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Benchmarking at Saudi Aramco. Presented By: Ken Ostrowski. Agenda. Overview of Saudi Aramco Benchmarking in Saudi Aramco Benefits and Lessons Learned Benchmarking Enhancements Related Accomplishments Conclusion. Introduction to Saudi Aramco. 100% owned by Saudi Arabian Government
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Benchmarkingat Saudi Aramco Presented By: Ken Ostrowski
Agenda • Overview of Saudi Aramco • Benchmarking in Saudi Aramco • Benefits and Lessons Learned • Benchmarking Enhancements • Related Accomplishments • Conclusion
Introduction to Saudi Aramco • 100% owned by Saudi Arabian Government • No. 1 oil company 13th straight year (Petroleum Intelligence Weekly) • Project types being planned and executed: • Oil & gas • Infrastructure • Pipelines • Power generation • Communications • Grass roots and modernization • Large capital program
Saudi Aramco Project Workload • Averaging 140 active projects per year over past 5 years • Project size over past 10 years ranges from $2 million to $2 billion • Maintenance-type projects less than $2 million • Project expenditures average $2-$3 billion per year • Approximately 700 engineers involved in planning and executing projects
Saudi Aramco Corporate Structure PRESIDENT & CHIEF EXECUTIVE OFFICER CORPORATE PLANNING LAW INFORMATION TECHNOLOGY MANAGEMENT SERVICES ENGINEERING & OPERATIONS SERVICES REFINING & MARKETING EXPLORATION & PRODUCING GAS OPERATIONS INDUSTRIAL RELATIONS AND AFFAIRS FINANCE
Project Performance Optimization Division Benchmarking, Development & Training Best Practices Value Engineering
Agenda • Overview of Saudi Aramco • Benchmarking in Saudi Aramco • Benefits and Lessons Learned • Benchmarking Enhancements • Related Accomplishments • Conclusion
Benchmarking in Saudi Aramco Integration Research & Development Benchmarking VALUE VALUE Implementation Integration
Three Levels of Benchmarking Analysis Benchmarking the company relative to the industry (CII and IPA) External (company vs. industry) Review of the efficiency of the Project System Internal (comparing projects over time) Evaluation of individual projects Internal (comparing one project with another)
Criteria for Selecting Projects • Review our “Master Scheduling System” for Project Proposal finish and funding date • Review project type and scope • Review for duplication of project scopes • Assess project value • Exclude projects that are non-capital or “one off” projects • Projects benchmarked at completion use similar criteria
Agenda • Overview of Saudi Aramco • Benchmarking in Saudi Aramco • Benefits and Lessons Learned • Benchmarking Enhancements • Related Accomplishments • Conclusion
Saudi Aramco’s Benchmarking • Benchmarking study showed that Saudi Aramco had many areas of project planning and execution performance that could be improved • Management set objectives to improve project performance: • Reduce project durations • Reduce project costs • “Formal” program to increase use of best practices
Benchmarking Benefits • Assess Front End Definition of a project • Evaluate competitiveness of the project for cost, schedule, quality and safety • Identifies potential risks and methods to mitigate risk • Compare the completed project with the industry • Develop trends and areas for improvements • Review project performance data • Set new targets based upon improvements over historical performance
What Have We Learned AboutOur Project Processes? • Continue with definition activities and strive to achieve “Best Practical” Front End Definition at Authorization • Obtain Stake-holder buy in • Produce a level III integrated project schedule • Produce a project execution plans that includes an integrated execution schedule • Show same commitment for smaller projects as large • Develop contingency value reflecting project risk • Maintain continuity during projects
What Have We Learned AboutOur Project Processes? • Reduce gap between preliminary engineering completion and detailed design start (bidding cycle) • Adopt a “scope freeze” policy after funding • Establish contingency plans for material deliveries • Detailed schedule planning is needed, including hot-tap tie-ins, shutdown and start-up planning • Develop resources for selectedValue Practices • Improve historical cost and schedule databases
Agenda • Overview of Saudi Aramco • Benchmarking in Saudi Aramco • Benefits and Lessons Learned • Benchmarking Enhancements • Related Accomplishments • Conclusion
Benchmarking Enhancements • Move toward a “program” vs. ad hoc benchmarking activity • More comprehensive use of CII/IPA/Internal benchmarking tools • More active interaction with CII and IPA • Better understanding of CII benchmarking and metrics capabilities • How can we maximize the use of CII benchmarking? • Can we use CII benchmarking to assess competitiveness of projects prior to funding? • Develop historic benchmarking database
Agenda • Overview of Saudi Aramco • Benchmarking in Saudi Aramco • Benefits and Lessons Learned • Benchmarking Enhancements • Related Accomplishments • Conclusion
Benchmarking and Value Improvement Accomplishments • 2002 • 15 projects benchmarked • 137 best practices workshops on 63 Major Projects • 26 value engineering studies • $100+ Million in life cycle cost avoidance • 637 personnel trained in benchmarking, best practices and value engineering • Past 3 Years • Cost performance: Project costs have decreased by more than 10% over the past three years • Schedule Performance: Project cycle times have improved by almost 25% over the past three years
Agenda • Overview of Saudi Aramco • Benchmarking in Saudi Aramco • Benefits and Lessons Learned • Benchmarking Enhancements • Related Accomplishments • Conclusion
Conclusion • Benchmarking is the key driver of Saudi Aramco’s project value improvement effort • Improvement in project performance metrics are being realized
Benchmarking in Saudi Aramco Integration Research & Development Benchmarking VALUE VALUE Implementation Integration