Whitepaper - Connected Project Portfolio Management in the Oil & Gas Industry

Connected Project Portfolio Management in the Oil and Gas IndustryInspire and shape the digital energy revolution

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Executive Summary

Challenges in the Oil and Gas Industry

What Is Capital Project Portfolio Management?

What Is Required to Enable Capital Project Portfolio Management?

What Are Some of the Leading Practice Reports and Dashboards?

What Value Would an Organization Derive from Implementation?

How Does an Organization Decide Which Technology Platform to Use?

How Can SAP Help?

The Power of SAP S4/HANA to Enable Capital Project Portfolio Management

The End to End Process Enabled by SAP S4/HANA

Solution Capabilities by Project Type

Capital Projects

Research & Development, Innovation Projects

Information Technology (IT) Projects

Customer Successes

Final Thoughts

TABLE OF CONTENTS

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EXECUTIVE SUMMARY

One vital question often asked by executives dealing with an ever-changing market landscape is, “How should my company most effectively invest in order to grow our revenue and capture market share, and increase profitability?”

To sustain long-term growth, companies must manage a number of projects at different stages of maturity. Many organizations struggle with capturing the voice of the customer, and translating that input into executable projects staffed with the right resources, while also ensuring adequate due diligence to make certain that projects align to corporate strategy and meet market expectations. Companies that more effectively manage this process position themselves for greater revenue realization, market share, and/or profitability.

Capital project portfolio management is all about making decisions about investment mix, matching in-vestments to objectives and aligning them to strategy, allocating the right resources to the right projects, and balancing risk against performance.

Ask yourself if your company effectively:

1. Maximizes value – Resources are allocated to maximize the value of the portfolio via a number of key objectives such as profitability, return on investment, and risk

2. Aligns to corporate strategy – The portfolio reflects the company’s innovation strategy and investment allocation aligns with the company’s strategic priorities

3. Achieves pipeline balance – Projects are staffed with the right number of resources in order to avoid pipeline gridlock at any given time

4. Offers transparency – Ensures that employees work towards the common goals and vision laid out by management

At SAP®, our approach to enabling capital project port-folio management is to provide a digital-ready platform and the connected business networks necessary for rapidly and securely executing new business models, extending value chains, and engaging with customers, employees, and partners like never before.

Our vision is to help the oil and gas industry digitally transform in order to drive profitable growth, build customer intimacy, and grow talent. This document offers our point of view on how capital project portfolio management must be implemented, how SAP can help, and some of the leading practices we have seen.

The Digital Project Revolution

Enterprise Project Portfolio Management Process

1 2 3 4 5Strategy Project Proposal

Project Planning Procurement Execution Monitoring

Technology Platform


We see three major capital projects trends in the oil and gas industry:

CHALLENGES IN THE OIL AND GAS INDUSTRYThe New Normal

Projects are becoming more complex, remote, and expensive, increasing the potential cost of errors or delays. The value of accuracy and efficiency has never been higher.

The use of technology and mobile connectivity is generating new levels of information to support decision making and optimization.

A growing share of workforce is nearing retirement, reducing availability of skills and experience in the field.

COMPLEXITY

DIGITISATION

CREW CHANGE

Even before projects are executed, organizations face challenges in selecting the right ones, which can be traced back to issues with portfolio management. Some of the commonly encountered issues are:

Business planning is often a financial/ budgeting exercise

Volatility and misalignment of the portfolio with prioritised business strategies

Businesses often only look at investment portfolios at the “total” level

The risk that seemingly balanced positions at the “total” level are masking constraints that are not being addressed

Scheduling is often a devolved exercise at the discretion of line/project managers

People working on the wrong things and a lack of productivity

Quality project plans and forecasts are often myopic or absent

Inability to tell how much capability is already committed

Capabilities are not organized rationally (for example, in skills-based service lines)

Difficulty establishing a holistic view of current and planned capability capacity

Capital project portfolio management is often seen as a career backwater

The wrong people doing the wrong jobs and perpetuation of existing problems

Processes often seen as bureaucratic, inflexible, and awash with data, with multiple processes in place that achieve the same outcome

Poor process uptake and engagement, requiring leadership input

Capital project portfolio management seen as an annual process, not a fundamental management discipline

A “bow-wave” of demand whereby plans become seasonal and poorly phased

Resulting in

Resulting in

Resulting in

Resulting in

Resulting in

Resulting in

Resulting in

Resulting in


REIMAGINING

What Is Capital Project Portfolio Management?In a connected world where every company must become a technology company, smarter products and services will refocus commerce on business outcomes and blur industry lines.


