COVID-19: Managing the operational impact in the natural resources industries
For our clients who have ‘production’ facilities, the COVID-19 virus has forced companies to reduce or even halt physical operations. Critical for the natural resources industries is how processing facilities and refineries keep running, what business continuity plans they have in place and how these impact operations.
While the number one priority remains the health, safety and wellbeing of staff, there is of course a huge cost, both economic and social to limiting or halting operations. COVID-19 will impact the full supply chain from raw material availability, logistics and shipping, delivery, access to spares, productivity and third party service providers.
Managing the operational impact that COVID-19 will have on the natural resources industries is also vital in protecting the long-term sustainability of projects.
The natural resources industries must focus on ensuring the process safety systems continue to protect people, property and the environment during the COVID-19 outbreak.
Trained, experienced operational staff are not a ubiquitous resource. Personnel who can both operate and/or maintain processing facilities are limited. This presents a major risk to operations if personnel are unable to come to work.
There are a number of strategies, focused around four key themes, and measures we are working on with our clients to curb the spread of the virus and maintain operations.
- Establishing COVID 19 response strategies, plans and teams. Foremost includes IT testing the resilience of systems and availability of assets to deliver high demand remote access, remote operations and remote working
- Reducing people on site to essential personnel only, reducing the time people spend on site, social distancing, rotations focusing upon limiting workforce risk and “exposure”
- Consider extending roster durations to minimise exposure from general public areas and implementing split accommodation for shifts
- Respecting the contribution the facility has to the local community. Being proactive in communicating and informing local communities if and when normal routines need to change
- Rapidly moving towards an essential maintenance only mode of physical operation, challenging work orders to focus on critical maintenance tasks only. This includes deferring turnarounds (TARs)/shutdowns including those in the planning and preparation phase, where safety allows
- Driving to a majority-remote operation to the greatest extent possible, using the opportunities that digitalisation presents. This includes upgrading systems to enable teams to work more flexibly through monitoring activities away from the plant
- Creating second and third lines of defence in other parts of the business’s personnel, ready to move into operations if the need arises
- Performing remote risk analysis and schedule review sessions to reset and recalibrate plans and work packages over projects in execution and commissioning stage. Assess the interface issues and implement mitigation measures
- Performing risk reviews of supply chain resilience including inventory, stocks, logistics, shipping, delivery, supplier financial stability including prompt payments and cash flow
- Reviewing contract terms and conditions with vendors and suppliers to manage contractual notices as well as ensuring obligations and the service level agreements set, are being met and determining what can be deferred. While force majeure may be in operation, our teams in Asia are working collaboratively to deliver commercial reviews and ensure continuity of existing supply chains
- Critical during this time is ensuring records are being maintained so appropriate resolution can be established in due course
- Reducing CAPEX appropriation – focus on the essential rather than the gold standard. Undertake a full funding review to scale back capital projects and programmes, with a documented, resource loaded programme ready for implementation when the external issues subside
- Plan and assess the impact of supply chain delays on completion dates, to allow greater clarity for when full operation returns
- Be proactive in facilitating early cashflow payments to support supply chains – direct payment to sub-vendors or advanced payment mechanisms to contractors
- Working with other local facilities to see if personnel can be shared between sites to ensure key skills are accessible
Please visit our COVID-19 response page for all of our resources relating to the impact of COVID-19 on the construction sector.