Business Management Systems Document

Corporate Standard
At The Gate
Rev 0, issued for comment
14/01/2009

Fairfield Energy Ltd

CORPORATE STANDARD

At The Gate
Sponsor Richard Thompson

(approving
document)
[Title]

Owner Andrew Hockey

(maintaining
document )
[Title]

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List of Contents

1.0 Introduction..................................................................................................................... 3
2.0 Roles & Responsibilities ................................................................................................. 5
3.0 Risk Analysis & Mitigation .............................................................................................. 6
4.0 Change Management Interface ...................................................................................... 6
5.0 Cost Estimate ................................................................................................................. 7
6.0 Schedules, Plans & Milestones ...................................................................................... 8
Appendix 1.0 Typical Risk Database .................................................................................... 9

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1.0 Introduction

Project management is the delivery of a project within time, cost, SHE and quality
constraints to a stakeholder(s). Each project is implemented as it will deliver value to
the stakeholder(s) – the use of a gated project approval system ensures that these
benefits are realised.

To realise the maximum amount of value from its projects, and allow it to weed out
projects that do not meet economic and/or SHE criteria at an early stage as possible,
most businesses include a stage process to their decision making. This stage process
involves gathering appropriate levels of information as early as possible in the project
life-cycle, which allows the organisation to either approve, reject or modify a projects’
goals before significant resources are applied to it. The figure below shows the
passage of influence value versus time, and demonstrates that at an early stage in a
project influence value is high, whilst definition and resource spend is low. Conversely
towards the end of a project influence value is low, whilst spend and definition is very
high.

As previously discussed the process of approving, rejecting or modifying project goals

can best be effected by implementing a gated system. The figure overleaf details the
proposed Fairfield Energy Gated system for managing and controlling projects through
their design life cycle – what is different from most gated systems is that Fairfield
Energy, in line with its simplified and focused approach, only employs 3 gates to
approve a project to meet its philosophy of rapid delivery.

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Each gate acts as a project review hold point where the business and technical
integrity of a project is assessed before it can proceed to the next phase. At all of
these hold points the business can assess risk and the level of definition to decide
whether the project can still deliver the required value, before additional resources
(time, budget, personnel, etc.) are released.

Each project phase must meet defined objectives before the proposal can progress
through the next gate, these are diagrammatically shown below;

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To assess risk and value each gate will require a minimum level of review and
information before a decision to proceed still further can be made, this is detailed in
the figure below;

P r o b le m o r
O p p o r tu n ity
Is t h e c h a n g e v a lid ? P r o b le m / O p p o r tu n i t y D e f in it io n
Is t h e s c o p e c le a r ? B u s in e s s Im p a c t , t y p e & q u a n tifi c a tio n
G a te 1 D o e s it w a r ra n t a s tu d y ? P o t e n t ia l S o lu tio n
A p p ro v a l f o r s tu d y / f a s t - t ra c k

P r io r itis e d S o lu t i o n
SoR Is t h e b u s in e s s c a s e P F D 's
v a lid ? P la n , m il e s t o n e s a n d lo n g -l e a d s
H a v e a ll t h e o p ti o n s b e e n
G a te 2 C o s t e s t im a t e ( f u ll jo b + / - 5 0 % ; n e x t
id e n t if ie d & s e le c te d ? s t a g e + / -1 0 % )
B u d g e t C o d e a n d /o r A F E

F E E D S tu d y
I s th e b u s in e s s c a s e s t ill
G a te 3 v a lid ?
I s th e jo b s a n c t io n a b le ?
H a s it s re la tiv e p r io r it y
D e s ig n a n d b e e n a g re ed ?
Im p le m e n ta tio n
H a v e c e r t' s b e e n s ig n e d
o f f?
A r e a l l p u n c h - lis t ite m s
H a n d-o v e r c le a r?
S y s te m C o m m i s s io n e d ?
O p e ra tio n s a n d D o c s & M M S u p d a te d ?
C o m m e rc i a l c lo s e - o u t ?
C lo s e - o u t
S tu d y R e p o r t t o c o n t a i n ;
- s c o p e d e f i n i t io n
- ris k e d c o s t e s tim a t e
- F u ll D D & I m p le m e n ta t io n S c h e d u l e
( ris k e d p l a n )
- P & D I 's + C & E 's + S C E 's
- S a f e t y S c re e n in g ( i.e . H A Z O P )
- R is k r e v ie w & p l a n
- I V B 's , S C E ' s , P S 's & W S E 's
- M MS
- S p a r e s & s p e c ia l to o ls
- D o c s & d ra w in g s a s - b u ilt
- T ra in in g
- O & M m a n u a ls
- le s s o n s le a r n t
- c o m m e r c ia ls / K P I 's

2.0 Roles & Responsibilities

The following table summarises the roles and responsibilities with respect to the Gate
system within Fairfield Energy and its key stakeholders;

Role Responsibility Organisational Level

Initiator Raise change Anyone
request/modification
Approver Line responsibility for Line manager (normally
proposing/rejecting change OIM/Team Leader)
request
Technical Approval Technical integrity and Engineering Technical
approval/rejection of change Authority
request
Change Management Facilitates Change Facilities Engineer
Management process
Scope Definition Define opportunity/risk, Engineering Technical
options and preferred Authority
solution(s)
Gate Proposal Propose project for gate
review Functional Manager (i.e.
Budget Provision Provision of budget for Drilling, Production,

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review/development of AFE Engineering, etc.)