CAPITAL PROJECT PORTFOLIO MANAGEMENT OVERVIEW

We define capital project portfolio management as an ongoing, dynamic process wherein projects and project proposals are regularly evaluated, prioritized, and se-lected with the goal of obtaining the greatest possible value from limited available resources.

Capital project portfolio management sits between business strategy and project management. Our defi-nition breaks it down into five interdependent capabili-ties:

1. Business Strategy – Crafting a long-term plan of action designed to achieve a particular goal or set of goals that will enhance shareholder value

2. Supply and Demand Balancing – Selecting the optimal mix of projects so that the business achieves its strategic objectives and plans

3. Capability Management – Understanding already utilized and available capacity (people, skills, cost, premises, sourcing strategy, environments) and developing in line with strategy and future demand

4. Scheduling – Deploying the right skilled resources to the right projects and escalating any resource shortages that might put the project at risk

5. Delivery Planning – Monitoring the progress of projects and their impact on available capacity

Each capability contains specific disciplines that need to be mastered.

What is Capital Project Portfolio Management?

Business Strategy

Portfolio Management

Project Management

SUPPLY & DEMAND BALANCING

CAPABILITY MANAGEMENT

SCHEDULINGDELIVERY PLANNING

“Doing the Right Things”

“Doing Things the Right Way”

People

Planning

Delivery

Work

Resource DeploymentResource EscalationCareer PlanningTime Capture

Skills Planning Sourcing Strategy Training Operating Models

Project Planning Estimating and Forecasting Project Governance Budget Change Control

Portfolio Modeling Project Commitment Demand Impact Assessment

BUSINESS STRATEGY

Investment Planning & BudgetingInvestment Prioritization Demand Monitoring



There are seven interlinked design elements that help enable capital project portfolio management:

1. Project Definition – Defining what a project is and when and how a project enters a portfolio and exits it

2. Project Data – Consists of data that ties a project to a specific business unit, the start and end dates, the status of the current project, the investment type (new to the world as opposed to regulatory versus maintenance projects), the project financials, and a subjective scoring model that helps to rank a proj-ect against others

3. Governance – Implementing a governance model that includes strategic investment targets, aligns and prioritizes the new capital projects portfolio with business strategy, and allows for conducting project reviews to ensure the success of both the project and the portfolio

4. Resource Management – Adequately defining resource pools, allowing for the optimization of the utilization of those resources and determining the right number of projects to pursue

5. Portfolio Views – Helps your organization synthesize and make sense out of captured data

6. Stage Gate Process – Implementing a development process that enables high-performing, cross-func-tional teams to make investment decisions based on facts as opposed to opinions (this must be scal-able to allow smaller projects or projects related to a particular strategic investment type to omit steps or deliverables that are called for in the stage gate process but are not required for successful comple-tion of the project)

7. Technology Platform – Leveraging a scalable platform that grows with an organization

What Is Required to Enable Capital Project Portfolio Management?


1 2 3 4 5Strategy Project Proposal

Project Planning Procurement Execution Monitoring

Technology Platform

Project Definition Do we all mean the

same thing when we say “project”?

Process & Governance

How do we maintain the portfolio process and align our project portfolio to our

business strategy?

Portfolio Scope When and how does a project enter and exit

the investment portfolio?

Resource Pools What do we need to

deliver portfolio objectives?

Portfolio Views How do we synthesize

this information and conduct scenario

planning?

Project-Level Data

Qualitative InformationHow do we identify projects?

Financial InformationHow do we slice, dice, and

aggregate portfolio information?

Subjective Scoring Model How should we value one project against another?



