Keeping the books: Chart of account approach to shutdown Bookkeeping

Create a chart of accounts for each shutdown. Here are some of the possible accounts.

Materials:                                                       Rentals:

Maintenance materials                                    Equipment rental

Large spares                                                   Tool rental

Maintenance parts                                          Vehicle rental

Maintenance supplies                                     Demurrage

PPE (disposable)                                                (welding tanks, rail cars, etc)

Inside prefabrication                                        Office trailers, toilets

Outside prefabrication                                    Mobile accommodations

Rebuilding services                                        Office equipment rental

Contracts:                                                      Shutdown overhead

Contracts (fixed price)                                    and other costs

Contracts (cost plus)                                      Security

Contracts (unit priced)                                    Housekeeping services

Project Management services                            related to Shutdown

Service contracts                                            Waste removal (both

Contract labor                                                     hazardous and

Contractor travel,                                            Non-hazardous)

     accommodations, per diem                       Project Management support

Engineering contracts                                     Shutdown management team

Inspection services                                         Damage Repairs

Other Consultants                                          Special Insurance

Training contracts for inside                           Legal costs

     and outside labor                                       Accounting costs and G & A

Labor (inside):

In-side Maintenance labor straight time (with fringes)

Overtime

Purchasing and accounting support

Inside Maintenance labor - overtime

Borrowed labor from operations

Borrowed labor from other plants

CPM/PERT is also a primary budgetary development tool because budgets are associated with each activity and event of the network. Furthermore, CPM is a budgetary control and project management tool throughout project execution because it provides alarms when:

• Interim targets are missed (earliest event time on the critical path)

• Float is reduced (latest event time off the critical path)

• The rate of financial commitment at any position in the network exceeds the budget

Spending

This accompanying chart is the spending pattern for a small shutdown. The costs start slowly and increase at an increasing rate and then decrease toward the end of the shutdown. If this pattern is charted the result is the curve Cumulative Cost Line Graph. By developing a graph like this for a proposed shutdown you’ll be able to see and predict what the costs should be against what they are for each reporting milestone.

Copyright 2005, Industrial Press, Inc., New York, NY