Sharing: Why your boss should want to replace your aging DCS

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by Paul Studebaker

You see a lot of issues with your aging–but still functional–DCS, but when you tell your boss that it ought to be replaced, he says, “It’s still working. The plant is meeting expectations and capital is tight, why would I want to replace it?”

That’s when you want to be acquainted with folks like John Dolenc, P.E., principal consulting engineer, modernization, and Dr. Douglas White, director, refining solutions, both at Emerson Process Management, who brought their intimate knowledge of how plant financial performance is measured, the role of process control in improving it, and insights into the minds of bean-counters to bear on this question in their Thursday afternoon session at Emerson Exchange.

First up is an understanding of how a modern control system differs from the old one in your plant. “You typically have a lot of PLCs out there – some are integrated, many are standalone,” Dolenc said. “You may still even have panel boards with pneumatic controllers.” Many loops are in manual control, and trips and outages are holding down your utilization KPIs.

Nowadays, most field devices are HART-capable or Foundation Fieldbus, connected through wired and wireless networks with electronic marshalling. Control and operator interfaces are “easy to implement and use,” Dolenc said. Condition monitoring, safety, diagnostics and advanced control features allow you to “track performance that can keep you running at that optimal level.” Information is delivered to higher-level systems to serve ERP and reporting dashboards and applications.

These capabilities deliver quantifiable financial benefits in process unit performance, production performance management, maintenance costs, logistics, safety and environmental metrics, and regulatory and fiscal reporting. Once you know where to look, identifying and quantifying more of the ways a modern system can increase revenue and reduce costs, such as reducing process variability, improving energy efficiency, raising availability and cutting maintenance expenses will come naturally to you as a process control engineer.

But to make sure you can answer the financial guys, you need a comprehensive understanding of costs. Here again, modern systems offer significant cost reduction potential. Their hardware and software costs are more than made up by savings on engineering, installation and start-up. “The best companies take only 70% of the industry average time to bring a business idea into production,” said Dolenc, and modern systems are one way they do it.

Don’t forget the additional equipment–better pumps and more efficient burners–needed to deliver the improvements you promise. Brownfield applications bring additional costs like documentation of what’s actually in the plant. Make sure you budget for training technicians, operators and software configurators, and allow 10% to 15% extra for the things you don’t expect.

Then study up on accounting principles and practices, or find someone like Dr. White to help you perform the critical task of putting the project in terms your finance people will appreciate. It begins by looking at the plant the way they do. “Take a financial view of the process unit,” he said. “It’s money in versus money out.”

Investors want to know the return on invested capital (ROIC), which is after-tax income divided by the amount invested. Some also are interested in the profitability index – the net present value divided by the investment cost. Net present value reflects future costs and revenues by converting them into equivalent amounts of today’s dollars.

Understand what’s important to your financial folks–if your plant can sell increased production at a good margin, then productivity and availability are valuable. If it’s market-constrained, “There’s no value to increased production,” White said.

Be aware that in most process plants, the highest operating cost by far is raw material, with energy coming in second, then operating expense, then maintenance. “You’re not likely to justify a project by reducing maintenance,” said White. “Process energy is the largest controllable cost.”

It’s also possible to claim quantifiable savings in risk management. The American Petroleum Institute measured 0.0067 serious incidents per year per kBPD capacity for refineries at an average of cost of $600,000 apiece, which works out to $1 million dollars per year for a 250,000 BPD facility.

Being aware of your plant’s financial model and financial priorities, and explaining your project in your financial team’s favorite terms, will go a long way toward helping them (and your boss) understand why they should want to back you up.

In short, said Dr. White, “It is possible to justify putting in new, modern automation on an existing plant with a working older system, using rigorous financial analysis.”

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