Approval of Approval for progressing General Manager
Budget/Gate project
Integrity Assurance ?? Approval for progressing Head of Engineering
project

3.0 Risk Analysis & Mitigation

All projects shall be subjected to an appropriate level of risk assessment, these can
occur through all stages of the project life cycle and can roughly be divided into the
following 4 elements;

1. Technical – technology, performance, safety & reliability

2. Execution – injury, environment & near miss
3. Management – information, resources, skills, organization, communications &
logistics
4. Commercial – market risk, contractual, schedule & budget

What is also evident is that risk changes as a project matures;

 Evaluate – the risk of implementing/not implementing the change
 Select – the risks associated in evaluating and selecting the best technical and
executable option
 FEED – defining the preferred option and mitigating the risks in delivering the
project
 Implement – structural risks associated with detailing, implementing and
commissioning the project. Earlier preparation should ensure that the risks for
effective delivery are understood and that sufficient schedule float and budget
contingency are available to cater for those risks.

Throughout the project life-cycle a risk register should be maintained, along with
mitigation strategies and identified owners.

Modelling software should be used to develop S-curves for schedule and cost P10,
P50 & P90 out-turn estimates. These will then allow the organization to make informed
decisions on project priorities, growth and contingencies (refer to Cost Risk
Management Procedure).

4.0 Change Management Interface

Given the significance of projects and modifications to an operating asset, project

approval must also be linked to the management of change process. On the Dunlin the
MoC process is managed by the dutyholder to ensure that all relevant parties are
consulted and involved in all changes that might arise on the asset.

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The dutyholder MoC process is controlled using a series of consultation forms, these
are discussed in the Amec procedure (0052-01-000-PRO-001) and can be
summarizsed as follows;

Change Description
Proposal Form
CP1 Change Proposal Initiation
CP2 Technical Change Review/Comment
CP3 Hazard Identification
CP4 Justification/Comment
CP5 Instruction to implement
CP6 Confirmation of completion

5.0 Cost Estimate

As the proposed project moves through various phases of technical definition, the
accuracy of the cost estimate should become more refined and the risks to the project
more quantifiable. It is important to distinguish between the estimated overall cost for
the project and the actual cost that is risked by implementing the next phase of the
work – the stage cost. The level of accuracy for each stage cost should be +/-10%, if it
is greater than that then more definition is still required before it is progressed.

Estimate Gate 1 Gate 2 Gate 3

Class
Definition Screening estimate Based on SOR and Based on BOD and
for evaluation of implementation final implementation
technical & strategy strategy
economic options
Output Detailed estimate Actual costs of Actual cost of BOD,
for production of SOR, detailed detailed estimate for
SOR with prelim estimate for eng, budget estimates
estimate for preparation of BOD for equipment & bulk
remaining and budget materials, fabrication,
workscope (+ estimate for all construction,
suitable growth other elements of commissioning &
allowances) the project close-out

All estimates must include dutyholder costs (onshore TA’s, offshore support, logistics,
beds, flights, etc.).

Every project must be charged to an approved budget. If one does not exist for the
work then an AFE must be raised and approved.

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6.0 Schedules, Plans & Milestones

All projects will require plans so that they can be included in the 5 year, 2 year and 90
day management plans. No modification should appear within the 28 day plan without
notice, unless there is an urgent business requirement – this will require specific
General Manager approval.

Forward Planning
The asset 2 year plan will show all known significant engineering modifications and
projects, that are approved or could potentially be initiated during this period. This plan
is regularly updated and will reflect existing budgets. It will be used to indicate potential
work to key contractors and as such requires their input (particularly when estimating
engineering, equipment delivery and implementation periods).

90 & 28 Day Plans

All projects must be included in the 90 & 28 day plans before they can be
implemented, this is to ensure that offshore activities are scheduled appropriately with
respect to the following factors;
 Offshore resources
 Bedding
 Potential conflicts with other activities
 Deck space management

It should also be noted that no project activity can enter the 28 day plan without an
approved workpack and available materials to implement the workscope.

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Appendix 1.0 Typical Risk Database

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