Opinion: A new approach to value engineering

Jonathan White
Jonathan White, business development director of Apollo Offshore Engineering
Opinion by Jonathan White

In the current economic climate, operators know they need to realise their reserves more efficiently than ever before within new budget boundaries.

They need to change the way they have traditionally worked.

Letters are being sent from operators to the supply chain seeking cost reduction for services.  Some request simple rate reductions, others are open to more creative thinking on how we can add value to their operations.

Where there is change there is opportunity. But to realise this opportunity we have to be nimble, quick, reactive, dynamic and, above all, cost-effective.

These are not attributes immediately associated with our industry but if we respond effectively to the challenge of change, we have the potential to unlock huge value for the asset owner.

Simply applying a 10% discount to contractor rates may be missing a trick and does it really give the industry long-term value?

We need to help our clients realise the value of change by challenging the traditional methods and dogmatic approach, which is widespread in our industry.

I have coined the term “value engineering” to reflect this new attitude.

This means using our engineering knowledge intelligently to understand defects and anomalies on oil and gas assets.

Rather than a complex design and replace project, perhaps a more efficient approach is to evaluate the risk of managing any defect through to cessation of production safely.

We also need to empower our engineers to deliver in a technically-led environment with appropriate project controls.

We are currently engineering in an overweight project management environment, which is escalating costs and stifling effective delivery.

Small, lean engineering teams can liquidate appropriate work scopes highly efficiently.

My philosophy is simple – let’s get back to engineering basics to manage the North Sea asset base effectively and efficiently in late life.

The supply chain has also evolved so that operators and asset owners can pull on ad-hoc engineering resource, rather than build internal overheads with engineering or contracted asset engineering teams.

Efficient use of this available engineering resource has enormous benefits and cost reductions to the client if well-executed.

Above all, we must demonstrate that value engineering is safe and that we manage our assets appropriately and in line with industry best practice.

It amazes me that today we have engineers managing asset critical data on computer spreadsheets, rather than customised software packages.

With the tools and processes available today, it is relatively straightforward for personnel conversant with database technologies who understand the value and necessity of engineering data to square the circle of information management.

These approaches are discrete activities that are available to us in the industry today.

By combining these skills, activities and intelligence to solve our issues and challenging the move from a traditional engineering model to a leaner, more intelligent approach we have the opportunity to provide value in line with the cost saving goals set by our leaders.

Jonathan White is business development director at Aberdeen energy service firm Apollo Offshore Engineering.

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