The new age of capital projects
The digital transformation in the business world arrives with force at the capital projects sector, which is reinventing itself to improve the efficiency, the security and the yield in planning, execution and operation of mega enterprisesOctober-December | 2017
When we think of the industries that deal with large capital projects, terms such as “innovation”, “change” and “digitalization” did not appear with frequency until very recently. Many of the companies in the civil construction, oil and gas, transport, energy, mining and infrastructure segments arrived at the 21st century driven by a culture that is traditional and more refractory to news than the average for other sectors. However, digital transformation in the business world is an imperative to which not even the most conservative industries can escape – under penalty of losing competitiveness, efficiency and financial margins. Technologies such as analytics, sensors, automation, drones, information modeling and Internet of Things (IoT) are being increasingly inserted in large capital projects – which is changing the way these mega-enterprises are planned, performed, operated and eventually demobilized.
“The construction and capital project market historically invests little in technology, but has a great potential for the smart integration of the enormous amount of data present in each project”, says Eduardo Raffaini, Deloitte Capital Projects practice lead partner in Brazil.
Raffaini’s evaluation corroborates the data compiled by the study “Capital Projects in the Digital Age – The capital project of the future”, released by Deloitte in December 2016. The document argues that the capital projects sector has spent the last 50 years investing little in technology and unable to integrate its supply chain effectively. The introduction of digital resources in project planning and execution and the creation of a workforce capable of using these resources can bring gains in time, reduce costs and risks and optimize the management and maintenance during the asset’s life cycle. “There are great opportunities to be seized with the introduction of analytics and data collection in these projects”, says Alan Richard, director of the Deloitte’s Capital Projects practice in the United States.
The introduction of the digital approach in project genesis boosts gains to be obtained in its life cycle. “In the planning phase, analytics can be applied to see the history of other projects, support technical feasibility studies and create a more assertive economic and financial modeling”, explains Eduardo Raffaini, from Deloitte.
A digital approach for capital projects contributes to a better analysis of the project's life cycle and provides more confidence to the investor., Eduardo Raffaini, Deloitte Capital Projects practice lead partner in Brazil.
The builder Andrade Gutierrez is aware of these possibilities. The company has been incorporating digital innovations in its projects – internally or externally developed – from their beginning. “There were isolated initiatives, but for which we could not scale. Now we have a corporate approach to the topic”, says Gláucia Alves, the company’s Excellence and Innovation Superintendent. A recent example was Digital Day, which convened external startups to submit innovative solutions for a large electric energy distribution line construction project to be initiated in 2018.
“We gathered 237 companies that presented ideas focused on materials, equipment and engineering methodologies” says Gláucia. Ten startups, which are already working on solutions for optimizing inventory control, network trace, use of drones – which will reduce inspection costs – and digitalization of field activities, were selected. “The use of innovative materials, such as cement grout for helical piles (used on the foundation of transmission lines), has the potential to bring major cost gains”, she confirms.
The capital projects’ supply chain is finding new ways to deliver products and services. There are changes in logistics and in the provision of solutions. In turn, the capital project owners are raising their level of management and governance through the use of digital, analytics, and other emerging technologies., Henrique Takemoto, Deloitte Capital Projects practice partner in Brazil.
These are examples of changes that the digital pulse is bringing to the relationship between builders, suppliers and their value chain. “There is, for example, 3D printers capable of producing materials for paving, with lower price and high quality. All these fronts will stimulate each other and the movement is gaining scale”, confirms Henrique Takemoto, Deloitte Capital Projects practice partner in Brazil.
Petrobras is a company that has expertise in both capital megaprojects (exploitation, refineries and petrochemical centers) and technological innovation. In recent years, the organization has multiplied the use of digital resources in several phases, implementing, in practice, research and development initiatives, internal or carried out with partners. “We deal with long cycle projects and we always anticipate the innovations that can consolidate themselves during these cycles and generate more efficiency” says Roberto Murilo Carvalho de Souza, Petrobras’ Information Technology executive manager.
