Zadco'S Value Assurance Process ةق يرط لا ةع ب ت م لا ي ف ةكرش او كداز نامض ل ةظ فاحم لا ىل ع ةي مق لا ةب س ت ك م لا By Zaid Hashem Al Habshi Student ID number 110028
Zadco'S Value Assurance Process ةق يرط لا ةع ب ت م لا ي ف ةكرش او كداز نامض ل ةظ فاحم لا ىل ع ةي مق لا ةب س ت ك م لا By Zaid Hashem Al Habshi Student ID number 110028
Faculty of Business
Dissertation Supervisor
MAY-2014
ABSTRACT
The decommissioning phase in the life cycle of petroleum installations is an important part of
ZADCO’ asset management strategy. The company is known for its integration of the value
activities geared towards development. This is critically important because the company, just like
any other oil and gas company, invests a lot on development. Therefore, identification of the root
causes of failure is advised at the beginning of projects before they are sanctioned. Value
assurance that is executed for a project addresses the question: “Are we doing the right project?”
Alternatively, the reviews around extraction time focus on the question: “Are we doing the
The value assurance process focuses on the non-technical aspects of projects, as the reasons for
cost and schedule overruns are often found in the non-technical aspects. This leads to the
approach. It is important to note that studies have shown that more projects fail from flaws in
VAR generally takes a week. It is delivered by a team of approximately five senior experienced
staff members. On the first day, project team presentations are made, followed by interviews in
the next two days, then synthesis and analysis of an integrated picture within the value assurance
team, and then finally the delivery of insights and recommendations to the costumer, that is, to
the senior executives that govern the project and those responsible for delivering the project, or
1
In this study we examine the feasibility of this process through the work of the staff interviews
and a questionnaire among the decision-makers in the organization to extract a clear picture of
مرحلة التفكيك في دورة حياة المنشآت النفطية هو جزء مهم من استراتيجية إدارة األصول في شركة زادكو .ومن المعروف أن الشركة
لتحقيق التكامل في عملية ضمان القيمة ،تماما مثل أي شركة نفط وغاز أخرى ،تستثمر الكثير في مجال التنمية .لذلك ،ينصح تحديد
األسباب الجذرية للفشل في بداية المشاريع قبل أن يتم فرض عقوبات عليها .ضمان القيمة التي يتم تنفيذها لمشروع يتناول عدة اسئلة منها
السؤال" :هل نحن نفعل المشروع الصحيح؟" بدال من ذلك يجب محورة السؤال حول" :هل نحن نفعل المشروع بطريقة صحيحة؟" بعد
البداء بالمشروع يعاد طرح نفس السؤال على كل مراحل المشروع. .
وتركز عملية ضمان القيمة على الجوانب غير التقنية للمشاريع ،وغالبا ما توجد أسباب التكلفة والجدول الزمني التجاوزات في الجوانب
غير الفنية .وهذا يؤدي إلى إدماج الجانب االقتصادي و التجاري والتنظيمي والسياسي ) (TECOPالنهج التقني .،،من المهم أن نالحظ أن
الدراسات أظهرت أن المشاريع تفشل في المراحل االولى بسب ظهورالعيوب في التفاصيل في أساسيات المشروع .
VARتأخذ عادة اسبوع في االنجاز .يتم تسليمها من قبل فريق من حوالي خمسة من كبار الموظفين من ذوي الخبرة .في اليوم األول ،يتم
تقديم عروض فريق المشروع ،تليها المقابالت في اليومين المقبلين ،ثم تجميع وتحليل صورة متكاملة ضمن فريق ضمان القيمة ،ثم أخيرا
تقديم رؤى وتوصيات إلى مصمم المشروع ،ثم الى كبار المديرين التنفيذيين الذين يديرون المشروع والمسؤولين عن تسليم المشروع ،أو
المديرين التنفيذيين زادكو في حالتنا .
ففي هذه الدراسة نقوم بدراسة جدوى لهذه العملية عن طريق عمل مقابالت للموظفين و استبيان بين اصحاب القرار في المؤسسة
الستخراج صورة واضحة عن جدوها في المسرى التطويري للمؤسسة.
2
CHAPTER 1: THE OUTLINE AND BACKGROUND OF THE THESIS
1.1 Introduction
company in Abu Dhabi, United Arab Emirates (ZADCO, 2006). In 1977 ZADCO became
productive company by the law No.9 which generated by the gaudiness of Sheikh Zayed Bin
Sultan Al Nahyan to initiate the development of Zakum Field. This step allows implementing the
establishment of Zakum Development Company (ZADCO) to evolve and operate the Upper
Zakum field. At present, the company is handled by three major stockholders, including the Abu
Dhabi National Oil Company, ExxonMobil and the Japan Oil Development Company (Al
Jarwan, 2006).
At present, the Zakum Development Company (ZADCO) is embrace by three key shareholders.
it include the Japan Oil Development Company, Ltd. (JODCO), with a 12% share, ExxonMobil,
with a 28% share, and the Abu Dhabi National Oil Company, with a 60% share (ADNOC
Website, 2012).
The company hold three main fields. The most significant of ZADCO's fields and one of the
prime fulfilments in Abu Dhabi is Upper Zakum (UZ); It is located 84 kilometres north-west of
the Abu Dhabi islands and covers 1,200 square kilometres of The Arabian Gulf marine areas. It
is the second largest employer in the Gulf and the fourth in the world, accommodating 550
ZADCO has considering expanded its exploration a continuous efforts since the early years, and
as a result, In 1969 located 25 km to the north-west of Abu Dhabi Umm Al Dalkh (UA) was
discovered and in 1985 the field prepared to be productive. Also not fare located 200 km north-
west of Abu Dhabi Satah Fields (ST) was discovered in 1975 and starting the production was in
3
1987(Al Jarwan, 2006).From all above fields the crude oil is pumped via oil pipeline to Zirku
Islands which consider the main industrial base for processing, storage and oil exporting and it
contain the latest technology in oil and gas equipment (ZADCO website: September 2013).
ZADCO’s vision is Building optimal sustainable production is ZADCO vision to ensure reaching
excellence in health , safety and environment caring, people development, efficient operations,
field development practices and use of resources.to reach level to be top world class company in
ZADCO achievements over the years include its merger with ADNOC in 1988, therefore
ZADCO maintain their highly standard by using the advance technologies in developing and
operation in their oil field to ensure high level of quality in health, safety and the environment
level. Its core values have led it to becoming a performance-driven organization that manages its
assigned business portfolio within the Supreme Petroleum Council strategy. For this reason, the
company merge a VALUE ASSURANCE SYSTEM as quality check procedure in all its
The decommissioning phase in the life cycle of petroleum installations is an important part of
ZADCO’ asset management strategy. The company is known for its integration of the value
activities geared towards development. This is critically important because the company, just like
any other oil and gas company, invests a lot on development. Therefore, identification of the root
causes of failure is advised at the beginning of projects before they are sanctioned. Value
4
assurance that is executed for a project addresses the question: “Are we doing the right project?”
Alternatively, the reviews around extraction time focus on the question: “Are we doing the
The value assurance process focuses on the non-technical aspects of projects, as the reasons for
cost and schedule overruns are often found in the non-technical aspects. This leads to the
approach. It is important to note that studies have shown that more projects fail from flaws in
VAR generally takes a week. It is delivered by a team of approximately five senior experienced
staff members. On the first day, project team presentations are made, followed by interviews in
the next two days, then synthesis and analysis of an integrated picture within the value assurance
team, and then finally the delivery of insights and recommendations to the costumer, that is, to
the senior executives that govern the project and those responsible for delivering the project, or
The process has two fundamentals: integration and independence. Integration is achieved
through an experienced team leader and a team of subject matter experts, whereas independence
is achieved through external company which will provide experts for this matter.
This process has resulted in many benefits, such as significant value being gained by the
discipline and communication required to prepare for the integration review and a better
understanding of the full range of factors affecting the project's success, therefore leading to
better management of risks and opportunities and better preparation of the organization for
surprises. Further, the review enhances project value through changes to concepts, alignment
2003).
5
ZADCO identifies three stages of the petroleum life cycle as covered by the following activities:
production, operation, and maintenance. The critical elements of asset management during these
facility management, well integrity management, and HSE (health, safety and environment) audit
The company’s value assurance process starts with the identification of several development
concepts in order to enable management to assess a few options that could be viable for
implementation. The company then selects only one possible development project from the few
options and then defines it comprehensively to enable execution and operation. The company’s
value assurance process can be further illustrated in the following figure (as presented on the
Figure 1: VAP Principles adopted by ZADCO (Source: ZADCO HSE Manual, 2010)
It is very important to note that this is just a summary of ZADCO's value assurance process.
There are several other intertwining processes that are not included in the figure, including the
VAR processes mentioned previously. Additionally, the decision support package (DSP) is a set
of deliverables that summarizes the key project information required in supporting the decision-
6
making process at THE GATE (the examination stage for the collected information). The
purpose of the DSP is to provide information on the project’s completeness, robustness and
Moreover, the development of management system monitors the different project phases.
Generally, project phases include evaluation, concept selection, concept definition and execution.
Gates are important in value assurance, since they improve the effectiveness of capital
investments and ensure an appropriate level of value improvement. They set the overall
objectives for each project phase, properly assess the project, and identity value drivers, risks and
uncertainties prior to committing any major expenditure. At the gate, the project team presents
the results obtained in the previous phase and their plans for the following phase. This
information may cause five possible outcomes: proceeding, reworking, holding, changing or
Better management and achievement of production targets is the main objective of ZADCO in
integrating the value assurance process into their asset management. The company has gone
through major events in its history, such as merging with other big companies. For instance, in
March 2006, the American company ExxonMobil bought 28% of ADNOC’s shares in the Upper
Zakum field. Further, there are a lot of changes in technology that are expensive but important to
the company's operations (ADNOC, 2012), as technology continues to advance and become
For example, ZADCO is always investing in automation technologies. Modern IT has been made
available to end users within ZADCO sites, as it is essential in key areas of work to achieve
greater productivity in the management of various operations and technical and human resource
functions. As political, economic and social environments continue to change, the company
wants to ensure that the uncertainty of field development planning is better identified in a
7
quantified manner. The company's management is committed to thinking of better ways to
Additionally, the value assurance process has been identified by analysts as the most effective
tool in managing projects, programmes, resources and processes in most companies. This is
crucial, especially with very large companies such as ZADCO. It enhances the identification of
the root causes of potential failure and provides advice before sanctioning. Value assurance is
important, as it answers the questions: Are we doing the right project? Are we doing the project
right? It focuses on the non-technical aspects and leads to integration of the TECOP approach;
With this, the aim of this paper is to evaluate whether ZADCO’s value assurance process is
The primary concern of this research is to examine the effects of ZADCO’s value assurance
process and its alignment to the overall business cycle. ZADCO is noted for its use of the value
assurance process in the management of its assets and has an good impact in their industry.
