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7 phases to build reliability into a capital project

Jan. 6, 2012
From initiation to closeout, authorization for expenditure requires design and costing evaluations.

Capital project management varies from managing everyday projects generally only in the scope and duration. The approval steps required for capital projects are more extensive because of the project scope and cost, but effective projects have several things in common.

  • All known hazards related to the work are identified and clearly communicated.
  • Responsibilities and authority for project work are clearly defined.
  • Consistent procedures are used for managing and then performing the work.
  • Reliability of assets is built-in, not an afterthought.

Capital project phases

The number of phases depends, in part, on the process for obtaining the authorization for expenditure (AFE) at each company. It is probable that a project may not reach the approved stage for final expenditures until some preliminary design and costing evaluations are completed. The assumption is made that the seven phases will be used (Figure 1). Capital project tasks that impact reliability are identified with colored text in the figure. Managing the project for reliability begins with ensuring there are sufficient resources to optimize reliability.

The seven phases used to support reliability are:

  1. Project initiation
  2. Feasibility
  3. Preliminary/conceptual design
  4. Detailed design and procurement
  5. Construction
  6. Commissioning/startup
  7. Turnover/closeout

Phase 1 — Project initiation gets the project into the capital plan. Some questions that support reliability in this phase include:

  • Are there any safety/environmental concerns to be addressed by this project?
  • What is the projected life of the product or change?
  • What is the estimated improvement?

If the projected life of the product is relatively short, say 10 years, the capital assets required may only justify the lowest first cost, even if the cost of unreliability can be estimated. Longer time horizons tend to support using the lifecycle costing (LCC) approach. LCC analyses optimize the initial and running costs of higher cost options with presumably higher reliability.

Phase 2 — Feasibility is sometimes combined with the project initiation phase, depending on the funding and approval process. Key to determining capital project feasibility is developing the scope and performing the initial design reviews. A high-level, reliability risk analysis can identify areas of the design that need more consideration to avoid an unreliable asset or system.

Commissioning of the capital asset is part of Phase 6, but failing to consider commissioning needs at Phase 2 can result in unnecessary costs at startup and possible higher unreliability. Preliminary commissioning plans should identify key test and evaluation parameters for design. Controls and interlocks with provisions to manage them could be overlooked.

Phase 3 — Preliminary/conceptual design often is the first place that reliability is considered, particularly if reliability by design is not a part of the company’s core competencies. The first of several formal design reviews are needed in Phase 3. Is this design feasible to meet the project demands? A feasible preliminary design needs also to be reviewed for constructability, operability and maintainability.

A chemical plant did not complete an adequate design review in its Phase 3. This led to a heat exchanger with dissimilar metal construction. Less than a year after being placed in service, the exchanger failed. To compound the problem, no maintainability review was performed and the exchanger could not be removed except through the roof of the four story building, which had no equipment hatch.

The preliminary design identifies the asset specifications, general arrangement of systems, utilities requirements and control scheme. Many companies also have defined lists of standard equipment. Standard equipment items have been established and are to be selected because of cost or reliability considerations. Lifecycle cost analyses may be used to justify more reliable alternatives if the reliability impact also is identified.

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Phase 4 — Detailed design and procurement finalizes the design, updates the commissioning plan and develops the procurement documents. A multi-factor, critical equipment risk ranking analysis should be performed. Failure modes and effects analyses identify operating modes where unreliability in the design can be resolved before construction. The reliability strategy for the assets in the project is updated. How will preventive maintenance, condition-based maintenance and predictive maintenance be integrated into asset care? What special tools and training might be needed for the equipment operators to perform minor maintenance?

Final design reviews for constructability, operability and maintainability are completed. If the new assets are being added to existing locations, it is a very good idea to do a walk-through with the production team leader to verify items such as equipment locations.

A refinery was updating assets and also needed to install some new sampling points. Before the sampling locations were approved the production team leader did a walk-through with the maintenance engineer. The carefully documented locations all were rejected one after the other. Finally the engineer asked, “Why are you rejecting the positions?”

The response was, “The area has two new operators, neither of whom can safely operate the sample station because they would be located too high for these shorter members of the team.”

Phase 5 — Construction is where the rubber meets the road. Are tests of key assets witnessed, including pump capacity verification? How are change requests managed and reviewed for reliability impact? Is the inventory of spare parts identified, approved and stocked in time for startup and commissioning? Have QA/QC programs been followed and discrepancies resolved? Are the operation and maintenance manuals in place in the correct language? Has training been provided for unique assets?

Phase 6 — Commissioning/startup finalizes all commissioning activities including the pre-startup safety review, hazardous materials analyses (HAZOP analyses), along with instrument and control final calibrations. The PM plan both for startup and ongoing operations is developed.

Punch lists are created to ensure that no part of the project is left incomplete. Vendor performance audits are prepared and then reviewed with the vendors. The findings are provided to the sourcing organization to ensure that both good and poor performing vendors are recognized for future projects and noted in the purchasing files.

Phase 7 — Turnover/closeout produces the commissioning report. In addition to traditional cost and schedule discussions, this report should document the lessons learned from the project. The reliability strategy (PM, PdM, CBM) should now be in place along with the parts, materials, tools and training required.

The project reporting should also contain a section with a self-evaluation rating for the project. Starting with a grade of C for meeting budget and schedule constraints, the evaluation improves with good performance, especially for safety and environmental considerations.


There are a multitude of decisions needed to build in reliability for a capital project. Documenting the decisions and the lessons learned completes the feedback loop for the next capital project.

William D. Conner, III, CMRP, P.E., is senior project manager, ABB Reliability Services (www.us.abb.com). He can be reached at (713) 876-9269 or [email protected].

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