Pcubed : Industries : Case Study : Petroleum Products Company

By: Pcubed  09-12-2011
Keywords: Project Management

Petroleum Products Company, Capital Expenditure Portfolio Optimization, Global Refining

The Challenge

The optimal allocation of capital to proposed projects in a multi-billion dollar capital expenditure portfolio is key to the long term health of the refining business and to achieving an acceptable return on capital employed for the enterprise. Projects were previously assessed primarily on financial measures, with decisions regarding other selection criteria made in a disjointed and unstructured fashion. Senior management could not assess the strategic value of a particular mix of projects or have confidence that strategic value was even considered in selecting the projects in which to invest.

The Pcubed Solution

The Global Refining management team engaged Pcubed to define a methodology for assessing the strategic value of proposed capital projects, and optimize the three-year capital project portfolio for Global Refining. In addition, senior management was provided with enhanced information regarding the business case and benefits for all proposed capital projects.

The Value and Business Benefits Delivered

The optimization methodology allowed the company to subsequently reduce annual capital spending by $400MM while still preserving the most critical and strategic projects. At the same time, the approach allowed the company to redirect $200MM of capital expenditure towards growth and improvement projects to generate long term competitive advantage.

Senior management received enhanced information on the business case and benefits of all capital projects and of the overall portfolio. Strategic business drivers and appropriate metrics were defined to assess the strategic alignment of capital projects. Rich decision support information was provided on the selected capital portfolio. A view of strategic health of the capital project pipeline was generated and a structured approach was established for using capital planning to implement strategy. Transparency of decision making regarding capital projects was greatly enhanced.

Petroleum Products Company, Project Management, Oilfield Management

The Challenge

The Facilities Technical team on the oil field had responsibility for the project management of all technical projects, and for the coordination of all asset development projects. Multiple partner companies provided resources for the projects, with resource pools being used across all projects. Projects were consistently running late, resources were underutilized, facility engineers were unable to accurately forecast time and schedule, and project prioritization was haphazard. Faced with these challenges, management explored options for consolidation of their schedule and resource management processes.

The Pcubed Solution

The Company engaged Pcubed to develop project management processes in order to better manage all resources and projects. Pcubed consolidated all business partners' schedules and resource management, using Microsoft Office Project Server, to provide all parties with single-sourced information. All processes were validated for the ability to provide the data needed to support timely resource and project decision making, after which the solution was prepared for a roll-out across the rest of the organization.

The Value and Business Benefits Delivered

Based on similar engagements within the same organization an estimated improvement of 20% in wrench time (resource utilization) was realized with annual cost savings/avoidance in the 3-5 million dollar range. The improved visibility into technical project schedules and timelines resulted in a reduction in cycle time mitigating the need to add to contractor head count to maintain an acceptable level of service on technical projects, further enhancing the value generated from the improvements.

Amongst a wider array of benefits the client achieved from the implementation, the primary results were consolidated visibility of Technical project schedules, accurate forecasting of project timelines, and the optimization of resource availability. Both operator and business partners were included to provide a complete resource management picture. As a result, the team was in the position to proactively manage all resource assignments to ensure highest utilization.

The information in this article was current at 06 Dec 2011

Keywords: Project Management

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