The Kvaerner management system. An introduction to how we manage our business

Transcription

1 The Kvaerner management system An introduction to how we manage our business

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3 Introduction The purpose of this book is to describe how Kvaerner manages its business. All documents described in this book are published on knet, the Kvaerner internal website. If you have questions regarding the content of this book, please contact your line manager. 3 Contents Introduction 3 Our corporate governance 4 Our management system 7 Our vision and values 8 Our Code of Conduct 9 Our policies 10 Our procedures 11 Our Project Execution Model 12 Our global networks 14 Our delivery model 16 After reading this text, you will: be familiar with Kvaerner s main governing bodies be familiar with the Kvaerner management system understand the key principles of our delivery model

4 Our corporate governance 4 Corporate governance: The system of structures, rights, duties, and obligations by which Kvaerner is directed and controlled. The governance structure specifies the distribution of rights and responsibilities among different functions in the corporation (such as shareholders, the board of directors, management at all levels, auditors and other stakeholders) and specifies the policies and procedures for making decisions in corporate affairs. Kvaerner performs its corporate governance within the framework of several legal requirements and principles in the respective jurisdictions in which it operates. Kvaerner aims to contribute to sustainable social development through responsible business practices and strives to conduct all business operations in an ethical manner and in compliance with applicable laws and regulations. Kvaerner has defined a set of basic corporate values, ethical guidelines and corporate social responsibility principles for the group to achieve this. Kvaerner strives continuously for zero harm to personnel, material and non-material assets. In addition, we are committed to ensuring that our products and services have no undue environmental impact, and to use energy and resources safely and efficiently. The corporate governance principles of Kvaerner are adopted by the Board of Directors of Kværner ASA. The Board of Directors evaluates the corporate governance statement on an annual basis. BOARD OF DIRECTORS Responsible for strategic direction, overall governing structure and values and policies, performed in accordance with Norwegian law and business principles. The Board of Directors, and the Board s subcommittee the Audit Committee (who has a safeguarding function), shall ensure that Kvaerner has sound corporate governance, Internal Control (including financial reporting) and Risk Management systems and procedures that are appropriate in relation to the extent and nature of the corporation s activities. The Board of Directors is elected by the General Meeting in accordance with applicable legislation. Board level consists of: Board of Directors Board s Audit Committee Board s Remuneration Committee Kvaerner has three main operating levels with defined authority set out in the authorisation matrix: CORPORATE Responsible for corporate governance, strategic development and implementation, and business area operational control. Each group function in Corporate has a global responsibility for following up on its respective areas of specialisation, and has ownership to its respective global policies and procedures. The corporate level supports the President & CEO with all ongoing and upcoming business matters and ensures alignment on strategic or general issues for the Kvaerner group. The President & CEO nominates the members of the Executive Management Team and the Corporate Management Team and the nominees should then be approved by the Board of Directors. Corporate management team (CMT) Supports ongoing and upcoming business matters on a daily basis. ¼ ¼ Executive management team (EMT) Ensures alignment in terms of strategic or general issues for the Kvaerner group. Member(s) from Corporate and each business area.

5 BUSINESS AREA Responsible for business area daily operations, as well as legal entity operational control. Each business area is responsible for adhering to the internal framework, execution of projects, and for ensuring reliable financial reporting and compliance with applicable legislation and regulations. 5 Each business area has full responsibility for profit and loss (EBIT), operational cash flow and operational balance sheets. Each business area consists of a number of legal entities organised in accordance with the business area strategy. LEGAL ENTITIES Responsible for daily operations of legal entities resides with BA management.

6 6 The Corporate Planning and Control processes include: Annual strategy process Annual risk review process Annual finance budget process Annual internal control processes Annual management performance process Quarterly and monthly business reviews (QBR and MOR) The Board of Directors evaluates Kvaerner s strategy, goals and guidelines, through a designated strategy process and a strategy workshop. The Board of Directors performs an annual risk review focusing on the most important areas of exposure to risk and its internal control environment. This is linked to the annual strategy process. Each business area is required to prepare budgets annually. These budgets should cover the next financial year as well as projections views for the following years. Budgets must be prepared in accordance with targets set in the annual strategy process. Each business area is required to perform an internal control process to ensure that all business activities meet financial and non-financial requirements and are carried out in accordance with the group s common norms and values. An annual performance dialogue is performed to clarify each employee s job accountabilities, set clear objectives, follow up progress, and evaluate performance and employee development. Each business area reports status for ongoing operations on a monthly and quarterly basis. MOR (Monthly Operating Report) monitors the development of business operations according to defined Key Performance Indicators (KPI). QBR (Quarterly Business Report) is used as basis for quarterly reporting to shareholders and the market.

