Not very important

Not important at all

Importance of Business case Importance of Business case reasonreason

Could not maintain old Could not maintain old systemsystem

Replace obsolete systemReplace obsolete system

Improve Improve AutomationAutomation

Use of advanced control Use of advanced control algorithmsalgorithms

Cost Priorities End Users

0% 20% 40% 60% 80% 100%

Purchase cost

Initial cost

On Going cost

All cost incl. 1 year



All cost incl. >5 year

Exit cost

Priority 1

Priority 2

Priority 3

Priority 4

Priority 5

Priority 6

Priority 7

Priority 8

Economic Profile (EP)Economic Profile (EP)

EP = Life Cycle Benefits (LCB) - Life Cycle Cost EP = Life Cycle Benefits (LCB) - Life Cycle Cost (LCC)(LCC)

LCB = NPV LCB = NPV YEL (Annual (Annual ManufacturingManufacturing Cost savings + Annual Cost savings + Annual Production Increases)Production Increases)

LCC = System Price + Initial Eng. Cost + LCC = System Price + Initial Eng. Cost +

NPV NPV YEL = Annual Eng. Cost + Annual Ops costs + Annual = Annual Eng. Cost + Annual Ops costs + Annual Maint. Maint. costs)costs)

Annual Ops. CostAnnual Ops. Cost• Software licenties (aanschaf, licentiekosten Software licenties (aanschaf, licentiekosten

voor uitbreidingen)voor uitbreidingen)• Onderhoudscontract, remote onderhoudOnderhoudscontract, remote onderhoud• Investeringswaarborgen (lange Investeringswaarborgen (lange

termijnondersteuning, migratie en termijnondersteuning, migratie en softwarebescherming)softwarebescherming)

• Betrouwbaarheid (Hardware, software en Betrouwbaarheid (Hardware, software en configuratie)configuratie)

• Complexiteit (topologie, software, Complexiteit (topologie, software, procedures)procedures)

• Kennis (Training, toepassing, ondersteuning) Kennis (Training, toepassing, ondersteuning) • Down time (van productie installatie)Down time (van productie installatie)• ( het niet kunnen produceren doordat ( het niet kunnen produceren doordat

systeem niet beschikbaar is) systeem niet beschikbaar is) Yel = Years of Expected lifeYel = Years of Expected life

Live cycle CostLive cycle Cost

SysteempriSysteemprijsjs

Initiële Initiële engineerinengineerings- kostengs- kosten

Installatie Installatie kostenkosten

Jaarlijkse Jaarlijkse engineeringsengineerings

kostenkosten

Jaarlijkse Jaarlijkse operationeloperationele kosten e kosten (OPS)(OPS)

Jaarlijkse Jaarlijkse onderhoudsonderhoudskostenkosten

GemiddelGemiddelde de percentagpercentage kosten e kosten eerste eerste

5 jaar5 jaar

23,2%23,2% 28,5%28,5% 16,1%16,1% 9,3%9,3% 7,6%7,6% 15,3%15,3%

Op basis onderzoek 1996 (data 1991-1996) Source ISA

Model Woordward 1997Source: Ken Keiser en Todd Stauffer levenduur DCS componenten 2007 intech

Migration Risk v.s. Migration Risk v.s. BenefitsBenefits

ConclusiesConclusies Migraties en vervangingen van een DCS Migraties en vervangingen van een DCS

systeem worden veel meer gedreven systeem worden veel meer gedreven door de angst voor een obsolete systeem door de angst voor een obsolete systeem dan door de terugverdiencapaciteit en dan door de terugverdiencapaciteit en betere besturing of andere functionele betere besturing of andere functionele mogelijkheden van een nieuw systeem.mogelijkheden van een nieuw systeem. Zoals bijv. zaken zoals Zoals bijv. zaken zoals procesverbeteringen en hogere procesverbeteringen en hogere productie. productie.

Een groot percentage DCS en ICT-Een groot percentage DCS en ICT-projecten haalt niet succesvol de projecten haalt niet succesvol de eindstreep, de businesscase wordt niet eindstreep, de businesscase wordt niet gehaald, de projectduur is langer en gehaald, de projectduur is langer en de kosten zijn hoger als oorspronkelijk de kosten zijn hoger als oorspronkelijk bepaald. De hoofdredenen zijn het bepaald. De hoofdredenen zijn het onvoldoende functioneel te onvoldoende functioneel te specificeren van de projecteisen en specificeren van de projecteisen en tussentijdse wijzigingen.tussentijdse wijzigingen.

Vroegtijdig inspelen op de specificaties geeft Vroegtijdig inspelen op de specificaties geeft maximale manoeuvreerruimte voor maximale manoeuvreerruimte voor besparingen (dan wel minimale kosten voor besparingen (dan wel minimale kosten voor een verandering) daarnaast is het vroegtijdig een verandering) daarnaast is het vroegtijdig bestrekken van inkoop in de specificatiefase bestrekken van inkoop in de specificatiefase een kostenbesparing en zou je hiermee zo een kostenbesparing en zou je hiermee zo vroeg als mogelijk hiermee moeten beginnen. vroeg als mogelijk hiermee moeten beginnen. Doordat er een tekort aan deskundige Doordat er een tekort aan deskundige (interne) mensen is, zal het verstandig zijn (interne) mensen is, zal het verstandig zijn om een externe consultant in te huren om te om een externe consultant in te huren om te helpen in de startfase van het project om helpen in de startfase van het project om deze besparingen ook te realiseren. deze besparingen ook te realiseren.

Uiteindelijk wordt dit de Uiteindelijk wordt dit de keuzekeuze

Dat de beste keuze een systeem is waar de Dat de beste keuze een systeem is waar de sterkten van het systeem overeenkomen met sterkten van het systeem overeenkomen met de behoeftes van de plant. Dat is altijd beter de behoeftes van de plant. Dat is altijd beter dan een systeem dat bijna alles kan, maar de dan een systeem dat bijna alles kan, maar de belangrijke zaken voor de plant niet; belangrijke zaken voor de plant niet;

””Die leverancier te kiezen die voor de Die leverancier te kiezen die voor de onderneming op lange termijn het geringste onderneming op lange termijn het geringste risico vormt. Door het kleinste risico te risico vormt. Door het kleinste risico te combineren met de met de hoogste combineren met de met de hoogste (tevredenheid) score op de selectiecriteria (tevredenheid) score op de selectiecriteria resulteert in een aanbeveling voor die resulteert in een aanbeveling voor die betreffende leverancier”.betreffende leverancier”.

Het zijn de mensen die het doen, zowel in de selectie als in de implementatie en onderhoud, zorgvuldige selectie van de juiste teams is dan ook belangrijker dan veel technische aspecten.

EndEnd Contact information for more informationContact information for more information [email protected]@dcsselect.eu [email protected]@Stork.com

WebsiteWebsite WWW.DCSSELECT.EUWWW.DCSSELECT.EU 1e results 1e results

http://www.dcsselect.eu/RES_ENDUSER/_frame.htmhttp://www.dcsselect.eu/RES_ENDUSER/_frame.htm

Concept ThesisConcept Thesis http://www.dcsselect.eu/Concept%20Thesis.hthttp://www.dcsselect.eu/Concept%20Thesis.ht

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Hazenberg 20090527 Kennisdagen Presentatie Versie Final1 B

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