Value is often eroded through project execution. io provides stewardship of concept value proposition and the design / operation intent during FEED.
There are exceptions but, in many industries, we know that large complex projects generally underperform. We continue to lose value over and over again because expectations consistently do not meet reality. Projects are often poorly implemented and the original schedule, cost and revenue forecasts are often over-optimistic. This problem exists across industries and sectors executing projects of scale. Whether they are in oil & gas, infrastructure, energy, mining or chemicals, projects in all these sectors are equally susceptible to these pitfalls and value loss.
There are five root causes of value loss that project development teams have to grapple with in order to protect value through the front end journey:
people: finding the right talent with the right “front end” mindset, “systems engineers” who understand the bigger picture beyond their specific skillset. There is also the challenge of finding the right project leader and ensuring continuity of that leadership through the front end process. When the wrong person is selected to sit atop a complex project, failure regularly follows.
production attainment: due to unreliable forecasts based on optimistic subsurface assumptions, failure of assurance processes and a lack of accountability for production volumes. The oil & gas industry is often overly optimistic about basic subsurface characteristics, especially in the absence of actual data.
cost & schedule growth: as with the production attainment issue, it is difficult to accurately forecast cost and schedule estimates for complex projects and there are real data access issues.
project processes: must be decision orientated and, even if they are, they are not always followed. In a complex project with high organisational complexity there can also be ambiguity over ownership of the process.
project definition: value is lost from the outset if the business case is overlooked or rushed, with the risk of selecting the wrong development concept. Organisations can be reluctant to spend a significant amount of time or money on early stage engineering but adhering to the stage gate process is proven to protect value.
During FEED io provides a value protection team, ideally utilising team members who have been involved during the conceptual stages of the project (concept selection & definition). The fundamental role of the team is to ensure that the value proposition created and endorsed by the client during the conceptual stages is carried through the FEED, if possible enhanced, and only altered when clear justification is demonstrated.
The value protection team ensures that the FEED contractor is fully aware of client value drivers and fundamental requirements from the development.
The team may perform some or all of the following activities:
stewardship of concept value proposition and the design / operation intent during FEED.
support clients in project integration, system engineering and interface management.
perform value checks / validation of significant design developments using the concept definition value model (cost estimate, economic model) as a guiding tool. Feedback all findings to the FEED contractor and client.
facilitate value improving practices (VIPs) such as project framing, value engineering, risk assessment, lessons learned, design to capacity, etc.
attend key project meetings & workshops and act in a general project advisory role.
support clients in technical oversight of FEED or FEED competition and provide specialised technical input as required (safety & risk, environmental & social, flow assurance, advanced analysis, etc.).