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Royal Dutch Shell plc

Opportunity Realisation Manual

Version 1: 24 November

CONTENTS
1

SUMMARY

OPPORTUNITY REALISATION MANDATORY REQUIREMENTS

EXPLANATION OF GOVERNANCE, ROLES AND RESPONSIBILITIES

3.1

Line of Sight

3.2

Business Opportunity Manager (BOM)

3.3

Decision Executive (DE)

3.4

Decision Review Board (DRB)

3.5

Key Competences of BOMs, DEs and DRBs

3.6

Opportunity Team

EXPLANATION OF THE OPPORTUNITY REALISATION PROCESS

4.1

The Six Phases of an Opportunity

4.2

Opportunity Realisation: mandatory activities and deliverables

10

4.2.1 Mandate

10

4.2.2 Opportunity Framing

11

4.2.3 Opportunity Roadmap, Risk Management & Stakeholder Engagement Plans

11

4.2.4 Opportunity Assurance Plan

12

GUIDANCE ON THE PRACTICAL APPLICATION OF THE ORM

13

5.1

Scaleable Application of the Opportunity Realisation Manual

13

5.2

Opportunity Archetype Guides

13

5.3

Opportunity management and other requirements

13

GLOSSARY

14

Terms in purple font are defined or referenced in the Glossary at the back of this manual
The Executive Vice President Controller is the custodian of this manual.

1 Summary
The Opportunity Realisation Manual (ORM) provides mandatory instructions and guidance on the
application of the Group Governance and Management Standards with respect to the management
of opportunities within Shell. The ORM is a component of the Shell Control Framework with links
to both the Investment Decision Manual (IDM) and Joint Venture Manual (JVM)1.
The Shell Control Framework
Foundations

Organisation

Processes

External Regulatory and Legal Environment, External Stakeholders


Shell General Business Principles
Royal Dutch Shell plc Board, Chief Executive and Executive Committee
Statement on
Risk Management
Standards, Manuals
and Guides

Code of Conduct
Delegation
of Authority

Strategy, Planning
and Appraisal

Assurance and Compliance


Businesses, Functions

Legal Entities

November 2007

Governance and
Management Standards
Investment Decision Manual
Joint Venture Manual
Opportunity Realisation Manual

Archetype Guides
Illustrations of how the
requirements of the
Opportunity Realisation
Manual can be applied in
different opportunity types

Opportunity Realisation is defined in Shell as any activity that, if pursued through to execution,
will require an Investment or Divestment Proposal (as detailed in the IDM). These include capital
projects, acquisition/divestment opportunities, or integrated cross-Business opportunities2.
The ORM shall be applied across all Shell Businesses and Functions to all opportunities with a
headline size exceeding US$ 100 mln (on a 100% basis) or involving unusual risk3. Individual
businesses may choose to apply the ORM to opportunities with a smaller headline size.
The ORM sets out a rigorous approach to the management of opportunities to ensure that they
are appropriately defined, evaluated and executed. It is founded on:
A
 decision-driven Opportunity Realisation Process (ORP), that promotes good preparation,
planning and appropriate assurance in the delivery and execution of an opportunity
Competent people with clear roles and responsibilities leading, staffing and governing opportunities
A clear governance structure for the opportunity
Section 2 lays out the Opportunity Realisation mandatory requirements. Sections 3 to 5 provide
further explanations of these requirements and guidance on their application.
The application of the ORM is intended to be scalable so that it is fit-for-purpose for the
dimensions, complexity and risk profile of the opportunity. For specific opportunity types,
Businesses/Functions may have additional requirements and offer further guidance on key
activities and best practices. Where appropriate these are referenced in the Opportunity
Archetype Guides (available separately) that highlight for different opportunity types, the key
activities that are typically undertaken.
With respect to non-controlled Joint Ventures, Shell should use its influence to ensure that the
intent of the ORM is followed, taking a risk-based approach.
1
2

Nothing in this manual overrides the requirements and authorities set out in the IDM.
Long-term purchase and sale contracts are however excluded from mandatory application of the ORM.
The definition of headline size can be found in the IDM.

The mandatory requirements outlined below shall be applied to all opportunities with an
anticipated headline size above USD 100mln (on a 100% basis) and all opportunities involving
unusual risk4. For each opportunity all mandatory requirements must be adequately documented.
Further explanation of each of these mandatory requirements can be found in Sections 3 to 5.
(1) All opportunities shall have a common governance structure, which consists of: (Section 3)
a
 Business Opportunity Manager (BOM) accountable to the Decision Executive for the day-today management and delivery of the opportunity.
a
 Decision Executive (DE), accountable to the individual in the Shell organisation with the
appropriate delegated (organisational) authority for the opportunity. The DE is responsible for
steering, supervising and supporting the BOM as well as ensuring the provision of appropriate
assurance of the opportunity.
a
 Decision Review Board (DRB) which contains the relevant expertise to support the DE in his/
her decision making. Finance has the right to nominate a representative to participate in each
and every DRB.
a
 Line of Sight, the single chain of accountable individuals from the opportunity team via the
BOM and DE to the individual in the Shell organisation who holds the appropriate delegated
authority for the opportunity.
a
 Mandate, agreed up-front between the BOM and the DE that gives the BOM instructions
but also room to manage the opportunity on a day-to-day basis. The Mandate, which must
be within the authority delegated to the DE through the Line of Sight, sets out the objectives
and boundary conditions for the opportunity, as well as key assumptions. It also describes
key accountabilities, the governance structure and how the opportunity will be resourced. (see
Section 4)

