Guide To Value Improving Practices (VIPs)

GUIDE TO
VALUE IMPROVING
PRACTICES
(VIPs)
GUIDE TO
VALUE IMPROVING PRACTICES
(VIPs)
Independent Project Analysis, Incorporated
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July 2005
CONFIDENTIAL DOCUMENT
This document is the proprietary property of Independent Project Analysis, Inc., which retains all copyright and
other ownership rights in its contents. Information about the subject matter, content, and structure of this
document is confidential and proprietary. Neither this document nor any such information may be disclosed to
any third party without the prior written consent of IPA except as expressly provided by the contract between
IPA and the client to which IPA had delivered this document.
TABLE OF CONTENTS
INTRODUCTION........................................................................................................................................... 1
WHAT ARE VIPs?..................................................................................................................................... 1
CRITERIA FOR SUCCESSFUL APPLICATION OF VIPs........................................................................ 2
VIPs PROVIDERS/CONSULTANTS ........................................................................................................ 4
TECHNOLOGY SELECTION ....................................................................................................................... 5
DEFINITION .............................................................................................................................................. 5
APPLICABILITY ........................................................................................................................................ 5
CRITERIA FOR VIPs USE........................................................................................................................ 5
IMPLEMENTATION GUIDELINES ........................................................................................................... 6
KEY SUCCESS FACTORS FOR IMPLEMENTATION ............................................................................ 9
RELATED VIPs ....................................................................................................................................... 10
CASE STUDIES: SELECTED EXTRACTS OR MODIFIED EXAMPLES............................................... 11
PROCESS SIMPLIFICATION .................................................................................................................... 13
DEFINITION ............................................................................................................................................ 13
APPLICABILITY ...................................................................................................................................... 13
CRITERIA FOR VIPs USE...................................................................................................................... 13
IMPLEMENTATION GUIDELINES ......................................................................................................... 14
RELATED VIPs ....................................................................................................................................... 16
PREDICTIVE MAINTENANCE................................................................................................................... 17
DEFINITION ............................................................................................................................................ 17
APPLICABILITY ...................................................................................................................................... 17
RELATED VIPs ....................................................................................................................................... 18
PROCESS RELIABILITY SIMULATION MODELING ............................................................................... 20
DEFINITION ............................................................................................................................................ 20
APPLICABILITY ...................................................................................................................................... 21
RELATED VIPs ....................................................................................................................................... 23
CUSTOMIZING STANDARDS AND SPECIFICATIONS ........................................................................... 24
DEFINITION ............................................................................................................................................ 24
APPLICABILITY ...................................................................................................................................... 24
RELATED VIPs ....................................................................................................................................... 26
DESIGN-TO-CAPACITY............................................................................................................................. 28
DEFINITION ............................................................................................................................................ 28
APPLICABILITY ...................................................................................................................................... 28
RELATED VIPs ....................................................................................................................................... 32
CLASSES OF FACILITY QUALITY ........................................................................................................... 34
DEFINITION ............................................................................................................................................ 34
APPLICABILITY ...................................................................................................................................... 34
iii
RELATED VIPs ....................................................................................................................................... 37
VALUE ENGINEERING.............................................................................................................................. 40
DEFINITION ............................................................................................................................................ 40
APPLICABILITY ...................................................................................................................................... 40
RELATED VIPs ....................................................................................................................................... 44
CONSTRUCTABILITY REVIEWS.............................................................................................................. 45
DEFINITION ............................................................................................................................................ 45
APPLICABILITY ...................................................................................................................................... 45
RELATED VIPs ....................................................................................................................................... 48
ENERGY OPTIMIZATION .......................................................................................................................... 49
DEFINITION ............................................................................................................................................ 49
APPLICABILITY ...................................................................................................................................... 49
RELATED VIPs ....................................................................................................................................... 52
WASTE MINIMIZATION ............................................................................................................................. 53
DEFINITION ............................................................................................................................................ 53
APPLICABILITY ...................................................................................................................................... 53
RELATED VIPs ....................................................................................................................................... 57
3D CAD ....................................................................................................................................................... 58
DEFINITION ............................................................................................................................................ 58
APPLICABILITY ...................................................................................................................................... 58
RELATED VIPs ....................................................................................................................................... 62
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CONTRIBUTING AUTHORS
Value Improving Practice Author

Technology Selection Felix Parodi
Process Simplification Gerry DelRosario
Predictive Maintenance Deepesh Singh
Reliability Simulation Modeling Ricardo Borges
Customizing Standards and Specifications Shekhar Patil
Design-to-Capacity Greg Jones
Classes of Facility Quality Shekhar Patil
Value Engineering Jorge Castaneda
Constructability Reviews Jorge Castaneda
Energy Optimization Sabine Agena
Waste Minimization Robert Brown
3D CAD Theodora Paschoudi
REVIEWERS
Edward M. Merrow
Dean P. Findley
Oscar Ngaiza
EDITORS
Shekhar Patil
Julie McCarrick
Janice Handler
Note: This document is based in part on information gathered by Independent Project Analysis
(IPA), Inc. analysts, during project review meetings with project teams as part of
benchmarking evaluations.
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INTRODUCTION
The Value Improving Practices (VIPs) described in this document are out-of-the-ordinary
practices used to improve cost, schedule, and/or operational performance of capital construction
projects. IPA currently benchmarks 12 such project practices.
The purpose of this guide is to serve as a general reference for the 12 project practices.
For each VIP, the guide provides definitions, applicability criteria, and implementation
guidelines. Further, this guide explains the general criteria used by IPA during project analysis
to assess a project team’s use of the selected VIPs. The guide also briefly describes the
interrelationships, similarities, and differences among the VIPs.
The objective of this document is to offer general guidelines for applying VIPs that can
be customized to meet the needs of individual projects. Therefore, this guide is not meant to be
a rigid standard. To the contrary, the descriptions in this guide are intended to allow for flexibility
and creativity among VIPs practitioners. However, the guide should enhance understanding of
the VIPs so that they are applied with consistency. Moreover, project teams should be able to
measure and document the value added to projects by VIPs.
The Guide to Value Improving Practices is provided only to the current members of the
VIPs Roundtable, a subcommittee of the Industry Benchmarking Consortium (IBC).1 IPA
expects to periodically update this document as a service to the VIPs Roundtable. Comments
and suggestions are encouraged.
WHAT ARE VIPs?
What distinguishes VIPs from other Best Practices is that each VIP has a measurable
and statistically demonstrated effect on cost, schedule, and/or reliability of the constructed
facility. VIPs are also different from other practices, such as team building or partnering, in the
following ways:
• Each VIP must follow a distinct and defined work process.

• The VIP is not merely a detailed review of some portion or aspect of a project.
• The results of VIPs exercises must be documented so that the project team is
accountable for incorporating those results into the project.
Each VIP is used during the Front-End Loading (FEL), or project development phase.
However, 3D CAD and Constructability Reviews, 2 of the 12 practices currently classified as
VIPs, continue to add value to projects well into the execution phase. Figure 1 illustrates the
best time during FEL for using each VIP to obtain its maximum effect. Three distinct
phases⎯FEL 1, FEL 2, and FEL 3⎯comprise project definition or FEL.
1
The IBC is a voluntary association of owner firms in the chemicals, petroleum, and minerals processing industries
that have employed IPA’s quantitative benchmarking approach. The members have agreed to exchange data,
information, and metrics to improve the effectiveness of their project systems.
1
Value Improving Practices
Timing During FEL
FEL 1 FEL 2 FEL 3
Business Planning/ Scope Development/ Project Planning/ Execution Operation
Appraise Select Alternative Define
Phase 1 Phase 2 Phase 3 Phase 4 Phase 5

Customizing Standards
and Specifications
Waste Energy Value

Minimization Optimization Engineering
Process
Simplification Design-to-Capacity
Classes of
Reliability Simulation Predictive
Facility
Modeling Maintenance
Quality
Technology
Selection
3D CAD
Constructability Reviews
= Business Reviews and/or Go/No-go Decision
CONFIDENTIAL
Figure 1
CRITERIA FOR SUCCESSFUL USE OF VIPs
The 12 VIPs benchmarked by IPA are not entirely independent of each other. For
example, both Value Engineering and Customizing Standards and Specifications seek to
eliminate non-value-adding standards or items of scope. Therefore, by using both these VIPs, a
project team should not expect to add twice as much value as using any one of the two. Another
example is that of Process Simplification and Waste Minimization. The intent of both of these
practices is to optimize the manufacturing process.
IPA’s research also indicates that a “point of diminishing returns” exists when using
VIPs. The most value is derived when project teams use 40 percent to 60 percent of those 12
VIPs that are applicable to the project being developed. A VIP is applicable to a project if there
is any scope to use the principles of that practice. The value added from VIPs diminishes when
project teams use more than 60 percent of the applicable VIPs.
Successful use of VIPs requires a formal, disciplined, and documented approach with
measurable results. The criteria for successful use of each VIP are described in detail in this
guide. However, the generic criteria for successful use of all VIPs are as follows:
• VIP activities must be scheduled and resourced early during a project's life cycle for
these practices to have their maximum effect on project costs. The necessary
2
resources may even include individuals external to the project to oversee or facilitate
the application of the VIP.
• VIP activities must be done thoroughly. For example, ensuring that a project employs
the best available technology—the goal of the Technology Selection VIP—requires
identification of potential technology candidates through rigorous patent searches,
visits to university research centers and process licensors, and subsequent
evaluation of these candidates. Thorough application of this VIP means that the
potential candidates cannot be limited to only those of which the firm or the project
team is currently aware.
• The VIP must be applied to the full scope of the project (at least initially). Arbitrarily
limiting the scope to a portion of the project unnecessarily limits the potential benefits
of the practice.
• Guidelines must exist to ensure that each VIP is applied consistently. Without a
consistent and repeatable work process, or guidelines for incorporating each VIP into
a project, the project team may inadvertently skip some key elements, which may
degrade value improvement. For example, the guidelines for the VIP being used
must spell out which costs to evaluate (e.g., capital or operations and maintenance,
or both) and which economic and financial assumptions to use.
• The results of VIPs application must be documented. Documentation is performed to

(1) gain alignment, (2) provide a basis for the project team to evaluate the cost
effectiveness of the practice, and (3) provide lessons learned for future project
teams. At a minimum, the following information should be recorded:
- A description of the activity
- The monetary value of the scope of work reviewed
- The action items incorporated into the project
- The monetary savings and the type of savings (capital, maintenance, etc.)
achieved
- The cost of applying the VIP
To assess the consistency, or the lack thereof, with which project teams use VIPs from
project to project, questions that cover the following for each VIP are included in IPA’s data
collection workbook:
1. Point of time in FEL when the VIP was first used
2. Functional representatives (business, operations, process, etc.) that participated in

the sessions to incorporate the VIP into the project
3. Independent facilitation, as applicable (For example, independent facilitation is

important for performing Value Engineering or establishing Classes of Facility
Quality, but may not be necessary for process Reliability Simulation Modeling.)
4. Percentage of the project scope and cost estimate to which the VIP is applied
3
5. Of the total hours expended to implement the VIP, percentage of person-hours that
involved interactive team time
6. Primary driver of the action items that resulted from using the VIP (For example,
incorporating the action items into the project may reduce the estimated capital
expenditure, shorten the schedule duration, or reduce the operating costs.)
7. Whether the value added to the project by using the VIP was estimated and formally
documented by the team as part of the evaluation
In addition to such questions, IPA analysts ask some VIPs-specific questions as part of
the project team interview to collect project data. Those questions and each of the 12 VIPs
currently benchmarked by IPA are described in the following sections, along with additional
information specific to each VIP for successful application.
VIPs PROVIDERS/CONSULTANTS
A list of VIPs service providers based on their successful use by IBC member
companies is provided in the VIPs Information Area at www.ipaglobal.com under VIPs Provider
List. The password required to access this list and other information about VIPs can be obtained
by contacting the designated IPA client coordinator for your company. IPA provides this list only
as a resource, and it should not be construed as an endorsement by IPA. Any client planning to
engage one of these providers should conduct their own due-diligence investigation. IPA offers
no assurance, express or implied, that the services of any of the providers will improve the
effectiveness of client projects.
4
TECHNOLOGY SELECTION
DEFINITION
Technology Selection (TS) is a formal, systematic process by which a company

searches for technology outside the company (or, in some instances, in other divisions within
the company) that may be superior to the technology currently employed. It is a method to
ensure that the technology used by projects is the most competitive available technology that
meets the business objectives.
Technology strategy is an essential element of the competitiveness of the owner’s

businesses. For most owner companies, this VIP is implemented in the context of capital
projects. The process of selecting technology is usually one of the first activities in the Front-
End-Loading (FEL) of a project. Decisions made at this stage can have a major impact on the
financial success of the project. The focus of the TS process is to search for outside sources of
competitive technologies to break the “not invented here” paradigm and to improve
competitiveness.
APPLICABILITY
The most common use of TS is in production processes. TS can be applied to any type
of project, regardless of size, complexity, type, or industry, as long as the project has any scope
that could benefit from formal TS. For small and/or less complex projects, the effort should be
customized to the particular business need. However, TS may not be applicable for small
maintenance-type projects where the business need is to replace a piece of equipment in-kind.
In most cases, implementing TS early in FEL results in a greater effect on project

objectives and functionality of the production process. TS use in FEL 1 usually affects several
production steps. Therefore, when used in FEL 1, the possible effects of TS on the different
steps or units cannot be isolated. For example, TS in FEL 1 may help the project team choose
between continuous versus batch process technology. TS use during FEL 2 may focus on
subprocesses, equipment, and/or components as listed in the examples in this section. For
example, during FEL 2, TS may help the project team choose between low solid cooking
enhancements versus continuous digesters. TS decisions for equipment may involve the
metallurgy, materials of construction, or hydraulic versus electrical operations. Because of its
expected effect on project objectives and functionality, many TS efforts require a review in early
FEL 2. This review ensures that the project team has determined the right sequence for
completing FEL 2 deliverables for the selected project alternative before the decision gate
review at the end of FEL 2.
CRITERIA FOR VIPs USE
The following are criteria that should be followed for using the TS VIP:
• Extent of application: TS should be applied to the entire project scope, at least

