CME2000 Master Thesis

Transcription

1 CME2000 Master Thesis Developing a framework to structure and improve the decision-making process from an asset manager perspective A study towards the information flow for asset acquisition decisions at Allseas Engineering Lisanne van Duffelen MSc. Construction Management & Engineering Date - 16 December 2016

2 Cover image: Department of Public Relations, Allseas Engineering

3 Developing a framework to structure and improve the decision-making process from an asset manager perspective A study towards the information flow for asset acquisition decision at Allseas Engineering By L.S van Duffelen in partial fulfillment of the requirements for the degree of Master of Science in Construction Management and Engineering at the Delft University of Technology, to be defended publicly on Friday December 16, 2016 at 11:00 AM. In cooperation with Allseas Engineering (Delft, the Netherlands) Chair: Prof.dr.ir. P.M. Herder Delft University of Technology (TPM/E&I) Daily supervisor: Dr. R. Schoenmaker Delft University of Technology (CEG/CME) Supervisor: Dr.ir. R.M. Stikkelman Delft University of Technology (TPM/E&I) External supervisors: Ir. D. van Strijp Allseas Engineering Vice president Operations Ir. ing. L. van Donge Allseas Engineering Unit head Continuous Improvement

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5 PREFACE This document represents my graduation project, and final step, to achieve the degree of Master of Science in Construction Management & Engineering at the Delft University of Technology. This research contributes to the improvement of the decision-making process concerning capitalintensive assets and is commissioned by the department Operations and unit Continuous Improvement of Allseas Engineering. I would like to thank everyone who participated in my research by providing me the means to establish this thesis. First of all, I would like to thank Dries van Strijp and Lori van Donge for giving me the opportunity to do my graduation thesis at Allseas Engineering. Through this opportunity I got introduced to the offshore industry and the capital-intensive assets that Allseas owns. It has been a great experience to participate in this organisation. Secondly, I want to express my gratitude to Rob Schoenmaker and Rob Stikkelman for all their effort they have done to assist me. Through their sharp comments during the meetings, have helped me to demarcate my thesis and improved my structure, research and motivate me throughout my thesis. Furthermore, I would like to thank my professor Paulien Herder for her time to read my thesis and give her opinion about my research. Finally, I would like to thank my family and friends who have helped me during this process by providing me with advice, food and reading skills! Lisanne van Duffelen The Hague, December 2016 iii

6 EXECUTIVE SUMMARY Context The operational environment of capital-intensive asset companies in the oil and gas industry is challenging. Since project specifications gradually change and technology improves it requires companies to keep investing in order to maintain their market position. This makes the operational environment dynamic and a layer of complexity is added to the decision-making process regarding their assets. Allseas Engineering is a capital-intensive asset company in which adequate investments are needed to provide the (required) service in order to meet the demands of a client. Information is an important part of the decision-making process since asset acquisition decisions are only as good as the quality of the information it is based on. Currently, the means for structuring and assessing information for asset acquisition is insufficient within Allseas. Within asset acquisition projects the decision-maker, operating at the strategic level, focuses on the profit, accountability and business strategy of the company. The asset manager operates at the tactical level and provides the advice for asset acquisition based on the information concerning costs, risks and performance of the asset. This information comes from the experts operating at the operational level. Gathering this information throughout the different levels within an organisation is referred to as the flow of information in this study. The primary focus of an asset manager is to combine the information of the operational experts, economics and business strategy within an interdisciplinary approach and to give structure to the decisionmaking process. Gathering this information involves determining the requirements of the client, in-house asset availability and the market. It is practical impossible that the asset manager has all the information at his or her disposal and therefore uncertainty in asset acquisition exists. Some information is known before asset acquisition and this study focuses on to be more precise in order to reduce the risks for a company, in asset acquisition decisions, and to answer the following research question: How can the decision-making process for asset acquisition be improved by optimising the flow of information within an organisation from an asset manager perspective? A framework has been designed to improve the decision-making process at Allseas Engineering by combining the theories of System Engineering (SE), Business Case (BC) and Front-End Loading (FEL) with input and validation by experts in this field. Research The decision-making process for asset acquisition is improved by providing a five-step stagegated approach combined with feedback loops defined from literature. Each step includes activities to be followed in order to gather the information that is needed for asset acquisition. Those steps are (1) define task and requirements, (2) expert mapping, (3) option development, (4) preferred option(s) analysis and (5) asset recommendation. The stages in which the five steps take place consist of the following three: project initiation, pre-feasibility and feasibility stage. The asset acquisition advice is defined by the asset recommendation step that involves the summary of the previous stages by the asset manager. An organisation can use this designed framework to structure and assess the information for asset acquisition to improve the decision-making process. The stage-gated approach aims to minimise the changes and rework during the implementation of an asset acquisition project by optimising the information at every end-gate of a stage. The feedback loops contribute to this as it provides an iterative process that starts and ends with the user to reduce additional requirements, which can come up during implementation and/or during the operational stage of the asset. iv

7 Results The effect of improving the information gathering process by providing a clear structure influences the asset acquisition project. A practical study involving a survey and case study has been conducted at Allseas Engineering. The success realisation of an asset acquisition project is influence by the flow of information as practical revealed how critical the flow of information is between the decision-maker and the experts. A decision has been made without consultation of the operational experts, which resulted in a failure of the needed capability of the asset that has been required to fulfil the task. Furthermore, through consultation of a variety of disciplines after the decision made, resulted in additional requirements. This is caused by the difference of gathering information within the levels of an organisation. The asset manager is focussing more on the general information whilst the expert is focussing more on specific information. However, when all sources came into place a more successful asset acquisition project has been achieved. Therefore, it is emphasised through practice that a structural approach using feedback loops optimise the flow of information within an organisation and enables a well defined front-end. In this way, changes and additional expenses can be minimised using the framework see Figure 1. FIGURE 1. THE ASSET ACQUISITION FRAMEWORK Conclusion It can be concluded that it is of great importance that all information and insights available are considered during the process such that changes at a later stage can be dealt with up-front minimising the risks. The flow of information can be optimised using the framework designed for this research. The results have shown that an insufficient flow of information negatively influences the operational stage of a project. The information flow can be optimised by a clear structure, documentation and communication. The framework provides this by indicating which and with what process the information should be gathered during asset acquisition. This way, a guideline to manage the information flow by the asset manager is provided. In addition, structuring the information flow by following the framework provides the means to evaluate the information needed. The advantage of a stage-gated approach that consists of feedback loops, is that it makes the information gathering process more precise. It establishes a more informed advice based on a comprehensive set of information that is validated throughout the stages as well. Recommendations This research has focussed on improving the decision-making process for asset acquisition by improving the flow of information at Allseas Engineering. More possibilities for further research can be found in the application to other assets within other industries to gain insight whether such an asset acquisition should be managed differently related to the type of investment, industry and organisation. In this way, it can be determined how the framework should be adapted accordingly. For Allseas it is recommended to use this framework to improve the corporate management of change procedure. In this way, how information should be gathered is added to the procedure and a more consistent approach can be achieved. Next, it is recommended to involve more disciplines before the decision is made in order to reduce and minimise changes during the implementation and operational phase. Finally, an organisation should be set-up regarding a plan when to start this process, type of investment and responsibility. However, time is an important aspect as using this framework is more time consuming. This influences the process of asset acquisition and is not always beneficial in some situations. Therefore this should be taken into consideration. v