Further, this research will focus the examination of the company's asset management to
understand the industry in which the company operates and to distinguish it from other
companies in the field. Note that there are a number of oil and gas companies, and they make use
of same processes in oil production, processing and even exportation, meaning that they are very
similar in management.
It is well recognized that asset value management is the underlying concept behind the value
assurance process. Value management is said to have evolved in the post-World War II era in the
United States, when the shortage in supply compelled the manufacturing industry to search for
8
alternatives or substitutes. Nowadays, the management tool is continuously used in many
industries and companies around the world, both public and private.
solving the general problems of a company. Other scholars have defined it as a creation of
management tool designed particularly to motivating people, sharpen skills and initiate
innovation, with the an important aim is fully maximize the overall performance of an
organization. This idea was generated out of previous methods based on the concept of value and
a functional approach. These were pioneered by Lawrence D. Miles in the 1940s and 50s. He
came up with the technique of value analysis (VA) as a method to improve value in existing
products. Basically, value analysis was initiated to identify and clarify unnecessary costs to be
other than cost. Therefore, the application of VA has sparedfar away beyond products into
services, projects and administrative procedures (The Institute of Value Management Report,
2006).
The main objectives of value management may vary from company to company, but the main
Value management has proved to have many other benefits that include improving
identifying unnecessary expenditures, and updating standards, criteria and objectives, among
others.
The British Standard Institution provides GUIDELINES to the steps in a value management
procedure. First, information identification is done and the program or project rationale is tested
from the perspective of stakeholders' positions. Secondly, functions are analysed, identified and
9
ranked as primary or secondary functions. Thirdly, ideas for value improvements are generated.
Fourthly, evaluation, sorting and prioritizing takes place. After this, the action plan, that is, the
strategies required to achieve value are identified. The final step includes analysing, reporting,
At present, value management includes the practice of studying product orientation, standards,
protocols and validation, which is referred to as value assurance (Iyer, 2006). Value management
serves to gain an understanding of value assurance, which is the main concern of this paper.
In this century, major changes have occurred in political, economical, environmental, social and
technological arenas, all of which affect the progress of any business with an objective of
growing or expanding. Particularly in the oil industry, which is one of the main drivers of the
world economy, much attention has to be placed on these changes. ZADCO, as one of the
companies in this field, has proved to be a leader in terms of management of resources and
development of projects over the years. Its secret has been the application of its value assurance
process.
This study is expected to add to the existing field of knowledge of value management, especially
in the study of value assurance. Furthermore, this study will be significant in understanding the
issues and opportunities faced by companies in the oil industry and how these opportunities are
ZADCO is the best of all examples and will be used as the sample of this study to espouse the
challenges it has overcome in its long growth journey through the application of value assurance.
Considering the objective of the study in analyzing the effectiveness of ZADCO’s value
assurance process, the following research questions are formulated to find specific answers:
10
a) Question 1: What are the environmental issues that influence ZADCO’s concerns in the
It is important to note in the first question that ZADCO is in the oil industry, which
involves significant environmental issues. For example, Zirku Island is the industrial
centre of ZADCO’s operations. Evidence that ZADCO operates in harmony with the
natural environment includes a great number of local and migrant birds, rich marine life
b) Question 2: What are the elements of ZADCO’s value assurance process and how are
It is important to know the procedures taken to understand the ZADCO value assurance
investigate the elements that make ZADCO’s value assurance process unique and that
c) Question 3: What are the results of the company’s value assurance process in maximizing
It is necessary to understand the challenges faced by ZADCO which drive the value
The study scope is in the global context since oil companies such as ZADCO serve a world
market.
In this study, several assumptions are considered. These include the soundness of the theoretical
framework. In the research, it is assumed that the theoretical framework is clear and represents
the actual activities at the grassroots. Secondly, it is assumed that all variables in the study are
clear and measurable and that they will lead to results that are recommendable or representative.
11
Third is the validity and reliability of the research methodology. The methodology used in the
research study is assumed to be accepted as reasonable and result oriented. The final assumption
is that the results can be generalized. As stated before, the research’s significance is to clearly
However, limitations also exist, for instance, in the possibility of the theoretical framework being
inaccurate to some extent. In addition, the definition of variables in this research may vary from
other scholars and therefore cause some difficulty in trying to understand the actual thing being
talked about. In addition, the research methodology used in this research could vary from those
used by other scientists or analysts. It is hoped that this research will detect and close some
loopholes that may be remaining in the company’s value assurance process and therefore be of
This research study has five chapters, namely introduction, literature review, methodology,
The introduction chapter subtopics are background of the study, the problem statement, purposes
of the study, rationale, research questions, significance of the study, and assumptions and
limitations.
In the literature review, the dissertation contains an introduction into the topic of the study, that
is, value assurance. The body of the literature review will involve a detailed discussion into value
The next section after the literature review is the research methodology chapter. This generally
involves the channels used in linking up theoretical assumptions in chapter one and the actual
results of the study. In other words, it is how the research is carried out. It will include critical
subtopics such as the research philosophy, the theoretical framework of the study, the research
12
design strategy, qualitative research techniques, data collection procedures, an overview of data
coding, data accuracy verification, limitations of the methodology,and ethical issues that relate to
this study. Chapter four is simply a description of how the data collected is analyzed.
The last chapter discusses the results of research, and this leads to making conclusions about the
research, such as the relationship of the current study to prior research. Further, the chapter
13
CHAPTER 2: LITERATURE REVIEW
2.1 Introduction
Value assurance is a method of ensuring to the higher executive management that the expected
business returns are used for maximizing opportunities and integrating them into company
program strategies and large projects (Phillips, 2008). It is a process of managing assets and
activities over a company’s life cycle. In this literature review, it is aimed to gain an
understanding of the process of value assurance based on the existing studies in the field.
Furthermore, it is aimed to review the existing body of knowledge regarding the role of the
Companies in the oil industry adopt technological techniques to ensure value. Some independent
entities provide these types of services by formulating software, which is focused on flow
assurance and reservoir optimization in order to improve production while efficiently managing
resources. The drive for capital effectiveness derives from the need for companies to ensure
value due to their nature of investing in projects in risky environments (Mattu and Marini, 2011).
ZADCO’s reservoirs involve some of the most technologically advanced developments in the oil
and gas industry, especially in its value assurance process, which has led to it becoming the
leading oil company that operates in the UAE. The company’s value assurance process covers
three life stages, namely production, operation and maintenance. The elements in this process
include reservoir management, production, operations, facility integrity, well integrity, HSE
In the company’s value assurance process, the challenge is to meet production targets
simultaneously while keeping its business process strong. A business planning process was
therefore adopted to improve the field development process. Next in the process was to ensure
the alignment of the business planning process with the company’s value assurance process.
14
The company made sure of the maturity of the field development options and presented possible
actions for potential uncertain consequences. The next issue presented in the case study was the
identification of limitations of the business planning process. This provided the basis for the
company to improve data management and workflow enhancement. The overall results were
satisfying, and there was a noticed improvement in understanding the business process and
In the value assurance process for oil and gas companies, capital effectiveness is the main reason
that many oil and gas companies adopt development management systems. A development
management system is needed for the organization to identify the actions that need to be taken,
when they should be done, and the process to accomplish the needed tasks. In this system,
assurance reviews are necessary so that improvement actions can be implemented. This is
especially important for companies in the oil and gas industry to make sure that the value of
projects and their governance are not reduced and that return of investments are guaranteed
Value assurance technique is one of the fundamental methods used to determine the current
project state in relation to projected status. Most of the key elements from the project should
involve shared awareness. This will help fill any gaps in a project as defined by the
multidisciplinary team which is concerned with the project assessment. This process is mainly
supposed to be conducted during the planning phase of a project and needs to be in advance of
Since project value assurance (PVA) is an internal process, it should be done by a multi-
disciplinary team in an organization. The team needs to make an in-depth honest assessment and
review the current realities of the project. Their plan of action will define whether the project
will be able to fill in the gaps and reduce costs in the execution and operation of the project
15
phases. When the team is conducting its venture, it needs to define some of the assessment
The first objective is to provide a general overview regarding project status and to redefine the
forward plans. Secondly, value assurance is geared towards identifying gaps in a just and
transparent manner. The third objective entails allowing the management teams to prioritize and
ensure the application of necessary actions that are taken. Fourth, value assurance is aimed at
conducting integral stage reviews. Another objective is to determine whether the assigned project
team is relevant and worthy to carry out the assessment. Finally, value assurance entails making
sure that the process of quality assurance is followed precisely (Kahneman and Tversky, 1984).
It is very crucial to determine and maintain investments made in various organizations since
most organizations look at achieving greater returns on investment from their assets, especially
from information technology services (IT). The micro-focus assurance process should be
designed in such a way that it helps in deployment, solution planning and maintenance of teams
who have the ability solve problems to their best advantage, regardless of any change in the
The dimensions of value assurance are very critical and can immensely damage the entire
operations, since they occur in almost 90% of such projects. The quest to solve problems drives
management teams to excel in these main four dimensions: project strategy, capability building,
project management and technical expertise. The value assurance methodology is applied in
many private and public sector clients in a range of industries. This approach combines issues
regarding IT projects and the transfer of capabilities and focuses on business value activities
16
The use of assurance can be featured in four major dimensions: The first dimension is a
managing strategy that covers a detailed analysis of the project, risk identification techniques,
business strategy and mitigation. The second is good mastery of technology in the context of
infrastructural designs, establishing IT architecture, assuring quality, rolling out plans, and
managing the project scope. Third is the ensuring that teams are built up with proper capabilities
that ensure that clients are supported by proper training modules in hard and soft skills. Fourth is
the delivery of proper project management practices, which include establishing a value
assurance agency, resolving issues, preparing a project master plan, and instituting reporting
systems and quality gateways. In order to start a value assessment project, companies need to
establish some of the critical challenges, especially areas of weakness and strengths in every
dimension. Good companies will always check for findings and develop the next steps by
The simplicity of value assurance is termed as revolutionary, since it has worked for a number of
decades, especially in large-scale construction and engineering efforts. The procedure can be
applied in ongoing financial, strategic, compliance, and other operational areas. The parts used
for the nine dimensions include areas such as enterprise and risk management (ERM).
