Describe a Time When You Took a Great Risk. What Was the Outcome?

ion C) Describe a time when you took a great risk. What was the outcome?

I joined Samsung Heavy Industries (hereafter ¡®SHI¡¯) in 2014 and was assigned to one of the most difficult projects called TOTAL EGINA project as this project was facing a significant loss at the time. MY job was to minimize SHI losses and to prepare a financial recovery plan.

The EGINA project was awarded to SHI as a Lump Sum Contract and this made it very difficult in terms of seeking cost and time relief from TOTAL, a French energy company. I was responsible for managing the financial risk for the project and for seeking ways to maximize all opportunities including the identification of variations.

Background with problem identification

The EGINA project in Nigeria is valued at approx. USD15 billion. The EGINA field consists of 44 oil wells connected to a Floating Production Storage and Offloading (hereafter ¡®FPSO¡¯) vessel with a capacity 2.3M barrels producing 200,000 barrels of oil equivalent per day(BOEPD) processing capacity. TOTAL will operate the FPSO.

TOTAL engaged SHI to perform the Engineering, Procurement, Supply, Construction and Commissioning for the FPSO vessel on a lump sum contract basis.

After entering into the CONTRACT, SHI identified unforeseeable increase in quantities of Piping, Electrical, Instrumentation, HVAC and Structure during detailed engineering stage. This increase in quantities was beyond SHI¡¯s reasonable contemplation giving rise to significant cost overruns.

Finding and analyzing problem causes

As a contract manager in charge of variations, I tried to identify the causes of the significant increase in quantities in respect to Piping, Electrical, Instrumentation, HVAC and Structure. After all my research, I identified the following findings that could form the basis of a claim:

Basic engineering documents listed in the CONTRACT were provided by TOTAL. Among them, FPSO Weight Control Report Rev.03 represented a Topside weight at 32,832 tons including robust margins about 17.73% for quantity increase during detailed engineering which would be implemented by SHI.

SHI requested TOTAL to allow SHI to undertake verification of the basic engineering several times. However, TOTAL didn¡¯t accept SHI¡¯s request and made the following written statements:

The level of basic engineering was much higher than any other projects.

The FPSO Weight Control Report Rev.03 in the basic engineering documents included sufficient margins to cover anticipated quantity growth during detailed engineering.

The significance of the above TOTAL¡¯s statements in the context of a competitive tender situation could not be underestimated. Therefore, SHI estimated a bidding price based on the quantities as per the basic engineering documents provided by TOTAL without implementing verification of the basic engineering. After a lengthy tender process, TOTAL and SHI entered into the CONTRACT on the 15th of April in 2013 and SHI started detailed engineering. Despite SHI¡¯s optimization efforts, SHI realized that TOTAL¡¯s written statements were inaccurate given the fact that Topside weight has been increased by 14,998 tons which was 48% increase compared with the weight indicated in the basic engineering as a consequence of inadequacies of the basic engineering. The extent of growth was significant and far beyond what could have been reasonably foreseen. As a consequence of SHI¡¯s reliance upon the statements made by TOTAL, SHI incurred substantial additional costs and significant schedule impacts.

Outcome: Preparing a claim and settlement

I prepared a claim based on the above findings emphasizing inadequacy of the basic engineering undertaken by TOTAL and inaccuracy of TOTAL¡¯s statements. After officially submitting it to TOTAL, I had multiple negotiation meetings with TOTAL contract manager and confirmed each party¡¯s different position without making any progress. TOTAL¡¯s argument was that the CONTRACT price is all inclusive covering additional quantity so that TOTAL had no obligation to pay for additional quantities.

In order to refute TOTAL¡¯s incorrect statements and to demonstrate the inadequacy of the basic engineering, I presented TOTAL a detailed report to show all of the variations causing significant increase in quantities and TOTAL was surprised in respect of the inadequacy of the detailed engineering and acknowledged that the unforeseeable significant quantity increase was beyond a reasonable range. Later, TOTAL and SHI reached a commercial settlement and this was finalized in the form of a variation.

Question E) Describe the most outstanding leader you have worked with. Indicate some aspects of the way you work that are similar to the way this leader works and others that are different

Michel Laine, Senior Executive Vice President, is the most outstanding leader I have worked with. Since he joined Samsung Heavy Industries, Ltd. in 2014 as a project advisor, he has managed several Offshore Oil Production Facility projects awarded by TOTAL. He generally gives valuable advices to project managers regarding various project issues and is directly involved in the management, preparation and negotiation of claims.

When I prepared a claim for TOTAL EGINA project,