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9 TABLE OF CONTENTS PREFACE... III EXECUTIVE SUMMARY... IV LIST OF ABBREVIATIONS AND TERMINALOGY... IX LIST OF FIGURES... X LIST OF TABLES... XI 1 INTRODUCTION BACKGROUND INFORMATION RESEARCH PROBLEM RESEARCH SCOPE RESEARCH OBJECTIVE AND DELIVERABLES RESEARCH QUESTION RESEARCH RELEVANCE RESEARCH PROCEDURE RESEARCH STRUCTURE LITERATURE RESEARCH: ASSET ACQUISITION PROCESS AND INFORMATION ASSESSMENT ASSET ACQUISITION METHODOLOGIES INFORMATION ASSESSMENT SUB-CONCLUSION: THEORETICAL FRAMEWORK PRACTICAL RESEARCH METHODS THE RESEARCH PROCESS AND QUALITY SURVEY TO EXPLORE THE KEY INFORMATION CASE STUDY TO EXPLAIN THE FLOW OF INFORMATION DATA ANALYSIS DATA COLLECTION: BACKGROUND INFORMATION KEY CRITERIA ASSET ACQUISITION PROCESS SUB-CONCLUSION: KEY CRITERIA AND IMPLICATIONS OF INFORMATION FLOW EVALUATE THE THEORETICAL FRAMEWORK WITH THE PRACTICAL RESULTS EVALUATE THEORY AND PRACTICE DEVELOP CUSTOMISED ASSET ACQUISITION FRAMEWORK SUB-CONCLUSION: THE ASSET ACQUISITION FRAMEWORK VALIDATION OF THE ASSET ACQUISITION FRAMEWORK RESEARCH LIMITATIONS FRAMEWORK AGAINST CURRENT PRACTICE ALLSEAS FRAMEWORK APPLICATION SUB-CONCLUSION: FRAMEWORK VALIDATION CONCLUSION AND RECOMMENDATION CONCLUSION LIMITATIONS RECOMMENDATIONS REFERENCES APPENDIX A CORPORATE MANAGEMENT OF CHANGE PROCEDURE B LITERATURE ON SYSTEM ENGINEERING B.1 SEARCH PHRASES B.2 SYSTEM ENGINEERING METHODOLOGY C LITERATURE ON BUSINESS CASE C.1 SEARCH PHRASES C.2 BUSINESS CASE METHODOLOGY D LITERATURE ON FRONT-END-LOADING D.1 SEARCH PHRASES D.2 FRONT-END LOADING METHODOLOGY D.3 THE STAGE-GATED PROJECT MANAGEMENT PROCESS E EVALUATION CRITERIA F EVALUATION METHOD: ANALYTICAL HIERARCHY PROCESS G DATA PROTOCOL G.1 SURVEY vii

10 G.2 CASE STUDY G.3 INTERVIEW TEMPLATES H SURVEY RESULTS: CONFIDENTIAL I CASE STUDY: CONFIDENTIAL J INTERVIEWS: CONFIDENTIAL viii

11 LIST OF ABBREVIATIONS AND TERMINALOGY TABLE 1. LIST OF ABBREVIATIONS Abbreviations Explanation AFE Approval For Expenditure AHP Analytical Hierarchy Process AIMS Allseas Integrated Management System AM Asset Management BC Business Case Corporate MoC Corporate Management of Change FEL Front-End Loading IMO International Marine Organisation IRR Internal Rate of Return LCC Life Cycle Cost NPV Net Present Value QHSE Quality, Health, Safety and Environment SE System Engineering SMART Simple Multi-Attribute Rating Technique Asset Management For this research: a discipline that that provides a coordinated activity for a company to make the best decisions it can about its assets based on a clear understanding of its long-terms objectives. Asset manager Combines the information of the operational experts, economics and business within an interdisciplinary approach and gives structure to the decision-making process. Capital-intensive assets Pipelay vessels and high capacity handling and pipelay equipment for the execution of pipelines offshore. Flow of information The information gathering process between the decision-maker, asset manager and experts. ix

12 LIST OF FIGURES FIGURE 1. THE ASSET ACQUISITION FRAMEWORK... V FIGURE 2. THE THREE LEVELS IN A COMPANY... 2 FIGURE 3. FLOW OF INFORMATION WITHIN THE ORGANISATIONAL LEVEL... 2 FIGURE 4. RESEARCH SCOPE... 4 FIGURE 5. RESEARCH STRUCTURE... 7 FIGURE 6. RESEARCH PROCEDURE... 8 FIGURE 7. CONCEPTUAL MODEL TO DEVELOPED THE FRAMEWORK FOR ASSET ACQUISITION... 9 FIGURE 8 ASSET MANAGEMENT PROCESS (HASTINGS, 2015) FIGURE 9. STAGE-GATED PROJECT MANAGEMENT PROCESS (LAVINGIA, 2006, P. PM.01.02) FIGURE 10. THEORETICAL FRAMEWORK INCLUDING A FIVE-STEP STAGE-GATED APPROACH COMBINED WITH FEEDBACK LOOPS BASED ON THE THEORY OF SE, BC AND FEL FIGURE 11. RESEARCH PROCESS FLOW CHART FIGURE 12. PERSPECTIVE VIEW ON CASE STUDY FIGURE 13. POSITION OF THE IMPLICATION OF THE INFORMATION FLOW (N=43) FIGURE 14. FOCUS POINT OF THIS CHAPTER: PROVIDE IMPROVEMENT ACTIVITIES THROUGH EVALUATING THE THEORY AND PRACTICE AND EMBED THE KEY CRITERIA INTO THE ASSET ACQUISITION FRAMEWORK TO ACHIEVE AN IMPROVED AND CUSTOMISED FRAMEWORK FIGURE 15. THE ASSET ACQUISITION FRAMEWORK INCLUDING THE ACTIVITIES TO STRUCTURE AND ASSESS INFORMATION BASED ON THEORY AND PRACTICE FIGURE 16. FRAMEWORK AGAINST CURRENT PRACTICE ALLSEAS FIGURE 17 CORPORATE MANAGEMENT OF CHANGE PROCEDURE (ALLSEAS, 2016) FIGURE 18 DAU SE PROCESS MODEL FIGURE 19. ISO SE PROCESS MODEL FIGURE 20. SE THROUGH THE LIFE CYCLE (BISHOP, 2015) FIGURE 21 ASSET MANAGEMENT PROCESS (HASTINGS, 2015) FIGURE 22. INFLUENCE OF THE COSTS THROUGH PROJECT RETRIEVED FROM (BATAVIA, 2001, P. 2) FIGURE 23. STAGE-GATED PROJECT MANAGEMENT PROCESS (LAVINGIA, 2006, P. PM.01.02) FIGURE 24. VALUE-FOCUSSED THINKING THROUGH AHP METHOD x

