Tag Archives: decommissioning

Do modern economics mean the sale of redundant plant is impossible?

In the latest of his regular columns for Demolition and Recycling International, RVA’s Managing Director Richard Vann gave his thoughts on whether modern economics make selling redundant plants impossible.

If you haven’t read the full article, you can catch up here….

Impossible is a strong word. By definition, it means something that is completely out of the question – it cannot be done.

But of course, this statement is not true when it comes to the sale of redundant plant. There are occasions when assets that have reached the end of their useful life for one operator, can still contain inherent value in the eyes of another. A sale therefore can go ahead.

Consideration of this route is understandable. The goal – for any soon-to-be-decommissioned facility – should always be to maximise the return on assets where possible and safe to do so. However, factors such as plant age, former processes, recovery cost, testing, market forces and commercial competition, will all form part of the decision as to what should happen next.

As my dismantling for re-erection column stressed in the last issue of D&RI, the sale of redundant plant should be realistically viewed and often not prioritised as the ‘plan A’ for an unwanted facility, as the challenges likely to obstruct a sale are significant in both scale and quantity.

Supply and demand

Firstly, there are the basic economics of supply and demand at play.

In developed parts of the world – across virtually every heavy industry – operators are seeking ever more efficient processing technologies. Sometimes this is to stay on the right side of the law, if the ageing plant risks breaching necessary legislative or EHS standards. But there are capacity, ecological, financial and innovation advantages associated with investing in smarter and more modern equipment too, which, collectively, can prove the catalyst for operators looking to proceed with an ‘out with the old’ strategy.

This widespread availability of redundant assets means that from a resale perspective, the market is becoming saturated with standard and off-the-shelf kit, and such plants – or component parts of them – are consequently becoming harder to sell.

Copycat technologies

Processing markets are becoming further saturated because – as markets are maturing and operators’ expectations are becoming increasingly sophisticated – all eyes are on the latest plant and equipment. But many countries are so proficient at designing and manufacturing ‘copycat’ technologies – often for very affordable investment levels – that any ageing assets would need to be extremely advanced to justify purchasing something ‘second hand’ as opposed to brand new.

Could you sell a ten-year-old laptop on eBay, for example, when so many better, more current models exist – often without breaking the bank? It would probably be a struggle – especially if the laptop is shipped in hundreds and thousands of component parts that require re-assembly before it can be used.

Finding a ‘buyer’

The sale of a redundant asset is – perhaps unsurprisingly – far easier if the facility is to be transferred to an operator within the same group as the seller.

When RVA was engaged to oversee the decontamination, demolition and dismantling of a manufacturing facility on an 11-hectare site on Jurong Island, Singapore, for example, selected plant items were carefully recovered so that they could be transferred to the owner’s sister plants worldwide.

This project was bound by tight timescales, given a commercial driver for the client to exit the site within defined lease and permit parameters. The work was therefore planned sequentially with designated demolition areas handed over in a carefully phased manner. Potential sources of ignition were subject to strict controls, due to the nature of the chemicals housed nearby and the presence of some units which had to remain operational during the initial stages of the programme.

Had this shipment of assets been dependent on the involvement of a third-party buyer, the project specifics may have been quite different, due to the complexities involved. In-house transfers are often easier than external ones, as the ‘owner’ has control at both ends.

Sometimes, sadly, deals also fall through. And the longer a plant lays idle – whether comprehensively mothballed or not – the greater the chance, on the whole, that an eventual sale will prove difficult. The condition of the asset is likely to deteriorate, and with the passage of time there is usually an increased risk that EHS and legislative compliance will no longer be guaranteed. In addition the cost of keeping an asset in saleable condition increases exponentially with time and can erode any potential commercial gain.

What is financially viable?

Acknowledging that the operator will undoubtedly wish to proceed with the most financially advantageous – and hopefully safe – route map for their decommissioning project, a feasibility and options study will prove an extremely valuable modelling exercise before any works begin.

It is crucial to explore all possible project scenarios because, sometimes, the route eventually selected may not have initially been considered or deemed possible, due to false perceptions of the associated financial burden.