initially. The project team can then narrow down the scope of TS to specific scope
elements and/or subprocesses to conduct a worldwide search of competitive
technologies.
5
• Facilitated team effort: TS is almost always facilitated by specialists from outside the
project team, either internal or external to the company. In addition, TS should
include adequate cross-functional representation, particularly during the final
analysis and decision-making.
• Use of standard work process: The TS team should follow a distinct and definable
work process, usually a repeatable company procedure that is integrated with the
overall FEL process. TS is typically used during FEL1 and/or FEL 2.
• Documentation: The TS team should produce documentation for at least two final
options, including the extent of TS use, criteria for selection, process used for
performing TS, and alignment with the business objectives.
IPA’s Measures for Assessing the Use of TS
IPA analysts often supplement the standard questions about VIPs use, such as timing
during FEL and the use of a formal, repeatable work process, etc., with a discussion about
when and how critical activities were completed and the reasons for not using TS, if that is the
case. If TS is used by the project team, the IPA analyst will request documentation of that effort.
It is not reasonable to argue that TS has been used if the documentation needed to incorporate
the results into the project does not exist.
Good engineering practices, such as the use of pilot plants, visits to trade conferences,
equipment selection, vendor selection, and/or selection of best technology within the company,
do not, by themselves, ensure that TS was used.
IMPLEMENTATION GUIDELINES
The timing of TS implementation depends, in part, on the importance of the technology

to the business and the intended level of innovation. TS may start during FEL 1 or FEL 2,
depending on its intended purpose. TS can start during FEL 1 as part of research and
development (R&D) or technology development or when significant time is expected because of
interfaces with licensors, negotiation with joint venture (JV) partners. TS can also start during
FEL 1 if the project initiates a major program to standardize or roll out (new) technology for the
company. TS can help the FEL 1 team to improve definition of business objectives, and it may
reveal new business opportunities.
When TS is used during FEL 2, the project team should perform a full analysis of the
technologies that support the alternatives. This would include financial, reliability, and
maintenance considerations. When used late in FEL, TS should include a review of pertinent
earlier decisions to avoid rework and changes during FEL 3 and/or execution. A typical work
process for using TS involves some key steps that are described in detail in the following
sections.
Business-Technology Alignment
The basis for the business opportunity and its alignment with the company’s technology
strategy provide essential guidance for the TS effort. The business leadership team should
formally assign a business sponsor. The TS leader, who is usually from R&D, technology
6
development, and/or project organization, is usually a process design specialist who is familiar
with this type of process and the plant.
The business sponsor and the TS team leader should decide on TS team composition
and key aspects of the TS plan based on the scope and complexity of the effort. The TS team
composition should include multifunctional representatives, particularly from business, technical,
and production areas. Each of the three areas needs to have at least one representative.
The team should give some thought to using individuals outside the project to increase
diversity of perspectives, as well as the probability of incorporating innovative technology into
the selection process. Additional experts and/or specialists may be brought in on an as-needed
basis. In many cases, an internal or external consultant, preferably independent of the team,
acts as facilitator throughout the TS process. The TS facilitator should be familiar with the
company’s capital project development (FEL) and TS processes. The facilitator should also
have practical facilitation expertise in a wide variety of tools and/or methods to improve the
team’s focus and productivity. Examples of these methods and/or tools are brainstorming,
affinity diagram, prioritization matrix, flow charts, and use of workshops.
After the TS team is formed, it should confirm understanding of the business objectives
and how these objectives translate into project objectives, particularly the objectives related to
project technology. In many cases, the newly formed TS team uses existing business objectives
and priorities, block flow diagrams, and high-level estimates, along with a set of boundaries as a
starting point. More important, the boundaries that are driven by business objectives should help
the team to focus on the identification of potential competitive technologies.
It is important for the project team to recognize that competitors’ technology strategies
could be more flexible with its boundaries, but TS decisions can have long-term implications
(e.g., TS may have effects on operating costs). Therefore, the level of incremental technology
improvement that the project would deliver should be aligned with the company technology and
business strategy.
Business management should be aware that the TS effort usually requires significant
commitment of resources and coordination with the capital project development process. The
TS effort should be planned as a project. The TS team should customize the company TS
process, particularly the decision-making process, and select tools and resources (e.g.,
additional experts, potential testing facilities, etc.) that will be used to search for most
competitive technologies.
Search
The search phase includes planning and seeking out competitive technologies that best
respond to business needs. The team should consult patent literature, publications, vendors,
industry contacts, professional organizations, universities, technology licensors, competitors,
etc. At this stage, additional experts and resources should be considered, such as corporate
libraries, external technology consultants, procurement experts, professors, contacts in industry
associations, competitive intelligence experts, corporate technology representatives, process
peer review groups, and technology specialists. Because of the diversity of potential
approaches to search for competitive technologies, these efforts have to be planned as a
project, that is, they must be assigned a leader or coordinator, budget, schedule, and
mechanism to track progress.
7
An important task that the TS team needs to incorporate in the search effort is to gather
the essential information, such as critical characteristics, that could be used in the next step to
discard the weakest technologies during the screening process. During the search phase, the
TS team should define the interfaces with other VIPs, such as Process Simplification (PS),
Classes of Facility Quality (CFQ), and Value Engineering (VE).
Speculation
The TS team should develop ranking criteria and weighting factors to compare the
technology alternatives. Table 1 shows an example matrix that includes weighted factors. In this
phase, the TS team should seek alignment with business and project objectives by engaging in
discussions about relevant aspects of the CFQ evaluation that need to be an essential part of
the TS selection criteria. However, the TS team should consider that technology could come
from the outside and could affect key facility quality elements. The speculation phase includes
the identification of technology options, discussion of advantages and disadvantages, and
consolidation of information for analysis. Examples of methods and/or tools that can be applied
in this phase are matrices and prioritization methods like those used in CFQ and other VIPs.
During this phase, the TS team can discard the weakest technology candidates.
Table 1
An Example of Potential Ranking Criteria for Technology Selection
FINANCIAL Weighting TECHNOLOGY Weighting
Rate of Return Factor Degree of Commercialization Factor
Net Present Value Process Risk
Life Cycle Cost License Fees
Capital Constraints Cost of Additional Development
Low Cost Producer Time to Implement
Yield Advantage
OPERABILITY MECHANICAL
Feedstock/Rate Reliability
Variability Ease of Maintenance
Product Specification Utility Requirements
Ease of Handling Upsets Plot Space Constraints
Ease of Retrofit
ENVIRONMENTAL and LICENSOR

SAFETY Experience with the Technology
Emissions Ability to Cover Total Process
Incident Rate Scope
Potential Future Liability Experience With Retrofits
Analysis
The TS team initiates evaluations using ranking criteria, picks the top two to five options,
consolidates and documents decisions for the top options (pros, cons, and issues), and creates
action items to acquire more in-depth data to support the decision. The TS team needs to
ensure alignment of the technology options with business objectives before moving to the next
step. A prioritization matrix is a common tool used in this phase.
8
Development
The TS team develops additional information required to reduce uncertainty by

conducting visits to observe technology in action, generating more pilot plant data, documenting
user references of the technology, consulting with technology vendors, etc. This can be
especially important for new technology or existing technology applied outside the original
boundary conditions. The final analysis should be conducted with the top choices within the
boundaries of the ranking criteria.
Presentation
The TS team recommends the best option to the project executive or decision-making
board. The deliverable should include a prioritized list of technologies with their associated risks
and benefits, along with their effect on the production process. In addition, the TS team should
present a plan to implement the selected technology and recommendations for immediate
decision and/or for further development.
Documentation
The TS team should document its decisions about TS, particularly key lessons from
competitors and others outside the industry; trials; pilot plant work; R&D work; site visits, both
internal and external; and key supplier comparison studies. These studies can be used in
technology development, process improvements, and future projects. Documentation can help
avoid “reinventing the wheel” on future endeavors and/or can be used as a valuable reference
during the implementation of the selected technology. The documentation should include the
objective of using TS, description of the process, selection criteria, basis of recommendation,
results (key conclusions and benefits), procedure for assessing cost, and cost/benefit of the
resulting action items. In addition, the documentation should include information about the team,
such as names of the leader, facilitator, and team members, including support from specialists,
as well as timing during FEL.
KEY SUCCESS FACTORS FOR IMPLEMENTATION
The following are the key success factors for implementation of the TS VIP:
• Corporate and business unit objectives and strategies should be clearly defined and
confirmed throughout the TS effort. This effort will require an ongoing dialog between
business and engineering. The TS effort thereby strengthens both the business case
and team dynamics, which are critical to success.
• The TS team should ensure that an unbiased process is followed to compare

external and internal competitive technologies that are aligned with the company
strategy. The intent is to break the “not invented here” syndrome. The independent
and objective role and experience of an external facilitator is important because
different functions have different incentives, particularly in “technology push”
programs.
9
• The TS effort should be planned as a project with a budget, schedule, and
deliverables. Technology chosen without a well thought-out plan can lead to cost
overruns, longer schedules, and lost opportunities in the marketplace.
• The TS effort should be systematic, focused, and thorough. The owner TS team
should “take charge” and make informed decisions. The TS team should also
consider the use of workshops to increase team focus, specialists to generate
options, and lessons learned from similar TS efforts in the past.
• The TS team should customize the company’s TS process, including its integration
into the FEL process. The decision gate review at the end of FEL 1 should confirm
alignment of technology strategy with business objectives, the effect of TS on the
business case, raw materials, final products, legal aspects, and project (technical
and commercial) risks. The decision gate review at the end of FEL 1 should also
include TS plans for FEL 2, how a disciplined FEL 2 process will be maintained, and
the interface and communication plans between the TS team and the project team.
• The TS team should incorporate the TS plans into the FEL 2 schedule to ensure that
the critical path and dependencies are understood and that the project team follows
the right sequence of activities to complete all FEL 2 deliverables.
• TS efforts conducted during early FEL 3 (e.g., in combination with VE) should be
scrutinized, and the results should be immediately integrated with the business case
analysis. By integrating the results, the TS team will confirm that the design basis
and key premises agreed on in Gate 2 reviews are not affected.
• The business sponsor should ensure that the project team follows a customized
capital project process and that Best Practices for JVs and/or new technology
projects, when these characteristics are present, are integrated promptly. Business
should be aware that technically or commercially complex projects require more
resources during FEL and that fast-tracking the FEL of complex projects may present
a major risk.
RELATED VIPs
PS, CFQ, and VE are related to TS.2 The sequence and timing for implementing these
VIPs has to be established during FEL 1 based on business opportunity and priorities. TS and
PS can be implemented together when PS requires a technology solution. Using TS and PS
together is typically driven by business and/or operations and is usually implemented during
FEL 1 or early FEL 2. Similarly, TS and VE can be combined later in the project process when
the functionality of the subprocesses or major equipment is evaluated to meet the facility needs
defined through CFQ analysis. The TS effort may require coordination with other planned VIPs
to avoid disruption of the FEL process and rework. In most cases, if a team can implement TS
early in FEL, it has a greater effect on competitive business advantage.
2
Descriptions of these related VIPs can be found in their respective sections in this guide.
10
CASE STUDIES: SELECTED EXTRACTS OR MODIFIED EXAMPLES
Case 1
The TS team used the company TS process over the course of several months. More
than 20 options were compared using the following categories: capital expenditures; footprint;
operability; availability; health, safety, and environmental (HSE) compliance; mechanical
reliability; OPEX; ramp-up rate; proven technology; impact on capacity of related unit; and
viability of byproducts. The TS team selected a small list of technologies for final consideration.
The decision-making workshop included reviewing the required capacity, FEL 2 phase
update, commercial risks, technical risks, decision matrix, economics review, project schedule,
and recommendations. The team obtained additional input and support through company-
specific risk assessment methods, technology peer reviews, solicited bid packages, updated
project estimates and schedules, and confirmation of capacity of associated units.
The commercial risks of various technology options were addressed, and the results
were presented in a matrix format as follows:
• Y-axis: Investment, need for additional capacity, product price, choosing the wrong
technology, delay in authorization, and delay in technical selection
• X-axis: Cost to the project of not mitigating the risk for technology A, technology B,
technology C, and technology D
The technical risks of various technologies were addressed, and the results were
presented in a matrix format:
• Y-axis: Utility availability, complexity of construction, operability flexibility, waste

management, handling stream A, and compliance risks
• X-axis: Cost to the project of not mitigating the risk for technology A, technology B,
technology C, and technology D
The economic summary included the annual revenue, annual operating cost, capital
cost, and net present value (NPV) for two alternative capacities; risk range; and decision matrix
score. The team used a matrix format for reporting that included more than 10 different
elements with previously established weights. The review of project risks was completed
separately and included environmental compliance, schedule risk, and competition for
resources.
The final list summarized options and business cases and included CAPEX, OPEX,
NPV, and strengths and weaknesses for each technology. Themes of discussion were level of
innovation, use of existing equipment, future debottlenecking, potential energy and/or
turnaround cost savings, and other elements typically discussed during CFQ.
Case 2
The TS workshops included information, selection, evaluation, and developmental

phases. The TS team established some boundaries, such as limiting the TS effort on
11
preselected technologies and requiring that the evaluation criteria include safety, operability,
schedule, and cost.
The TS team planned a workshop to review five technologies in detail to ensure

knowledge of unit objectives and design basis, select the best technology for the company,
challenge requirements on which design was based, and select and review designs that met the
essential operating requirements. The comparison of four selected technologies included
technology advantages and disadvantages and comments. Following the workshop, the TS
team gathered additional information that emphasized risk assessment, business analysis,
benefits, and disadvantages and then reached a decision.
Case 3
The TS team followed a phased company process for 2 months and developed a short
list. Capital costs (factored estimates), operating costs, and NPV factors (indices compared to
cheapest) were developed for four technology options. Additional considerations, including
alignment with business and project objectives, were used to discard the weakest candidate.
Additional examples of these considerations are complexity (e.g., amount of equipment and
operational and maintenance input); costs versus technical advantages; and vendor’s
competitive information.
The TS process included technical evaluation to meet functional requirements,

commercial evaluation of licensor and/or vendor proposals, risk assessment, and life cycle
assessment. The mechanism for evaluation of competing technologies used a structured,
qualitative scoring system to evaluate the functional “wants.” The matrix included 12 categories
of functional requirements; questions within each category that defined the functional
requirement, a scoring system that assigned maximum values to each category (from 1 [trivial]
to 5 [essential]) and to each question, and evaluation of each technology against each
functional requirement. Examples of functional requirements were civil, structural, piping,
construction, and maintenance. Examples of categories were robustness of design; technical
risk; codes and standards; mechanical; machinery vessels; and process design HSE.
An overall question score was calculated by averaging the score of each person by the
category weighting. A similar scoring system was used to evaluate vendors’ information
collected by using extensive questionnaires and follow-up communication. Finally, the TS team
consolidated all comparative information, highlighted benefits and disadvantages for each
technology, and recommended a technology for implementation.
12
PROCESS SIMPLIFICATION
DEFINITION
The Process Simplification (PS) VIP is a rigorous, structured, and formally facilitated
process to search for opportunities to eliminate or combine chemical or physical process steps
while satisfying needed functionality at the lowest investment cost, and often operating costs as
well. The PS VIP focuses on improvements in a facility’s or plant’s operating process.3
APPLICABILITY
PS is applicable to most process facility projects involving multiple process steps. For
projects with one process step, project teams may have to evaluate the applicability of PS on a
case-by-case basis. In some cases, an evaluation of the preceding steps, the succeeding steps,
or the concurrent steps in the process may help the team identify opportunities to simplify the
process. However, PS is not likely to add significant value to projects that are either in-kind
replacements or that involve only one processing step.
IPA assesses whether PS is formally used by a project team by using the following
criteria: (1) when PS is used during FEL, (2) whether all necessary functions participate, (3)
whether the effort is facilitated, and (4) whether results are documented.
Comprehensiveness of Application
The facilitated PS workshop should be conducted early in the design process after
preliminary process flow diagrams (PFDs) have been prepared. A function analysis is used to
generate ideas, which are prioritized and ranked. Key project team members, such as the
project manager, project engineer, process engineer, and operations and maintenance
representatives, assess the cost and operability impacts of the top ideas and integrate them into
the work plan.
IPA’s Measures for Assessing the Use of PS
In addition to the standard questions about VIPs use—such as timing during FEL; the
use of a formal, repeatable work process; and the primary driver of the action items resulting
from the use of the VIP—IPA uses several other measures to consistently benchmark the use of
PS. Such measures include whether the project team used function analysis and whether the
team produced a work-off list of suggestions from the PS review. If a project team does not use
a formal process for implementing PS, the effort is not likely to add value to the project.
3
The PS VIP investigates the process steps, in contrast to the Value Engineering (VE) VIP, which focuses on
improvements to equipment and nonprocess items. Refer to the VE section in this guide.
13
Figure 2 shows the procedure for implementing PS and illustrates the major activities
that are conducted in FEL 2. The activities are performed in a PS workshop and are discussed
in detail in this section.
Process Simplification
Implementation Flow Chart
FEL 1 FEL 2 FEL 3
Business Planning/ Scope Development/ Project Planning/
Phase 1 Phase 2 Phase 3
Form the PS VIP Team
Assemble
Project Information
Review PS Process
Identify Function and