13 LIST OF TABLES TABLE 1. LIST OF ABBREVIATIONS... IX TABLE 2. RESEARCH APPROACH IN RELATION WITH SUB-QUESTIONS... 7 TABLE 3 TOOLS FOR SE PROCESS DERIVED FROM BISHOP (2015, P. 269) TABLE 4. KEY DELIVERABLES AND ACTIVITIES IN BC-1 (BASED UPON GAMBLES (2009), HASTINGS (2015) AND (SCHMIDT, 2009)) TABLE 5. KEY DELIVERABLES AND ACTIVITIES IN BC-2 (BASED UPON GAMBLES (2009), HASTINGS (2015) AND (SCHMIDT, 2009)) TABLE 6. KEY DELIVERABLES AND ACTIVITIES IN BC-3 (BASED UPON GAMBLES (2009), HASTINGS (2015) AND (SCHMIDT, 2009)) TABLE 7. OVERVIEW OF THE METHODOLOGIES TABLE 8. EVALUATION CRITERIA DERIVED FROM YASSERI (2012, P. 154/155) TABLE 9. MATRIX USED FOR CASE TABLE 10. DATA SOURCE - CASE STUDY TABLE 11. KEY CRITERIA TABLE 12. FOCUS AREA OF INFORMATION ASSESSMENT TABLE 13. EVALUATION STEP 1 - FINDINGS THEORY AND PRACTICE TABLE 14. ACTIVITIES FOR STEP 1 - COMBINING THEORY WITH PRACTICE TABLE 15. EVALUATION STEP 2 - FINDINGS THEORY AND PRACTICE TABLE 16. ACTIVITIES FOR STEP 2 COMBINING THEORY AND PRACTICE TABLE 17. EVALUATION STEP 3 - FINDINGS THEORY AND PRACTICE TABLE 18. ACTIVITIES FOR STEP 3 COMBINING THEORY AND PRACTICE TABLE 19. EVALUATION STEP 4.A - FINDINGS THEORY AND PRACTICE TABLE 20. ACTIVITIES FOR STEP 4.A COMBINING THEORY AND PRACTICE TABLE 21. EVALUATION STEP 4.B FINDINGS THEORY AND PRACTICE TABLE 22. ACTIVITIES FOR STEP 4.B COMBINING THEORY AND PRACTICE TABLE 23. EVALUATION STEP 4.C FINDINGS THEORY AND PRACTICE TABLE 24. ACTIVITIES FOR STEP 4.C COMBINING THEORY AND PRACTICE TABLE 25. EVALUATION STEP 4.D FINDINGS THEORY AND PRACTICE TABLE 26. ACTIVITIES FOR STEP 4.D COMBINING THEORY AND PRACTICE TABLE 27. EVALUATION STEP 4.E FINDINGS THEORY AND PRACTICE TABLE 28. ACTIVITIES FOR STEP 4.E COMBINING THEORY AND PRACTICE TABLE 29. EVALUATION STEP 5 FINDINGS THEORY AND PRACTICE TABLE 30. ACTIVITIES FOR STEP 5 COMBINING THEORY AND PRACTICE TABLE 31. DESCRIPTION INTERVIEWEES TABLE 32. KEY DELIVERABLES AND ACTIVITIES IN THE BC PHASES (BASED UPON GAMBLES (2009), HASTINGS (2015) AND SCHMIDT (2009) TABLE 33. TERMINOLOGY OF PROJECT PHASES TABLE 34. INFORMATION CRITERIA TABLE 35. SCALE OF RELATIVE IMPORTANCE DERIVED FROM SAATY, 1977 IN YASSERI (2012, P. 157) TABLE 36. STEP 2 AND 3 AHP METHOD PRIMARY CRITERIA TABLE 37. STEP 2 AHP-METHOD SUB-CRITERIA TABLE 38. RANDOM INDEX (RI) OBTAINED FROM (YASSERI, 2012, P. 160) TABLE 39. SUB-CRITERIA ASSESSMENT ALONG ALTERNATIVES TABLE 40. STEP 4 FINAL SCORE TABLE 41. DATA SOURCE - CASE STUDY TABLE 42. MATRIX USED FOR CASE xi

