Professional Documents
Culture Documents
2006 BP
Limited.
All rights
reserved.
2007
BPInternational
International
Limited.
All rights
reserved.
In appraisal, we confirm project viability, create the overall business case and
make the key strategic decisions that drive project value for years to come. This
requires excellence in many dimensions.
This guideline has been developed based on the knowledge and experience of
our multi-discipline appraisal community including our top appraisal leaders; it
provides guidance to all involved in delivering appraisal excellence.
Through the consistent application of this guideline, we will ensure that we
create the right distinctive projects in Appraise and Select to support our strategy
of being the #1 projects operator.
Neil Shaw
technology vice president - projects & engineering
contents
context
overview
15
2 BP biases
21
2.1 Integration
22
2.2 Standardization
22
24
25
26
28
31
33
36
46
58
65
66
75
85
86
86
89
92
93
6 toolkit
95
102
109
109
110
111
111
115
context
Our goal is to generate business value by delivering projects, which are efficient
in both capital investment and long-term operation. We will do this by consistently
creating distinctive projects and delivering them with world class execution. The
Major Projects common process (MPcp) is a key part of the overall project system
which is designed to support Strategic Performance Units (SPUs) in pursuit of this
goal. This system includes our people and processes, supported by networks and
functional authorities, guidelines, tools and good examples.
Project
Principles
App Sel Def Exe Ope
Dashboards
MPcp Elements
HSSE
MPcp
Subsurface Resource
Guidelines
Characterization
HSSE
Technology, Engineering &
Appraisal &
Technical Definition
Pre-development
Project Management & Execution
Engineering & Quality Mgt
Procurement & Supply Chain
Project Management & Execution
Management
Procurement & Supply Chain Mgt.
Project Services
Project Services
Organizational Capability
Organizational Design
Commissioning & Operational
Commissioning & Operational Readiness
Readiness
Risk Management
Performance & Risk Management
Knowledge Management
Knowledge Management
Resources
Tools
Templates
Examples
context
Guidelines have been written for each of the MPcp elements to provide more
detailed support to teams in the achievement of MPcp expectations. They have been
compiled from the wisdom and experience that exist in the company and represent
the current view of discipline requirements and good practice, which should be
applied consistently across our range of projects.
Over time we expect the Major Projects community to identify improvements in
the practices described in these guidelines. These should be communicated to the
Directors of Appraisal within Exploration Production and Technology Function who have
clear ownership of this guideline and are accountable for its planned and systematic
update. Appraisal teams should adhere to and are responsible for implementing the
guidelines unless a material departure is considered to provide significant benefit.
Any proposed departure should be discussed with the Directors of Appraisal.
overview
The Appraisal Guideline has been written to serve a diverse community, which
crosses multiple disciplines and functions involved in appraisal and the front end of
projects. It describes additional aspects that go beyond just supporting delivery of
MPcp expectations to provide:
Further information on appraise and select expectations.
Other important areas in delivering appraisal excellence and distinctive projects.
Examples of success with other tools and approaches.
Disciplines involved in appraisal are also involved in Access and Renewal, Exploration,
Opportunity Progression and Brownfield operations. These disciplines include
Subsurface & Wells, Drilling & Completions, Projects & Engineering, Operations and
Commercial.
Ecp
Exploration
MPcp
Major Projects
BtBcp
OPcp
Opportunity Progression
Base Management Excellence
Production Efficiency Improvement
Integrated Field Planning
BMcp
PEIcp
IFPcp
SPMcp
De-commissioning
Decline
ILX
Plateau
Infill
Ramp
Installation
Development
Case
First Oil
Appraisal
Prospectivity &
Development
Case
Access
overview
Appraisal
Guideline
figure 1.2 how Exploration & Production common processes relate over
the life of an asset
The fundamental emphasis is on integration that evaluates project opportunities,
improves front end loading and informs investment decisions. Figure 1.2 shows how
appraisal relates to the Exploration & Production common processes.
The Appraisal Guideline is organized in six parts.
1. Habits of great appraisal leaders
The habits are proactive behaviours leaders and teams must display and embed for
the creation of distinctive projects.
2. BP biases
This section describes the biases of BPs approach to appraisal that allow us to deliver
viable and robust projects.
3. Appraise work focus and activities
A codified and standard approach to the work focus and activities for BP projects in
Appraise to meet MPcp expectations and support teams as they form and build their
10
overview
WorkFocus
Stage
Objectives
Appraise
Select
Appraisal Planning
Appraise Programme
AppraiseSelect Gate
Business Framing
Opportunity Characterization,
Option Evaluation & Viability
Assessment
Viability
Confirmation
Option
Evaluation
Concept
Selection
Establish
selection criteria
Develop
engineering
data acquisition
programme
Evaluate options
Engage
contractors
Update risk
and uncertainty
management
plans
Update learning
and knowledge
management
plan
Select concept
Engage
and select
contractors
Deal structuring,
contract
framework,
market
development
and access
Governance
Activity
Appoint AGM
Generate options
Ensure full value
characterization
Consider all sources of value
and assess markets
Perform Value of Information
analysis and acquire data
Develop decision framework
and analysis
Consider standardization
options
Identify risks and uncertainties
and develop mitigation plans
Understand trade-offs
Establish reference case and
alternative options
Make informed decisions
Reconfirm
strategic
context and
business
objectives
Confirm
options
Build the
select team
Plan Select
Appraisal Plan
Coaching Workshop
Appraisal
Plan
Reserves Approval
Memorandum (RAM)
Legend
Concept
Definition
Appoint PGM
Appraise
Entry
Gate
Define
Preparation
Select Programme
Select
Entry
Gate
HOD Review
key document
Set targets
Build Define /
Execute team
Plan Define
Complete
Statement of
Requirements
Manage
residual risk
and uncertainty
IPA Review
Select Coaching
Workshop
Appraise
PHSSER
entry gate
Updated Appraisal
Plan and DSP
workshop
Select
PHSSER
review
IPA Review
RAM
Define
RAM
PHSSER
11
overview
12
13
14
Seven habits have been defined based on the experience of BPs senior appraisal
leaders and practitioners. The habits are proactive behaviours that leaders and teams
must display and embed within their project. They complement the habits of great
project managers described in the Project Management and Execution Guideline.
Creating distinctive projects
Appraise
Select
Define
Execute
Operate
Scope
Performance Management
Integration
Organization
Relationships
Contracting
Strategy
Planning Ahead
Evaluation and
Decision Making
Intervention
15
16
17
Habit 7 - Relationships
Identify and closely manage key external relationships.
Think carefully about reporting relationships to ensure alignment across the
team (contractors and BP staff). Work on weaknesses to resolve issues rapidly.
Continually test for communication problems and break them down.
Recognize the power of team building and co-locating staff from key disciplines
to create a high-performing team.
Create a credible upward relationship with senior management by raising and
tackling relationship issues early. Report the status of the project whether good
or bad.
Personal impact of great appraisal leaders
In addition to the seven habits, successful appraisal leaders demonstrate the
following traits:
High energy.
Ability to create focus for the team.
Ability to make hard decisions.
Respect and humility when dealing with others, especially external
stakeholders.
Positions team and stakeholders for success.
Is always aware of the project status whats going well and whats not going well.
Business acumen.
Resilience.
Keeps promises and delivers.
18
19
20
2 BP biases
BPs distinctive approach to appraisal supports our objective of becoming the leading
projects operator. This approach is summarized by six biases which describe how our
appraisal teams work together, what they do and ultimately what they deliver. These
biases are:
Integration.
Standardization.
Full value characterization.
Risk and uncertainty management.
Natural pace.
Quality through choice.
Figure 2.1 depicts how the biases relate to the scope of the appraisal team.
Subsurface
Full Value
Characterization
Projects &
Engineering
ility
Viab
ty
ni
tu ter
or ac
pp ar
O Ch
Standardization
Integration
Business
Framing
Risk &
Uncertainty
Management
O
E v a p tio n
lu a t
io n
Drilling &
Completions
Appraisal
General
Manager
Commercial
Natural Pace
t
ep n
nc ctio
Co ele
S
Concept
Definition
Work Focus
Quality
Through
Choice
BP Biases
HSSE &
Operations
Disciplines
LEADER
INTEGRATOR
MANAGER
21
2 BP biases
2.1 Integration
Our drive for integration is based on the concept that the whole is greater than the
sum of the parts.
Integrated coaching is a key
component of MPcp. The
Appraisal Plan CoachingWorkshop
provides the foundation for
business framing and creates
cross-discipline alignment early
in Appraise. The Select Coaching Workshop supports integrated team thinking to
deliver the Select stage. This approach greatly improves team efficiency by creating
a focus on doing the right things. It also enhances knowledge transfer between the
various technical and commercial disciplines.
Integration is a behavioural characteristic
founded in the holistic, multi-disciplinary
(technical and commercial) approach BP
applies to appraisal.
All key project interfaces, internal and external, are well understood.
Lessons learned from Appraise and Select are captured for future use by
others.
