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ERP – Ir. H. Noor Hidayat, MMT. Syllabus Introduction ERP Platform ERP Component ERP Development (Chevron Way) System Life Cycle References: CPDEP: Chevron Project Development and Execution Process, © 2009 Chevron Corporation Last Updated: 31 March 2009 ERP – Ir. H. Noor Hidayat, MMT.

CPDEP Overview - Outline What is a Project and What is Project Management? What is CPDEP? Why do we use CPDEP? How CPDEP is used? Where CPDEP is used? What value does CPDEP add?

Definition: What is a “Project”? Has a definable beginning and end, and thus is "temporary" in nature. Creates a unique, definable product or service. Should include all scope items that: Are needed for the project’s product to stand alone (needs no other improvements to make it work), and Represent the true total cost of the opportunity.

Definition: “Project Management” “Directing and coordinating human and material resources throughout the life of a Project by using modern management techniques to achieve predetermined objectives of scope, cost, time, quality, and participant satisfaction ……… the application of knowledge, skills, tools and techniques to project activities in order to meet or exceed stakeholder needs and expectations from a project.”

Basic Concept of Project Management (PMI) Closeout Control Execution Planning Initiation

Project Management - Key Knowledge Areas…. Support the processes and principles of project management Total Project Management Project Safety Management Project Risk Management Project Procurement Management Plus one Project Quality Management Project Human Resource Management Project Communications Management Project Integration Management Project Scope Management Project Time Management Project Cost Management The building blocks of Project Management

The Project Life Cycle For every project, there is a life cycle that starts with a concept that is developed into an executable plan, and implemented to result in a unique product or service. ChevronTexaco did not invent the life cycle, they just called it “CPDEP”. CPDEP is the ChevronTexaco Project Development and Execution Process

What is CPDEP? CPDEP covers both decision making (early stages) and execution (later stages) Circle of the “CPDEP” represents the continuous nature of the process. CPDEP is a process that improves decision making and execution by fostering better planning, collaboration and communication

CPDEP Vision: The right projects implemented with Excellence High Consistent Success Good Projects Good Execution Random Success Good Projects Average Execution Ability to Make Right Decisions Mid Success Unlikely Poor Projects Poor Execution Random Success Poor Projects Good Execution Low Mid High Ability to Implement Decisions in Best Way Possible

Why use CPDEP? It’s a process that can “guide” Team efforts: Selecting the best opportunities through improved decision making process. Improving overall outcomes by excelling in the execution of business driven decisions Goal of the process is to have all of our projects fall into the top right quadrant: WE ARE SELECTING THE RIGHT OPPORTUNITIES AND DOING THEM WELL! (This is making the same point again, but don’t shy away from this - it is important!) Doing the right project poorly or doing the wrong project well, leaves money on the table ChevronTexaco could use elsewhere. Without consistent process, projects fall all over the grid. The CPDEP process is nothing new. It is simply a collection of best practices put all together under one umbrella. We use common terminology to ensure understanding and consistency throughout the company.

CPDEP impact on Asset/Project Value Value Identification Value Realization Good Project Execution Good Project Definition A VALUE B In the early phase the value of an opportunity is identified, but not realized until the later phases. Both are important. Curves represent: A - Selecting the right project and doing it well B - Selecting the right project and executing poorly and eroding value. C - Doing the wrong project well D - Doing the wrong project poorly. Critical to the success of the SBU to generate the highest earnings and NPV is the ability to manage the portfolio of excellent opportunities. Project Planning is a critical phase in managing the portfolio because this is where value is identified and created. CPDEP provides the core work process that allows multi-functional teams to collaborate in the generation of well thought out development plans. Each asset in the portfolio has a CPDEP Roadmap which identifies the critical decisions required to advance the asset, the information needed to make the decisions, and the resources required to generate the information. Innovation and creativity are essential to driving the value of our assets even higher. Generating creative business and technical alternatives, and the use of innovative technology are examples of value-added activities in the early phases. Review / reinforce the 1:10:100 rule. Poor Project Execution C Poor Project Definition D Phase 1 Opportunity Identified Phase 2 Generate & Select Alternatives Phase 3 Develop Preferred Alternative Phase 4 Execute Phase 5 Operate

CPDEP Principles CPDEP is not just the roadmap which is commonly seen. Focus on key value drivers for the opportunity Use of integrated multifunctional teams Effective input, communication and alignment between teams, decision makers and stakeholders Decision driven, not activity driven - do the work necessary to support the next decision Consistent use of best practices and tools (e.g. Decision Analysis, Benchmarking, PEP, VIP, etc.) 5 4 3 2 1 CPDEP is not just the roadmap which is commonly seen. The process is indeed these five principles. Discuss each of these principles to ensure understanding (especially decision driven - this concept is not necessarily intuitive to those who want to go build something). The roadmap is simply a communication tool and a representation of how to apply these principles. Make sure you tie in Peer Reviews as supporting strongly the CPDEP Principles. “Activities create deliverables, decisions create value.” The five principles are the heart of CPDEP. By design, the process and tools are flexible and scalable; the CPDEP roadmap is simply pictorial representation of the project. You must apply the principles to create and deliver value.

