PMF Application

PMF is mandated by the P&T Business Management System (BMS) Core process ‘Manage Capital Projects’ and is required regardless of headline size. This standard is applicable for all Integrated Gas & Upstream (IGU) and Projects & Technology (P&T) executed Capital Projects. Other Businesses and project practitioners executing Capital Projects should consider the use of PMF as a recommended practice and consult as appropriate. The intent based design of the PMF makes it scalable to projects of all sizes and complexity.

The Growth Project Management Framework (Growth PMF) and the Exploration Opportunity Realisation Process (XORP) have been combined to form the IDENTIFY phase of the PMF, and this is the framework for Exploration opportunity delivery prior to DG1.

The PMF therefore starts in the IDENTIFY phase prior to DG1 and ends at the start of the Operate phase, or the Post-Investment Review (PIR) if applicable.

Applying the PMF in Portfolios

The PMF is applicable to Portfolio Projects. It is recommended that risks common to the individual projects are managed by applying the PMF to the portfolio rather than to each project. This could be done by establishing a standing procedure describing how to address single or multiple controls, and/or Expected Practice steps for the portfolio in its entirety. By adhering to this procedure, portfolio projects could prove that they also meet the intent of the PMF, without having to explicitly address each PMF control.

Applying the PMF at Roll-Out and for New Entries

At roll-out, the opportunity/project leadership needs to demonstrate that the intent of controls from previous ORP phases was met or that plans are in place to meet the intent of the controls. The FEDM and PM are accountable for recording of the evidence and for obtaining approval by the Decision Executive (DE).

Applying the PMF at Decommissioning and Restoration Projects

The PMF is applicable to decommissioning and restoration (D&R) projects. Guidance on how the PMF should be applied to D&R projects can be found in the Library. D&R projects do not generate income from hydrocarbon sales, so there is a strong focus on reducing cost. Target setting for D&R projects can rarely be done through economic analysis, as there is typically no revenue associated with these projects. Income from sale, reuse or recycle of components may be considered, but the target is more likely to result from a qualitative assessment demonstrating that the correct balance has been struck between risk and cost. Early assessment of non-traditional methods, in particular non-traditional contractor(s), is important in order to reduce costs if it can be demonstrated that these meet Shell’s safety and quality requirement.

Applying the PMF in Non-Shell Operated Ventures

In Non-Shell Operated Ventures (NOVs), Shell cannot impose the application of the PMF. Shell will use its influence to ensure that the intent of the PMF is followed by the operator. In NOVs, Shell takes a risk-based approach in influencing how the NOV manages its opportunities and projects (Glossary, Ref. 3). Besides PMF and DCAF, The Shell NOV governance team needs to consider JV Governance Standards, NOV Management Model, NOV Project Governance Guide (to come) and Opportunity Realisation Standards.

The PMF provides a reference for the Shell NOV project governance team to assess and determine what the key focus areas should be, by comparing PMF with operator’s equivalent project management framework. Whilst the application of PMF to NOVs is not mandatary, it is the Shell governance team’s accountability to decide how the intent of the PMF is to be used during each project phase and how to address any potential gaps.

The steps below describe some considerations for governance team. It is recommended to start this process early, at the start of each phase.

1. Obtain NOV equivalent PMF (could be commonly referred to as project management system) at the start of each phase.

2. Apply NOV management model, carry out the operator assessment, assess the risk, strategy and value especially understand the difference in view between Shell and the operator/other partners. Map the NOV Control Points and Controls to their equivalents in PMF, recognizing that this is not always a one-to-one relationship. In the NOV environment.

  • The primary area of focus is the context and purpose of the PMF Controls. Through the steps described above, the governance team can decide if and how the intent of each Control could be applied.
  • The Expected Practices can be a useful reference for the governance team if it brings additional value to the venture. However, it is equally important to learn from the Operator how they achieve the intent of the Expected Practices, as there could be other ways to achieve the purpose by the operator.
  • The Control Points and their accountability will be as per the operator’s project management system/framework

3. Based on gap assessment, identify gaps between Shell and the Operator’s process, if any. A range of scenarios are included below

  • Shell does not need to provide any further inputs - Controls and Control Points are adequately carried out by the Operator. In this case, there should be no duplication from Shell 
  • Shell to give technical inputs - In cases where Shell observes a gap, Shell governance team can influence to address the gap by bringing additional expertise to support the Operator’s work. However, it should be clear to both parties that the accountability for such work remains with the Operator.
  • Shell needs to conduct as a Shell only deliverable - This could be due to a significant gap observed after comparing Shell and Operator’s control points with very limited influence from Shell on the Operator within the project time frame. Note that the focus should be to influence the operator by demonstrating the value associated with the work. In such a situation, the Shell governance team can decide to carry out work on certain Controls or Control Points internally, subjected to internal assurance and incorporated in Shell’s NOV PCAP to document the evidence. The governance team still needs to decide what appropriate follow up actions are with the Operator (influencing, adjust Shell’s own risk view), as it could eventually lead to different decisions between Shell and the Operator.

In the scenario if NOV has decided to fully adopt Shell PMF processes, access to iPMS can be provided through a formal request from the NOV Shell Shareholder Representative. Further examples on this topic and NOV performance framework can be found in the Shell JV Excellence Page.

Library Material: