Opportunity Classification & Assurance Tool - FAQ

Frequently Asked Questions

rev 10
August 24, 2011
PTE/V

Why Risk Based Assurance?

Risk Based Assurance has been developed as a way to ensure that the assurance level for a
project is ‘Fit-for-Purpose’. A basic premise has been that the assurance is not only linked to the
investment but to the risks over the complete TECOP range. This can in result in a lower level of
assurance for a larger straight forward project while a smaller project with higher risks will be
subject to more assurance activities.

For who is Risk Based Assurance applicable?

Although the methodology has primarily been developed for projects over 100 MUSD , the
methodology is very well scalable and can be used for smaller projects. For DS it is expected that
RBA will be applied for projects over 20 MUSD (to be confirmed).

What is the status of the Opportunity Classification & Assurance Tool?

The Opportunity Classification & Assurance Tool is part of PS02 and PG02. The tool is completed
for Upstream and Commercial opportunities. The tool is also prepared for DS but is not rolled out
yet and in DS the current ‘calculator’ should be used.

How is the risk balanced between the different TECOP elements?

To have more focus on ECOP these elements carry more weight than the T(echnical) elements.

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What is the difference in the execution model between Shell Operated ventures, Not
Shell Governed JV’s and NOV’s.
The two flowcharts below show the difference in the decision tree for Shell Operated Ventures
and NSGJV/NOV’s.
Shell Operated
Exposure (Value & Risk) Decision

Major Project Medium Project Base Project

No Yes
OE
Competence & Capacity Decision

PT Executed Project OE Executed Project

Stand-alone
Implant
Secondment
Default: All operated projects > $500 million
Organizational Decision are P&T executed

NSGJV / NOV
Exposure (Value & Risk) Decision

Major Project Medium Project Base Project

No Yes*
Operator
Competence & Capacity Decision

PT Executed Project JV Operator

Executed Project
Stand-alone *Major Projects: IDM/ORM
apply, Governance, Assurance
Implant & PM selection/ approval;
Secondment specialist advice by PT

Organizational Decision

What is the definition of Self, Focussed and Premium Assurance?

Self Assurance, Focussed Assurance and Premium Assurance are assurance models with
an increasing level of assurance.
Premium Assurance
• For large headline size opportunity with high Risk Exposure & Uncertainty, e.g. Novel
Technology, Project Execution, Environment
• Self Assurance (DCAF, Project QA/QC) plus external opportunity assurance across the full
TECOP spectrum
• Derogation of expected VAR, ESAR, PER reviews is required with EVP sign-off.

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Focused Assurance
• For opportunity with either high headline size or medium/high Risk Exposure &
Uncertainty, including smaller investment opportunity with exceptionally high Risk Exposure
& Uncertainty
• Self Assurance (DCAF, Project QA/QC) plus selected external reviews to focus on key
specific (T)ECOP risks only
• VAR, ESAR, PER, IFR are typically expected, with a focused, fit for purpose TOR
Self Assurance
• Small headline size opportunity with medium or low Risk Exposure & Uncertainty, e.g. with
high degree of replication in a mature setting
• Based on local/regional assurance by opportunity team and functional lines through DCAF
and Project QA/QC
• Limited , optional external support, and only when included in the OAP by DE

Why are there different thresholds for different businesses?

Each Shell business has it’s specific characteristics and RBA takes these into account. This is partly
embedded in the Risk Assessment of the Opportunity Classification and Assurance Tool but is also
reflected in the thresholds in the matrix.

Does Risk Based Assurance cover all disciplines?

Risk Based Assurance currently covers VARs, PARs, ESARs, PERs, PIR, e-VAR, S-VAR, T-VAR, OR
Reviews. It is the intention to extent this to other disciplines as well.

What is a First Contact Meeting

A First Contact Meeting shall be conducted early in the project, e.g. immediately after the
Opportunity Framing Workshop (although it is sometime practical to run it before the OFW).
During the First Contact Meeting the assurance level for the project will be determined and the
first version of the Opportunity Assurance Plan will be created.

