Lean Facilities Management Improvement for Cost Reduction in the Oil and Gas Industry

Case Studies Corporate Services
U.S. Energy Company Facilities Non-technology Improvement Initiative
A Top 10 U.S. Energy Company Facility Management Group

Case Study: Lean Facilities Management Improvement for Cost Reduction in the Oil and Gas Industry

United States

Lean Facilities Management Improvement for Cost Reduction in the Oil and Gas Industry

Executives at the global energy provider were upbeat when they authorized a new, state-of-the-art corporate campus. Then falling oil prices gave them buyer’s remorse. It was too late. Construction was well under way and behind schedule. The newly appointed Facilities Management Officer (FMO) faced a flood of additional issues. Costly office and research facilities around the world required lease renewals, remediation and maintenance. The property tax bills for these facilities were growing 50 percent faster than expected. The new technology for worldwide maintenance management was underperforming. Other corporate services slated for significant cost cutting seemed immune to the most basic cost control: courier delivery, daycare and cafeterias—even the internal move management operations.

Project Sponsor:

Facilities Management Officer

Non-technology, self-funding operational
improvement implementation:

– No new technology
– End-to-end facilities management
– 6-month implementation

Client Description, Project Scope, Objectives

The FMO began with process improvement to address what turned out to be underuse of the maintenance system’s capabilities. Campus construction delays resulted from a “self-inflicted” lack of change order process standardization within the energy firm’s own design group. The FMO looked to The Lab for facility management cost saving ideas. Over the course of 6 months, a lean kaizen blitz in each group identified hundreds of non-technology improvements. Lean administration cut property tax appeal prep times, and productivity metrics doubled the success rates.

This company is a Top 10 energy provider with diverse subsidiaries in chemicals and gas liquids. It maintains an extensive internal consulting capability, but these teams had limited success improving knowledge worker productivity. The company needed lean facilities best practices implementation.

The implementation project began with a 7-week Phase I analysis. This delivered a self-funding, non-technology, money-back-guaranteed improvement work plan. Implementation was completed in 6 months.

Project Objectives:

– Cost reduction
– Lean management routines
– Operational efficiency improvement

Project Scope:

– Maintenance operations
– Property tax and real estate
– Employee services

Facilities Management Improvement and Cost Cutting – Lean Initiative Examples

The Lab implemented more than 250 non-technology lean process improvements. Examples:

Standardized Lean Maintenance Principles — The internal lean consulting team held frequent kaizen events and identified valuable individual improvements. However, these were never documented, standardized and incorporated into the maintenance procedures and work standards for capacity planning. The Lab helped implement these lean maintenance principles across the facilities network.

Eliminated ERP Technology Workarounds — New ERP technology to increase productivity in facilities management seemed to underperform because employees used their familiar spreadsheets and uploaded data when complete—“ERP workarounds.” The Lab introduced both process standardization to ensure timely data entry and productivity metrics to monitor the gains.

“Industrialized” the Tax Appeals Process — Real estate operations treated each tax appeal as a unique event. The Lab used lean process reengineering to standardize one-off procedures into lean standard work products. The organization was industrialized into a knowledge work factory. Productivity metrics helped document a threefold increase in appeals filed.

Implementation Results:

  • Operating cost 15%
  • Annual savings $5M
  • Productivity 20%
  • Break even point 4 mos.
  • ROI (12 month) 4x