Opportunity Realisation Mandatory Requirements

2O
 pportunity Realisation
Mandatory Requirements

(2) O
 pportunities shall be led and staffed by professionals with the appropriate level of
competence and experience (Section 3)
(3) Opportunities shall be managed through a decision driven stage-gate process (Section 4)
The opportunity must be progressed through the six defined phases of the ORP. In this process
there are key decision gates at which it is decided whether to stop, hold, recycle or proceed.
(4) The DE is personally accountable that as a minimum there shall be: (Section 4)
O
 pportunity Framing, an activity which defines the scope of the opportunity through
consideration of the Technical, Economic (and financial), Commercial, Organisational,
stakeholder and other Political (TECOP) aspects of the opportunity. Mandatory outputs of
Opportunity Framing, which are then updated, as required, throughout the lifetime of an
opportunity are:
a
 n Opportunity Roadmap, which outlines the plan to deliver the opportunity, including the
timeline, milestones, decision gates, resource requirements and key deliverables.
a
 Stakeholder Engagement Plan, which identifies key stakeholders, what is known about them,
and sets out the plan to understand stakeholders perspectives, engage with them and create
both internal and external alignment.
a
 Risk Management Plan, which identifies key risks and upsides and plans how the risks will
be mitigated and the upsides captured.
a
 n Opportunity Assurance Plan, which sets out the assurance events and reviews that will
promote good quality decisions in all phases of the opportunity and how functional/technical
discipline controls will be applied.

In exceptional cases, derogation of the mandatory requirements may be justified for individual opportunities.
Derogation must be authorised in writing by the individual in the Line of Sight with the appropriate delegated authority for
the opportunity.

3E
 xplanation of Governance,
Roles and Responsibilities
3.1 Line of Sight
The successful delivery of an opportunity is supported by clear definition of roles and responsibilities,
personal leadership and a disciplined approach of individuals executing their responsibilities.
Delegated organisational
authority (IDM)

For all opportunities there will be a single


Line of Sight (LoS) from the opportunity team
via the BOM and DE to the individual in Shell
with the appropriate delegated authority.
This LoS consists both of delegated authority
(as defined in the IDM) and the separate
hierarchy within the opportunity team itself,
which includes the DE and the BOM. All
individuals involved with an opportunity
must be clear where responsibilities and
accountabilities lie.

Board

Chief Executive

Executive Director

Exec. Vice President

Vice President

Note: DE can also link to


ED, CE or VP depending
on size of opportunity

Opportunity
Decision
Review Board

Decision Executive
Business Opportunity
Manager
Team

Three key roles in the governance of an


opportunity are:
(1) The individual (likely to be Executive Vice
President or higher) who has the delegated
authority for the opportunity (see Note 1)
(2) Decision Executive (DE)
(3) Decision Review Board (DRB) Member

The governance (i.e. steer, supervision,


support and assurance) and decision
Opportunity Line of Sight
responsibility for the opportunity, along with
boundary conditions, are vested in the Decision Executive. This covers the key decisions required to
develop the opportunity such that it can be presented to the authority holder in the form of a PCN or
an Investment Proposal. The Line of Sight above the DE sets expectations and provides clear direction
to the DE with respect to the opportunity. The Decision Executive takes the responsibility delegated
to him/her for all decisions taken related to the opportunity that are within his/her remit, and is
expected to champion decisions that are not within his/her authority to the appropriate level up the
Line of Sight.
The DE delegates the daily management of the opportunity to the Business Opportunity Manager
(BOM) in the form of the Mandate. The BOM takes day-to-day responsibility for the delivery of all
aspects of the opportunity including ensuring the opportunity is framed and planned, and activities are
executed effectively (see section 4.2). The Decision Review Board members support the DE, enabling
him/her to take good quality decisions. The DRB also supports the BOM to facilitate the delivery of
the opportunity, but neither individual DRB members nor the DRB in its entirety have decision-making
authority over the opportunity.
Notes:
1. D
 elegated (Organisational approval) authorities are as defined in the Investment Decision Manual
and Manual of Authorities. The size and nature of the opportunity will determine who in the Line of
Sight (VP, EVP, ED , CE or RDS Board) will have delegated authority for the opportunity. Although
the threshold above which the application of the ORM is mandatory has been set at a headline
size of USD 100mln (on a 100% basis), the Shell-share may be significantly smaller. In addition,
individual businesses may choose to apply the ORM to opportunities with a smaller headline size.
2. A
 n integrated, cross-business opportunity must be run as one opportunity. Even though members of
the Line of Sight may come from different businesses it is imperative that a single line of opportunity
governance is established. The opportunity team is also likely to contain members from different
Businesses and Functions. With respect to the opportunity, team members take their orders and
directions from the BOM, in line with the Mandate.
3