Projects can be evaluated countless ways, but companies experience diminishing returns when their requirements are redundant and overly complex. The main goal of these reports is to enable decision making with relevant and timely information. An organization can start with as few as four or five requirements while keeping the focus on consistency of measurement and definition.

Ultimately, the value of these reports is in the conversation, not the numbers, and managers should test assumptions rather than create more data reflecting false precision. Some of the leading practice reports used by companies that have implemented capital project portfolio management are:

What Are Some of the Leading Practice Reports and Dashboards?

REPORTS DESCRIPTION WHY IS IT IMPORTANT? Allows decision makers to see how development investments are being al-located across groupings and how they compare to strategic targets – group-ings can include product lines, regions, platforms, or innovation types

• Highlights the actual contribution percentage to projects based on the strategic bucket they are aligned to and compares this to the recom-mended contribution percentage

Classic balance test, which plots projects into a four box grid that com-pares the probability of technical success with reward

• Identifies projects based on risk and net present value (NPV)

• Helps to determine which projects should be executed and which should not » Bread and butter – Projects that

represent the backbone of the organization

» Pearls – Projects with high proba-bility of success and high NPV

» White elephants –Projects with low probability of success and low NPV (should not be executed)

» Oysters – Projects with low probability of success and high NPV (should not be executed)

• Determines if an organization is spending too much time and resources on one quadrant

35%

15% 10%

20%

20% Brand Maintenance New to Drive Core Product/Pack Upgrade Expand Core Disrupt the Market 35%

15% 10%

20%

20% Brand Maintenance New to Drive Core Product/Pack Upgrade Expand Core Disrupt the Market

*Bubble size indicates development cost.

Risk vs. Reward

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0 100 200 300 400 500

Prob

ability*of*Techn

ical*Success

Expected*Commerical*Contribution*(NPV*given*Technical* success,* $MM)

Risk*vs.*RewardBread*&*Butter Pearls

White*Elephants Oysters

Portfolio Mix and Balance


CAPITAL PROJECT PORTFOLIO MANAGEMENT OVERVIEW What Are Some of the Leading Practice Reports and Dashboards?

REPORTS DESCRIPTION WHY IS IT IMPORTANT?

Funnel chart that shows the balance of projects over multiple phases – phases or stages can vary from organization to organization

• Identifies projects based on phase or time to launch

• Assesses whether there are enough projects in the pipeline

• Determines how many projects per phase

• Indicates possible crunch in resource availability if too many projects are concentrated in one phase or time period

Stacked column chart high-lighting gross margin contri-bution per quarter based on product line

• Highlights gross margin contribution of product lines per quarter

Highlights resource demand per function over time

• Identifies capacity shortages per quarter

• Net capacity horizontal line shows the total resource capacity of the organization

Quarters

*Bubble size indicates development cost.

Capacity Utilization

Expected Contribution from Pipeline Projects

Pipeline View by Phases or Time to Launch

Quarters

Ideate Evaluate Develop Implement Launch


CAPITAL PROJECT PORTFOLIO MANAGEMENT OVERVIEWWhat Are Some of the Leading Practice Reports and Dashboards?

REPORTS DESCRIPTION WHY IS IT IMPORTANT? Identifies projects based on ROI (gross margin percent) and capital expenditure (Capex)

• Size of bubble shows the resources utilized (larger bubble means more resources are being used by that one project)

• Identifies projects based on four criteria: » High return and low Capex–

Ideal/favorable » High return and high Capex –

Not favorable » Low Return and high Capex –

Not favorable » Low return and low Capex–

Not favorable

Provides all data, including NPV, project status, and aggregate value

• Highlights all relevant project info on one page

• Provides info on the following: » Total costs to date » NPV per project or total NPV

based on priority or strategic buckets

» Overall project status – Launch date, expected revenues

Master Project Lists

Investment vs. Return

**Bubble size indicates aggregate resource utilization.

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Total&Investm

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Investment&vs.&Return

High return,&Low&CAPEX

High return,&High&CAPEXLowreturn,&High&CAPEX

Lowreturn,&Low&CAPEX


CAPITAL PROJECT PORTFOLIO MANAGEMENT OVERVIEWWhat Value Would an Organization Derive from Implementation?

