Defining and delivering a radical reorganisation for securing site survival

Background
A heavily-unionised petrochemical site in France which had suffered from underinvestment and underperformance was brought under the control of new investors working in a joint venture (JV) structure. The new owners recognised that historic practices and behaviours would have to be overturned and competences upgraded if the site was to become com-petitive.

Objectives and Approach
T.A. Cook was asked to provide an independent assessment of opportunities across the whole plant from maintenance to shutdown  management; engineering to facilities management and inspection to HR.

Given the sensitive nature of the task, the T.A. Cook team initiated the exercise with a comprehensive programme of communication covering staff and unions. Emphasis was placed on ensuring that all major expectations between Shareholders, the JV company and vice-versa were clearly stated and documented.

Findings
The site uses a significant contractor workforce which is effectively embedded into the company organisation. Some of the working practices and, especially the expectations surrounding working practices, were symptomatic of long-term relationships.

Specifically T.A. Cook found:
At site level - good union and works council relations, but:
•    a belief that little improvement was possible
•    no overall dashboard or KPIs
•    too few identifiable control and feed-back loops

In maintenance - pockets of good practice, but:
•    poorly-defined roles and responsibilities
•    lack of contractor performance man-agement
•    over-generous standard times
•    inadequate maintenance planning and scheduling, lack of cost estimation
•    mostly reactive supervision

In Project Engineering - good project execution capability, but:
•    late scope definition
•    inadequate understanding of the JV partners’ different validation processes
•    weak definition of Turnaround scope

In Support Services - good SAP imple-mentation and data structures but:
•    little cost transparency and insufficient personal accountability
•    poor contract set up and variable contractor management
•    inadequate controls on localised pro-curement

It was clear that the significant effort expended by the JV Partners over several years to introduce “best practice” had produced disappointing results and a new approach was called for.

Solutions
The T.A. Cook team was asked to provide an opinion of management capability with a view to designing an externallyled but internally-supported change programme that would have the highest chance of success.

Deciding upon a strategy of keeping the existing operating level required an up-front three-month detailed definition and design programme that focused on in-creasing awareness of performance, cost and the ability to influence and set expectations.

From a solid start of significantly enhanced management belief and under-standing of detail, mid and lower levels of staff were engaged to review processes and organisations if they were fit-for-purpose and determine opportunities. The Definition Phase ended with a Management-endorsed improvement target supported by bottom-up detail and localised buy-in of the actions and changes required for the next 12 month and a 3 year outlook.

Benefits
Both the new owners and the site management were impressed by the nature and style of the engagement and the speed with which benefits were attained. These include:
•    A management team which is aligned and wholly supports improvement and cost-cutting measures required to secure future investment
•    New organisational structure with clear roles and responsibilities has been designed
•    Improvement opportunities within key processes have been identified and evaluated
•    A clearly-defined implementation plan driven by T.A. Cook but designed together with all significant managers and supervisors
•    A 10% reduction versus the original budget has been identified
•    A 24% fixed cost reduction within the next 3 years has been identified
•    An improvement program has been installed to reduce variable cost as well
•    Project benefits (CAPEX) are in line with the fixed cost reduction targets
•    Turnaround costs are estimated to be reduced by 25% on the upcoming shut down.