txho/G:\Zxd453\Ppt\10101ZXD453.PPTCONFIDENTIALThisreportissolelyfortheuseofclientpersonnel.Nopartofitmaybecirculated,quoted,orreproducedfordistributionoutsidetheclientorganizationwithoutpriorwrittenapprovalfromMcKinsey&Company.ThismaterialwasusedbyMcKinsey&Companyduringanoralpresentation;itisnotacompleterecordofthediscussion.January2001CreatingNewPlanningProcessesinaLargePetroleumCompanyAndreasEngerTomMolnarTomGraceWarrenStricklandHowardHarrisStefanWisbauerGregLalickerPETROLEUMPRACTICEtxho/G:\Zxd453\Ppt\10101ZXD453.PPT2INTRODUCTIONPurposeofthisdocumentToprovideanoverviewoftheshareablerecommendationsforredesignedplanningprocessesforalargepetroleumcompanywhohadnotupdatedtheirprocessessincethe1970’sKeyfunctionsaddressed•Strategicplanning•Capitalapproval•PerformancemanagementCorrespondingactivitieswithintheclient•Businessplan•Operatingplan•Capitalbudget•Expenditurerequestapproval•Accountabilityreviewstxho/G:\Zxd453\Ppt\10101ZXD453.PPT3OVERVIEW•CurrentProcessIssues•NewProcesses–Overview–StrategicBusinessPlanning–PerformanceManagement•OrganizationalImplications•ImplementationRoadmaptxho/G:\Zxd453\Ppt\10101ZXD453.PPT4OVERVIEW•CurrentProcessIssues•NewProcesses–Overview–StrategicBusinessPlanning–PerformanceManagement•OrganizationalImplications•ImplementationRoadmaptxho/G:\Zxd453\Ppt\10101ZXD453.PPT5THECURRENTPLANNINGPROCESSESMEETSREQUIREMENTSBUTHASAREASOFPOTENTIALIMPROVEMENTStrengths•Meetscorporateobligations•Provideslongtermfinancialforecast•Ensuresprojectsarereviewedpriortoapproval•Providesannualbudgets•Involvesallpartsoftheorganisation•KeepsthebusinessrunningWeaknesses•Dispersedaccountabilityduetolackofclearownership•Littletimeforin-depthstrategicdiscussionatseniormanagementlevel•Operationalandprojectdetailburdentopmanagementagenda•Largepartofplanningispaperexercisedoneatstafflevelrequiringsignificanttimeandresources•Projectexecutiondependentonbusinessplancycle•Notrackingofprojectperformanceorsystematiccapturingoflearningtxho/G:\Zxd453\Ppt\10101ZXD453.PPT6SIGNIFICANTTIME&EFFORTISINVESTEDINPLANNINGYEAR-ROUND…Businessplanandcapitalprogramme•Issueguidelines•Managementreview•Sr.managementreview•Boardreview•Issueguidelines•Managementreview•Sr.managementreview•BoardreviewOperatingplan•Issueinstructions•Managementreview•Sr.managementreview•BoardreviewAccountability•Issuemid-yearinstruction•Sr.managementreview•Boardreview•IssueYEinstructions•Sr.managementreview•BoardreviewDecJanFebMarAprMayJunJulAugSepOctNovDecPrioryearDec4Jan28Feb15,16Apr4Jun22,23Jul15Jul1Oct15,17Nov12,13Dec1Nov3Sep18,19Aug29Jun27May3,4Mar24,25,26Mar10,11,12Dec2SpringFallupdateOperatingplanMid-yearYear-endCapitalbudget•Projectsubmittal•Projectsubmittal•Managementreview•Sr.managementreview•BoardreviewNov3Sep18,19Aug29Aug8CapitalbudgetAug10txho/G:\Zxd453\Ppt\10101ZXD453.PPT7ForecastpaymenttogovernmentBereadyandpreparedfordemandEnsurestrategyimplementationtoachievetargetsBudgetingSetclear&consistentdirectionSustainablerevenue/profitgrowthMakesuperiordecisionsFacilitateresolutionofconflictingobjectivesIdentifyessential/strategicinitiativesCreatemaximumvalueUnderstandwhatcompetenciesneedtobedevelopedCopewithpotentialthreatsFunctionofPlanningProcess0246810SuccessRating*…YETCONSTITUENTSAREONLYPARTIALLYSATISFIEDWITHTHERESULTSInternalperspectiveofplanningprocesseffe...