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15 1 INTRODUCTION The operational environment of capital-intensive asset companies in the oil and gas industry is challenging (Popović, Vasić, & Curović, 2010). The industry is a market driven business in which companies should anticipate. The high oil price allowed for difficult fields to be lucrative i.e. economically feasible - and it is expected that these fields will be attractive again in the future. This requires a continuous search for oil and gas in deeper water and harsher environment. To avoid staying behind, companies have to be ahead of the market. While the world energy demand is still increasing, the project specifications gradually change - e.g. shift of gas and oil exploration towards deeper-water - and while technology improves, companies need to keep investing in order to maintain their market position. Capital-intensive asset companies, such as Allseas Engineering, are big consumers in assets in which adequate investments are needed to provide the (required) service in order to meet the demands of a client. Pipelay vessels and high capacity handling and pipelay equipment are the capital-intensive assets that Allseas owns. These assets are the key factor for the capability of Allseas to perform work in an effective and efficient manner. Effectiveness is defined as the achievement of a company s objectives and efficiency relates to achieving the expected outcome. The process necessary to achieve this is complex and is part of what the discipline of Asset Management (AM) organises. AM is defined by ISO (2014) as: the coordinated activity of an organization to realise value from assets (p.4). This means in the simplest way that a company is making the best decisions it can about its assets based on a clear understanding of its long-terms objectives (IAM, 2014). Asset acquisition decisions can be essential for three purposes of Allseas: (1) strategy, (2) project requirements, and (3) research development. Whether Allseas is capable of meeting its strategic and operating objectives is influenced by this decision. In terms of strategy, the procurement of an asset can be essential for meeting future opportunities. With regard to obtaining a certain project with different operating objectives, an intervention is needed to meet the new performance requirements. Lastly - in terms of research - new technology can be developed in which Allseas needs to invest to be ahead of the market. These are not straightforward decisions as asset acquisition is complex due to the uniqueness of every investment decision. Furthermore, due to the dynamic operational environment of capitalintensive asset companies a layer of complexity is added to the decision-making process regarding their assets. Information is an important part of the decision-making process, as asset acquisition decisions are only as good as the quality of the information it is based on. However, the levels within an organisation put different demands on which information is needed and how it should be gathered (Nowé, 2001). This affects the decision-making process, as such decisions are often made in isolation from the rest of the business (IAM, 2014). Gathering this information involves determining the requirements of the client, in-house asset availability and the external business. The primary focus of an asset manager is to combine the information flow between the decision-maker and operational experts. It is practically impossible that the asset manager has all the information at his or her disposal and therefore uncertainty in asset acquisition exists. Currently, the means for structuring and assessing information for asset acquisition is considered insufficient within Allseas. Since several ways exists in theory to gather information and some information is known before asset acquisition, this research is focussing to be more precise in order to reduce the risks in asset acquisition decisions. Therefore, the goal of this research is to gain insight how to optimise the information gathering process by the asset manager, so that Allseas can benefit from an improved decision-making process for asset acquisition. 1

16 1.1 BACKGROUND INFORMATION A company can be divided in three levels; strategic, tactical and operational - see Figure 2. Within the strategic level, future opportunities of a company, in which assets and actions are needed to achieve this, are determined. The tactical level looks at what assets are needed to achieve the strategic objectives of a company. In the operational level, the day-to-day activities take place. Strategic Business Tactical Asset management Operational Technical FIGURE 2. THE THREE LEVELS IN A COMPANY AM combines the technical and business knowledge to provide the asset related needs of a company as a whole in an effective and efficient manner. The aim of AM is to achieve the objectives of a company and realise value by balancing the costs, risks and performance. To achieve this balance, an alignment should be reached between the business level where the decisions are made towards the technical level where the day-to-day activities take place, see Figure 3. This means that the business goals must be in alignment with the AM goals in order to maximise the overall performance of a company and support the business needs. The asset managers role is to combine the business related knowledge and the technical knowledge to obtain the objectives of a company and the assets needed to fulfil this. It should be mentioned that asset management is a separate activity from the other aspects in an organisation. These aspects are (Hastings, 2015, p. 44): Business planning, Operations, I.T., Finance, Engineering, Maintenance, Logistics, Purchasing, Human Resources, Training, and Legal. The flow of information between the decision-maker, asset manager and experts is shown in Figure 3 and discussed below. Why should it be done Decision-maker Business - responsible Focuses on profit, accountability and business strategy What should be done, when and where Asset Manager Bridge between business and expert Provides advice based on costs, risks and performance How should it be done Expert view Information input Provides the information Link between the areas of a business Specific Knowledge within a business Legal Training Human Resources Purchasing Logistics Maintenance Engineering Finance I.T. Operations Business planning FIGURE 3. FLOW OF INFORMATION WITHIN THE ORGANISATIONAL LEVEL The relation between these levels is shown in Figure 3 as the asset manager focuses on (i) the alignment between the business level and the operational level to make sure that value from assets can be created. This involves understanding the business needs in which the asset manager understands the capability that is required for the business, and (ii) gives advice 2

17 towards the decision-maker based on the information concerning costs, risks, performance and business needs. For asset acquisition decisions the focus of the decision-maker in the business level is on the profit, accountability and business strategy of the company (Hastings, 2015). The main question that will be asked in this level is: whether the asset will realise value in terms of profit to the company. For the asset manager to give an answer to this question, the balance should be known between the costs, risks, and performance of the asset in order to give an advice to the decision-maker prior to the decision to make. For the asset manager to find the balance between the costs, risks and performance, information input from the experts is needed. These experts at the operational level are focussing on their expertise in which factors such as, equipment availability, maintenance, logistics, risks, continuity and technology are important to consider (Hastings, 2015). In summary, making a decision all starts with collecting the information needed throughout an organisation. Gathering this process throughout the different levels is referred to as the flow of information in this study. The primary focus of an asset manager is to combine the information of the operational experts, economics and business within an interdisciplinary approach and to give structure to the decision-making process. Gathering this information involves determining the requirements of the client, in-house asset availability and the external business. However, it is practical impossible that the asset manager has all the information at its disposal and therefore uncertainty in asset acquisition exists. 1.2 RESEARCH PROBLEM Allseas introduced the Corporate Management of Change (Corporate MoC) procedure within the Allseas Integrated Management System (AIMS). This procedure is used to structure a change such as acquiring a new asset and consists of five steps; (1) propose the change that is required or desirable, (2) communicate plans by searching the information that is necessary to determine the impact and consequences of the change, (3) evaluate feedback and decide; the information provided is discussed and the risks/opportunities need to be assessed after which the decision is made, (4) implement change, and (5) review the effectiveness of the change after implementation. See appendix A for the procedure. A problem exists in this procedure that is related to the information that needs to be gathered in step 2 and evaluated in step 3. This procedure outlines the needs to determine the information that represents the impact of acquiring a new asset and to give an advice about this impact. However, it does not include how this information should be determined. Therefore, the means for structuring and assessing information for asset acquisition is considered insufficient within Allseas. Considering the complex nature of asset acquisition and the importance of the flow of information as asset acquisition decisions are only as good as the quality of the information it is based on, the following problem statement is defined: Some information is known before asset acquisition, however it is practical possible that the asset manager has all the information at its disposal. Furthermore, an approach how information should be gathered is considered insufficient within Allseas. There are several ways to gather information but it is unknown how this impacts the flow of information within an organisation in order to reduce the risks in the decision-making process. Therefore a study is required towards the flow of information to consider in asset acquisition to be more precise in the evaluation of asset acquisition decisions in order to reduce the risks, so that Allseas can be benefit from an improved decision-making process. This research focuses on the process of the flow of information within the decision-making context from an asset manager s perspective. 3