This involves developing an integrated uniform assurance capability and support pillars, such as
(EPM) applies to the application, project and vendor. Business and IT auditing services include
The value assurance process is very costly and involved. The process has become dominant,
especially in Japan, which utilises total quality management (TQM), as applied by Deming, and
17
business process reengineering (BPR), as kick-started by Michael Hammer (1990). Capacity,
which needs to be clearly in line with the TQM, is another part of the process.
The process of value assurance, especially in IT, gives guidelines in setting up a management
process in all environments. These guidelines provide possible suggestions so that companies
can master key management activities, roles and responsibilities which need to be undertaken or
improved. The guidelines define the indicators of excellent performance and allow companies to
The roadmap to successful assurance can be summarized in three steps as follows: planning,
scoping and executing. In the execution section, some of the key variables to be considered are
those used in determining and understanding the assurance subject, in defining the scope and
nature of operations in the management process, in testing outcomes, in documenting the impacts
and control measures, in testing the effectiveness of the design processes, and in developing
The first step entails refining understanding to comprehend the environment in which the testing
should be done. The assurance objectives need to be agreed upon and communicated to all the
stakeholders. Included in the second step is refining the scope in terms of the testing done to
ensure that evaluation and design controls are well accomplished. This helps in assessing the
operational effectiveness in the control design and confirming that controls are placed in the
operation. The third step entails testing the outcome to help look for direct and indirect evidence
of quality outcomes. Fourthly, the design is tested to evaluate and conform to test controls and to
assess the operational effectiveness of the control designs. Finally, documentation of the impact
is done to help illustrate potential achievements through the use of survey results to compare the
18
Bhatia and Fiaz (2006) note that the Upper Zakum is one of the biggest oil fields in the region; it
was established to increase oil production within a short time frame. This project has posed great
challenges, especially in terms of managing reservoirs, but also in terms of expanding offshore
facilities. The gas to be produced is projected to increase because of higher oil production and
the likelihood of a gas breakthrough because of continuous gas injection. The company has
already launched the initial stage of its expansion plans for rebottling and expanding gas
compression to export the gas to the Upper Zakum Central Complex (UZCC).
Total gas production depends entirely on gas handling, and the project strategy is set to ensure
minimum interruption of the production process when the project is executed. The company
follows four value assurance processes at different stages. The stages include identification,
selecting, assessing, and defining and executing. The identification, assessing and selection
stages are already complete as per the recent research. The selection stage, also called the
feeding design, is ongoing and is scheduled to be complete by the fourth quarter of 2010. The
project is likely to handle a gas capacity ranging from 125MMSCFD to 230 MMSCFD
During the selection stage, several conceptual engineering processes were carried out with many
specialized personnel. Some of the studies conducted were on: [1] computational fluid dynamics
(CFD), [2] reliability, availability and maintainability (RAM), and [3] the process simulations for
cooling water checkups, fuel and gas system checks, pipeline hydraulics, fare rationalization,
alternative technology evaluations, construction of the QRA of the UZ GTP plant, identification
of safety and environmental reviews, and the critical tie-in points. Some of the issues that could
lead to collapse and loss in the production process of this project were considered during the
initial stages of the project. The approach enabled the management teams to evaluate and focus
on key issues during the FEED and EPC stages. Findings shown so far show that the studies
19
carried out have increased stakeholder’s confidence in the company, hence enabling it to achieve
The company has been operating in the upper Zakum (UZ) field for over 20 years. It has been
named as one of the largest and richest offshore oil production facilities. It is segmented in four
areas: north, west, south and central, where there are 62 platforms (WHPTs) which are made up
of production wells, gas injection wells, gas lift wells and water wells. A highly integrated
management VAP is thus required to ensure transparency for the benefit of the company’s
One goal in the consideration of restructuring is finding a model that is supportive and workable
to realize a payback from the VAP, especially when planning and execution times are
constrained as a result of an increase in the production targets of the stakeholders. Every strategic
initiative was started based on a potential incremental increase in the oil, water and gas
production rates; it was agreed to focus heavily on the activities of the Zakum Field
Development Department as the most crucial point for proper improvement and development by
the teams. The appointed task force came up with the following conclusions in terms of the most
advantageous strategic aims: developing clear roles and responsibilities, having an integrated
multidisciplinary and multinational approach, and establishing a better embedded project model
2.6 The Application of the Value Assurance system in an Oil and Gas Development Project:
A Case Study
Oil and gas companies make considerable investments in risky and complex environments. This
therefore calls for the companies to improve their capital effectiveness, which leads to their
20
Most companies' projects are divided into phases, and this involves making decisions at the end
of every phase. The project team presents plans to the management team and then decisions are
made by the management about continuing with the projects. However, there are independent,
multidisciplinary expert teams who also take part in evaluating decisions. Their evaluation
covers the methodology of the value assurance checks, different types of project reviews,
techniques and practices for planning and executing reviews, and application of the project
Therefore, in my assessment, this case study will enable us to understand the effectiveness of
value assurance after seeing its actual application in the oil industry, where all development
projects begin after the discovery of a well and end when a plant is started up. A lot of
investment is done in this risky environment. Therefore, for a company to ensure capital
effectiveness, they have to closely monitor and control their projects, hence creating value for the
company. The main reason that companies use a development management system is to
Development projects occur in different phases. They are usually concluded with a review of the
work done. A review is an indicator of whether extra work is steel needed or whether the phase
has been completed satisfactorily. Further, it can be used as a basis for the start of the next
activities. In general, there are four main project phases for most companies. The first phase
entails evaluation, which includes assessing the value of the existent opportunity and the
concepts. Included in the second phase is concept selection, which involves generating concepts
and then selecting and optimizing the preferred concept, based on technical, economic and risk
evaluations. Concept definition occupies the third phase. This means defining the selected
concept and tendering and producing the project execution plan, which leads to project
21
sanctioning and execution. Finally, the fourth phase entails commissioning, starting up and
performing tests: that is, operating and evaluating the asset to maintain performance and
The phase review is generally conducted at the end of a project phase at the intermediate
decision point when the management decides on whether to continue with the project or to stop
it. The selection process begins upon looking at the overall project, after which management
approves it and commits funds and necessary resources required in that phase.
At the gate, the management team will present results obtained in the previous plans and assess
the next possible outcome in the following five steps: [1] proceeding if the project has made the
approval criterion, [2] reworking the project if the work performed was not enough to support the
recommendations or holding if the project is viable, [3] killing the project if it cannot hold in the
22
future, and [4] changing the project if changing he scope is necessary (Kim and Mauborgne,
1997).
At the gate, the project team presents the results that have been obtained in the previous phase
and their plan for the coming phase to the management, and this information may lead to several
actions. First, the project may be approved to proceed to the next phase. Second, it may need
some rework if the work done was not sufficient. Third, it may be held if the project is viable but
not to be executed immediately. Finally, it may be changed as in changing the scope to make it a
more viable option, or it may be terminated if the project is not viable at all.
The Gate point sets the overall objective of improving the effectiveness of capital investments as
it ensures both an appropriate level of control and value improvement. It ensures that the value
drivers and the risks and uncertainties are identified before committing any expenditure. It
enables the identification of necessary project activities and activity results that are documented
through ensuring that investment decisions are made in a comprehensive and consistent manner,
considering all elements of a project (technical, commercial, political and commercial, among
others) in making the decisions, and providing uniformity and openness of decision-making
Access to the gate is possible following the preparation of a corresponding decision support
package (DSP) or the execution of a project value review (AR). Gates ensure that all the
investment decisions are made and carried out in a comprehensive and consistent manner and
also provide uniformity and transparency in the process of decision making in most development
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The decision support package is a set of deliverables summarizing the key project information
that is required to support the decision-making process at the gates. DSP is therefore the key to
the gates and provides sufficient information to decision makers on the project's completeness,
Assurance reviews (AR) are structured, independent reviews that challenge the project team to
justify the conclusions of their work, identify the weaknesses and shortcomings and make
purposely to increase potential project value and allow the project to avoid any risk of missing
opportunities for business and technical solutions (Moonthanah, Poynter-Brown, and Jefferyes,
1998).
In other words, the AR takes a detailed look at different aspects of the project and challenges the
project team to demonstrate that changes and improvements should be agreed upon as a result of
representatives, among others. These groups are meant to ensure that the process of AR is well
The review results are presented to the project team for discussion of the improvement actions.
The decisional process at the gates is usually supported by recommendations which arise in the
reviewing exercise by the expert, independent team. The practice is a critically useful tool to
assure the value of projects and project governance (Prague, and Carlson, 1982).
Also, at the end of phase gates, there are specific cases in which intermediate decisions are
required when circumstances justify such an occurrence and when the associated risk has been
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A project review is engaging activity to determine the appropriateness, capability and
As stated before, value assurance aims to provide the project team with assurance and assistance
at critical decision points through a process of support, independent challenge and review. The
process is very important, especially because development projects are capital intensive with
The company benefits both financially and in terms of strategic relevance and risk from review
monitoring. Value assurance may help the project team to achieve the following: [1] identify
opportunities for value creation, [2] control project performances, [3] suggest possible
The value management plan is a high-level document that is a guideline for the project reviews.
It defines the project's commitments to assurance activities for the coming phase. It often
The scope and objective of each assurance check. These are the expected outcomes and
the terms of reference; competencies should also be defined well in the assurance process.
The number, timing and duration of assurance checks for the next phase, that is, the
plan’s rationale.
It may also contain plans for other value management activities, for instance, value improving
Note that the value management plan is usually produced before the end of each project phase
and added to the corresponding DSP together with the value assurance activity reports delivered
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2.12 Review versus Audit
audit evidence and to evaluate. On the other hand, a review is an act done in order to define the
suitability, sufficiency and usefulness of the subject with the aim of achieving the established
objectives.
This dissertation is however concerned with the review. There are several types of reviews with
different objectives and durations. The following are some examples of project reviews in value
assurance.
ARs are independent reviews that examine all aspects of a project before accessing a gate,
although additional ARs may be required for pre-execution investments and or major project
changes.
They focus on the aspects of a project that require the most attention. They take a wider view of
protecting before the gate, and they provide assurance and assistance to booth the project team
and decision makers. This enables the project team to be more confident in accessing the gate
and to be committed to action for achieving the improvement points, and it enables decision
makers and the project team to get both assurance and assistance from the AR team
recommendations. It further helps in all aspects before accessing a gate, and lastly it enhances
the decision making process and makes it more effective, therefore benefiting from different
qualified viewpoints that focus on the recommendations and critical issues (Ireland, 2006).