2 BP biases
Reduced CAPEX
Repeat Engineering - design one, build many
Repeat contracts with key suppliers - equipment and services
Scarce resources deployed on what really matters
Efficiency of integration
23
2 BP biases
2 BP biases
take rate and co-development of assets to share fixed costs and improve schedule.
At times, full value characterization may not necessarily be aligned with external
stakeholders. In such instances, relationships need to be managed to deliver
mutually satisfactory outcomes.
For the practitioner, delivering full value characterization requires:
Vertical and horizontal cross stream integration.
An understanding of the value added through the dimensions of life of field,
follow on potential, standardization and relationship opportunities.
An understanding of the value added through adoption of standardization and
programme approaches.
Assessment of value trade-offs within the business context.
Consideration of the opportunity cost of scarce resources (staff, equipment,
time etc.).
2.4 Risk and uncertainty management
Exploration & Production is a business where taking informed, well-judged risks can
secure competitive positions for BP, often with advantaged returns. Risk and uncertainty
provide a powerful basis for project and portfolio planning and are not inherently bad,
where project value can be created in a safe and responsible manner.
A risk is typically defined as an event (circumstance) that, should it occur, would
have a material effect on project value. Risk can result in a value degradation (threat)
or improvement (opportunity). Uncertainty is the mechanism for describing the
distribution of a parameter whose value is not absolutely known. It can be expressed
as a continuous range or as distinct alternatives. In appraisal it is important to divide
uncertainties into those which are irreducible and those that during appraisal may be
reduced with additional work or data. Uncertainty, or combinations of uncertainties,
when allied to investment decisions with expectations of delivery, may generate risks.
Not all parameters with uncertainty will be linked to risks.
Managing key risks and associated uncertainty is crucial to delivering project value and
success. Upside opportunity must be addressed as aggressively as downside risk.
In the early phases of a project the range of uncertainty is normally large. Informed
decisions demand complete transparency of all risks and uncertainties associated with
a project.
25
2 BP biases
2 BP biases
Experience has shown that setting artificial or arbitrary schedule targets has been a
significant contributor to poor front end loading, poor project execution performance
and value extraction by external stakeholders.
For the practitioner it is critical to proactively communicate the natural pace of the
project. This requires:
Planning and executing activities that reduce risk and uncertainty to an
appropriate level.
Embedding standardization opportunities.
Identifying technology requirements, commercial framework and data
acquisition with long lead durations.
Accounting for the business environment of the project.
Understanding the true value drivers of a project (cost, schedule, quality
or production / resources) to differentiate between competing options and
projects.
Obtaining stakeholder approval.
Communicating the full range of schedule uncertainty to avoid the creation of
unrealistic internal or external expectations.
Senior management (comprising the Strategic Performance Unit Leader (SPUL),
Group Vice President (GVP) and Segment Executive Team), fully informed by the
Appraisal General Manager (AGM) and team, can then make business decisions
based on the full knowledge of natural pace.
27
2 BP biases
Asset monetization and operatorship decisions are also supported by quality through
choice. All projects should carry and maintain an exit option to enable dilution or
divestment decisions to be considered (if appropriate) at key stage gate milestones.
BP currently operates 80% of its projects portfolio; however, appraisal teams should
consider the comparative benefits of others operating where they are equally
competent or even advantaged. In addition, the AGM should always consider
alternative ways to monetize the opportunity.
For quality through choice to succeed, there should be multiple options from which to
choose and these must be assessed consistently. The Segment common processes
play a crucial role to establish common language and a consistent set of expectations
that enable balanced assessments of options. The characteristics of high quality
projects include:
The project can be executed in a manner that is consistent with BPs HSSE
objectives.
Investment quality (investment returns and overall value) versus risk has been
considered and there is a compelling business case that includes all significant
sources of value consistent with SPU and segment strategies.
Embedded standardization and demonstrated learning from other projects.
The project benefits from integration with other BP assets or distinctive
capabilities.
The project is robust across a realistic range of schedule, cost and subsurface
uncertainties.
Key risks are managed and there is flexibility to capture upside opportunities.
There is adequate organizational capability to deliver the project.
The project enhances our broader capabilities and reputation, e.g. through new
technology or building internal expertise.
28
2 BP biases
29
30
The road map below shows the Appraise work focus and activities that support
creating distinctive projects in BP and delivering MPcp expectations. It also shows the
timing relationships of key activities and governance milestones including coaching
workshops, documents and functional reviews.
WorkFocus
Stage
Objectives
Appraise
Confirm commercial viability of opportunity and identify a range of
development options consistent with resource, uncertainty and market
conditions, at least one of which is viable technically and commercially
Appraisal Planning
Appraise Programme
AppraiseSelect Gate
Business Framing
Opportunity Characterization,
Option Evaluation & Viability
Assessment
Viability
Confirmation
Governance
Activity
Appoint AGM
Build appraisal team
Consider business
drivers: resources,
developability, markets,
and external influences
Identify technologies
Identify risks and
uncertainties and
develop mitigation plans
Create learning and
knowledge management
plan
Understand
heritage commercial
arrangements
Appraise
Entry
Gate
Reconfirm
strategic
context and
business
objectives
Confirm
options
Build the
select team
Plan Select
Appraisal Plan
Coaching Workshop
Appraisal
Plan
Reserves Approval
Memorandum (RAM)
Legend
Generate options
Ensure full value
characterization
Consider all sources of value
and assess markets
Perform Value of Information
analysis and acquire data
Develop decision framework
and analysis
Consider standardization
options
Identify risks and uncertainties
and develop mitigation plans
Understand trade-offs
Establish reference case and
alternative options
Make informed decisions
Select
Entry
Gate
HOD Review
key document
review
Appraise
PHSSER
entry gate
Updated Appraisal
Plan and DSP
workshop
PHSSER
31
2 BP biases
MPcp describes the stage objectives and the expectations for BP projects. These
represent the overarching goals of the work focus and activities.
During early Appraise, an Appraisal Plan will be developed. The Appraisal Plan is a
formal document which outlines the scope of activities and estimated expenditure in
the Appraise and Select stages. Its focus is to enable an informed decision on project
viability and concept selection. It describes the first Depletion Plan for the field or
opportunity being considered. It should capture the opportunity from a life of field
perspective and consider the project phase and also operating the asset over the
long term. The Appraisal Plan provides a single point of reference for characterizing
opportunities.
The Appraisal Plan does not constitute financial approval. Individual Finance
Memoranda (FM) are required to release funding for each element of the Appraisal
Programme. The Appraisal Plan is the key governance document used to assure
delivery to MPcp expectations.
MPcp describes the governance expectations for BP Major Projects. The scope of
the Appraisal Guideline relative to MPcp and the principal components of governance
are shown in figure 3.2 below.
Creating Distinctive
Projects
Appraise
Select
Appraisal Plan
Governance
HoD Reviews
& TVP
Attestation
Integrated
Coaching
Define FM
Discipline
reviews
Appraisal
Plan
Select
Coaching
Appraise
Select
PHSSERs
Appraisal Guideline
Execute
Operate
Execute FM
Discipline
reviews
Execute Start-up
Define Health Efficiency
Review
Coaching check
Detailed Engineering
Pre-Sanction
Construction
Pre- start-up Operate
33
Greenfield
Exploration
Success
Extension/
Tie Back to
Hub
Brownfield
New
Greenfield
Access
Appraise
/ MPcp
Incumbent
Resource
Position
New
Brownfield
Access
Greenfield projects
Greenfield resource development opportunities that lead to Major Projects typically
originate when a successful exploration discovery confirms the potential for a
commercial development, or when we acquire a Greenfield opportunity. MPcp and
the Exploration common process describe the expectations at handover between
the exploration team and the appraisal team. Greenfield projects include discoveries
that are candidate tie-backs to existing infrastructure.
It is vital that the MOC through the transition into Appraise is effective and includes:
Existing HSSE thinking from Exploration.
Agreement on transition process including a handover meeting.
Description of the opportunity including strategic fit, outline costs, schedule
and methods used to derive them.
Technical Assurance Memorandum identifying thoughts on developability and
34
Brownfield projects
Brownfield Major Projects originate when either, an option is progressed from a
SPU/business units Opportunity Progression Hopper, or an access deal is signed
to develop an existing discovered resource (often under an agreed bid with a capital
or work programme commitment). All business transformation of existing assets is
considered Brownfield.
MPcp and Opportunity Progression common processes describe the expectations
at handover between the asset or renewal team and the appraisal team. For new
access Brownfield opportunities, MPcp, with a combination of the Exploration
35
opportunity set, have a high probability of delivering the true business value.
Business framing is achieved through creating a shared understanding of project
scope, issues, drivers, decision criteria and boundaries and then identifying a range
of unique alternatives that help define the potential business value a project has to
offer consistent with SPU and BP strategy.
MPcp sets out the framework and expectations to create a distinctive project and
includes the provision for support, advice and guidance from integrated, coaching
events (Appraisal Plan Coaching Workshop and Select Coaching Workshop).
