Professional Documents
Culture Documents
no
The Management
System Health Check
Are you realizing the full potential
of your Management System?
PwC Consulting
Stavanger
Contents
globally on how to structure their business and adapt the scale of their organizations
to the current business environment.
A consistent observation throughout our work has been how a high quality
Management System can generate value for the organization and the importance of
a Management System to adapt to change in the current business landscape. We
have observed large differences in companies’ ability to realize the potential value of
Why should you preform a Management System Health Check? 4 their Management System, and as a consequence, we have developed a
Management System assessment to help clients realize the benefits such a system
What are the benefits of a Management System? 6 can provide.
Selected references 12
2 3
By the end of the Management
System Health Check, PwC provide
By the end of the Management System Health Check, PwC provides the following:
the following:
a Management System
compares to your peers and industry your organization. your performance.
best practice across the assessment
• You will know how you perform and
dimensions.
what areas to focus on in alignment
The oil and gas industry is currently facing A high quality Management System organization. It is a key component in The PwC Management System Maturity Value
an increasingly competitive business secures efficient and safe utilization of preventing and mitigating losses to people, Ladder illustrates and categorizes levels of User driven
• Value driven
environment with market uncertainties your organization’s resources. It improves environment, assets and reputation, and Management System maturity (Comply, mindset
putting pressure on companies. In a collaboration, enables effective sharing of act as a critical barrier towards incidents Standardize, Collaborate, Learn, • Optimization of resources
business landscape subject to change, the information and increases efficiency and accidents. It is important that E&P Optimize), as well as responsibilities for and activities
top performers are able to adapt and through reduction in wasteful overlaps. companies regularly update their implementing and updating the Line Manager driven
handle disruptions smoothly. This requires This requires proper establishment and Management System to ensure it reflects Management System (Top Manager, Line (process owner)
• Continuous improvement
a Management System that can alignment of critical aspects i.e. changes in: Manager, User). The Maturity Ladder from lessons learned
comprehend business challenges in a safe organizational structure, understood roles helps our clients visualize the current • Industry learnings and best
• Strategy and goals practice alignment
and efficient manner. A high quality and responsibilities, culture, process status and value of the Management
Management System provides benefits to familiarity and availability, as well as • Organizational changes through organic System, as well as the potential for
• Effective internal and external
multiple stakeholders, such as providing necessary technology. growth, farm in, farm out and M&A’s improvement. By comparing your Top Manager driven information sharing
compliance for the HSE Manager, Management System against industry top
• Joint Ventures • Clear roles and
increasing efficiency and collaboration for performers in your segment, we can
Your Management System should provide responsibilities
Functional Managers and improving • Industry learnings and best practices identify critical improvement areas for
a shared “one view” of how your • One common
governance and control for the • Political landscape and governmental increased business performance. The way of working
organization works to help secure
Management team. Figure 1 outlines some requirements maturity stages depicted in Figure 2 and •
compliance and ensure that organizational Head Office
of the benefits provided by a high quality related improvement areas are based on compliance
learning is implemented as common and • External threats • Governmental and HSE
Management System. our extensive experience from working
documented practices in your compliance
with E&P companies, and are covered in
detail in the following sections. Time
Management and Figure 2: The PwC Management System Maturity Ladder
HSE Benefits Operational Benefits
Governance Benefits
• A barrier against undesired • A clearly defined way of working, • Value creating activities to support
events/major accidents with clear roles and company strategy and to achieve Comply – we are in line with or Head Office). Paradoxically, numerous accessible and intuitive, and the employees
responsibilities to secure objectives Head Office, Government and of these companies fail audits. Why? need to be involved in developing the
• Adherence to regulatory standards Mostly due to insufficient focus on content. This will secure knowledge and
handovers
• Improved interaction between
HSE requirements
• Enhanced risk management implementation and adaption, i.e. the ownership to the Management System.
• Reduced silo mentality through Head Office and subsidiaries culture of using the Management System. Additionally, ensuring Management
• Increased ability to learn and Your Management System is a
more efficient resource allocation, If you pass the first step of a Management System adherence to HSE is critical to
• Structured governance and critical barrier against undesired
improve from audits information sharing and System audit – having a system in place – secure continuous and safe operations.
control of critical activities events and major accidents. Lack of
collaboration you can still fail the second step that looks HSE processes need to be embedded in
• Facilitation of behavioral and compliance with regulations or
• Increased ability to adapt to at employees’ ability to demonstrate how it everything an oil and gas company does
cultural change • Increased focus on continuous Head Office can cause operational
changes – faster response to works and how they use it. There is no - across the assets and across the
improvement downtime and inflict substantial
• Reduced reputation risk external and internal issues point in having a Management System if organization. Having the right
• Increased productivity financial losses.