7 Our management system Management system: The Kvaerner management system consists of policies and procedures needed to control the organisation. The purpose of the management system is among other to ensure: GLOBAL REQUIREMENTS VISION & VALUES 7 financial control and efficient use of human and capital resources predictable execution of projects secure quality and risk based management meeting customer expectations CORPORATE CODE OF CONDUCT POLICIES PROCEDURES JACKETS The Kvaerner management system consists of global requirements, as well as requirements for the various business areas and legal entities. The governing documents provide the framework for how we run our business. PROJECT EXECUTION MODEL TOPSIDES SPECIFIC REQUIREMENTS NETWORKS CONCRETE SOLUTIONS ONSHORE CONTINUOUS IMPROVEMENT

8 Our vision and values 8 Vision statement : An aspirational description of what an organisation would like to achieve or accomplish in the mid-term or long-term future. Value: Important and lasting beliefs or ideals shared by the people in Kvaerner about what is good or bad, desirable or undesirable. Values influence a person s behaviour and attitude and serve as broad guidelines. Our vision: Our values: Kvaerner s vision is to become a top league international EPC player. Values are essential for building trust, in each other, in our partners, in our customers and with society. Our values are: Open and direct dialogue We encourage early and honest communication People and teams All our major achievements are teams efforts HSSE mindset We take personal responsibility for HSSE because we care Our mission: We realise the world's most amazing and demanding projects, through: Hands-on management We know our business and get things done Customer drive Building customer trust is key to our business Delivering results We deliver consistently and strive to beat our goals

9 Our Code of Conduct Code of Conduct: A set of rules outlining the Kvaerner standards and proper practices both for the company and for the individuals. 9 The purpose of our Code of Conduct is to summarise Kvaerner s standards of behaviour. Our aim is to ensure that we run our operations in line with our values and all relevant laws and regulations, with a high level of integrity. All people working on Kvaerner activities must be familiar with this code. Kvaerner aims to cooperate with partners and suppliers that adhere to the same high standards as we do. We commit to monitoring the performance of our partners and suppliers and will take immediate action if the ethical performance of our business partners comes into question. 行 为 准 则 Code of Conduct тәртіп ережелері Kodeks postępowania Кодекс деловой этики Etiske retningslinjer

10 Our policies 10 Policy: A policy describes the operating principles within a specific area, defining the roles, responsibilities and main work processes in that area. Kvaerner has a set of global policies. Each global policy contains a statement describing the ambitions of the policy and how to achieve these ambitions. All Kvaerner policies are subject to an annual review. Governance Risk Management People Health, Safety, Security and Environment Business Integrity Tender Project Execution Quality Communications Third Party Representatives and Joint Venture Supply Management Investor Relations Legal Financial Planning and Reporting Investment and Disposal Tax Treasury Information Security Information Technology Technology and Intellectual Property Management Insurance Real Estate and facility Management Health, safety, security and environment policy In Kvaerner, HSSE is a core value expressed in our HSSE mindset: > All incidents can be prevented. We strive continuously for zero harm to personnel, material and non-material assets. > We focus on employee health and on continuously improving the work environment. > We conduct our operations through efficient use of materials and energy, with minimum waste and damage to the environment. > We design products and services to have no undue environmental impact, to be safe and to be efficient in consuming energy and natural resources. We seek to ensure that our products can be recycled or disposed of safely. Jan A. Haugan President & CEO To live up to our HSSE mindset, we will: > Require every employee to take personal responsibility for HSSE by focusing on own behaviour. > Apply a systematic and measurable approach to continually improve our HSSE culture and performance. > Bring with us our high HSSE standards wherever we do business. Complying with applicable laws and regulations is only the minimum. > Openly communicate HSSE issues and performance, and share and learn from HSSE best practices, internally and externally. > Include HSSE performance in the selection, appraisal and reward of our staff. > Integrate HSSE in all business processes. > Require line management to provide HSSE leadership and implement this policy.

11 Our procedures Procedure: A procedure describes requirements related to methodologies or work processes. 11 Each global policy may have one or more associated global procedures for areas where common methodologies or work processes are deemed necessary. A procedure may also have attachments, for example templates, forms and/or calculation sheets, guidelines and work instructions.