3. The members of the LoS and the opportunity team may change as an opportunity matures.

All opportunities shall have a Business Opportunity Manager (BOM), who is responsible for the
full day-to-day management of the opportunity. The individual leading the opportunity shall have
the right experience and competencies required to ensure the full integration of all the Technical,
Economic (and financial), Commercial, Organisational and stakeholder and other Political
(TECOP) elements of the opportunity. To deliver the opportunity the BOM is often supported by
dedicated team leaders each responsible for the delivery of individual TECOP elements or subelements (see section 3.6).
The BOM is held accountable for the delivery of the opportunity within the Mandate agreed
with the Decision Executive, including ensuring the quality of the delivered opportunity and the
handover to the future owner. It is best practice that the BOM writes the Mandate that he/she
needs and proposes this to the DE for approval. This Mandate is updated whenever required.
[NB: for large commercial transactions the Mandate is recorded in the Deal Sheet].
Opportunities can have very long durations (e.g. a material EP opportunity can take from
discovery to on-stream some 6-8+ years) and the nature of an opportunity can change through
its course (e.g. from negotiating key terms with host governments to constructing facilities) and
thus opportunities may require a change of team leadership and staffing. To manage these
transitions, effective and well-documented handovers are essential.

3.3 Decision Executive (DE)

Explanation of Governance, Roles and Responsibilities

3.2 Business Opportunity Manager (BOM)

The Decision Executive (DE) plays a central role in the delivery of an opportunity. Through the
responsibility delegated to him through the Line of Sight, the DE takes full and personal accountability
for the decisions made relating to the opportunity that are within his remit, the overall delivery of
the opportunity and the adequacy of opportunity assurance. The Decision Executive agrees the
Mandate for the opportunity with the BOM and provides steer, supervision and ongoing support
to the BOM and Opportunity Team. To be effective in his/her role, he/she must be at all times
fully familiar with the opportunity, ensure appropriate resources are made available and assist
with the co-ordination and integration of activities that are beyond the BOMs control.
The Decision Executive chairs the Decision Review Board and is responsible for ensuring that
key expertise and knowledge are represented in the DRB that, according to the risks and issues,
allow him/her to make the right decisions related to the opportunity. Accountability for decisions
made in the DRB lies with the DE, who must consider the input of the DRB in reaching his/her decision.
The Decision Executive, in support of the BOM, champions the opportunity and facilitates its
delivery and approval up the Line of Sight. He must ensure that all the individuals up the Line
of Sight are fully aligned with the direction and pace of the opportunity, that they are aware of
issues, and also the roles they are expected to play in the delivery of the opportunity.

3.4 Decision Review Board (DRB)


Opportunities within the scope of the Opportunity Realisation Manual are required to constitute
Decision Review Boards (DRB) chaired by a Decision Executive.
The DRB has no executive authority in its own right over the opportunity (these responsibilities
rest solely with those with the appropriate delegated authority in the Line of Sight), but the DRB
members facilitate the delivery of the opportunity by providing support and advice, based on
their specialisms, to the Decision Executive, the BOM and the opportunity team. In particular
the DRB can facilitate the opportunity by providing access to resources, ensuring functional
alignment, communications and review and challenge of decisions. If deemed appropriate,
the DE should call on relevant DRB members to provide assurance and, as appropriate, secure
technical and other functional support against requirements as stipulated inthe Investment
Decision Manual, and in the Opportunity Roadmap and Opportunity Assurance Plan.
The DRB should be appropriately scaled for the opportunity and contain only the relevant
business and functional representation required to support the opportunity and to help the DE
make the right decisions. Finance has the option under the Shell governance model to nominate
a representative for each and every DRB, in order to provide an independent assessment of all
opportunities that may be brought forward for approval via an Investment Proposal. For large,
complex opportunities, with significant exposure and large risks, the appropriate governance
structure will typically require a cross-section of functional and business expertise. It is considered
good practice that the DRB remains small in size.

3.5 Key Competences of BOMs, DEs and DRBs


The successful and effective delivery of opportunities is determined to a great extent by the skills,
knowledge, and not least the behaviours of those leading them. The table below summarises
the key attributes of the BOM, the DE and DRB members that are considered essential for
opportunity delivery, and which are based on learnings collected from past opportunities across
the Group. The competencies are listed per specific role and consist of personal, relational and
business competences.

BOM (Opportunity delivery)


Personal

Relational

Business

Show effective leadership


Accountable to the DE for the day-today delivery of the opportunity.
Ensure selection of the right team
members to complement your
competencies/expertise.

Manage team effectively


Responsible for getting the best out of the
opportunity team and the DRB.
Motivate the team and drive effective
behaviours.
Be clear on accountabilities within the team.
Provide feedback and developmental
opportunities.

Drive and deliver the opportunity


Be decisive and drive actions appropriately to
deliver results.
Negotiate skillfully/ensure the team negotiates
skillfully to create the best possible outcome
for Shell.