• Improved portfolio management no one uses it. Management System implemented and
• Improved relationship with securing top management ownership of
Some companies regard their
suppliers and partners In order to get your employees to use your HSE activities helps to build a strong HSE
Management System as a tool to help the
Management System, it must be easily culture and focus in the organization.
organization pass audits (either regulatory
Figure 1: Examples on Management System benefits
6 7
To achieve the compliance level of communicate continuous improvements To attain an optimized maturity level, your
maturity, top management must ensure Collaborate – we facilitate from lessons learned to the organization. Management System must be tailored to
that the Management System is compliant external and internal Incorporating and continuously updating your organization’s needs and size.
with Head Office, government and HSE lessons learned in daily operations (by the Activities and documents are easy to
information sharing
requirements. Ensuring compliance builds users), as well as the latest industry access and update, and employees know
stakeholder trust and secures the license to learnings helps to prepare the how to do it. Furthermore, the content,
Lack of information sharing
operate. organization against losses to people, including processes and guidelines, is
prevents internal and external
collaboration and often increases environment, assets and reputation. At mutually exclusive (no overlaps) and
operational risk the learning maturity level, your collectively exhaustive (in summary it
“We have had unrealistic expectations Management System serves as an contains all relevant documentation/is
regarding the status, and the usage of our Collaboration between functions and important tool to capture individual complete). At the optimized maturity level,
Management System. Establishing the levels in the organizational hierarchy as learnings and transform these learnings every activity in your Management System
current status has aligned our perception well as with external parties is important into organizational learning – facilitating should create value for your company and/
with the actual status of the Management to communicate critical information and a paradigm-shift from individual learning or for company clients, including support
to organizational knowledge capturing. functions as well as the core business
System to help us move forward” ensure efficient and continuous
operations. Most E&P companies have a functions. Furthermore, an optimized
- Quality manager long way to go in this domain. Having the Management System increases
right information at the right time is productivity, improves resource allocation
necessary to reduce uncertainty and make and enhances the organizations’ ability to
Optimize – we utilize our adapt to change.
well-informed decisions.
resources efficiently
Once your employees refer to your
Management System for their own “We have always done it this way”
Standardize – we have a activities as well as guidance in how and can be a blinding mindset and
when to involve other functions, it has result in non-value implemented
common way of working across
reached the collaborative level of processes, which are not fit for
the organization maturity. Your Management System purpose.
should then provide a logical interface
Many of the Management Systems
between internal and external parties, Old and unchallenged business processes
we encounter lack critical E&P
and ensure effective information sharing have a tendency to stick with a company
activities, common work
in handover interfaces (between project even though they do not create any value.
methodologies and clear
phases), referral interfaces (between core Additionally, shortage of talent and skills
ownership of activities.
and support functions) and external puts pressure on E&P companies to
interfaces (to contractors and other efficiently utilize resources. The right skills
Policies, processes and procedures are not team must be involved in communicating A compliant and standardized Management
external stakeholders). To do this, need to match the right tasks. Critical skills
properly aligned with overall company the importance of the Management System is one that has: ownership of content
accountability matrices need to focus on need replacement options to avoid full
strategy, and activities are not System, the value it brings to your by employees, a user friendly and intuitive
interface clarification and functional dependency.
standardized across functions. Low organization and that its use is not interface, common work methodologies
collaboration to create value. This creates
efficiency, lack of control and a confusing optional, rather a minimum requirement across the organization and well defined and
a clear picture of who is responsible,
work environment follows as a result; Ad of how we as a company operate. mapped expectations from top management.
accountable, consulted and informed in
hoc tasks that fall outside the standard Furthermore, you should clarify the The Management System should now be
the interfaces both internally and
process create unnecessary stress on the expectations, requirements and degree of mature enough for functional process owners
externally.
organization, unclear roles and involvement of the top management team, to manage and govern the system to ensure
responsibilities create micromanagement as it will be the reference point for the that the content is updated and valid.
challenges, and juggling too many standardized way of working.
activities increases the possibility of
critical mistakes. Learn – we continuously
improve from previous
There is a significant potential for E&P experiences and industry
companies who are willing to put in an learnings
effort towards a common work “By identifying our performance gaps
methodology – a consistent and uniform Surprisingly many E&P companies
we are now able to approach our have a strong focus on
implementation of policies, processes and
improvements areas strategically and documenting incidents, but fail to
procedures, with clear roles and
responsibilities. To achieve a standardized more efficient” prevent future occurrences from
work methodology, your management - SVP Operations happening by implementing
changes in the organization.
