CS-132

The Situation:

In the days when crude oil prices hit record highs, oil sand extraction – which was long considered too expensive to be a practical source of oil – became a multi-billion dollar industry. In Northern Alberta, home of some of the largest oil sands in the world, a modern day black gold rush ensued.

The falling price of oil combined with a 90% contractor maintenance budget overrun last year forced the management team at a Northern Canadian oil sands mine to critically assess the maintenance operation. The Vice President of Maintenance was given a directive to improve budget attainment through cost reduction and improved productivity. The management team knew that productivity was not being effectively managed and service con-tractor costs were well above the industry norm.

The Driver Goal:

Increase maintenance contractor productivity by 25% while decreasing maintenance costs.

Actions Taken:

Following a thorough assessment of the current situation, The Highland Group concluded that management needed to gain better control of contractor maintenance execution. There was no easy fix, nor would technology provide a solution. Success could only be achieved through rigorous application of basic fundamentals: addressing gaps in the management system, assigning ownership and enforcing accountability for performance, and developing a performance control at the point of execution.

The Highland Group partnered with client teams to develop and install an Integrated Management System. The new process, metrics, and behaviors established accountabilities for meeting budgets and schedules, driving productivity to new levels and ultimately reducing total maintenance costs. The Integrated Management System included:

• Optimization of shift and work schedules through Effective Planning and Scheduling significantly reduced overtime hours by 24% and improved schedule attainment. More effective work schedules cut overtime, while also reducing contractor headcount.
• Redesign of the Permit Process and Start-up Procedures, which significantly reduced the permit field authorization cycle time by 34 minutes. This savings lead to improved “Time on Tools,” time spent doing the assigned task, leading to higher performance.
• Installation of a Management Operations Dashboard linking data from multiple systems, comparing actual results to plan at multiple levels, on a real-time basis, for their balanced scorecard.
• Installation of Short-Interval Management process. Over 250 first-line supervisors were engaged in a Customized Training Program to set daily performance expectations for contractors and follow-up throughout the day to ensure expectations are being met. Training also included a Barrier Resolution Process to capture, correct, and remove impediments to achieving performance targets.

The Results:

• Supervisory behaviors and morale improved significantly as employees took accountability for performance and new processes led to successfully meeting targets.
• Sustainable performance through training. Front-line supervisors learn new processes in real-time to ensure improvements are built to last.
• Safety is never compromised. Safety performance targets are always the #1 priority and performance improved along with productivity improvements.
• $70 million dollars in annualized savings
• 24% reduction in overtime costs
• 41% improvement in budget attainment
• 50% reduction in permit field authorization cycle time