Optimize Portfolio• Reduced percentage of misaligned projects• Portfolio aligned to corporate strategy • Decreased exposure to risk

Increase Investment Value• Increase in average NPV of the portfolio• Informed decision – objectivity in project selection

Increase Throughput• Savings in portfolio operation costs• Reduced reporting costs• Reduced time to market

Lower Resource Costs• Increase in resource utilization• Reduction in contractor headcount/costs

Improve Delivery Performance• Reduction in projects delivered late/over budget• Reduction in project management costs

By implementing capital project portfolio management, an organization can reap the following benefits:

COMPANY PERFORMANCE(Source – SAP Performance Benchmarking)

KEY PERFORMANCE INDICATORAverage Performers Top 25% Performers

Average Deviation of ROI (in %) 5.50 1

Capital Projects on Time, Budget, and Scope (in %) 77.30 85

% of Approved Projects with Business Case 88.98 100

Resource Utilization Rate (in %) 78.80 85

Capital Project Administration Cost (% of rev) 0.82 0.11

Project Audit Cycle Time (in days) 4 1

Project Manager Headcount Cost (% of project administration cost) 70.20 62.20

Time Spent on Capital Project Reporting (in %) 14.20 10

Traditionally, we have seen companies performing between the average and top 25% of performers following the implementation of capital project portfolio management:



Organizations should take a holistic approach when deciding which technology platform to use. Requirements should be looked at using two broad categories:

1. Functional 2. Technical

There are six functional requirement categories to consider when deciding whether to implement a particular technology platform:


FUNCTIONAL REQUIREMENT CATEGORY KEY QUESTION(S) TO ASK

1. Idea and Demand ManagementHow well does the technology platform process demand and ideas for new work? How well is the prioritization process implemented?

2. Portfolio Management

How well does the technology platform support the creation of new portfolios and the analysis of existing portfolios? How is the portfolio budget management process implemented?

3. Program and Project Management

How well does the technology platform support the creation of new projects and the management/tracking of existing projects? How well does the tool represent and track (hierarchical) interdependencies?

4. Financial Management

How well does the technology platform support the cre-ation, tracking, and management of costs and budgets? How flexible is the financial reporting across various proj-ects, programs, and units?

5. Resource and Time Management How well does the technology platform support resource forecasting, allocation, and time tracking?

6. Stage Gate Management Can existing standard processes be customized within the technology platform?



There are six technical requirement categories to consider when deciding whether to implement a particular technology platform:


TECHNICAL REQUIREMENT CATEGORY KEY QUESTION(S) TO ASK

1. Reporting

How well does the technology platform support the customiza-tion and personalization of dashboards, charts and diagrams, custom reports, and report templates; searching and filtering functionalities; saving customized reports; multiple export formats; e-mail alerts; KPIs; and financial reporting?

2. Accessibility and SecurityHow well does the technology platform enable access restrictions and allow for the flexibility of security concepts, accessibility via the Web, and support of single sign-on?

3. Localization and LanguagesHow well does the technology platform enable the use of multiple currencies, regional calendars, and region support, as well as the calculation of exchange rate effects?

4. External Interfaces

How well does the technology platform integrate with other proj-ect management tools such as MS Project and Outlook/LDAP, export to common desktop applications, and integrate with common financial applications, help desk applications, require-ments management tools, and Web portals for publication?

5. Modularity and Adaptability How easy is it to configure and/or customize the technology platform?

6. Document ManagementHow easy is it for the technology platform to store documents, workflow integration, and standard interfaces for document management systems?


IMPLEMENTING

How Can SAP Help?SAP supports digital oil and gas companies with a digital core, business networks, supply chains, and the Internet of Things (IoT).


HOW CAN SAP HELP?

