EY STAGE GATE PROCESSES

1. EY’S FOCUS IS ON ENABLING CLIENTS TO
“MAKE THE RIGHT PROMISE, AND DELIVER ON THE PROMISE MADE”
Identify
opportunities in
line with
Company
strategy.
Select the best
alternative to
implement the
project.
Finalize project
scope, cost and
plan and obtain
approval of
funds.
Execute the
project,
considering the
scope, cost and
plan.
Operate and
assess ensuring
performance
and maximum
return for the
company.
Identification Selection Definition Execution
Operation and
Control
Is the
opportunity aligned
with Company
strategy?
Is it the
best alternative to
implement the project?
Should the
Project
proceed?
Can operations
start?
Stage-Gate Objectives
G4
G1 G2 G3
Select Best project
Describe Best
Project
Implement Best
Project
Benefits of Stage-Gate Governance
• Alignment of resource commitment (e.g. financial, organizational) to project definition, leading to investment optimization
and cost savings
• Optimized effort in project development, by addressing critical success factors defined for each stage-gate; investment
in early-stage planning (or Front End Loading)
• Effective mitigation of risks through effective stakeholder engagement, by ensuring dependencies/ unknowns are
analyzed progressively, stakeholder inputs are duly considered and carry-over of risk is minimized to subsequent stages
Pre-Feasibility
Concept Feasibility

2. KEY IMPERATIVES BEFORE RRPL
FEL 1
Concept
FEL 2
Pre-Feasibility
FEL 3
Feasibility
FEL 4
Execute
FEL 5
Operate
G4
G1 G2 G3
Eliminate Options & Select Best project Define Best Project Execute Best Project
► Have options (e.g. capacity/
location/ technology) been
identified for the
opportunity under
consideration?
► Has technology assessment
been completed for listed
options?
► Has site evaluation been
initiated?
► Have conceptual layouts and
conceptual engineering
definition been completed?
► Have major risks associated
with the opportunity, along
with critical success factors
for the project been
identified?
► Has the Class 5 Cost Estimate
(-50% to +100%) been
prepared?
► Have major milestones for
the opportunity/ project been
identified?
► Has Conceptual Procurement
Plan been prepared?
► Has Long Lead strategy
worked out?
► Have we evaluated and finalized the
technology option for further
definition?
► Have we evaluated and finalized the
site for the project?
► Have the Lessons Learnt from similar
projects been reviewed and
incorporated?
► Has the preliminary Project Execution
Plan been prepared?
► Has the preparation of Environmental
Impact Assessment been initiated?
► Have project sustainability objectives
been frozen?
► Has initial Geo-Technical study been
initiated? Have preliminary plot plans
been prepared?
► Has the process of detailed risk
identification been initiated?
► Has the evaluation of Execution and
Contracting Strategy been initiated?
► Has the Class 4 Cost Estimate (-30% to
+50%) been prepared?
► Has the preliminary L-1 schedule been
prepared, duly sequenced and
networked?
► Has Draft Procurement Plan prepared?
► Has Enquires floated for Long Lead
Items?
► Has the Execution &
Contracting Strategy been
prepared?
► Has the Environmental Impact
Assessment been approved?
► Has the Geo-Technical Study
been completed? Have plot
plans/ plant layout been
prepared?
► Has the mandatory
engineering definition been
achieved?
► Has the Class 3 Cost Estimate
(-20% to +30%) been
prepared?
► Has the Level-1 Integrated
Project Schedule been
prepared, duly sequenced and
networked?
► Have project risks been
identified & qualified,
mitigation plans prepared and
contingencies estimated?
► Has Constructability
Assessment been initiated?
► Has Baseline Procurement
Plan prepared?
► Has Order Placed for Long
Lead Items?
► Has All engineering
deliverables prepared
timely & to the
correct standard?
► Has all equipment &
material purchased
and being delivered
within time &
budget?
► Has all the statutory
clearances for build
has been obtained?
► Has the execution
organization in place?
► Are all execution
manpower & other
resources are
deployed?
► Have all services
contract been laid
out?
► Are all HSEQ need of
the project
addressed?
► Is the operation
organization in
place?
► Is the operation
philosophy
defined?
► Is the Raw Material
& Consumable
sourcing strategy
defined &
infrastructure is in
place?
► Is the product
evacuation
strategy defined &
infrastructure in
place?
► Are maintenance
strategies defined
and in place?
► Are all CSR being
implemented as
per the vision
adopted?