Create the room to operate


Obtain mandate from DE and commit
to it.
Maintain confidence in the face of
ambiguity, shifting priorities and rapid
change, even over long extended
opportunities.
Maintain a learning agenda
Demonstrate open and authentic
communication.
Apply internal and external best
practice to the delivery of the
opportunity.
Capture and disseminate learnings.

Maintain relationships
Forge and maintain effective relationships
with external counterparties; connect
effectively with internal stakeholders and
other businesses; leverage existing networks
and develop connections.
Communicate
Be clear to Line of Sight; communicate clearly
about progress, blockers and risks.
Proactively communicate when and what
decisions/support are required of the DE.

Be creative and innovative to secure maximum value


Leverage technical knowledge, commercial
savvy and relationship strengths to generate
ideas and approaches that create value.
Help others envisage greater synergies
and possibilities in opportunity making
combinations.
Maintain the overview
Integrate all aspects of the opportunity. Manage
risks and upsides.
Plan the opportunity and execute the plan.
Stay delivery focused.

Personal

Relational

Business

Empower the BOM


Give the BOM the room to operate.
Make time available and be accessible.
Act as coach; support and challenge.

Champion the opportunity


Keep Line of Sight involved; ensure buy-in
by senior leadership; determine with BOM
and DRB how to approach / involve and
communicate with internal stakeholders.

Determine key strategies


Engage with BOM and DRB to define strategy,
boundaries etc; obtain delegation from Line of
Sight; agree strategy with Line of Sight, and
agree Mandate with BOM.

Resource DRB and clarify roles


Choose DRB members with appropriate
expertise and knowledge; communicate roles
DE, DRB and BOM to all parties; ensure
full enrollment of DRB and effective DRB
operations by utilising existing processes
(e.g. assurance).

Secure maximum value


Take responsibility for the opportunity decisions.
Push boundaries; encourage to think broadly
(especially) early in the opportunity and
focus on hard delivery (particularly) later in
opportunity; draw on knowledge DRB in tradeoff decisions.

Maintain external relationships


Understand external stakeholders and
influencers; work with the BOM to develop
and implement a productive stakeholder
management strategy.

Balance speed and rigour


Act decisively; take accountability for decisions;
avoid reworking same decisions; take conscious
decisions regarding flexibility; be clear about
factors (e.g. commercial) demanding change of
timeline and make proper use of assurance.

Create a culture of trust and


accountability
Act honestly and transparently;
Act consistently; communicate your role;
encourage feedback and listen.
Reflect and learn
Review own, and BOM strengths and
weaknesses; choose DRB and team
members to complement each other
in the all phases and aspects of the
opportunity.

DRB (Support and advice to DE)


Personal

Relational

Business

Actively engage as DRB member


Fully commit to the role; engage with
team; understand the opportunity. Provide
both challenge and support.

Be clear on your role


Support the DE in him/her making good
decisions. Understand that a DRB role and
responsibility is separate and different
from any line position.

Manage input and impact


Offer advice, guidance, ideas to DRB and DE;
be clear about your views and the impact on
the opportunity; do not act as roadblock; be
flexible.

Act as ambassador in support of the


opportunity.
Be an ambassador to organisation outside
the opportunity; take full ownership of
decisions taken; use your connections to
assist in resourcing the opportunity team.

Offer an objective and informed viewpoint


Ensure your viewpoint is understood; stay
objective and respect and support DE decision;
if you have different view, ensure this is
minuted.

Take time to reflect and implement learning


Challenge DE to use best practice; share
feedback constructively; contribute your
knowledge.
Challenge and support the DE to empower
the BOM
Connect personally with BOM; support
DE to address strengths and weaknesses
of the team and the approach to the
opportunity; be honest and direct in all
matters.

Support links to the external world


Scan external world for relevant
information; challenge full understanding
of counterparties. Support the opportunity
through your relationships.

Explanation of Governance, Roles and Responsibilities

DE (Governance, ie: Steer, Supervision, Support)

Think broadly
Bring the strategic context in the picture and
take a panorama view of the opportunity;
challenge quality of decisions; challenge DE
and BOM to prevent tunnel vision; stay focused
on delivery.
Provide Assurance
Ensure that there has been assurance in extent/
scale and depth that is appropriate to the
opportunity risks to give confidence that sound
decisions are recommended to the DE.

3.6 Opportunity Team


The composition of an opportunity team must be well planned, promote single point accountabilities
and shall involve the appropriate mix of expertise from technical, commercial, finance and
other functions relevant to the opportunity. It shall also include, from an appropriately early
stage, representation of the future owner that will ultimately be involved in delivering the value,
and, often in the case of acquisitions and divestments, a member of the implementation/
integration team. An example of an opportunity team is illustrated below, but it is stressed that
the composition of the team will vary according to the nature of the opportunity and is likely to
change as an opportunity matures.

