A.T. Kearney & Aker Solutions
Contracting Strategies & Behaviours
1) Process & Culture2) The Twelve Deadly Sins3) Collaboration4) Lean Processes
CONTENTS
To tackle the current challenges one hypothesis is that we need to remedy two systemic areas of value leakage
·A lack of cost focus during $100 oil has seen inflation of development and extraction costs in the race to First Oil
·Robust, collaborative processes are now required that cut across functional silos in a fact based methodology to reduce Total Cost of Ownership across the entire value chain
·Years of silo’ed thinking and competitive attitudes across operators and OFS providers have led to uncoordinated actions, specifications and duplication of common costs
·Today’s climate may justify a more radical approach, learning from other (younger) industries to tackle common O&G challenges in a combined effort – and getting the best person for the job!
THE TWELVE DEADLY SINS is a framework enabling us to tackle common causes of value leakage in processes
The Twelve Deadly sins of value leakage in processes
Drilling Projects
1 Mismatch helicopter flights
2
3
4
requirements levels
Unawareness technology
making
VO’s)
disconnect
outcomes not factored in materials” structures
Operations strategies intention and logic handover
overtime necessary
(waiting/idle time)
11 required at sites inventory
12
Specification process
Execution process
Sourcing process
10 Poor planning causing just in time needs
6 Global, local
7 Poor contract
8 Poor contract
9 Lack of commercial
awareness
5 Unit price focus
Lack of challenge and involvement at strategy setting
Over specification
Not considering
value, spreads etc.
Over-specified wells, incl. logging
Company men not familiar with
Commissioning services when not
Rig type to well requirements
New technology not considered (e.g. cuttings handling) Procurement involved too late to influence specs and strategy
Global agreements not incorporating local needs
Not incentivizing crew for best well
Mobilizing last minute support
Keeping kit offshore when not
Focus on day rates not associated
Not using operations data for functional decision making
Wrong concept choice
Tender driving wrong behavior (e.g.
Triggering variation orders
Contracting strategy not inducing optimal contractor behavior
agreements for local optimization
contractors to make best decision
commissioning spares to ops
Metallurgy for subsea equipment
Not using latest weight saving
Lack of flexibility in EPC frame
Payment terms, interfaces, risks etc.
Lack of consideration for handover to
Not sharing impact of delay to
Poor handover of spare parts and
Over-sized safety stocks or service
Overlooking experience and qualifications of contractor staff
differentiated, e.g. off-/onshore
Offshore staff unaware of contract
Storing obsolete/slow moving stock
Offshore O&M
Low capacity utilization of e.g.
Not using latest inventory replenishment software
No TCO mindset in decision
Maint. frame agreements not
Uncontrolled use of contractor
Low utilization of contractors
High share of spend on “time &
Should we be following leading examples of collaboration in other industries?
This mode of operation and collaboration would require an enlightened view on how to work in an industry, as well as a radical change in attitude...
Addressing the cultural challenges in Oil & Gas
Tesla: SRM & Open Source mindset
·“Tesla Motors was created to accelerate the
·If we clear a path to the creation of compelling electric vehicles, but then lay intellectual property landmines behind us to inhibit others, we are acting in a manner contrary to that goal.
·Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.”
·Tesla rely on leading SRM behaviours to learn
advent of sustainable transport.
about technology advances from their suppliers
Oil Operators: proprietary mindset
·Some emerging shared contracts across operators (e.g. maintenance)
·However, limited collaboration or shared development and planning
·Growth in patents has grown at double digit rate in the six years since 2008 recession
Collaboration
Values
Lean Work Processes
Lean Work Processes
Lean Work Processes