3. OUR FRAMEWORK FOR FEASIBILITY ASSESSMENT
AND BUSINESS CASE
FEL 1
Identify
FEL 2
Assess & Select
FEL 3
Define
FEL 4
Execute
FEL 5
Operate
G4
G1 G2 G3
Define Best Project
Execute Defined
Project
Realize Value
Identify Options
Select Best
Option
Is the
opportunity aligned with
Company strategy?
Is it the
best alternative to
implement the project?
Should the
Project proceed?
Can operations
start?
“Make the right promise” “Deliver on the promise made”
FID
► Define Objective
► Market Study
► High Level
Technical Study
► Financial Analysis
► Business Case
Definition
► High Level
Project Definition
► High Level
Demand Supply
Analysis
► High Level
Technical Study
► High Level
Financial Analysis
► High Level
Business Case
► Business
Objectives
► Detailed Market
Study
► Technical Study
► Statutory
Approvals
► Financial Analysis
► High Level
Business Case
► High Level
Project
Objectives
► Customer,
Supplier,
Competition,
Market
Environment,
Substitutes
► High Level
Technical Study
► Statutory
Approvals
Requirement
Details
► Financial Analysis
► High Level
Business Case
Activities
Deliverables
► Review Business
Case
► Technology Eval.
► Facilities Design
Basis
► CAPEX
estimation
► Financial Design
Basis
► PEP
► Updated Business
Case
► Technology
Recommendation
► Design Basis
► CAPEX
► Financial
Requirement
► Project Executive
Summary
► Project Execution
Plan
► Detailed Business
Case

4. PROJECT DEVELOPMENT, REVIEW AND APPROVAL
KEY QUESTIONS
► Have options (e.g. capacity/ location/
technology) been identified for the
opportunity under consideration?
► Has technology assessment been
completed for listed options?
► Has site evaluation been initiated?
► Have conceptual layouts and conceptual
engineering definition been completed?
► Have major risks associated with the
opportunity, along with critical success
factors for the project been identified?
► Has the Class 5 Cost Estimate (-50% to
+100%) been prepared?
► Have major milestones for the
opportunity/ project been identified?
► Has Conceptual Procurement Plan been
prepared?
► Has Long Lead strategy worked out?
► Have we evaluated and finalized the
technology option for further definition?
► Have we evaluated and finalized the site
for the project?
► Have the Lessons Learnt from similar
projects been reviewed and
incorporated?
► Has the preliminary Project Execution
Plan been prepared?
► Has the preparation of Environmental
Impact Assessment been initiated?
► Have project sustainability objectives
been frozen?
► Has initial Geo-Technical study been
initiated? Have preliminary plot plans
been prepared?
► Has the process of detailed risk
identification been initiated?
► Has the evaluation of Execution and
Contracting Strategy been initiated?
► Has the Class 4 Cost Estimate (-30% to
+50%) been prepared?
► Has the preliminary L-1 schedule been
prepared, duly sequenced and
networked?
► Has Draft Procurement Plan prepared?
► Has Enquires floated for Long Lead
Items?
► Has the Execution & Contracting
Strategy been prepared?
► Has the Environmental Impact
Assessment been approved?
► Has the Geo-Technical Study been
completed? Have plot plans/ plant layout
been prepared?
► Has the mandatory engineering
definition been achieved?
► Has the Class 3 Cost Estimate (-20% to
+30%) been prepared?
► Has the Level-1 Integrated Project
Schedule been prepared, duly sequenced
and networked?
► Have project risks been identified &
qualified, mitigation plans prepared and
contingencies estimated?
► Has Constructability Assessment been
initiated?
► Has Baseline Procurement Plan
prepared?
► Has Order Placed for Long Lead Items?
FEL 1
IDENTIFY
FEL 2
ASSESS & SELECT
FEL 3
DEFINE
G1 G2 G3
DEFINE BEST PROJECT
IDENTIFY OPTIONS SELECT BEST OPTION
IS THE
OPPORTUNITY ALIGNED WITH
COMPANY STRATEGY?
IS IT THE
BEST ALTERNATIVE TO
IMPLEMENT THE PROJECT?
SHOULD THE
PROJECT PROCEED?
“MAKE THE RIGHT PROMISE”
FID