18 1.3 RESEARCH SCOPE The scope of this research is demarcated in this section and is visualised in Figure 4. This can be explained as follows: before an advice can be given about asset acquisition information is needed to make a sound choice. The asset manager is needed to make this choice and will give an advice towards the decision maker. To do this in a structured manner a process is needed that captures the steps to take towards asset acquisition and the flow of information that need to be gathered. Decision-making process The steps to undertake 1. Information flow Information assessment 2. Asset Acquisition 3. Advice To the decision-maker Asset manager Bridge between business and experts FIGURE 4. RESEARCH SCOPE The research scope identifies the gaps to be explored. This research is divided in two parts: theoretical and practical. The theoretical part involves a literature study towards (1) the process that indicates the steps to take for obtaining the information needed, and (2) the information assessment. This involves defining the criteria upon which an asset acquisition is evaluated and how information can be evaluated. However, not all gaps are filled with this literature study. Therefore an empirical research is used to reveal the flow of information necessary to achieve an informed advice in a real-life context, indicated as gap (3). This takes place at the company Allseas Engineering. Allseas is an offshore contractor specialized in pipeline installation projects. The installation of pipelines is an important part of the construction of offshore infrastructure. Pipelay vessels and high capacity handling and pipelay equipment are a set of individual assets that Allseas Engineering has for the execution of pipelines offshore. These assets are a key factor for the capability of the contractor to perform work in an effective and efficient manner. In summary, this research focuses on the process of the flow of information for asset acquisition decisions from an asset manager s perspective at Allseas Engineering. 1.4 RESEARCH OBJECTIVE AND DELIVERABLES Considering that asset acquisition decisions are complex and that it is practical impossible that the asset manager has all the information at its disposal the following objective of this research can be formulated: The aim of is this research is to gain insight which and with what process information should be gathered. This is done by exploring the process of the flow of information for asset acquisition decisions and to come up with a framework for structured and validated asset acquisition 4

19 decisions. The goal is to reach the main objective: to be more precise in the information to reduce the risks in the decision-making process of asset acquisition. In order to achieve this, several sub-objectives are defined: Explore theoretical methods to gain insight in the structure and information assessment for asset acquisition decisions. Explore practical knowledge of what and how information is gathered and with what results to gain sight in the implications for the flow of information, by executing a survey and a case study at Allseas Engineering. To explain how the information gathering process can improve the decision-making process using the framework, by evaluating theory with practice. These objectives can be translated into the main deliverable that will be established in this research: Design of the framework The main goal of this research is to design a framework that can improve the information gathering process by the asset manager so that Allseas can benefit from an improved decisionmaking process for asset acquisition. The framework will be based on theory and practice. The basis of the framework is made during the analysis of the literature. This is done by defining on one hand the process structure and on the other hand the information assessment. During a survey and a case study, practical knowledge is gathered and evaluated with the theory. In the end of the research, the theoretical and practical knowledge is combined in one framework. 1.5 RESEARCH QUESTION Derived from the problem definition the point of departure for this research can be created by stating the main research question: HOW CAN THE DECISION-MAKING PROCESS FOR ASSET ACQUISITION BE IMPROVED BY OPTIMISING THE FLOW OF INFORMATION WITHIN AN ORGANISATION FROM AN ASSET MANAGER PERSPECTIVE? This research question can be answered by answering the following sub-questions: 1. WHAT FRAMEWORK TO MAKE AN INFORMED ADVICE FOR ASSET ACQUISITION CAN BE DEFINED FROM THE LITERATURE? 2. WHAT ARE THE KEY CRITERIA TO ASSESS AN ASSET ACQUISITION PROJECT? 3. HOW IS THE FLOW OF INFORMATION ASSESSED BY ALLSEAS ENGINEERING FOR ASSET ACQUISITION? 4. WHAT ACTIVITIES CAN BE EMBEDDED INTO THE ASSET ACQUISITION FRAMEWORK TO IMPROVE THE DECISION-MAKING PROCESS? 5. IS THE FRAMEWORK USEFUL TO ASSESS AND EVALUATE INFORMATION WITHIN ALLSEAS AND IN GENERAL? 1.6 RESEARCH RELEVANCE The main relevance of this research is to provide a practical solution for Allseas on the basis of scientific knowledge. The relevance of both scientific as well as practice of this research is described in this section RELEVANCE TO SCIENCE This research contributes to science by providing a framework to optimise the flow of information for asset acquisition. This framework is based on both theory as well as practical knowledge. The theoretical methods that are used to establish the basis of the framework are derived from the methodologies System Engineering (SE), Business Case (BC) and Front-end Loading (FEL). The 5

20 three methodologies complement each other for the purpose that this research is aiming for. Furthermore, the framework is based on the findings in theory and supported by practice. Together new insights can be given for the currently available theoretical knowledge on asset acquisition to be more precise and reduce the risks so that capital-intensive companies can benefit from an improved decision-making process RELEVANCE TO PRACTICE The relevance of the research for Allseas Engineering is established in multiple ways. First, the framework will give an overview of the information that Allseas should consider in asset acquisition. Secondly, it gives Allseas structure in terms of what steps to take before a decision can be made. This provides Allseas the means how the information should be determined in case of an investment in capital-intensive assets. This can be integrated in the Corporate MoC procedure of AIMS, in which the framework is an improvement of the current Corporate MoC procedure. 1.7 RESEARCH PROCEDURE The research procedure that involves the methods used to collect the data is explained in this section and visualised in a flow chart shown in Figure 6 on page 8. This is explained below: To conduct a research it is necessary to decide what kind of approach the direction of the research will be. The first choice to make is if the research should be in breadth or depth. If the approach is breadth than the research will be easier to generalise in contrast to an in-depth approach. Nevertheless, the results of the research will be less in-depth, elaborated and complex. When the approach is in-depth the research will be easier to reach soundness, complexity and elaboration of the results (Verschuren, Doorewaard, Poper, & Mellion, 2010). This research is focussing on Allseas, which is very context specific. In addition to this, research will be done how the decision-making process of asset acquisition can be improved based on optimising the flow of information within Allseas, which indicates a further specification of the research and therefore it can be stated that this research will be an in-depth approach. The second choice to make is if the research will be quantitative or qualitative. This research will focus on developing a framework in which the steps and information assessment are made explicit. This can be seen as a more qualitative approach. The last choice to make is deciding between an empirical or desk research, which strongly relates to the second choice. This research will be based on theory and practice in which theories and real situations will be used. Following from these decisions, the research strategy can be chosen which are according to Verschuren et al. (2010) five strategies: survey, experiment, case study, grounded theory approach and desk research. Based on the above decisions the survey, case study and desk research are most suitable strategies for this research. By combining different strategies triangulation can be accomplished. Triangulation refers to the convergence of data collection from different sources, to determine the consistency of a finding (Yin, 2014, p. 241). This means that the information that is gathered will be more accurate and strengthens to construct validity of the study because multiple sources of evidence are used to provide multiple measures of the same phenomenon (Yin, 2014, p. 121). The desk research will be used to create a theoretical framework. The aim of the survey is two-fold by exploring the key criteria according to Allseas and to map the current process. A case study is used to generate an in-depth view of a case in a real-life context to explain how the information is gathered and with what result. The practical knowledge obtained will be used to evaluate the theoretical framework to explain how the information gathering process can be improved. In this way practical knowledge can be translated into the framework and an improved process is established. To increase the reliability of this research a protocol can be designed that function as a guideline for the data collection throughout this thesis see appendix G. for the data protocol of the survey and the case study. How these strategies are used in this research can be seen in Table 2 below. 6

