Useful Resources
PetrEX International website has a publication on the Technical Limit Continuous Improvement approach.
BP Alaska Wells Team use Technical Limit approach to streamline operations.
Benchmarking & Capability Analysis
Current performance is not a good measure of capability. Processes often operate well below their potential for a number of reasons including poor operating or maintenance practices, high variability, out-of-date procedures or even just low expectations of performance.
Management need to be constantly challenging what the business processes are capable in order to:
- identify and evaluate opportunities for improvement,
- build appropriate levels of stretch into performance targets, and
- allocate expansion capital appropriately.
Benchmarking is a useful tool for challenging the status-quo. Benchmarking is the process of comparing your performance against some standard in order to determine the potential for improvement. Excellent businesses should be benchmarking on a regular basis, and using the information to inform their planning and improvement processes.
Typically, the term benchmarking is used in the external sense, describing the process of comparing yourself against strong competitors who are deemed to have “best practice”. However, internal benchmarking can be just as, if not more, effective.
External benchmarking can be a very valuable activity, particularly when you want to generate a paradigm shift, but it does pose a number of challenges including:
- Difficulties in identifying and accessing best practice companies,
- Difficulties in making an apples and apples comparison...there is always room for critics to argue that the benchmark doesn’t apply here because the circumstances are different.
- Difficulties in applying the learnings from one company to another which has a different business and cultural context.
Internal benchmarking is a powerful and often overlooked vehicle for improvement that avoids some of the issues of external benchmarking. It has been successfully used by many companies, including Rio Tinto, DuPont, BP and Woodside.
In internal benchmarking, you can compare current process performance against:
- The performance of another, similar process within your own company,
- The Theoretical Capability (technical limit) of the process, or
- The Best Performance the process has achieved.
Theoretical Capability is often called the nameplate performance. It is calculated based on a fundamental understanding of the technical limits of the process. It is a theoretical number which may never be achieved in practice, but provides an upper limit to performance.
Best Performance, on the other hand, is the highest actual performance achieved over a short period of time. It provides a benchmark that is easy to measure, and has high credibility with the workforce. Benchmarking against best performance should prompt people to ask:
- What was different about the period in which we achieved the best performance?
- How can we achieve that performance more of the time?
A continuous improvement approach based on the use of Technical Limits is widespread in the Oil and Gas industry. The concept was developed by Woodside Offshore Petroleum in the mid-90’s. Information on this approach can be found on the websites listed under Useful Resources.