Quality improvement on installation and management of laboratory at vietnam energy inspection corporation

HO CHI MINH CITY OPEN UNIVERSITY UNIVERSITÉ LIBRE DE BRUXELLES SOLVAY BRUSSELS SCHOOL OF ECONOMICS & MANAGEMENT MBQPM 6 ĐỖ ĐỨC THÀNH QUALITY IMPROVEMENT ON INSTALLATION AND MANAGERMEN

HO CHI MINH CITY OPEN UNIVERSITY UNIVERSITÉ LIBRE DE BRUXELLES

SOLVAY BRUSSELS SCHOOL OF ECONOMICS & MANAGEMENT

MBQPM 6

ĐỖ ĐỨC THÀNH

QUALITY IMPROVEMENT ON INSTALLATION AND MANAGERMENT

OF LABORATORY AT VIETNAM ENERGY INSPECTION CORPORATION

MASTER FINAL PROJECT MASTER IN BUSINESS QUALITY AND PERFORMANCE MANAGEMENT

Ho Chi Minh City (2018)

HO CHI MINH CITY OPEN UNIVERSITY UNIVERSITÉ LIBRE DE BRUXELLES

SOLVAY BRUSSELS SCHOOL OF ECONOMICS & MANAGEMENT

MBQPM 6

ĐỖ ĐỨC THÀNH

QUALITY IMPROVEMENT ON INSTALLATION AND MANAGERMENT

OF LABORATORY AT VIETNAM ENERGY

Authenticity

I certify that the final project of Master of Business Quality and Performance Management titled

“Quality Improvement on Installation and management of laboratory” is my own work and has not been present elsewhere for assessment except materials from other reference sources

Do Duc Thanh

24 March 2018

Acknowledgement

I would like to thanks all professors of MBQPM6 program, who taught much Quality

Management Knowledge and inspired me of making this useful dissertation for my career

TABLE OF CONTENTS

INTRODUCTION: VIETNAM ENERGY INSPECTION CORPORATION 5

WHY THIS INSTALLATION AND MANAGEMENT OF A LABORATORY IS IMPORTANCE 8

Part 1: installation and management of the laboratory 9

CHAPTER 1: IN THE INSTALLATION (SET UP) LABORATORY 9

1.1 Geographical location 9

1.2 Human resource management 12

1.3 Selection standard method of testing 13

1.4 Budget 15

CHAPTER 2: Laboratory Management (Lab operation) 19

2.1 Quality management in conformity with ISO 17025 19

2.2 Monitor the reliability of testing methods: repeatability, reproducibility 23

2.3 Applying Process manager tool to control repeatability & Reproducibility values of testing process 24

2.3.1 Monitoring repeatability for water determination in Diesel Oil 24

2.3.2 Sulphur in Gasoline 26

2.3.3 Calculation relative density for Liquefied Petroleum Gas 29

2.4 Some problems in managing laboratory 33

PART 2: THE LABORATORY PERFOMANCE 35

CHAPTER 1: MONITORING PERFOMANCE 35

3.1 Solving managing problems 35

3.2 Building Key Performance Indicators for Laboratory 36

3.2.1 Balance scorecard for laboratory 36

3.2.2 Key Performance Indicators for Laboratory Operation 39

CHAPTER 2: PERFORMANCE IMPROVEMENT 45

4.1 Implementing Lean Production in Laboratory 45

4.2 Applying Laboratory Information Management System Software – LIMS 46

4.3 Estimate the improvement in performance 47

CONCLUSION 48

REFERENCE 49

INTRODUCTION: VIETNAM ENERGY INSPECTION CORPORATION

Vietnam Energy Inspection Corporation (EIC) - a member of Vietnam National Oil and Gas Group (Petro Vietnam) – founded in 2008, gathering hundreds experts and specialist, professional and qualified staff from the oil and gas and other industrial sectors Thanks to their expertise and diligence, EIC have successfully performed specialized service related to the project quality management, consultancy, quality control and assurance to ensure risk free and integrity of the Petro Vietnam assets as well as Health, Safety and Environment for all oil and gas activities covering up – mid and downstream;