In addition to that, an AR tests the project team's technical and strategic recommendations
against decision makers' needs and expectations, assists in maximizing the value of
opportunities, facilitates best practice transfer into the project team, captures lessons learned for
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dissemination across the other projects, and helps in the provision of external challenges to the
The independent review team is usually composed of multidisciplinary team members that
should integrate expertise from different areas, including economics, local business, HSE and
quality. The concern of this committee should be to meet the stakeholders’ needs before
proceeding to the next phase. Broadly, the focus of this review is to stimulate feedback, creating
learning opportunities and identifying possible recommendations. This review looks in detail at
different project aspects and challenges the project team as to whether they have optimized and
assessed the project's robustness and weakness and come up with specific recommendations and
improvements.
The AR confirms that the current phase has been successfully completed in relation to the
objectives and that the project is consistent with company requirements and is ready to proceed
to the next phase. The AR also checks the suitability of future plans and strategies. At the end of
every AR, an assurance review report is delivered and added to the corresponding DSP, together
with the project team's resolutions concerning the most pressing issues addressed by the AR
team. This report contains a summary of AR findings and conclusions, pointing out areas of
weakness and any gaps that require further attention (Young-Hoon Kwak, 2005).
A progress assurance review (PAR) is carried out on projects with a long execution phase. They
are intended to provide confidence that the development project is meeting its objectives and that
the specific recommendations will positively contribute to the project. This assurance review
provides confidence to stakeholders that [1] the performance requirements are satisfactorily
progressing during the implementation, [2] the project management systems are adequate and
correctly applied, and [3] the key project risks are clearly identified, and mitigation plans are
and the PAR team leader. The PAR is usually carried out during the execution phase and
involves canalization of the on-site project structure, organization, cost, timing and contract
status, the identification of critical situations, and the relevant causes and possible mitigation
actions for all major technical or functional areas. The PAR team performs a preliminary
analysis of the project before performing the visit on site. This is based on the project
documentation available and information derived from past activities. The objective of the
A PAR is usually carried out through the analysis and verification of the technical or functional
areas that have been defined by the PAR team through meetings, document review and a survey
performed by the project team. The analysis should lead to the identification of the critical
situations and associated causes, therefore finalizing the relevant finding (Hamilton, 2004).
A preliminary feedback report is usually issued to summarize PAR results; note that this is
discussed before issuing the final feedback report with an action plan. The scope of this review
usually includes [1] controlling physical progress, spending, costs and schedule [2] generating a
execution plan and measuring its interaction with reservoir performance, [4] closing out
outstanding issues from ARs, and [5] implementing management systems to ensure maintenance
of the integrity of the facilities during the design, execution, implantation and commissioning of
The review team is mandated with making recommendations with an aim of improving the
project performance, updating the project execution plan and validating the revised cost and
risk and the operability criteria. These types of ARs should be held either periodically or before
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important project execution milestones, such as before commissioning or while being handed
Peer reviews (PR) are recommended independent reviews that examine specific project activities
or work steps in order to ensure appropriate quality. PRs are defined at the pre-gate AR for the
following phase, where the review group will establish their scope and timing by mutual
agreement with the project team. They are usually narrower in terms of reference than ARs, and
A peer assist is an activity in which experienced internal or external professionals who have
appropriate levels of experience or expertise suggest improvement points and challenge and
verify the work in progress. These ARs are usually requested by the protect team to identify any
gaps in the project. They are usually technical in nature and single disciplined, and they are
A project review is called and prepared by the project team. The project schedule typically
already contains the tentative dates of the next reviews, which have been planned in the value
management plan presented in the previous DSP. The project team starts to prepare the DSP
when the project is approaching the end. The package already clearly states and demonstrates the
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results that have been obtained and describes activities performed and technical studies. In
addition, it should contain objectives and requests for the next phase (Pinto and Slevin, 1998).
It should be noted that the project team presents a project to the management, stating what they
are planning to do and the resources that are required, that is, the budget, manpower and time.
The review team is usually independent, and they usually are not aware of the project’s
difficulties and what has been performed up to that moment. The DSP is a tool that lets the
review team understand the nature of a project. Therefore, it is very important to prepare a clear
and exhaustive DSP. After the DSP has reached a good level, the project manager contacts the
At this stage, a short document called the terms of reference is produced. This contains a short
description of the project, the review objectives, the suggested composition of the review team,
the tentative agenda and the logistics to be followed. Once the terms of reference has been
created, the review team leader starts to organize the event. For instance, some deliverables may
be made available to the review team before the actual session in order to enable understanding
of the project background and the main review topic framing. This documentation should contain
relevant deliverables, such as the project execution plan, basis design, and reports from previous
reviews, among others, and therefore enables the review team to gain an understanding of the
Project reviews are executed by a dedicated team, which is usually made up of a team leader and
a variable number of team members. The team leader plays the key role because he or she is
independent of the project. The team leader should have substantial experience with reviews, be
part of the senior staff, and have a broad knowledge of and experience with typical key driver
issues (technical, commercial, etc.). The team leader coordinates the team and ensures progress,
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cooperates in selection of review team members, keeps the project team informed, promotes a
The type and number of team members depend on the nature, vulnerability and size of the
project phase being reviewed. The team should be external and independent to the project. The
competencies and composition of the review team vary according to the focus of the review. The
team should however include individuals who will review from a universal perspective with an
understanding of typical key drivers. The team contributes to the execution of the review and
ensures that all the views of the team members are integrated (Seymour, Hoare, and Itau, 1992).
A pre-event step (that is, the preparation of the pre-reading material, review organization and
logistics).
An execution step that includes (a) information which involves aligning the review team with
process and rules, carrying out presentations and interviews; (b) development that involves
carrying out in-depth interviews, drawing conclusions for identified themes, drafting a
preliminary theme report, stating the findings and recommendations, adjusting the findings,
prioritizing the recommendations and then lastly producing the final report.
A post-execution step involving the close out, presenting the final report and defining the
action plan.
This is a value study process in the value management SAVE body of knowledge. It is a tested
and common way of proceeding, and it guarantees a correct and comprehensive development of
the event.
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2.17 The Project Review Report
The project review report usually includes a short background of the project, a summary of the
review results and details about the findings and recommendations. Note that the
recommendations represent the score content of an AR report. The project review report is
usually shared with the project team before being presented at the gate. At the end of the review
activities, the AR team should not only state the recommendations, but also give an evaluation of
them in terms of the importance (the potential impact of issue) and urgency (the urgency needed
Morris (1994) explains that importance is evaluated on a three-point scale: [1] high importance
(the potential to significantly impact achieving project objectives), [2] medium importance (the
potential for significant values erosion through schedule, costs, reserves or revenue), and [3] low
importance, which is the potential for value erosion. A 3-point scale is usually used for
A recent report shows that over 5000 assurance statements have been provided in the last 15
years, incorporating about 90% of the global reports on assurance. This type of report is now a
part of the business mainstream. The publications provide external assurance of the designated
project with the objective of shedding light on the development and identification of best
practices. With corporate social responsibility (CSR), we can explain some of the approaches
used in quality assurance. Quality assurance elements are used in several countries and across
many sectors in organizations to carry out assurance programs. Some of the sponsors which are
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dedicated to providing quality assurance networks include SGS, LRQA and KPMG (Matthew,
The sustainable report from SGS gives more than what one would expect since it defines
and commitment towards continuous improvement. SGS has made a lot of effort in advancing
the CSR agenda and identifying the best practices in the field.
Sustainability is a basic business requirement, and most stakeholders are demanding companies
of corporate responsibility. Assurance ensures that reports are made more credible and thus
improve customer or stakeholder confidence. When one seeks assurance, this is simply a
corporate responsibility process opening up in the management system. The process also gives
quality improvements through increasing system performance. The major function of value
assurance is in determining the current state of a project in comparison with the required status.
Its output can be measured, assessed and shared by the multidisciplinary team in case of any
The process should be conducted during the planning phase through the execution and
operational phases. This is to ensure that there is enough time for implementing and assessing the
outputs and also for positioning the teams to realize a successful execution of results. The
assessment is normally a self-assessment and does not involve an external team of experts. The
multidisciplinary team works first on an honest and in-depth review to remediate the gaps in the
execution and operational phases of a project. The key assessment objectives include providing
an overview of status and forward plans, identifying gaps in an honest and transparent way,
organizing the gaps and recognizing them, determining and recommending whether the project
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teams are worthy for the project success, ensuring that the quality assurance process is followed,
conducting stage-to-stage gate reviews, and allowing teams to prioritize the best actions to be
Some risks resulting from seeking assurance need to be factored in by all parties. Reporting is
one thing which needs to be done to ensure that assurance is effective in organizations. It is
healthy for stakeholders and other investors to have faith that assurance has been conducted with
integrity, independence and impartiality and that the provider has the necessary knowledge and
the right skills to carry out assurance. Reporting and assurance need resources, and companies
Quality assurance of firms or organizations may not be accredited due to the following reasons
that may result in underperformance: [1] an un acceptable quality level arises when products
have defects and when service is not practical or economical; [2] companies may be unwilling to
pay for quality assurance since they may not get an immediate payback; [3] few organizations
and [4] many organizations may think that complicated standards are hard to implement, which
might hinder them from complying to standards. According to Phillip Crosby, factors which
and a lack of knowledge concerning quality (Ansoff, Declerk, & Hayes, 1976).
Lack of involvement by the management team, as suggested by Crosby, can be explained by the
high costs associated with defects, management unwillingness to accept responsibility fully,
failure in enforcing the right standards and failure to reward those who perform better in
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Lack of success can also be attributed to the following reasons, among others: poor
communication skills in organizations, lack of principles and knowledge of quality, a poor and
unqualified categorization scheme, poor delivery of information at various levels within the
organization or company, and poor production and services. Quality is very hard to accomplish
because it requires the cooperation of executives and staff. Achieving eminence requires an
obligation and of the establishment of an environment in which quality grows (Munro-Faure and
Munro-Faure, 1992).
Reports on assurance have many titles: sometimes they are called expert opinion reports, external
acceptable, but they contain specific rules and regulations which need to be determined on their
own terms. The presentation of an audit of annual reports and accounts (AR&A) is regulated by
practitioners and forms a statement on a legal basis. Practitioners have to agree on an assurance
report, and it should be communicated; otherwise, it will lead to a bad image, which can be
confusing or misleading. Each of the statements should define references, set objectives for
achievement and for the nature, method and scope of operation. The stakeholders or the
assurance team need to read these articles carefully and understand them.
Many formats exist for assurance approaches. Some of the factors to determine are the
company’s experience in reporting, the scale and size of its operations, budget constraints and
opportunity for accuracy and completeness of information. An internal review is less costly and
needs to be balanced with the problem of assurance, which stakeholders may see as not reliable.