These coaching events, which are part of MPcp governance, are led by the appraisal
coaching team and supported by the Directors of Appraisal.
Who and how
The coaching workshops are structured multi-disciplinary events aimed at assisting
appraisal teams frame the business opportunity and develop the future work
programme through:
Understanding the strategic framework, business drivers and decision criteria.
Characterizing and transparently communicating the key risks, uncertainties
and opportunities.
Identifying / evaluating the project scope, development scenarios and business
options.
Prioritizing data needs to address the key risks, uncertainties and opportunities.
Considering standardization and global agreements.
Facilitating discipline integration and alignment.
Transferring learning and best practice across the organization.
Identifying resource needs for delivery.
Clarifying Functional Excellence Elements Expectations and Requirements.
Business framing at the Appraisal Plan Coaching Workshop helps inform the
Appraisal Plan. The Appraisal Plan is a fundamental governance document in MPcp
for the Appraise and Select stages. Technical and non-technical functions should
be consulted and involved in Appraisal Plan Heads of Discipline (HoD) Reviews
(commercial business development planning and analysis Finance Control &
Accounting, Shipping, Legal, Finance, Tax, Gas Power & Renewables, Integrated
Supply & Training, as appropriate). Appraisal teams are encouraged to establish
contact with the non-technical functions early.
2007 BP International Limited
37
Approach
1. Collect and analyse key existing data by discipline
This data is collated and used to develop a baseline understanding of what we do and
do not know about the project. The 4 legged stool is used to develop the business
context, integrate the initial findings, identify key gaps and establish communications
lines across disciplines within the appraisal team. This simple structured approach (in
figure 3.4 below) is used to help integrate the discipline data and also to:
Understand and test the strategic context (project alignment with strategy).
Develop insights on discipline issues (uncertainties, risks, opportunities)
and identify interfaces and challenges across the disciplines with a focus
on Resource base, Developability (technical definition including technology),
Markets and External Influences.
Facilitate integration, alignment and informed decision making.
Strategic Context
Establish viability (strategic, technical and commercial)
Resource
Developability
Oil / gas
Fluid properties
Structural complexity
Stratigraphic complexity
Rates and reserves
Benchmarks
Site Characteristics
Drilling & Completions
Flow Assurance
Wells
Facilities needs
Infrastructure
Technology
External influences
Integration,
Informed Decisions,
Confidence
Markets
Price
Oil and gas sales
Market intelligence
Export options
Negotiating strategy
Contracting strategy
Market developments
38
Project Scope
Surface Facility
Drilling
Options
HPHT BP Team
Pump
Onshore
Facility
USCG
Marine Vessel
Export System
IST
Well
Companions
Mid-Stream
MMS
Salt
Other Structures?
West Bump
East Bump
Operating Unit
Paleocene
Adjacent Structures?
39
Shareholder Value
Corporate HSSE
Imperatives
1. GHSSER
2. Utilization of existing
infrastructure
3. Plan for Training project
personnel ( CTD, N2, Current
Ops Procedures )
4. Minimise gas venting and flaring
5. Establish optimimum footprint
6. Embed rigor on control of work
7. Meet IM standard
8. Incident and injury free
environment
9. Successfully managed SIMOPS
10. Successfully conduct PHSSER
BP Reputation
1. Comply with third party
contracts
2. Respecting landowner,
community commitment
3. Regulatory compliance
4. Proactive PR demonstrating
value of BP presence
5. Good rapport with contractors
6. Manage internal expectations
7. Progressing technology for
producing mature
Distinctive CTD&C
Capability for Tight Gas
Financial
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Utilization fo existing
infrastructure (IM)
Resource (NP4) progression
Manage project pace
Cost effectivness for life of field
Identify and manage long lead
items
Integrated schedule for project
operations/activitties
Incremental Reserves and
expected project profile
Recognize the technical
challenge (uncertainty)
Fully Integrated cost across all
project elements and interfaces
SPMcp, Supplier performance
management system
Establish space for learning
Unwavering Management
Commitment (funding)
1. Completion techniques
2. Establish tight gas Frac
techniques
3. Technique to Manage Hole
stability
4. Knowledge management
5. Lead industry in tight gas
recovery/development
6. Understand and establish
Intellectual Property position
7. Identify and close technology
gap
8. Identify and establish
organization capability
Capture
Total
Infrastructure
Low
Cost/
Minimal
CAPEX
Screen
Solution
Earliest
Oil
Reservoir
Pressure
Maintainence
Number of
Drill Sites
Development
Gas
Injection
Single
Dry Trees
Water
Injection
Multiple
Wet Trees
Combination
of Gas and
Water
Combination
Host Facility
Liquid Export
System
Gas
Management
Gas
Pipeline
System
Lease/
Purchase
Development
Tightly design to
capacity (Fit for
purpose)
TLP / SPAR /
Tie Back to
Infrastructure
Store in
alternate
horizon
Loop Existing
Line
Purchase
Build for
Expansion
(Equity)
FPSO
Offshore
Load
Export via
Pipeline
Stand-alone
Lease
Tie Back to
Infrastructure
PHA
Non-Pipeline
Solution
Lease to
Own
Flexibility to
Process
Build for
future growth
(Reservoir
Update)
Semi
Sub-Sea to
tie back to
host facility
Natural
Depletion
Triggers
New Build
Pipeline
GTL
Through
Existing
Host Facility
Offshore
utilisation
(electric power)
Decisions
Choices
Investment themes
Triggers
41
Technology identification
All technologies must be analysed to assess associated risks, but they should also be
selected with reference to the technology biases that have been developed for the
Exploration & Production segment. The biases are intended to ensure a consistency
of approach in the application of technology and form the foundation of our Major
Project Technology Plans, they are:
See the Engineering and Quality Management Guideline for more information on
the biases. It is important to include an assessment of all technologies including
Subsurface & Wells, e.g. seismic imaging. After the preliminary selection of the
technology it is important for the project to understand the nature of the technology
it plans to utilise and a key step in this process involves determining whether a
technology is proven or unproven (new).
Proven technology is that practice or item which has been provided to BP before,
to the same specification and manufactured at the same location with the same
techniques, for use under the same known conditions.
Unproven technology is a practice or item providing a function which has not
previously been used in a BP project under the conditions appropriate to that project.
This definition includes both novel technology in familiar application environments and
existing (proven) technology in new application environments or in new processing
sequences.
In the context of Major Projects, unproven (or new) technology can fall into two
categories based on value:
Enabling - a technology critical to project success, without which the project
cannot be successfully implemented.
Enhancing - a technology upon which the project is not reliant, but if
successfully implemented would enable more value to be realized for the
project.
42
It is important to note that all unproven technologies must have reached a certain
level of maturity by the end of the Select stage. The Technology section of the
Engineering and Quality Management Guideline provides much more detail in this
area and should be consulted, but the key point relates to Technology Readiness
Levels (TRLs) and by the end of Select any technology selected should be at TRL3.
A TRL value lower than this means the technology is immature and the project will
carry additional risk.
To maximize the value of new technologies and minimize the implementation risk
and uncertainty, multi-disciplinary reviews of project technology requirements for
each alternative development concept should be held early in the Appraisal Planning
stage, and refreshed after key data is acquired and the opportunity characterization
matures. The outputs from these reviews and updates will form the basis for the
technology section of the Appraisal Plan which should also contain a technology
development schedule.
The objective is to define not only the project specific requirements, but also to
assess how to implement key technology biases and technology levers into the
project. There must be a plan to get to the right technology choices by the end of
Select and a detailed technology delivery plan for Define.
Technology planning is addressed in more detail in MPcp, the Engineering and Quality
Management Guideline and the other common processes.
Knowledge management
Knowledge management leverages the unique diversity of experience, expertise and
general know-how that resides throughout BP and externally.
Knowledge management should be initiated early in Appraise. The implementation
of the knowledge management plan is crucial to risk mitigation and continuous
improvement.
For the practitioner, learning and knowledge management requires:
Capturing and applying relevant learning from other similar projects, including
those outside BP.
Transferring learnings to other appraisal teams and the Projects library.
Document control and the data management plan to support current and future
decision making.
43
The AGM is accountable for ensuring a knowledge management plan exists and
is implemented. A knowledge management champion should be designated to coordinate this.
A variety of knowledge sources exists in BP including:
Appraisal coaching team.
Heads of Discipline.
Functional Directors.
Network leaders.
Subject Matter Experts / Advisers.
Segment Technical Authorities.
Chief Engineers.
Projects and Engineering shared learning system.
Projects library.
Projects forum.
See section 6.2 for further information. The MPcp Knowledge Management Guideline
also contains further information.
The Appraisal Plan
The Appraisal Plan is a formal document which outlines the scope of activities and
estimated expenditure in the Appraise and Select stages. The focus of the Appraisal
Plan is to enable an informed decision on project viability and concept selection.
The Appraisal Plan is the output of the Appraisal Planning stage. It sets a broad
framework for the activity plan from discovery to first production. The plan is
specifically the execution plan for the Appraise and Select stages.
