Mission Command - alternative project management
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Transcript of Mission Command - alternative project management
MISSION COMMAND
ALTERNATIVE PROJECT MANAGEMENT (IT’S NOT ABOUT THE BOK)
MARK RICHARDSON
APACHE NORTH SEA
PROJECTS GROUP MANAGER
14 MAY 2014
Certain statements in this presentation may contain "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 including, without limitation, expectations, beliefs, plans and objectives regarding production and exploration activities. Any matters that are not historical facts are forward-looking and, accordingly, involve estimates, assumptions, risks and uncertainties, including, without limitation, risks, uncertainties and other factors discussed in our most recently filed Annual Report on Form 10-K, recent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K available on our website, http://www.apachecorp.com/, and in our other public filings and press releases. These forward-looking statements are based on Apache Corporation’s (Apache) current expectations, estimates and projections about the company, its industry, its management’s beliefs and certain assumptions made by management. No assurance can be given that such expectations, estimates or projections will prove to have been correct. Whenever possible, these “forward-looking statements” are identified by words such as “expects,” “believes,” “anticipates” and similar phrases. Because such statements involve risks and uncertainties, Apache’s actual results and performance may differ materially from the results expressed or implied by such forward-looking statements. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. Unless legally required, we assume no duty to update these statements as of any future date. However, you should review carefully reports and documents that Apache files periodically with the Securities and Exchange Commission. Cautionary Note to Investors: The United States Securities and Exchange Commission ("SEC") permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable, and possible reserves that meet the SEC's definitions for such terms. Apache uses certain terms in this presentation, such as “BO resource,” “BO Potential” and other similar terms that the SEC guidelines strictly prohibit Apache from including in filings with the SEC. “BO Resource,” “BO Potential” and other such terms do not take into account the certainty of resource recovery, which is contingent on exploration success, technical improvements in drilling access, commerciality and other factors, and are therefore not indicative of expected future resource recovery and should not be relied upon. Investors are urged to consider carefully the disclosure in Apache’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011, and amendments thereto, available from Apache at www.apachecorp.com or by writing Apache at: 2000 Post Oak Blvd., Suite 100, Houston, Texas 77056 (Attn: Corporate Secretary). You can also obtain this report from the SEC by calling 1-800-SEC-0330 or from the SEC's website at www.sec.gov
FORWARD LOOKING STATEMENTS
Apache North Sea Limited
Apache Projects
Traditional Project Management Approach
Traditional Project Management Performance
Mission Command History
Principles
Implementation
Discussion & Questions
4
AGENDA
5
APACHE NORTH SEA
SAFETY PERFORMANCE
Company Improvement
Notices
Prohibition
Notices
Maersk (all sections) 13 3
Talisman 10 1
Shell U.K. Limited 8 6
CNR 8 1
Marathon 7 0
Petrofac Facilities Management 5 0
Total E&P 4 0
Chevron 4 0
Taqa 3 0
Nexen 3 0
BP 2 0
Premier Oil 2 0
Apache 2 0 Sources: OGUK Benchmarking 2013 Data and HSE http://www.hse.gov.uk/notices/notices
7
2013 PRODUCTION
Forties
Beryl Area
Nelson Scott
Nevis S Telford Buckland Ness Maclure Bacchus
0
500
1,000
1,500
2,000
2,500
3,000
MBOE/D
0
20
40
60
80
100
120
140
Gas
Oil
8
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
APACHE
MARATHON
TULLOW
PERENCO
BHP
CENTRICA
ENQUEST
BRIDGE
NEXEN
DANA
COP
TAQA
RWE
BG
CHEVRON
ITHACA
PREMIER
SHELL
TOTAL
BP
TALISMAN
MAERSK
CNR
E.ON
2013 PRODUCTION EFFICIENCY
1
3
5
7
9
11
13
15
17
19
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Op
erat
or
Ran
kin
g