In the planning and construction stage, 3D visualization technologies build virtual models of works in progress and allows the testing, in the digital environment, of the future performance of units not yet operational. Artificial intelligence (AI) solutions are used to study big data collected in previous projects of drilling, considerably reducing the time spent on analysis and planning. AI is also applied in drilling pressure control. In the operation of bases in isolated spots, sensors and automation resources reduce human interference in the processes and allow a more assertive monitoring, performed remotely.
“All this brings more efficiency, better control and a more integrated view of the project’s full cycle” says Souza, from Petrobras. “From the governance point of view, we take care of monitoring the adoption of these technologies throughout the company, trying to include digital within our strategic planning. More than solve problems, digital becomes a motivator, a lever to review processes and even generate new business opportunities.”
Another oil and gas giant, Statoil, maintains its largest field of exploitation outside of Norway in Brazil – the Peregrino, at Bacia de Campos. In the planning, operation and management stages of capital projects associated with the field, the company concentrates investments in process automation, advanced analytics and AI, as well as smart robots that contribute to the reduction of operational errors and reduce human exposure to security risks.
“With data analysis, we have increased the probability of new discoveries and we leveraged the reservoirs recovery. We have the assurance of more secure operations, with access to security information and forecasts regarding risk conditions” says Igor Dantas, Statoil Brasil’s Supply Chain leader. Specifically about his area, Dantas assesses that digitalization positively influenced the work. “We have developed process automation initiatives: issuance of purchase orders, registrations, inventory and delivery control. The efficiency gains allowed to use resources in more strategic activities.”
With the exponential advancement of sensor presence, autonomous platforms and big data in capital projects, the next few years should bring new challenges for the segment. “Companies collect an increasing volume of information about each stage of the projects, but it is necessary to transform this information into something useful, which helps in management”, says Nick Prior, Deloitte Infrastructure and Capital Projects global leader.
In about five years, we will have artificial intelligence acting in the collection and interpretation of data and in the creation of solutions based on them. Then we will see the complete automation of management processes in capital projects – and also in other industry segments., Nick Prior, Deloitte Infrastructure and Capital Projects global leader.
In Brazil, as usually happens when the topic is innovation and transformation, we are at the beginning of the journey. Latin America’s Director from the Association for the Development of Cost Engineering (AACE Brasil), Aldo Mattos, talks about the panorama: “We see that company’s investments in the sector are still timid in comparison with other emerging countries, despite not having clear indicators on these investments. However, there is a clear increase of the companies’ interest in investing resources on research and innovation”.
In branches such as infrastructure and construction, which, according to Mattos, face challenges to ensure profitability, the digital transformation, especially in project management, can be of decisive importance. “These resources bring more speed in obtaining data and greater trustworthiness to information, which allows to make better decisions”, says the engineer.
Since 2008, the mining company Vale develops an integrated solution for their capital projects’ management, incorporating technologies such as advanced analytics and IoT into its processes. “Our focus today is to improve the capital allocation in large projects, exploring analytics to transform this process. It is an important lever to increase productivity and reduce costs”, says Jânio Souza, Vale’s Information Technology Services executive manager.
“These resources allow increased collaboration between different areas and reduce errors in project formatting and execution. Even with the reduction of our capital expenditure portfolio in recent years, we continue to expand the platform and incorporate new solutions.” As recent digital transformation examples, Souza mentions the use of 3D models in engineering and drones in remote inspection of construction sites.
“The investment in technology and innovation generally only makes itself felt in the long term, which is a problem in emerging economies like Brazil” ponders Nick Prior, from Deloitte. “However, in the country, there are many opportunities and needs to be remedied, in fields such as logistics and transportation.”
Fact is that the use of digital technologies in capital projects’ planning and management can bring more transparency and more efficient accountability, helping to make the sector more attractive to investments.