12 Our Project Execution Model 12 Project Execution Model (PEM): Kvaerner s PEM is based on 30 years of experience with complex oil and gas industry projects. For each execution phase of a project, the PEM provides activity descriptions and checklists, thus securing that all Kvaerner projects are executed in a coordinated and standardised manner. The objectives of the Kvaerner Project Execution Model (PEM) are to: Secure predictability in project execution and operations by using a standard and transparent methodology well known to the team. Focus on safety, quality and cost efficiency. Ensure multidiscipline understanding and coordinated efforts based on understanding of interactions between work processes Avoid rework correct the first time The main principle for all the modules of the Kvaerner PEM is to define the mandatory Kvaerner requirements for activities to be undertaken/completed at a given stage of the execution. Such sets of requirements (and corresponding checklists) are provided across all project phases and for all identified work processes. The PEM therefore represents a powerful tool in risk mitigation and auditing, supported by effective management systems and tools. Whilst the PEM defines the activities to be undertaken, the detailed description of the work is provided in underlying procedures. The Kvaerner PEM ensures that our work progresses in a controlled manner and that Kvaerner meets its business objectives. Consequently, the PEM contributes to maintain our record of successful project execution. Securing coordination of interrelated and parallel activities The success of a Kvaerner project depends on successful coordination of a high number of simultaneous processes, involving both own activities as well as the activities performed by subcontractors and suppliers. Our subcontractors execute significant portions of our work. The PEM supports and ensures an integrated management process, taking into account such interdependencies. Through an efficient utilization of the Kvaerner PEM, our ability to control internal and external interfaces as a foundation for a successful project execution, is secured. The quality principles of the PEM It is a core element in our project processes to continuously monitor achievement of required quality and maturity. Before proceeding to the next stage of the project, a formal Gate Review is performed as an integral part of Kvaerner s system to ensure quality in the project execution. Kvaerner PEM adaptation The Kvaerner PEM comprises a global part that is mandatory for all businesses, covering activities such as business development, tendering and project management. Furthermore, execution methodologies that reflect the specific requirements of the execution processes for the various project types are covered by PEM modules maintained by the respective business areas. Whereas it will always be Kvaerner s ambition to execute projects in line with best practice, as reflected in the PEM, the execution of unique projects will normally require project specific adjustments. Thus, for most of Kvaerner s major projects, project specific PEMs will be established providing an execution methodology capturing both the essence of our experience based best practice and the project specific requirements.

13 13 The PEM covers all phases of projects: Feasibility & concept System definition Detailing & fabrication Assembly & erection System completion Tender & kick-off Contract completion

14 Our global networks 14 Global networks: Networks foster the exchange of information, lessons learned and coordination of development within the organisation. The objective is to exploit the potential of the organisation and its capabilities by joining forces on a specific professional area. Kvaerner has built networks for alignment and coordination across business areas (BAs). Common processes across Kvaerner create opportunities to exchange our knowledge and skills. Members of the various networks may be employed in different parts of the organisation, but typically share roles and responsibilities. The networks focus on lessons learned, experience transfer and interactions between the BAs. In order to support continuous improvement, all business areas are expected to share their development work, training material and project execution experiences through the network. Participants should encourage interaction between their organisation and the network, and promote alignment across Kvaerner. Kvaerner operates networks on different areas and levels in the organisation: Corporate networks BUSINESS AREA Key execution networks Professional area networks Sub- and discipline networks BUSINESS AREA BUSINESS AREA BUSINESS AREA

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16 Our delivery model 16 Delivery model: The delivery model is Kvaerner s overall structure of execution methodologies, skills, support and monitoring, enabling a high quality project performance. Kvaerner is a specialised engineering, procurement and construction (EPC) company, working on some of the world s most demanding offshore and onshore oil and gas development projects. Kvaerner will partner up with and/or subcontract portions of the project to selected companies or partners around the world. This may include engineering and/or construction, as well as manufacturing of equipment. As a minimum, Kvaerner will control project management and the EPC management processes. Our approach is to standardise work routines, thereby increasing the quality of project deliverables from both Kvaerner and subcontractors. Furthermore, the Kvaerner delivery model is tailor-made to maintain control of all phases of execution and to monitor work with subsequent completion of the overall project. Project management Integration of the individual parts and phases: ENGINEERING MANAGEMENT Kvaerner s own engineering - Jackets - Concrete PROCUREMENT MANAGEMENT Kvaerner s own procurement Engineering subcontractor - Concrete - Topsides - Floaters - Etc. Procurement by sub-contractor, partners, customer, etc. FABRICATION/CONSTRUCTION MANAGEMENT Execution methodologies Based on strategic assessments, construction work is divided into practically sized modules or sections. This allows for an optimal construction method and assembly arrangement. Kvaerner s own fabrication Fabrication subcontractor

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18 18 Skills Our personnel are of great importance to maintain and develop the required competence Kvaerner has a flexible workforce and resources, which can be deployed to execute projects globally. Kvaerner may partner up with or subcontract engineering/fabrication provided that the relevant company has proved its capability to perform its scope of work. Kvaerner has developed a strong methodology, through the use of systems and software applications, for scope management and control (systematically define, control and monitor scope of works for all involved parties). Kvaerner also has the capability to undertake large-scale works related to the major onshore market within the oil and gas industry (such as refineries) as well as for hook-up and completion of offshore oil and gas installations. Kvaerner plans for and performs onshore demolition work related to end-of-life for offshore installations, with a major focus on environmentally controlled recycling. Support and monitoring Kvaerner has four main processes supporting business needs and project execution. In order to achieve best practices, each of these processes is supported by process owners and tools. Support and monitoring processes BUSINESS AREA Corporate management and planning Including business development Tender and execution Global sourcing Including supply management, contract and subcontract Support processes Including HSSE, HR, finance, legal, compliance and IP Kvaerner monitors performance through key performance indicators (KPIs), as well as by managing risk through early identification and continuous monitoring of risk exposure. Focus on quality and continuous improvement drives our achievements, our customer relations and our financial performance. BUSINESS AREA BUSINESS AREA BUSINESS AREA

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20 Photos: Kvaerner, Bård Gudim, istock. Layout design: Haugvar as