The name EIC have become familiar and close to the owners, operators and contractors working

in oil and gas sector in Vietnam Also proved by the presence of EIC professional staff in most of oil and gas project, particularly for the important project of Petro Vietnam, namely Dung Quat Refinery, VietSo Petro, Offshore Oil and Gas Projects, Gas Thermal Power Plants, Oil and Gas Terminals, etc …

Through its cooperation with global partners and corporate network EIC have focused in new technology to provide its clients with advanced solution and complete process equipment, technical service and specialty materials serving for their needs to develop a project in every stage from a conceptual design up to operation

Base on Knowledge, Procedures and Laboratories we are confident to satisfy our Clients requirement where Quality- Health- Safety and Environment are vital This is also a mandate for EIC staff in building the core values of EIC

Following the Petro Vietnam Energy Development Program in future, EIC have set its development target to meet the higher and more challenging requirements of our clients

EIC now have six branches with a team of 200 qualified and professional senior managers, surveyors and staffs in various fields and industries Three petroleum analysis laboratories certified

in conformity with the national standard (VILAS) alongside of the country Many services provided by EIC in variety of fields such as quality and quantity inspection of gasoline, diesel, jet A1, LPG, CNG, LNG and others petroleum products, chemical products; management and

protect the asset value of their physical property and goods to insurance, transportation, financial corporations

From recent years, with many success and achievements gained, EIC considered the most steady and fastest development company in the petroleum inspection section In the globalization context, there are a lot on competitions from international company like Intertek, SGS, but we confidence

in competition and believe in making business progress

SERVICES AND PRODUCTS

INSPECTION, SURVEY AND ASSET EVALUATION

EIC has been recognized and highly appreciated by its clients for enhanced quality and innovative services The survey, inspection, verification and asset evaluation services are performed in an independent and accurate manner:

Oil, Gas and petrochemical Inspection

Machinery and commodities Inspection

Marine and Technical Property Surveys

Ship & Terminal Vetting and Audit

Technical inspection for safety of machinery, equipment material and substances with has strictly requirement as stipulate in the laws and regulations

Lab & Analytical Services

Construction Quality Inspection

Industrial & Technical Services

VISION

To become one of the leading group in providing the clients in energy sector with expertise, quality services, creative technological solution in both local and global markets

MISSION

Innovating in advertising and marketing, after sale services and customer services

Innovating in management, training and developing human resource

Renewing equipment and devices, applying innovation of science and technology

t Financial Departmen

t

HRM Department

Analysis Center

Sale Department

Marine Department

Quang Ninh

Branch

Dung Quat Branch

Can Tho Brand

Vung Tau Brand

Hai Phong Branch

Da Nang Brand

LABORATORY NETWORK CHART

Furthermore, managing a laboratory is a difficult and complicated task; we not only controlling all these operations right on track but also assure the laboratory is making revenue and profit to the company This require a strategic planning for installation or set up a laboratory and the art of managers skill of operating process On this graduation dissertation for Master in Business Quality

& Performance Management Program, I will analyze some critical points for installation and management of laboratory, and making some suggestion for monitoring and improvement performance of laboratory operations

LAB MANAGERS

LAB HO CHI MINH

LAB QUANG NINH

LAB DUNG QUAT

LAB VUNG ANG

LAB TRA VINH

PART 1: INSTALLATION AND MANAGEMENT OF THE LABORATORY

CHAPTER 1: IN THE INSTALLATION (SET UP) LABORATORY

In the quality point of view, setting up laboratory is very similar to preparation stage of project manager At this step, we taking care of elements that affect more or less to this phase All things must be analyzed and considered carefully This will help us adjust everything relevant to the circumstances and context On my opinion, one of the most important thing that will determine the project’s feasibility is the organization’s business strategy In the inspection field, we can make the outline plan base on company business conditions, by selecting some key factors that make our company go beyond other competitors

1.1 Geographical location

Geographical location mean selecting the location for our laboratory We must take care many things about the location I only mention about key factors that make most advantage to the laboratory

First, laboratory must be established near the sources of samples that are oil refinery plants, thermal

or gas power plants, storage tanks at transportation hub or seaports Because if we do that we can shorten the time of transferring sample form sources to the laboratory and it will decrease the cost

of transfer too Finally, the cost of testing sample will be reduce also, that make our price more competitive and making attraction to the customer On the other hand, our lab’s location must be easy access by customer; I recommend that we should put our laboratory next to the source such

as door-to-door EIC have experience of selecting the location of laboratory We did set up one of our petroleum laboratory very close to the Dung Quat Oil Refinery, just 3 km away of the factory For this close distance, we just take 6 minute for transferring sample from factory to our laboratory and none of our competitors can do that This tactic was applied to all our next installation of laboratories except the Lab at Saigon and it gave us a huge step over competitors Besides that, according to national environment protection law, all laboratory must be located in industrial zone due to the worry about hazard waste

Second, the square space of the laboratory must be considered The location must be enough space

Quang Ninh Lab

Vung Ang Lab

Dung Quat Lab

HCM LAB

Tra Vinh Lab

Picture 1

The EIC Laboratories Network

No Laboratory name Customer Established

year Province

Distance form source

to lab (km)

Time of sample transfer (minute)

1 Dung Quat Lab Dung Quat Oil

Refinery Plant 2009 Quang Ngai 3 10

2 Ho Chi Minh City

Lab

Dinh Co Gas Processing Plant

PV Oil

PV GAS Petrolimex

2010 Ho Chi Minh City 120 90

3 Vung Ang Lab Vung Ang Coal

Power Plant 2015 Ha Tinh 4 13

4 Tra Vinh Lab Duyen Hai Power

Plant 2015 Tra Vinh 4 13

5 Quang Ninh TKV 2017 Quang Ninh 3 10

Table 1 Distances from EIC Laboratories Sample Sources

1.2 Human resource management

There are two types of laboratory: the commercial Lab and the Internal Lab The Commercial Lab

is seeking external clients and doing work for a fee The Internal Lab is a “captive lab” that responds to the needs of the parent organization EIC Lab is the internal Lab We not receive sample directly from customer We are receiving and analyzing sample via request from Energy Department that is taking sample from customers In the classical view, personnel that working in the laboratory are technical excellence, independent working and less communicating to each other Things have changed in recent years Nowadays, group working prove that we can handle number of sample more effectively and less failure than working in individual, so teamwork is key basic of high performance Furthermore, it should be remember that, on the average, people are average Fresh man graduated from college need to be trained and educated for new practical environment that are quite different from college laboratory EIC is a member of The International Federation of Inspection Agencies (IFIA) that provide certification for inspectors that required for working offshore

Working in the laboratory is boring job Lab technician repeat the experiment every day, so we need to motivate or regenerate them by classify tasks and assigning job differently That term also stimulate curiosity and make them more dynamic

EIC Lab planned for changing to Commercial Lab, so the HR policy have to be changed for adapting to new situation The types of people needed and the skills they must have differ greatly from Internal Labs and the most important skills are business skills These are sales and marketing skills, financing skills, contracting skills, personnel management skills, quality control skills Technical skills are still important in the Commercial Lab, but they are secondary in nature Often the technical aspects of the Commercial Lab are already prescribed by regulations or industry standards and the Commercial Lab is not primarily a technology driven endeavor

Picture 2 Standard flowchart of Lab recruitment

1.3 Selection standard method of testing

There are many book of standard all over the world They are made by independent organizations, two most famous are ISO (The International Organization for Standardization) and ASTM (American Society for Testing and Materials) Vietnam also have developed own national standard (TCVN) and national technical regulations (QCVN) Every methods system their own requirement for facility and resources They also have their own weakness and strong points In this respect, the question is how to choose the right methods of testing services

National standards and national technical regulation are the rule of all testing method But in petroleum segment, almost standard are based on ASTM standard, so selecting ASTM standard for our testing services is the smart choice and making long term benefit Because ASTM now is ASTM International have a long history of formation and development, they have been accepted widely all over the world Not only in Vietnam, many countries have use ASTM standards for their national standard In this globalization time, using same standard as developed nations give our goods and services more competitive advantage

Table 2 National technical regulation on gasoline QCVN1:2015/BKHCN

When selecting method of standard, we also notice that science and technology have huge jumps over decade What we know today may not be right tomorrow Especially in the fourth revolution

of science and technology, life cycle science-technology equipment are much shorter than previous time There a risk in investment for lab equipment, because some equipment are specialized for standards If the standard is withdraw due to obsolete, this equipment will be extruded As a result,

we should invest in equipment that built on newest technology and more automation