EVP

DRB

DE

Opportunity Team
Technical
expert

BOM

Project/
Technical lead

Future
Owner

Commercial
lead

HSSE

Project
expert

Implementation
lead

Treasury

Finance
lead

Economics
Cost
estimator

Controllers

Tax

CO2
Legal

An illustration of an opportunity team, and its Line of Sight


(Actual team composition depends on nature of opportunity)

Resource requirements should be identified and agreed by the BOM with the Decision
Executive and both human and financial resources made available in a timely manner. Specific
accountabilities of the Opportunity Team members should be explicitly agreed up-front, including
for securing functional/technical discipline support. The members of the opportunity team
report to the BOM with respect to matters pertaining to the opportunity, even though formal
organizational (e.g. functional) reporting lines remain in place. Opportunities can also be very
complex and involve large teams. Within Opportunity Teams, there may be separate workstreams, with designated work-stream leaders who sit on the core team and must be kept aware
of all dimensions of the opportunity. A clear and direct line of communication must exist between
these work-stream leaders and the BOM.

4.1 The Six Phases of an Opportunity


Opportunities are developed through six phases; Identify to Operate (see figure below).
Each phase has clear milestones and Decision Gates, activities, deliverables and decision
requirements. Understanding what activities need to take place in which phase of an opportunity,
and taking a disciplined approach to their delivery are essential to success. In the early phases
of an opportunity the focus will be on understanding potential scope, feasibility and maximising
value creation and capture. In the later stages of an opportunity the focus changes to value delivery.

Identify

Assess

Select

Define

Divergent Thinking

Decision Gates
Mandate and
IDM Steps

Do we understand
what we are
starting?

Mandate

Operate

Convergent Thinking

Look wide.
Identify Opportunity.
Understand
Understand
what are
what we get into
feasible options

Execute

Concept selection.
Focus in on and
evaluate best and
"doable" options

2
Have we looked
wide enough?

Prepare to lock
Implement the
into an investment/
opportunity
divestment

3
Have we selected
the optimal
solution?

PCN

4
Is everything in
place to ensure
success?

Deliver the Value

Explanation of the Opportunity Realisation Process

4E
 xplanation of the Opportunity
Realisation Process

Are we ready
to Operate?

GIP

(as required)

In the lifetime of an opportunity there are key Decision Gates coinciding with phase boundaries
at which the Decision Executive (DE), supported by advice from members of the Decision Review
Board (DRB) formally decides whether to stop, hold, recycle or proceed, and where the DE seeks
approval up the LoS for this decision, if it is outside his/her own delegated level of authority.
Decisions to stop, hold, recycle or proceed may also occur between Decision Gates when new
information becomes available or when other key milestones in the progress of the opportunity
are reached.
To ensure that value is maximised and to enhance the chance of success, the Technical, Economic
(and Finance), Commercial, Organisational and Political (TECOP) aspects of opportunities need
to be fully considered throughout, though the balance will naturally depend on the nature of the
opportunity. The BOM should ensure that the relevant knowledge and expertise that is available
within Shell is fully utilised throughout the lifetime of the opportunity. Typical activities in the
different stages of the ORP are outlined overleaf.

Identify
T

E (& F)

Select

Define

Execute

Operate

Description
of technical
challenge.

Describe range of
options, pros &
cons & feasibility.

Focus in on
optimal concepts
and develop
concept designs.

Articulate the
conceptual design
as required for
FID (GIP).

Initiate technical
implementation.

Technical
implementation
moves to steady
state.

Understand
economic
& financial
dimensions
and metrics
using available
information.

Assess economics
based on technical,
commercial value
drivers, incl. tax
& financing,
involving those
functions.

Evaluate economic
value proposition
of the opportunity,
reflecting all
agreed functional
inputs. Articulate
risks, uncertainties
and sensitivities.

Complete detailed
economic evaluation
with full risk and
uncertainty analysis.
Show financial
reporting impact.
Obtain functional
support from
economics,
Controllers, Tax
and Treasury.

Monitor
opportunity
performance
and track costs.
Record transaction
in the accounts.
Execute financing
strategy.

Report information
to management
on operational
performance
and costs.

Show the strategic


and portfolio fit.

Engage with
counterparties
and develop
value propositions.

Perform due
diligence
and detail
the preferred
commercial
structures for
opportunity.

Negotiate
and conclude
commercial
agreements for
signature after GIP
approval. Obtain
functional support
from Legal.

Execute
commercial
agreements.
Address
outstanding
commercial
issues before
"completion" of
the opportunity.

Operational
management
of commercial
agreements.

BOM, DE, LoS


established
Mandate.
Opportunity
Framing.

Opportunity
Roadmap, Risk
and Stakeholder
Management Plan
and Opportunity
Assurance Plan.

Carry out
assurance. Start
implementation
plan. Prepare
& submit PCN.
Manage risk.

Inform ECJV
& ECPV if
>$1bln. Carry
out assurance.
Prepare to
implement.
Prepare and
submit GIP after
Finance sign-off.

Transition to
implementation
team. Prepare to
operate. Monitor
performance.

Transition to
operational team.
Opportunity and
Implementation
teams dissolved.

Immediate
stakeholders
recognised & who
knows who/what.

Stakeholders
mapped and
engaged 3D
Discovery &
Diagnosis.

