Project Critical Path and Procurement

Process in Oil & Gas Industry: Algeria

Case Wednesday, 29 of Sep 2021
th

Presented by:
Bosmen Rianto
AGENDA

Introduction
01 The presenters resumes
Project Lifecycle & CPM
02 Project Lifecycle, CPM
SCM in Oil & Gas Industry
03 Objectives, Principles and Flow Process
The Adjustments
04 Theory adjustments in Project & SCM in Algeria Contexts
Lesson Learned
05 Sum up of Project & SCM
 Bosmen Rianto
The presenters have profoundly involved in the procurement process of Oil & Gas Industry for more than 15 years.

Work Experiences
2021 – Present PIEP Ast. Manager SCM Business Partner
2019 – 2021 PIEP Ast. Manager Strategic Procurement
2015 – 2019 MLN SCM Manager, COPAL & Pertamina Algeria EP
2009 – 2015 PHE ONWJ, DWS Contract & Procurement Team Lead
2006 – 2009 BP West Java. D&C Contract & Procurement Team Lead
1999 – 2006 Various positions in Process, Production, Product & Field Engineer.
Education
2011 MBA – IPMI Business School
1994 B Eng. – Gas & Petrochemical Engineering Dept. UI

Hobby

Skills Oil & Gas Supply Chain Management

Logistic & Warehouse Management
Contract Management „If you can't explain it to a six year old, you don't understand it yourself.“ - Einstein
Project Management
 Project Lifecycle & CPM
02 Project Lifecycle, CPM
PTM Upstream Development Way Project LifeCycle in Real Organization
72

Investment Process Approval

Propose Review Decide

DG4

DG3
DG – Decision Gate, decision Closure
making process based on
DG2
investment proposal
Execution
DG1
Evaluation – Due
Dilligent

Selection

Initation FRUITFUL PROJECT

PROJECT LIFECYCLE 4 stages of Project Lifecycle

Initiation Planning

1. Creating tasks and organizing

1. Develop Project Charter 1. Creating project plan 2. Briefing team members 1. Analyzing project
2. Feasibility study 2. Creating workflow diagram 3. Communicating with team 2. Analyzing team performance
3. Identifying scope, 3. Estimating budget members, clients and upper 3. Documenting project closure
deliverables 4. Gathering resources management 4. Conducting post implementation reviews
4. Identify Stakeholders 5. Anticipating risk 4. Monitoring quality of work 5. Accounting for used and unused budget
5. Developing business case 6. Kick of meeting 5. Controlling Budget

Sometimes Monitoring & Controlling is considered as separate stage

 OIL & GAS INDUSTRY CONTEXT
Authorities
Alger
Government
ALNAFT,
Sonatrach,
Custom
Hassi
MLN Doha Military
Messaoud

Stakeholders
(Public, Algeria Shareholders
Community,
Contractor, Oil & Gas (Partners &
Sonatrach)
Customer, Industry
Sonatrach)
Jakarta

Considerations
1. The Distance from Jkt to MLN approx. 12.5k km with 4 flights
(stop) Regulations

2. Jakarta time is 6 hours ahead.

3. Nearest populated city/support is HMD (approx. 375 km)

4. Official Language : Arab & French

5. Remote area

6. Oil & Gas Industry : Huge investment & Heavy regulated

ALGERIA OIL & GAS INDUSTRY CONTEXT
 GAS CAPACITY INCREASE PROJECT – PHASE-4 DEVELOPMENT
No Activity Predecessor Duration
1 Surface Facility
A Top Facilities Review - 3 months
B Pipeline and Equipment Design A 3 months
Surface
Facility
C Budget & Estimate Approval B 3 months
D Goods & Servxces Procurement Process C 15 months

E Permit & Access Approval C 6 months

P4D
Project F Work Execution E,D 24 months
Existing
Facility
Drilling 2 Drilling Campaign
Campaign
Upgrade
A’ Key Personnel Recruitment - 6 months
B’ Well Design & AFE/Budget Approval A’ 6 months
C’ Goods & Services Procurement Process B’ 18 months
D’ Wellpad Preparation C’ 6 months
E’ Rig & SCE Inspection B’ 2 months
F’ Rig Mobiilization & Access Permit E’ 6 months
G’ Drilling Work F’ 24 months
 CRITICAL PATH METHOD – DRILLING CAMPAIGN
2 Drilling Campaign Predecesor Duration
A’ Key Personnel Recruitment - 6 months
B’ Well Design & AFE/Budget Approval A’ 6 months
C’ Goods & Services Procurement Process B’ 18 months
D’ Wellpad Preparation C’ 6 months
E’ Rig & SCE Inspection B’ 2 months
F’ Rig Mobiilization & Access Permit E’ 6 months
G’ Drilling Work D, F’ 24 months

C’ D’

A’ B’ G’

E’ F’
CRITICAL PATH METHOD – DRILLING CAMPAIGN

C’ D’

A’ B’ G’

E’
F’

ES Activity EF ES Earliest Start EF Earliest Finish

LS Duration LF LS Latest Start LF Latest Finish

Activity Activity

Duration Duration

Forward Pass 12 C’
18
30 30 D’
6
36

36 G’ 60
0 A’ 6 6 B’ 12 24
6 6

EF = FS + Duration 14 F’ 20
12 E’ 14
LS = LF - Duration 6
2
 CRITICAL PATH METHOD – DRILLING CAMPAIGN

C’ D’
ES Activity EF
LS Duration LF

A’ B’ G’
ES Earliest Start EF Earliest Fin
LS Latest Start LF Latest Fini

Activity Activity
E’
F’

