Reference Document

Overview of the Group’s Activities
6.3. Description of project strategy 6
6.2.3. Geographical areas where the
Group is present
Technip is a global player in the oil and gas industry with significant
revenues in most regions of the world:
the Middle East accounted for 23% of Technip’s revenues in
2009 and 38% of its backlog at the end of the year;
Europe, Russia and Central Asia: 27% and 18% respectively;
Americas: 24% and 17% respectively;
Asia Pacific: 12% and 8% respectively;
Africa: 14% and 19% respectively.
6.3. Description of project strategy
Projects are increasingly more ambitious, more complex and in
many areas, more pioneering.
In this environnement, Technip must focus its management and
financial resources on its specialty sectors, develop teams and
assets adapted to these challenges and prepare for the future by
strengthening its technological assets and expertise.
Within this strategic framework, Technip’s organization has
evolved and now focuses, in particular, on continuing to develop
its geographical presence and optimizing project execution.
Technip’s seven Regions are responsible for marketing and sales
activities, project execution, and financial results.
Technip’s decentralized structure favors the Group’s development
while allowing the Group’s management to make decisions
related to major projects exceeding a certain threshold, below
which decisions are made by the Regions.
6.3.1. Selective approach to projects
Because of the high cost associated with preparing a proposal,
Technip only bids on projects that have been scrutinized through
its selection process. In particular, each project is evaluated on
its own merits with no exceptions, market share and/or asset
utilization considerations included.
To achieve an optimized “Risk/Reward” profile satisfying the
Group’s criteria, all transactions are reviewed at the Group or
Region level to properly assess all risks. The decision to follow-up
on a project, submit an offer and/or accept a letter of intent or
sign a contract is systematically subject to preliminary approval
at the appropriate level. The latter is defined by business segment
and by Region with respect to the Group’s organization note.
6.3.2. Internal process for review
of potential transactions
Before a decision is made to submit a proposal, Technip first
reviews each specific prospect through an Early Tendering (“ET”)
process, at the end of which the Management of the Group or of
a Region decides whether Technip should make a proposal.
After a decision is made to submit a proposal, Technip enters the
proposal formulation stage, during which all terms and conditions
of the transaction are analyzed through an Authorization to Tender
(“ATT”) process. At the end of this process, the Management of
the Group or of a Region, as the case may be, decides the terms
under which the proposal will be submitted or, in very few cases,
a proposal will not be submitted.
Once a proposal is made by Technip and accepted by the client,
the analysis and risk assessment performed during the ATT process
is updated during an Authorization to Commit (“ATC”) process.
Technip cannot accept any letters of intent and cannot enter into
any contracts prior to receiving approval from the Management
of the Group or of a Region during an ATC.
6.3.3. A “de-risking” approach
“De-risking” has been a key element of Technip’s strategy since
2007. It strives to improve the Group’s project management as
early as the proposal stage.
Through this strategy, Technip strives not only to improve the
range of contract types it offers, but also to achieve a better
balance of revenue generation among its Regions and business
segments.
6.3.3.1. Change in contractual forms
Depending on the nature of the risks highlighted during the ET
and ATT processes, Technip will propose “cost plus fee” contracts
rather than contracts on a lump-sum basis and/or will propose to
exclude certain services such as equipement procurement and/or
construction, particularly, where design studies are not developed
enough during the proposal stage, or will propose progressive
turnkey contracts instead of lump-sum turnkey contracts.
In the context of its “de-risking” approach, Technip also strives
to obtain firm commitments from its suppliers prior it submits
proposals to clients on a case-by-case basis.
2009 Reference Document
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