Stakeholder &
counterparties
engaged - 3D,
Diagnosis &
Design.

Stakeholder &
counterparties
engaged 3D,
Diagnosis &
Design.

Stakeholder &
counterparties
engaged 3D,
Design and
Deliver.

Value delivered
with stakeholders
and new
opportunities
identified.

Assess

As outlined below, Opportunity Framing should be undertaken and the mandatory deliverables
prepared as early as is practically possible in the life of an opportunity. Opportunity Framing
should, thereafter, be repeated and the deliverables revised and updated throughout the lifetime
of the opportunity as new information becomes available and in response to external events. It is
the responsibility of the BOM and DE to agree the appropriate scaling of Opportunity Framing
and the deliverables for the size and complexity of the opportunity.
There are no prescribed formats at Group level for Opportunity Framing or deliverables, although
Businesses and Functions may require the use of formal templates in certain circumstances.

4.2.1 Mandate
At the outset of every opportunity the individual with the appropriate delegated responsibility will
define the remit of the DE with respect to the opportunity. Within this remit, the DE will agree the
Mandate with the BOM , which shall address the following:
O
 pportunity objectives: A clear statement of what the opportunity is, boundary conditions and
the aspired end position and value that could be delivered from the opportunity. A description
of the wider context around the opportunity can be included.

Explanation of the Opportunity Realisation Process

4.2 O
 pportunity Realisation:
mandatory activities and deliverables

A
 ssumptions that will affect the time, cost and objectives of the opportunity. These assumptions
may be Shell specific as well as independent from Shell.
Roles and responsibilities, including governance and the Line of Sight.
H
 uman resources and budget needed by the Opportunity Team to deliver the opportunity to an
Investment Proposal, or to the first exit decision point.
K
 ey Decisions that the BOM cannot make him/herself and for which either the Decision
Executive (or the individual with delegated organizational authority for the opportunity) is to be
involved and accountable.
Timing of key decisions.
The Mandate establishes the accountability of the BOM and provides him/her with the room to
manage the opportunity on a day-to-day basis. The Mandate must be reviewed and updated at
appropriate points throughout the opportunity life and significant changes to the Mandate should
always be agreed with the DE, and documented.
The Mandate is at all times subject to the requirements of the IDM.
[Note: For large, commercial transactions, the Deal Sheet is used to document the Mandate. The
Deal Sheet also documents aspects of the Opportunity Roadmap and Opportunity Assurance Plan.]

10

4.2.2 Opportunity Framing


Opportunity Framing is a scalable activity, which is undertaken at an early stage of an
opportunity when the potential to create and capture the value of an opportunity is at its
greatest. The emphasis of Opportunity Framing is on preparing for success and requires taking
sufficient time with the right people to:
Reach internal alignment on the scope of the opportunity (i.e. what optimises value for Shell)
Define success in explicit terms
Identify key relationships and where not present, start developing these
C
 onsider counter-party/stakeholder requirements (external drivers) and diagnose, through wide
(not deep) external engagement where Customer/Counterparty Value may lie in the
opportunity.
Identify, and understand the various (technical, commercial, economic etc) value drivers of the
opportunity and how these need to be managed to maximise value and mitigate downside risk.
Identify key technical and other functional contributions and reviews (as appropriate)
Apply learnings from other opportunities
Understand and manage the timeline identify when and how the most value can be delivered
D
 efine roles and responsibilities and plan the way forward for the opportunity (i.e. key
activities, key milestones, decisions to be taken)
The key deliverables of Opportunity Framing are outlined in Section 4.2.3.

4.2.3 Opportunity Roadmap, Risk Management


& Stakeholder Engagement Plans
Opportunity Roadmap
The Opportunity Roadmap is the agreed plan for the delivery of the opportunity, and aligns the
activities of the opportunity team, the individuals in the Line of Sight and other involved Shell
stakeholders. The Opportunity Roadmap should articulate which activities should be undertaken
when, including:
The timeline, with dates for key milestone decisions
The key decision points
Any intermediate decisions between key decision points
The deliverables required to support the decisions
The Opportunity Roadmap should integrate the critical activities and/or milestones that are
contained in the stakeholder engagement strategy and the Risk Management Plan (see below).
Often a Roadmap can only provide a detailed description of the activities in the next phase
and an outline of activities envisaged for later phases; it is then updated as the opportunity
progresses.

11

The effective management of risks (threats and opportunities) is fundamental to being able to
deliver opportunities and value to Shell. Risks may be internal to the opportunity, such as cost or
resource availability, but can also be external to Shell, such as potential competition, linkage to
other opportunities. The management of risk requires that:
Risks and opportunities are recorded in a Risk and Opportunity Matrix
Their likelihood and consequence are assessed
Responses and mitigation are planned and implemented; and
T here is an ongoing process of monitoring, appraisal and reassessment, leading to a revision
of the Risk Management Plan, when required.

