Sharzad Winkelmann

In the first part we listed seven big picture criteria to consider to ensure the selection of the best available quality equipment: Bids and proposals, specifications, milestone meetings, greenfield vs brownfield, new or refurbished equipment, tests, and reports and schedules. Let's see a few more criteria.

  Although, you may have to pay a higher price for your equipment while reviewing bids, you need to also consider the cost of maintaining that equipment in your final selection of the equipment.

Downtime cost should be a factor in your selection of the successful bidder, which brings me to the OEM’s Reliability and Availability of the equipment and whether they can guarantee those percentages.  You need to also consider how often the equipment has to be shutdown for a full maintenance and how long it takes to do the maintenance.  That should help you with your production loss calculations during the downtime and selecting the best OEM for your application.

Next are the overhaul costs, how often they should be performed, parts and their availability from the OEM and spares considerations.

Should the first transportation of the equipment to the site be carried out by the OEM or a third party?  Consider insurance responsibility and who is on point to deal with the insurance company in case of a mishap.  It is not just that you would recover your loss but who would be running after the insurance to file the claim and ultimately get paid.

Make sure you state a date.  OEMs may give you x many months to deliver.  If so, make sure the start date is clearly defined.  Is it from the PO, Kick Off meeting between owner/user and supplier, from submittal of drawings or design review?  I have seen commercial confusion when you think you have secured the delivery date by your PO but the supplier has a side note conditioning that delivery on submitting certain design data on time.   You are both right but this ambiguity could still cost you at the end of the day.

If the OEM is responsible for transportation to your site, make sure you have two delivery dates identified:

Ex-Works factory date - which tell you they are ready to ship, and

FOB site date – which is the actual delivery date to site. If there is a delay with the first one, there could be a delivery impact at site depending on the length of the delay and variations in transportation.

Don’t forget about all the ancillary and loose-ship items that may or may not come with the package or train.  Goes back to possible storage or staging at site, if shipments are not consolidated.

If operation schedule is critical, you may want to consider an incentive to the supplier to FEEL your urgency by imposing penalties both on

Issuance of drawings so you can start preparing your site installation logistics, and

Delivery of equipment to site. And, perhaps including a bonus for an earlier delivery.

Accuracy of the performance criteria. If you are relying on certain margins on performance (HP, KW, Efficiency, HR, Emissions, etc) in the field, you may want to impose performance LDs on the supplier to be verified during the start up and commissioning.

Make sure if the remedy to the contractual deliverables is a repair or providing a brand new (sub)system or the entire equipment, a time frame in which those repairs or exchanges have to be completed is clearly stated and agreed upon.

You can accept monetary remedies in some cases, if the shortcomings are still well within your requirements.  Or, in some cases you may let the contractual deadlines slide.  For example, if the OEM’s delivery is delayed but has no ultimate impact to you as your site schedule has also been skewed.  Remember, it is a game of give and take.  Make the supplier a partner in the process (I am not talking contractually - just in spirits).  Establish trust, expect quality, be firm and demanding but compromise when you can.  At the end of the day, your success depends on their performance.

Make sure you understand the difference between warranties and guarantees.  Warrantees normally are time limited.

Find out whether they can warrant Reliability and/or Availability.  Don’t just rely on the percentage figures for those parameters, instead make sure you understand and agree on how the OEM calculates those parameters.  I have seen major differences, depending on the formula used to come up with Availability factor.  Decide whether you want one, both, or any as a contractual condition depending on the sensitivity of your operation.

Understand equipment vs Part warranties.  Find out what the difference is and what impact either one has on Reliability and/or Availability.

Determine whether you need the Parts’ warranty to be the OEM’s standard, Extended (time wise) or Expanded (including labor) and who would be paying for the transportation.

Ask whether the warranty is “ever green”.  Does the clock re-start after the exchange or is it a one-time deal?

Find out whether availability of the parts from the supplier could be guaranteed.  Ask for a typical turn around time for the major parts.  Where would the parts dispatch from and how is the priority amongst users set by the OEM?

Make sure you understand and agree on when the warranty period for your equipment starts?  Is it from the start up or first beneficial use?

