Pan Malaysia Maintenance, Construction and Modification (PM-MCM) Contract 2018 – 2023 is a PETRONAS-led initiative in collaboration with Malaysian Oil & Gas Operators, which are also known as Petroleum Arrangement Contractors (PAC), aimed at cost optimization through the technical standardization of offshore Hook-up and Commissioning (HUC) and Topsides Major Maintenance (TMM) works. The initiative was participated by ten (10) Petroleum Arrangement Contractors (PACs) operating in Malaysia (redundant).
The initiative competitiveness relied heavily on the number participating PACs in order to accumulate and integrate sufficient volume of work through sharing of their long-term offshore work plan over a period of 5 years with active contribution on lessons learned, best practices, and challenges. Leveraging on high volume of work per region will generate the economics of scale thus drive cost reduction.
The technical standardization is achieved through the identification of minimum requirements for each work (HUC and TMM) by operators, and where applicable, common specifications are accordingly derived. This simplifies the requirements and accordingly reduces the number of specifications to be complied across the region, thus, effectively allows the HUC/TMM Contractors to competitively quote the best price for the services.
Apart from the technical standardization and optimization above, the initiative is further supplemented through the standardization of the Contract Terms and Conditions among the PACs. However, landing to an agreement amongst the ten (10) established Oil & Gas Companies was crucial and considered as a major challenge, as each company had operated differently under their own set of Terms & Conditions. Despite this, consensus achieved towards standardization.
In assisting the tender evaluation and aligning with PETRONAS’ effort towards Digitalization of its Busines Operation, digital tools were deployed. Online eAuction and digital bid price analyzer were extensively used to commercially evaluate and to identify best value for PETRONAS and PACs, respectively.
In conclusion, the PM-MCM contract was successfully awarded with a significant cost reduction against the original estimated cost by approximately 40%. In comparison to previous contracts, Pan Malaysia MCM also recorded significant reduction in most of the unit rates of similar services rendered. Market feedbacks obtained by participating bidderss indicated that the standardization had indeed helped the participants to lower their prices.
Pan Malaysia Maintenance, Construction and Modification Contract has brought forward industry players into one crucial objective of cost optimization. The collaboration between PETRONAS and PAC which resulting for greater impact and value to all players involved through productivity improvement and cost reduction.