5. STAGE GATE FRAMEWORK (2/3)
►Stage Gate Framework is flexible in terms of number of Gates to be followed depending on nature of
Project
Critical
Projects
Significant
Projects
Routine
Projects
► CAPEX: > 25 M USD
► High Complexity
► High Risk
► CAPEX: > 5 M USD
and <= 25 M USD
► Medium Complexity
► CAPEX: <= 5 M USD
► Low Complexity
FEL 1
Concept
FEL 2
Pre-Feasibility
FEL 3
Feasibility
FEL 4
Execute
FEL 5
Operate
G4
G1 G2 G3
FEL 1
Concept
FEL 2
Pre-Feasibility
FEL 3
Feasibility
FEL 4
Execute
FEL 5
Operate
G4
G2 G3
FEL 1
Concept
FEL 2
Pre-Feasibility
FEL 3
Feasibility
FEL 4
Execute
FEL 5
Operate
G4
G3
Project Classes Number of Gates Criteria
► Critical Project: Setting up New Refinery /Petrochemical Complex
► Significant Project: Adding New Unit in Existing Complex (New Diesel Hydrotreater for Euro IV quality Diesel)
► Routine Project: Revamping Existing Unit for improvement of Quality / Quantity of Product
Examples

6. STAGE GATE FRAMEWORK (3/3)
►Stage wise functions and involvement
Stages
Functions
FEL 1 FEL 2 FEL 3 FEL 4 FEL 5
Business
Technology
Project Management
Project Control
Engineering
Procurement &
Contracts
Vendors & Contractors
Construction
Operations and
Management
Support Services
Management
No Involvement Low Involvement Medium
Involvement
High Involvement Responsible

7. Stages FEL 1 FEL 2 FEL 3 FEL 4
Engineering
Level of Engineering
Definition
<5% <20% <40% 50% to 100%
Process Design Preliminary Issued for Information Issued for Design Issued for Construction
Layout Definition Block Diagrams Major Equipment laid out
(long leads/critical)
Major Equipment & Structures laid
Structures laid out
Multi disciplinary model complete
complete
Material Take Offs - Benchmark estimates Information Actual
Procur-
ement
Procurement Plan Conceptual Draft Plan Baseline Plan Updated Plan
Long Leads Strategy Identified Enquiries Issued Order Placement Delivered
Const,
Comm
&
Operations
Modularization/ Pre
Assembly
- Conceptual Preliminary Final
Constructability - Planned Reviewed Implemented
Logistics and Installation
Installation
- Planned Reviewed Implemented
Sche-dule
Project Master Schedule
Schedule
Level 1 Level 1 Level 1-5
Progress Reporting - - Preliminary Final
Project
Budget
Purpose of Estimate Concept Study and cost of
of prefeasibility study
Viability Base line Detailed base line
Methodology Parametric or capacity
factored
Budget vendor quotations
quotations
MTO’s from defined work pkgs; Detailed MTO’s and final vendor
Contingency +30% to 40% +20 to +30% +10% to +20% +05% to +10%
Accuracy Range L: -20% to -50%
H: +30% to +100%
L: -15% to -30%
H: +20% to +50%
L: -10% to -20%
H: +10% to +30%
L: -05% to -15%
H: +05% to +10%
STAGE WISE LEVEL I DELIVERABLES

