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Complete Contract Control - why it matters to your business

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8over8 customer experience shows that on large infrastructure projects, hundreds of millions of dollars can be saved if a project adopts complete contract control best practices to manage all communications where important contractual matters are discussed and agreed. This adoption supports successful contract change management, improved contractual obligation compliance and enhances the ability to successfully defend yourself against future claims while complying with industry standards such as FIDIC & NEC3.

This presentation ‘Total contract control for rail projects’ delivered by Abdulkareem Saleh Al-Yami, Director for Middle East Sales, focused on:

- Importance of adopting complete contract control best practices.

- How contract risk management can help you go beyond business basics and improve governance and compliance.

- Why building strong and transparent relationships can help deliver a successful capital asset.

For further information, please visit www.8over8.com/procon-overview/ or download our FREE Capex project overruns: Tackling the lasting negative effects of risk whitepaper here http://info.8over8.com/resources/thought-leadership/white-paper-capex-project-overruns

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Complete Contract Control - why it matters to your business

  1. 1. Complete Contract Control And why it matters to your business Middle East Rail 2016 Conference with Abdulkareem Al-Yami, 8over8’s Regional Director - ME
  2. 2. 8over8: Who we are? 8over8 Limited, an AVEVA Group Company, 2016 All rights reserved. Software author that helps large and complex projects improve their performance and profitability through complete contract control. • Founded in 2000 and acquired by AVEVA Group in Jan 2015 • Combined revenue of £345m (FY 2014) • Headquartered in UK, with offices in Europe, North America, Australia and the Middle East. 2 250 Capital projects, $500bn of managed assets, up to 5% saving on project costs
  3. 3. Traditional Project Performance 8over8 Limited, an AVEVA Group Company, 2016 All rights reserved. 4 Understanding the key issues
  4. 4. 8over8 Limited, an AVEVA Group Company, 2016 All rights reserved. EY analysis of 365 mega projects across a number of industries: • 64% face cost overruns • 72% report delays • Completion costs 59% higher than initially estimated Source: EY, 2014 5 Credit Suisse analysis of the reasons why projects fail Industry Performance on Mega projects
  5. 5. 8over8 Limited, an AVEVA Group Company, 2016 All rights reserved. 6 “Average value of a construction project dispute is $ 32.1m, taking over a year to resolve, but the ME is significantly higher in both” “Growing trend of ‘mega disputes’ where disputed sum exceeds US$1 bn” EC Harris, Global Construction Disputes, 2014 Industry Performance on Mega projects
  6. 6. 8over8 Limited, an AVEVA Group Company, 2016 All rights reserved. 7 Rationale for these Statics What happened and why?
  7. 7. Organization/Governance 8over8 Limited, an AVEVA Group Company, 2016 All rights reserved. 8 Rail Company EPC/M Supplier Supplier Asset Build phase Maintenance, Repair, Operations Government Extremely difficult to defend against claims Reactive rather than proactive risk management • Many interfaces: • Governments, private partners, contractors, etc. • 1000s of contractually significant communications • Poorly defined contract management processes • Required compliance to governance (FIDIC/NEC3) • Critical information scattered across ad hoc systems – emails, spreadsheets, hard drives • Insufficient tracking of contractual obligations Contract Control Portal
  8. 8. 8over8 Limited, an AVEVA Group Company, 2016 All rights reserved. 9 AFP verification process Managing Change Requests/Orders Mitigating Against Claims Managing Claims Administration Subcontractor PMC / Main Contractor Subcontractor Subcontractor Solution: • Standardised processes • Contract Line Items • Bulletproof audit trail • Early warning indicators Subcontractor Subcontractor Contract Control Portal Contractual processes
  9. 9. 8over8 Limited, an AVEVA Group Company, 2016 All rights reserved. 10 What does ‘Complete Contract Control’ look like? Ensuring projects complete on time and on budget
