10/12/2018
JSC NIIK`s general manager attended the conference «Downstream project management».
Mr. Kostin was the moderator to the panel discussion «Contract Strategy: risks vs cost».In 2018 the fifth conference took place from 4th to 5th of October in Frankfurt, business capital and the most innovative city of Germany. An international company GBC Ltd. organized the conference.
Among the attendees there were representatives of the biggest integrated oil companies, world`s EPCs and engineering companies, design institutes, consultants and credit agencies as well as the project management solutions suppliers, namely PJSC «Gazprom-neft», PJSC «Lukoil», JSC «Uralkhim», JSC «SDS Azot», «Baltic gas chemical company Ltd» along with foreign concerns BASF, ThyssenKrupp AG and others.
This conference is the only one that is completely devoted to the efficient capital projects management issues in oil refining and petrochemical industry.
The conference has a practical character: key experts analyze real cases and implement best practices and the most recent models of projects management together with innovative technologies.
The conference was focused on the examples of best practices in cooperation between customers with foreign and domestic contractors and contract strategies and efficient contractor’s management. The biggest investment projects were overviewed in CIS region and in Europe as well as the creation and coordination of cross-functional project teams.
The participants discussed the foreign design solutions adaptation issues, project management in conditions of digital transformation, deadlines, costs and quality compliance of the projects as well as risk management for financing and implementation of capital-intensive projects.
Today`s projects are larger, highly- specialized and are executed faster than ever. The outdated strategies for project implementation are evolving due to the possibilities offered by automation, digital technologies and engineering.
Despite the obvious benefits of innovative technologies application to capital projects execution, several major companies don`t eager to implement global changes to the entrenched processes.
Many companies that started executing large projects recently have already faced the problem of a significant budget overruns and exceeded deadlines, experiencing not only typical but also specific regional issues. Those issues are associated whether with the specificity of particular projects or with the general industry challenges. During a widespread modernization and construction of new plants, companies and factories have a long way to go and should be ready to face any possible challenge. They also have to consider the experience of those who already completed this way.
While executing an investment project it is extremely important to decide on the contract strategy from the very beginning. That will help to execute the project promptly in a cost-effective manner and with maximum risk-management efficiency. It is important to understand that there are no common strategies for EPC contractors’ engagement.
While choosing a contract strategy the deadlines, costs and risks should be estimated for each of the projects separately.
The vast majority of the studies of key reasons for failures of large capital projects showed that the main reasons is the vulnerability of project management, standards, systems, tools and technical skills.
Issues of leadership, management details, motivation and culture of project teams are subject to analysis less frequently. One thing is quite clear – project success depends entirely on the team’s motivation and the company`s flexibility for taking decisions.
As Mr. Kostin has remarked, this conference gave a way to a productive dialogue between the managers. The managers had the opportunity to share and exchange their experience in regards with those projects implementation in Russia, in CIS region and in Eastern Europe and involve potential suppliers and contractors into the discussion as well.