Equipment, tools and Lab facilities must be in conformity with HSE Policy of company and general requirement Lab construction Each Lab instrument and equipment require their own workspace so make hard to find out a medium of square space for each testing methods On the other hand, we can group instrument, equipment and tools by their physical characters and put them in the same room such as Gas Chromatography room, Thermal room Furthermore, put them all in-group specialize for specific products like Oil product analysis room, Coal analysis room

On the other hand, lab must left empty space for expanding in future In case of tumble real estate price, laboratory that require large space usually locate in suburban area or industrial zone, near main hub of transportation and sources of sample

1.4 Budget

All lab technician want to work in a most modern and advance laboratory, with tons of high tech equipment and tool However, when at the planning stage of set up, we will decide which level our new laboratory will start up We must focus on the number of samples This is the economic feasibility of the project Base on the quantity of sample of a year, total number of sample per contract, or some time sample number is low in present time but it will growth very high in future All these perspectives lead to the choice for scale of installation However, we must look carefully for business strategy of the company, and keep aligned with it If we stay away from the company business strategy, we will make many big mistakes and get the collapse of whole plan

No Laboratory name Product type Number of

testing methods

Level of complexity

Investment Amount (in billion VND)

1 Dung Quat Lab LPG 10 Medium 2.0

2 Ho Chi Minh City

Lab

LPG, CNG, LNG, Gasoline, Diesel, FO, Jet A1, Coal

65 High 4.5

3 Vung Ang Lab Coal 1 Low 0.25

4 Tra Vinh Lab Coal 1 Low 0.25

5 Quang Ninh Coal, Diesel,

FO 15 Medium 1.1

Table 3 EIC Lab network with level of complexity and investment amount

The more complexity of the Laboratory network the more investment amount is need Economic aspects play an important role of Lab installation

There are many scenarios for setting level of laboratory First, we must have the expecting number

of total testing samples from business contract If not, we should launch some market research and get result These data will be analyzed for business aspects such as return of investment (ROI), than we make the approach for set up These aspects also influence the level of technical complexity of our instrument Absolutely, more complexity or advance and automation cost much more than manual instrument that have lower productivity That will make reverse impact on our business performance

Picture 3 Koehler K40590 manual distillation apparatus - ASTM D 86

Instrument Koehler K40590 Normalab NDI 450

ASTM methods D86, D216, D233, D447,

D850, D1078

D86, D216, D189, D524, D850, D1078, D4530 Operation Manual Automatic

Samples per day 8 20

Accuracy +/- 1

oC temperature +/- 1 mlflow

+/- 0.1oC temperature +/- 0.05 mlflow Power Consumption 1000W 3000W

Price 5000$ 20000$

Table 4 Automatic and manual distillation spec comparison

As we see the comparison Table 4 The Normalab NDI 450 is 4 times expensive than the Koehler K40590 Although power consumption is higher for Normalab NDI 450, but it is more precise and the most important is saving work force It mean that technician only need to put sample into NDI Instrument and switch to other test, it also mean saving a lot of time Productivity of the automatic one is much more for sure, it is a high valuable of investment

Testing cost estimate is complicated process It totally base on Lab expense for operating energy, consumable supplies, cost of labor, space cost, depreciation of fixed assets for instrument, equipment and tools Cost per test depends on method development cost and the number of samples run If only a few samples and a couple of months method development time, cost per sample is quite high Thousands of samples using a known method is much less Cost therefore ranges from

$5/sample to over $100 /sample, depending on number and type of testing item per sample Cost also different to type of method, test using automatic instrument is quite more expensive than manual instrument

CHAPTER 2: LABORATORY MANAGEMENT (LAB OPERATION)

2.1 Quality management in conformity with ISO 17025

Technical Management/Quality:

Many approach technical and quality management as somehow separable, but they are integrated The selection, validation and application of testing technology to achieve reliable results is inseparable from managing laboratory quality This can be seen in any of a number of quality management guides, but no one is clearer than ISO 17025

In the Scope, ISO 17025 states:

- This International Standard specifies the general requirements for the competence to carry out tests and/or calibrations, including sampling It cover testing and calibration performed using standard methods, non-standard methods, and laboratory-developed methods

- This International Standard is applicable to all organizations performing tests and/or calibrations These include, for example, first-, second- and their-party laboratories, and laboratories where testing and/or calibration forms part of inspection and product certification