Analyze Process Steps
Generate and Evaluate PS

Ideas and Select Best Ideas
Summarize and
Document Findings
Present to Stakeholders Redesign/Update

and Seek Approval Process Flow Diagrams
CONFIDENTIAL
Figure 2
Preworkshop Preparation
Prior to the PS workshop, the PS team is formed, which typically includes the project
manager; project engineer; process engineer; operations and maintenance representatives;
health, safety, and environmental (HSE) representative; and PS facilitator. An extended PS
team may include a technology specialist, construction representative, equipment vendor,
research and development (R&D) representative, and business analyst. It is helpful to invite
expertise, or “fresh eyes,” from outside the team to participate in the workshop. The team
assembles project information to prepare for the workshop, including the objectives, detailed
process description, preliminary PFDs, results of verification of as-builts and on-site inspection,
and existing and planned equipment layout. The total duration of the PS workshop and the size
of the PS team depend on the size of the project and the number of opportunities for further
simplifying the process.
14
Activities in PS Workshop
After the preworkshop preparation, the PS VIPs team is now ready to perform the PS
workshop. The following activities should be performed during the workshop:
1. Review the process equipment, process flow conditions, PFDs, and process
technology implementation plans. If the project will use technology that is new or
different from the existing technology, the process engineer or representative from
the technology center should present a detailed description of the new process
technology. Its impact on the operability of the existing plant and its potential effects
on the cost and schedule objectives of the project should be discussed.
2. Conduct a functional analysis and develop a Functional Analysis System Technique

(FAST4) diagram, which assists in analyzing the basic functions of processes and
equipment. FAST diagrams improve the understanding of the problem and aid
creativity. FAST diagrams also help in defining the problem and breaking large
problems down into smaller ones. It shows the relationships of “how,” “why,” and
“when” among the functions. As part of the FAST diagram, the work performed by a
project, product, process, or procedure is defined. The functions are classified
according to a hierarchy that includes a basic function (also referred to as necessary
function) and a secondary function (also called supporting function). Functions with
high cost and functions with low value, i.e., low worth or cost or low performance or
cost are highlighted. Secondary functions that do not contribute to the basic
functionality of the process are eliminated.
3. Identify the process area or equipment that needs improvement and prepare a cost
histogram of high-cost items. If necessary, conduct PS modeling5 to assess the
effects of the process changes in the operability targets of the facility. Process
alternatives or ideas are generated that will provide savings to the project and to
operations. Some examples of PS ideas include the following:
• Combine first- and second-stage hydrocyclones.
• Segregate product tank and process slope versus combining them in one storage
tank.
• Eliminate water injection in the overhead condensers.
• Eliminate vent scrubber and send directly to flare.
4. Document the ideas generated in a PS idea form as shown in Figure 3. The

alternatives or ideas selected should provide the most value. The costs (initial cost,
redesign, and operations and maintenance cost) associated with the changes should
be estimated and incorporated into the overall project design.
5. Develop an implementation plan.
4
Additional information about FAST is available for free at
http://www.value-eng.org/pdf_docs/monographs/FAbasics.pdf
5
The Reliability Simulation Modeling (RSM) section of this guide describes the use of simulation modeling systems or
software.
15
After the PS workshop, the PS VIPs team should seek approval from the steering
committee or decision-makers for the changes to be implemented and incorporated into the
project design. The results are then distributed and presented to key project personnel and
stakeholders.
Process Simplification Idea Form Sheet 1 of ____

Project:
PS Idea No.___ Process Unit/Plant No.______________ Date:________
Original Concept:
Recommended Change:
Advantages: Disadvantages:
Risks/Justification/Other Comments:
Cost Analysis Initial Cost Annual O&M Cost Life Cycle Cost
Original Concept
Recommended Change
Savings
Prepared by: Date: Reviewed by: Date:
Approved by: Date:
Figure 3
RELATED VIPs
PS may be implemented concurrently with Design-to-Capacity (DTC), RSM, and

Technology Selection (TS)6 and should be completed early in FEL 2. The function analysis and
FAST diagram are also used later in FEL 3 during the VE exercise.
6
16
PREDICTIVE MAINTENANCE
DEFINITION
Predictive Maintenance (PM) techniques are used to monitor the condition of equipment
during operation to predict failure before it occurs. These techniques anticipate when and what
type of maintenance is required to prevent failures stemming from deterioration. Typically, this
approach requires adding various measurement devices to evaluate operating characteristics.
In contrast to preventive maintenance, which is based on time to failure, indicators of equipment
condition trigger PM.
The PM VIP should be used during FEL 3 and involves establishing the approach to
maintaining facilities. With this approach, assets that are designed and installed by the project
are monitored, and repairs are performed as indicated before failure. PM makes use of
advances in sensor and instrumentation technology to monitor characteristics, such as heat,
lubrication, vibration, cracking, noise, and presence of corrosion. Prevailing technologies for PM
include the following:
• Lube oil monitoring and analysis or wear particle analysis is used for identification of wear in
rotating equipment.
• Airborne ultrasound is used for bearing and steam trap inspections, valve leaks, pressure
vessels and tanks leaks, piping leaks, electrical arcing, tracking, and corona detection.
• Infrared thermography is used for inspection of rotating equipment, refractory vessels, and
electrical systems.
• Electrical current signature analysis is used for detection of rotor bar deterioration, rotor
eccentricity, stator phase imbalance, motor speed and slip, gear and belt imperfections, and
average running current.
• Compressor and engine analysis is used to measure all aspects of compressor and engine
performance.
• Laser alignment is used to measure alignment of equipment.
In general, the preference in Industry is to move from a reactive maintenance

environment, where the focus is mostly on restoring system function following a failure, to a
proactive maintenance environment. The proactive maintenance environment focuses on
inspection, monitoring, and servicing, which are preplanned tasks to sustain uninterrupted
system functionality.
APPLICABILITY
PM involves evaluating the equipment or other item in the scope to determine the
criticality and type of maintenance, and the process takes about 1 to 2 days. Therefore, PM is
applicable to any project that installs equipment or other items of scope that require periodic
maintenance. Several technologies are available to measure the condition of rotating
equipment, such as pumps, compressors, turbines, gear boxes, and fans and static equipment,
such as valves, pipelines, vessels, tanks, and electrical systems. Therefore, PM is generally
17
applicable to all projects for which the scope includes any or all these components. PM is
generally not applicable to distributed control system (DCS) and information technology (IT)
projects, unless the scope warrants use of available technologies for PM.
When benchmarking a project, IPA’s criteria for deciding whether a project team used
PM includes when the VIP is used during FEL, facilitation, comprehensiveness of application,
value measurement, and how that value was incorporated into the project.
A typical PM study can last up to several days, depending on a project’s technical

complexity, project cost, number of engineered equipment items, and other scope items
requiring maintenance. PM requires that purchase specifications for vibration, thermal,
acoustical, and other relevant characteristics are established for all new and rebuilt equipment
in addition to the normal vendor or “standard” specifications.
IPA’s Measures for Assessing the Use of PM
In addition to the standard questions about VIPs use such as timing during FEL; the
primary driver of the action items resulting from the use of the VIP; and the use of a formal,
repeatable work process, IPA uses several other measures to consistently benchmark the use
of PM. Such measures include whether provisions are made in the specifications for recording
“as-installed” or on-line characteristics, such as vibration, flow, etc., during operation. In cases
where projects add assets to existing facilities, whether PM can be incorporated into the
facility’s existing maintenance program is used as a measure of the team’s ability to effectively
implement PM on a project.
PM should be conducted late in FEL 3 when the project team has almost completed
development of the scope of the project with first draft of P&IDs issued. At this point, most of the
engineered equipment has been identified. However, after applying PM, the project team should
have sufficient time to incorporate the findings into the design and the cost estimates. The PM
study must be interactive with all those who can influence the project and must be facilitated by
someone from outside the project team. Facilitation helps the project team make an unbiased
determination of PM approaches that are best aligned with the project and business objectives.
The typical PM team comprises qualified individuals with thorough knowledge of the operations
and maintenance of the type of facility being studied. The PM team typically includes a
facilitator, operations representative, maintenance representative, process engineer, reliability
engineer, project engineer, and project manager or lead.
RELATED VIPs
In recent years, there has been a transition from PM to reliability-centered maintenance

(RCM). RCM is a method for planning equipment care based on analyzing all failure modes and
their effects and putting predictive, preventive, or detection activities in place to prevent or
18
mitigate these potential failures. RCM is a more aggressive process than PM. It also provides
more in-depth study into failure modes and effects before developing the work tasks that will
involve both operations and maintenance personnel. This is accomplished by using the
principles of Failure Mode and Effects Analysis (FMEA) to identify system components that are
critical to system function and then assigning appropriate maintenance strategies to each.
Maintenance strategies typically used are PM, preventive maintenance, and reactive
maintenance or run-to-failure (RTF). PM is becoming part of the overall RCM process, which will
ultimately allow operators to choose which maintenance strategy is appropriate for each
component of their facility.
19
RELIABILITY SIMULATION MODELING
DEFINITION
Reliability is the extent to which a piece of equipment or procedure will perform its
required function with consistency and expected quality over a specified time period and under
specified conditions. The concern of business is to maintain reliability affordably while
controlling operational failures to reduce costs and improve operations.
Reliability Simulation Modeling (RSM) is a computer-based simulation technique to

examine operability targets for a facility. The objective is to determine in-line sparing
requirements, controls and maintenance requirements, and in-process storage requirements
that meet operability goals, minimize cost, and achieve safe operations. Typically, RSM uses
actual failure data and repair times—given the system availability, reliability, maintainability, and
other operating system details—to assess costs and to decide the lowest long-term cost of
ownership and trade-offs. The RSM VIP should determine, in monetary terms, the relative
impact of changes in component design and operation so that knowledgeable decisions can be
made. The objectives of RSM are as follows:
• Provide an early indication of the design's potential to meet the design reliability
requirements.
• Enable an assessment of the life cycle costs.
• Enable the user to establish which components, or areas, of a design contribute to

major portions of the overall unreliability.
• Enable the user to investigate trade-offs among reliability, maintainability, and testing
or inspections to achieve a given level of reliability.
The prediction quality when using RSM tools depends on the following:
• The accuracy of the information used to create and upload the model (project scope,
drawings, premises, and equipment data)
• The quality and relevance of representative failure rate data to the specific service
• Limitations in the system definition and scenarios considered
Different types of RSM tools are available. For capital projects, the two main categories
of reliability modeling7 are as follows:
• Challenge-Response Models assess conditions where components or systems fail,

but the failure is not identified until a critical event occurs, compared with typical
failure situations such as those that occur from the passage of time, cycles, etc.
• Tolerance-Requirement Models assess conditions when the performance

characteristic(s) fall outside of some predetermined fixed limits, and gradual
degradation occurs based on use or time.
7
Barringer and Associates, “Life Cycle Cost and Good Practices,” NPRA Maintenance Conference, 1998.
20
APPLICABILITY
The best time to influence asset reliability is early in any capital project or turnaround.8
RSM can be applied to any system or unit in a proposed project alternative, in a consolidated
project scope in an existing facility, or even in a system part. In some types of projects, like
schedule-driven projects, the team must consider if data and resources are available to support
an analysis at the desired level of detail.
IPA considers RSM applicable for a project or turnaround when the project team is
required to address any of the following project issues:
• Selection of the preferred project options (for component, equipment, unit, or entire
plant) for mode operation or technology features
• Design and implementation of plant safety levels according to validated company

safety and risk policies
• Process, logistics, or waste handling optimization
• Redundancy optimization for power, command, and instrumentation
• Energy consumption optimization
• Maintenance policies
• Optimization of time between turnarounds
IPA does not normally consider RSM applicable for replacement-in-kind projects or
“clone” projects with no scope changes.
RSM models complex redundancies, partial failures, cutbacks, and loss of efficiencies
that cannot be modeled using other common related techniques, such as process reliability
plots or reliability block diagrams. RSM takes into account derating and curtailment of
equipment. It allows any equipment or system item to be at any capacity rate between 0 percent
to 100 percent. On the other hand, RSM also requires more data to produce useful results. This
approach typically requires the following:
• Non-constant failure rate data for any block
• If partial block failures are allowed (i.e., not just on or off), definition of the distribution
for each such block
• If desired, definition of more detailed repair and maintenance strategies, such as

time delay to receive spare parts
8
A turnaround is any scheduled shutdown of facilities or units within facilities to perform maintenance work and/or
install capital projects.
21
• Additional reliability distributions that account for the other parameters to be included
in the model, such as aging, common failures, and other maintenance issues
• Flow and storage issues, including capacity definition of items
RSM affords more accurate modeling of production levels, although it requires great
effort to gather the required level of information both for the project team and also for the
reliability analyst. The outcomes provide likelihood of cutbacks, as well as the effect that the
cutback would have on overall production levels. This approach typically requires at least 3
months to complete. RSM produces results for a range of system parameters:
• Total Downtime Over Lifetime: Expected total time that the system will be failed
during its lifetime
• Mean Unavailability Over Lifetime: Expected fractional time that the system will be
failed over its lifetime, that is, the total time that it is failed divided by the total system
lifetime
• Point Unavailability Over Lifetime: Probability that the system will be failed at the end
of its lifetime
• Expected Number of Failures Over Lifetime: Expected total number of system

failures that will occur throughout the life of the system
• Unreliability Over Lifetime: Probability that the system will have failed at least once
during its lifetime
For process industries, the cost of unreliability is a global effectiveness measure.