35
It might also be time consuming, since it requires the creation of an internal team with
appropriate skills and knowledge which is independent from the activities being evaluated.
Another disadvantage may arise from the problem that the assurances undertaken will not meet
the specifications of all the stakeholders. The view of the unrepresented stakeholders whose
views are not taken into account will lead to conflicts among the stakeholders (Miller, Goss,
Symons, 1998).
It is good to use an expert corporate responsibility program to provide good commentary and
proper opinion reports. These reports are crucial, especially in creating and building trust among
the members. However, this type of an assurance may not give accurate information on the
underlying systems. It is therefore very important to give an overview of the working scope and
recommended, and an organization needs proper knowledge, skills and expertise to enable value
assurance to be realized so that the reporting company can meet stakeholders’ needs. However,
proper assurance is likely to cost a lot. Some local arrangements need to be made to undertake
real-time assurance with electronic reporting in which updated information can be included and
Continuous improvements of assurance are needed in organizations. Some of the areas which
need improvement are in management systems, the content of reporting, boundaries or approach,
assurance scope and data collection. Assurance is applicable to each company, and it acts as a
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The process of value assessment helps most CIOs and other senior leaders to diagnose the
challenges they face in most IT projects. Mckinsey’s University of Oxford study showed that
23% of IT projects operate at a level that is more than 80% within budget. Value assessment can
also help organizations to [1] identify whether IT-enabled projects are on the right track under
the stated objectives, [2] determine how the IT team should work together in a more effective
way, [3] discern the risks which may cause the project to fail, [4] capture the full value of an IT
project, and [4] distinguish the likely techniques which should be applied to improve on the
Integration of web-based surveys of IT team members can be useful in helping the value
assurance team identify and clearly articulate the issues and drive the performance of an IT
project. The survey assessments require slight preparation and at least a two-day intensive review
of the documents. The findings are then discussed as well as the possible next steps to be taken.
In the preparation stage, the activities involved include scheduling interviews, launching a web
survey, and sending out data requests. Under project review, analysis of documents and
interviews are carried out, while lastly, sundry discussions on the review findings are done in the
workshop stage.
Conditional on the dimension and complexity of the project, the process might take up to two
days before it proceeds. Managers should try to strike a balance between the internal and external
factors both in technical and project performance. The value assurance 3600 program helps
organizations decide or focus on what matters, connects business and technology by integrating
McKinney’s top management approaches to nurture experts, [4] attains stability in terms of
37
vendor and project partnerships and in integrating and implementing their work (Marshall and
Rossman, 1999).
The procedure for value assurance is not complicated in that it first involves assessment of the
readiness of a project in terms of good sustainable values before proceeding to the next step.
Secondly, it requires that the team be ready in assessing major challenges that are likely to hinder
them in the next step. A cross section of a range of actives which are necessary in achieving
In the above diagram, the identification procedure is required in order to understand the starting
point and the probable issues related to the project before if starts. The assessment process
requires that all ranges of values be identified and considered; in the selection stage, the optimal
alternatives should be identified. Then, everything needs to be defined to ensure the success of
the project. In the post-implementation stage, the researcher should determine the best decisions
The process of adding value has a number of advantages and can help a company avoid negative
perceptions about a project. The process includes the following: [1] provides an external
challenge at each of the decision point levels in a project lifecycle to help assess the decisions
38
made at various dates and identifies areas needing attention in the next stages; [2] the lessons
learned from value assurance can be disseminated across other projects so as to facilitate best
economic, social and environmental impacts and ensures that opportunities are properly
assessed; [4] well-done portfolio analysis will ensure consistency in assessing risks across
In today’s world, a major challenge is establishing positive relationships with third parties,
especially administrators. Effective relationships are necessary to ensure that values are being
maximized. It is usually easier to use available service providers rather than seek alternative
suppliers.
In outsourcing relationships, management leaders face issues regarding whether they have the
right delivery locations and whether businesses they work with are aligned with the performance
and strategy of the organization. There is a big need to understand cost performance that is
relative to other models both within and across sectors. The KPMG’s 6P model is one of the
benchmarking models designed to provide routes for aligning services effectively. It is good to
assess the 6P areas in service delivery, including price, performance and processes. In the
performance part, it is good to ensure that there is continuous, positive performance over the life
of a project. The processing part ensures a continuous change in environment, and the processes
need to be updated and clearly defined so as to make sure that documentation is adhered to in
order to support both corporate and good practice standards (Youssef and Zairi, 1995).
The 6p model includes planning and potential and perception stages. In the planning and
potential step, there needs to be a clear understanding of the business targets, since they are
crucial determinants in the success of a business. The provider of a service needs to demonstrate
an ability to improve and anticipate future needs. Service providers should provide evidence of
39
innovation and a drive for future improvements. On the other hand, a clear understanding of
perceived and actual performance is necessary and should be considered in assessing future
expectations in service level agreements to ensure that contractual agreements are met.
analyzing outsourcing performance. To work, it requires the following strategies be laid down
and enforced: [1] a strategy defining the relationship between the business and the service
providers, [2] an operational strategy which includes day-to-day activities in the management of
organizations, [3] projects activities should be finished within a set time frame. The 6P is split
into two main domains, which are the fundamental domains and the differentiation domains. The
fundamental domains include hard factors which are focused on the core and contract services,
while the differentiation domains are the soft factors that mostly focus on business direction and
strategies. With the fundamental domains, the price should not fluctuate beyond a given level of
consumption, and the charges should be comparable to those provided in the market for any
The differentiation domain is subdivided into the following subsections: planning and potential,
innovation, price prediction, billing accuracy, benefits realization and reporting, resources units
and value and others. The process involves communication, measurement, incentive schemes,
reporting, perception and management, service levels, and service improvement strategy, and in
terms of people and governance, good decision making, process documentation, a governance
structure that allows adherence to the contract, continuous improvement and process adherence
The responsibilities of a specialist in value assurance of a company include several roles. Among
the roles which are performed by these specialists, the following are included: [1] facilitating
value assurance activities such as shaping , assisting peers, performing functional reviews,
40
framing and doing after-action reviews; [2] identifying value adding opportunities and the
processes employed in value assurance; [3] providing feedback obtained from reviews of
technical, economic, commercial, operational and political (TECOP) issues (which include a
range of opportunities in gas/oil projects; [4] providing support and advice to SME managers and
other sponsors of E&P projects; [5] up streaming of BD&I codes of practices; [6] assisting
managers following the IEPMS processing components and participating in IEPMS projects to
complete the asset portfolios; [7] provision of ongoing coaching, teaching and advice in the
application of IEPMS within customer opportunity projects; and [8] capital excellence, whereby
individual needs and customer representations are well represented. Any candidate dealing with
this field of specialization is supposed to have knowledge of E&P management systems and the
gate phase processes. Specialists should be a B-Tech or hold a BS degree with some years of
experience and proper project management certification credentials (Gunningham, Thornton, and
Kagan, 2005)
As shown from above discussion, most companies' projects are segmented into phases, and this
involves making decisions at the end of every phase. The project team presents the results to the
management team and plans for the following phase, and then management makes the final
multidisciplinary expert teams also take part in evaluating decisions. They are involved with the
methodology of value assurance checks, different types of project reviews, preparation for
conducting reviews, techniques and practices for planning and executing the reviews, and the
The concepts of value management and governance comprise the underlying framework from
which this study analyses the use of value assurance systems by oil companies such as ZADCO.
ZADCO belongs to complex and risky environment in which it makes risky investment decisions
41
(Marini, 2011). This drives the company to improve capital effectiveness and assure value of
every project in every stage of development. Value management and governance assures the
Value management works towards ensuring that savings in resources are managed and governed
to convey business value, thereby enabling optimal business strategies to be adopted. In this
writing, it enables us to reconcile the varied expectations and views of stakeholders with regard
to the way value is perceived and managed for initiatives involving change. Its main aim is to
ensure that an enterprise has achieved its core goals and objectives. This is done by choosing and
executing all investments and managing assets by the use of an affordable resource with a
reasonable degree of risk so that there is overall maximization of value in the long run (Stewart,
2010).
Value management is a diverse field that comprises the following interrelated disciplines:
Portfolio management: this involves prioritizing the top IT-enabled investments in the
Benefits realization: This involves having insight into the organization and efficiently
Value governance: This largely deals with the decision-making organ of the company. Its
key responsibilities are monitoring information processes and making pertinent decisions
ZADCO has proven scientific techniques that support the above named interventions. These
techniques ensure that all the stakeholders in the organization are in agreement and that they are
actively involved in supporting the company’s course in the value assurance process. Their
assistance is in terms of services delivery, for example, in the provision of training and coaching
42
so as to enhance the internal capability through teamwork. To facilitate these services, support
offices have been established to encompass the varied needs of the organization. Examples of
support offices found in the company are the portfolio management office, the process
improvement office and the investment management office, among many more.
3.1 Introduction
In this research, a survey was conducted to ascertain the efficiency of ZADCO’s value assurance
ZADCO’s value assurance process through various sources of information. To gain a contextual
understanding, a quantitative and qualitative research was conducted. This enabled the researcher
to establish a thorough examination of all the principles governing the company and to learn how
they facilitate the effectiveness of ZADCO’s activities. In addition to the qualitative research, the
researcher incorporated diverse quantitative sources of information so that both empirical and
objective results of the study can be well known (Kothari, 2005). This helped in reflecting reality
in mathematical terms, thus enhancing the authenticity of the information given in this literature.
Furthermore, quantitative data has the ability to effectively translate data into easily quantifiable
statistical models, thus ensuring that the information passed is easily understood and elucidated
well. Generally, this section will cover the various methodologies adopted in the analysis.
43
3.2 Research Design Strategy
The research design serves as the plan of how the study was conducted. Here the researcher
established the objective of the research together with all the identified research questions that
facilitated the data gathering process so as to fulfil the objective of the study. The main objective
of the study was to ascertain whether or not ZADCO’s value assurance process is effective in the
company’s asset management. Generally, this part of the text helps the researcher in answering
research questions accurately, validly, objectively and economically. It is important to note that
the research design serves two critical roles (Rugg and Petre, 2007).
Its first function is to aid the identification and later the development of rational arrangements
and actions required to commence a study. Secondly, the research design lays prominence on the
quality (validity, objectivity and accuracy) of the procedures adopted during the study. During
the process of research, it is critical to note that a research design is not the same as the methods
Research design can be classified into the following forms: correlational, descriptive,
categorized into two broad methods, namely qualitative and quantitative research designs. This
study will primarily settle on a descriptive design, specifically a survey (Babbie, 2010). The
logic behind the choice of this design is basically based on the financial constraints. That is the
major reason that I ignored other forms of design, such as experimental design, which often
require substantial financial input. Moreover, unlike other forms of design, this type of design
allows the researcher to use both quantitative and qualitative data in establishing answers to most
research questions. This is basically because the descriptive design permits a wide variety of data
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Broadly, the design adopted in this study has five crucial phases (see Figure 5 below). The first
stage deals with identification of the problem under study. Then, the second phase actualizes a
literature review process regarding the effectiveness of ZADCO’s value assurance process.
