Simplified Front End Loading: A Route to Better Project Outcomes
- David Newman (University of Adelaide) | Steve Begg (University of Adelaide) | Matthew Welsh (University of Adelaide)
- Document ID
- Society of Petroleum Engineers
- SPE Asia Pacific Oil & Gas Conference and Exhibition, 17-19 November, Virtual
- Publication Date
- Document Type
- Conference Paper
- 2020. Society of Petroleum Engineers
- Benchmark, Front End Loading, Decision-based, Project, Decision Quality
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- 20 since 2007
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This paper aims to encourage Front End Loading (FEL) to be used more effectively to increase the likelihood of delivering better project outcomes. It introduces a simple and pragmatic approach to assessing FEL which can be carried out in-house.
Previous research has shown that, despite FEL being highly regarded, companies regularly sanction projects with insufficient levels of FEL. This has frequently resulted in projects not achieving the outcomes promised at the Final Investment Decision (FID) in terms of cost, time and production attained. This paper reviews reasons why FEL may not be used very effectively at present and proposes a solution to change this.
An alternative method of assessing FEL has been developed which: is decision-based; can be carried out internally; and provides clarity on the factors that drive good FEL. In addition to assessing the status of activities carried out in the phase, the decision-based approach emphasises value-creation by considering key factors that could influence an increase or decrease in Decision Quality and thus the value created by the final outcome.
The benchmarking and the decision-based approaches to FEL are very different. FEL benchmarking is external, objective, more bottom up; whereas the decision-based approach is internal, subjective and more top down. The benchmarking approach is more detailed, with a large number of individual activities assessed, and the progress on these aggregated to provide an overall benchmarking score. The decision-based approach is more of a big picture view.
FEL benchmarking is well proven and its use is advocated. The decision-based FEL approach is unproven, but it has benefits that are not available from benchmarking and avoids some of the disadvantages. It encourages consideration to be given to activities that may result in value being created or destroyed; e.g. ensuring there are sufficient and appropriate alternatives during the Select phase, and that the benefits of flexibility are taken into account. A further advantage of the decision-based approach is that working through the FEL tools as a project team leads to a better joint understanding of the project and improves team integration.
The two approaches consider FEL from different perspectives and have different benefits. They complement each other, and so the combination of the two approaches is more powerful than either on its own. It is suggested that the two approaches are worked in conjunction with each other to gain the benefits of both methods, provide a better understanding of FEL, and have a stronger basis for decision-making.
A new way of assessing FEL has been developed which uses a decision-based approach aimed at increasing the value of project outcomes. Separate tools are provided for the Concept Select and FID phases.
|File Size||1 MB||Number of Pages||15|