Usually, the asset management team of a business unit or the project team determines the cost
of unreliability and compares the available alternatives before making the final decision.
IPA’s Measures for Assessing the Use of RSM
In addition to the standard questions about VIPs use such as timing during FEL and the
primary driver of the action items resulting from the use of the VIP, IPA uses several other
measures to consistently benchmark the use of RSM. Such measures include the name of the
simulator employed and a description of the process steps to which RSM was applied.
RSM is not considered a VIP if the project scope is unclear or if the scope changes in
such a way that model inputs change (in such cases, RSM must be applied again). Also, RSM
is not considered a VIP if maintenance and operations personnel have not approved the failure
data and maintenance and operational premises used in the model.
RSM should be used during FEL 2 after the release of PFDs, even if they are
preliminary. The RSM review session must include all those who can influence the project, must
involve a reliability representative, and must be facilitated by someone from outside the project
team. Facilitation helps the project team make an unbiased analysis. If the RSM process started
with preliminary PFDs, the process should be reviewed again after the approved release of the
PFDs.
22
Figure 4 illustrates a typical process flow for RSM implementation during FEL. Before
using such a process, a project team should consider the following:
• Company risk policy

• Company safety and health procedures
• Project capital cost
• Criticality in terms of safety, including environmental losses risk
• Environmental impact
Reliability Simulation Modeling

FEL 1 FEL 2 FEL 3
Determine Appropriateness
of RSM and
Identify RSM
Tools and Support Team
Schedule Time and Establish

Budget for the Selected
RSM Approach
Build, Verify, and Validate the Model
Run the Analysis and

Perform a Sensitivity Analysis
Report on the Model With Recommendations.
CONFIDENTIAL
Figure 4
RELATED VIPs
RSM is most closely related to the maintenance approaches for the facility being
designed. Some of the parameters used in RSM require the project team to have determined
the maintenance philosophy to be used for the proposed asset. Data from a Design-to-Capacity
(DTC) evaluation also constitute the input for RSM. On the other hand, the results of RSM can
serve as useful input for a Value Engineering (VE)9 analysis. RSM is sometimes confused with
reliability-centered maintenance (RCM) techniques. However, the primary focus of RCM is
maintainability of individual pieces of equipment.
9
See the DTC and VE sections of this guide.
23
CUSTOMIZING STANDARDS AND SPECIFICATIONS
DEFINITION
The practice of Customizing Standards and Specifications (CSS) for a project involves
an evaluation of the specific needs of a facility before it is designed. Engineering standards and
specifications can affect manufacturing efficiency, product quality, operating costs, and
employee safety. However, the application of codes, standards, and specifications sometimes
exceeds the business needs of a facility and unnecessarily increases cost. The objective of
CSS is to meet the facility’s needs by employing the minimum required standards.
APPLICABILITY
In the early days of the process industries, uniform design standards were not defined.
As a result, some leading companies developed their own standards based on their internal
know-how and experience. Over the years, these standards became rigid and inflexible. In more
recent times, efforts occurred to develop process industry standards. However, comprehensive
process industry standards accepted broadly across the industry do not exist. As a result,
project teams are faced with situations in which operations and maintenance will adhere to a
company's internal standards—for example, regarding unique materials of construction, sizing
or fabrication, or the extent of automation and instrumentation—rather than adopt available
industry standards. However, insistence on unique company standards could unnecessarily
inflate project costs. Moreover, such standards can exceed the actual needs of the facility being
designed. Therefore, project teams should ensure an appropriate balance between the value of
the standards and specifications being used for the project and the facility requirements for
health, safety, environment, operations, and maintenance.
Another consideration is the procurement of equipment. A unique process design during

early development of a technology often demands equipment that is built according to a specific
design specification. However, procurement of equipment meeting a specific design
specification is undoubtedly more expensive and time-consuming than buying similar equipment
off-the-shelf. Therefore, project teams should review all pertinent design standards before
deciding what standards to use on a project. This involves developing a set of minimum
required standards and specifications that combine elements of existing and customized
standards to meet the needs of the facility.
CSS is generally applicable to any project that uses written standards and specifications
for equipment or bulk material used in design and construction. However, as with almost all the
VIPs, project teams must consider the trade-off between the time and effort required to perform
CSS and the expected value of such an exercise. In some instances. project teams may decide
against using this VIP, even though CSS may be applicable to the project.
CSS include (1) when the VIP is used during FEL, (2) comprehensiveness of application, (3)
value measurement, and (4) how that value was incorporated into the project.
24
The CSS VIP should be used in FEL 2 for a preliminary review and then in early FEL 3
to ensure that minimum required standards and specifications are employed for developing the
project scope and cost estimate for authorization. Companies sometimes have standard
procedures to review and achieve alignment on the standards and specifications to be used on
projects. Simply following such procedures may not be sufficient to achieve the objectives of a
CSS review. Standard procedures sometimes limit the team to “checking the box” to determine
the standards and specifications for the proposed facility. Key actions or tasks for using the CSS
VIP include the following:
• Conduct a structured, multidisciplinary review.
• Involve or solicit comments from key service contractors, vendors, and suppliers.
• Eliminate standards, specifications, and procedures not applicable to the project.
• Agree on precedence of company and industry standards and specifications.
• Where feasible, replace general specifications with preferred alliance vendor model
numbers.
• Simplify applicable standards, specifications, and procedures:
- Remove extra wording (“boiler plate” text) and use standardized datasheets.
- Eliminate duplication from international and national standards.
- Minimize cross-referencing with the intent that each standard or specification is

standalone.
• Challenge remaining standards and specifications for which there is no clear value-
justified basis and evaluate the costs and benefits of company standards on a life
cycle basis.
IPA’s Measures for Assessing the Use of CSS
In addition to the standard questions about VIPs use such as timing during FEL; use of a
formal, repeatable work process; and the primary driver of the action items resulting from the
use of the VIP, IPA uses several other measures to consistently benchmark the use of CSS.
Such measures include the percentage of project scope that used standards and specifications
based on each of the following:
• Existing owner or facility standards
• Existing standards used by the engineering contractor
• Existing vendor standards
• Existing industry consortia standards
• New standards developed for the project
25
For CSS, the project team conducts a structured, multidisciplinary review of the relevant
standards, codes, or specifications for the project. The CSS review should involve interactive
meetings attended by representatives from process, engineering, operations, maintenance, and
construction. Key contractors and vendors should also provide input for CSS. The review should
eliminate the standards and specifications that are not applicable to the project, and the team
should achieve consensus on the precedence of company and industry standards and codes.
Figure 5 illustrates a typical flow chart of key steps in a CSS review.
Customizing Standards and Specifications

FEL 1 FEL 2 FEL 3

Define
Preliminary
Scope
Form CSS
Review Team
•Owner/Plant
•Engineering
Review and Rank Contractor
Applicable •Vendor
Specifications •Industry
Consortium
•Project Specific
Determine Minimum
S&S for Piping, E&I,
HVAC, Civil, and Insulation
Prepare Matrix of
Scope Items and
Specifications
for the Project
CONFIDENTIAL
Figure 5
RELATED VIPs
Decisions made in a Classes of Facility Quality (CFQ) evaluation may influence the
standards and specifications used to design the facility, and the standards and specifications
used to design a facility may influence the reliability and maintainability of the facility. Therefore,
CSS may be more effective when used in conjunction with Reliability Simulation Modeling
(RSM) and/or Predictive Maintenance (PM). On the other hand, a project team may not need to
use both CFQ and CSS on a project because the principle goal of both these practices is to
establish standards that are aligned with the business objectives. CSS and Value Engineering
(VE) are also conceptually similar because they both seek to eliminate unnecessary or non-
value-adding items or features based on an analysis of functionality versus value.
26
If a project team decides to use the related VIPs,10 in one meeting or workshop, the
project manager should ensure that the team members distinctly document each VIP’s use for
future reference.
10
27
DESIGN-TO-CAPACITY
DEFINITION
Engineers often design major equipment items with a level of conservatism to ensure
that the overall plant will achieve its nameplate capacity, even under operating conditions that
are significantly different from those used in the design basis. The rationale behind the
conservatism is usually to reduce the probability of encountering operational problems.
However, oversizing equipment relative to its service can, in fact, cause operating problems. For
example, when designing heat exchangers for fouling service, engineers generally include an
additional heat transfer area to compensate for the expected fouling. This is usually achieved by
increasing the volume through which the fluid passes, which decreases the space velocity and
often aggravates the fouling problem. In this way, design conservatism becomes a source of
operability problems rather than a solution to them.11
The main problem with oversizing equipment is that the increased capacities often
translate into more costly equipment. This means that, when engineers take a view on the
appropriate margin of design conservatism for major equipment items, they may be unwittingly
determining how much extra project capital will be invested to provide an additional margin of
plant capacity. Ultimately, this leads to equipment, or even entire manufacturing facilities, being
designed with an excess capacity (“overcapacity”) that is not explicitly supported by the project’s
business investment analysis. Conversely, engineers may strive to design process equipment
that adheres closely to the facility’s planned operating campaign in cases where the business
requires a more generous margin of additional capacity for future expansion. The result is either
that money is wasted in the short term by the team inadvertently providing excess plant capacity
that was never justified, or, in the long term, additional investment becomes necessary to
debottleneck a facility that should originally have been built for expansion.
Design-to-Capacity (DTC) provides a method of achieving early alignment between a

project’s business, technical, and manufacturing representatives on the most appropriate level
of plant flexibility and overcapacity. This helps to save project capital by helping designers fully
understand the operability of every process step and equipment item. The practice also forces
the business to think explicitly about capacity and expandability scenarios and to communicate
its decision in a way that the project team can understand and implement.
The heart of the DTC process involves choosing how much design flexibility is required
for the overall facility and each major piece of equipment or system. The impact of adopting
different design factors on project cost and risk are critical elements of DTC discussions.
APPLICABILITY
When determining if a VIP is applicable to a project, IPA’s guiding principle is to consider

whether the project includes any scope that would be technically amenable to application of the
practice. DTC is applicable to projects that include in their scope any major equipment for which
decisions about sizing and capacity are to be made. Provided that this simple criterion is met,
DTC can be applied to almost any type or size of project in any industry. Conversely, DTC is not
11
For further information, refer to Jones, G.M. and Bott, T.R., “Designing Petroleum Processing Heat Transfer Capital
Equipment Subject to Fouling,” presented at the Conference of the United Engineering Foundation (UEF), Heat
Exchanger Fouling: Fundamental Approaches and Technical Solutions, Davos, Switzerland, July 8-13, 2001.
28
considered applicable when the project team does not need to make decisions about equipment
sizing or capacity. Examples might be projects that do not include any major equipment items in
their scope or small projects for which the business or manufacturing functions have specified
that a like-for-like replacement should be made.
DTC is no less applicable to small projects or revamp or retrofit projects. However,

application of the practice to any project should be commensurate with the opportunity to add
value; smaller projects will generally dedicate less time to the DTC sessions than larger
projects.
The project’s design in a DTC evaluation should have a minimum of three classes or
alternatives for each aspect. The classes reflect varying levels of manufacturing flexibility and
facility expandability, each of which will have an impact on invested capital. Capital cost is only
one of many factors that affects a project’s attractiveness, but it is often the most important.
Nonetheless, serious consideration should be given to the longer-term business strategy, which
may include possible future expansions or a need for increasing process flexibility to deal with
future feed uncertainties.
Table 2, at the end of this section, shows an example framework of design classes and
describes the performance characteristics for each level. The examples given in the table are
not meant to be prescriptive, but are intended to stimulate thought and discussion and to
enhance communication between all parties concerned.
IPA’s Measures for Assessing the Use of DTC
In addition to the standard measures, such as the timing of use during Front-End
Loading (FEL); use of a formal, repeatable work process; and the primary driver of action items
resulting from the use of the Value Improving Practice (VIP), IPA uses several other measures
to consistently benchmark the use of DTC. Such measures include whether the team evaluated
the capacity of each major equipment item and whether any extra “safety factors” were built into
the design to ensure reaching nameplate capacity.
As shown in Figure 6, the DTC practice begins during the early stages of FEL 2. The
practice begins with determining the facility’s overall design factor, which is commonly a product
of the Classes of Facility Quality (CFQ) VIP.12 Ideally, both of these VIPs should be initiated
simultaneously in FEL 2. This allows the CFQ sessions to conclude with a discussion of DTC
issues and lays a solid foundation for implementing DTC.13 These two VIPs are similar in that
both require representatives from the business, operations, and engineering functions to
discuss options objectively to align the project’s design philosophy with the business objectives.
12
CFQ is described in its respective section of this guide.
13
The initial discussion to develop the facility’s overall design factor should take no more than a few additional hours
when carried out in conjunction with CFQ, but could easily require a full day if conducted separately.
29
Design-to-Capacity
FEL 1 FEL 2 FEL 3