8. STAGE WISE ACCURACY OF COST ESTIMATION AND CONTINGENCY
Stage FEL 1 FEL 2 FEL 3 FEL 4
EstimateClass CLASS 5 CLASS 4 CLASS 3 CLASS 2
Estimation Purpose Screening Concept Study
Budget, Authorization, or
Control
Control
Cost Estimation Methodology
Capacity Factored,
Parametric Models,
Judgment
Equipment
Factored or
Parametric Models
Semi-Detailed Unit
Costs
Detailed Unit Cost
Accuracyof Cost Estimation
L: -20% to -50%
H: +30% to +100%
L: -15% to -30%
H: +20% to +50%
L: -10% to -20%
H: +10% to +30%
L: -05% to -15%
H: +05% to +10%
Percentage Contingency +30% to 40% +20 to +30% +10% to +20% +05% to +10%

9. STAGE WISE LEVEL II DELIVERABLES FOR ENGINEERING
Stage FEL 1 FEL 2 FEL 3 FEL 4 FEL 5
EstimateClass CLASS 5 CLASS 4 CLASS 3 CLASS 2 CLASS 1
Project Scope Description General Preliminary Defined Defined Defined
Plant Production/Facility Capacity Assumed Preliminary Defined Defined
Plant Location General Approximate Specific Specific Specific Specific
Soils & Hydrology None Preliminary Defined Defined Defined Defined
Integrated Project Plan None Preliminary Defined Defined Defined
Project Master Schedule None Preliminary Defined Defined Defined
Escalation Strategy None Preliminary Defined Defined Defined Defined
Work Breakdown Structure None Preliminary Defined Defined Defined
Project Code of Accounts None Preliminary Defined Defined Defined
Contracting Strategy Assumed Preliminary Defined Defined Defined
Block Flow Diagrams Started/Preliminary Preliminary Completed Completed Completed
Plot Plans Started Started/Preliminary Completed Completed
Process Flow Diagrams Started/Preliminary Preliminary/Completed Completed Completed
Utility Flow Diagrams Started/Preliminary Preliminary/Completed Completed Completed
Piping & Instrument Diagrams Started Preliminary/Completed Completed Completed
Heat & Material Balances Started Preliminary/Completed Completed Completed
Process Equipment List Started/Preliminary Preliminary/Completed Completed Completed
Utility Equipment List Started/Preliminary Preliminary/Completed Completed Completed
Electrical One-Line Drawings Started/Preliminary Preliminary/Completed Completed Completed
Specifications & Datasheets Started Preliminary/Completed Completed Completed
General Equipment Arrangement Drawings
Drawings Started Preliminary/Completed Completed Completed
Mechanical Discipline Drawings Started Preliminary/Completed Completed
Electrical Discipline Drawings Started Preliminary/Completed Completed
Instrumentation/Control System Drawings
Started Preliminary/Completed Completed
Civil/Structural/Site Drawings Started Preliminary/Completed Completed
General
Project
Data
Engineering
Deliverables

10. 10
STAGE GATE PROCESS (TBD)
The project stage gate process framework will establish the decision criteria and
processes for progressing the project from one stage to the next
Initiation Execution
Planning Close-out
SG
DP
DM
Review and
close project
set-up and
undertake
commissioning
activities
Safely
implement
project
consistent with
scope,
specifications,
cost and
schedule
Long term and
short term plans
for engineering,
procurement,
construction
and
commissioning
Finalize project
scope, design,
cost, &
schedule
Operation
Operate and
evaluate
performance
relative to
business
strategy
SG
DP
DM
SG
DP
DM
SG
DP
DM
DP: Decision Package DM: Decision Maker SG: Stage Gate
DM
DP SG