The SAP S/4HANA® Enterprise Management solution helps organizations build the next-genera-tion business suite by providing:

1. Innovative in-memory database2. New architecture and data

models3. Renewed applications4. New user interface (UI)

technology5. Cloud and on-premise

deployment models6. Native integration

Within the SAP S4/HANA ecosys-tem, the SAP Enterprise Portfolio and Project Management package enables customers to manage a wide range of portfolio and project types using a single platform. As a result, your organization will be able to:

1. Take advantage of a new data-base model – Enable easier con-sumption using analytical tools like Microsoft Excel, SAP® Busi-nessObjects ™ Lumira software, and more; external tools can access SAP Enterprise Portfolio and Project Management data via core data services

2. Reduce complexity – Eliminate duplicate functions (for example, merge projects, initiatives, and portfolio items) in a single entity and/or enable use of one project lifecycle management (PLM) document management system

3. Remove obsolete features/integration for lower total cost of ownership (TCO) – Get rid of Portal Knowledge Management and Collaboration Rooms, cFold-ers, SRM integration, and others

4. Simplify application object models – Leverage the capa-bilities of the SAP HANA® plat-form, and/or use “insert only” or cross-application CDS views

5. Make use of a comprehensive new SAP Fiori® user experience (UX)-based user interface – Select roles like project manager and project team member

6. Integrate new SAP cloud solu-tions – Migrate products from SAP Success Factors®, SAP® Fieldglass®, Concur®, SAP® Ariba®

The Power of SAP S4/HANA to Enable Capital Project Portfolio Management


TYPICAL CURRENT STATE WITH SAP S4/HANA

• Strategy, planning, and reporting done using dis-parate third-party tools such as Microsoft Excel, PowerPoint, etc.

• Scheduling done using Oracle Primavera or Microsoft Project, without any integration back to the SAP ERP application

• SAP S/4HANA real-time project analytics for accurate portfolio decisions

• SAP Fiori applications simplify access to project information for business users

• Live tracking of financial project KPIs by leveraging SAP HANA in-memory technology

• Direct and accurate access to financial and logis-tical project information – logistical processes synchronized with project management

• Optimized object model for reduced mainte-nance effort of project and portfolio information

• Better utilization of project resources through digital core into HR

HOW CAN SAP HELP?The Power of SAP S4/HANA to Enable Capital Project Portfolio Management

Here are the differences between a typical system used by customers and SAP S4/HANA:

We believe SAP S4/HANA can help oil and gas companies transform their businesses, stay competitive, and deliver on business imperatives. An organization’s inevitable transformation to digital will spark the need to reprioritize the portfolio and budget, execute new types of projects, and improve collaboration with the entire busi-ness network. The SAP concept of one unified business suite will allow for:

1. Higher consistency across business processes and lower IT TCO with greater flexibility2. Improved insight and control for the entire investment portfolio 3. Reduction in project risks


HOW CAN SAP HELP?The End to End Process Enabled by SAP S4/HANA

Companies use SAP Enterprise Portfolio and Project Management to provide a single platform that covers all the specific characteristics for each of the project types detailed below. At the same time, common components can be shared across the different business areas to establish one central project repository, helping compa-nies gain a holistic picture of all projects running in the enterprise. SAP categorizes projects in three ways:

1. Capital Projects – These are typically large, long-term projects and are often seen in asset-intensive industries such as utilities, oil and gas, and chem-icals. These companies usually have the need to invest in new production facilities or technologies where the break-even may only be reached after being in business for decades. Managing project budgets and monitoring the overall project costs against the initial estimations is therefore key to ensuring the profitability of these long-term invest-ments. Integration into the logistics of a company’s enterprise resource planning (ERP) system ensures the procurement of materials and services planned and available according to the project schedule. Capital projects for oil and gas can be grouped into three main types: engineering construction proj-ects, major maintenance projects, and well and field development projects. » Engineering construction projects include

the design and construction of platforms, refineries, and pipelines. These projects are typically handled by major engineering con-struction companies such as Fluor, Bechtel, Kiewit, KBR, and many others.

» Major maintenance projects include activities such as shutdowns and turnarounds for plants and refineries. For producing oilfields, major maintenance can include activities such as large well workover projects.

