A Collaboration for Capital Project Innovation
What Are Capital Projects?
A capital project is a long-term, capital-intensive investment to create, build upon, add to or improve a capital asset. Capital projects are relevant across different markets and industrial sectors. Building new facilities, maintaining civil infrastructure, making improvements to public parks, constructing electric vehicle charging stations – these are just a few examples of capital projects that impact our daily lives. Capital projects tend to be multi-year and big-budget initiatives, so their management and methods of implementation are critical to success.
In an industrial context, capital projects often involve an investment in the procurement or construction of significant fixed assets, such as infrastructure like roads and bridges, factory warehouses or production sites. These projects are very common and impactful in asset-intensive sectors such as Energy & Utilities, Oil & Gas and Transportation & Infrastructure.
Challenges of Capital Projects
Given the complexity of capital project management, effective System Integration across the many digital systems involved has always been a massive pain point for capital-intensive businesses. No technology solution to date has been able to achieve satisfactory functional integration across essential processes, including the management of capital asset design, projects, documents and works administration. When trying to integrate capital project management and Enterprise Resource Planning (ERP) systems, businesses often face the following challenges:
- Lack of synchronization between various highly-dispersed roles in the project
- No synchronization between ERP databases/asset registers and the drawing register or Digital Twin
- Sub-optimal integration between finance, project and asset management systems and related document controls, leading to complexity and unnecessary work
- Impaired visibility and accountability of changes to asset data and related documents
- Delayed recognition of assets by both physical and financial asset registers
- Long turnaround times for design changes and other project changes with dependencies
- Delayed updates of maintenance and operations systems during capital projects
- Complex project forecasting and reporting processes
From a capital control and project perspective, these challenges can lead to chronic cost, time and quality losses. Even worse, the capture of asset management data is often late or inaccurate, putting operations and business performance at risk. From an asset management perspective, many of these pain points manifest as part of the “asset handover problem,” in which organizations struggle to synchronize all required asset information across systems and production processes.
The Asset Handover Problem
One difficult and well-known problem for capital-intensive enterprises is how to quickly and effectively identify the critical sub-set of data generated by projects that is used to update ERP systems. This task is often completed by asset master data administrators, and the master data from capital projects must be very carefully managed for the safe maintenance of assets. Asset managers need drawings or records that are “as built,” meaning assets have been confirmed to represent what was actually built or installed and are therefore qualified to be put in-service and then recorded in the solution for maintenance and other related processes. Recording something wrong or missing key data can be the difference between life and death in some industries, or more usually, lead to expensive asset failures and excessive operating costs.
Asset master data administrators should not have to sift through gigabytes of project data to reconstruct what was qualified for service and what was actually delivered. Instead, the required data should be easily identified, in the correct format and available for a quality check before uploading to ERP systems such as SAP. The process should be quick and seamless, with a visible end-to-end chain of accountability so that any concerns or questions can be quickly addressed.
Data administrators should also not have to wait a long period of time for the correct project documents to be checked and delivered, whether they be as-built drawings, operating and maintenance manuals, commissioning results, certifications or warranties. Quite often, the asset is already in service when this documentation is being painstakingly compiled using traditional methods. Efficient and effective document management is critical for seamless operations.
The culmination of these problems is a large delay between when the asset is actually in service and when your ERP system is updated to reflect this reality. Imagine you are a maintenance technician and have an asset to maintain, but the data is not yet prepared for your maintenance plans and work orders. You would not be able to maintain the assets effectively or know if the assets are under warranty.
To make matters worse, financial officers and auditors can get very agitated that they have not yet been able to commence depreciation of the assets due to delay in asset recognition. The project capital costs can be stuck in “Assets under Construction (AuC)” for too long. The asset registers need to be established in good time to allow the costs to move and the assets to depreciate. If there is too long a delay, the actual financial position of the company is hard to accurately report with growing AuC balances.
Niche solutions exist that address individual aspects of the overall asset handover problem, but only recently, through a partnership between SAP and Siemens Digital Industries Software, as well as the partnership of implementation experts like Engineering Industries eXcellence, has a more flexible, holistic solution become available across all of these critical business processes.
Introducing SAP CaPEM
To address these capital project management challenges, Engineering Industries eXcellence has partnered with SAP and Siemens Digital Industries to deliver a ground-breaking solution that enhances Siemens' industry-leading Teamcenter Product Lifecycle Management (PLM) offering for capital works processes and deep functional integration with SAP S/4HANA. The resulting solution is called SAP Capital and Project Engineering Management (SAP CaPEM).
SAP Capital Project Engineering Management adapts Siemens Teamcenter technology to apply the principles of PLM to the planning, design and construction of assets, integrating with SAP as the ERP system of choice. SAP CaPEM manages business processes and data exchanges between SAP and the project-specific activities around the design and build phases of the project. This includes managing the Common Data Environment to support the operation of Digital Twins and the sharing of design process documents. In short, SAP CaPEM makes easy the work required to effectively integrate the data and business process flows.
SAP CaPEM enables the owner or operator to consolidate technical data supporting their assets and facilities into a single collaborative digital environment. This covers information generated by engineering, procurement, construction, associated service providers and their supply chains.
What makes SAP CaPEM transformational is its ability to integrate project and design information that is usually isolated with other sources of technical and business data for assets and capital projects. With SAP CaPEM, your business can take the next step forward on its digital transformation journey and achieve a single, synchronized source of asset truth for frictionless business processes, operations and cross-department collaboration.
So how does it work?
Common Data Environment Framework
Looking at the above diagram, we can see that SAP CaPEM performs a critical orchestration and integration role between design authoring solutions and ERP systems. On the design side, SAP CaPEM manages the various design interoperability frameworks that are common amongst many vendors. This results in the production of drawings and documents that identify information required for ERP.
If a facility is undergoing refurbishment, a document will be created that states what assets were removed and what assets have been added, like in the example interface on the next page. This can be thought of as a change management request for the ERP system, which is fully transparent and traceable, resulting from SAP CaPEM interoperability with project management and design processes.
The above interface shows what elements have been removed and added to a design document or digital drawing register. No one needs to derive this from a drawing themselves, as SAP CaPEM tracks the changes with the drawing objects.
SAP CaPEM also makes it much easier to compile data and check changes, update registers in ERP and view them across Geographic Information Systems (GIS). Once assets have been updated in the physical asset register, the equipment numbers or quantities can be used by accounting to register assets in the financial register and depreciate assets from the capital budget.
Why Engineering Industries eXcellence?
Engineering Industries eXcellence, a company of the Engineering Group, is a long-standing, strategic and expert partner of both Siemens Digital Industries and SAP. Our global team of experts can provide consultation on how to remove capital project pain points with SAP CaPEM and improve the performance of your capital works program. Our specialists have real-world experience with SAP capital works management, project integration, GIS integration and asset master data management. We also have an established global practice of some of the world’s most technically specialized experts in PLM. Together, we deliver a combination of dual partnership reliability, business process knowledge, technical expertise and implementation capabilities that no other company but Engineering IndX can claim. Let us join you on your digital transformation journey for the future of your business.