The purpose of an Appraisal Plan is to capture current understanding of the ranges
of technical and commercial uncertainty and risks / opportunities. It also defines an
activity programme that will lead to robust, compelling and viable business options
to be carried into Select. The Appraisal Plan provides the team and the Executive with
an opportunity to endorse or comment upon the full activity set envisioned during the
Appraise and Select stages at a time when it is most meaningful. A robust Appraisal
Plan also allows the team to deliver that activity set within the strategic bounds of
the endorsed plan.
The appraisal team should create the Appraisal Plan by addressing the questions in
the Appraisal Plan contents table in figure 3.8.
44
Questions
Examples
Activity sequencing
Critical path - optimization of information
45
The Appraisal Plan should be fit for purpose and as short as practical. It is not intended
to contain all the support material necessary to underpin the recommended activities.
It should be derived from cross-disciplinary integration, addressing all of the key risks
and uncertainties which impact the decision on project viability and commerciality,
including:
An evaluation of the strategic fit of the opportunity.
A strategic review of BPs opportunity position versus the competition in the area.
Well evaluation and new data acquisition including the need for appraisal
well(s), additional seismic data and reprocessing existing data.
Feasibility studies on the host facility capability and performance, including
compatibility of produced fluids when Infrastructure Led Exploration or tiebacks are an option.
Identification of potential development options and associated costs and schedules.
Preconceived options may not always be the optimal choice or decision.
Identification of any new technology which requires early investment to
execute the project.
Organizational capability necessary to carry out activities within the proposed
schedule.
An update to the Appraisal Plan will form the Decision Support Package for the
Appraise-Select gate.
A template for the contents of the Appraisal Plan is provided in the Projects Library.
See section 6.2.
3.3 Appraise programme
The need to know information and data and the perceived impact on the key
decisions, as discussed in business framing (section 3.2), drives the activity set
definition in the Appraise Programme.
The Appraise Programme activities focus on assessing which combination of sources
of value (in a risked sense), result in the greatest overall value impact. The activities
should also focus on demonstrating viability.
The Appraise Programme will not mitigate all risks. Residual risks must be owned,
planned for and managed by the team beyond the end of Appraise.
46
Ris
k/U
nc
ert
ain
ty
The proportions of known, need to know and residual risk and uncertainty change
over time as a result of risk and uncertainty management and data acquisition. See
RRU
RRU
Need
to Know
Need to
Need
to Know
Know
Need to
Know
Known
Early Appraise
RRU
Known
Known
Known
End Appraise
End Select
47
that will be further evaluated during the Select stage, will have been identified.
Entry into Select requires that there is a minimum of one technically and commercially
viable option. Viability is described in MPcp. Commercial viability requires an
expectation of positive net present value and of sufficient investment quality
(Investment Rate of Return).
Section 3.4 describes the specific deliverables and governance requirements at the
Appraise-Select gate.
Opportunity characterization
Opportunity characterization is the key to creating distinctive value from an asset
relative to our competitors. As an opportunity is characterized in more detail, the
Appraisal Plan should be updated to provide a central repository of information.
To understand the degree of this distinctive value, potential opportunities are characterized
with an integrated, full value approach that includes initial assessments of:
Strategic fit how well is the opportunity aligned with segment and SPU strategies?
Full value characterization, particularly those derived through synergies with
other BP assets.
The primary risks and uncertainties to delivering value from the opportunity.
The resources and organizational capabilities required to progress the opportunity.
Potential to leverage BPs unique know-how, experience, or technologies
including the potential benefits of standardization.
Figure 3.10 shows how opportunities evolve through options into concepts as a
project develops. These terms are the standard approach taken in this guideline to
describe project evolution.
48
Option
Opportunity
Option
Concept
Option 1
Project
Option 4
49
Figure 3.11 shows the expected volume increments per penetration from the Gulf
of Mexico. It illustrates how the tie-back versus standalone decisions depend on
resources, and how this was used to inform development decisions.
Resources
500
Best Fit Volume down to mapped spill point
Current Location 600 above spill @ M51, LKO
Local
Host
400
Deep S/T
00
Grey
Zone
OWC S/T
00
Initial Well
SS
Tieback
100
5
0/
Se
M
al
iti
In
48
P
en
.
5
Se
g
54
Se
g
51
M
Se
g
Se
g
51
Reservoir segments
figure 3.11 example of risk and uncertainty management from the Gulf
of Mexico
2007 BP International Limited
51
Once risks, uncertainties and opportunities have been considered, the data and
studies needed to resolve them will form the basis of the Appraisal Programme.
Establishing the business drivers of a project helps to facilitate quality trade-off
discussions and decisions. It is essential to develop the drivers early and in concert
with the projects internal and external stakeholders. Risks and uncertainties, their
impact and mitigations need to be clearly stated in the Appraisal Plan.
Tools available to identify, assess and design mitigations for risk and uncertainty
include:
Risk register single location for recording project risks.
Risk matrix Boston square describing the probability / impact and manageability.
Risk Assessment Tool assesses relative risk.
Decision trees enable responses to Appraisal Programme outcomes in advance.
Design Structure Matrix investigates links between data acquisition and risk
reduction via system dynamic models.
Recommended practice for framing, assessing and managing subsurface risk and
uncertainty is described in the Reservoir Uncertainty Statement & Management
Guideline. Additional information on risk and uncertainty management can also be
found in the Geoscience Handbook and Exploration & Production Risk Management
Guideline.
Data acquisition programme
The objective of the appraise data acquisition programme is to gather need to know
data to inform viability. VOI analysis compares the relative value of appraisal data
and assesses its impact to assist determining project viability. It allows the Appraisal
Programme to focus on acquiring the most important data.
VOI is founded on the concept that data has value only if:
The data impacts current or future decisions that have uncertain outcomes.
The cost of obtaining the information does not exceed the risked value
derived from the data.
The struggle is to recognize when further appraisal spend does not materially
impact development decisions and therefore begins to erode value from the
opportunity. See figure 3.12.
52
Optimal
Appraisal
Spend
Appraisal Cost
figure 3.12 understanding value of information
The data acquisition programme must encompass technical information and
sources of information from non-technical disciplines that will allow the appraisal
team to evaluate the viability of the opportunity. Consideration must be given to
the data required throughout field life, e.g. reservoir surveillance data for reservoir
management purposes.
Technical data gathered for Greenfield non-programme opportunities is biased
towards defining the ranges appropriate for selecting the potential development
concept. Opportunities that are part of a programme have data gathering biased
towards confirming viability of the existing or previously selected concept.
There are two types of information required:
Characterizing the range, type and anticipated production performance of
resources available for development including uncertainties.
Characterizing concept options, developability and associated costs and
schedules.
2007 BP International Limited
53
There are a number of excellent tools available to enhance the rigor and completeness
of decision making. Decision trees are one tool which can enable the outcomes of the
Appraisal Programme to be planned in advance. In this way, an objective assessment
of Appraisal Programme options can be developed and outcomes can be thoroughly
communicated as means for everyone to understand uncertainty and risk. Decision
trees can be used to evaluate the relative value of different decision pathways (using
Expected Monetary Value). They also inform concept selection choices linked back to
Appraisal Programme outcomes. Figure 3.13 is an example of a decision tree used to
evaluate Appraisal Programme outcomes.
3-D shows no
structure, drop Lease
-$15 MM
Buy
0.4
Run 3-D
survey
Lea
se
Drop Lease
$-18MM
Drop Lease
-$15 MM
e
as
Le
uy
b
nt $0
Do
3-D
con sur v
ey
firm
s
0.5 lead
5
Drill
y
Dr
Drill second
wildcat
le
ho
0
6
0.
0.15
0.2
5
Dry hole
drop Lease
-$21 MM
0.
45
0.35
0 .2
Mid Case
Discovery
+$24 MM
High Case
Discovery
+$99 MM
Dr
Drop Lease
-$12 MM
Dry hole
Drop Lease
-$15 MM
High Case
Discovery
+$108 MM
Drill
seco
wildc nd
at
Mid Case
Discovery
+$33 MM
0.
90
0.10
0.1
0
yh
0 . 8 o le
0
0 .0 5
0 .0 5
55
Commercial themes
During Appraise the key commercial themes to address include:
Opportunity characterization
Do we understand the business drivers?
Are our objectives aligned with our partners and with government?
What business model makes money for BP, our partners and government?
Have we evaluated the value proposition for BP, competitors, partners and
government?
Who are the competitors, what are they doing and how will they respond to
our actions?
What is our distinctive advantage? Is our offer distinctive?
Why should the stakeholder choose to work with BP? What options do we
have for improving our offer? For example, gas and infrastructure.
Is our competitive position sustainable?
How does the opportunity fit with the area or basin catchment strategy?
Relationship management
This is focused on external stakeholders.
Do we know the key people to influence and who makes the decisions?
Is the risk commensurate with our interest and the returns we may earn?
Market assessment, development and value chain management
This is principally through Gas, Power & Renewables for gas and gas products.
