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Expectations and key success factors

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Presentation on theme: "Expectations and key success factors"— Presentation transcript:

1 Expectations and key success factors
Eddie Eide – Senior Procurement Advisor Draugen EPCm Project

2 Company overview Industry pioneer with over 100 years history
A leading service company within the oil, gas and renewable energy industry Eight locations in Norway and four internationally Aibel employees around 5,000 worldwide Annual turnover in 2013 approximately billion NOK 50 % ownership in EMC (Egyptian Maintenance Company) Long term maintenance and modifications contracts Deliver new platforms and modules Present on half of the offshore installations and 4 onshore terminals in Norway Successfully entered into offshore wind market

3 Company overview cont. 50 % ownership in EMC (Egyptian Maintenance Company) Long term maintenance and modifications contracts Deliver new platforms and modules Present on half of the offshore installations and 4 onshore terminals in Norway Successfully entered into offshore wind market

4 Aibel locations 8 lokasjoner i Norge, 5 internasjonalt – eget verft i Thailand Yard in Haugesund Yard in Thailand Headquarter in Stavanger

5 Aibel suppliers Current status – our supplier database
Suppliers are key to Aibel - 2/3 or approx % of value creation is procured Huge influence on Aibel competitiveness Mundtlig: Med Ums: 12,6 Mrd. og 8 Mrd. Spend mot Aibels leverandører 2/3 av Aibels verdiskaping kommer fra Aibels leverandørbase  Dvs. enorm påvirkning på Aibels konkurransekraft Fordelt på ca leverandører Vi bruker gode 60 Mio NOK på de 1000 nederste leverandørene (rangert etter spend) Poeng: Få frem hvor viktig leverandørene er for Aibel! (80% av spend levert av ca. 7% av leverandørene)

6 Purchases per county in Norway

7 NCS - Future expectations
Good potential for new large and small discoveries Further optimization of the shelf New installations under construction will provide new MMO contracts Deferred maintenance and modifications will provide new employment There will be industrial development in northern Norway The industry has undergone continuous restructuring – we will succeed again!

8 Strategy and goals Aibel has a leading position on the Norwegian continental shelf and aims to maintain this position We aim to expand internationally Need for cost reduction and increased efficiency - We reposition and make improvements Integrated and cost effective execution model Increased international interest in the implementation of our projects

9 Aibel, international share

10 What is important to us – and our clients
Delivery performance Quality Documentation Solution provider, not (only) a supplier of goods and/or services Cost awareness Cost optimisation - The ability to be creative and proactive Efficiency and productivity Reputation Flexibility Key personnel

11 Main focus areas Knowledge of specifications Reliability in delivery
Quality in execution

12 Knowledge of specifications
Pay extra attention HSE & working environment HSE requirements must be first priority in all projects Our biggest customer, Statoil, have increased focus on working environment for maintenance Offer according to specifications in inquiry If supplier offer standard equipment – specify exceptions

13 Reliability in delivery
Effects of delays are increased both in cost and schedule! Therefore: Be ‘realistic’ regarding delivery time You will be challenged – know your capabilities and the risks involved Inform when in trouble Do not expect to solve all problems – inform us and work to solve it Give us the possibility to reduce the negative effects

14 Quality in execution Use qualified sub-suppliers
Contractual demands / selected makes etc. Ensure quality and expedite! Use your quality system in project execution Do it right the first time Negative trend in ‘punch-items’ and ‘warranty issues’ ‘Short-cuts’ on quality does not pay off

15 The key to success Project deliverables A winning culture
Quality Schedule Productivity A winning culture A good working environment

16 Areas of improvement Where suppliers can contribute:
Schedule – My Responsibility Capability vs. capacity Estimation and experience data Commercial awareness Cost optimisation Continuous improvement

17 Success areas Open Flexible Solution oriented
Local presence and global capability Tender execution CIC capability and competence

18 Further expectations Interaction with Aibel
Correct behavior - attitudes Training - knowledge of the requirements and compliance Management commitment at all levels Safety in the value chain Employee participation - risk assessment Focus on major accident risk Focus on groups at risk Notification and follow-up of incidents and illnesses

19 HSE, Compliance and Quality

20 Health, safety and environment
Zero injury philosophy Specific KPIs for HSE Lost time incidents Total recorded injury rate Serious injury rates Sick leave HSE programme developed yearly Action plan for overall activities Local action plans tailored for each location

