8over8 customer experience shows that on large infrastructure projects, hundreds of millions of dollars can be saved if a project adopts complete contract control best practices to manage all communications where important contractual matters are discussed and agreed. This adoption supports successful contract change management, improved contractual obligation compliance and enhances the ability to successfully defend yourself against future claims while complying with industry standards such as FIDIC & NEC3.
This presentation ‘Total contract control for rail projects’ delivered by Abdulkareem Saleh Al-Yami, Director for Middle East Sales, focused on:
- Importance of adopting complete contract control best practices.
- How contract risk management can help you go beyond business basics and improve governance and compliance.
- Why building strong and transparent relationships can help deliver a successful capital asset.
For further information, please visit www.8over8.com/procon-overview/ or download our FREE Capex project overruns: Tackling the lasting negative effects of risk whitepaper here http://info.8over8.com/resources/thought-leadership/white-paper-capex-project-overruns
Complete Contract Control - why it matters to your business
1. Complete Contract Control
And why it matters to your business
Middle East Rail 2016 Conference with
Abdulkareem Al-Yami, 8over8’s Regional Director - ME
2. 8over8: Who we are?
8over8 Limited, an AVEVA Group Company, 2016 All rights reserved.
Software author that helps large and complex projects improve their performance
and profitability through complete contract control.
• Founded in 2000 and acquired by AVEVA Group in Jan 2015
• Combined revenue of £345m (FY 2014)
• Headquartered in UK, with offices in Europe, North America, Australia and the
Middle East.
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250 Capital projects, $500bn of managed assets, up to 5% saving on project costs
4. 8over8 Limited, an AVEVA Group Company, 2016 All rights reserved.
EY analysis of 365 mega projects across
a number of industries:
• 64% face cost overruns
• 72% report delays
• Completion costs 59% higher than
initially estimated
Source: EY, 2014
5
Credit Suisse analysis of the
reasons why projects fail
Industry Performance on Mega projects
5. 8over8 Limited, an AVEVA Group Company, 2016 All rights reserved. 6
“Average value of a
construction project dispute is
$ 32.1m, taking over a year to
resolve, but the ME is
significantly higher in both”
“Growing trend of ‘mega
disputes’ where disputed sum
exceeds US$1 bn”
EC Harris, Global Construction Disputes, 2014
Industry Performance on Mega projects
6. 8over8 Limited, an AVEVA Group Company, 2016 All rights reserved. 7
Rationale
for these Statics
What happened and why?
7. Organization/Governance
8over8 Limited, an AVEVA Group Company, 2016 All rights reserved. 8
Rail Company
EPC/M Supplier
Supplier
Asset Build
phase
Maintenance,
Repair,
Operations
Government
Extremely difficult to
defend against claims
Reactive rather
than proactive risk
management
• Many interfaces:
• Governments, private partners, contractors, etc.
• 1000s of contractually significant communications
• Poorly defined contract management processes
• Required compliance to governance (FIDIC/NEC3)
• Critical information scattered across ad hoc systems – emails,
spreadsheets, hard drives
• Insufficient tracking of contractual obligations
Contract Control Portal
8. 8over8 Limited, an AVEVA Group Company, 2016 All rights reserved. 9
AFP verification process
Managing Change Requests/Orders
Mitigating Against Claims
Managing Claims Administration
Subcontractor
PMC / Main Contractor
Subcontractor
Subcontractor
Solution:
• Standardised processes
• Contract Line Items
• Bulletproof audit trail
• Early warning indicators
Subcontractor
Subcontractor
Contract Control Portal
Contractual processes
9. 8over8 Limited, an AVEVA Group Company, 2016 All rights reserved. 10
What does ‘Complete
Contract Control’ look like?
Ensuring projects complete
on time and on budget
10. ProCon
Complete Contract Control
8over8 Limited, an AVEVA Group Company, 2016 All rights reserved.
Improved
Capital Discipline
Collaborative
Decision Making
Performance
Dashboards
Transparent
Stakeholder
Engagement
Optimized & Predictable
Commercial Outcomes
11. Communication Best Practices
8over8 Limited, an AVEVA Group Company, 2016 All rights reserved.
Early warning
indicators
Timely and regular
communication helps to
spot early warning
indicators of risk
Contractual
relationships
Clarity, & consistency
ensure building a healthy
relationship between
different stakeholders
At the right time, in
the right sequence
Decisions about scope,
schedule, cost changes
are made by the right
people, at the right time,
in the right sequence.
Complete
Audit trail
A complete
communication audit trail
is key to managing and
defending against claims.
Independent
source of truth
Regular communication
delivers tamper-proof
independent source of
truth.
12. Benefits of using ProCon
8over8 Limited, an AVEVA Group Company, 2016 All rights reserved. 13
• Gives the user ownership of the communication channel.
• Systemizes all processes that may affect contract performance.
• Shows the real-time Financial Health of every contract,
including potential commitments and changes.
• Tracks both parties’ contractual obligations and issues
proactive notifications about potential delays.
• Contract cost and schedule data to project, business unit and
organizational level.
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What does
ProCon look like?
Ensuring projects complete
on time and on budget
14. ProCon Functionality
8over8 Limited, an AVEVA Group Company, 2016 All rights reserved. 15
Pre-Award Post-Award
• Contractor Registration
• Questionnaires
• Tender Management
• E-Bidding/Contractor Portal
• Audit
• Award
• Communications & Instructions
• Manage Change
• Manage Payment
• Manage Contract Obligations
• Manage Claims & Disputes
• Manage Closeout
Analytics
Integrations
15. 8over8 Limited, an AVEVA Group Company, 2016 All rights reserved.
ProCon Analytics: Pre-Award Overview
1. Gain advanced insight
2. See early warning indicators
3. Connect all decision makers
16
AuditorVenture
Manager
CFO
16. 8over8 Limited, an AVEVA Group Company, 2016 All rights reserved.
ProCon Analytics: Post-Award Overview
1. Gain advanced insight
2. See early warning indicators
3. Connect all decision makers
17
AuditorVenture
Manager
CFO
17. 8over8 Limited, an AVEVA Group Company, 2016 All rights reserved.
Contract Financial health
1. Budget
2. Commitment
• Potential
• Pending
• Approved
3. Expenditure
• Potential
• Pending
• Approved
4. Not To Exceed value / ACV
5. Updated in real time
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Summary
19. ProCon customers believe…
8over8 Limited, an AVEVA Group Company, 2016 All rights reserved.
We’ll be using ProCon more and more. We deploy it on our 16 largest projects but there’s
scope to extend it further. The Prelude deployment of ProCon has been a pathfinder for
Shell and is the benchmark for other Shell projects to work against. Shell
It’s important to know that data can’t be compromised. With ProCon all information is
stored securely in one place – that’s highly reassuring for an operation like ours,
collaborating across diverse locations. Tullow Oil
ProCon’s transparency gives you the big picture and the close-up view of every detail into
project-critical processes and procedures. Chevron
I am really pleased with ProCon - all our users have adopted it enthusiastically. PDO
20. ROIs confirm these believes…..
8over8 Limited, an AVEVA Group Company, 2016 All rights reserved.
• ProCon replaced 10 lawyers at Arrow responding to a claim for a week;
estimated savings of 1680 lawyer hours and $22m in avoided claims
• $12bn Shell Prelude – first FLNG ever built – zero claims
• BP Angola recovered $2bn from JV partner for valid project changes
• Oil major’s capital over-runs reduced from 157% to 103%
of forecasted budget
• ProCon is saving $1m daily at Woodside - 3% of the Woodside capex
Average: $20-$100m bottom line savings on a $2bn capex project