For critical operations, you may want to consider extended warranty, especially if there is a chance that the equipment may be stored prior to the actual installation.  Also, find out what the OEM needs to inspect for an extended warranty to be issued, if added on at a later date.

Have designated personnel to coordinate receipt of all shipments from all your suppliers.

Plan and allocate real estate for staging or storing various shipments while waiting for the rest to arrive.  If long-term storage becomes a reality, determine which equipment has to be in an AC-controlled environment, enclosed or as a minimum protected by a tarp cover.  I have seen multi million dollar packages damaged simply due to improper storage in the rain or flood when they are only suitable for indoor installation.  How about the requirement to rotate the generator?  In case of generator set packages, some alternators have to be rotated every 6 to 12 months, if in storage.   If so, what are the set up and power requirements to do so?  You may invite the OEM to perform that task to ensure performance.  Oh, and do NOT forget about your batteries.  Shelf life is usually 3 to 6 months (with 6 months really pushing it).  Make sure you do not have depleted batteries before you are even to start.  If you know there will be a delay at site, you may ask the OEM to ship the batteries at a later time closer to your installation period.

Who is responsible for ensuring all deliverables are delivered at site?  Make the supplier part of the process.  Have their Rep be present at site and at the time of delivery with one of your own Reps, to count all shipments against the bill of lading.  Do not open sealed and/or preserved boxes, if you are not planning to use them right away.

Insist on at least one meeting prior to equipment arrival amongst all the players including owners/users, suppliers, contractors, electricals, civil, etc to agree who is responsible for what as well as line of communications and interfacing amongst the suppliers.  See “Meetings” above.

Make sure you understand, agree, and allocate each of your suppliers’ start up time requirements.  Identify which tasks could be performed in parallel and whether and when multi suppliers should be at site at the same time for better communication amongst the players.  The devil is in details – in this case interface amongst the equipment and systems.

Ensure all necessary permitting is ready before the equipment arrival and after the commissioning is completed and find out what the OEM can do to support your permitting efforts ahead of time.

Ask and familiarize yourselves with the OEMs’ maintenance requirement of your invested multi million dollar equipment.  Do they require monthly, quarterly, half yearly, and yearly? And, how does that compare with your plant operations, scheduled shutdown, etc?

Find out whether they offer any monitoring systems for their equipment or overall plant.  You may want to compare that with your existing (SCADA) system and decide to take theirs as is or feed some of the sensitive variables into yours.

Find out which maintenance requires a complete shutdown of the equipment vs those that could be performed while unit is running.

Have the OEM identify critical parts for their equipment and decide what spare parts should be allocated at site and which could be provided from their factory.  Ask for a commonality parts report if you have more than one unit from the same supplier.

Ask the OEMs on their plan for obsolete parts which would be collecting dust in your spare parts storage as you upgrade/uprate your equipment or as the OEM switches parts and sub-systems.  I have seen multi million dollar investments in spare parts that eventually became mostly obsolete.  Come to an upfront agreement with the OEM on a program should that happen.  Make it a time bound criteria to make it fair to both sides as you do want technological advances but not so rapid that makes your spares meaningless.  For example, what can they take back, what triggers are in place to notify you as your purchased spares become obsolete say within 3 years (or whatever you agree upon) of purchased parts.

Ask the OEMs on what basis their overhauls are.  Is it a time or condition based trigger?  If it is based on condition of the equipment, they should include reports as they perform scheduled maintenance and provide a trending report.

Ask for intelligent systems to alert you before a shutdown occurs amongst major suppliers.  For example, if your gas turbine is feeding an HRSG, make sure heat and mass flow are measured/calculated, accurately and alarms are set with sufficient margin to react.  Or, if the fuel gas compressor is feeding your turbo machinery consider the location of the fuel pressure or dew point measurements – at the source or destination, or both?  Make sure there are enough margins in dedicated alarms to react before it reaches a shutdown condition.

Ask for an O&M training of your operators by the OEM at site and after the equipment is up and running.  You may also want to consider classroom type trainings at the OEM’s depending on the experience and expertise of your operators.

Make sure you understand how many shifts or max students can be included. And, make sure ample time is allocated for question and answer sessions to ensure interactive and optimum comprehension.