Stakeholder Engagement Plan


It is essential to understand and engage with stakeholders who are affected by an opportunity
and can influence positively or negatively its outcome. The Stakeholder Engagement Plan
requires that:
internal and external stakeholders are identified
the opportunity team understand what is known about the stakeholders; attitudes, interests and
influence, and potential routes for engagement

Explanation of the Opportunity Realisation Process

Risk Management Plan

a
 plan for stakeholder engagement is created which aims to understand stakeholder
perspectives, attitudes and interests and creates internal alignment. Best practice plans include
a strategy considering sequencing of engagements.

4.2.4 Opportunity Assurance Plan


The Opportunity Assurance Plan (OAP)5 sets out an agreed set of activities and deliverables that
are collectively designed to provide confidence that the opportunity will be / has been undertaken
in a manner that will meet objectives. The OAP must include the assurance activities and
deliverables that are mandated in the relevant Businesses involved, and may include additional
assurance activities and deliverables as considered appropriate by the DE/DRB and Team.
Establishing the OAP is the responsibility of the Business Opportunity Manager (BOM) who
is accountable for its creation and delivery. The DE must approve the OAP and the Terms of
Reference for the major external assurance reviews.
[In the case of Large Complex Transactions the key elements of the OAP will be recorded in the
Deal Sheet.]

 ccountability for the opportunity always remains in the Line of Sight , but various parties, internal or external to this Line
A
of Sight, can be responsible for providing assurance. Some (external) forms of assurance can have the dual purpose of
providing counsel to the Line of Sight, as well as providing confidence to Businesses and/or Functions that requirements
will be met. In capital projects in EP, the OAP is known as the Project Controls and Assurance Plan (PCAP).

12

5G
 uidance on the Practical
Application of the ORM
5.1 Scaleable Application of the Opportunity Realisation Manual
The application of the Opportunity Realisation Manual should be scaled appropriately for the opportunity,
dependent on its dimensions, associated risks and the timescales involved. The detail of how the
Opportunity Realisation Manual will be applied on a particular opportunity must be agreed between
the BOM and the DE. Individual businesses may have additional mandatory requirements for some
opportunity types, and where this occurs the BOM and DE will also need to ensure they are addressed.
The scaleable application of the Opportunity Realisation Manual is illustrated below for three
opportunities, which have different financial dimensions and risks.
Small Financial
Dimensions
Low Risks

Moderate Financial
Dimensions
Moderate Risks

Large Financial Dimensions


Large Risks

DE links to

VP or EVP

EVP

EVP or ED or CE

DRB

Small, but sufficient to provide


the needed support. In some
instances the DRB may be limited
to those who sign-off the proposal,
organisational approval and
finance co-signature.

The DRB must be able to provide the


support for such an opportunity. All
key functional and business expertise
should be represented, including the
future owner.

The DRB must be able to provide the


support for such an opportunity. All
key functional and business expertise
should be represented, including the
future owner.

Framing

Mostly in team. All TECOP aspects


reviewed. Input requested where
there are gaps. Typically 2-4 hour
formal OF session needed. Written
output.

Team plus input from peers outside


team. All TECOP aspects reviewed.
Typically 1-2 day facilitated formal OF
session needed. Written output.

Extensive exercise, involving team plus


input from peers. Typically 2+ day
facilitated formal OF session needed.
Written output.

Roadmap, Risk/
Opportunity
and Stakeholder
Management

Simple Roadmap, reflecting


limited complexity of opportunity.
Risks and Stakeholder issues must
be understood and plans made to
address these.

Roadmap outlines the plan to address


issues and deliver the opportunity.
Risks and Stakeholder issues must
be understood and plans made to
address these.

Roadmap reflects work-plans of


multiple work-streams working on the
opportunity. Risks and Stakeholder
issues must be understood and plans
made to address these.

Opportunity
Assurance

Assurance plan weighted towards


peer assistance and challenge.
Discipline controls and assurance
is applied in all opportunities,
regardless of size.

Assurance plan includes peer and


(formal) technical and other functional
assistance and challenge plus formal
external challenge, including on key
technical functional deliverables (e.g.
in EP the Field Development Plan and
Project Execution Plan) at key decision
gates, as either agreed by DE or
stipulated by Business requirements
(such as mandated VARs in EP).

Plan includes peer and formal (technical)


functional assistance and review and
formal external challenge on key
(technical) functional deliverables
(e.g. in EP the Field Development Plan
and Project Execution Plan) at all key
decision gates as either agreed by DE
or stipulated by Business requirements
(such as mandated VARs and ESARs
(in e.g. EP).

5.2 Opportunity Archetype Guides


To assist in the practical application of the Opportunity Realisation Manual a number of
Archetype Guides have been created. These Archetype Guides, available in a variety of formats,
outline typical activities for different opportunity types but are not intended to be exhaustive or
comprehensive. Users should view them as guidance, not as checklists.
The Archetype Guides will typically include a number of the following elements

 pictorial illustration of the typical activities of an opportunity


A
Helpful illustrations: e.g. typical team structure, risk matrix, Opportunity Roadmap
A
 narrative describing the key activities in each of the ORP phases
Q
 uick-look tables outlining key activities in each of the ORP phases
A
 dditional useful information sources

The Archetype Guides include reference to all the mandatory requirements of the Opportunity
Realisation Manual and also to Business and Function Standards and guidance, where appropriate.