Review Business
Objectives and
Design Philosophy
Form Integrated,
Multifunctional
Team
Determine Overall
Facility Design
Factor Level
Determine System
Design Factor
Level
Determine Individual
Equipment Design
Factor Level
Check That Revisit During
Design Factors Value
Are Being Engineering
Implemented
CONFIDENTIAL
Figure 6
In cases where CFQ has not been applied, project teams can use the output from the
project’s Business Planning, or FEL 1 phase, as a basis to determine the most appropriate
overall design factor. In either case, the project’s executive sponsor will help the team
understand the required design philosophy.
The next step in the practice is to determine the design factors for individual systems
and, subsequently, for individual equipment items and should not be attempted until the project
process flow diagrams (PFDs) are completed. The executive sponsor typically has a less
important role to play at this stage because the project’s technical specialists are often able to
effectively translate the overall facility design philosophy into more scope-specific design
factors. Technology Selection (TS),14 if used, should be completed before attempting to apply
DTC.15
IPA has found that projects using DTC often require a little more time to reach their
nameplate capacities or may not have the same flexibility or robustness when faced with a
departure from the facility’s originally intended service. Implementing DTC therefore requires
that teams reach early alignment with the business unit and operations function on these
matters, which, in turn, requires the full participation of each of these functions in the VIP
sessions. Although the size and complexity of the project will determine the optimal team
14
TS is described in its respective section in this guide.
15
Revisiting the DTC output during a project’s Value Engineering (VE) application often requires just a few hours, but
can provide a valuable opportunity for realignment to ensure that all team members have adhered consistently to the
selected design philosophy.
30
representation on the DTC study team, a group of between six and eight people is often
appropriate if productive team dynamics are to be maintained. Suggested participants include
the executive sponsor, project director, project manager, process engineers, equipment
engineers and specialists, plant manager, area supervisor, and representatives from the
operations and maintenance functions.
Establishing DTC Design Factor Levels
The first step in DTC is to determine the overall facility design factor (e.g., level 1, 2, or
3). Teams should refer to the Business Planning (FEL 1) deliverables or the CFQ results for
guidance on the required capacity, product quality, flexibility, and expandability.16 Table 2, at the
end of this section, describes the objective and characteristics of different facility design factor
levels. The table also discusses considerations that can influence the decision.
Setting the overall facility level does not necessarily mean that all equipment should be
designed to that same level. The second step in DTC is to break the total facility down into
systems (groups of related equipment or single pieces of equipment). Each system should be
discussed and assigned its own level. A common methodology used by project teams is to
highlight systems on the project’s PFDs and then assign design factor levels while capturing
issues and impacts of the decisions.
After agreement has been reached, the design factor levels and approach are
documented so that all the project team members can understand on what basis the facility is
being built. The DTC levels should be revisited after each phase to ensure that alignment is
being maintained. This is especially important because the engineering disciplines and vendors
that will see the design package much later in the project life cycle will have a guide by which to
supply only the capacity that the project requires.
Design Factor Levels
The three design levels described in this document are examples encompassing the
range of types of facilities that many companies use in their manufacturing facilities. The three
levels do not relate to three levels of any particular type of equipment; there may, in fact, be
more or fewer levels.
The design levels reflect variations of capital investment versus different levels of
flexibility, etc. The level of invested capital is only one of the many factors that affect project
profitability, but it often is an important contributor when viewed in light of the total business
strategy.
There are circumstances in which a low initial investment, with its poorer flexibility, etc.,
may be the appropriate choice. The choice obviously must be based on an understanding of the
total business needs rather than simply relying on a single design class to cover all aspects of
the project(s). In addition, capacity issues are very complex because they are not independent
of other project objectives, such as conversion, yield, or maintenance of process control.
16
Choosing the higher cost categories in the CFQ practice does not automatically require that the team choose
similarly generous DTC levels.
31
RELATED VIPs
As stated previously, significant benefits can be achieved by starting DTC just as CFQ is
being completed. This facilitates a smooth transition and full alignment between the project’s
facility objectives and the overall facility design factor. However, although CFQ and DTC
complement each other, they are independent of one another. Using one of these practices
according to IPA criteria does not mean that criteria for effective application of the other VIP has
automatically been satisfied. Similarly, although Reliability Simulation Modeling (RSM) helps
achieve a design that is free of bottlenecks, using RSM does not automatically satisfy the
criteria for using DTC.
32
Table 2
DTC Facility Design Factor Levels
LEVEL 1 LEVEL 2 LEVEL 3
OBJECTIVE/CHARACTERISTICS Build a facility that only needs to operate Build a facility with just enough flexibility Build a facility with additional flexibility that
at well-defined, unchanging conditions to operate easily at nameplate capacity in can operate at the nameplate capacity
over its total life. This tighter, but less most design cases. This would probably required at the limiting design case, plus
capital expensive, design might take require minor debottlenecking to handle future unknown operating/
longer to start up or could require minor unforeseen variations in feed or product feed/product requirements. The level of
debottlenecking to reach nameplate specifications or to provide minimal assurance is high that the facility will meet
capacity. This facility could have trouble overcapacity. nameplate capacity and will be easier to
handling unforeseen processing operate and start up, but it will require more
conditions not considered in the original capital.
design.
The incentive to build this type of facility is The incentive is to spend a little more The incentive is that capacity requirements
that it is less expensive and carries money initially for some additional will be met quickly over varying process
minimal risk of failing to achieve flexibility, with the aim of providing some conditions and that potential overcapacity is
nameplate capacity because processing future overcapacity that could be used. provided. However, this additional flexibility
conditions do not change and are well costs more initially.
defined.
CONSIDERATIONS:
FEEDSTOCK/PRODUCT Range of feedstock variations may have a

Range of feedstock variations does not Product rates are sensitive to feedstock
QUALITY/YIELD/CONVERSION significant impact on throughput and yield.
have significant impact on throughput and quality/yield or conversion. The likely
The "design basis" can bracket the
yield. Feedstock is available and not combinations are predictable and can be
anticipated operating cases. However, there
expected to change over the facility life, or incorporated into the design. Alternatively,
is sufficient likelihood of additional cases
product quality/yield/conversion is the products can be blended or are
that are not predictable at this time that have
secondary to throughput and does not processed further to meet product specs
to be accommodated. This uncertainty
significantly affect profitability. without the need for additional process
warrants additional design conservatism in
flexibility designed into the facility.
the form of larger design factors.
DEGREE OF
Proven process New process
COMMERCIALIZATION
FINANCIAL
Potential loss is low if capacity or product High potential loss if capacity objectives are
quality is not met. not met.
DESIGN GUIDELINE Design all major equipment with no Design all major equipment with modest Design all major equipment with liberal
additional capacity design factors, that is, capacity design factors (10 percent) to capacity design factors (25 percent) to
just meet 100 percent of the process ensure that the equipment operates at the ensure that the equipment operates over a
requirements. limiting conditions and somewhat beyond. broad range of likely conditions and provides
for future unknown flexibility.
The design factors are intended to allow The design factors are intended to allow for
for some uncertainties in physical large uncertainties in physical properties and
properties as well as process variations. process variations.
33
CLASSES OF FACILITY QUALITY
DEFINITION
The practice of evaluating Classes of Facility Quality (CFQ) involves a structured team
review to validate and modify, if necessary, the facility characteristics needed to meet the
business objectives defined at the end of Front-End Loading (FEL) 1. These facility
characteristics include the facility life, expected reliability or uptime, likelihood of expansion,
production rate changes with time, feedstock type and availability, product quality, product
demand, product flexibility, reliability, expandability, and degree of automation. The purpose of a
CFQ evaluation is to establish a balance between each of the facility characteristics and the
capital, as well as operating costs associated with the proposed investment. The CFQ
evaluation also serves the purpose of communicating the project objectives to all concerned so
that the completed facility meets expectations. Project teams also use CFQ to review the
business objectives at the end of FEL 1 or to determine needed design allowances,
redundancy, sparing philosophy, and room for expansion in early FEL 2.
APPLICABILITY
The basic elements of a CFQ evaluation, such as the asset life, future expansion
considerations, or maintainability, are applicable to any type of project. Therefore, CFQ is
generally applicable to all projects regardless of the size, type, or industry. Possible exceptions
could be small projects in which the business objective is simply to extend the life of the facility
through selective, like-for-like replacements of individual (not facilitywide) pieces of small
equipment or piping or components of control systems.
CFQ include when the Value Improving Practice (VIP) is used during FEL, facilitation,
comprehensiveness of application, value measurement, and how that value was incorporated
into the project. The CFQ review session must be interactive, involve all those who can
influence the project, and be facilitated by someone from outside the project team. Facilitation
helps the project team make an unbiased determination of project objectives that are best
aligned with the business objectives.
IPA recommends a minimum of three classes or alternatives for each aspect of the
project’s design in a CFQ evaluation. The classes reflect varying levels of capital investment,
facility life, reliability, expandability, degree of automation, etc. The choice of class must be
based on an understanding of the total business needs rather than simply relying on a single
design class to cover all aspects of the project. Although the level of invested capital is just one
of many factors that affect project profitability, it is often an important contributor when viewed in
light of a total business strategy and current capital constraints. Some consideration, however,
should be given to life cycle costs. There are circumstances in which a low initial investment,
with short life, high maintenance costs, etc., may be the appropriate choice. An example
framework of design classes is illustrated in Table 3.
34
Table 3
CFQ: Framework of Design Classes
Class I Class II Class III Class IV
Low Capital High Capital
Short Life Long Life
Low Reliability High Reliability
Not Flexible Flexible
Designed for Single Designed for Multiple
Set of Conditions Sets of Conditions
High Operations and
Low Operations and
Maintenance Cost
Maintenance Cost
(Fixed and Variable)
Manufacturers’
Customized Equipment
Standard Equipment
Labor Intensive Highly Automated
IPA’s Measures for Assessing the Use of CFQ
In addition to the standard measures for assessing the use of VIPs, such as timing of
use during FEL and use of a formal, repeatable work process, information about the number of
sessions used and whether a formal process exists for establishing the classes is also used to
assess the use of CFQ.
The CFQ VIP should be used during in early FEL 2 when the project team works on
translating the business objectives into project objectives. Project teams generally begin
formulating project objectives early during FEL 2 based on the business objectives and related
information provided by the business in FEL 1. Information provided by the business includes
facility life, expected uptime, likelihood of expansion, production rate changes with time,
feedstock type and availability, product quality, product demand, product flexibility, and status of
commercialization of the technology. During FEL 2, this information from the business is used to
determine the redundancy or sparing philosophy for achieving reliability, allowances for future
expansion or changes, and degree of automation of facilities necessary to meet the business
goals. This process establishes the classes of facility quality, as illustrated in Figure 7.
The business, operations or manufacturing, and technical representatives should

discuss and determine the classes of facility quality for various elements of the project before
the final process design work begins. During this discussion, the technical function helps the
business understand what the proposed classes of facility quality mean in terms of cost,
reliability, expandability, etc., so that the selected alternatives meet the business needs. The
manufacturing representatives should ensure that they understand and are aligned with the
operations and maintenance needs of the facility when it is complete.
35
Classes of Facility Quality
FEL 1 FEL 2 FEL 3

Gather Preliminary Data
for Following Parameters:
– Capacity
– Product Quality
– Flexibility
– Technology
– Marginal Investment
Criteria
– Expandability
– Reliability
– Controls
– Maintainability
– Life
Form Team to Review

Classes of Facility Quality
Determine Class
of Facility Quality for
Each Parameter
CONFIDENTIAL
Figure 7
All those who can influence the project objectives, execution, startup, or operation of the
facility must participate in the CFQ review to evaluate the performance characteristics for the
proposed facility. The CFQ evaluation team must have representation from the business,
operations or manufacturing, project management, and technical functions, in addition to an
experienced external facilitator. The facilitator should be from outside the project team, although
not necessarily from outside the owner organization. The technical functions should include a
process lead, engineering lead, and equipment specialist(s). The number of work hours needed
to complete a formal CFQ evaluation will vary depending on the size, type, and complexity of
the project.
A CFQ evaluation may be repeated, along with a Value Engineering (VE) exercise, in
FEL 3 to serve as a realignment process. The information required to perform a CFQ evaluation
includes the following:
• Business objectives defined and documented in FEL 1 that cover feasibility data for facility
life, expected uptime, expandability, flexibility, feedstock, product quality, product demand,
and technology
• Environmental, safety-related, or other pertinent regulatory information
• Results of a Technology Selection (TS) review, if done
36
• Site/infrastructure options
• Conceptual design data, including a preliminary process flow diagram (PFD) for the
manufacturing process
Examples of performance characteristics for various classes of facility quality are

described in some detail in Table 4. The table is intended as a guideline only; a similar guideline
must be custom-developed for use by each company.
RELATED VIPs
Process Simplification (PS) is another VIP that project teams use early in project
development. By the time that the teams use CFQ or PS, the only other VIP that is likely to have
been used already, if applicable, is TS.17 Nevertheless, the basic objectives of a CFQ evaluation
are alignment and communication before the project team begins FEL 2 in earnest. Therefore, a
CFQ evaluation should not be combined with the implementation of any other VIP. However, the
results of CFQ serve as an important basis for performing Design-to-Capacity (DTC) and
Customizing Standards and Specifications (CSS).
17
37
Table 4
Classes of Facility Quality – Performance Characteristics
Class 1 Class 2 Class 3 Class 4
Process Characteristics
Capacity Designed for a specific capacity with Designed for a specific capacity and Designed for multiple, but similar, Designed for multiple feedstocks and
one feedstock and one set of feedstock with allowances for different feedstocks at a given feed rate. feed rates as well as start-of-run and
operating conditions. No capacity operating conditions and deterioration Difficult to replace major equipment end-of-run conditions; hence,
allowance for deterioration of of mechanical integrity. If operated sized with overcapacity. overcapacity expected in most cases.
mechanical integrity or process outside stated conditions, capacity
performance over the life of the plant. may be impaired.
Product Quality Designed to meet product Expect to meet product specifications Expect to meet product specifications. Designed with assurances that product
specifications at a given set of when outside stated conditions may Difficult to replace major equipment specifications will be met; hence,
conditions only. have to compromise on rate or other impacting quality; designed exceeds quality requirements at
parameter. No specification conservatively. design conditions.
overcapacity provided.
Flexibility No flexibility to handle off-design Only minimal flexibility to meet off- Moderate flexibility and turndown. Broad flexibility and large turndown.
conditions. Additional expenditures design conditions. Additional Additional expenditures necessary to Future expenditures probably minimal,
likely as experience gained. Very expenditures likely as process use full capability of that equipment even to realize most major equipment
limited turndown. requirements change. conservatively designed. maximums.
Marginal Investment Not normally considered, even when Consider only for high payout. Not less than base project investment Limited by corporate capital "hurdle,"
high payout. criteria, including consideration of i.e., earning power could be less than
Criteria usable plant life. that of base project. Long plant life
and/or early full capacity needed.
Plant Characteristics
Expandability Tight plot space with low first cost Tight, low first cost orientation. Somewhat more open space to Open plot with provisions to isolate
orientation. Debottlenecking and Debottlenecking may be difficult. improve accessibility and permit sections for maintenance. Room for
modifications to improve or change are Potential future changes to improve modest changes for debottlenecking process and capacity modifications.
difficult, if possible at all. performance may be considered. and product improvement.
Reliability Sparing limited to applications Sparing generally limited to Spares applied for orderly shutdown in Spares, etc., applied in most
necessary for an orderly shutdown. applications necessary for orderly services known to need frequent applications to maintain basic plant
Availability less than 80%. shutdown, or where experience with maintenance, require plant outages, or operations at or near design conditions
similar services indicates frequent are necessary to keep the plant in a during component maintenance.
plant outages for repairs are likely. "ready" position while repairs are Industry standard equipment and
Consideration given to imposing made. Consideration given to minimal sparing applied to sections
special conditions on particular imposing special conditions on that are intended to optimize plant
equipment as an alternative to sparing, particular equipment as an alternative performance, but that do not impact
installing bypasses, etc. Availability to sparing, etc., or if the equipment is basic product out-turn. Availability
85-90%. nonredundant and critical to the basic 95+%.
plant operation. Availability 90 - 95%.
Controls and Data Simple. Intended for operating at Simple. Intended for primarily Moderate number of control loops; Complex with sophisticated systems.
design case only. Heavy reliance on operating at design conditions. Some reliance on operators reduced during Less reliance on operators, especially
Provisions operating personnel. No provision for recognition of needs for operating normal operations. Sufficient in the field. Sufficient equipment for
specified turndown, optimization, or modestly outside design case. Heavy equipment and data collection for continuous or nearly continuous
troubleshooting. Minimal data reliance on operating personnel. troubleshooting and frequent optimization and performance studies,
collection. Connections provided for temporary optimization studies. Extent of this including variations of process
hookups of instruments for equipment tempered by knowledge variables. Extensive data collection,
troubleshooting and optimization and experience with the process. handling, and retention. Provisions for
studies. Minimal data collection. computer information and/or control.
Maintenance Minimal, if any, maintenance facilities Maintenance facilities installed only Maintenance facilities and accessibility Need for temporary maintenance
included in the original plant. where experience with this type of for mobile equipment provided where facilities minimized and accessibility
Accessibility for mobile equipment may plant dictates. Accessibility for mobile experience with this type of plant for wide use of mobile maintenance
be limited. Major maintenance equipment may be limited. Major dictates. Space also provided for equipment provided. Justifications
expenditures may be necessary for maintenance expenditures may be difficult maintenance jobs during based on anticipation of long plant life.
operation beyond 2 to 5 years. High necessary if plant is to continue normal life of unit. Major maintenance costs not
maintenance costs. operation more than 4 to 6 years. contemplated over a long plant life.
Life 2 to 5 years 5 to 10 years 10 to 20 years 20+ years
39
VALUE ENGINEERING
DEFINITION
Value Engineering (VE) is an analysis of the functions of a program, project, system,