21 TABLE 2. RESEARCH APPROACH IN RELATION WITH SUB-QUESTIONS Research strategy Sub-questions Theoretical research 1. What framework to make an informed advice for asset acquisition can be defined from the literature? Empirical research 2. What are the key criteria to assess an asset acquisition project? 3. How is the flow of information assessed by Allseas engineering for asset acquisition? 4. What activities can be embedded into the asset acquisition framework to improve the decision-making process? Validation 5. Is the framework useful to assess and evaluate information within Allseas and in general? Desk research X X X X X Survey X X Case study X X 1.8 RESEARCH STRUCTURE The structure of this research follows the four phases of the double diamond process: (1) Discover, (2) Define, (3) Develop, and (4) Deliver created by the British design council. The relation between the four phase and the chapters is shown in Figure 5 and explained below. PART I Discover the research The first phase focussed on the discovery of the research in which the subject of this thesis is introduced and the problem is discovered that forms the driver for this research. PART II Define theoretical framework In the second phase, the theoretical framework is defined through a literature review. Next, the methods used to research the theory in practice are explained. PART III Develop the asset acquisition framework Practical knowledge will be gathered at Allseas by executing a survey and a case study. The output of the empirical results is evaluated with the theory to gain insight in the activities to improve the decision-making process and translate this in the framework. PART IV Deliver the answer The main research question will be answered in the general conclusion and supported by the subconclusions provided throughout the research. Next, recommendations are given for Allseas as well as for further research. PART I: Discover the research Chapter 1 Introduction PART II: Define the asset selection process Chapter 2 Literature review: Define theoretical framework PART III: Develop the asset acquisition framework Chapter 4 Data analysis: define key criteria and the flow of information Chapter 6 Validation of the asset acquisition framework PART IV: Deliver the answer Chapter 7 Conclusion and Recommendation Chapter 3 Practical research methods Chapter 5 Evaluate the theoretical framework with the practical results FIGURE 5. RESEARCH STRUCTURE Figure 5 shows the process that this research will undergo. There exist an interaction among the four phases of this research. The interaction between the discover, define, develop and deliver phased makes sure that research question, research subject and observations during this research will be adapted by the data collection that is obtained throughout this research. This process is indicated through the dotted line in the figure. 7

22 Determine search phrases Search phrases Scientific Literature Search relevant literature Asset acquisition Determine criteria Evaluation tools methodologies Select evaluation Select aaset acquisition Criteria methods methodologies Selected asset Selected evaluation acquisition methods methodologies Combine asset acquisition methodologies & evaluation methods Answer Theoretical = sub-question 1 framework FIGURE 6. RESEARCH PROCEDURE Practical knowledge Determine survey questions Select survey persons Select interview persons Determine interview questions List with List with List with List with List with surveyers the criteria questions interviewers questions Conduct Survey Conduct Interview Asset acquistion Criteria according Asset acquistion process according Criteria according to experts process according to experts to experts to experts Describe key criteria Describe information flow in detail Answer sub-question 2 = Key criteria Information flow = Answer sub-question 3 Experts in this field Evaluate theory and practical knowledge Determine interview questions Select interview persons Improved process List with List with Develop customised questions interviewers Framework Customised = Answer framework sub-question 4 Conduct Interview Validate framework Recommendation implementation Validated = Answer framework sub-question 5 Anwer Main research question Answer 8

23 2 LITERATURE RESEARCH: ASSET ACQUISITION PROCESS AND INFORMATION ASSESSMENT The aim of this chapter is to answer the following sub-question defined in section 1.5: 1. WHAT FRAMEWORK TO MAKE AN INFORMED ADVICE FOR ASSET ACQUISITION CAN BE DEFINED FROM THE LITERATURE? The focus of this chapter is two-fold by defining on one hand the process structure and on the other hand the information assessment. This is done by investigating different processes for structuring asset acquisition decisions in section 2.1. Next to the identification of different processes, the information assessment that is required in asset acquisition is identified in section 2.2. This involves defining the criteria upon which an asset acquisition is evaluated and how information can be evaluated. In section 2.3, the sub-question is answered through the construction of a framework including the structure and information assessment. The conceptual model for the construction of the framework is visualised in Figure 7. The arrows indicate the flow of information as every step consists of the activities concerning the information to gather (vertical arrow). All these activities lead to the next step (horizontal arrow). Asset Acquisition Process Methodology STEPS Flow of information Information Information assessment Advice Asset Manager FIGURE 7. CONCEPTUAL MODEL TO DEVELOPED THE FRAMEWORK FOR ASSET ACQUISITION 2.1 ASSET ACQUISITION METHODOLOGIES This section aims to explore different methodologies for structuring an information gathering process for asset acquisition that can lead to a substantiated decision. Before literature of methodologies is being reviewed to structure an asset acquisition process it is needed to define what a process is. A process is defined as a logical sequence of tasks performed to achieve a particular objective (Estefan, 2007, p. 2). To be more precise of the information before asset acquisition, the information gathering process can be improved. However, a process does not describe how it should be done. Methods and tools are needed to facilitate this. ISO 9001 is an international standard that focuses on quality management. In principle, through structuring processes a better understanding can be gained to analyse and evaluate the information prior to the decision to make (ISO 9001, 2015). Therefore a methodology should be searched that encounters the process, methods and tools to be more precise of the information before asset acquisition. Many different methodologies exist to structure asset acquisition decisions. A couple of methodologies are discussed in this section: System Engineering, Business Case and Front-End Loading as these methodologies are considered to complement each other for the purpose of this research. More methodologies exists but are considered less relevant for this research. For a more information about these methodologies see appendix B, C and D. 9

