‘It might just be plumbing but………….’

15th June 2011

Jonathan Crone

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Outline

An insight into some of the challenges faced when implementing EVA and integrated Project Controls into an established deep sea construction company

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Subsea 7 An introduction to Subsea 7 and the work we do

Our Vision

To be acknowledged by our clients, our people, and our shareholders, as the leading strategic partner in seabed-to-surface engineering, construction and services.

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Where we operate

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A global leader

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Something about our projects

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Northern Production line Offloading Buoy

Riser Tower

FPSO mooring

Northern Water injection line

Gas injection line

Southern Production line

Southern Water injection line

Major Project – 183km Offshore Angola

Umbilicals

Service line

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Flowlines

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Umbilicals

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RISER TOWER

• 1,240 m

• 4,057 T

• 2.3m diameter

• 11 Risers

• 1 umbilical

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EVA in Subsea 7 So, its fancy plumbing, but………..

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Key Considerations

• Financial and Statutory focus

• Global Environment

• External and Internal Stakeholders

• Best Application of EVA - ‘Horses for Courses’

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Financial and Statutory Focus

FINANCE PROJECTCONTROL

REPORTING •Forecast(POC)•Treasury/ tax•Year end •Currency

•PM Forecast •Scope•Project Life•‘As-sold’ rates

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Financial and Statutory Focus

FINANCE PROJECTCONTROL

REPORTING •Forecast(POC)•Treasury/ tax•Year end •Currency

•PM Forecast •Scope•Project Life•‘As-sold’ rates

DISCIPLINE •Accountants•Financial Control•Accuracy of historic data•Focus on Actual

•Project Profession•Delivery to scope and budget•Trends and likely outcome

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Financial and Statutory Focus

FINANCE PROJECTCONTROL

REPORTING •Forecast(POC)•Treasury/ tax•Year end •Currency

•PM Forecast •Scope•Project Life•‘As-sold’ rates

DISCIPLINE •Accountants•Financial Control•Accuracy of historic data•Focus on Actual

•Project Profession•Delivery to scope and budget•Trends and likely outcome

SYSTEMS •Accounting systems eg JDE, SAP, Excell

•Cost Management eg Cobra

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Financial and Statutory Focus

FINANCE PROJECTCONTROL

REPORTING •Forecast(POC)•Treasury/ tax•Year end •Currency

•PM Forecast •Scope•Project Life•‘As-sold’ rates

DISCIPLINE •Accountants•Financial Control•Accuracy of historic data•Focus on Actual

•Project Profession•Delivery to scope and budget•Trends and likely outcome

SYSTEMS •Accounting systems eg JDE, SAP, Excell

•Cost Management eg Cobra

STRUCTURES •Financial, eg:entities, Chart of Accounts•Transactions

•Scope and Cost, eg:WBS•Control Accounts

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Financial and Statutory Focus

So the answer is….

Acknowledge the differences and….

Play to our strengths!!!

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Play to our Strengths!!!Systems, Structures and Reporting

POC

Manual/Auto

PROJECT REPORTING

COBRABudget

ForecastPerformance

AnalysisVariations

PRIMAVERA

Progress DataDates

Offline Analysis

Ad Hoc reports

SAPPurchasing

RatesPaymentsInvoicesACWP

Project StructureTimesheets

Misc. Local

Costs

FINANCIAL REPORTING

Data structures mapped at ‘Control Level’ between

systems to enable integration at Control account level

Actuals

Structure

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Play to our Strengths!!!Systems, Structures and Reporting

Internal Resource

Financial Control in SAP

Ship and Equip Allocation

Procurement

Project

Network Activities

WBS Elements

Awards, Commitments and Actual Expenditure

Proj

Cost Management and Project

Performance in Cobra

Budget, Forecast, EVA, PMSR

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Play to our Strengths!!!Reporting

Sensitivity Reporting:

POC

Worst Case

PM ‘Achievable’

Best Case

Enables a view of risk exposure whilst being able to support market figures

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Play to our Strengths!!!Reporting

• EVA metrics form part of:

Project Dashboards

Country, Territory and Corporate Portfolio Reports

Used to cross check integrity of forecast

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Play to our Strengths!!!Disciplines

It is important to achieve clarity of role and purpose. This has been done through:

Right organisation structure

Clear Role Profiles

RACI

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Play to our Strengths!!!RACI

PROJECT CONTROLS AND FINANCE FUNCTIONSPROJECT COST CONTROL AND PROJECT ACCOUNTANT - RACI

ACTIVITYProject Cost

ControlProject

Accountant1. Cost Planning R I

2. Cost Estimating R C

3. Cost Forecasting R C

4. Cost Tracking R C

5. Budget and Scope Control R I

6. Value Engineering R I

7. Inflation R

8. Contingency Management R I

9. Recovery Planning R C

10. Valuation R I

11. Breakdown Structure R C

12. Convert As-Sold Budget R C

13. Actual Work Performed + Forecast Deviation R C

14. Forecasting R C

15. Determine Trends R C

16. Valuation of Sensitivities R C

17.Variation Control R I

18. Variance Analysis R I

19. Cost Profiles and Currency dentification R C

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Internal and External Stakeholders

• Revenue vs Cost

• Programme/Progress measurement

• Legal Entities

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Best Application of EVAHorses for Courses!

Influences on the application of EVA:

• Project Phases: eg Vessels can be 60% of project costs

• Type of Work – pipelay, fabrication, Engineering

• Contract Conditions – EPC or Reimbursable – small vs large

• Corporate View vs Project View

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In Summary

Its not just the work that can make the application of EVA difficult:

• Financial and Statutory implications, eg:

– POC

– Tax

– Currency

– Entities

– Year end

• External and Internal considerations

• Nature of our projects:– Type of contract

– Nature of work

– Phase of work

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…..But it still has a value at all levels of the Project Organisation!

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seabed-to-surfacewww.subsea7.com