product, item of equipment, building, facility, service, or supply aimed at eliminating or modifying
items that do not contribute to meeting business needs. In the construction industry, VE is a
systematic, multidisciplinary team effort applied during the planning and design phases, with the
purpose of achieving project objectives at optimal cost while maintaining the necessary value.
“Fit-for-purpose” is another term used to refer to VE. VE is sometimes also called “Value
Analysis,” especially in Europe.
VE is directed toward analysis of functions (i.e., functionality of items in a project’s

scope). It focuses on the elimination or modification of anything that adds cost to an item without
contributing to its required function or the elimination of any item with a function that does not
add value. The principal concepts that underlie the methodology are (1) function, (2) cost, and
(3) worth.
“Value analysis” and “value management” are two terms commonly used in Industry that
are related to VE, but there are subtle differences among these practices. VE is the value study
of a project or product in its developmental stages, that is, it analyzes the cost of the project as it
is being designed. Value analysis is the value study of a project or product that is already built
or designed and analyzes its improvement potential. Value management identifies the
methodology and techniques used in value work.
APPLICABILITY
IPA’s guiding principle is that a Value Improving Practice (VIP) is applicable to a project
as long as the project has any scope that could benefit from the VIP’s use. Thus, VE can be
applied to any type of project, regardless of the size, type, or industry. For small projects,
however, the number of reviews and the time spent on each of them should be implemented
proportionally to the size and complexity of such projects. However, small projects that are
maintenance driven or involve like-for-like replacements may not be suitable for VE.
VE include when the VIP is used during Front-End Loading (FEL), comprehensiveness of
application, external facilitation, value measurement, and how that value was incorporated into
the project.
Frequently, a project team’s first response to a presentation on VE is “We do it all the

time, but we don't use that name.” However, VE has many elements, such as teamwork,
functional analysis, creativity, cost-worth, and systematic application of a recognized technique.
Unless all of these elements are used, the effort is not likely to be true VE, and it will not yield
the results that a VE study will yield.
40
VE should be used in FEL. It can be used during FEL 2 to review the elements included
in the scope that comprises the design basis. VE should be used early during FEL 3 when the
project team has completed the project study phase and when the team has started working on
translating the design basis into preliminary engineering deliverables. At this point, sufficient
design information is available to perform a detailed function analysis for each item of scope.
The total effort for a typical VE study can be anywhere from a few hours to 5 days, including
multiple sessions, depending on the size and complexity of the project. VE review sessions
must be interactive and must be facilitated by a specialist external to the project team.
Facilitation by a VE expert helps the project team to properly implement a Function Analysis
System Technique (FAST) and to focus on ideas and leaves the mechanics of coordinating the
implementation process to the facilitator. Also, an external facilitator helps the project team
make unbiased decisions for eliminating or modifying scope items that do not contribute to
meeting business needs.
VE review sessions should involve at least the following project functions: process,
engineer, project manager (owner and contractor), process engineer, operations representative,
and cost estimator (owner).
IPA’s Measures for Assessing the Use of VE
use during FEL; the use of a formal, repeatable work process; and the primary driver of action
items resulting from the use of the VIP, IPA uses additional measures to asses the use of VE.
Such measures include the number of VE sessions, use of function analysis, “work-off” list of
ideas, and use of FAST to aid idea generation.18
IMPLEMENTATION GUIDELINES19
VE can be applied at any point in FEL, but, to obtain maximum effectiveness, VE studies
should begin as early as possible in FEL 3 before preparing the cost estimate for authorization.
The length of time required for a study varies and is dependent on the complexity of the project.
By having the VE workshop team effort done at one time rather than extending it over several
weeks or months, the team members do not have to become reacquainted with the project, and
momentum is maintained. Figure 8 illustrates the steps that are typically performed for VE.
18
See the Implementation Guidelines section for an explanation of FAST.
19
The Society of American Value Engineering provides details about the Value Methodology Standard and Function
Monographs. For more information, please visit www.value-eng.org.
41
Value Engineering
FEL 1 FEL 2 FEL 3
Preparation
Information
Speculation
Evaluation
Development
Implementation
CONFIDENTIAL
Figure 8
Preparation and Information
In the Preparation/Information Phase, the project team briefs the VE facilitator, who
plans the VE workshop. Then, the necessary project team functions are assigned, and
necessary information for distribution to the team is identified. The Classes of Facility Quality
(CFQ) VIP captures key information to be used in the preparation phase of the VE VIP. Project
team members (and external facilitators) should review the outcome of the CFQ, if used, before
proceeding with VE.
Speculation
In the Speculation Phase, the project team reviews the VE process, reviews the project,
agrees to the project scope and metrics, isolates the project systems, and identifies the
functions to brainstorm using FAST. VE defines a function as the intent or purpose of a product
or service performing in its normally prescribed manner or as normally expected. In this phase,
the project team will describe the functions using two words: an active verb and a measurable
noun.
FAST is a powerful analysis process used by most Value Engineers to analyze the
functions and to improve the value of physical components, assemblies, hardware products,
and construction projects. FAST depicts what the system does. In addition, FAST recognizes
function dependencies by asking the intuitive questions of “Why?” and “How?” and gives those
42
questions a directional reference. “How” is always read from left to right, and “Why” from right to
left. By answering these questions, the VE team will have a map of the functions of the system,
and the team will then brainstorm these functions for new ideas.
The team applies brainstorming techniques to develop good alternatives to the way that
the project is currently designed. Brainstorming forces people to be creative. The mechanism
that produces this phenomenon is called synergism, which means that one idea triggers other
ideas or thoughts through similarities or like ideas, contiguous or adjoining ideas, and
contrasting or opposite ideas.
Evaluation
The advantages and disadvantages of each remaining alternative are listed in the
Evaluation step. Each advantage and each disadvantage are described in general terms. The
team can perform a weighted matrix analysis to determine which alternative is best, based on
the relative importance of each of the desirable criteria that must be addressed. This analysis
satisfies the VE objective of achieving the best blend of performance, cost, and schedule.
Development
After the team selects the best alternative, it is fully developed through sketches, cost
estimates, validation of test data, and other technical work to determine if any assumptions
made during the study are, in fact, valid. The final step before presenting the team’s
recommendations to management is to formulate an implementation plan describing the
process that the project must follow to implement any recommendations. The final product of a
value study is the formal VE report and the presentation of the team's recommendations.
Presentation and Implementation
The VE team presents its findings to the decision-makers, typically the gatekeeper or
steering team, to explain the ideas that deserve to be implemented. The decision-makers
ensure that the recommended ideas are incorporated into the project. This phase quantifies the
amount of savings generated by the VE study based on the recommendations incorporated into
the project.
Figure 9 provides an overview of the typical steps involved in Value Engineering.
43
Value Engineering
Typical Steps
Preparation Information Speculation Evaluation Development Implementation
• Scope • Analyze • Brainstorm • Cluster Ideas • Develop • Package

Project Information Functions Scenarios Scenarios
• Identify
• Structure • Determine • Generate Champions • Analyze • Develop Sales
Team Goals & Ideas Risks/Benefits Strategy
• Rank Ideas
Objectives
• Identify • Record Ideas • Score • Present
• Select Ideas
Information • Determine Attributes Proposal
• Avoid
Boundary • Expand
• Plan Roadblocks • Validate • Agree to
Conditions Ideas
Workshop Assumptions Scenario
• Suspend
• Assess
• Perform Judgement • Plan Project
Attributes
Function
Analysis • Isolate
Systems
CONFIDENTIAL
Figure 9
RELATED VIPs
VE is closely related to Process Simplification (PS).20 PS focuses on the alignment of

process design with business objectives. VE focuses on equipment types, numbers,
configurations, and design details, as well as constructability issues. Ideally, a PS study is
conducted very early in the FEL 2 phase of a project, and VE is conducted in the FEL 3 phase
of a project.
20
See the section on PS in this guide.
44
CONSTRUCTABILITY REVIEWS
DEFINITION
A Constructability Review or Buildability (United Kingdom term) comprises an analysis of

the design, usually performed by experienced construction engineers, with the objective of
reducing costs or saving time during construction. Constructability is usually a program in which
competent construction professionals are involved as part of the project design team, working
with the engineers from the conceptual stage of the project and continuing through completion
of design. Construction professionals provide input on the plans and designs to facilitate
construction, and they work with the engineers to plan how to best meet the desired end
result.21
Constructability is the integration of construction expertise throughout the design

process to facilitate reduction of construction cycle time and cost. Constructability issues are
considered in key development decisions. To be considered a Value Improving Practice (VIP)
rather than just a good project practice, Constructability Reviews must follow a formal,
repeatable work process that begins during Front-End-Loading (FEL) and continues through
construction.
APPLICABILITY
Constructability Reviews are applicable to any type of project, regardless of the size,
type, or industry. For small projects, however, the number of reviews and the time spent on
each of them should be implemented proportionally to the size and complexity of such projects.
Constructability Reviews include when the VIP was used during FEL, if the Constructability
Review used an outside facilitator, how comprehensive the application was, if the value added
was measured, and how that value was incorporated into the project.
If Constructability Reviews are used early in FEL, they help the construction engineer to
realize cost and schedule savings for the project. Constructability Reviews should start early
during FEL 2 or even earlier, if the type of project has a scope that allows earlier use of this VIP.
Also, Constructability Reviews should be used to influence a project’s design to improve cost,
schedule, or safety. A review focused on the feasibility of construction of a given design is a
good practice, but it is not a Constructability Review.
21
“Constructability Improvement During Conceptual Planning,” Construction Industry Institute, Source Document 4,
March 1986.
45
In addition to timely use and the involvement of key functions, project teams should use
a formal, repeatable work process with measurable results to implement constructability. The
project constructability team should include, but is not limited to, the following:
• Project constructability coordinator
• Construction manager
• Project manager
• Cost/schedule control engineer
• Procurement
• Operations
• Project engineers and discipline engineers
• Contractor/major subcontractor representatives
• Safety
• Quality control
• Other specialists, such as rigging, piping, and transportation
IPA’s Measures for Assessing the Use of Constructability Reviews
use during FEL and the use of a formal, repeatable work process, IPA uses additional measures
to asses the use of Constructability Reviews. Such measures include information about the
background of the facilitator, the constructability engineer/specialist’s experience, and the
number of Constructability Review sessions.
Constructability Reviews should integrate construction expertise throughout the design

process to facilitate reduction of time and cost. Constructability issues should be considered in
key development decisions. Typically, competent construction professionals review the project’s
plans and design documents after design is essentially complete, and resulting changes are
minor modifications to ensure feasibility of construction. Even in lieu of a broader program, such
reviews can provide benefits. However, much greater benefits are obtained when a
Constructability Program is implemented. A Constructability Program involves the construction
professionals on a more-or-less continual basis, beginning at the conceptual stage of the project
and extending through completion of design. In such a program, the construction personnel
function as part of the project design team. As such, they are involved with the total design effort
rather than simply making the decision about whether a completed design can be readily built.
They work with the engineers to plan how to best meet the desired end result.
Table 5 presents the key differences between typical construction reviews and
Constructability Reviews that are used as a VIP.
46
Table 5
Distinctions Between Typical Construction Reviews
and the Constructability Review VIP
Typical Construction Formal Constructability Constructability Program
Reviews (not VIP) Reviews Starting During FEL
Experienced construction Experienced construction This includes all the
professionals review plans professionals provide input into elements of Constructability
and designs after design is the project’s plans and designs Reviews, plus the following
essentially complete. during FEL 2 or early FEL 3. factors.
Minor modifications are The reviews follow a formal, Construction personnel
made to ensure feasibility repeatable work process and function as part of the
of construction. involve all key functions on the project design team.
Limited input still provides project team. Changes focus on
some benefits. Ideas and proposed engineering planning and
modifications to design that scheduling, for example:
target time savings or cost - Early construction
reduction during construction sequencing
are documented, prioritized, - Drawing issue
and assigned for follow-up. sequence
Value added from - Site layouts for crane
Constructability Reviews is access
estimated and formally - Laydown space and
documented by the team as staging areas
part of the evaluation. - Guided detailed
designs
Engineering and
construction work are
planned together.
A project that implements a Constructability Program changes the focus of engineering

planning and scheduling. Engineering and construction work are planned together, with
construction needs often driving the engineering approach. This may involve departing from the
normal design sequence to have engineering deliverables better serve construction needs.
Unusual designs may be needed to allow construction to operate in limited space. Engineering
details are designed with the immediate construction input to more closely optimize project
costs. The result, in any case, is an overall project plan driven by the business needs of the
project itself. Engineering schedules are crafted based on a holistic view of the project needs,
including optimal construction sequences, as opposed to construction schedules being based
on promised drawing issue and material delivery dates. Properly timed initiation of a
Constructability Program provides early construction sequencing, drawing issue sequence
determination, determination of the minimum detail work needed to adequately impart the
design needs to the construction force, etc. Constructability Reviews would ensure site layouts
that provide for crane access, adequate laydown space and staging areas, access for materials
and personnel, and avoidance of unnecessary limitations on construction methods. Detailed
designs would be modified as necessary to avoid difficulties in construction.
47
The Construction Industry Institute (CII) developed a Constructability Implementation
Roadmap to provide guidance in planning, developing, and implementing a Constructability
Program.22 CII presents this roadmap as a comprehensive approach to implementing a
Constructability Program. The major steps in the roadmap are the following:
1. Commit to implementing a Constructability Program.
2. Establish a Constructability Program.
3. Acquire the capabilities to perform Constructability Reviews.
4. Plan implementation of Constructability Reviews.
5. Implement Constructability Reviews.
6. Update corporate program.
Each step (or milestone) includes specific, detailed activities. These steps are oriented
toward constructability at corporate and project levels. Steps 3 to 5 are oriented toward a
project-level Constructability Program. The application of a Constructability Program is
enhanced when construction and fabrication contractors external to the team (i.e., “fresh eyes”)
participate in Constructability Reviews, and lessons learned from analogous projects are
integrated into project Constructability Review procedures.
Facilitation focuses the discussion and clarifies understanding. It offers objective

expertise to guide the project team through the discussion, debate, and decision-making
process in Constructability Reviews. Any approach to solving problems, analyses, planning, or
change, can benefit from having the process facilitated.
RELATED VIPs
The potential of Constructability Reviews is greatly enhanced when combined with 3D