5.3 Opportunity management and other requirements

13

The Opportunity Realisation Manual sets out mandatory requirements to be applied to


opportunities across Shell. However, for particular opportunity types, additional mandatory
requirements defined by Shell Businesses and/or disciplines and guidance on professional
practice may also apply. For instance, there is a business requirement in EP that ESARs are
carried out for all field development opportunities. At the discipline level in EP, the Discipline
Controls and Assurance Framework (DCAF) provides the standard approach towards Quality
Assurance (QA) and Quality Control (QC).

Glossary

6 Glossary
Archetype Guides Illustrative examples, using a variety of formats, of how the ORM, other
manuals within the Shell Control Framework, and other Business/discipline requirements are used
complimentarily to develop the opportunity in a generic category of opportunities (= Archetype).
Assurance Assurance is an objective, systematic and independent process of ensuring that the
business risks, e.g. opportunities of projects, are adequately managed to achieve stated business
objectives through adherence to prescribed policies, standards and procedures. (see also Quality
Assurance).
Business Opportunity Manager (BOM) The individual responsible for the day-to-day
management of the opportunity, who is accountable to the Decision Executive.
Deal Sheet A standard format for registering all relevant aspects of an opportunity, used for all
large commercial opportunities
[http://sww.shell.com/sx/commercial_academy/framework/framework_deal_sheet.html].
Decision Gates The point where an opportunity moves from one phase to the next.
Decision Executive (DE) The individual who provides steer, supervision and support and is
fully and personally accountable for the decisions made relating to the opportunity, the overall
delivery of the opportunity and for quality assurance.
Decision Review Board (DRB) The team, consisting of individuals with the appropriate functional
expertise, which advises and supports the DE and BOM.
Estimate and Schedule Assurance Review (ESAR) A review which provides an independent
assurance that project schedule and cost estimates accurately represent the project scope and the
risks to project delivery, and are compliant with Group project guides.
Headline size Refer to the Investment Decision Manual for definition.
Investment Decision Manual (IDM) A separate manual, which provides mandatory instructions
on the application of the Group Governance and Management Standards and Delegation of
Authority process in relation to Investment (/Divestment) and Financing Proposals. The ORM
does not contradict any mandatory requirement in that manual.
[http://sww.shell.com/finance/authorities].
Investment Proposal Refer to the Investment Decision Manual for definition.
Joint Venture Manual (JVM) A separate manual, which provides mandatory instructions on the
application of the Group Governance and Management Standards with respect to joint venture
governance. The ORM does not contradict any mandatory requirement in that manual.
Line of Sight (LoS) The clearly documented single chain of accountable relationships that exist
during the lifetime of an opportunity from each member of the Opportunity Team, upwards via
the BOM and the DE to the individual in the Shell organisation with the appropriate delegated
organisational authority.
Mandate The document agreed between the BOM and the DE, which sets out the opportunity
objectives, boundary conditions and assumptions. It also describes the governance structure and
the opportunity team make-up.
Opportunity Assurance Plan (OAP) A mandatory deliverable in the ORM, which sets out
the assurance activities that will be undertaken to enhance the decision quality around the
opportunity. (For Capital Projects in EP, the OAP is known as the Projects Controls and Assurance
Plan (PCAP)).
Opportunity Framing (OF) A structured set of activities involving all members of the opportunity
team, which are collectively designed to define the ultimate objective of the opportunity, deliver
an Opportunity Roadmap, Opportunity Quality Assurance Plan, Stakeholder Engagement Plan
and Risk Management Plan.

14

Opportunity Realisation Any activity that, if pursued through to execution, will require an
Investment or Divestment Proposal (as detailed in the IDM). These include capital projects,
acquisition/divestment opportunities or integrated cross Business opportunities. Long-term
purchase and sale commitments are not included in this definition.
Opportunity Realisation Process (ORP) The process for managing opportunities and on which
the ORM is based.
Opportunity Roadmap A high-level plan for the opportunity, showing Decision Gates and the
main deliverables and activities per phase.
Opportunity Realisation Manual (ORM) Manual which sets out the common approach to the
management of opportunities across Shell.
Proposal to Commence Negotiations (PCN) Refer to the Investment Decision Manual for definition.
Project Manager The person, who is specifically responsible for the development and
realization of the hardware of the assets in a capital project. If the Project Manager is
responsible for the entire opportunity (across TECOP dimensions), the Project Manager is in fact
the Business Opportunity Manager.
Quality Assurance Part of quality management, focused on providing confidence that quality
requirements will be met.
Quality Control Part of quality management, focused on fulfilling quality requirements.
Risk Management Plan An inventory containing risks and opportunities associated with the
opportunity together with actions planned to influence the likelihood of occurrence.
Shell, the Shell Group, or simply the Group: Collective terms used interchangeably for companies
in which Royal Dutch Shell plc holds a controlling interest, either directly or indirectly, including itself.

15

Shell International Limited 2008


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