Effective Asset Investment Planning for Sustaining Capital Projects - A Case Study for Steel Manufacturing Operations
Steel companies rightly pay most attention to significant large projects in their investment portfolio. Usually smaller projects outnumber large practices, yet they constitute a significant component of capital spend often exceeding the investment allocation of a major projects. As the project evaluation process often deliver inconsistent results for the portfolio of smaller projects, the consistency of asset investment decision-making presents a challenge. Small scale sustainable capital projects often suffer from inadequate scope definition, inconsistent risk criteria and most importantly the underlying asset health has not been assessed properly or consistently.
To overcome this problem, a Capital Spending Assessment Program was developed by Hatch specialists to help optimize the capital spending within tolerable risk levels based on the principles of condition-based risk management .
The key elements of the Capital Spending Assessment Program the following are;
- Decision tree analysis to stream projects according to appropriate techno-economic evaluation criteria
- Decision models to improve consistency of decision-making
- Benchmarking within asset classes to find best alternatives for each project
- Review of project maturity and estimate quality
- Asset condition assessment to assess ongoing operations risk
- Portfolio scheduling techniques to prioritize projects
NLMK Group developed a portfolio of over 5500 projects across their 5 facilities. Such a wide range of plant installations require a significant capital re-investment program to maintain the asset integrity within acceptable norms for operational safety / security.