CPDEP Helps Drive Better Decisions The Decision Quality Spider Diagram can be used to measure the quality of a decision 1 Appropriate Frame 2 Creative Alternatives 3 Meaningful Information 4 Clear Values & Trade-off 5 Logical Reasoning 6 Commitment to Action Decision Quality The Six Components of the Decision Quality Spider provides a framework for assessing Decision Quality The “webbing” on the spider indicates the status of each DQ component. Low is toward the center, high toward the outside. Teams can use the spider diagram tool in many different ways: Measures a team’s collective assessment of decision quality. Provides a measure of quality that does not depend on the outcome. Defines a road map of what work or analysis needs to be done in order to have “clarity of action”. A quick thermometer to measure decision readiness.

Develop Alternative(s) Select Alternative(s) Outline of CPDEP Process 3. HOW DO WE GET THERE ? 1. WHERE ARE WE NOW? 2. WHERE DO WE WANT TO BE? Phase 1 Identify and Assess Opportunity Phase 3 Develop Alternative(s) Phase 2 Select Alternative(s) Phase 4 Execute Phase 5 Operate and Evaluate The process is based on classical gap analysis. Point out how each part of our process relate to the three modules of this gap analysis. Story to reinforce point: “If you don’t know where your are or where you are going, any route will do! When you plan a vacation, don't you normally take a map, identify the start point and the end point, then your route? That is what we’ll do for a project using CPDEP.” Opportunity Statement Boundary Conditions CPDEP Roadmap Contingency, Action & Execution Plans Definition of Success

Deliver the Project Right CPDEP Fundamentals AR/AFE APPROVAL Define the Right Project Plan Your Work Work Your Plan Choose the Right Project Deliver the Project Right Phase 5 Operate Phase 4 Execute Phase 1 Identify Phase 3 Develop DRB Phase 2 Select Clearly Frame the Goal Generate and Select Preferred Alternative Fully Define the Scope Implement the Execution Plan Monitor Performance Evaluate and learn Projects are divided into five phases, each with a key decision point

PREFERRED ALTERNATIVE(S) Objectives and Key Activities of CPDEP Phases 1 2 3 4 5 IDENTIFY AND ASSESS OPPORTUNITIES GENERATE AND SELECT ALTERNATIVE(S) DEVELOP PREFERRED ALTERNATIVE(S) EXECUTE OPERATE AND EVALUATE OBJECTIVES: Develop Frame Strategic Commercial Business Case Conduct Preliminary Assessment Develop Preliminary Overall Plan Plan For Phase 2 Seek and Incorporate Learning's OBJECTIVES: Validate Business Case Strategic Commercial Frame Generate Alternatives Define Preliminary Scope for Each Alternative Develop Preliminary Implementation and Execution Plans Assess Preliminary Value Narrow and Select Alternatives Plan for Phase 3 Capture, Share, and Incorporate Learning's OBJECTIVES: Refine Business Case Fully Define and Freeze Scope Develop Final Implementation and Execution Plans Confirm Value and Commit to Business Metrics Capture, Share, and Incorporate Learning's OBJECTIVES: Finalize Business Plan Execute Consistent with Execution and Implementation Plans Finalize Operating Plan Capture, Share, and Incorporate Learning's OBJECTIVES: Execute Business Plan Operate Asset Monitor and Evaluate Performance Identify New Opportunities Capture, Share, and Incorporate Learnings Key objectives of the five phases Phase 1 - Clearly frame goal Phase 2 - Generate several alternatives & then select the best alternative(s) to move forward Phase 3 - Fully define scope of selected alternative(s); select one alternative to move forward Phase 4 - Implement execution plan Phase 5 - Monitor performance Provide linkage from Phase 5 to Phase 1 (new opportunity) Points outlined are key objectives of phases. There are other objectives in each phase which are also important. There is more elaboration in following slides. For your project, objectives may be slightly different. The process may be customized. Perhaps illustrate the point using a simple process example (I.e. planning a vacation).

Elements of CPDEP Team Alignment Quality Decisions Project Execution Emphasize that the balance of the three elements changes depending on where you are in the life of the opportunity and what you are doing. Understanding elements from all sides, trying to find the win-win Use of multifunction team (critical, especially early in a project when they have a chance to add greatest value) Communication tool Provides alignment at each phase CPDEP is a balance of three key elements: Team Alignment Quality Decisions Project Execution

Decision Review Board Member Project Manager / Team Leader Key CPDEP Roles Endorser Decision Executive Decision Review Board Member Project Manager / Team Leader Project Team

Questions ???

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