The complete clearance of a plant is often the most straightforward and cost-advantageous exercise overall, for example. This is because, from a technical perspective, a full clearance usually only requires a global or battery limits isolation strategy. In simple terms, the plant is usually rendered ‘cold and dark’ so that, once residual hazards have been removed, all structures can then be demolished for scrap and the site taken back to flat slab. This then paves the way for the construction of a new facility, or the sale of the site ‘as is’. In many instances the net cost/gain of such a project could be far more attractive than that to facilitate the sale of a redundant plant.

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Murco Milford Haven

Murco had the required skill to plan and execute complex construction projects but we recognised early on in this process that our understanding of the consequences of embarking on a demolition project was limited…….

RVA were able to provided the detailed knowledge and experience of high hazard demolition projects we required in our decision making process……..

RVA were also engaged to manage our interaction with the contractor supply chain for demolition and run the demolition contract tender process.  They did this in a thorough and rigorous way….

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RVA to present redundant asset management seminar

RVA Group will be exhibiting at the 2014 Plant and Asset Management show at the NEC later in the spring. The event, which expects to attract over 40,000 visitors, takes place at the NEC Birmingham from Tuesday 8th until Thursday 10th April.

One of the highlights of the plant, works and maintenance calendar, the exhibition also includes an extensive seminar programme covering a broad spectrum of engineering developments and issues presented by a selection of industry experts.

RVA’s MD Richard Vann will lead a seminar session exploring the challenges and opportunities associated with redundant asset management planning. He will highlight best value strategies giving examples of projects ranging from a complete site exit to the removal of a single redundant asset from a large-scale, high-hazard, operational site.

If you wish to discuss your specific asset management planning issues during the show please visit RVA in Hall 3, stand P412.

Bookings to attend Richard’s presentation can be made via the show’s website www.maintenanceuk-expo.com

 

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Total Petrochemicals UK Ltd

The Polystryrene Plant of Total Petrochemicals UK stopped production in 2013. The site was to be demolished and a small team of employees were retained to oversee the project. After some initial training in demolition it became apparent that specialist assistance was required to help our staff but also in order to comply with legislation in terms of competence and CDM regulations.

After competitive tender, RVA were appointed to the role of CDM-C for the project.

RVA provided a very competent team of staff to see us through the hazards, they worked alongside our site knowledge with their demolition expertise. RVA ensured that the demolition contractor followed appropriate method statements and completed risk assessments.

I would recommend the use of RVA in the role of CDM-C.

 

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Working at height – a different angle

We recently had the opportunity to comment in leading publication Health and Safety Matters on the importance of maintaining a robust stance on work at height and in particular the dangers that exist when erecting, operating or maintaining plant and equipment. A topic at the forefront of every project.

“Work at Height Regulations are widely communicated within the construction and demolition environment, given the potential dangers that exist when operating on fragile roofs or near unfenced edges for example.

Over time the concept has become more comprehensively understood. Industry managers and employees are increasingly, albeit slowly, acknowledging that working at height covers every scenario, at or below ground level, where they could fall and become injured. Yet still it remains a root cause of many major injuries and fatalities, which shows further work is needed.

One area where work at height considerations have taken somewhat longer to come to the fore is the maintenance of plant and machinery, with cranes or 360° excavators being a perfect example. When operatives are rigging cranes or excavators, connecting hoses or conducting routine maintenance operations such as refuelling for instance, they often have to climb up onto the equipment, which can be a significant distance above ground, therefore putting themselves in danger. Even cab access or egress presents potential risks.

Generally speaking, machinery manufacturers have worked hard to design and implement more safety features on their equipment, including railings, non-slip walkways and rigging winches. The European Union Machinery Directive 2006/42/EC was influential here, stating that: “Parts of the machinery where persons are liable to move about or stand must be designed and constructed in such a way as to prevent persons slipping, tripping or falling on these parts.” Considering slips and trips were identified as the most common cause of major injuries to employees in a 2011/12 HSE report, it is important that equipment manufacturers are taking note of this EU guidance.

But perhaps the actions of manufacturers should go beyond simply legislative compliance, which in truth ensures only the minimum acceptable standards. Manufacturers are perfectly placed to further heighten site safety, but health and safety professionals within the industry need to apply pressure on them to do this. A zero tolerance approach to inadequately equipped plant and machinery would magnify the somewhat obligatory position that manufacturers find themselves in to further drive standards.