Source: OGUK Production Efficiency Task Force Data Pack
FortiesAcquisition
2003 2004 2005 2006 2007 2008 2009 2010 2011MNSLAcquisition
2012 2013
Running Costs 130 180 186 226 226 236 198 208 253 365 428
Other Capital 683 9 19 35 22 26 23 24 48 33 1250 64 84
ITS Capital 28 158 214 176 253 226 156 202 263 271 323
Drilling Capital 23 185 240 133 260 210 198 367 527 553 476
Cum. Spend ($ million) 683 873 1415 2091 2647 3412 4106 4681 5507 6583 7833 9086 10397
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
0
200
400
600
800
1,000
1,200
1,400
Cu
mu
lati
ve S
pen
d $
mill
ion
An
nu
al S
pen
d $
mill
ion
9
EXPENDITURE
2003 2004 2005 2006 2007 2008 2009 2010 2011MNSLAcquisition
2012 2013
Oil & Gas Revenue 273 472 1275 1355 1399 2103 1369 1605 2185 2771 2728
Total Spend -873 -542 -675 -557 -765 -694 -576 -826 -1076 -1250 -1254 -1311
Current Tax Liability -41 35 -310 -504 -439 -1091 -360 -599 -1235 -1097 -880
Cumulative Rev less Spend less Tax Liability -641 -677 -388 -94 102 419 853 1034 908 -342 78 616
-2,000
-1,500
-1,000
-500
-
500
1,000
1,500
2,000
2,500
3,000
$
mill
ion
10
REVENUE STREAM
Apache North Sea Limited
Apache Projects
Traditional Project Management Approach
Traditional Project Management Performance
Mission Command History
Principles
Implementation
Discussion & Questions
11
AGENDA
12
Projects Group Manager
Mark Richardson
Topsides
Kevin Duncan
Subsea
Paul Williams
Project Services
Richard Stark
Construction
Willie Ferguson
Systems
Kieran Marr
Develops & FASP
Neil Rogerson
THE PROJECTS TEAM
13
THE DELIVERY PROCESS identity
process and control
quick reference
stage summaries
How to...
CP1 CP2 CP3 CP4 CP5 CP6
PROJECTS DELIVERY MANUAL
100 - General philosophy and approach 200 - Broader Project Management Topics 300 - Specific methods and tools
FASP topsides installed - Hook up and commissioning now 99% complete.
Forties Charlie Deep Gas Lift - Commissioned and two wells brought on line.
Beryl's Subsea Campaign - Reinstating shut-in subsea production from S66/S64 plus N10 and S59, correcting integrity faults, laying a new pipeline and installing a new Skene umbilical.
FASP
FC Deep Gas Lift Compressor
Skene Subsea Umbilical Replacement
2013 PROJECTS
Aviat Fuel Gas Tie-back - FEED completed.
Nevis Ness - Concept select phase completed.
Bacchus - Third well hooked up and commissioned.
Tonto Field – New field brought on through Forties.
Forties Delta Controls System ‘Delta V’ upgrade - Complete with wells now being cut over.
Beryl Alpha Rig 2 Reinstatement Project - Completed and now drilling.
Bacchus Third Well Tie-in Delta V Equipment Room Reactivated Drilling Rig
Ness Nevis Tie-back
Aviat Schematic
2013 PROJECTS
Apache North Sea Limited
Apache Projects
Traditional Project Management Approach
Traditional Project Management Performance
Mission Command History
Principles
Implementation
Discussion & Questions
16
AGENDA
17
Definition Project management is the application of processes, methods, knowledge, skills and experience to achieve the project objectives.
General A project is a unique, transient endeavour, undertaken to achieve planned objectives, which could be defined in terms of outputs, outcomes or benefits. A project is usually deemed to be a success if it achieves the objectives according to their acceptance criteria, within an agreed timescale and budget.
17 17 17 Source 1 : http://www.apm.org.uk/WhatIsPM Source 2: http://projectjedi.wordpress.com/2012/04/30/a-brief-history-of-project-management/
TRADITIONAL PROJECT MANAGEMENT
STAGE GATE PROCESS
Defer, Delay or Do Nothing
19
RISK MANAGEMENT
Pro
bab
ility
Cost/Time P50
Flyvbjerg – Optimism Bias
Esti
mat
e V
aria
nce
Time
4.0 X
0.25 X
1.0 X
McConnell - Uncertainty
People, not Process Deliver Projects
Apache North Sea Limited
Apache Projects
Traditional Project Management Approach
Traditional Project Management Performance
Mission Command History
Principles
Implementation
Discussion & Questions
20
AGENDA
21 Source: KPMG 2013 PROJECT MANAGEMENT SURVEY REPORT
There has been a significant increase in project activity in the past two years across all sectors of the economy.
However failure rates are increasing – with survey results showing that only one-third of projects are delivering the desired outcome.