Afterwards, the researcher embarks on the process of collecting empirical data, methodical
analysis and interpretation of the collected data and finally draws valid conclusions based on the
data collected.
In this research design, the survey methodology ensures that a sample of individuals from the
entire target population is evaluated by the use of data collection techniques such as interviews
and questionnaires (Babbie, 2010). This is aimed at establishing statistical inferences about the
In this research, the researcher conducted a single survey, which focused on the effectiveness of
ZADCO’s value assurance process systems. The success of the entire exercise largely depended
on the wise choice of a representative population sample with regard to the target population.
Despite its ease of use, the survey methodology is often coupled with a number of challenges
that include making decisions on how to evaluate and test questions, supervise and train
interviews, spot and select sample participants, check data files for internal consistency and
45
accuracy, select the approach for posturing questions and collecting responses, and adjust survey
approximations to correct errors (Pett et al., 2006). In this regard, it is therefore mandatory for a
researcher to use authentic means of survey, taking into consideration the difficulties one is
likely to face in the course of action. This will greatly reduce survey challenges.
Qualitative data helps in providing a rich and detailed picture of different aspects of real life
(Rugg and Petre, 2007). It facilitates reality by providing the most original and first-hand
information, thereby enhancing the credibility of the information being gathered. Furthermore,
qualitative data has the following advantages if adopted: it provides a detailed depth of
information, creates openness and thus reduces bias, stimulates personal experiences during data
collection and finally attempts to prevent prejudgments by enabling the researcher to have a
meticulous investigation of the subject matter. Evidence is the most important aspect in research.
At times, it is hard for a researcher to provide substantial proof of his or her findings. This
eventually leads to doubts being cast on the researchers’ work. To curb this menace, qualitative
data is considered the best option for providing tangible evidence to research work. Researchers
often use qualitative data in illuminating hypothesis, attitudes, motivations and even beliefs.
Ideally, qualitative research is usually a first step, since it enables the researcher to simplify the
Qualitative research works under various fundamental principles, which ensure that the data
collection process is conducted without fear or favour. Researchers should always use techniques
that give the respondents a substantial degree of freedom. By doing, so they ensure that they
have created the right atmosphere, which enables people to speak from their hearts without bias.
In this regard, researchers opt to use less rigid strategic approaches that are familiar to the
respondents. Qualitative research always tries to find out a new aspect from the participants other
46
than what is already known. In this research, the researcher correctly used open-ended
questionnaires that are less narrow and more explanatory to gain the true information about the
One of the major principles of qualitative research is that it often involves few respondents or
participants. This is perhaps because of the methods used in data collections. For example,
interviews require a small sample of the target population for valid inferences to be made. It is
important to note that the small number of individuals involved in qualitative research does not
make the research less scientific. The method still remains authentic and valid, regardless of the
The approach employed in this paper focused on three basic areas and issues related to those
Needs: What value assurance needs are currently being met by ZADCO? Which ones are
not being addressed at the moment, and which ones are not being met at all?
Barriers and drivers: What are the common drivers of the value assurance process, and
These three key areas offered the outline around which the information collected was
In this paper, the researcher adopted a historical type of case study in which a holistic approach
of describing and analyzing ZADCO historically was illustrated, laying emphasis on its value
47
assurance process. Case studies are a form of qualitative research used to collect substantial
information from a small group of people or a whole population of people. It can also be defined
interviews, tests, performance records and writing samples to collect samples for case study.
Historical case study helps the researcher in explaining complex issues, thereby strengthening
what is already known by the participants. Moreover, it lays emphasis on the detailed contextual
scrutiny of the narrow relationships of various parameters found during survey. The diagram
below shows the process by which information is disseminated through a case study approach.
As shown in the above diagram, the case study has the following targets in this paper:
Describing the phenomena: The researcher used a case study approach in describing the
Explaining: This approach helped the researcher in explaining the reasons ZADCO’s
value assurance process is effective in the influence of asset management and overall
capital effectiveness.
Predicting: The researcher employed this method in anticipating the success of the
company regarding its value assurance process, thereby establishing the likelihood of
48
Planning improvements: A historical case study looks at the historical background of the
subject matter. In that regard, the researcher was able to obtain a record of historical
allowed the researcher to deduce whether a significant probability of success exists in the
company’s value assurance process and whether its effectiveness will be permanent or
ZAKUM Development Company, commonly known by the acronym ZADCO, was formally
established on 15 November 1977 as per Law No. 9, which was issued by the late sheikh Bin
Sultan Al-Nahyan. ZADCO’s main responsibility was to develop the region of Zakum for the
interest of investors and partners. At present, ZADCO has three shareholders, namely the Abu
Dhabi National Oil Company, which is commonly known by the acronym ADCON, ExxonMobil
and lastly the Japan Oil Development Company Ltd, which is also commonly known by the
acronym JODCO. The three shareholders own shares in the ratio of 60:28:12, respectively. On 1
April 1988, ZADCO merged its operations with the Umm Al-Dalk Development Company
(UDECO). The main aim of this union was to cut the operational cost of the two companies,
thereby increasing profits in the long run. The first ship carrying crude oil from the region was
seen on 24 May 1983. This was an achievement for ZADCO, since it had already publicized
itself globally. In 2000, ZADCO reorganized itself into units of business whereby it was able to
effectively undertake trade with the outside world. By the end of 2000, ZADCO had exported a
total of 4000 oil shipments. This was a major achievement as far as the value assurance process
is concerned. Due to its efficiency in value assurance and management, ZADCO received a
major award, the ADNOC HSE Award in 2007. This was a major boost considering the fact that
the company was then celebrating its 30th anniversary in the same year. It is important to note
49
that since then, the oil company has received two more ADNOC awards (in 2009 and 2011,
respectively).
Subsequently, the company has been able to meet its objectives through its value assurance
process systems. It has done this while ensuring the safety of its personnel and preserving and
maintaining a clean environment. Moreover, the company has been able to achieve an
outstanding record in the area of safety, which has been marked by an integrated performance in
An extensive variety of data that focuses on ZADCO’s value assurance process was available.
Information in this study was largely collected from primary data sources consisting of a sample
of 50 respondents who were the primary stakeholders of ZADCO. The data collected has been
interpreted in relation to ZADCO’s value assurance process. This aspect was of great
importance, since it enabled the researcher to distinguish between ZADCO’s value assurance
process against those of other oil and gas companies around the globe. Moreover, the evaluation
measures were formulated based on the research conducted in order to determine the
effectiveness of ZADCO’s value assurance process and any change management needed in the
company.
Despite the existence of various methods used during the collection of primary data, the primary
data collection techniques in this survey consisted of questionnaires, personal interviews and
observations. The researcher utilized both open- and closed-ended questions in administering
questionnaires to various individuals in the company (Royse, 2008). These questionnaires were
administered to various respondents via a number of ways. These included hand delivery, postal
addresses and emails. Consequently, the delivery of the questionnaires was made in time to
enable respondents to prepare adequately in answering the questions. In particular, the secondary
50
data sources utilized in this survey were mainly organizational databases, scholarly journal
articles, trusted web sites, conference papers and reference books (Montello et al., 2006). Only
sites relevant to the value assurance process were visited. Finally, the argument in favour of
using many secondary data sources in this research was to increase the precision of the data
The organization of data in a research study is important in order that data can be monitored,
tracked and retrieved for future use. A computer database is a very useful tool to achieve this.
With the increasing trend of technology advancement, several statistical tools have been
introduced to aid in studies. An example of this is the Computer Aided Qualitative Data Analysis
Software, which enables data recording, storage and retrieval (Baxter and Jack, 2008).
In this research, the researcher used the software package for storage of credentials, such as
interview transcripts and questionnaires. Subsequently, the software was used in the indexing of
manuscript units and coding of research information, thereby refining and establishing categories
within data contents. In general, the programme significantly reduced the time typically needed
for sorting, cutting and pasting interview records (Warren and Ramakrishnan, 2006). In the long
run, the researcher was able to effectively merge the data together with ease. Initially, the
researcher concurrently employed the use of a detailed logbook, which allowed the tracing of
both the progress made in data analysis as well as the changes encountered in the analysis of
data. This allowed the researcher to exclusively focus on the methodological issues faced during
research (Baxter and Jack, 2008). Finally, the researcher settled for a computer-aided coding
Reliability and validity: ZADCO is an important oil producing company. Its value
assurance process is of great interest globally, especially to its competitors. To that effect,
51
it is therefore imperative to always keep the information obtained about the company
confidential. Above all, the information must be kept in its original state. Therefore, the
Objectivity: The quality of research entirely depends on the researchers’ ability and
efforts to establish accurate data collection. In addressing this issue, coding facilitates
A common criticism of the coding method is that it aims at converting qualitative data into
empirically legitimate data containing scientific-oriented properties. The critics argue that coding
drains the variety and richness from data. In this survey, the researcher responded promptly to
this argument by establishing comprehensive descriptions of codes and by linking the specific
codes appropriately with regard to the underlying data, thus retaining the richness of the data
kept.
Data accuracy is significant on all fields of study and the data collection. Dependability and
truthfulness of a case study depend on the accuracy of data gathered. Data accuracy is made
through choosing the best tool that appropriate and fit the study. In this study, data accuracy has
been accomplished through reducing errors in each particular data item, avoidance of protocol
To assure the accuracy of the study, which also affects its validity and credibility, the researcher
at the start of the study. It was also necessary to establish a research design that could fit the
objectives of the study. To address this issue, a systematic collection and treatment of data was
heavily emphasized for proper analysis, which is a key element for obtaining credible results.
52
Quality is a crucial element in any work. The quality of this study has been earned with the use
of qualitative research itself as opposed to quantitative research (Johnson and Christensen, 2012).
Generally, evaluating any research work can be done through certain tools such as analysing
3.7.1 Validity
According to Mitchell, Mark and Janina (2013), research validity can be existing in two shapes:
internal and external validity. Internal validity it main interest is the point when the study have
the capability to reflect it result in the realism. It tends to generate a essential relationship
between the realism and the collected data as opposed to imitation relationships. However,
work, internal validity of the study has been achieved by carefully reviewing the information
collected and recorded during the interviews. Conversely, external validity requires the scope to
The study results can more easily be generalized if several situations have been considered
during the study and if similar results have been found (Mitchell, Mark and Janina, 2013). In this
study, the external validity was achieved with a large number of respondents and a wide range of
secondary data sources. The secondary sources of information largely emphasized the
effectiveness of ZADCO’s value assurance process. The validity of this information can be
sourced from the writings used to obtain substantial information about the company’s value
assurance process.