23
CAD. The use of 3D CAD helps improve communication between engineering and
construction. The combination of these VIPs allows the reviewers to easily visualize a series of
options in design and construction sequences for providing input into the design that will
facilitate construction activities. Constructability Reviews and 3D CAD have evolved in the last
decade into 4D CAD or “nD CAD,” which incorporates other dimensions, such as time and cost,
into the 3D model. Representation of 3D models over time (i.e., 4D CAD) can be a powerful tool
for use in Constructability Reviews.
22
Construction Industry Institute, "Preview of Constructability Implementation,” Bureau of Engineering Research, The
University of Texas at Austin, Publication 34-2, February 1993.
23
See the 3D CAD section in this guide.
48
ENERGY OPTIMIZATION
DEFINITION
Energy optimization, recovery, and integration involve a technical analysis aimed at

determining the best possible capital cost, operating cost, and operability for a process unit,
utility system, or manufacturing site. Using the basic thermodynamic data, targets for energy
consumption and power generation that take into account the cost of equipment can be
TM
determined in an Energy Optimization (EO) study. Process modeling tools, such as HYSIS
and Aspen, are available to support such studies. Software tools may use linear programming
routines to evaluate the optimal configuration of, for example, a heat exchanger network. Other
methods to optimize energy include heat recovery with turbine generators.
According to the first law of thermodynamics, heat and energy are related. Thus, it was
common practice in the process industries to install feed effluent exchangers around reactors
and distillation columns. However, since the early 1970s, a different approach taking into
consideration energy integration of a complete processing area has been developed. A detailed
analysis of heat and energy integration (pinch analysis) can be found in Townsend and
Linhoff.24
Pinch analysis provides a systematic methodology for energy savings in processes and
for total sites. The methodology is based on thermodynamic principles. After heat and material
balances (H&MBs) are established, heat sources and sinks are identified, and options to
exchange heat are assessed. Energy sinks and sources are, for example, coolers, heaters,
condensers, and reboilers. For a process area or site, after energy sources and sinks are
identified, energy savings can be realized, for example, by setting up heat exchanger networks
for energy integration.
The purpose of an EO study is to improve the return on investment (ROI) for projects by
identifying the most economic levels of heat recovery and power generation.
APPLICABILITY
EO is applicable across a range of energy-intensive industries including oil; chemicals;

mining, minerals, and metals; pulp and paper; pharmaceuticals; and food and beverage. A
recent IPA study demonstrates that EO is used on about 30 percent of large process projects
and that the refining sector is increasingly using this Value Improving Practice (VIP), while its
use in the commodity sector remains steady at about 20 percent. EO is used worldwide, but its
use in the United States is among the lowest; Canada is the leader, with about 43 percent of
projects using EO.
EO is applicable to all types of process projects, from revamp to grassroots, as long as

energy sources and sinks are part of the project scope. Therefore, for process projects, EO is
generally applicable. For a purely electrical, mechanical, construction, instrumentation, or
distributed control system (DCS) project, EO is generally not applicable, although there may be
opportunities for energy conservation on such projects.
24
D.W. Townsend and B. Linhoff, “Heat and Power Networks in Process Design, Part I and II,” AIChE J., 29:742,
748, 1983.
49
Some sites have an ongoing overall EO program. In such circumstances, even if the
site’s program identifies a particular project’s EO opportunities, that may not constitute the use
of EO as a VIP because a VIP should be implemented for a specific project scope in a formal
manner.
The following criteria have to be met for this VIP to add value to a project:
• An EO study (typically a pinch analysis) is performed prior to the start of the

execution phase and during the project definition phase (typically toward the end of
Front-End Loading [FEL] 2 when H&MBs are established and during early FEL 3). A
process engineer or EO specialist typically leads the effort.
• A document regarding the EO study exists. The documentation would typically

include technical information such as cascade diagrams, temperature-enthalpy
diagrams, composition curves, pinch matches diagrams, and final process design
diagrams (process flow diagrams [PFDs]).25 In addition, the impact on cost should be
documented. A number of alternatives might be examined. For every alternative,
energy savings and cost savings should be documented.
• Optimization areas are identified and incorporated into the project’s scope.
The results of an EO study should be reviewed in a structured manner, should involve

the whole project team, and should include functions such as business, maintenance, startup,
and operations. Impacts on capital costs, as well as operating expenses, should be addressed,
and buy-in from business should be secured because investment cost might increase as a
consequence of implementing the recommendations from an EO study. Issues regarding
increased complexity and equipment problems need to be addressed and planned for,
particularly with respect to startup and operability.
IPA’s Measures for Assessing the Use of EO
use during FEL; the use of a formal, repeatable work process; and the primary driver of action
items resulting from the use of the VIP, IPA uses additional measures to asses the use of EO.
Such measures include the type of software package used, if any, and whether pinch analysis
or linear programming was employed.
The EO process is most effective if it is an integral part of the basic process engineering
activities that occur during the development of PFDs. However, it is commonly done in parallel
with process engineering and can also be done based on a “finalized” PFD, especially if an
25
For further reading, see J. M. Douglas, Conceptual Design of Chemical Processes, McGraw-Hill, ISBN 0-07-
017762-7.
50
outside consultant does the EO study. EO is a process design methodology with two primary
inputs: thermodynamic data and cost data. The end product is the optimized PFD.
The basic EO process is summarized below. The EO study involves a thermodynamic

analysis and an assessment of the economic situation and ends with the completion of the
process design. Process engineers responsible for developing the PFDs typically perform EO.
Input from capital cost estimating groups, project economics groups, and process licensors is
needed for EO. The EO process includes the following:
• Thermodynamic analysis
- Determine required process temperatures.
- Define background utility systems (if existing).
- Define mass flow rates and specific heat data.
- Define operating constraints of process.
• Economics
- Determine installed costs for heat recovery equipment, furnaces, steam

generators, power generators, etc., as a function of “size.”
- Determine the site's true energy costs for fuel, power, etc.
• Conceptual design
- Calculate the energy target that corresponds to the optimized cost.
- Develop a process design that meets the energy target and recognizes all
operating constraints.
- Optimize the process design.
- Finalize the PFD.
The following information is required to conduct an EO study:
• Block flow diagram
• Reaction temperatures
• Separation temperatures
• H&MBs
• Enthalpy data
• Approximate installed cost data for equipment
• Characteristics of the utility system
51
For retrofit or revamp projects, the following information is needed:
• H&MBs based on operation
• Existing equipment data
• Approximate installed cost data for equipment
• Characteristics of the utility system
RELATED VIPs
None of the other VIPs use pinch technology or seek to achieve the most economic
levels of heat recovery and power generation or are conceptually similar to EO. Nevertheless,
project teams that intend to use EO should consider using Classes of Facility Quality (CFQ)26 to
gain alignment with business over the potential capital and operating cost trade-offs. In addition,
Reliability Simulation Modeling (RSM) may help teams that use EO understand how linking
various unit operations through heat integration influences reliability of the facility.
26
52
WASTE MINIMIZATION
DEFINITION
Waste Minimization (WM) is a process stream-by-stream analysis to develop and

consider concepts and proposals to reduce and/or eliminate nonuseful (i.e., waste) streams
from a specific process. The WM Value Improving Practice (VIP) uses a disciplined approach
during the initial stages of design to minimize waste production and its net impact on the
business.
In response to greater environmental awareness and increased regulation, the process

industries have expanded waste reduction efforts from simply installing end-of-pipe solutions to
minimizing the generation of wastes. For existing process units in operation, it is not always
possible to minimize waste at the source or to reuse it because the existing unit and process
conditions limit the options available for reducing or reusing waste. However, during the initial
stages of project design, ample opportunity exists to implement design modifications that reduce
the need for waste treatment by source reduction and/or reuse. WM involves a systematic
approach of design and scope development questions aimed at identifying WM opportunities
more easily.
APPLICABILITY
IPA considers WM applicable to all capital projects that either create or process an
unwanted (i.e., waste) stream. This rule holds for most capital projects regardless of industry,
size, or project type, including capital projects that may not include a process step, but produce
a significant waste stream. For example, WM is applicable to new laboratory or office building to
minimize wastewater and/or stormwater runoff. Capital projects that are primarily
civil/construction projects or basic bulk material installations generally do not have scope to
perform a WM analysis. In addition, WM is not likely to apply to capital projects dealing primarily
with electrical, instrumentation, and control.
For capital projects driven by environmental regulations or compliance issues, WM is still

considered applicable. In these instances, a WM exercise can be implemented under two
separate frameworks. In the first case, a WM exercise is inherent in the scope of the project or
process. For example, a project installing a new thermal oxidizer could use the exercise to
optimize burner design to minimize air emissions. In the second case, WM methodology could
assist in developing the project’s initial scope. For example, a business unit, faced with the need
to reduce overall emissions of volatile organic compounds (VOCs) for a plant site, would
implement the overall WM exercise and related waste treatment hierarchy at the earliest stages
of Front-End Loading (FEL) to assist in basic scope development.
WM is also applicable to small capital projects when the creation or processing of a

waste stream is within their scope. For example, a project installing a new heater could use WM
to consider the use of low emission burners or to eliminate the need for burners by sharing heat
from a nearby process.
53
For the purposes of benchmarking, IPA’s criteria for whether a project formally used WM
are based on the timing of use during FEL, comprehensiveness of application, formality of use,
measurement of results and value added, and how the results are incorporated into the design.
To be effective, a WM exercise should be implemented during the final stages of FEL 2

or the early stages of FEL 3. This timeframe is optimal because the project will have completed
a preliminary project design, including finalized process flow sheets and heat and material
balances (H&MBs). These design elements are necessary for identifying and quantifying
potential waste streams. Applying WM later in project definition is problematic because the
design of the project processes and equipment specifications may be too far advanced to
introduce changes.
WM is generally conducted based on industry guidelines as set forth in Kraft (1992)27

and Mulholland and Dyer (1999).28 This framework includes a multistep work process beginning
with initial environmental screenings, engineering evaluations, and project environmental
overview. WM is managed using a waste treatment hierarchy ranging from prevention to recycle
and reuse to waste treatment. Key elements of this hierarchy are described in the
Implementation Guidelines section.
IPA’s Measures for Assessing the Use of WM
use during FEL and use of a formal, repeatable work process, IPA uses an additional measure
to asses the use of WM. The additional measure is a description of the design changes to
reduce waste production that are incorporated into the design by the project team.
WM is generally implemented based on a set of industry norms and standards. These

standards, which will vary between industry and company, are originally based on the waste
treatment hierarchy first proposed by Kraft (1992). Table 6 summarizes this 10-step process.
The framework includes more than the specific WM VIP steps and demonstrates how a WM
effort should be integrated into a company’s capital project work process.
27
Robert L. Kraft, “Incorporate Environmental Reviews Into Facility Design,” Chemical Engineering Progress, August
1992.
28
K. L. Mulholland and J. A. Dyer, Pollution Prevention: Methodology, Technologies, and Practices, American
Institute of Chemical Engineers, 1999.
54
Table 6
Waste Minimization Steps and Procedures
Process Step Comments
Conduct initial screening
• Determine if site remediation is needed prior to construction.
and predesign
assessments. • Define impact on existing waste treatment facilities.
Assign project
• Role is to lead and coordinate project guidelines.
environmental leadership
responsibility. • Identify and assign resources.
• Objectives focus preferentially on source reduction and recycling
versus waste treatment.
Define project's
environmental objectives. • A hierarchy of emissions and discharges is considered.
• A list of specific goals for reductions of emissions and discharges is
compiled.
• Obtaining permits is often the most critical and time-limiting step in the
project schedule.
Identify the need for any • Permit requirements or limits are not always clearly defined and often
permits. may be negotiated with regulatory agencies.
• Define whether new permits or modifications to existing permits are
needed.
Determine the • Make sure the project meets applicable regulations and guidelines.
environmental compliance • Generally, compliance is determined by emission and discharge limits
requirements. specified in the application permit.
• One of the greatest opportunities may be during the fundamental
research that led to the process chemistry.
Perform an overall WM
analysis. • New and exotic technology is not usually required to minimize waste.
• Having fairly accurate flow sheets that identify all major process
streams and their composition is important.
Apply “Best Environmental • Prevent or minimize leaks at the source.
Practices” for emission-free • Capture, recycle, or reuse to minimize the need for abatement.
and discharge-free • Abate emissions so as to have a minimum or zero impact on the
facilities. environment.
Determine waste treatment • Waste treatment is used only as a necessary last resort.
and disposal options. • Goal is to define the most cost-effective treatment method.
Perform engineering
evaluations of waste • This step requires information such as capital investment, costs, etc.
management options.
Complete project • Compile a summary of results and a summary of various
environmental review by environmental reviews.
documenting the results. • Audit construction and startup to ensure implementation of
environmental recommendations.
55
Waste Minimization
FEL 1 FEL 2 FEL 3