2010 2012
Consistently on Budget 48% 33%
Consistently on Time 36% 29%
Consistently Delivering Stated Deliverables
59% 35%
KPMG 2012 SURVEY OF PM PRACTICES IN NEW ZEALAND
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
> $5bn < $5bn
2011 E&P Projects with >50% Budget Overruns
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
1997 2005 2011
% of E&P Projects with >50% Budget Overruns
◤ Capital spend has tripled in the past 10 years to reach $500-600 bn.
◤ Oil and gas projects failed to meet their original objectives in 78% of cases.
◤ 60% of the failures suffered severe operability problems 2 years after they entered production.
22 22 Source: SBC Capital Projects Survey 2012
SBC 2012 GLOBAL OIL AND GAS PROJECT PERFOMANCE
23
US $BN
End
eavo
ur*
TAA
S-YU
RYA
KH
*
Med
co*
NLN
G**
*
Cen
tric
a*
GD
F Su
ez*
Mae
rsk*
Eco
pet
rol*
OM
V
PT
TEP
*
Sun
cor*
Luko
il**
Wo
od
sid
e*
Petr
on
as*
Talis
man
An
adar
ko
Hes
s
Dev
on
BG
Gro
up
Ap
ach
e
Co
no
coP
hill
ips
BP
Stat
oil
Shel
l
Ch
evr
on
Legend
Major NOC Independent
Mega developers
(average > $4bn)
Large developers
(average < $4bn)
23 23 Source : Company 10-K & 20-F, Rystad, SBC Capital Projects Survey 2013 Note: * from Rystad **Global development cost expenditure was used for Lukoil *** 2012 value only
SBC 2013 SURVEY PARTICIPANTS
24 Source: IHS Upstream database; US PPI Index – Only projects exceeding $1bn (in 2011 US$) were considered, representing an average of 14 projects per year
PROJECT DELAYS AND SEVERITY OF DELAY
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2003 2002 2001 2000
Years o
f de
lay %
of
tota
l pro
ject
s d
ela
yed
2012 2011 2010 2009 2008 2007 2006 2005 2004
Average delay
2 to 5 years
More than 5 years
1 to 2 years
25
Disappointing performance
COST ESCALATION SCHEDULE SLIPPAGE LIFECYCLE VALUE
13%
38% 50%
>40% 18%
20 - 40% 14%
10 - 20% 14%
5 - 10% 9%
0 - 5% 46%
>40% 17%
20 - 40% 26%
10 - 20% 17%
5 - 10% 7%
0 - 5% 33%
Projects capture largest proportion of life cycle value
Significant value left in various forms
A non-negligible part of long-term value not captured
Source: SBC Capital Projects Survey 2013
2013 OIL AND GAS GLOBAL PROJECT PERFORMANCE
26
Central project management function
Formal stage-gate review process 92%
80%
5-10 years ago >10 years ago <5 years ago
Source: SBC Capital Projects Survey 2013
STAGE GATE PROCESS AND CENTRALISED PROJECTS
27
8%
8% 6%
Governance Supply chain 20%
28%
30%
People & organisation
. Safety & environment
Technical & economic challenges
External stakeholders
Talent availability
Training/development
Skill pool management
Availability & quality of critical equipment and engineering services
Contracting & procurement approach
Decision-making
Expectations and targets
Risk management / assurance
Framing and FEL
Source: SBC Capital Projects Survey 2013
2013 PROJECT CHALLENGES
Complexity
Apache North Sea Limited
Apache Projects
Traditional Project Management Approach
Traditional Project Management Performance
Mission Command
History
Principles
Implementation
Discussion & Questions
28
AGENDA
5/15/2014 29 APA BLUE WHITE TEMPLATE.pptx
MISSION COMMAND
WHAT IS MISSION COMMAND?
Mission command is a command approach that is based upon the exercise of local initiative within the framework of command intent. This is enabled by an appropriate delegation of authority that allows subordinate commanders the latitude to plan and conduct operations based upon their understanding of the local situation
MISSION COMMAND HISTORY
Carl von Clausewitz - ‘On War’ (published posthumously 1832)
Field Marshal Von Moltke - Father of ‘Auftragstaktik.’ “Obedience is a principle, but the man stands above the principle.”