3.7.2 Reliability
Reliability refers to the rate to which research can be repeated and still obtain the same study
results. Since it is not practical for a qualitative study to be completed more than once, the
reliability of this study has been realized by establishing trustworthiness. Since this research is
53
qualitative in nature, the research has been made auditable by frequently checking that the
interpretations are transferable, credible, confirmable and, above all, dependable. In addition, the
research has tightened the reliability of the study by providing an in-depth explanation of the
underlying theories and perspectives of the study and the details regarding interviewees’
selection and background. This aspect greatly helped in authenticating the information obtained
The case study shows some restriction and boundaries base on the approach that adopted in this
study which may have affected the truthfulness of the result. It is important to be aware of these
restrictions and limitations, so that actions may be performed to avoid such limitations. On
qualitative case study the limitations was focused on missing of rigidity, unsuitable base for
. It is important to drag to attention that results from this study are difficult to generalize, since
the survey only focused on a single subject, which was ZADCO’s value assurance process.
Regardless of the comprehensiveness of this study and the choice of the representative sample,
the researcher faced various limitations in the course of action. Some of the information
collected through interviews about the effectiveness of ZADCO’s value assurance process had
some inherent weaknesses that could affect the conclusion reached in this text in a way. Some
respondents of this survey were required to base their responses on their own personal
knowledge based on the records presented. Consequently, it is impossible to establish the reality
and validity of the records used by the respondents to respond to the questions asked. Therefore,
there is a likelihood that some of the information given was biased, thereby posing a challenge to
54
The impact of the lack of a homogeneous definition of the value assurance process posed a great
challenge in the study. Some respondents were unable to establish the meaning of value
assurance, thereby creating a need for clarity. This affected the reliability of some of the
In the research conducted, it was evident that some questionnaires sent through the post office
were not returned or were returned when it was already too late to use the information. This
reduced the number of respondents so that the research did not meet the required number.
were time consuming, and the detailed qualitative data created a challenge in analyzing and
interpreting the information gathered from the respondents in most cases. This was because the
researcher conducted an open form of questionnaire in some interviews, which allowed the
Data confidentiality is an important factor that is expected by the respondents in any study. This
was firmly the aim of the research conducted (Krishnaswamy, 2006). The survey aimed at
determining the confidence level in ZADCO’s value assurance process in relation to any other
oil and gas company globally. As expected, the pollster collected data from the company, and the
information gathered was used for legitimate purposes. Ideally, ethics have become a major
Before carrying out this study, every study participant was obligated to read and understand the
provision relating to social research ethics. This helped in minimizing the violation of rights of
respondents during the study. Moreover, each participant was required to sign a compulsory
form declaring that they had agreed to operate within the scope of the research ethics, which
55
emphasized research integrity, a friendly researcher-participant relationship and, above all, non-
Often, qualitative research captures data that is recorded in narrative form. Therefore, the
researcher uses qualitative methods in observing and describing conditions apart from entirely
explaining them (Yang, 2008). In this regard, the researcher used the basic qualitative principle
for research, which dictated that no one was allowed to tamper with any natural settings in the
study. During the study, caution needed to be taken seriously so as not to cause damage to any
possessions of ZADCO Company. It is necessary to always bear in mind that the responsibility
of conducting research is to gain research information and not to change the existing principles
underlying the usual operation of the institution in scrutiny. Therefore, all participants were
required to exhibit high levels of integrity so that the environment could be kept as it was before
the survey.
Privacy is a very crucial aspect in research. To address this issue, all the participants were
required to maintain exceptional levels of confidentiality and privacy in terms of any information
they get access to regarding ZADCO’s value assurance process. In summary, the following
Simultaneous submission: All the publishing protocols were keenly followed to avoid
assurance process.
Sanctions for violation of integrity: Any violation of the stipulated ethics guidelines
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In review, it is the responsibility of the researcher to protect all the participants involved in the
study. This involves obtaining consent, protecting privacy, and ensuring that participants are
The survey results were presented in terms of descriptive statistics, as shall be discussed in this
chapter. To gain a contextual understanding relevant to the value assurance process at ZADCO,
57
increase the viability of the responses given, both closed- and open-ended questionnaires were
company. Owing to the sheer magnitude of the study, only representative sample results of the
entire population will be discussed in this chapter. The participants involved in the study were
between 21 years and 69 years old. However, in order to diversify the study responses, the
participants were selected from each unit of the company. This included the Commercial
Department, the Department of Corporate Planning, the Department of NFPD, and the
Department of Construction and Commissioning. For the purpose of this research, findings from
First, 30% (15 responses) of the entire respondents interviewed were engineers working in the
Commercial Department of the company. These employees have worked in the company for a
period of between four and 15 years. Of them, 10% (five respondents) came from the operation
management level, 10% (five respondents) from the middle management level, and the other
According to 80% of the engineers working in the commercial department, VAP has been
utilized by the company for a period of more than six years, and for that reason, they strongly
agree with the assertion that the value assurance process at ZADCO is effectively timed.
Moreover, they assert that the value assurance process is frequently applied in the company.
However, when asked about the environmental issues influencing ZADCO and the VAP, they
gave varied responses, and 90% (45 respondents) of these engineers suggested environmental
Pertaining to elements of ZADCO’s value assurance process and the way they are integrated into
the company’s investment decisions, 85% responded by highlighting three elements, namely
“choose right”, “develop right” and “deliver right”. Additionally, they claimed that the elements
58
are integrated by the implementation of VAP stages for appropriate decisions aligned with
business objectives. With regard to the results of the company’s VAP in maximizing field
development, 90% of them said that the process has helped in the achievement of distinctive
When asked about the challenges/setbacks involved in the implementation of the VAP at
ZADCO, a variety of responses were obtained. However, a majority of respondents argued that
cost and time posed a very high risk for project implementation. With regard to what can be done
to improve the applicability and successfulness of the process at ZADCO, 75% of the engineers
suggested that essential training of all related personnel regarding implementation of the VAP is
needed for effective and appropriate decisions to be made. Training that results in improved
decision making will help to achieve the primary desired outcomes for the VAP.
To conclude, 64% of these respondents gave additional information on the operation of the VAP
at the company. For instance, one respondent department asserted that, “VAP/VARs are applied
with success over time and extended to non-technical projects such as office refurbishments and
IT”. He then added that “the value assurance reviews are focused on a higher level to ensure that
Second, 25% of the respondents in the study came from the Department of Corporate Planning.
Most of the personnel in this department have worked for more than 12 years in the company,
and 15% belong to the strategic management level, 5% to the middle management level, and the
other 5% came from the operation management level. According to 90% of these respondents,
the VAP has been fully utilized in the company for a period of more than six years.
Consequently, they agree that the introduction of the value assurance process at ZADCO was
effectively timed. They also affirm that the VAP is frequently applied at the company.
59
Pertaining to the environmental issues influencing ZADCO’s concerns in terms of the VAP, 60%
claimed that the HSE team is heavily engaged in the VAP process and in enhancing the
gatekeeping process. Additionally, the team advises which HSE studies should be conducted for
each project to be successful. On the subject of the elements of ZADCO’s value assurance
process and how they are integrated into the company’s investment decisions, over 80% affirmed
that ZADCO’s VAP ensures that all projects are generated, selected and implemented in a way
that minimizes risk by studying different options along with the cost. When asked to name some
of the results of the company’s value assurance process in maximizing field development
opportunities, over 50% suggested the need for the early stages of VAP process development
scenarios to be integrated with facilities development. Pertaining to whether there are any
95% said “yes”. Consequently, they supported their answer by giving the following responses.
Some employees are ignorant about the VAP process, but ZADCO corporate planning (CP)
conducts regular awareness sessions for all employees. Also, bypassing CP and getting top
management approval for one of the VAP stages without approaching shareholders is an issue.
Additionally, cost and time factors have been very detrimental in the implementation process. In
this regard, a majority of respondents recommend that in order to increase the applicability and
successfulness of the process at ZADCO, the following should be done: keep conducting VAP
awareness sessions to all ZADCO employees, interlink the VAP system with the commercial
system, and conduct close-out meetings with stage sponsors after each gatekeeping process.
In conclusion, over 75% these respondents gave additional information about the value assurance
Complete VAP (CV): This follows all stages of VAP, i.e. identify, assess, select, define,
Principles of VAP (PV): Identify, assess, select, and define stages are combined under
One of respondents in this category, however, said that VAP selection is made using a matrix
based on two variables, namely project complexity and project cost. This particular interviewee
offered a remarkable illustration of the two variables, as shown in the figure below.
Complexity
Third, 20% of the respondents came from the Department of NFPD. Members who were
interviewed from this department have been employed in the company for a period of between
eight and14 years. Most of these employees work under the middle management level and the
strategic management level. For instance, 12% came from the middle management level, while
8% came from the strategic management level. Just like other respondents, 88% of these
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participants claimed that VAP has been fully utilized at ZADCO for more than six years.
Similarly, 91% of them agree with the assertion that the introduction of the value assurance
process at ZADCO was effectively timed. However, 11% of respondents claim that the value
assurance process is moderately applied, while 89% claim that it is frequently applied. When
asked to list the environmental issues that influence ZADCO’s concerns in terms of the value
assurance process, they gave a variety of results. However, most of the respondents listed two
aspects: awareness of the value assurance process in non-project divisions and shortcuts to the
With regard to the elements of ZADCO’s value assurance process and how they are integrated
into the company’s investment decisions, they responded by emphasizing the same elements
listed by other respondents (i.e. asses, select, define, execute and operate). It is evident from the
responses that each of the aforementioned stages is detailed to a level which defines the activities
required to complete the stages and to develop decisions on whether to invest in moving the
project to the next stage or not. Also, 94% of them claim that the VAP supports the company on
implementation of projects. This is done by following best practices and structural methodology
With regard to the results of the company’s value assurance process in maximizing field
development, survey participants gave varied responses, though most of the responses applauded
the effectiveness of the process. For instance, one of the respondents said that the process gave
approach”. Consequently, when they were asked to give the challenges/setbacks involved in the
implementation of the value assurance process, most of their answers were based on the change
in procedures followed in the process. For example, one participant indicated that “shortcuts of
62
VAP procedure due to urgency and the change in management hindered the implementation of
the process as change scope was not in line with project stage”.