Duration Duration

12 C' 30 30 D' 36
Forward Pass 12 18 30 30 6 36 Backward Pass
EF = FS + Duration
LS = LF - Duration 0 A' 6 6 B' 12 36 G' 60
0 6 6 6 6 12 36 24 60

12 E' 14 14 F' 20
28 2 30 30 6 36

Critical Path – A’ – B’ – C’ – D’ – G’
 SCM in Oil & Gas Industry
03
1. SCM Components & Roles

2. Algeria Related Information

3. Algeria Procurement Challenges

SUPPLY CHAIN MANAGEMENT

3 SCM Components

DEMAND SUPPLY LOGISTICS

MANAGEMENT MANAGEMENT MANAGEMENT

• Planning (Strategic item • Analyze fulfillment • Warehousing (Receive,

monitoring) • Procure storage, upkeep,
- Dependent Demand - Tender distribute)
Supply Chain - Independent Demand
- Aggregate Demand
- Direct Selection • Transport passenger
- Single Source vehicle, heavy vehicle
Management • Analyze
• Provide Information & Data
• Contract/PO • Custom clearance
(Data base, regulation, • Vendor Management • Write off
system)
• Standardization (commodity
and proses business)

Supply Management
Sumber: Burt, Dobler & Starling (2003)
7 SCM ROLES IN A COMPANY

1
• Provide an uninterrupted flow of materials and services to the operation.

2
• Keep inventory investment at a minimum.

3
• Maximize quality.

4
• Find and develop competent sources of supply.

5
• Standardize requirements for products and services.

6
• Purchase materials and services at the lowest total cost of ownership (TCO).

7
• Foster cross-functional relationships.

Sumber: Insitute of Supply Management (2008)

Procurement Process

Challenges
1 2 3
In Algeria
Law & Regulations Custom & Importation Location & Access
Algeria Law Silo approval process Remote Area
ALNAFT IH, Radio Equipment Military Check
Sonatrach needs special permit Points
Provinces/Wilaya

4 5 6
Suppliers Resources
Extreme Weather Culture & Language
Limited number of
suppliers - 3 C to 63 C Holidays
OEM Storm during Arab & French
representatives transition
period
PROCUREMENT PRINCIPLES

Effective & Efficient

1 Doing the right things & Doing the things right

Transparent & Fairness

2 All bidders have access to the tender documents and evaluated
. on the same criteria

Competitive
3 Obtain the most competitive price at the right quantity and
acceptable quality as per tender document

Accountable
4 The officers are responsible for the actions and decisions
 PROCUREMENT OBJECTIVES IN OIL & GAS INDUSTRY

COST RECOVERY

To obtain goods & services to support Company’s operations

Right Time
Right Price
Right Quality

Right
Quantity
 PROCUREMENT CYCLE IN OIL & GAS INDUSTRY

WP&B Prequalification Bidder Selection / Contract

Planning Management &
(Work Plan & preparation Tender Supplier
Budget) Relationship
Management
Develop Procurement Plan (SRM)
Tender Document Tender announcement
(WP&B)

Bidders’ Selection/tender
method & Procurement Prequalification
strategy

Supporting tender document Prebid Meeting

Bid Evaluation

Award Recommendation
 The Adjustments
04 Project and SCM adjustments to suit
with Algeria Contexts
OIL & GAS PROJECTS ARRANGEMENT IN ALGERIA

• The Projects Plan shall be approved by Operator, Partner and Authority (Sonatrach).

• The Authority and Partner assign their representatives to monitor the Project Execution.

• Working Schedule based on Operator proposal and Labor Office in Local Authority.
PROCUREMENT & LOGISTIC ARRANGEMENT IN ALGERIA

• Bidders are not allowed in the same room, which cause no:
Prebid Meeting
Collective Site Visit
Collective Negotiation

• Tenders @treshold have to be reviewed by Authority (Sonatrach) & Partners

• Public Announcement is only in the Bulletin des Appel d'Offres du Secteur de l'Energie et des
Mines (BAOSEM) website.

• Special Importation Arrangement for any related Radio’s equipment needs approval from
Interior, Defense Ministry & Custom.
ALGERIA PROCUREMENT FLOW PROCESS - ADJUSTED

Pengambilan
Penilaian Pemberian
Periode
Pengumuman Pendaftaran Dokumen
Kualifikasi Penjelasan
Klarifikasi
Tender

Penyampaian Pembukaan
Protes
Periode Evaluasi
Dokumen Dokumen Negosiasi
Klarifikasi Penawaran
Penawaran Penawaran

Penentuan Penetapan Pengumuman

Penunjukan
Calon Calon Calon Sanggahan
Pemenang
Pemenang Pemenang Pemenang
SCM BUSINESS PROCESS

Government regulation, company policy, economics &

business environment, corporate social responsibility

Management Process

Strategic Planning & Management

Users (Internal Custiomers)

Material & Services

Material & Services

Main Process
Suppliers

Supply Logistic
Demand Management
Management Management

General Services

Enabler & Support Process

Information Human Finance & Legal &

Technology Resource Controlling Audit

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 Lesson Learned
04 Success Story
LESSON LEARNED

• Closely Communication with Partner and Authority is a MUST.

• Heavy Load Project Job shouldn’t be done during Summer time.
• Supply Chain Management Strategy:
Collaborate
with Build Integrate Develop Design in
customers seamless purchasing SCM as a process
and end-to-end and supply core flexibility
suppliers processes functions capability and agility

• Procurement Process:
• Develop robust, advance & clear tender documents
• Provide sufficient time for tender clarification

• Logistic Issues:
• Conservative formula for min/max system
• Regular monitoring with local authorities
• Dedicated Personnel for the custom and other formalities matters
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THANK YOU