How does the product get to market and do we know the cost of access to
market?
2007 BP International Limited
57
Are there any existing agreements which impact the selection criteria? For
example, Joint Operating Agreements and Production Sharing Agreements.
Can we define any key conditions precedent for the Appraise / Select stages?
Do we understand and have we taken into account the impact of local laws
including competition law and the business and energy market regulatory
framework?
Economic Evaluation
58
Entry into Select requires a minimum of one technically and commercially viable
option, where viable is defined as:
59
Key Deliverable
End Appraise
End Select
Appraisal Plan
Updated
N/A
Wells Basis of
Design (BoD)
Preliminary
Prepared
Finalized
Scenario Planning
Project Statement of
Requirements (SoR)
Outline Prepared
Complete
Surveillance Plan
Outline Prepared
Technology Plan
In Place
Updated
Current/Predicted FEL
Assessments complete
Engineering Basis
of Design (BoD)
Project Execution
Plan
Operations and
Maintenance Strategy
Draft Developed
Commissioning
& Start-up Plans
Relationship
management plan
Being implemented
Interface Management
Plan
Organization Strategy
Knowledge
Management Plan
Established
Updated
60
A RACI chart showing the key MPcp documents and deliverables is on the following
pages. This describes which of the key leadership roles in the appraisal team owns
each deliverable. Bold elements denote the single points of accountability.
In addition to the key deliverables at end-Appraise the appraisal team must also meet
the expectations for each of the MPcp elements.
61
e
rc
ou
P
M roje
an ct
ag R
er es
A
M ppr
an ais
ag al
er G
e
at
o
in
rig
O
oc
um
en
ne
ra
Appriasal Plan
Scenario Planning
Organizational Strategy
R/A
Technology Plan
10
11
HSSE Plan
12
13
14
15
16
17
18
Depletion Plan
19
62
C
M om
an m
ag er
er cia
l
O
D pe
ev ra
el tio
op n
m s
en
tM
H
an
SS
ag
E
er
M
an
ag
er
Pr
M oje
an ct
ag G
er en
er
al
m
am
P
M roje
an ct
ag D
er ev
e
lo
p
en
W
M ell
an s P
ag ro
er gr
63
64
WorkFocus
Stage
Objectives
Select
Define
Preparation
Select Programme
Option
Evaluation
Concept
Selection
Concept
Definition
Establish
selection criteria
Develop
engineering
data acquisition
programme
Evaluate options
Engage
contractors
Update risk
and uncertainty
management
plans
Update learning
and knowledge
management
plan
Select concept
Engage
and select
contractors
Deal structuring,
contract
framework,
market
development
and access
Governance
Activity
Appoint PGM
Select
Entry
Gate
Set targets
Build Define /
Execute team
Plan Define
Complete
Statement of
Requirements
Manage
residual risk
and uncertainty
IPA Review
Select Coaching
Workshop
Select
PHSSER
Legend
key document
review
RAM
entry gate
Define
RAM
workshop
PHSSER
65
Option
Opportunity
Option
Concept
Option 1
Project
Option 4
The Select Coaching Workshop can provide support for Appraise insights and building
on any screening criteria employed during Appraise. This workshop helps the team
plan for Select and prepare for the Define FM. It also assists preparation for Select
stage deliverables and an external benchmarking review that will take place later in
Select (e.g. Independent Project Analysis (IPA) Pace Setter Review). Inviting IPA to
prepare for the Pace Setter Review and using BPs in-house STEP tool (from midSelect) to self assess end-Select readiness is recommended.
Establishing concept selection criteria
Selection criteria will be developed and agreed by the team at the start of Select.
These are used to differentiate between shortlisted options carried forward from
Appraise. Selection criteria should be aligned to the key business drivers.
Classic economic measures such as net present value and return on investment are
primary considerations in developing selection criteria. GIAAP provides guidance on
the boundary constraints for criteria.
Factors to consider when developing selection criteria include:
Aligning with access to and extraction of value from product / export markets.
67
It is essential the select team seek input across all disciplines to inform selection
criteria.
Figure 4.3 describes the process for ensuring the design case for safety in BP
projects. The design case for safety must be considered as early as possible in Select
and is used as the basis for the operations case for safety. Further details can be
found in the Engineering and Quality Management Guideline.
OMS
OPERATIONAL SAFETY
Inherently
Safer
Design
Procedural safety
Maintain design intent (MOC)
Operations & Maintenance plan
Capex/Opex
trade-offs &
Operational
feedback
an
eg
is t
O
ca pe
s r
d e f atio
Ha o n
za r s s
rd a
s fe
R t
DESIGN SAFETY
er
Safety Critical
Design Measures
EXECUTE
OPERATE
DECOMMISSION
plan. Experience shows dedicated and regular integration meetings are necessary to
create the right environment and behaviours to deliver this.
Work carried out in this period will fall into three categories:
1. Technical definition and integration. This is the effort within individual disciplines
and across disciplines to deliver:
69
Opportunities for major data acquisition during Select are more limited than in
Appraise. Consequently, the focus in Select is more on management and mitigation
of key risks and uncertainties. Additional data can be acquired but must be carefully
planned. Data collection in Select should target two areas:
1. Concept selection.
2. Concept definition.
The AGM must ensure risk and uncertainty management and mitigation plans are
updated to inform option maturation and concept selection. The Project General
Manager (PGM) owns the residual risk and uncertainty for the chosen concept. The
PGM is identified by mid-Select.
The AGM and the select team will, based on the options shortlist, review and update
the risk and uncertainty profile and put in place plans to:
Mitigate key risks and uncertainties that influence concept selection or overall
viability.
Reduce risk and uncertainty to a level consistent within the current business
context, ready for handover to the incoming PGM.
The incoming PGM, and the define team will own and manage residual risks and
uncertainties following handover and transition into Define.
Through Select it is necessary to consider:
The surveillance plan, including life of field data to differentiate between upside
and downside outcomes.
What interventions can be made to mitigate the downside and to capture upside.
What remaining risks and uncertainties are carried into Define and Execute.
Can any of these be designed out? What are the mitigation plans for the
remaining risk? How can the opportunities be exploited?
It is important to establish an integrated risk management process for Select (and
Appraise) that enables visibility of risk items at aggregated and individual discipline
levels and provides context for resulting mitigation plans. This process will ensure
selection decisions can reflect the impact of the prevailing business.
See the Reservoir Uncertainty Statement & Management Guideline for further
70
information. All activities here need be in compliance with the Risk Management
Guidelines for Major Projects and the Engineering & Quality Management
Guideline.
Data acquisition programme
Availability of the right data (type, quality and level of detail) is fundamental to the
selection process. The primary data acquisition objectives are to gather information,
of the right quality and at the right time, to enable the select team to:
Make the necessary concept choices that will underpin creation of the Define
FM and progression of the project into Define. The VOI analysis should inform
this thinking.
Prepare for longer term activities in the Define stage. Gathering soils data to
underpin FEED is a classic example of this.
Data gathered physically from the location of the opportunity or from the
market. This includes:
Geohazards surveys.
Reservoir models.
Cost estimates.
Data and information must be integrated with those acquired in Appraise.
Information that underpins the concept selection process includes:
71
Experience and judgement is required to combine the right data elements to inform
the concept selection process. Peer assists are recommended to support this
process.
Knowledge management
Knowledge management initiated early in Appraise must receive continued focus
through Select to ensure documentation of, for example:
Select options.
Selection criteria.
Contracting strategy.
In addition, in Select it is crucial to incorporate benchmarks from other projects to
ensure maximum knowledge transfer and efficiency.
For the practitioner, in Select, learning and knowledge management requires:
Capturing and applying relevant learning from other similar projects, including
those outside BP.
Document control and the data management plan to support current and future
decision making.
The AGM is accountable for ensuring a knowledge management plan exists and
is implemented. A knowledge management champion should be designated to coordinate this.
See section 6.2 for further information. The MPcp Knowledge Management Guideline
also contains further information.
Contractor engagement and selection
Work across the respective technical and commercial disciplines underpins the
selection decision. Generally this is completed in-house (e.g. Subsurface & Wells) but
the facilities teams are likely to require support from external contractors / consultants.
This external activity is commonly referred to as Pre-FEED. Further definition beyond
72
concept selection will be required to support the Define FM. Integrating the output
of Pre-FEED work with the other disciplines is vital.
Pre-FEED enables better understanding of the conceptual design issues. It reconfirms
technical viability and generates cost and schedule estimates, based on more detailed
work than was appropriate in Appraise. These support the selection decision.
The Pre-FEED scope of work includes evaluation of opportunities for standardization.
Outputs need to be aligned with the sector strategy approach during the latter part
of Select.
It is expected that the Pre-FEED contractor will provide support throughout the entire
Select stage, not just to concept selection, and provision for this should be made in
early contractor engagement discussions. There must be BP control, ownership and
performance management of Pre-FEED contractor work.