11.  Failure to set standards
 Failure to optimize design (value
engineer) for project
 Failure to optimize design across
multiple projects
 Over-engineering or inadequate
engagement of operations
including consideration of full
lifecycle costs
 Procurement functions are
overwhelmed - creates a
bottleneck and loses control
 Poor strategic alignment
 Lack of project detail
 Unrealistic assumptions (market,
technical, regulatory etc)
 Capital scarcity competing
projects - investors require a far
quicker +ve NPV than before the
banking crash
 Far greater scrutiny on ROI and
difficulties managing stakeholder
expectations
 Unpredictable market conditions
 High level of Project
optimism/misplaced
commitment
 Lack of contract strategy and
alignment to work scope
 Selecting the wrong contractor (Price
rather than value or maturity)
 Poor understanding of the supply
chain and current market conditions
 Fraud risk/ counterfeit product risk
 Ineffective management reporting
 Health, safety, environment (TRIR)
 Inexperienced project management
functions
 Fail on market analysis and
valuation
• Lack of clarity surrounding the
appropriate contracting model
• Resource planning / availability
challenges
• Estimating realistic capital costs
• No common project/ programme
management processes
• Poor understanding of where risk is
best managed (client vs supply
chain)
• No culture of "programme
delivery" vs asset operator
EY’s expertise in Capital Investment Projects
Appraise Select Define Execute Operate
EY’s
Commonly
Occurring
Lifecycle
stage
challenges
Lifecycle
stage
specific
credentials
Cross-
Lifecycle
credentials
Credential
s Key
N.B. The number within in each
circle provides a link to the
detailed credential which can be
found in the appendix
X Oil & Gas Cred X Power & Utilities Cred X Mining & Metals Cred
1
Improving
Contractor Mgt
2 Gaining control of
Capital Investment
3
Investment
Appraisal Process
4 Program and vendor
management
5 Capital Commercial
Excellence
6
Smart metering
delivery design
7
Revised
Contracting
Process
8
EPCM Incentive
Review
9
Business Case Analysis for gas
interconnection
10
Smart metering – Regulatory
Positioning
11
Capital Projects Contracts
Risk Assessments
12
Compliance &
construction mgt
X Infrastructure Cred
16 Internal Audit
17 Cost Verification
18
Station Redevelopment
Process
19
Project Mgt
Capability
Enhancement
20 Transforming
operations
21 Programme Assurance
22 Organisational Design
23
Security &
Resilience
24 Expansion Diagnostic
Review
26
Assurance & Program
Management
Capability
27
Independent
Investment Review
28 Internal Audit
30
Tendering
Methodology &
Sourcing Strategies
What are
Shell’s
Challeng
es?
Project
life cycle
Initiation
Business
Case
Test
Opportuni
ty
Data
appraisal
Concept
selection
Developme
nt
Plan
Negotiati
on
Strategy
Design
basis
Execution
Plan
Design
&
Commissi
on
Operate
Maintain
&
Improve
FEED
13
Project Assurance
System Review
14
Resource Planning
Process
25
Contractor
Review
29
Governance Structure
Design
X UK&I Cred
Global Cred
15
Contract Mgt
System
Enhancement
X
Construction
Advisory Audit
31
Proj Mgt Plan
Development
32
Construction Cost
Evaluation
33
Construction
Cost &
Schedule
Review
34
Procurement
Process
Improvement
35
Finance Community
of Practice
36
Project Mgt
Process Review
37
Oil Sands Org.
Design
38
Contract Mgt
Review
39
IntegratedPlanning
& Project Practices
40
UpstreamRisk
Management
41
UpstreamProject
Coordination
42
Critical Resources
Mgt
43
JV Process
Management
44
Budget / Contractor
Revision
45
Project Spend
Analysis
46
Financial
Expenditure
Analysis
47
Supply Chain
Process
Management
48
50 Supply Chain and Skills
Requirements for Onshore O&G
FID
 Ineffective handover operational
handover
 Poor asset register
 Poor asset management strategy
and processes
 Asset integrity is not fully
understood
 Poor investment case
 Poorly Optimised spares
management
 Minimisation of overheads as plants
move towards decommissioning
 Infrastructure and equipment
sabotage
Project Expansion
Audit
49