8 9
The Management
Assessment Analyze Define
Select
Dimensions
The Management System Health Check will provide an objective view of your current Performance Measures
Management System utilization, and the value it provides to your organization. We will
illustrate where your company is located on the Management System Maturity Ladder,
and how to maximize the utilization of your Management System to achieve higher Applications and tools
business performance. The Management System Health Check is based on four value
elements: our PwC E&P experience and competency, the PwC Health Check methodology,
our Management System Diagnostic (MSD) tool and our E&P best practice benchmark
data, as illustrated in Figure 3.
Information sources Example of gap illustration Example of recommendations
The Management System Health Check report will include identified key issues and
recommendations to close critical gaps and maximize the Management System’s value • Interviews and workshops Key Issues Recommendations
to your organization. Although the MS processes are good, their implementation and 1 2 3 4
• Focus groups
practical application is weak. Enhance navigation, search, usability,
1 filtration and readability of the
It is difficult for the end-user to find information relevant to their Management System
1
activity because MS Processes are too detailed and elaborate
It is difficult to understand MS processes due to its language, style and Strengthen process ownership of
1
• IT-enabled questionnaire
3 corporate HSE MS processes (Manager
vocabulary.
ownership)
Processes are not linked to business processes 3 5 6
PwC’s Oil and Gas Centre of Excellence is a trusted business advisor to major national Departments and functions are not adequately involved in HSE MS 4 6
4 Implement corporate HSE processes in
the functions and assets
• Review of documentation
review and continuous improvement.
and international E&P companies. Our industry professionals have extensive There is limited link from reporting to analysis and improvement 4 6
• Benchmark data
developing new processes and procedures.
PwC E&P range of clients. There is a gap between Corporate HSE and the functions in the
implementation of HSE procedures.
3 4 5
6
Apply risk management to classify and
prioritize critical HSE activities (example
well delivery and projects)
There is a general lack of awareness of HSE MS requirements in the 3 4 5
competency
The PwC Health Check methodology will secure the quality
of project deliverables by using a well-proven and
adaptable framework. Using a standardized framework,
PwC Health Check accelerates work and provide our clients with maximum Figure 4: The Management System Health Check Methodology and associated dimensions.
value within given project constraints. The framework is
methodology
structured around a set of critical Management System
dimensions, illustrated in Figure 4, to ensure that all value
driving aspects of the Management System are assessed.
The
Management
System Health
Check The PwC Management System Diagnostics tool supports
the project team in interaction with the client and key
stakeholders to ensure a consistent and efficient “The oil and gas industry is subject
PwC Management assessment. It contains templates with predefined
System Diagnostic questions and rating criteria’s to support the project team to a rapidly changing business
(MSD) tool in collecting information and data from multiple sources.
The MSD tool also comes with multiple presentation
landscape. Now is the time to
templates, used to illustrate critical gaps in engagements capitalize on our Management
with key stakeholders.
PwC E&P best
System and realize the potential
practice value necessary to stay competitive”
benchmark data PwC E&P best practice and benchmark data (including E&P blueprints) gathered from
the oil and gas industry over the last decades, provides us with a solid foundation for an - General Manager Production
in depth analysis of your Management System. Our benchmark data is structured based
on the framework dimensions to secure consistency and comparison between peers. and Operations
10 11
Updating the corporate governance structure
Selected references and Management System to fit the perspective
of upstream, midstream and downstream
subsidiaries
Results
Evaluating and improving the company’s Context • Increased having clarity of own
Management System The corporation suffered from inconsistent HSE management practices across objectives, activities and roles/
its subsidiaries and set out to align its approach across the entities. responsibility across all regions
Results PwC was engaged to update the HSE Management System on a corporate level (departments).
Context based on input from upstream, midstream and downstream subsidiaries. The
A National Oil company had a future vision of a shared Management System • The project established a project had to develop a concise governance structure based on
• Established expectations as how
across subsidiaries in the up, mid and downstream part of the oil and gas corporate Management System recommendations from selected stakeholders across the organization in line to they interact across borders to
business.
that enhanced efficiency and with international best practices. support each other.
