Thoughts and Insights on Business Excellence in the Energy and Heavy Process Industries
There have been many initiatives taken on by the majors in recent years. As margins eroded and began impacting overall performance, the imperative to get “fit” has finally become reality in the inner sanctum of the C-suite.
In our last posting we introduced the topic of incentives and consulting agreements by asking the question: It is possible to have so much skin in the game that the consultants start taking over how the client operation is run? We also described how a fees for performance arrangement differs from a fees at risk structure, highlighting the risk of driving unintended results.
In 2004, Forbes ran a story that talked about how consultants, keen to demonstrate their commitment to delivering results, were increasingly electing to enter into fee arrangements tied to performance. These typically involved setting aside a portion of the overall fees and tying their payment to the achievement of stated benefits for the client, and even providing for “gain share” arrangement for sharing in a portion of results delivered over the target.
Not surprisingly we have a long track record with many of the industry’s best companies because our approach adds more value in the short term and far more value in the long term—and they recognize that. The outcome is that we have worked in all aspects of the value chain of many of the clients we serve.
Learning how to deliver superior results faster by motivating people and growing their capability is a key source of shareholder value and competitive advantage for our clients. It is the “magic” that enables all successful organizations to maximize the return on their strategy, assets and investments.
The logical implication of the quip that “good ideas are nothing without implementation” is that without good ideas, you can’t implement anything.
Major capital project execution is a huge driver of enterprise capital efficiency in terms of controlling costs while meeting development objectives on time. Major capital projects include green field site developments, major expansions or de-bottlenecking projects, reservoir exploration and development, and major turnarounds.