Driving operational performance in oil and gas

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m m Causes of inefficient operating performance W hi l e m an y o rg an i z at i o n s are s u cce e d i n g i n s o m e cri t i cal o p e rat i o n al are as o f f o cu s , f e w , i f an y , are e f f e ct i v e l y m an ag i n g them all. Industry analysis suggests operational performance gaps begin at the strategic level and carry through to a specific process breakdown within assets. In addition, operations functions often lack continuous improvement efforts targeting these inefficiencies and failure modes. Below, we outline the most common key factors behind operational inefficiencies. Strategic factors 1 2 N o n - i n t e g r a t e d b u s i n e s s a n d a c t i v i t y p l a n n i n g • Lack of leadership sponsorship an d m at u ri t y • I n e f f e ct i v e s t rat e g y an d framework • Difficulties translating strategy i n t o o p e rat i o n s L a c k i n g a n e f f e c t i v e o p e r a t i n g m o d e l • Siloed design architecture • Unclear decision governance • Insufficient performance m an ag e m e n t • lack of standardization, policy an d e n f o rce m e n t T act i cal f act o rs 1 2 3 M i s m a n a g e d s u p p l i e r a n d c o n t r a c t o r r e l a t i o n s h i p s P o o r a s s e t r e l i a b i l i t y a n d i n t Inefficient e g r i t y cost management • Prequalification and contract e x e cu t i o n n o t ro b u s t • L i m i t e d v i s i b i l i t y t o co n t ract o r and supplier risks • Poor field management and p e rf o rm an ce an al y s i s • Assumption of project uniqueness • Discounting predictive ai n t e n an ce f o r s che d u l e d ai n t e n an ce • P o o r s hu t d o w n an d t u rn aro u n d m an ag e m e n t • I n e f f e ct i v e o p e rat i o n al re ad i n e s s p l an n i n g • O v e r- ab u n d an t m act i v i t i e s ai n t e n an ce • Insufficient data analytics • Unaware of cost drivers across v al u e chai n an d i n t e rd e p e n d e n cy • Lack of production management o p t i m i z at i o n • Inadequate business component m o d e l i n g 1 0
m m m O p e rat i o n al e x ce l l e n ce re s u l t s i n b e t t e r o u t co m e s S t r a t e g i c d e c i s i o n - m a k i n g B e t t e r q u e s t i o n B e t t e r a n s w e r B e t t e r o u t c o m e A NOC sought to improve the way its top management was making key s t rat e g i c d e ci s i o n s . A n o rg an i z at i o n with multiple subsidiaries, the NOC f ace d a chal l e n g e t o as s e s s t he i m p act o f m aj o r s t rat e g i c d e ci s i o n s , M& A act i v i t y an d o t he r l arg e investment projects it was making on key financial metrics of its entities an d at t he co n s o l i d at e d l e v e l . T he NOC had to answer the question: “ C an re - e v al u at i n g o u r d e ci s i o n - making strategy help us develop t he m o s t o p t i m al co m b i n at i o n o f i n v e s t m e n t d e ci s i o n s ? ” • ►Our team identified revenue and co s t d ri v e rs re l e v an t t o e ach p art o f t he b u s i n e s s . • ►We created a flexible, transparent and robust decision-making model t hat e n ab l e s b e t t e r b u s i n e s s p e rf o rm an ce , cal cu l at e s K P I s , an d identifies and quantifies the key risks for better risk management an d m i t i g at i o n . • ►We designed a documented p ro ce s s , he l d t rai n i n g s f o r al l stakeholders and ensured our o d e l w o u l d b e s u b j e ct t o continuous development to make i t s u s t ai n ab l e i n a chan g e - d ri v e n e n v i ro n m e n t . Our strategic decision-making model empowered the NOC to make better i n f o rm e d s t rat e g i c d e ci s i o n s . T he t o p decision-makers now work with more t ran s p are n t i n f o rm at i o n , e n ab l i n g t he m t o m o re cl e arl y an al y z e t he i m p act o f t he i r s t rat e g i c d e ci s i o n s o n both the consolidated group’s and its individual subsidiaries’ financial p e rf o rm an ce . O u r m o d e l has b o o s t e d the NOC’s analytical capability an d co n s i s t e n cy i n p e rf o rm an ce m an ag e m e n t acro s s s u b s i d i ari e s . T a c t i c a l d e c i s i o n - m a k i n g B e t t e r q u e s t i o n B e t t e r a n s w e r B e t t e r o u t c o m e A n o rg an i z at i o n w as s t ru g g l i n g t o keep its assets intact while continuing t o b e a l e ad i n g s e rv i ce p ro v i d e r an d juggling significant internal spend. T he o rg an i z at i o n had t o an s w e r the question: “Will performance improvement help identify significant co s t s av i n g s ? ” • W e an al y z e d an d e v al u at e d the maintenance team’s work p ro ce d u re s an d t he cri t i cal p e rf o rm an ce e l e m e n t s t he y s t ru g g l e d w i t h d ai l y . • ►We redesigned the maintenance team’s processes, streamlining their work routines to more effectively link to one another and scale up t he i m p act o f s i n g l e m ai n t e n an ce e f f o rt s . • ►We introduced a leading-practice s t af f p e rf o rm an ce as s e s s m e n t to make successes measurable, e n s u re co n t i n u o u s i m p ro v e m e n t an d s p re ad t o p p e rf o rm an ce i n t he l o n g ru n . Our client’s annual costs for internal ai n t e n an ce s e rv i ce s d e cre as e d b y ro u g hl y 15% o f t o t al i n t e rn al ai n t e n an ce co s t s . I n ad d i t i o n t o the financial impact opportunities, our client benefited from higher p e rf o rm an ce o f i t s m ai n t e n an ce t e am s , w hi ch are n o w b e t t e r o rg an i z e d an d m o re m o t i v at e d . Driving operational performance in oil and gas | 1 1
Page 1 and 2: Driving operational performance in
Page 3 and 4: 1 E x e cu t i v e s u m m ary T he
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