2005 Annual Report - SBM Offshore

Report of the Board of Management
its ability to balance the activities between supply and lease
within the constraints explained, and the current split is
expected to be maintained in the future.
Operational Risk
The Company provides custom built solutions to clients’
requirements, and the technical risk carried by each project is
therefore a major preoccupation.
This is addressed by:
• use of the Company’s considerable resources, experience,
and know how (including in-house procedures, proprietary
know how and patents) to manage the technical aspects of
each project, in terms of engineering, project management,
procurement and subcontracting;
• strict adherence to the rigorous Group Management
System incorporating Quality Assurance and Quality
Control Procedures;
• review by and compliance with the requirements of the
relevant Classification Society.
The cost of the technical solution identified for the client is
calculated by a highly skilled cost-estimating department.
Before submission of an offer to the client, the detailed cost
calculation is reviewed, item-by-item, by all appropriate
departmental heads, and defined levels of management,
depending on the value of the project. Bid validities to clients
are matched with those of the principal suppliers or
subcontractors to limit exposure to cost price increases and
delivery times during the pre-sales phase.
Execution risk (including offshore installation) of the technical
solution is controlled through constant monitoring during the
construction, installation and start-up phases. A detailed
monthly reporting and forecast procedure to prevent
execution delays and budget overrun is used. The
consequences of problems in execution, except faulty
design, are always insured. The financial viability of major
vendors and subcontractors is always verified and strict
tendering procedures applied to procure quality equipment at
competitive prices.
A key element of the Company’s strategy is to own adequate
means for installation of its own floating systems. This policy
provides protection from potential scarcity of appropriate
means from the specialised installation contractors and from
resulting cost inflationary pressures.
The Company is a global operator, for which careful coordination
between the respective execution centres,
construction sites and shore bases is essential. The
continuity of operations in each of the principal locations is
therefore addressed by business continuity plans setting out
the appropriate responses to major potential events such as
fire, and the necessary steps for re-establishing key functions
efficiently.
In this respect, the ability to work from any of the main
execution centres using the same tools and systems is an
important advantage.
The main turret cylinder of the FPSO Capixaba is lowered into the vessel