Ultimately, no-one would purchase a car without a seat belt, so contractors should not have to even contemplate an investment in equipment that does not have equivalent safety features. The cost to retrofit handrails for example is very minimal, but it mitigates a very large risk. The industry needs to be less accepting of manufacturers’ dismissal of their obligations.

The fact that many pieces of plant were built before the introduction of Work at Height Regulations (2005) also presents problems, as does the delayed implementation of these safety and risk management principles amongst other manufacturers. A significant retrofit requirement perhaps consequently exists. Some contractors can only afford to purchase such older plant, but they still require protection.

We have to move away from the opinion that enhanced safety mechanisms can be optional extras. All companies are understandably trying to work smarter following an extended period of economic difficulty and squeezed margins, but this cannot be to the detriment of safety.

Of course some projects present extraordinary and uncharted working conditions, and in such instances a collaborative approach between the equipment manufacturer, contractor and project consultant or manager will encourage the development of a bespoke solution.

It is important to note that the finger should not simply be pointed at crane and excavator manufacturers and users; their inclusion here is purely for illustrative purposes. In truth there is work to be done to improve the mindset throughout the entire trades industry. A scaffolding contractor may provide an incredibly helpful, compliant and safe product for a building firm to utilise, but that same contractor may neglect to recognise his own work at height risk when climbing up on to his trailer to actually remove the poles before erection. The fringes of any job must be considered in addition to the most obvious project risks.

The salient point is that the most effective accident prevention mechanism is education. The greater the awareness of varied work at height dangers, the more our mindset is switched on to identify, plan for and mitigate risk. We all have a moral duty to protect ourselves and others from accident and injury and we need to maintain momentum in this important field.”

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RVA Group experiences continental drift

RVA Group has cemented its position as an internationally-acclaimed engineering consultancy, having secured three prestigious new projects on three different continents.

In only the last six weeks the expertise of RVA’s specialist decommissioning team has been sought by clients in Canada, Singapore and the Netherlands. These new schemes of work – on top of ongoing projects in the UK and mainland Europe – mean the firm has a healthy forward order book and is continuing to expand its team.

RVA’s managing director Richard Vann explains: “The nature of our work is particularly complex and a somewhat unusual skill set is required to safely manage the inherently high-hazard projects that we oversee. Identifying the best people is therefore not an easy task as we are looking for such highly skilled professionals in their respective fields, be it chemical, structural, mechanical, or civil engineering, for instance. However there is a phenomenal amount of talent out there so now it is a case of handpicking the industry’s finest and gradually adding the RVA sector specifics to their already highly developed skill sets.”

With a resident project management role on the five month North American contract, RVA is set to supervise the meticulous dismantling of a complex petrochemical plant, for resale, relocation and reassembly in Eurasia. Elsewhere other RVA engineering experts are on two large chemical sites in Singapore and the Netherlands to support the client to manage the dismantling of redundant assets that are intertwined with operational plant and services.

Richard continues: “Projects of this nature are the very reason that RVA was established back in 1992, and international growth has long been part of our carefully planned expansion strategy. As our reputation has grown and our relationships with multinational blue-chip clients have developed, we have steadily secured more overseas work. These three new projects represent an exceptional achievement for the company and they are a testament to the capabilities and results of our team.”

This type of work is not for the fainthearted though. “We quickly have to acclimatise ourselves to varied local requirements to ensure legislative and environmental compliance,” Richard explains. “There can sometimes be language barriers and time zones present challenges too, when we need to communicate with colleagues on the other side of the world. Indeed with the current geographical spread, we can have colleagues separated by almost a whole day”.

But all of this simply represents a new dynamic for the business, concludes Richard. “We develop knowledge-based partnerships whether we’re working in the North East of the UK, or the Far East of the world. Our aim is to develop totally safe, environmentally sound and cost-effective regimes wherever we may be, and we will devise bespoke team structures and on-site methodologies to best tackle the challenges that any project poses.”

RVA’s work continues on nine UK projects nationwide.

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