It is actually hard to imagine a testing or research laboratory that does not fall under this very broad international scope Hence, a review of ISO 17025 guidelines is indispensable in establishing, correcting and improving technical and quality management systems in a laboratory Managers of all types engaged in laboratory work (front line to highest executives) are highly encouraged to obtain, read, understand and follow this extensive standard regardless of the specific field of technology It is virtually impossible to have consistently reliable testing results unless the recommendations of ISO 17025 are followed In this dissertation, we will review some key elements

Management System:

One of the most important features of ISO 17025 is recognition that there must be a management

This includes systems that:

Provide a planned and functioning quality management organization,

Provide for written quality standards of performance – including Standard Operation Procedures (SOP’s),

Provide for the management of all pertinent records – including results and documents supporting those results,

Provide a stated quality policy that can supersede and critique specific procedures,

Provide methods for identifying and maintaining quality objectives

Provide means for management review of performance

Unless an organization has the systems in place to implement these basic functions, quality performance will eventually suffer with dramatic consequences That “system” includes a human resource element A management system cannot function if the managers are do not have the proper training, experience and commitment Furthermore, the management system must be designed such that it naturally hires, trains and utilizes appropriate technical personnel in the testing processes

Document Control:

ISO 17025 relies heavily on documentation to ensure that quality systems are in place and operational This depend much on technical personnel Unfortunately, failure to document usually happen in later confusion and doubt This failure destroys the value of any test result More worst

is the failure to plan document control and retrieval Much too often, good initial documentation

is frustrated by the inability to retrieve the data and the supporting information needed to verify and validate those data Without the ability to retrieve critical information, the value of testing is meaningless

Due to ISO 17025, all documents are kept for 3 years However, when we put in practice, there are many flexible ways for document storage Sometime quite to the contrary, less is often better;

we only keep the most important documents Destruction of redundant and irrelevant records quite often helps focus attention and efforts onto the critical data, and necessary to preserve the value of some experimental efforts

Corrective Action:

Corrective Action is another key tenant of ISO 17025 It appears in many ways Clearly when procedures fail, there needs to be a recognition that the system has failed and corrective action should be taken Most organization formalize procedures around failures that are likely and maybe even anticipated The danger here is that these “failures” can become “routine” and not considered failures at all, but just the way business is done When “corrective action” becomes routine, it is

no longer “corrective.” It has become a part of the standard way of doing business In this case, Corrective Action must go deeper and investigate the entire quality system It is at this point that Corrective Action becomes a management review to ferret out where policies or even managers themselves have gone awry

Selection and Validation of Methods:

ISO 17025 specifically acknowledges a common error in testing – using the wrong method Applying inappropriate measurement technique on a sample happens far too often The results of the measurement may be horribly biased and that bias may not be at all obvious Careful selection

of sampling, sub-sampling and measurement techniques are all crucial for valid results Horror stories in this area abound Hence, the ISO 17025 Standard requires the appropriate scope for sampling, analysis and data reporting This selection process cannot be left up to chance, but must

be an overt part of the management system so that even accidental mismatches are quickly identified and corrected

The ISO 17035 Standard require that all methods must be validated for the types of samples being processed Where practical “standard methods” should be used These are methods that have been validated by multiple organizations and documented as being appropriate for specific sample types The Standard describes some of the techniques used for validating non-standard method The technique used “shall be as extensive as is necessary to meet the needs of the given application

or field of application” This is a tall order in many cases and can rarely be done without some equivocation The limitations of the validation should be disclosed to data users

Statistical Controls:

ISO 17025 relies heavily on statistical validity of data Data that are devoid of any estimates of precision and accuracy are of little value In all cases, data should have associated estimates of uncertainty Where this can be done in a statistically valid fashion the actual uncertainty should be reported Where this is not practical, comments on the probable error and potential error should be given The degree of rigor in estimating error should be appropriate for the use of the data The management system should be capable of ensuring that the precision and accuracy of the results are appropriate for the use of the data and that, where this may be questionable, the data user is appropriately notified

These same statistical control principles must be applied to all equipment, standards and reagents Calibration procedures and checks should be recorded in document and the acquiring, use and retiring of standards and reagents be appropriately controlled

Sampling:

