Abstract

The Kinabalu Drilling Alliance is named Puncak Jaya. Puncak is Bahasa Malaysia for peak, and Jaya is success, thus Puncak Jaya translates as the Summit of Excellence. The evolution of incentive contracting in SSB/SSPC has seen the introduction of simple bonus and penalty schemes in services contracts at the beginning and of recent the establishment of a tightly knit operations team to address safety, quality and cost performance. The Alliance and Partnering mode adopted for the Kinabalu round I development project of some 8 wells (7 long reach horizontals and 1 multi-lateral) was built upon SSB/SSPC's successful incentive practices over the last 5 years. These include contractual incentive arrangements that addresses plateau performance, quality achievement, project domain consistency, feedback mechanism, target normalisation and bonus distribution. Built into the Alliance Agreement are these custom incentive processes that have driven the various successful incentive contracts such as the Integrated Incentive Contract and the Quality Enhancement Contract (QEC). The Alliance Agreement also has seen the integration of more established practices e.g. mud cost incentive, into their individual contracts during the services contract tendering stage. The incentive mechanisms are simply a means to an end, and for the case of the Alliance, the purpose was to put rewards into place for excellence in teamwork achieving breakthrough bottom line cost performance. The design of Puncak Jaya never wavered from this guiding philosophy and has a peer team of ten partners of which the main drivers are SSPC and the drilling contractor. Each partner actually leads the team when it comes to their area of expertise. This paper describes the incentive structure used and the motivation that each component provides. Important as these are, the critical success factor in an Alliance is instead, the change in working culture that is brought about due to the alignment of goals that these component incentives achieves. Puncak Jaya owes its existence in part to CORAL Malaysia, taking inspiration from the high level teamwork demonstrated and the call for industry wide cost efficiency.

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