» Well and field development projects are highly complex projects that involve evalua-tion and development planning. Evaluation includes estimating the initial volume of oil and gas in the reservoir; simulating the reservoir fluid flow behavior to estimate the

number, type, and location of wells to optimize the field production; and assessing economics based on forecasted production revenue and estimated development costs. Development planning establishes the number of wells to be drilled to reach production objectives, the recovery techniques to be used to extract the fluids within the reservoir, the type and cost of installations, the separation systems for gas and fluids, and the treatment systems needed to preserve the environment.

2. R&D, Innovation Projects – These are mainly rel-evant to an R&D organization looking to build and launch new products into the market. This could be the case for an oilfield services company designing a new measurement service or a new downhole pump. It could also be relevant to an operating company innovating on new ways to fracture wells.

3. Information Technology (IT) Projects – IT orga-nizations are often faced with a limited number of resources but a huge number of requests requiring new IT solutions, maintaining installed applications or fixing incidents, or providing support. Therefore, IT organizations usually establish project gover-nance processes that allow them to prioritize differ-ent requests according to strategic importance and deliver projects following standard processes and templates.


HOW CAN SAP HELP?The End to End Process Enabled by SAP S4/HANA

To help aid the execution of the above types, SAP also defines an end to end process that takes a project from strategy to execution:

The purpose of having a standard process is to control the transition from one phase to another by checking mandatory deliverables and evaluating the progress and outcomes of each phase. SAP enables each phase with different capabilities that are part of the SAP Enterprise Portfolio and Project Management package.

1. Vision & Mission2. Define Corporate Goals3. Set Strategic Initiatives4. High Level Budget Planning

1. Identify Business Opportunities2. Risk Assessment3. Rank Project Proposals4. Budget Planning

Strategy

Project Proposal

Project Planning

Procurement

Execution

Monitoring

1

2

3

4

5

1. Structure Project2. Schedule Tasks and Activities3. Manage Milestones

1. Plan Internal/External Resource Demand

2. Schedule Purchase Orders 3. Track Availability of Resources

1. Phase Approvals2. Project Accounting3. Time Recording4. Milestones

1. Progress Tracking2. Budget Control3. Plan vs. Actual


Capital Project Portfolio Management

Capital Shutdown, Turnaround, and Outages

R&D and Innovation Capital

Owner

3rd PartyEPC

Owner

3rd PartyEPC

Owner

3rd Party

3rd Party

Owner

3rd Party

Customer

Executive Management

Portfolio Management

Project Types

Project Management

Operations Management


BUSINESS IMPERATIVE SOLUTION CAPABILITIES VALUE TO THE ORGANIZATION

HOW CAN SAP HELP?Solution Capabilities by Project Type

SAP defines value and solution components depending on the project type while following the end to end process as defined in the previous section.

1. Capital Projects –

• Describe and estimate investments

• Track and monitors execution • Manage project risks

USER INTERFACE

• Central project repository• Long-term financial planning• Integrated project management• Cost and schedule tracking with

SAP Fiori applications• Integration to procurement and

plant maintenance

SOLUTION COMPONENTS

Maximize Capital Investments

Portfolio Dashboard Project Specific Dashboard

Financial Planning Dashboard Risk Dashboard



USER INTERFACE

SOLUTION COMPONENTS


1. R&D, Innovation Projects –

• Identify opportunities to develop new products

• Align product innovation with corporate strategy

• Effectively commercialize new offerings

• Idea management• Portfolio management• Project management

Manage Innovation

Idea Management Idea Evaluation




3. Information Technology (IT) Projects –

• Select IT projects that will meet the organization’s strategic goals

• Monitor the execution and progress of IT projects

• Ensure the availability of human and financial resources

• Establish project governance process

• Project planning and scheduling• Resource management• Task confirmation (SAP Fiori)• Solution manager integration

USER INTERFACE

SOLUTION COMPONENTS

Maximize Business Transformation Projects

Capacity Planning Task Confirmation


VALERO

Industry Classification • Downstream

Background

• HQ: San Antonio, Texas• Oil and gas downstream• World’s largest independent refiner• 15 refineries• 2.9 billion barrel/day• 22,000+ employees

Customer Pain Points

• Create a standard model for engineering work requests• Minimize redundant systems • Simplify work processes and reduce manual report generation• Improve capital and maintenance budget stewardship

SAP Solution(s)

