An analysis of the effect of introducing a profit database in a maintenance and modification contract.

Abstract

The maintenance and modification business is expanding on the Norwegian continental shelf. This means high activity for the service providers operating there. Aker Solutions is providing these services and was awarded a new contract by Statoil in 2010. This was a new type of contract that is compensated by self-cost rates and where profit is based on performance. Statoil demands better quality at a lower cost delivered on time. Profit is based on a set of criteria’s that are defined in the contract. The aim of this thesis is to analyze the effect of introducing a database that can handle the profit criteria’s. The objectives where to see if there are criteria that can be used as KPI’s to better monitor the projects, does focus on profit lead to more profit, is the Project Execution Model (PEM) good enough to be able to deliver a good result and can benchmarking be used to increase the results. The main method used was qualitative interviews of 11 task mangers in the Statoil M&M contract. Information was gathered from Aker Solutions internal documentation and published books found on the subject. Relevant theory was, project management, key performance indicators, benchmarking, Aker Solutions project execution model and contractual terms of the Statoil M&M contract. The findings from the interviews have been discussed in the light of relevant theoretical framework. Due to the timeframe of this thesis I have not been able to back up the findings with data. The findings are purely based on the information collected in the interviews and the knowledge collected in the published books. A profit database was created in Microsoft Access 2010 to be able to handle the profit criteria’s. The major findings show that there is a potential to use a few of the profit criteria’s as KPI’s. This would give the modification managers and task mangers better control over the tasks that make up their portfolio. More focus on profit will lead to more profit. Awareness is important. If the people are aware that their actions have an effect on the profit then they are most likely to deliver a better result. The operating system that is used in Aker Solutions is a good tool that will do the job. There are areas of improvement within especially cost and follow-up. Benchmarking has a huge potential to boost the results in the contract. This is an area that I suggest that Aker Solutions prioritizes. I think that Aker Solutions has a lot to learn from it and can dramatically improve their results. I believe that there are a lot of opportunities to make money in this contract. People need to think more commercially and more concerned if the contract is delivering a good financial result or not. It is important that everybody daily thinks about what they can do to improve the result. The database is a step in the right direction.