21 Quality An important goal for Aibel is to deliver consistent and correct quality for all our projects. Through our management system W3, we ensure that we always use our best practice for the execution of projects and work. The management system fulfills the requirements of the following standards and directive: ISO 9001: Quality management systems ISO 14001: Environmental management systems BS OHSAS 18001: Occupational health and safety management system Pressure equipment directive 97/23/EC module H ISO : Fusion welding ISPS: International code for the security of ships and of port facilities

22 Compliance Many years of experience in developing and living up to high business compliance and ethical standards Implemented new methods and systems in recent years to ensure a highly compliant and ethical business conduct (Code of Conduct)

23 Procurement Method Dine notater

24 Method As it is vital to get: Overall method Procurement process
the right material in the right quality to the right site at the right time at the lowest total cost Procurement is a key for success in all our projects. Overall method ProVision is the standard method for start-up, execution and close-out of projects. Procurement process Visualized in W3 and includes all relevant procurement procedures, templates and method descriptions needed for procurement in a project. Dine notater

25 Tools Aibel SAP or customers ERP (Enterprice Resource Planning):
Procurement Toolbox Aibel SAP or customers ERP (Enterprice Resource Planning): The Material Management module in SAP Reservations (qty, specifications, need dates, status) Purchase Orders (PO) Reports (status, commitments) Achilles – database for relevant suppliers Procurement Corporate Frame Agreements - database New Vendor Request - database Proarc – document control system …In accordance with provision TMEPCI…. NOTE: use other systems until this is implemented

26 Documentation requirements
Attached to an inquiery you will find a typical example of Supplier Documentation Requirement List (SDRL) showing documentation and data tables to be submitted with the bid and as a part of the PO-delivery. Read this carefully and calculate the costs assosiated. Invest the necessary resources to deliver the documentation according to the contract. Documentation is 50% of the delivery!

27 How to become a supplier to Aibel and Shell:
Achilles registration! Step 2: Mail regarding “New Vendor Request” will be issued from Aibel asking for Address information Ownership information Initial Contact Information Payment information Aibel will evaluate and check / approve information Aibel to perform verification of received information Close / check any gap – go or no go NB: Aibel use Achilles as the basis of “Approved Vendor List” and has it own area where vendor information is available – Achilles is a “key” to be approved! Dine notater

28 Step 3: How to become a supplier to Aibel:
Aibel`s Supplier Qualification Process consist of a “questionnaire” asking for info on: Management and leadership, information and analysis, strategic planning, human resources, process management, business improvements and operational results, customer focus and satisfaction, supply management and HES. Aibel will evaluate and score completed form Verification of received information (visit) Close any gap – go or no go Dine notater

29 Prequalification levels if approved
QUALIFICATION LEVELS IN APPROVED VENDOR LIST (AVL) In order to choose the most fitted supplier for each purchase, Aibel evaluate the criticality of each purchase. This results in a criticality rating from 0 (Not Critical) to IV (Quality is vital and must not be compromised). To match the criticality of the purchase Aibel’s AVL is segregated in qualification levels. This means that suppliers, based upon a TQSR (Total Quality System Review) or previous KPI’s (Key Performance Indicator), are prequalified for certain criticality ratings. General comments: All permanent material on a project shall be supplied by a supplier in minimum level 1. Use assistance from all relevant resources when evaluating the correct level.

30 Supplier Quality Management after approved
Supplier verifications/audits is performed, also based on “Key Performance Indicators” Supplier approval and re-approval Maintenance of Aibel Approved Vendor List (Achilles) Key performance indicators is established and shared with supplier`s to agree if any corrective action is required on one or both sides to improve performance. Non Conformance system in place Dine notater

31 Typical findings at new suppliers
Missing or insufficient: HSE thinking not according to expectations in the oil&gas industry Presentation of organisation Missing organisation chart Diffuse responsibility Systems for reporting of injury and sick leave Target for TRIF factor and strategy to keep low Total Recordably Injury frequency Number of injuries x 1 mill mhr / actual mhr Risk management systems

32 Typical findings at new suppliers
Verification and Audit systems for subcontractors Systems to satisfy Norsok S-006 Risk management of working environment Treatment of nonconformance Monitoring of ability to deliver, quality cost, ”on time delivery” etc Documentation of prosesses and results of these Systems for high ethics standard Capacity and competence to handle complex systems Engineering Planning Financial

33 Summary What to remember
Aibel use only Achilles approved suppliers who are also Aibel approved. Aibel has an open approach regarding co-operation and new vendors. Aibel will keep “find contracts” updated to reflect current opportunities. All vendors to Draugen must be TA (Technically Approved) by Shell. Dine notater

34 © 2008

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