• SAP Portfolio and Project Management 5.0 for capital projects and the SAP IT Portfolio and Project Management rapid-deployment solution

• Capital forecast/budget management in SAP Portfolio and Project Man-agement

• Automate AFE document based approval process • Request approval framework built on the SAP Business Workflow tool• Capacity and resource management (SAP IT Portfolio and Project Man-

agement rapid-deployment solution)• Integration with OpenText• Rolled out SAP Portfolio and Project Management to all 15 Valero

refineries by Q3/2015

Benefits Realized• Offered one system to manage projects requests and approved projects• Increased resource utilization on project based work from 30% to 38%

HOW CAN SAP HELP?Customer Success


NIGERIA LNG LIMITED

Industry Classification • Liquefied Natural Gas (LNG)

Background

• Founded in 1989 with HQ in Port Harcourt, Nigeria• Owned by multiple shareholders• Has grown from an annual cargo count of 5 in 1999 to over 300 cargoes

per annum in 2015• Fourth largest LNG plant in the world, owns fleet of 24 LNG carrier ships• Supplies over 80% of cooking gas (LPG) in Nigeria


• Need for formal stage gate control• Align strategy to projects executed• Integrate standard portfolio management process and annual capital

budget• Capitalize assets accurately

SAP Solution(s)

• SAP Portfolio and Project Management 5.0 for planning and monitoring of capital and maintenance projects

• Real-time information (projects, cost, dates, and status) on NLNG Capex portfolios

• Integrated portfolio management – from idea to detailed activity schedule and to assets

• SAP PS for Project Control and Integration with SAP MM/SRM, FICO• Integration to Primavera P6

Benefits Realized• Calculate and report work package and project earned value• Annual budget aligned with project portfolio • Improved governance performance



BASF

Industry Classification • Chemicals

Background

• HQ: Ludwigshafen, Germany• Largest chemical producer in the world • 6 integrated production sites • 390 other production sites • 112,000+ employees• €4 billion annual investment budget • 1.000 engineering projects• €2.5 billion maintenance projects


• Need for global cross-project reporting• Monitoring of global strategic KPIs• Standardization of engineering and manufacturing processes • Provide transparency to optimize project steering

SAP Solution(s)

• SAP Portfolio and Project Management 6.1 for site engineering and large capital projects

• Central engineering project management system• Project management information and reporting system• One single tools for project administration • Integrated with Microsoft Project and Primavera

Benefits Realized

• Centralized project repository • Harmonized system and processes • Consolidated view on financial and capacity resources • Shorter processing time for month end reporting



TRANSFORMING

Final ThoughtsThe journey to the digital energy network begins with a capability analysis and results in a business transformation agenda.


HOW CAN SAP HELP?Lessons Learned from Implementations

In summary, implementing capital project portfolio management allows an organization to gain the required top-down and bottom-up visibility. That said, here are 10 lessons we learned while implementing capital project portfolio management:

1. Before embarking on a capital project portfolio management implementation, build and maintain executive alignment – Answer the question, “Why do we want to do this?”

2. The end solution must have something of value for everybody

3. If an implementation is going too slow, anecdotes send signals to the rest of the organization

4. Data breeds a desire for more data – Plan to improve accuracy over time

5. Keep the solution criteria list short and simple

6. Ensure a business-driven approach to system implementation

7. Make a plan to deal with the impact of “shining the light” on current practices

8. Communicate project value and rationale, and tie it to corporate strategy

9. Provide for ongoing training, process management, and continuous improvement

10. Generate cross-functional involvement and maintain political balance

Most importantly, implementing capital project portfolio management is not a project – it’s a journey.

… to manage daily project operations and maximize the value of their capital projects

350+ oil and gas and mining companies rely on SAP …

Authors:

Ashwin MenonIndustry Value Advisor [email protected]

Ken LandgrenDirector – Oil and [email protected]

Renato ZadroSolution Owner – Enterprise Portfolio and Project [email protected]

Adam DuranSolutions Management – Enterprise Portfolio and Project Management and 3D Visual [email protected]

www.sap.com/contactsap

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Date post:	10-Feb-2017
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