Several contractors have Pre-FEED experience. The AGM should ensure use of global
agreements to underpin delivery of Engineering and Project Management Services
unless there is a compelling reason against this. It is necessary to ensure that
prospective contractor(s) have the right skills to support Select activities. Right skills
centre on ability to:
Work at a level appropriate to Select, i.e. less detailed than Define and Execute.
Engage with other technical disciplines, as integration is key to Select stage success.
73
assurance for the remainder of the Select stage. Peer assist of inputs and
outputs should be considered at this time.
Once data analysis is complete, a concept selection recommendation can be made
for internal and external endorsement. Supporting work and analysis must be fully
documented to support stakeholder engagement and to provide data reference for
future work through the rest of Select. The options not selected must be adequately
documented, for future reference during Define Preparation.
Commercial themes and outcomes
In the Select phase the focus of commercial activity is on:
Market and competitor analysis
Updating our knowledge to develop a commercial framework which can become a
robust foundation for the detailed contract structure, for example:
Supply alternatives, demand and product price differentials for oil, gas, Natural
Gas Liquids.
Identification of value chain drivers and likely acceptable outcomes for partners
and other stakeholders.
Economic analysis
The economic evaluation model should be assured externally to the SPU for
Major Projects.
Finance and Finance Control & Accounting should be involved when evaluating
currency effects.
Mature (technically and commercially) and enhance the quality of the selected
concept in readiness for the transition to Define the AGM will remain
accountable for this up to and including receipt of approval for the Define FM
and successful passage through the Select / Define stage gate.
Create work and organization plans for Define - the PGM will take
accountability for this with support from the AGM.
The PGM will have been identified by mid-Select, and will have been engaged in
concept selection. The PGM will work with the AGM to complete the Select stage,
including concept definition, setting targets and preparing the Define FM. Project
accountability will pass from the AGM to the PGM at the end of Select via an MOC
process.
75
Contracting strategy.
A fully worked (bottom up) cost estimate and schedule underpinned by the
latest estimating norms; implementation of cost and schedule risk analysis.
77
Primary stage gate deliverables outlined in MPcp as shown in figure 4.4. Examples of
typical detailed delivery lists are included in the Engineering and Quality Management
Guideline.
Key Deliverable
End Appraise
End Select
Appraisal Plan
Updated
N/A
Wells Basis of
Design (BoD)
Preliminary
Prepared
Finalized
Scenario Planning
Project Statement of
Requirements (SoR)
Outline Prepared
Complete
Surveillance Plan
Outline Prepared
Technology Plan
In Place
Updated
Current/Predicted FEL
Assessments complete
Engineering Basis
of Design (BoD)
Project Execution
Plan
Operations and
Maintenance Strategy
Draft Developed
Commissioning
& Start-up Plans
Relationship
management plan
Being implemented
Interface Management
Plan
Organization Strategy
Knowledge
Management Plan
Established
Updated
A
M pp
an ra
ag isa
e l
Pr r Ge
ne
M oj
an ec
ra
l
ag t R
Pr er eso
M oj
ur
an ec
ce
ag t D
e
W r eve
M el
lo
an ls
pm
ag Pr
en
og
e
t
r ra
C
M om
m
an m
m
e
ag er
O er cial
M pe
an ra
ag tio
e ns
H
SS r D
ev
E
el
M
op
Pr ana
m
M oj
en
ge
an ec
t
r
ag t G
er e
ne
ra
l
in
a
rig
O
oc
um
to
en
Select stage
Value Improving
Practices
Project Dev.
Manager
Environmental
Performance
Requirement (EPR)
Compliance Report
Operations Dev.
Manager
Plan of
Development
Project Dev.
Manager
Wells Basis of
Design
Wells Project
Manager
Facilities Basis of
Design
Project Dev.
Manager
Appraisal General
Manager
Quality Plan
Project Dev.
Manager
Commissioning
and Start-up Plans
Operations Dev.
Manager
Management of
Change (MoC)
procedure
Appraisal General
Manager
10
Authorities to
Negociate (ATNs)
Appraisal General
Manager
11
Define Finance
Memorandum
(FM)
Appraisal General
Manager / Project
General Manager
79
A RACI chart describing which of the key leadership roles in the Appraisal team
owns each deliverable is in figure 4.5.
Select-Define Gate
Assurance
Internal assurance processes will require considerable focus at this point.The following
discipline reviews must be undertaken prior to the Define FM HoD Review:
Engineering.
Commercial.
government and regulatory approvals) which can be addressed during the Define and
Execute stages. Detailed plans to deliver these are required by end-Select.
Key to a successful project is the need to ensure the commercial and contractual
aspects of the entire deal (from concession access, joint venture terms to product
sale terms across the value chain) can progress without the project being stalled by
an incomplete contract or a partner yet to commit to the terms.
Define FM
The Define FM is the final deliverable from the Select stage and is the basis for
achieving internal approval to progress into Define. It is a relatively short document
that conveys sufficient information to enable strategic and project perspectives to be
taken by key decision makers.
The Define FM will be prepared in line with GIAAP and the Group Economics
Evaluation Methodology available on BP group websites. The Group Delegation
of Authority website should be used to establish who has the financial authority
to approve the resource request. Templates of the correct Define FM format and
contents are available on GIAAP websites and MPcp.
When entering Define, management or a joint venture may set targets for the
project. This may be to achieve a performance target capex or to meet the financial
frame of the SPU. The Define FM will also have a boundary condition based on Not
to Exceed capex to enable the project to be executed at a lower level of delegated
authority, e.g. Segment CEO rather than Resource Commitment Meeting. An open
conversation, transparently informed by all appropriate data should occur with key
stakeholders in setting targets (including Segment Executive Team).
Capex targets should be underpinned by Project Services estimating procedures
(see the Project Services Guideline) and should describe the performance target and
Not to Exceed capex values. This area is typically also considered at a HoD review.
The schedule in the Define FM must adequately consider the drivers of natural pace
and must be transparent in describing how residual risk will be managed.
Investment quality and any financial targets should be realistic and be supported by
an understanding of the uncertainty ranges for resources, costs, schedule and the
attendant risks.
81
The recommended concept is viable, robust and compelling and the processes
used to derive it.
Risk and uncertainties have been characterized, and mitigations and processes
address residual risk and uncertainty.
There are forward plans with appropriate targets set for the define / execute
team.
The Decision Support Package will also articulate the estimated development costs
and schedule and the associated economic parameters along with some clearly
defined sensitivities.
The toolkit in section 6 provides links to Decision Support Package and Define FM
templates.
82
83
84
The roles and key accountabilities for the BP appraisal team, which cannot be
delegated to others within the project. These are described in sections 5.2 and 5.6.
The AGM must bring these complementary elements together and adhere to the
organizational principles, as outlined in section 5.3, to form the organization strategy
as described in section 5.4. The organization strategy is developed in early Appraise
by the AGM and tested in the Appraisal Plan HoD review.
When the organization strategy has been confirmed, organization charts are
developed detailing key positions to be appointed. These feed into staff mobilization
and succession plans, and ensure adequate resources are available for Appraise and
Select. The organization will need revisiting at end-Appraise to enable the appropriate
evolution of staff numbers and skill areas.
The PGM will develop a resource plan to ramp up the define / execute teams. This is
done in accordance with the MPcp Organizational Design Guideline. During Select, the
Define / Execute organization is further detailed by the PGM after their identification in
mid-Select. Providing data to the Resourcing for Success process is important at this
stage to enable functional planning for deployment of scarce staff resources.
2007 BP International Limited
85
Stakeholder alignment.
Environmental considerations.
Concept elements or building blocks that could make up the project, e.g.
onshore, offshore, subsea.
Local factors, such as the requirement for national staff development, schools
and rotas, housing, medical, staffing policies and visa restrictions.
The range of Brownfield activities for the project or other SPU project activities.
Technology requirements.
5.2 Key accountabilities
The BP appraisal leadership team accountabilities are illustrated in figure 5.1. These
must not be delegated.
86
Leadership
Set context
and direction,
Set strategies
and intervene
Provide
assurance,
Performance
manage project
disciplines
Technical definition
Technical
integrity/HSSE,
Enhanced
reputation,
Distinctive value
Performance
management
Define scope
and standards,
Manage
technology
development
Integrate across
functions,
Manage interfaces
Interface
management
Enforce the standards for HSSE and technical integrity, and ensure standards
are not prejudiced by schedule and cost pressures.
Provide strategic context and focus for technical and commercial activities.
Set clear lines of delegated authority and accountability from the project single
point of accountability to individual team members.
2007 BP International Limited
87
Technical definition
The appraisal leadership team must:
Control the overall scope through application of the project codes and
standards, SOR and engineering and wells.
