Contract administration in an international oil service company - current practices and possible improvements

Abstract

The thesis presents how an international oil service company, Halliburton, administrates their contracts. Contract administration and management is important in order to optimize the contract’s full potential.

There are few articles on the field on contract administration; due to different companies have different procedures that may all work in the specific setting. An introduction to how a contract is created and regulations on public procurement are featured to give the reader a full overview.

Several departments in Halliburton work with contracts and contract administration. Business Development, abbreviated BD, receives the tender request, and is responsible for communicating with other departments to make the tender process run smoothly. BD is also responsible for negotiating any contracts terms and conditions. The legal departments reviews the contract and decides whether the contract impose Halliburton of any unwanted risk. The finance department reviews the financial terms and if the contract complies with Halliburton’s policies.

Halliburton uses several databases to manage different aspects of their contracts. The contract price database, abbreviated CPD, stores all the information about prices and price history. CLM, the global contract database, contains a contract summary and holds information about upcoming escalations and reviews. BSA is used by planners, engineers and coordinators as a planning tool, and is also used for invoicing clients.

An important part of contract administration is to always work with the latest version of the contract. Much work is therefore spent on continuously update the contract with the latest prices, amendments and variation orders.

Some possible improvements were found with the CLM database; small upgrades so that the tasks are less exposed to human error than today. But the improvement that could possibly impose the biggest positive effect is a more proactive contract management approach. Examples of how to turn the current situation into a more proactive approach could be achieved by joint business development cooperation, or trying to sign more Master Service contracts and agreements with the different Operators.