Introduction
In this case study, we examine the transformation of operational processes at a 755 MWe coal-fired electricity generating station in the Midwestern United States. The facility, featuring four turbine steam generators, faced significant challenges that impacted its bottom line due to inefficient outage management and procurement practices. This case study details the challenges, solutions implemented, and the significant cost savings realized as a result, serving as a compelling blueprint for small to midsize business owners aiming to refine operational strategies and enhance profitability.
Client Background
The client operates a coal-fired power station with the capacity to generate 755 MWe across four units. This facility not only supplies power to an aluminum smelter located directly across the street but also contributes additional power to the regional grid. The maintenance organization within the plant is structured into mechanical and electrical departments, each essential for the station’s operation.
Challenges
The plant faced several operational inefficiencies:
- Scheduled Outages: The annual outage was fixed at 28 days without considering the actual volume of work needed, leading to potential revenue loss.
- Coordination Issues: There was a notable lack of effective coordination between different crafts and contractors.
- Procurement Practices: Absence of a formal bid process resulted in cost overruns.
- Time Management: There was no established system to gauge time against work effort.
- Leadership Void: The absence of an Outage Champion led to disjointed effort during critical periods.
The financial implication of these inefficiencies was severe, with the plant losing approximately $200,000 per day in revenue during outages, compounded by the cost of purchasing power externally to meet contractual obligations.
Solutions Implemented
To address these challenges, the following strategic solutions were adopted:
- Outage Management Enhancement:
- A formal annual outage plan was developed using Microsoft Project.
- A worst-case scenario work plan was created to estimate the maximum time required for outages, which helped in optimizing the schedule.
- Skills Utilization and Flexibility:
- An Employee Skills Flex Matrix was developed and implemented for the maintenance department. This tool helped in maximizing the potential of both mechanical and electrical teams.
- Procurement Process Overhaul:
- A formal bid process was established to ensure competitive pricing and transparency during the procurement of services, particularly for critical maintenance work.
- Establishing Reasonable Expectations:
- The plant utilized an observation process to set reasonable expectations for job completion times, improving the accuracy of scheduling and planning.
Results
The implementation of these solutions yielded significant financial and operational benefits:
- Reduced Outage Duration: The refined outage plan reduced the maximum required outage duration from 28 to 21 days, resulting in a direct savings of $1,400,000 annually.
- Cost Savings in Procurement: The new bidding process for generator overhaul led to a competitive bid that was $350,000 less than the previous cost, totaling an annual saving of approximately $350,000.
Conclusion
The strategic overhaul of the outage planning and procurement processes at the coal-fired power station not only streamlined operations but also led to substantial cost savings of approximately $1,750,000 annually. These improvements optimized resource utilization and enhanced the station’s financial stability. This case study underscores the importance of structured planning and competitive procurement in achieving operational efficiency and improved profitability in power generation and other industries alike.
This transformation demonstrates the tangible benefits that can be realized through targeted operational improvements and can serve as a model for other businesses facing similar challenges.