Pertaining to what can be done to improve the applicability and successfulness of the process at
The MOC procedure awareness campaign to ensure the changes, impact/evaluation and
A fast track should be developed for the VAP for urgent requirements/projects.
Fourth, 15% of the respondents came from the Department of Project Supports/New Field
Project. Most of the employees in this department have been working for the company for a
period of between three and nine years, and they operate under the operation management level
and middle management level. To be precise, 10% of the respondents belonged to the operation
management level, while 5% accounted for employees from the middle management level.
According to 96% of these respondents, the value assurance process has been fully utilized at
ZADCO for more than six years. A total of 90% of participants strongly agree with the idea that
the introduction of the value assurance process at ZADCO was effectively timed. However, 5%
of them only agree with that idea, while none of them disagree. Regarding how often the value
assurance process is applied at ZADCO, 84% of respondents argue that the process is frequently
applied in the company, while 16% claim that it is moderately applied. Conversely, concerning
the environmental issues that influence ZADCO’s concerns in terms of the value assurance
process, 92% of these participants argued that the changing environment was the main activating
factor.
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On the question on the elements of ZADCO’s value assurance process and how they are
integrated in the company’s investment decisions, 94% overwhelmingly indicate that “choose,
develop, deliver with the agreed quality, and HSE measures in addition to economics
parameters” are the main elements of the process. Similarly, when asked to name the results of
the company’s value assurance process in maximizing field development opportunities, over
90% claimed that “the approved economics in addition to high excellence in HSE/quality” is the
With regard to the question seeking to establish whether there are any challenges/setbacks
involved in the implementation of the value assurance process at ZADCO, over 84% of
respondents placed blame on cost and prolonged project time. For example, one participant gave
the following response on that question: “very minimal like prolonged schedule/additional cost
Lastly, 70% of respondents conclude that regular and fixed training sessions, as well as the
inclusion of VAP as part of new employee induction course, will help in improving the
applicability and success of the process at the company. However, 28% of these individuals
recommend that the VAP requires more awareness by all ZADCO employees.
Fifth, 10% of the respondents came from the Department of Construction and Commissioning -
NFPD. Over 70% of employees in this department have been employed in the company for a
period of six to 14 years. They operate within the middle management level and the strategic
management level. A total of 86% assert that the value assurance process has been fully utilized
at ZADCO for more than six years. Subsequently, 82% strongly agree with the idea that the
process was effectively timed at the company. With regard to how often VAP is utilized in the
company, 88% of them claim that the value assurance process is frequently applied.
64
Regarding to the question about the environmental issues influencing ZADCO’s concerns in
terms of the VAP, over 92% of participants alluded to the notion that the prevailing
environmental factors are the main triggering factors. For instance, one respondent asserted that
“environmental regulations and standards are becoming more and more complex, and based
upon that rationale, ZADCO’s management is committed to adhere to those disparities in full”.
Pertaining to ZADCO’s value assurance process, 92% of them gave responses relating to the
business case, the structural approach to project selection, and execution, and full alignment with
overall business objectives. Most interestingly, one of the participants claimed that “these VAP
demands are integrated there, and therefore the value assurance process ultimately facilitates
With regard to the results attained by virtue of the company’s VAP in maximizing field
development opportunities, 89% of these participants responded that the company has attained
full project results through effective implementation of the process. One of the respondents said,
“VAP helps in making sure that the projects executed by the company are properly chosen, well
planned, properly sequenced and executed in order that the final outcome is successful in
meeting the company’s goals and objectives”. Pertaining to the challenges and setbacks involved
in the implementation of the value assurance process at ZADCO, 78% affirm that the time factor,
a constantly changing environment, and impatience among project planners are the main
challenges. An example is this response from one of the study participants: “Challenges &
setbacks exist, including prolonging project durations and the constantly changing environment
of projects”.
Finally; in order to improve the applicability and successfulness of the process at ZADCO, one
of the participants in this department recommended that there should be more awareness of the
VAP. He however elaborates on this point by asserting that, “I have worked for BP before, and
65
they provide a lot of training and awareness to their staff on CVP (same as VAP), unlike
ZADCO”. He adds that, “I have been in the company for six years and never attended training or
awareness sessions/workshops”. Moreover, the respondent recommended that the process should
5.1 Conclusion
The current study is expected to add to prior research and to the body of knowledge regarding
the issue of exploration. In this regard, the current study provides the basis for answering
questions encountered in the prior research. The positive feedback from the participants clearly
advocates that the process is of great economic importance to the company at large. Based upon
the results obtained from the Commercial Department, the Department of Corporate Planning,
the Department of NFPD, and the Department of Construction and Commissioning, there is valid
evidence that the value assurance process has been fully operational for a period of more than six
years. Most interestingly, over 85% of responses obtained from all units of the company indicate
that the VAP is frequently applied in the company. This clearly shows that its implementation is
As discussed in Chapter 4, it is also evident that over 89% of employees interviewed agreed with
the idea that the VAP enabled the company to maximize field development opportunities. Given
the overwhelming number of participants who asserted that VAP ensures that projects are
executed properly, well planned, properly sequenced and executed well, it is rational to conclude
that the VAP is of great significance to the company. Moreover, over 90% of responses obtained
illustrate that the process facilitates approved economics in addition to high excellence in
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HSE/quality. Owing to the above responses regarding the VAP at ZADCO, the study shows that
The current study is expected to fill the gap in the field of study related to the value assurance
process of oil and gas companies. The investigation into the company’s asset management can be
a basis for studying the oil and gas industry and its influence on society. The current study is
expected to be significant; since its goal is to add to the body of knowledge regarding the issue of
exploration and since oil and gas are two of the most important commodities in the world and
becoming scarce. In this regard, it is therefore wise to note that; the current study provides the
basis for answering questions encountered in the prior research. Basically, it provides continuity
to the initial research problem and seeks to identify strategies to be implemented in the system in
order to check out the problem under study. Significantly, the current research relies entirely on
prior research in the establishment of ZADCO’s historic background, which forms a major
platform in the establishment of the company’s market trends over the past years. The market
trends are vital in assessing the company’s economic growth over time. Growth in this case gives
an inference towards the effectiveness of the current systems of management and with regard to
previous supervision. The researcher has noted that prior research sought to establish the
This research was diverse and did not give account of internal mechanisms facilitating ZADCO’s
economic development. The current research gives an account of the internal drivers of the
company’s growth and development. This clearly provides an overview of the significance of
ZADCO’s value assurance process in terms of asset management and serves as a pillar for
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5.3 Implication of service
Findings in the current study may also have implications to practice. Results can serve as a basis
for any strategic modification necessary for improving the value assurance process. This can also
help management make better decisions that maximize investments made on project
developments, since companies aim to derive greater investment returns from their assets. This is
especially important for ZADCO, since it belongs to an industry where its assets are considered
waning assets. Oil keeps getting scarcer and scarcer over time. This is basically due to it being
overused. Moreover, human beings have failed to employ the use of renewable sources of energy
in carrying out economic activities. The results obtained in this research can be used to
encourage the incorporation of value assurance processes at other oil producing companies,
thereby facilitating outstanding management of this important asset that might be depleted if not
properly administered. The world economy is currently facing financial challenges owing to the
fact that sustainable resources are decreasing. This has forced most oil producing companies to
hike the prices of their products. The end result has been an increase in the poverty level of most
developing countries. In the long run, the developing countries have had to rely on the developed
countries for economic empowerment. If more companies utilized a value assurance process at
an earlier stage, then perhaps products could be made available at a more affordable price. The
researcher advocates that major companies should test the value assurance process and its impact
on asset management and its importance in attaining core goals and objectives.
Further research is needed to strengthen this study. This is especially important since this is a
case study, which is focused on the value assurance process of only one company. It is therefore
necessary to gain comprehensive knowledge of the value assurance process from a diverse
68
perspective. This can be achieved through a contextual study of a wide range of companies and
assessing their value assurance processes. This will be helpful in the establishment of authentic
In review, the method adopted in this study was entirely a case study approach. It was in the
form of qualitative research. Consequently, this method faced some limitations in the process of
data collection. The researcher faced challenges in using this qualitative case study to establish a
foundation for scientific generalization due to the small number of subjects involved in the
survey. This is exclusively because the researcher conducted a single survey to infer information
about ZADCO’s value assurance process. In addition, massive documentation and difficulty in
the data collection exercise posed a major challenge as to the accuracy of the data collected.
Furthermore, it was hard for the researcher to establish the validity of the information given
during interviews due to the high probability of bias associated with the method of data
collection. The method employed may have influenced the credibility of the results obtained
during the survey. It was difficult for the researcher to identify the reality behind all the
responses obtained. Owing to the limitations of the research methodology, further research is
crucial to attain a valid and reliable conclusion regarding the effectiveness of ZADCO’s value
assurance process.
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76
APPENDIX A
Student ID Supervisor
DECLARATION
I confirm that I have read and understood the University Policy on Academic Honesty and that
the work contained in the attached dissertation is my own work. Any assistance, of any type,
has been acknowledged in my bibliography.
I also understand that the university may use plagiarism detection software on any submitted
work, whether plagiarism is suspected or not.
I do hereby consent/ do not consent (delete as applicable) that my work is submitted into
the plagiarism detection software to check the originality of my work.
_______________________________ _______________________________
Signature Date
Official stamp:
77
APPENDIX B
By
Student ID number 110028
Faculty of Business
Dissertation Supervisor
MAY-2014
78
APPENDIX C
Kindly respond to the following questions. The responses provided are meant for research
purpose and will be highly private and confidential (Please follow the instructions given in each
question carefully).
A. Demographic Information
1. Gender________________________________________________________
2. Age___________________________________________________________
3. Profession_____________________________________________________
4. Department_____________________________________________________
6. Management level
7. How long have value assurance process been fully utilized in ZADCO according to you?
Less than 1 year [ ] 1-3 years [ ] 4-6 years [ ] more than 6 years [ ]
8. Do you think the introduction of value assurance process in ZADCO was effectively
timed?
79
10. What are the environmental issues that influence ZADCO’s concern on value assurance
process?
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
11. What are the elements of ZADCO’s value assurance process and how are they integrated
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
______________________________________________________________________
12. What are the results of the company’s value assurance process in maximizing field
development opportunities?
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
13. Are there any challenges/setbacks involved in the implementation of Value assurance
________________________________________________________________________
________________________________________________________________________
80
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
14. What do you think can be done to improve the applicability and successfulness of the
process in ZADCO?
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
Additional Comments
15. In case you have any additional information about value assurance process at ZADCO,
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
81