Define / Execute
Appraisal
General Manager
(AGM)
Project
General Manager
(PGM)
SS&W
P&E
D&C
Commercial
Operations
HSSE
Project
Resource
Manager
(PRM)
Project
Development
Manager
(PDM)
Wells
Program
Manager
(WPM)
Commercial
Manager
(CM)
Operations
Development
Manager
(ODM)
HSSE
Manager
(HSSEM)
Reservoir
Management
Base
Management
New Well
Delivery
Concept
Selection
Facilities
Engineering
Definition
Projects
services
PSCM
Completion
Engineering
Well
Construction
Drilling
Engineering
Economics
Agreements
Non technical
functions
Markets
O&M
Strategy
Readiness
Safety
Operations
integrity
Security
Environment
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Leadership
The project Single Point of Accountability should split accountability such that
each individual has a manageable workload with an understanding of the risk,
geographical diversity, scale, scope and complexity.
Where project scope and scale allows, the project Single Point of
Accountability should be the AGM with accountability for all project activities,
including Subsurface & Wells, Drilling & Completions, Projects & Engineering,
Operations and Commercial, maximizing integration between the BP
disciplines. See figure 5.2.
The roles of each team within the BP appraisal leadership team should be
clearly defined by the AGM in Appraise.
The AGM sets the overall strategy and organization of their direct reports.
The leadership team should define their own organizations, and agree on the
size and shape of their team with the AGM. This allows the managers to take
ownership of their teams.
The PDM should report directly to the AGM. The PDM will also have a reporting
relationship to the SPU EA.
The PDM (supported by the technical authorities, the SPU EA, advisers, senior
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advisers, chief engineers, and HoD Engineering as necessary) has Single Point
of Accountability for technical quality and the resolution of engineering issues.
Development engineers will be appointed within the BP engineering teams.
They will cover process, structural and subsea positions as a minimum
requirement, as well as other positions as required by the complexity and scale
of the opportunity.
Where the AGM has a subsurface background the PDM will be their second in
charge.
The Project Resource Manager (PRM) and the subsurface team are central to
the characterization of the resource and the overall understanding of value of the
project.
The PRM is the Single Point of Accountability for resource issues and technical
quality of the work.
The PRM will also hold the relationship with the SPU Reserves Authority
including resources assurance via the reserves Compliance Managers.
The PRM will be second in charge to the AGM, if the AGM has a nonsubsurface background.
The Wells Programme Manager (WPM) and the wells team are central to well planning,
design, cost estimation, wells programme execution and the overall understanding
of value of the project.
The WPM is the Single Point of Accountability for wells issues and technical
quality of the work.
The Operations Development Manager is central to operations best practices being
considered in engineering design. They will work with the operations team in existing
assets to ensure Brownfield projects are fully informed by asset learning and are fully
integrated with host facility and infrastructure plans.
The HSSE Manager will support this process and ensure inherently safe design,
operations integrity, security and environment areas are fully addressed.
The AGM and their second in charge should be from different disciplines. Of the
other disciplines, the Commercial Manager offers a further powerful integration
perspective.
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Integration Management
The appraisal leadership team will directly manage:
Transition between the appraisal leadership team and the project management
team.
A member of the appraisal leadership team will be delegated responsibility to ensure
integration is effectively managed.
Continuity of staffing between Appraise/Select and Define will be considered to
ensure knowledge of the underlying rationale for the creation of the project is carried
forward into the project management team.
Performance management processes
The AGM will establish systems to aggregate project performance information and
analysis to ensure the appraisal leadership team has a holistic view of the project
status. Suitable KPIs must be established as early as possible in Select. This will
ensure intervention as required to performance manage delivery.
5.4 Setting the organization strategy
An organization strategy is a required deliverable for the Appraisal Plan review and
should:
Define how the project scope will be delegated from the project Single Point of
Accountability to individuals and teams providing a clear rationale for the work
breakdown structure and demonstrating alignment with the opportunity.
Provide clarity on the use of agency personnel and secondees from contractors
or partners.
Define how Projects & Engineering, Drilling & Completions, Subsurface & Wells,
Commercial and Operations will be integrated into the project organization.
Identify and manage key business, safety and integrity risks within the project.
Provide detailed and specific skills which are not readily available in the agency
or contractor market.
The balance of BP, agency and partner secondees on a specific project will be
influenced by the availability of experienced people, the agency market, strength
of contractors, partner needs and political requirements. Opportunities to second
experienced staff into joint ventures should be considered to make a distinctive
contribution for mutual advantage.
BP staff will be employed in other positions to provide staff development, discipline
capability for the future, training and for the retention of knowledge within the
company.
The high level principles used to determine the BP badged positions are in figure 5.3.
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BP in-house
BP development
Agency / Partner
Demonstrate visible HSSE leadership by example and deliver the Appraise and
Select programmes consistent with BPs Safety & Operations Integrity agenda.
Ensure strategic fit and business context and drivers are understood and
communicated at the beginning of Appraise.
Prepare an Appraisal Plan and lead the team through HoD and TVP reviews to
achieve attestation and approval of this key governance document.
Lead the team to generate and evaluate the options informed by the most
appropriate data, considering all sources of value, and taking into account
trade-offs.
Inform decisions involving quality through choice and a full value chain
assessment of investment quality versus risk to determine if a technical and
commercial viability option exists at end-Appraise.
Lead the Select programme to establish selection criteria, gather the data
to evaluate and select the concept option and prepare sufficiently for Define
entry, including the Define FM.
Ensure the chosen concept is tested for strategic fit, technical viability and
technology risk and has a commercially robust business case; all via open and
transparent conversations with SPU and Segment leadership.
Ensure effective transition of the chosen concept and the team to the PGM by
end-Select.
2007 BP International Limited
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Experienced in leading teams in Appraise and Select and also Define and Execute.
Able to build and maintain both strong internal and external relationships.
Participate in the appraise / select leadership teams comprising AGM and team
leaders for Subsurface & Wells, Commercial and Operations.
Provide leadership input to Partner and Concessionaire Technical and Project meetings.
Familiarity with BPs Capital Value Process / Common Process, with particular
focus on Appraise / Select expectations.
Leads key Subsurface & Wells Common Processes where relevant (Exploration,
Opportunity Progression, Base Management) and ensures timely Subsurface &
Wells input to other key processes (notably MPcp, Beyond the Best).
Resourcing and managing Subsurface & Wells team within the project
organization.
Ensures long lead data and information needs are being addressed, including
geotechnical and geohazard areas.
Provides overall technical assurance for the work completed by the team.
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Lead the Drilling & Completions team within the project organization.
Technical input to business proposals and providing necessary cost, risk and
deliverability assessments.
Key accountabilities
Interface with non-technical disciplines, e.g. Legal, Tax, Finance Control &
Accounting, and Communication & External Affairs.
Interface with Gas Power & Renewables on term Gas Sales Agreements.
Interface with all technical functions, including PSCM and Project Services.
Experienced coach.
Identify key operations risks and issues to be addressed in the Select stage.
Ensure the proposed concepts can meet the projects operations strategy and
identify high level risks with each option from an operations viewpoint. Bring a
2007 BP International Limited
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Aware of available trade-offs between capex opex model (Choke Model) and
have a knowledge of available and emerging technology.
HSSE Manager
Overall role
Leads and integrates HSSE activity and advises on inherently safe concept design.
Key accountabilities
Confirm that significant HSSE issues that could affect the viability of the
potential project have been identified and that the information required
to assess HSSE risks, liabilities, regulatory compliance, HSSE contractual
commitments and adverse impacts is either available or measures are in place
to obtain it.
Ensure operational risks related to appraisal activities (wells, seismic) are being
managed appropriately.
Confirm HSSE risks (including Major Accident Review) are taken into account in
the evaluation of project options.
Ensure all HSSE concerns relating to the characteristics of the full life-cycle of
the project, novel technology and the nature of the chosen location have been
identified.
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the Asset in all disciplines (Drilling & Completions, Subsurface & Wells, Commercial,
Operations, etc.) must be woven into the project. The organization model needs to take
into account the ability of the Asset team to meet their existing responsibilities and
the demands of a new project. Teams historically underestimate the effort and time
required to manage these interfaces and technical exchanges. Consideration should
be given to staffing the project with full-time resources in most, if not all, disciplines.
If a team separate to the Asset is deemed appropriate, then strong consideration
should be given to taking people experienced in the Asset and embedding them in
the project team.
By definition, a Brownfield project builds on the wealth of data, information,
experiences and evolving business context inherent in the existing asset. Drivers
include:
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Recover and disseminate learning from and to the Operator and within BP.
The principles below should be followed for the composition of such a team.
Levels of financial exposure are a driver for resource allocation, so bigger projects
should have bigger teams. Small projects will usually be the last in the chain of
developments within a given venture; a track record will have been established, so it
will be possible for a relatively small team to discharge its responsibilities by focusing
on critical elements of the project.
In non-BP operated projects, incremental risk is introduced through the competencies
and biases of the Operator. All key functions (static reservoir description, reservoir
engineering, development engineering, Drilling & Completions) would normally be
represented on a non-BP operated team for a material project. However, the relative
emphasis for staffing decisions should be informed by a preliminary gap analysis of
the Operators skills and practices versus BPs. The analysis should be performed and
reviewed as part of the Appraisal Plan, and updated as required based on the results
of subsequent technical work by the full team.
