Reestablishing the project’s baseline for control

Abstract

One of the largest international oil companies in the world was in the midst of undertaking a USD 30 billion program that featured brownfield and greenfield construction elements, as well as lump sum and cost reimbursable contracts through EPCM delivery, with project teams in three locations to support design, fabrication and construction activities. Prior to Deloitte’s involvement, the project was dealing with issues of a poorly defined project scope at the time of the EPCM tender award, a fast-track schedule-driven project resulting in an inadequate commercial assessment of variations, and a schedule-driven approach to project management as opposed to commercial.

How we helped

Deloitte was engaged to conduct an evaluation of all design and construction contracts awarded to date. The team undertook an independent analysis of the project controls extending from procurement through to contract extension. Deloitte decided to supplement engineering, audit staff and PM services by undertaking detailed commercial reviews of key construction contracts, in order to reestablish the project baseline. In addition, workshops between the client and the EPCM contractor were facilitated in order to increase transparency and accuracy of reporting.

Results

The development of “lessons learned” documentation enabled the client to gain an understanding of impacts resultant from procurement issues. Clear reporting requirements of EPCM for all activities were established, while the project baseline for all critical activities going forward was reestablished, identifying the updated CAPEX required to deliver the project. An enhanced cost management framework was created incorporating contracting strategy, change management and cost forecasting. The project team gained a greater understanding of cost recovery requirements and the importance of effectively structured and periodic reporting of all activities.

Critical Success Factors