Auftragstaktik - Senior commanders should not order more than was absolutely necessary but should ensure the goal was clear. In case of doubt, subordinate commanders should seize the initiative
1986 - Field Marshal Bagnall KCB GCB CVO MC* - Introduces principles of Auftragstaktik to UK Military doctrine and influences NATO doctrine. Doctrine becomes known as ‘Mission Command.’ and is adopted by US Military
Successfully deployed in all operations since 1986
British Army’s Field Publication, Volume 2, Mission Command:
‘The Army's philosophy of command is described in British Military Doctrine and has three enduring tenets: timely decision making, the importance of understanding a superior commander's intention, and, by applying this to one's own actions, a clear responsibility to fulfil that intention. The underlying requirement is the fundamental responsibility to act (or, in certain circumstances, to decide not to act) within the framework of the commander's intentions. Together, this requires a style of command, which promotes decentralised command, freedom and speed of action, and initiative.’
BRITISH MILITARY MISSION COMMAND
33
US Forces Mission Command Principles:
Build cohesive teams through mutual trust
Create shared understanding
Provide a clear commander’s intent
Exercise disciplined initiative
Use mission orders
Accept prudent risk
MISSION COMMAND PHILOSOPOHY
British Military Tenets:
Timely decision making
Understanding the senior leader’s intent
Responsibility to fulfil that intent Leadership Requirements:
Decentralised decision making (formal delegation/empowerment)
Freedom (and speed) of action
Initiative
HOW DOES MISSION COMMAND DIFFER? Mission Command Detailed Command
Probabilistic Assumes War/Project is Deterministic
Unpredictable Predicable Disorder Accepts Order
Uncertainty Certainty Decentralisation Leads to Centralisation
Spontaneity Coercion
Informality Formality
Loose Rein Tight Rein
Self-Discipline Imposed Discipline
Initiative Obedience
Cooperation Compliance
Acceptable Decisions Faster Optimal Decisions but Later
Ability at all Levels Ability Focused at the Top Implicit Communication used Explicit
Vertical and Horizontal Vertical
Interactive Linear Organic Organisation type Hierarchic
Ad Hoc Bureaucratic Delegating Leadership Styles Directing
Transformational Transactional Art of Delivery Appropriate for Science of Delivery
Conduct of Operations Technical and Procedural Tasks
The Commander retains ultimate responsibility
Genuinely empowers their people
Trust is essential
Leadership at all Levels
Action in accordance with commander’s intent
MISSION COMMAND IMPLEMENTATION
The Commander: Briefs his intent to 2 levels down Explains the limitations, e.g. time, boundaries, mission, tasks,
resources Allocates resources States WHAT is to be achieved, not HOW it is to be achieved Gives decision-making criteria The Subordinate Commander: Understands role in commander’s plan 2 levels up Devises his own plan in achieving the commander’s intent Asks for more resources if needed, but offers back resources
not needed Briefs his subordinates 2 levels down
MISSION COMMAND PROCESS
37
COMMAND, CONTROL AND COMMUNICATION
Source: http://www.fas.org/irp/doddir/army/adrp6_0.pdf
Leadership
Command
Control Communication
38
“… Never tell people how to do things, tell them what to do and they will surprise you with their ingenuity”
Sense of urgency
Devolved decision making
Best answers win
Respect, integrity and trust
BEHAVIOURAL REQUIREMENTS
Leadership
Responsibility, accountability and authority
y = 102,948,194x-0.4120
R² = 0.5327
0
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
0 5 10 15 20 25
Cost p
er M
axim
um
Nu
mber o
f W
ell C
on
nectio
ns (
US
D)
Maximum Number of Well Connections
Non-Deepwater Subsea TiebacksCost per Well (subsea only projects)
Eng, Mat, Inst
North Sea Asia/Australia Africa ss_only Precision Range +/- ss_only Trend
Some points on this chart may be obscured
by others with near-identical values.Outlier with y > 120,000,000 is not shown.
Bacchus Project 4 Wells
BACCHUS BENCHMARKING
40
FASP $54,865/Tonne
FASP 4.8%
FASP AWARD WINNING EFFICIENCY
‘It Works in Practice, but does it Work
Theory’
41
Apache North Sea Limited
Apache Projects
Traditional Project Management Approach
Traditional Project Management Performance
Mission Command
History
Principles
Implementation
Discussion & Questions
42
AGENDA
43
PROJECTS d e l i v e r y a t p a c e
Recommended Reading: ADRP 6.0 Mission Command (www.fas.org/irp/doddir/army/adrp6_0.pdf) British Army Doctrine
(https://www.gov.uk/government/uploads/.../ADPOperationsDec10.pdf) Transforming Command: The Pursuit of Mission Command in the U.S., British
and Israeli Armies (http://www.amazon.co.uk/Transforming-Command-Pursuit-Mission-British/dp/0804772037)