24 1.1.1 SYSTEM ENGINEERING System Engineering (SE) is an interdisciplinary approach to support system development. The principle of SE is to integrate different disciplines during development and structures the process from concept to production to operation (Bishop, 2015). SE focus on the business and technical needs with the primary goal of providing a system that has the quality that meets the needs of the user (Bishop, 2015). In its basis, it defines the activities needed to develop a system in which it begins and ends with the user (Wasson, 2015). These activities are divided in two categories: (1) technical process and (2) technical management process and shown in Table 3. For more explanation of these activities see appendix B. (1) Technical process: defines the requirements of the stakeholders and defines what is to be built. (2) Technical management process: structures the activities in the technical process and analysis the alternatives against these processes. TABLE 3 TOOLS FOR SE PROCESS DERIVED FROM BISHOP (2015, P. 269) Categories Process Area Tools Purpose of Tools Technical process Requirements Analysis Quality Function Deployment (QFD) Map customers needs to engineering characteristics Modelling and Simulation (M&S) Functional Analysis Morphological matrix of alternatives Map physical elements to functional elements M&S Design Analysis Design structure matrix or N2 Map interaction between physical elements M&S Technical management System Analysis and Control Multi-attribute decision making Decision support for analysis of alternatives (AOA) process Pugh matrix Analytical Hierarchy Process (AHP) M&S The information gathering processes for asset acquisition taken from SE, are the iterative process that starts with the users and ends with the user through the feedback loops of the technical processes and technical management processes. The contribution of SE for this research is to reduce additional requirements to come up during the implementation stage of an asset. It is mentioned that SE can provide input to support a business case assessment of a decision to make (Smartt & Ferreira, 2012). The next section will discuss this methodology BUSINESS CASE A business case (BC) is defined as a recommendation to decision makers to take a particular course of action for the organisation, supported by an analysis of its benefits, costs and risks compared to the realistic alternatives, with an explanation of how it can best be implemented (Gambles, 2009, p. 1). It defines which information should be assessed (Schmidt, 2009). In it basis, it is an argument for taking a particular acquisition or development path (Hastings, 2015, p. 113). The main purpose of a BC is to give guidance in a way of thinking about the expenditure in assets by providing a foundation from which to measure and manage an asset acquisition project. Within the focus area of AM it is an approach that aims to provide a means to take a course of action for the decision-maker. It consists of the activities from the trigger to initiate a new development until a recommendation can be made. These activities involve collecting the information that is needed in asset acquisition and a structure is reached through this process. The phases of AM in which the activities take place is visualised in Figure 8 below and defines the position of BC within this process: 10

25 BC-1 PHASE 1 Capability requirement Analysis BC-2 PHASE 2 Pre-feasibility Analysis BC-3 PHASE 3 Feasibility Analysis 1. PHASE 4 Asset Acquisition PHASE 5 Implementation FIGURE 8 ASSET MANAGEMENT PROCESS (HASTINGS, 2015) BC-1: In this phase a capability requirement analysis is done that explains why a project is needed. This entails assessment of the business needs and the determination of asset requirements to fill the gap, shown in Table 4. The first phase is not expected to be on a high level of detail. TABLE 4. KEY DELIVERABLES AND ACTIVITIES IN BC-1 (BASED UPON GAMBLES (2009), HASTINGS (2015) AND (SCHMIDT, 2009)) Key Deliverables Key Activities BC-1 Project initiation Capability requirement statement: Define Task & Requirements BC-2: In the second phase the idea of an asset acquisition project is explored. The capability that is required to achieve the business needs is the basis for this phase. A development team needs to be established who will plan the development. This involves mapping the key experts. Different options are created in which the preferred options are researched in-depth in the third phase, shown in Table 5. TABLE 5. KEY DELIVERABLES AND ACTIVITIES IN BC-2 (BASED UPON GAMBLES (2009), HASTINGS (2015) AND (SCHMIDT, 2009)) Key Deliverables Key Activities BC-2 Pre-feasibility analysis Expert identification Map key experts Preferred options Option development: Frame the context Define options Shortlisting to preferred options BC-3: In the third phase the preferred options are analysis through the expected function and effect, costs, benefits, risks and wider impact and implementation plan. This phase lead to the recommendation for asset acquisition project, shown in Table 6. The recommendation point is indicated through the decision element at the end of phase 3, shown in Figure 8. TABLE 6. KEY DELIVERABLES AND ACTIVITIES IN BC-3 (BASED UPON GAMBLES (2009), HASTINGS (2015) AND (SCHMIDT, 2009)) Key Deliverables Key Activities BC-3 Feasibility analysis In-depth information of the preferred options Expected function and effect, costs, benefits, risks and plan BC-1,2,3 Asset recommendation Problem or opportunity statement Aim of proposal Expected function or effect Financial summary: (i) Revenue, (ii) Costs, and (iii) NPV. Main benefits Risks Validate with experts The BC contributes to this research as it provides the overview of the information gathering process. This is achieved by defining and structuring which information should be assessed and consists of the activities for collecting the information FRONT-END LOADING Front-end loading (FEL) is providing effort in the front phase of a project regarding the final investment decision, before the project execution. In its basis, it consists of the activities from the moment the idea arises until the decision is made to invest. The main purpose of FEL is to align the business needs with the goals of the project and provide a plan for the execution of the project to achieve these goals (Motta, Quelhas, de Farias Filho, França, & Meiriño, 2014). 11