Assign Project
Environmental
Leadership Determine Waste
Responsibility Treatment and
Disposal Options
Define Project’s
Environmental Perform Engineering
Objectives Evaluations of Waste
Management Options
Identify the
Needs for
Any Permits Complete Environmental
Review by
Determine the Documenting the Results
Environmental
Compliance
Requirements Apply “Best
Environmental
Practices” for
Identify Nonuseful
Emission-Free and
and Recycle Streams
Discharge-Free Facilities
Waste Minimization includes steps shown in red boxes.
CONFIDENTIAL
Figure 10
Figure 10 illustrates the timing of each WM step during FEL. The initial steps, such as
assigning project environmental leadership, defining the project’s environmental objectives, and
identifying the environmental permit requirements, are practices that should be completed
during the initial stages of project development and are required to successfully implement the
WM exercise. These steps establish the baseline from which WM will work. In addition, these
steps are essential for determining whether WM is applicable to the project scope and to
determine whether the project may actually benefit from a WM exercise.
WM begins with segregation of all process streams into nonuseful (waste) and other
(feed, intermediate, or recycle). The nonwaste streams should be examined for their potential to
reduce waste. For example, a process may greatly reduce waste by using a higher purity
feedstock. In addition, the project team may find that modification to the recycle or intermediate
streams may eliminate downstream waste. With respect to the waste streams, the project team
should characterize and quantify each nonuseful or waste stream. This work is generally
completed using a standard checklist29 to determine whether the waste stream can be
eliminated at the source; whether the waste stream can be avoided due to recycle, reuse, or
coproduct sale; or whether the stream will require treatment before introduction to the
environment.
29
For an example of a standard checklist, see Robert L. Kraft, “Incorporate Environmental Reviews Into Facility
Design,” Chemical Engineering Progress, August 1992.
56
The step, “Apply Best Environmental Practices,” requires the project team to review the
overall project scope to reduce the potential for unplanned releases, spills, or fugitive emissions.
The review should follow a standard hierarchy of environmental control:
1. Prevention: Process or design changes to prevent the potential for leaks. This includes
reducing the frequency of equipment interconnections or upgrading equipment to a higher
grade to reduce the potential for leaks.
2. Recycle or Reuse: Capture all fugitive waste streams for reuse and/or recycle to minimize
the need for abatement.
3. Reduction: Consider waste reduction process options.
4. Treatment: Consider off-site or end-of-pipe treatment of remaining waste streams.
The goal of the project team should be to explore options 1 through 3 before settling on
a traditional end-of-pipe waste treatment method. The goal of the step “Determine Treatment
and Disposal Options” is to then define the most cost-effective treatment method to control
emissions and discharges so that they are harmless to the environment. The next step involves
engineering evaluations performed by project team members with help from outside WM
experts, if necessary. Finally, all decisions and changes to the process flow resulting from WM
are documented. This step is necessary to ensure that the recommendations arising from the
WM exercise are incorporated into the project’s final design.
RELATED VIPs
The WM VIP is closely related to the VIPs that focus on the specifics of
process/engineering design and optimization. These VIPs are Process Simplification (PS),
Reliability Simulation Modeling (RSM), and Design-to-Capacity (DTC).30 Energy Optimization
(EO) is a process to reduce energy use and consumption within the process, so its purpose is
related to WM. However, EO is different from WM because it specifically targets potential
energy savings, whereas a WM exercise focuses on reducing potential waste streams from a
process.
Related VIPs, if successfully implemented, may yield ancillary benefits related to WM.
For example, DTC may reduce the size of a heater, thereby reducing the number or size of the
burners and resulting NOx emissions. Given these interrelationships and ancillary benefits, it is
essential that WM is timed correctly in relation to the use of other VIPs exercises by the project
team. In addition, because of the amount of overlap in the design changes or ideas that may
come from these VIPs, using the related VIPs may preclude the judicious use of the WM.
30
57
3D CAD
DEFINITION
This Value Improving Practice (VIP) refers to the use of three-dimensional computer-
aided design (3D CAD) during Front-End Loading (FEL). The objective is to generate computer
models of the physical arrangement of the facilities installed by the project. The 3D CAD
software is the working tool for placement of major equipment, components of the surrounding
structure (e.g., steel and foundations), piping, electrical, and other elements of the facility. The
project team can view the model by way of PC workstation screens. The software can
automatically produce 2D drawings of layouts and pipe fabrication drawings for issue to
fabricators. When properly used, the practice reduces the frequency of dimensional errors and
spatial conflicts during detailed engineering compared with manual drafting methods. If not
mitigated, such errors create the need for design changes and/or rework during construction.
The use of 3D CAD also improves visualization of the facility, which increases the quality of
operations’ input and training. To be considered a VIP rather than just a good practice, the use
of 3D CAD must begin during FEL.
For 3D CAD to be considered a VIP, the 3D CAD tool must ultimately produce “fraction
of an inch” design detail, not just an artistic rendition of the proposed facility. This tool is the
platform for detailed design of the facility. The detailed spatial design prepared by each
discipline (e.g., piping or structural) must be developed with, reviewed in, and automatically
issued from the 3D CAD application and not some independent 2D drafting method. With that
said, some engineering firms have software packages that are easier to use for equipment
layout during FEL, which are then downloaded into a workhorse 3D CAD system. This approach
should be considered valid for IPA benchmarking purposes so long as it seamlessly flows into a
full-blown 3D CAD system.
APPLICABILITY
When it was first developed, the 3D CAD practice was more frequently used in major
greenfield process and facility projects. However, it can be and is also used to maintain the
integrity of existing facilities in small revamp projects, especially when work processes, training
tools, and existing models are in place. Laser scanning of existing facility interfaces is
increasingly being used to dimension as-built conditions for use with 3D CAD tools.
The 3D CAD practice is generally applicable to any project that has enough scope (i.e.,
process piping or tight spaces around process equipment) to develop a 3D CAD model. In some
instances, the trade-off between the time and effort required to develop a 3D CAD model and
the expected value of such an exercise may lead project teams to decide against using this
practice, even though the practice may be applicable to the project.
the 3D CAD practice include when the practice was used during FEL, how and for what purpose
it was used, who participated in the model reviews, if the value added was measured, and how
that value was incorporated into the project.
58
Work on the 3D CAD model development should start in late FEL 2 when the team is
completing the project scoping; these efforts should continue through detailed engineering,
construction, and startup. The development of the 3D CAD model peaks between the end of
FEL 3 and the beginning of detailed engineering when locating major equipment and routing of
large bore piping are finalized. During this period, the 3D CAD model should be reviewed like
any other design document, keeping in mind that the 3D CAD model is an integral part of
multidisciplinary engineering design processes and procedures. The review sessions must be
systematic, organized, effective, and interactive and must include all those who can influence
the project; no external facilitation is required. Model reviews for operations and design input
should be phased along with data input and should achieve operations buy-in to equipment and
major piping layouts, operability, accessibility, etc., during FEL.
Overall, operations, maintenance, and safety inputs are necessary to produce

consistent, coordinated construction documents that will eliminate change orders. However, it is
crucial to follow up through construction, using 3D CAD as a basis for work planning and project
control (physical progressing), and through startup for training operations. After project
completion, the 3D CAD model should be updated with as-built information.
IPA’s Measures for Assessing the Use of 3D CAD
use during FEL and the primary driver of action items resulting from the use of the VIP, IPA
uses a number of other measures to assess the use of 3D CAD. These additional measures
include the following:
1. Whether a specific role and responsibility is defined to manage design data captured
by the model
2. Discipline areas (layout, piping, mechanical, etc.) for which 3D CAD was used for
design and review during FEL
3. Whether software with intelligent piping (clash detection, smart P&IDs, etc.) was
used
4. Whether the 3D CAD model is linked to a database that includes the specifications of
equipment and bulk materials (piping, valves, electrical cable and conduit, etc)
5. The mechanism used to verify as-built dimensions
Early in FEL 2, changes in the project scope and the equipment specifications can
derive from engineering refinement and the implementation of other VIPs. Therefore, although
the 3D CAD practice is used early in FEL, the timing for the beginning of the 3D CAD practice
within the FEL phase is very important to avoid cumbersome rework for the engineering
disciplines very early in the project cycle. However, activities directly related to the 3D CAD
model development, such as generation of “as-builts,” laser scanning, and photogrammetry, can
be conducted before starting to develop the 3D CAD model.
59
Figure 11 illustrates activities that are conducted before, during, and after the
development of the 3D CAD model.
Commissioning
FEL Detailed Engineering Construction
and Startup
•Preliminary Information from: •Detailed design of •3D CAD model reviews •Improved
• Field-verified as-builts structural steel, piping, by construction visualization and
• Laser scanning and electrical in the 3D contractors and training of
• Photogrammetry CAD model (not on operations to facilitate operations
• Equipment specifications drawings) planning of construction
•Update of the 3D
•Evaluation of engineering and system turnovers
•3D CAD model reviews CAD model with as-
contractor’s capability in 3D CAD
(engineering disciplines, •Electronic transfer of built information
•Verification of work process to
operations, maintenance, files to the fabricator for
ensure it can support the use of 3D
construction manager, pipe spool drawings, data
CAD (e.g., less sequential
project manager, project generation, etc.
engineering).
control, and safety).
•Identification of specific work •Tracking of materials,
packages that could benefit from 3D •Decision-making over quantities, cost reports,
CAD. different constructability and specification texts by
• Identification of productivity gains issues and schedule modifying the 3D model
in engineering, construction, and scenarios (independently
fabrication time or as part of the
•Layout of equipment, structure, and Constructability Review
major pipeways VIP).
•3D CAD model reviews by
integrated team •Generation of
•Decision-making over different engineering deliverables
constructability issues and schedule from the database (if
scenarios (independently or as part using a datacentric
of the Constructability Review VIP). software)
Figure 11
The deliverables of the 3D CAD model can include preliminary, detailed engineering,
and construction drawings (i.e., civil and structural drawings, detail drawings such as pipe
supports and steel connections, and piping shop fabrication), material and construction
specifications, and status reports. Many of these features are enhanced when a datacentric
(linked to a database) approach is used by all project disciplines. Thus, ultimately, the 3D CAD
model can serve as an effective platform for the integration of more project parameters other
than just the structural arrangements.
60
The following examples illustrate some of the multiple enhancements for detailed
engineering when piping design is conducted using commercial 3D CAD software.
Figure 12
Figure 12 illustrates a capability that allows identification and correction of interferences

before fabrication.
61
Figure 13
Figure 13 illustrates a feature that minimizes omissions and errors by enhancing

communication within the team and the different disciplines. This feature can also be used
during peer reviews that are used by some companies to evaluate projects in FEL.
RELATED VIPs
The results of several other VIPs, if used, should be incorporated into the project scope
before developing a 3D CAD model. These VIPs include Technology Selection (TS), Classes of
Facility Quality (CFQ), Process Simplification (PS), Waste Minimization (WM), Customizing
Standards and Specifications (CSS), and Energy Optimization (EO).31
3D CAD and Constructability Reviews complement each other. After the 3D CAD model
is sufficiently developed and the model starts evolving, interfacing between 3D CAD and the
Constructability Review VIP will increase. The 3D CAD model, when using features such as
automated interference detection, can reduce the time spent during Constructability Reviews. In
addition, when using features such as construction activity sequencing and time simulation, 3D
CAD becomes a powerful tool for facilitating Constructability Reviews. Overall, the 3D CAD
practice positively influences time, effort, and quality of the Constructability Reviews through
improved visualization of the facility.
31
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GUIDE TO

Independent Project Analysis, Incorporated

44426 Atwater Drive

Telephone: +1 (703) 729-8300

Value Improving Practice Author

WHAT ARE VIPs?

• Each VIP must follow a distinct and defined work process.

Phase 1 Phase 2 Phase 3 Phase 4 Phase 5

Waste Energy Value

= Business Reviews and/or Go/No-go Decision

CRITERIA FOR SUCCESSFUL USE OF VIPs

• The results of VIPs application must be documented. Documentation is performed to

- A description of the activity

- The monetary value of the scope of work reviewed

- The action items incorporated into the project

- The cost of applying the VIP

1. Point of time in FEL when the VIP was first used

2. Functional representatives (business, operations, process, etc.) that participated in

3. Independent facilitation, as applicable (For example, independent facilitation is

Technology Selection (TS) is a formal, systematic process by which a company

Technology strategy is an essential element of the competitiveness of the owner’s

In most cases, implementing TS early in FEL results in a greater effect on project

CRITERIA FOR VIPs USE

• Extent of application: TS should be applied to the entire project scope, at least

IPA’s Measures for Assessing the Use of TS

The timing of TS implementation depends, in part, on the importance of the technology

ENVIRONMENTAL and LICENSOR

The TS team develops additional information required to reduce uncertainty by

KEY SUCCESS FACTORS FOR IMPLEMENTATION

• The TS team should ensure that an unbiased process is followed to compare

• Y-axis: Utility availability, complexity of construction, operability flexibility, waste

The TS workshops included information, selection, evaluation, and developmental

The TS team planned a workshop to review five technologies in detail to ensure

The TS process included technical evaluation to meet functional requirements,

CRITERIA FOR VIPs USE

IPA’s Measures for Assessing the Use of PS

Phase 1 Phase 2 Phase 3

Form the PS VIP Team

Identify Function and

Generate and Evaluate PS

Present to Stakeholders Redesign/Update

= Business Reviews and/or Go/No-go Decision

2. Conduct a functional analysis and develop a Functional Analysis System Technique

• Combine first- and second-stage hydrocyclones.

• Eliminate water injection in the overhead condensers.

• Eliminate vent scrubber and send directly to flare.

4. Document the ideas generated in a PS idea form as shown in Figure 3. The

5. Develop an implementation plan.

Process Simplification Idea Form Sheet 1 of ____

Approved by: Date:

PS may be implemented concurrently with Design-to-Capacity (DTC), RSM, and

• Laser alignment is used to measure alignment of equipment.

In general, the preference in Industry is to move from a reactive maintenance

CRITERIA FOR VIPs USE

A typical PM study can last up to several days, depending on a project’s technical

IPA’s Measures for Assessing the Use of PM

In recent years, there has been a transition from PM to reliability-centered maintenance

Reliability Simulation Modeling (RSM) is a computer-based simulation technique to

• Enable an assessment of the life cycle costs.