The core team will usually consist of the disciplines above. Dedicated individual team
members for specific disciplines will not always be justified - the implied requirement
for sharing of resources should, where possible, be with operated assets in order
to promote learnings transfer. Non-core disciplines, e.g. Commercial, HSSE, should
be sourced from other teams within the SPU or EPTG. The need for a dedicated
resource acting as AGM versus the role being performed by one of the core discipline
contributors should be assessed on a case-by-case basis. Since the team will probably
be relatively small but experienced, a flat organization is usually appropriate, modeled
on the standard design (see the Greenfield project section). As far as possible, there
should be clear role alignment with the Operator.
The ability to influence an Operator wanes rapidly after the Appraise and Select
stages, so it is critical to focus on this during Appraisal. Significant influencing
impacts are best made through a combination of appropriate influencing skills with
the early recognition, using highly developed integrating skills, of key strategic issues.
Inevitably, this requires a relatively senior profile for a non-BP operated team. The
non-BP operated team is the first source of assurance for HoDs and TVPs. Although
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other BP SMEs and peers are also valuable sources, the lens through which they
see the project is that of the non-BP operated team. The judgement required to
ensure focus of assurance efforts on key issues will require a relatively senior set of
technical team members.
Host & satellites projects
This section will look at two generic types of Host and Satellites organizations
through the lens of two specific BP Projects:
1. BP operated host with BP operated satellites.
2. BP operated host with non-operated satellites.
BP operated host with BP operated satellites
A good example of this is the Farragon Project, which was a very successful BP
Operated Satellite tied-back to the North Sea Andrew platform in 2005. This was
developed quickly, efficiently and safely through excellent communication and
cooperation between all disciplines involved, resulting in a record 31 months from
discovery to first oil (one month ahead of schedule), a doubling of the production
from the Andrew platform, and all achieved safely and on budget.
The keys to success for this project can be used as a model for other BP Operated
Satellites. They are:
Alignment at the Gatekeeper and Steering Group level to ensure the Asset and
Project teams worked together constructively and cooperatively.
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the Subsurface & Wells teams which are part of the Talisman project team. The key
part of the organizational design in this case is the relationship map between BP and
Talisman. This describes the key interfaces and communication channels between
BP and Talisman at the Owner, Commercial, Project team and Contractor levels and
is crucial to ensure the necessary alignment to deliver a successful project for both
parties.
This type of third party hub development requires a much deeper level of multidiscipline integration both within the appraisal team and across the BP and third party
project teams, plus excellence in Integrated Field Planning incorporating third party
requirements.
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6 toolkit
The toolkit is to support appraisal. The focus here is on tools that integrate across
the disciplines. An up-to-date list of tools is available on the BP MPcp web pages
http://mpcp.bpweb.bp.com and the appraisal network web page http://pe.bpweb.
bp.com/Default.aspx?tabid=416
Most contractors have a well-developed set of tools. The Concept Modelling and
Development team in EPTG can also assist. Where appropriate these should be
considered for use by the appraisal team where they improve work efficiency.
The key integration tools cover the following areas:
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6 toolkit
such as roads. Combining user defined cost and schedule information enables rapid
comparison of alternative development schemes.
Top Down Reservoir Modelling (BP)
TDRM is a technology developed by BP that consists of a philosophy and tools to
enable a faster and more robust exploration of uncertainty than has been possible.
The philosophy is to start investigations with the simplest possible model and
simulator appropriate to the business decision. Detail is added later as required. The
approach overcomes the problems of the conventional bottom-up process, which
uses detailed models that are too slow and cumbersome to fully explore uncertainty
and identify critical issues. Ongoing research and development is expanding the
scope from reservoir to wells and surface facilities.
OGM (BP)
Is used to generate the technical definition and costs for surface facility and
infrastructure components down to the equipment level for both offshore and
onshore developments.
OLGA (BP)
Is used to model steady state and transient response of pipeline networks to
demonstrate the viability of development solutions using multi-phase flow, e.g.
subsea well systems and gathering systems for cold climate onshore projects.
6.2 Emerging tools
Maximus (FEESA)
Maximus is a prototype integrated asset modelling software tool developed between
BP and FEESA. Maximus can provide deliverability predictions for complex converging
flowline systems through the lifetime of a project while simultaneously solving
rigorous thermal-hydraulic models for flow through wells, flowlines and risers.
VIPNOW (Pinnacle Resources)
This is a web-based spreadsheet tool used to support teams during Value Improving
Practice workshops. It enables the recording and more systematic reporting of
ideas generated and actions taken after the meetings. It has the added value of
enabling teams to search the corporate data base from other teams to see if similar
opportunities have been identified, and if so to learn from the outcomes.
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Clone (BP)
A work process tool developed jointly between BP and MIT to allow evaluation of
the economic value of standardized solutions either as clones of existing designs or
copies versus bespoke designs to assist business units in exploring the value of a
programme of standard solutions.
Major Projects Information Highway mpIH (BP)
A systems-orientated architecture and database structure is being developed by BP
which will allow the federation of development planning tools such as PetroVR, IPE to
allow rapid integrated evaluation of development options in both time and space.
6.3 Facilitation processes to support appraisal and development teams
bpSTART workshops (BP)
Strategic Technology Assessment workshops (bpSTART) can be used at the Appraise
stage to explore the potential value of combinations of both enhancing and enabling
technologies in creating development options. Use of enhancing technology biases
such as standardization, automation, operations optimization and predictable
performance can be assessed alongside any enabling technologies necessary to
make the development work. The process provides a methodology of rapid searching
of development options to identify a shortlist of those solutions which best meet
business expectations.
ALIGN workshops (BP)
Facilitated workshops can be used to develop contracting strategies or project
execution plans. These use techniques such as functional analysis, dependency
structure matrices and interviews to test project execution plans, optimise the
sequencing of activities, test project pace and resourcing plans and assist in aligning
contractor interfaces and expectations.
6.4 Knowledge management tools
MPcp is supported by a common framework for knowledge management which
is described in the MPcp Knowledge Management Guideline http://mpcp.bpweb.
bp.com.
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open discussion
written record
P&E SLS
Post a question
Search past discussions
Lessons
Project Library
Connect
Guidance
Templates
Tools
Examples
ETP Application
Project Forum
Local SLS
Team documents
6 toolkit
Well Engineering and Performance Forum (for Drilling & Completions, and Wells
function) http://epforums.bpweb.bp.com/wepf
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Accountability
The obligations and commitments assumed by an individual to deliver agreed
activities for which a delegation of authority has been given.
AGM
Appraisal General Manager.
Appraisal Plan
The Appraisal Plan is a formal document which outlines the scope of activities and
estimated expenditure in the Appraise and Select stages. The focus of the Appraisal
Plan is to enable an informed decision on project viability and concept selection.
ATN
Authorities to Negotiate.
Basis of Design
The Facilities and Drilling & Completions Basis of Design documents define the
respective technical basis for the project. It represents the conversion of the business
requirements (given in the Statement of Requirements) into a technical basis for the
project.
Brownfield projects
Projects involving modifications or additions to existing facilities.
BUL
Business Unit Leader.
EA
Engineering Authority.
EPTG
Exploration & Production Technology Group.
ETPs
Engineering Technical Practices.
FEED
Front End Engineering Design.
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FM
Finance Memoranda.
GHSSER
Getting Health Safety Security and Environment Right.
GIAAP
Group Investment Assurance and Approvals Process. Procedures for establishing
authority to progress major capital investments. Reference GIAAP for format and
guidance for preparing FM and Authority to Negotiate (ATN) documents.
Greenfield
Projects involving new facilities resulting from successful access or exploration. They
can be tie backs or extensions to existing hubs.
GVP
Group Vice President.
HoD
Head of Discipline.
HSSE
Health, Safety, Security and Environment.
IPA
Independent Project Analysis.
KPIs
Key Performance Indicators.
MOC
Management of Change.
MPcp
Major Projects common processes.
NGO
Non Governmental Organizations. E.g. Greenpeace, Friends of the Earth, Amnesty
International etc.
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PDM
Project Development Manager.
PGM
Project General Manager.
PHSSER
Project Health, Safety, Security and Environmental Review. A seven-stage process
linked to the CVP stages, which provides external reviews of the Health, Safety
Security and Environmental (HSSE) activities of projects. Provides assurance to
management that projects are setting appropriate HSSE standards and meeting
those standards. Ref BP ETP GP 48-01.
PRM
Project Resource Manager.
PSCM
Procurement and Supply Chain Management.
Regret position
BPs exposure in terms of financial commitments if the investment or project does
not proceed.
Responsibility
The roles and enduring duties to be performed by a leader or team member that may
be individual or shared on an ongoing basis.
SDDN
Staff Development and Deployment Network.
SIMOPS
Simultaneous Operations.
SOR
Statement of Requirements.
SPU
Strategic Performance Unit.
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SPUL
Strategic Performance Unit Leader.
TRL
Technology Readiness Levels.
TVP
Technology Vice President.
VOI
Value of Information.
WPM
Wells Programme Manager.
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