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Accelerating digitization helps companies improve operations and diversify revenues

With the acceleration of digital initiatives within the engineering sector due to the Covid-19 pandemic, assets will run faster, greener, safer, and longer.

Engineering, procurement, and construction companies are doing everything they can to quickly bounce back in the uncertainty created by the coronavirus pandemic. But while many EPCs see cost savings as an effective short-term response, longer-term adverse trends call for a more strategic vision and the acceleration of digitalization. Even before Covid-19 emerged, companies were faced with the commercialization of their services, frequent cost and schedule overruns, risky lump sum projects, and net margins averaging less than two percent.

Digitization can not only help EPCs meet these long-term challenges but can also lay the foundation for improved profitability and new revenue streams. Fortunately, there are already signs that digitization is gaining momentum. Two-thirds of construction industry respondents to a recent McKinsey survey, “The Next Normal in Construction” [PDF], believe the Covid-19 crisis will accelerate the industry’s transformation, and half have already invested increased in accordance with the shifts.

Common elements of an EPC company’s digitization initiatives can be divided into four main areas: data-centricity, technology consolidation, data flow automation, and enabling digital twin services. In terms of data-centricity, there is a shift from document to data-centric workflows for creating, managing, and sharing technical data. This means not only reducing reliance on documents to store and share information but also breaking down common deliverables into the data in those documents and making it more widely available for review and use. In addition, managing changes and propagating them to downstream participants is easier and faster.

The second important area is technology consolidation. The driver here is a push to consolidate and simplify technology platforms, apps, and software to reduce complexity and eliminate redundancy. Most engineering departments have more than 150 unique pieces of software and technology in use. From solution-level applications to premium vendors to homegrown applications and small niche tools, it’s often a technology bird’s nest with little hope of connecting applications and automating data flows.

By standardizing and strategically relying on key software vendors, eliminating redundancies, and using stricter criteria to support smaller niche apps, CIOs and heads of engineering can simplify the landscape of software they rely on.

Automation and reuse of data are the third focus area. Here lies an opportunity for EPCs to connect applications and data sources; automate information flows and reuse data in the EPC process stages. Once the software portfolio has been rationalized and consolidated, the integration of the remaining apps will begin.

The fourth priority area is leveraging digital information for additional value-added services, such as creating and maintaining digital twins. EPCs should look at using digital engineering and business data to provide value-added digital twin-based services during operations. The same engineering data used to design and build a plant can also improve startup, training, and operations while providing the additional and diverse revenue needed.

In a sense, a digital twin is an evolving digital profile of the historical, current, and future behavior of a physical object or process that helps optimize business performance. It can be viewed through three lenses.

The plant’s digital twin provides plant equipment and process models, along with relevant cost data. It is most commonly used for plant design, debottlenecking, and renewal, as well as tuning the operation of the asset during operations and maintenance. It is deployed offline and online and calibrated for plant operating conditions through autonomous model tuning.

The digital twin for operational excellence supports plant operations from enterprise-level to control level. These digital twins inform business decisions such as rough selections and product trading, as well as technical decision-making and optimization of quality, throughput, energy consumption, emissions compliance, and safety.

Finally, the operational integrity digital twin provides guidance on prescriptive maintenance decisions, with real-time recommendations to maximize uptime, adjust production to minimize environmental impact, minimize production losses and prioritize safety. In addition, quality and risk assessments provide a future view of equipment and asset health, risk profiles, and root causes of failure to improve uptime and operational integrity.

Most EPCs had already started digitizing certain activities before the pandemic started to disrupt in 2020. However, as market uncertainties persist, digitization initiatives are increasing. They will likely change many aspects of the business, from the way EPCs provide and carry out project work, to how they transfer projects to their customers and continue to provide support throughout the life of the project. Digitization also enables closer collaboration with owners, creating new value for the ecosystem while improving asset quality and sustainability. Assets work faster, greener, safer, and longer.