Value engineering in a cost-cutting environment

An Aberdeen business has called for the supply chain to ‘get back to basics’ to ensure continued investment and longevity in the North Sea, as the Oil and Gas Industry Conference gets underway today (Wednesday, June 17).

A recent study carried out by engineering firm Apollo revealed potential savings of £1million per asset for a North Sea operator through a value engineering approach – which involves managing any defect through to cessation of production safely, rather than a design and replacement project.

The company believes engineers have the talents to understand and manage defects where possible. Rather than replacing like for like, there is the opportunity to manage assets effectively and efficiently if they are already in late-life.

Jonathan White, director at Apollo, said: “In the current economic climate, operators know they need to realise their reserves more efficiently than ever before within new budget boundaries. They need to change the way they have traditionally worked.

“We need to reduce and control costs to ensure longevity and continued investment. The use of value-focussed engineering does not compromise on delivery or on high quality, health and safety, and environmental standards.

“This means using our engineering knowledge intelligently to understand defects and anomalies on our assets. Rather than a complex design and replace project, is a more efficient approach is to evaluate the risk of managing any defect through to cessation of production safely.

“We also need to empower our engineers to deliver in a technically-led environment with appropriate project controls. Small, lean engineering teams can work highly efficiently.”

Apollo is a technically-led provider of value-focussed engineering services to clients in the North Sea. With more than 400 years of combined experience, the team is dedicated to providing effective solutions.

In one project, a North Sea operator identified that an under-slung module was significantly corroded and required a structural replacement. The estimated cost exceeded £1million, but the same scope of work was quoted through a value engineering approach of £300,000 and executed to budget.

Mr White added: “The supply chain has evolved so that operators and asset owners can pull on ad-hoc engineering resource, rather than build internal overheads with engineering or contracted asset engineering teams. Efficient use of this resource has enormous benefits and cost reductions if well-executed.

“By combining these skills, activities and intelligence to solve our issues, and challenging the move from a traditional engineering model to a leaner, more intelligent approach, we have the opportunity to provide value in line with the cost saving goals set by our leaders.”

More about Apollo: Apollo is an engineering and project management service company that provides a highly skilled engineering capacity to deliver safe and appropriate engineering solutions. Its services cover project management, process and flow assurance, technical safety, structures, marine and subsea. It has offices in Aberdeen, London, Darlington and Nottingham.

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