  10. 10. ProCon Complete Contract Control 8over8 Limited, an AVEVA Group Company, 2016 All rights reserved. Improved Capital Discipline Collaborative Decision Making Performance Dashboards Transparent Stakeholder Engagement Optimized & Predictable Commercial Outcomes
  11. 11. Communication Best Practices 8over8 Limited, an AVEVA Group Company, 2016 All rights reserved. Early warning indicators Timely and regular communication helps to spot early warning indicators of risk Contractual relationships Clarity, & consistency ensure building a healthy relationship between different stakeholders At the right time, in the right sequence Decisions about scope, schedule, cost changes are made by the right people, at the right time, in the right sequence. Complete Audit trail A complete communication audit trail is key to managing and defending against claims. Independent source of truth Regular communication delivers tamper-proof independent source of truth.
  12. 12. Benefits of using ProCon 8over8 Limited, an AVEVA Group Company, 2016 All rights reserved. 13 • Gives the user ownership of the communication channel. • Systemizes all processes that may affect contract performance. • Shows the real-time Financial Health of every contract, including potential commitments and changes. • Tracks both parties’ contractual obligations and issues proactive notifications about potential delays. • Contract cost and schedule data to project, business unit and organizational level.
  13. 13. 8over8 Limited, an AVEVA Group Company, 2016 All rights reserved. 14 What does ProCon look like? Ensuring projects complete on time and on budget
  14. 14. ProCon Functionality 8over8 Limited, an AVEVA Group Company, 2016 All rights reserved. 15 Pre-Award Post-Award • Contractor Registration • Questionnaires • Tender Management • E-Bidding/Contractor Portal • Audit • Award • Communications & Instructions • Manage Change • Manage Payment • Manage Contract Obligations • Manage Claims & Disputes • Manage Closeout Analytics Integrations
  15. 15. 8over8 Limited, an AVEVA Group Company, 2016 All rights reserved. ProCon Analytics: Pre-Award Overview 1. Gain advanced insight 2. See early warning indicators 3. Connect all decision makers 16 AuditorVenture Manager CFO
  16. 16. 8over8 Limited, an AVEVA Group Company, 2016 All rights reserved. ProCon Analytics: Post-Award Overview 1. Gain advanced insight 2. See early warning indicators 3. Connect all decision makers 17 AuditorVenture Manager CFO
  17. 17. 8over8 Limited, an AVEVA Group Company, 2016 All rights reserved. Contract Financial health 1. Budget 2. Commitment • Potential • Pending • Approved 3. Expenditure • Potential • Pending • Approved 4. Not To Exceed value / ACV 5. Updated in real time 18
  18. 18. 8over8 Limited, an AVEVA Group Company, 2016 All rights reserved. 19 Summary
  19. 19. ProCon customers believe… 8over8 Limited, an AVEVA Group Company, 2016 All rights reserved. We’ll be using ProCon more and more. We deploy it on our 16 largest projects but there’s scope to extend it further. The Prelude deployment of ProCon has been a pathfinder for Shell and is the benchmark for other Shell projects to work against. Shell It’s important to know that data can’t be compromised. With ProCon all information is stored securely in one place – that’s highly reassuring for an operation like ours, collaborating across diverse locations. Tullow Oil ProCon’s transparency gives you the big picture and the close-up view of every detail into project-critical processes and procedures. Chevron I am really pleased with ProCon - all our users have adopted it enthusiastically. PDO
  20. 20. ROIs confirm these believes….. 8over8 Limited, an AVEVA Group Company, 2016 All rights reserved. • ProCon replaced 10 lawyers at Arrow responding to a claim for a week; estimated savings of 1680 lawyer hours and $22m in avoided claims • $12bn Shell Prelude – first FLNG ever built – zero claims • BP Angola recovered $2bn from JV partner for valid project changes • Oil major’s capital over-runs reduced from 157% to 103% of forecasted budget • ProCon is saving $1m daily at Woodside - 3% of the Woodside capex Average: $20-$100m bottom line savings on a $2bn capex project
  21. 21. © 2016 8over8, an AVEVA Group company. All rights reserved. All trademarks herein are the property of their respective owners. 8over8 and the 8over8 logo are trademarks of 8over8. 8over8.com @8over8 /8over8

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