1 1st PMI AGC Energy Forum: DMS Debates NOCs in the GCC no longer need a PMC on a Project 2 nd June 2010 Essa Al-Ansari

2 Outline Background PMT versus PMC Advantages of Owner PMTs versus imported PMCs Q & A

3 Background Bapco is a unique company in comparison to lots of other oil companies in the region and possibly worldwide. Realising the lack of engineering support in the region, Standard Oil of California when it established Bapco in 1929 and thereon Caltex, organised the engineering function along the lines of an EPC service provider with certain services as procurement, manufacturer base development, manufacturing quality control, process engineering services and capital stewardship supported directly from its London or New York offices.

4 Background… Cont’d Now Bapco is 100% owned by the Government. However, lack of readily available engineering contractors in Bahrain due mainly to limited major projects compared to the rest of the GCC countries has forced Bapco to continue relying on its in-house engineering in executing routine engineering projects and directly managing its major projects.

5 Background… Cont’d Bapco Engineering Division in its present organizational and functional structure provides EPC services to the Refinery and the supporting facilities. Bapco Engineering Division has a rich pool of experienced engineers who are accustomed to and are well versed in the Project Management essentials.

6 Background… Cont’d Also, as an offshoot of Bapco Engineering Division, Major Engineering Projects (MEP) Division serves as the Project Management Office (PMO) to Bapco. MEP draws its project management teams from the experienced resources in Engineering Division.

7 Background… Cont’d GCC companies that have Engineering & EPC services available easily within their reach don’t have this thinking built into their engineering departments and hence will not benefit from the long term reliance on their own permanent resources in managing their projects, and hence obliged to rely on Project Management Consultancy (PMC)..

8 PMT versus PMC … Cont’d With this backdrop, Bapco has always been in a strong position to provide teams to carry out the Project Management Consultancy (PMC) function. However, to achieve this objective Bapco had to hire new engineers to replace the resources in Engineering Division to meet the requirements for our Project Management teams. All selected members of the Project Management are close to the internal functions of Bapco and once the project is completed they continue with their roles in supporting the plant operation and maintenance. Unlike PMC members whose roles will finish with the project completion.

9 PMT versus PMC … Cont’d The outsourcing of Project Management Services to Project Management Consultancy Companies can be a double edged sword. There are many disadvantages of the PMC approach. The application of this strategy must be weighed very carefully before a commitment is made.

10 PMT versus PMC … Cont’d A professional project manager is not merely a technically sound person; he has to possess business management expertise, project management protocol knowledge, and experience in facilitation. He should be capable to rise above the internal political framework of the country and the company for which he is managing the project. He must understand the culture of the company for which the project is being delivered. The same applies, to a lesser degree, to the rest of the Project Team Members..

11 PMT versus PMC … Cont’d Owner companies who wish to stay competitive must assess internal capabilities to achieve what we have done in Bapco to deliver the necessary project engineering design quality and develop their internal local resources by entrusting them with the full responsibilities of directly managing projects. Bapco can never rely on PMCs to achieve these objectives.

12 Advantages of Owner Project Management Teams versus imported PMCs The following are the advantages of the dedicated cross functional Owner Project Management Teams versus imported PMCs:  Complete control over the project staff resource allocation and assignments  The Project Management Team members fully understand the requirements and the design philosophies of the Company besides the standards and specifications  Communications with stakeholders are timely and more effective due to long term relations

13 Advantages of Owner Project Management Teams versus imported PMCs …Cont’d  Core competencies in the Project Management Team understand the geographic impacts on the project such as remoteness from manufacturing sources etc  Core competencies in the Project Management Team understand the politics of the game impacting the project approval processes, decisions etc  Site specific requirements for HSE are readily integrated in to the project  Offers opportunities for the internal resources to interact with major engineering contractors and learn from the experience

14  Improves the agility of the participants as quick decision making is necessary to progress the work  Technology transfer is achieved for the long term benefit of the Company  This process enhances the internal company culture and skill sets of internal team leaders  Internal processes and procedures are easily tailored to suit requirements post delivery of the project  Early completion value is added by improving start up/commissioning and training needs Advantages of Owner Project Management Teams versus imported PMCs …Cont’d

15  Unlike PMC staff whose functions end with the project completion, owner project team members have long term commitment and accountability to the onward successful operation and maintenance of the plant. This factor will impact many design and material selection decisions impacting final plant safety and reliability  Financial saving of the PMC cost due to duplication of resources as owner will still have to maintain a core project team to interact with and manage the PMC Advantages of Owner Project Management Teams versus imported PMCs …Cont’d

16 شكــــراً Thank you !

17 Q & A !