Unlike many standards, ISO 17025 overtly address the appropriateness of sampling This is one

of the Standard’s most significant contributions to quality management Inappropriate sampling usually results in bias and often contributes to imprecision Too often, the laboratory ignores or is unaware of the sampling challenge This is especially problematic when the laboratory must take

a sub-sample in the laboratory to do an analysis If unaware of innate inhomogeneity or instability, the laboratory can inadvertently ruin an otherwise valid assay The Standard strongly suggests cooperation between the data user, field personnel and the laboratory

Traceability:

The Standard emphasize in several places the need to be able to trace calibration materials to the International System of Units (SI) This includes masses, lengths, volumes, temperatures, pressures, frequencies, voltages, energies, etc Pertinent units must be clearly and accurately reported in all results and calculations Traceability means that all important calibration standards and materials are certified as to their value and can be traced back to SI, usually by the manufacturer of the standard or material Where this is not practical, the laboratory must make its own disclosure on how a calibration standard or material was prepared by using SI traceable

calibration standards or materials The Standard specifically recognizes the potential for inappropriate calibrations that can be difficult to discover

Appropriate Data Reporting:

The Standard specifically acknowledges that some test results will be deficient in some ways, but may still be useable for the intended purpose The Standard requires that all deficiencies be acknowledge to data users so that they may be the final judge on the utility of the data The Standard encourages “full disclosure” regardless of the source of the deficiency

Conclusions:

ISO 17025 is a very detailed listing of quality management principles that should be used by all laboratories We have listed most of the general principles Managers should be familiar with and embracing of these principles They are a very good start toward consistently reliable and relevant

laboratory data

2.2 Monitor the reliability of testing methods: repeatability, reproducibility

Repeatability and reproducibility are ways of measuring precision, particularly in the fields of chemistry and engineering In general, scientists perform the same experiment several times in order to confirm their findings These findings may show variation In the context of an experiment

Repeatability measures the variation in measurements taken by a single instrument or person under the same conditions, while reproducibility measures whether an entire study or experiment can be reproduced in its entirety Within scientific write-ups, reproducibility and repeatability are often reported as standard deviation

What is repeatability?

Repeatability practices were introduced by scientists Bland and Altman For repeatability to be established, the following conditions must be in place: the same location; the same measurement procedure; the same observer; the same measuring instrument, used under the same conditions; and repetition over a short period

What is reproducibility?

Reproducibility, on the other hand, refers to the degree of agreement between the results of experiments conducted by different individuals, at different locations, with different instruments Put simply, it measures our ability to replicate the findings of others Through their extensive research, controlled inter-laboratory test programs are able to determine reproducibility

Why are repeatability and reproducibility considered desirable?

In terms of repeatability and reproducibility, test/re-test reliability demonstrates that scientific findings and constructs are not expected to alter over time For instance, if you used a certain method to measure the length of an adult’s arm, and then repeated the process two years later using the same method, it is highly likely that your results would correlate Yet if your results differed greatly, you would probably conclude that your findings were inaccurate, leading you on to further investigations As such, repeatability and reliability imbue investigative findings with a degree of authority

We can also use repeatability and reliability to measure difference and a lack of correlation If, for instance, we are unable to repeat or reproduce our findings, we have to ask ourselves why, and to investigate further

2.3 Applying Process manager tool to control repeatability & Reproducibility values of testing process

By selecting three methods of testing for three different petroleum samples, we will demonstrate the use of control chart of Process Manager for monitoring the repeatability for water determination in Diesel Oil, Sulphur in Gasoline Moreover, monitoring the repeatability & Reproducibility in calculation for relative density for Liquefied Petroleum Gas

2.3.1 Monitoring repeatability for water determination in Diesel Oil The test method official name is ASTM D 6304 - 16e1 Standard Test Method for Determination

of Water in Petroleum Products, Lubricating Oils, and Additives by Coulometric Karl Fischer Titration The scope of this testing method covers the direct determination of water in the range of

10 mg/kg to 25 000 mg/kg entrained water in petroleum products and hydrocarbons using automated instrumentation This test method also covers the indirect analysis of water thermally removed from samples and swept with dry inert gas into the Karl Fischer titration cell Because for diesel oil, the presence of high quantity of water could lead to premature corrosion and wear,