Ask if you could send your star operator(s) during critical portion of the factory test to shadow the OEM’s technicians/mechanics on a non-interference basis.  This may be the best hands-on training you could provide to your employees and note that it should be at no extra cost to you from the OEM.

Ask for the OEM’s 30-year life cycle support of your multi-million dollar investment.  This should also be considered during the bid and proposal and selection of the successful OEM candidate.

Ask what power uprates are available within the existing package frame for your rotating equipment. Ask for what upgrades are available for major sub-systems within your Turbo Machinery equipment such as Fuel, Controls, and emissions.

Ask for a plan for obsolescence or compatibility of the OEM’s on their aging or upgraded controls’ platforms or other sub systems.

In summary, at the end of the day, you should be able to treat your Turbo Machinery packages as separate “black boxes”, if careful considerations are made upfront.  Once it is specified, interfacing amongst the “black boxes” identified and set up correctly, you can and should be able to treat each of your major equipment (gas turbines, driven equipment, various balance of plant equipment) as a “black box” while ensuring the inputs to your multi-million dollar investments such as fuel, air, oil, power, pressures and flows are met.  Then, the OEMs should be accountable for the output deliverables of each of their perspective “black boxes”.  It is a partnership between you and your suppliers that will determine your success and secure your investment.

The author is a consultant to the turbomachinery industry

(Click here for the first part of the series)

Articles

15 things to consider while buying turbomachinery - II

You are about to make a major investment for your company spending multi-million dollars in favor of hopefully handsome return on your investment.  So, what are some of the big picture criteria to consider ensuring selection of the best available quality equipment is a success?

Here is a starting list you may want to build upon to fit to your specific business needs and applications:

You have send out your specifications and have received several bids back.  Here are some considerations in selecting a successful bidder:

Understand what the final price includes.  Ask each of the OEMs for a specific break out of cost for each specific scope based on your template.  I have seen cases where the successful bidder was the lowest price provider who became the most expensive supplier once they got the job.   The purchaser found out about cleverly hidden numerous exclusions that had to be added back in causing confusion, distrust not to speak of a steep spike in the final cost and possible lead time impact.

Ask them to clearly identify scope adders not in your template whether they have a cost and/or time impact.  This will help you create a base line to compare all bids.

Whether you are a savvy Turbo Machinery user or a first time buyer, it is important to identify the desired big picture outcome and ask the OEMs for services or options they believe they could provide in support of the final result that is not listed in your specifications.  Sometimes outsourcing or consolidating services may be useful where as in others you may want to diversify and not risk the success of the operation to one major supplier.

Compare the base cost (ie, cost of the equipment) vs performance and reliability vs maintenance cost vs OEMs’ level of support and urgency and their overall after sale performance track record.  This is really important in proper selection of your equipment, especially if you are planning to own the equipment for at least 20 years.

.  What is the min power, min train efficiency, max heat rate (of gas turbine) required in the field?  What is the base ISO condition performance of the OEM’s engine?  How does that compare with your site conditions?

How about emissions, NOx, CO?  What are the future emissions regulations going towards?  Should you consider Dry NOx technology, water injection, or can you live with the standard emissions?  The answer depends on where you would be operating in the world and how clean you want the environment to be vs cost and maintenance considerations.

.  The performance of your Turbo Machinery is as good as what goes into it.  Dry NOx injectors are more sensitive to fuel quality.  Make sure the OEM is part of reviewing your fuel source and get their approval.  If you are stuck with the quality of fuel, then make sure the OEM has a robost plan in detecting failures ahead of time and supporting injector change outs with minimum down time.

.  Is the installation in desert, coastal, extreme cold environment, industrial or even forest with blooming season?  This has a direct impact on proper selection of the filtration system.

What are the vibration considerations?  Is the equipment going on a fixed or floating platform, fast moving ferry or a ship, roof of a building or a basement?

How about noise requirements?  Will the equipment be installed in a residential or commercial area?  A hospital or an unmanned plant?  Should the equipment be fully enclosed, ie, the driver and driven or partially enclosed?

What are the gas, fire, and smoke detections and suppression requirements for the site vs the equipment?  Should the alarms be based on a voting or individual detection system?  Does the installation site have an independent detection system?

Reliability vs Availability of the equipment with regards to operation requirements should also be considered.