We helped the client assessing the maturity of the current Management System collaboration. • Clarification of management
and identifying gaps as part of developing and implementing a shared Challenges
• The Management System teams expectation to
Management System across subsidiaries. The team used our Management
System Diagnostic (MSD) tool, including our E&P Blueprints, to speed up the complied with National laws and • The HSE Management System structure was not fit-for purpose. Each collaboration.
project and secure quality in all parts of the project. The project involved a subsidiary had a different structure than defined by corporate, complicating
regulations. • Functional (process) ownership.
working team with members from all 10 subsidiaries to secure input and the use and effectiveness of overall HSE management in HQ and subsidiaries
prepare for corporate Management System change. • The corporate structure aligned • The interfaces and interactions between the policies and standards were not • Increased use of the
corporate and subsidiary entities clear. management system as
Challenges – a top-down alignment widely participation in developing the
• The lack of process based HSE Management System complicated the use of
accepted throughout the appropriate standards. system was created amongst
• The Management System, implemented in 2002, was not fit for purpose and
did not provide alignment between corporate and subsidiaries. different subsidiaries and in employees.
• The subsidiaries had a different set of HSE elements than that of corporate,
accordance with leading complicating the Management System structure, experience transfer and
• The client organization had “Chinese walls” between the departments,
industry practice. continuous improvement.
resulting in non-aligned objectives and limited collaboration.
• 10 subsidiaries were to be involved in the process of establishing a shared
Management System, entailing challenges related to participation, alignment
and communication.
12 13
About the authors Helping energy
companies succeed
Eirik Rasmussen
Director PwC Oil and Gas Centre of Excellence, Norway
eirik.rasmussen@no.pwc.com / +47 952 61 193
PwC is a leading advisor to the global industry trends, but we are analyzing
Eirik Rasmussen has more than 22 years of experience as strategy and
business advisor. He has in recent years been working with national and
energy industry, working with every
segment of the business,to provide
these changes from the perspective of
how they will impact our clients, and how Our
worldwide
global Oil and Gas companies as an advisor and subject matter expert on solutions tailored to meet your needs. we can best help companies prepare and
Business Management System and Governance projects. Our strength in serving this global manage the changes. On an annual basis,
business comes from our skills, our our practice gathers to hear from industry
He has an executive MBA in strategy and management from Norwegian experience and our team of industry
specialists. For more than 100 years, we
executives and experts, such as the
Executive Director of the International
Presence
School of Economics and Business Administration (NHH) and a Strategic
Management Program from National University of Singapore. have helped energy companies succeed. Energy Agency, to learn more about the A global oil and gas industry need a
opportunities and obstacles that lie trusted business partner with a
We help companies confront the ahead. We examine the issues, and build global perspective.
industry’s most challenging issues and teams of subject matter specialists who
changes by developing effective solutions develop appropriate solutions through PwC understands the global nature of
Jens Erich Jenssen and strategies. PwC can help energy our assurance, tax and advisory services. the oil and gas industry, and the
Senior Associate PwC Oil and Gas Centre of Excellence, Norway companies evaluate priorities, assess importance of having our audit and
jens.erich.jenssen@no.pwc.com/ +47 952 61 158 risks, and build stakeholder confidence. The Management System Health Check is assurance, tax and consulting
Our global energy practice focuses on an advisory service developed to assist professionals everywhere that our
Jens Erich Jenssen has extensive experience as a business advisor for clients delivering professional services to clients in confronting current industry clients operate. Through our global
in the Oil and Gas industry. In recent years, Jens Erich has worked companies of all sizes, across all segments challenges. The service helps our clients network of firms, we serve 422 of the
exclusively with operators in the upstream segment focusing on analyzing of the industry. We provide industry to understand the potential value of their Fortune Global 500 companies, and 439
and improving efficiency in all business areas for clients across Europe, the specific solutions in the fields of audit and Management System – to start of the FT Global 500 companies - more
Middle East and Africa. assurance, tax, deals and consulting capitalizing on their investments by than any other professional services
services to help companies address their utilize their Management Systems more firm. We have over 2,500 energy and
Jens Erich is a certified PRINCE2 Practitioner and has a green belt Lean Six business and stakeholder issues. efficiently to create value and adopt to a utilities clients around the world with
Sigma. He holds a Master of Science degree in Petroleum Technology from rapidly changing industry environment. more than 400 partners and 5,300
the Norwegian University of Science and Technology (NTNU) specializing professionals solely dedicated to serving
in operational efficiency and cost reduction, and a Bachelor’s degree in We look forward to the opportunity energy companies. With professionals
Petroleum Technology from the University of Stavanger. to work with your company. on the ground in 158 countries, we
We are not only watching the current provide our clients with local
knowledge and a global perspective
that is crucial to their success.
Tore Rudlang
Associate PwC Oil and Gas Centre of Excellence, Norway
tore.rudlang@no.pwc.com / +47 478 45 417
14 15
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