Project independent assurance
Shortly before reaching FID, a major oil and gas company and its JV partner commissioned an external review of the project’s procurement function, which was critical to handling larger purchases anticipated for the post-FID phase. Wouldthe major oil and gas company and its JV partner be able to determine if a multi-billion dollar offshore gas field development project would be able to remain on schedule and on budget?
- Our team reviewed the pre-award procurement process, working alongside our client’s internal audit team. We focused on existing procurement packages, readiness of the overall process work streams and procurement cycle times.
- We identified more than 30 findings of significant control gaps and inefficiencies in the process.
- Our assessment of the procurement cycle time showed clearly the current inability of the client’s procurement process to meet the project target milestones.
Our client gained an in-depth understanding of their exposure to significant risks and control inefficiencies in the pre-FID procurement process. The impartial perspective we provided empowered our client to address weaknesses effectivelyand realize 19 opportunities to increase process efficiencies. As a result, our client was able to strategically allocate investments and improvement efforts to set up a procurement process that would meet the schedule and budget milestonesin the post-FID phase of the project.
Capital project management
Our client, a JV comprising international and national oil companies (IOCs and NOCs), operates one of the world’s deepest producing supergiant oilfields and had initiated a capital expansion program to significantly increase productionfrom 2020 onward. Would the client be able to mitigate the challenges ahead concerning governance, controls and organizational capability?
We consulted our client across issues of project services, supply chain and project leadership. Our scope of work included:
- Assurance mapping, reviews and audit planning for internal controls, as well as designing and implementing the invoice-to-pay process to manage 1000+ monthly invoices.
- Delivering the plan to manage cost controls, redesigning and integrating the 3000-person organization operating model to realize US$1.5b potential savings.
- Implementation of ProCon from initiation to procedural roadmap development for post-award contractual procedures.
Our client gained greater control, visibility and efficiency through a leading practice internal controls framework and audit plan. The new scalable invoice-to-pay process will reduce cycle time by about 30%. The cost management work streamaccelerated readiness by three months and fully integrated the project control function, while the redesign and integration of the operating model delivered a 15% value improvement to date.
Project-independent review, development and implementation of world-class project management capability
An energy company with a diverse asset base and growing pipeline of capital projects had trouble completing its projects on time and on budget. More than 23% of their projects were at least 50% over budget and were significatnly behindschedule. Underperformance on agreed project terms was becoming the norm. How could the company overcome this downward trend?
A program was put in to place to improve consistent capital project delivery, with the ambition to triple the capital investment program to US$38b over the next 10 years across four business units.
- Our team delivered and implemented a new capital project governance structure.
- We assessed about 40 capital projects’ performance and root causes of poor performance, identified immediate improvement options and analyzed the management and control of projects across their life cycle.
- We designed and implemented the blueprint for future capital project delivery, closely involving our client in the multi-phased project approach to ensure the new business teams took ownership of and drove the changes sustainably.
Our client overcame diverging understandings of project delivery across its business units. Our client’s teams now deliver capital projects consistently within a robust framework: across asset types, business units, various project riskprofiles and performance levels. Our client now has greater reporting transparency, more reliable data across all capital projects, more consistent management standards throughout project lifecycles and enjoys sustainable improvementsthrough centralized project management.
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EY Global TAS P&U Associate Director and Resident
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Global Power & Utilities Analyst
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