To ensure success in the overall project, make sure you have the following meetings with your major OEMs:

:  Typically OEM’s Sales is involved during project and bid/proposal process.  And, from your side, management and hopefully some strictly technical personnel are involved.  When a job is secured contractually however, most likely players on both sides will change.  A kick-off meeting is a hand off from the first set of players to the execution teams on both sides to ensure every one is on the same page of deliverables and expectations including but not limited to technical scope, commercial details, line of communications and an overview of the project milestones.

a. Use this time to establish a relationship with your supplier (remember new players in this step) but don’t expect this meeting to turn into a design review – because it is not! You should NOT start any of your design based on preliminary or “typical” drawings that might have been included by Sales during bid and proposal phase.  I have seen major set backs (delays and cost) when the owners/users ran with “typical” drawings when the execution team from the OEM side was not even formed.  Although, you should expect certain standardization from your OEMs, each project is different and should be tailored to your design and site specifications.  So, resist the sales enthusiastic help by providing you upfront drawings from “similar” or “typical” projects to carry out your building installation design, etc.

b. If you have new people on your side who are not familiar with the OEM, ask the OEM’s Project Manager to include a high level introduction to the company with all services available. Make sure it is not a sales pitch just an informative 20-min presentation.  In return, make sure you have allocated at least 20 minutes to introduce the big picture project to the OEM, high light criticalities such as delivery or performance and make sure they understand how their portion fits in the bigger pictures. Also, make sure the OEM runs thru a big picture on how they execute the project internally, what information they need from you and at what point.

c. Depending on the complexity of the project, you should allocate at least a full day to this very important meeting. Ask for an agenda from the OEM and make sure there is enough time for discussions and that all major topics are covered.  Once again, remember you are just setting up the project on the right foot, by ensuring all involved are aware of and agree on the Deliverables - such as performance, drawings, reports; Deadlines – such as issuance of drawings, turn around time for your review of those drawings to provide comments, Readiness-to-ship from factory, delivery to site, if applicable; Line of communications to ensure there are one or two major points of contacts from each side (typical technical and commercial).

 Depending on the complexity of the project you should insist on a design review meeting.  Although, in my experience it has always been helpful to both sides to hold this crucial meeting to ensure a smooth field operation.  This meeting should be held by the OEM after they have received your comments on the drawings.  It should be clear that the OEM is still responsible for accuracy of the design as the “black box” is their core competency not yours.  You are just there to understand and agree on all interfacing systems – such as any required hand shaking, or specific user connections and any required inputs to their equipment.

a.You may ask for a combined or integrated design review amongst your major suppliers so there is a direct communication to minimize finger pointing or future confusion. These are the experts – let them interface directly.  I have seen major different outcomes at the end of these interactive meetings from assumed facts due to lack of information or just innocent mistakes.  Note that if you decide on an integrated design review, separate design reviews by each of the OEMs should take place prior to the integrated one.  Otherwise, you end up with an inefficient and prolonged process that could be avoided.

 Make sure you allocate a meeting at the site with all the players including your contractors, operation personnel and the OEMs.  Typically, there is again a hand over from the execution team to the field team from both sides.  Although, major key players like Project Managers on both sides are still on the project usually until first production use.  If you can have this meeting prior to the arrival of the equipment as there will be time to react depending on the outcome of the meeting.  For example, if the final set of drawings, or manuals have not been received.  Or, if you have to organize for special crane that was not already scheduled.  Ask for an agenda from the OEMs upfront.  The desired outcome of this meeting is to

Check off boxes to ensure everyone and everything is ready to accept delivery of the equipment.

Identify new lines of communications, if different, during start-up. Typically, OEMs’ and your field personnel would be on point for day-to-day activities where as Project Management from both sides would oversee the overall progress of the site start-up and commissioning and make decisions on safety or process disagreements.

Review performance guarantees, if applicable; as well as when warranty period would start and the logistics of that process; and

Identify line of communications after the start-up and level of support available by the OEMs.

Depending on answers to the following questions, your approach to selecting and maintaining your equipment may be different:

Will the equipment be installed in an existing or a brand new site? Enclosed or inside a building?  Even if the installation is inside, you may consider as enclosed of a train as possible for noise attenuation.  Also, if inside the building, consider the source(s) of air intake for the various segments of your Turbo Machinery train should be taken from?  Inside, outside, or a combination?