Who should organise the First Contact Meeting

The Business Opportunity manager is accountable to organise the FCM.

For which opportunities do I run a First Contact Meeting?

For UI-, UA- and PT managed opportunities the First Contact Meeting becomes mandatory when
the ORM becomes mandatory so at 100 MUSD. For Downstream the current practice to run a
First Contact Meeting from 20 MUSD will be continued.

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How do I run a First Contact Meeting?
It is suggested to have a Project Assurance Manager to facilitate your First Contact Meeting. This
will ensure that you use the method and the tool in the right way and ensure that knowledge is
shared between projects.

What is the difference between the Opportunity Framing Workshop and the First Contact
Meeting?
The objective of the Opportunity Framing Workshop (OFW) is described in the Opportunity
Framing guide as to “Create alignment and clarity between the DE, BOM, DRB, opportunity
team, key stakeholders and decision-makers as to what the opportunity actually is, purpose and
scope.”. The First Contact Meeting uses the output of the OFW as input to create the (initial
version) of the Opportunity Assurance Plan.

What are mandatory assurance activities?

During the First Contact Meeting, or at a later review moment the Assurance Activities are
tailored to the project specific risks (e.g. more focus on SP for project with a high ‘P’ risk or more
focus on Commercial reviews for projects with a high ‘C’ risk profile).
To cover the integrated TECOP spectrum Value Assurance Reviews, Estimate and Schedule
Assurance Reviews and Project Execution Reviews are minimum requirements for Premium
Assurance. Value Assurance Reviews, Estimate and Schedule Assurance Reviews and Project
Execution Reviews are expected for Focussed Assurance, with their scope ‘focussed’ to the
specific key risks for the opportunity.

How do I derogate mandatory Assurance activities?

No derogation is required. In the Opportunity Assurance Plan the Assurance activities are laid
down and this plan is signed off by the DE. In case of Premium Assurance derogation of expected
VAR, ESAR, PER, ITR type reviews is required with EVP sign-off.
A copy of the OAP should be send to PTE/VPA for statistics and analysis.

What is the difference between a OAP and a PCAP?

An Opportunity Assurance Plan (OAP) describes the assurance activities required/agreed upon
for a project. A Project Controls and Assurance Plan describes the deliverables of a project and
the Technical Authorities (TA’s) who are accountable for the deliverables. The PCAP can therefore
be seen as part of the OAP since the OAP has a wider context.

How often do I update the Opportunity Assurance Plan?

The first Opportunity Assurance Plan (OAP) should be developed in a First Contact Meeting early
in the project.
Since projects evolve a check whether the assumptions for the project are still valid is suggested
after each stage gate the OAP is updated. This way the assurance (via the OAP) can be tailored
to the phase and the current risks of the projects.

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What is the role of PTE/V?

PTE/V is an assurance provider for all businesses. Furthermore they can facilitate First Contact
Meetings. VAR’s and PER’s always need a PTE/V lead but can otherwise be staffed from regions
or other entities.

How is the Project Execution Model integrated with the Project Classification?
The Project Classification (base, medium, major) uses the same risk assessment and tool as the
RBA assessment. However, different headline size thresholds can be used and although there is a
relation there is no automatic link between the Project Classification and the RBA level. It is
therefore possible that a Major Project has Focussed Assurance and a medium Project has
Premium Assurance. It will be uncommon for a Base Project to have Premium Assurance or a
Major project to have Self Assurance but it is not impossible.

Why is the size of the subsurface assets represented in the subsurface risks?
Although the subsurface uncertainty is an important factor of the subsurface risks the size of the
subsurface assets are also represented. This to ensure that the role that a particular opportunity
can play to sustain the RDS production profile (i.e. the future revenue stream) receives the proper
attention. If the volume is large, that should play a role in how we see assurance and therefore be
represented in the risk classification. The thresholds 20 MMboe Shell Share recoverable and
100 MMboe Shell Share recoverable are aligned with the different subsurface assurance levels.

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