Should you consider a single large unit or multi smaller units depending on your redundancy requirement? If multi unit, you should plan on spare parts commonality.

Consider the application of your equipment and whether it would be changing throughout different phases of its life cycle. Load sharing, Import/Export, gas gathering, re-injection, gas transport, or a declining field?

Is there a need for a new or upgraded Station Control?

Should you stay with one Turbo Machinery OEM or can you mix and match? Depending on the application, you may have no choice but selecting different OEMs (generator sets, compressor sets, pump sets, EMDs, etc) but can you make one as the prime for single point of accountability?

How about the Balance of Plant equipment such as gas fuel compressors, scrubbers, HRSGs? Who is ensuring there is handshaking amongst the sub-systems to have a seamless operation and no finger pointing when things go wrong?  Who has the process ownership?

How about, the process safety? Who is responsible for the HAZOP study and when is the optimum time to perform it?

New or not new, that’s the question.  Well, the answer depends on your site conditions – relatively constant or a depleting field, lead times and delivery urgency as at times, refurb’ed equipment could be delivered quicker; and how long do you need the equipment for which brings me to the next question.  Is leasing an option for your specific operation?

.  Is there any major savings for a refurb?   Consider what you have to give up and what you would be gaining by going a refurb route.

OEM’s Refurb specification requirements.  If you decide on a refurb equipment, make sure all performances, emissions, noise attenuations, vibration limits, warranties and guarantees are the same as those of the new equipment.

Review OEM’s own test requirements.  What tests are static, simulated or dynamic and whether the entire train is tested?  In case of compressor sets, is it closed or open loop test? In case of generator sets, the kind of load banks do they use and how the outcome compares to that of your site and whether they can simulate load sharing conditions.

Pay close attention to the factory set up conditions vs your site’s.  For example, what slave (non-contractual) systems or fuel type is used and their impact on the performance.  Pay close attention as well, to how the package is secured to the ground.  Is it on vibration mounts, stands or directly on the ground and compare it to your installation site.

If the test results are based on ISO conditions, ask them to normalize the results to your site conditions.

Ask for a list of test operations in advance for review.  Make sure the back up system is thoroughly tested in case of power or fuel failures for safe shutdown of the unit or switching to say a secondary fuel, if available.

After review of the OEMs list of tests, determine whether any other tests should be added to the OEM’s standard tests based on failures you may have experienced in the field with previous turbo machinery operations.

Understand the difference between an Observe vs Witness test.  Depending on which term has been used (and paid for), it could have a time impact on the schedule, which may or may not work in your favor.

Determine which tests should be attended (driver, driven, entire package, BOPs) and who from your organization should attend.  Sometimes, sending operation personnel is a better bet than non-technical management!

Ask for site tests after the installation and make sure you understand possible deviation from the factory tests.  Review margin of errors and whether they are acceptable.

Ask for average time it takes to perform the site test, who performs it, set up requirements, and plan for it.

Ask for the major milestone schedules.  Ensure inputs to those milestones are clearly defined and responsible disciplines assigned. For example, cannot meet a Design Review milestone with the OEM, if their drawings are not submitted on time.  Or, drawings could be delayed if you have not provided design criteria to your suppliers such as filtration, pressure, flow requirements, installation configuration (indoor, outdoor, controls room, etc).

Compare the OEM’s schedule with your site’s delivery of other suppliers’ equipment such as Balance of Plant.  Do you need to stage the different equipment at site upon delivery or can they be directly installed in their designated locations?

Understand what portion of tests are static, simulated, dynamic, a sub-system or a train and determine its performance implication at site during start up and commissioning.  Even if the OEM is guaranteeing performance, if there are serious site failures, it is costing you expensive down time to remedy those limitations.

Ask for the factory tested fuel type and set up, and determine their performance impact based on your site conditions.  Is there any meaningful impact to the actual results due to those variations?

Ask for a consolidated report to include results of the performance test both at ISO and normalized to your site conditions, as well as to list all variables not tested but guaranteed such as noise or emissions.

(The author is a consultant to the turbomachinery industry)