26 In principle, FEL focuses on a staged gate approach that aims to provide well-defined engineering package in a detail design to minimize the changes and rework during the execution of the project (Batavia, 2001). The phases of the stage-gated project management process is visualized in Figure 9 below and defines the position of FEL within this process: FEL-1 FEL-2 FEL-3 AFE* PHASE 1 Identify & Assess opportunities PHASE 2 Select from Alternatives PHASE 3 Develop preferred Alternatives PHASE 4 Execute (detail EPC) PHASE 5 Operate & Evaluate *AFE = Appropiation For Expenditure FIGURE 9. STAGE-GATED PROJECT MANAGEMENT PROCESS (LAVINGIA, 2006, P. PM.01.02) During these FEL phases the questions why, what, when, how, where and who are answered (Archibald, Di Filippo, & Di Filippo, 2012). The aim is to create a good understanding of the requirements of the business as well as delivering maximum value for the business based on the requirements. It is not mentioned in this methodology how the characteristics of these phases should be taken into account. Insight should be gained in this to fit within the information gathering process of asset acquisition. A structured execution approach is aimed for, reducing the additional requirements to come up during execution. In this way, design changes and addition expenses are minimised. The following aspects are considered important for this research: A stage-gated project management process; the information essential in the process is optimised through the structured approach. This leads to an informed final investment decision made before execution of the asset acquisition project. Involving a disciplinary team: It is more possible that a feasible asset acquisition is reached when the information is gathered from different disciplines. This results in fewer changes during the execution phase SUMMARY OF ASSET ACQUISITION PROCESS This section summarises the discussed methodologies and assesses the usefulness of every methodology for this research. The overview can be found in Table 7. TABLE 7. OVERVIEW OF THE METHODOLOGIES Methodology Aim Activities Usefulness System Engineering An iterative process that starts with the users and ends with the user through feedback loops. Requirement analysis, Functional Analysis, Design Analysis, and System and Control Analysis. Integration of feedback loop through an iterative process. Business Case To give guidance in a way of thinking about the expenditure in assets by providing a foundation from which to measure and manage an asset acquisition project. Capability requirement analysis, Pre-feasibility Analysis, Feasibility Analysis, and Asset Recommendation. It can be used to provide the overview of the information gathering process. Front-End Loading Stage-gated approach to eliminates projects that do not meet the requirements or do not fit within the strategy of the company through every gate. A stage-gated project management process, and Involving a disciplinary team. Minimize the changes and rework during the execution of the project by providing a well defined frontend. The above-mentioned methodologies give the structure of the areas in which the information is gathered. Based on the literature of system engineering (SE), front-end loading (FEL) and business case (BC) to structure an asset acquisition process and assess information the framework is constructed. SE and FEL focuses on defining the requirement in a stage-gate 12

27 approach and BC focus more on defining the solutions that fulfil the requirements for asset acquisition. This does not provide the specific criteria upon which an asset acquisition is based. This is necessary to define as it provides a more comprehensive set of information. Furthermore, it does not describe how the information should be assessed/evaluated to come up with the informed advice. The information assessment considering this is the aim of the next section. 2.2 INFORMATION ASSESSMENT The aim of this section is to define the criteria upon which an asset acquisition is evaluated and how information can be evaluated. This is necessary to include in the information gathering process to be more precise to make an informed advice. First the evaluation criteria are determined through a literature review in Next, the information evaluation is discussed in EVALUATION CRITERIA This section identifies the criteria upon which an asset acquisition project can be evaluated. This is done through a literature survey, as shown in appendix E. The research of Yasseri (2012) is primary focussed on subsea technologies for the oil and gas industry. A distinction is made between the tangible and intangible criteria in a two-stage evaluation process. The first step is the consideration of the tangible criteria, such as: strategic, economic and technical. The second step is based on the intangible criteria that consist of: relevance, need, affordability and strategy for example. On the basis of the two-stage approach the feasibility of the potential subsea technology and the desirability to obtain the project goals in the future are covered. The criteria are found in the Table 8 below. TABLE 8. EVALUATION CRITERIA DERIVED FROM YASSERI (2012, P. 154/155) Category Criteria Architecture and design Modification Controls Scalability and reusability Code and Regulation Verification and testing Economical Capital Expenditure Operational Expenditure Lead-Time Integration Strategic Value Dependability Functionality and support Transition Technology compatibility Portability and adaptability Needed capability Asset Performance Efficiency and Productivity Size and Weight Manufacturing and deployment Maturity Fit for Purpose Maintenance Material selection Training Planned maintenance Complexity Engineering Technical risk Failure secure Performance Versatility Quality Relation and Supplies Communication Technology trends Spares Regulation and standards Obsolesce 13

28 1.1.5 INFORMATION EVALUATION This section focuses on the means to evaluate the information that is gathered during the asset acquisition process. When a method is followed for this a more systematic assessment of the information can be done (De Haan, Willemse, de Heer, Vos, & Bots, 2009). In the previous section it is indicated that in SE, BC as well as the stage-gated project management process of FEL, several decision points exists. Already in several tools are indicated that can be used in decision support of Analysis of Alternatives (AOA). A couple of tools are discussed in this section: scorecard, simple multi-attribute rating technique (SMART), analytical hierarchy process (AHP), and workshop. These tools are considered for this research as they provide the basis of the multi-criteria analysis and a workshop is chosen due to the amount of information to consider in asset acquisition. A workshop provides collaboration and discusses the information with multiple people and therefore suitable for this research. Scorecard The scorecard is used to compare different options independently. The scorecard does not describe if an option is good or bad but determines if the option is scoring better than another option on the basis of a criterion. The aim of the scorecard is to create an overview, despite the different units of the criteria, in which the options are compared with the criteria established. The scorecard makes use of colours to determine which options scores good, average or bad in relation to the criterion (De Haan et al., 2009). Simple multi-attribute rating technique (SMART) Within this method a weight is linked to the criteria. The scorecard gives colours to seek for a comparison in contrast to the SMART that normalised the values between 0 and 1. The use of this technique is often used within decision-making. By the normalisation of tangible as well as intangible criteria can be compared with each other. The weights per option are added up and an order of importance of the options is derived (De Haan et al., 2009). Different methods exists for determine the weights of criteria; a method that can be used is the Analytical Hierarchy process (AHP). This method is discussed below. Analytical Hierarchy Process (AHP) The AHP is an approach to deal with the selection of options for both rational and intuitive manner, in which criteria are measured through pairwise comparisons judgements. A variety of people are needed to rate the criteria on the basis of the level of importance. A rating scale is used from 1-9 to compare the criterion in a pair-wise and judgement manner. A rating score of 1 indicates that the criteria are equally important. If a criterion is determined superior above another element, the rating will be higher over the other criterion. A judgement matrix is created that visualise the scores. After this step, the scores are normalised. To find the relative weights, the normalised score per row are calculated. To gain insight if the scores are computed in a consistent manner a statistical test can be done. The consistency ration should be less than 0,10 to be valid. For a more in-depth explanation see appendix F. A downside of the AHP method is that a variety of people are required to be involved to determine the weights of the criteria. Furthermore, after seven sub-criteria the comparison between the criteria are difficult to assess (Yasseri, 2012). Workshop To make an advice based on the gathered information a workshop can be done. Workshops are used to collaborate with multiple experts such as technical staff, end-users and management to discuss information concerning the task to be developed, project planning, requirements specification etc. Such workshops increases the involvement of experts in the asset acquisition process (Schalken, Brinkkemper, & van Vliet, 2004). To increase accuracy in the advice to give, it is stated that the combination of multiple opinions, in which it is preferred to be uncorrelated, the accuracy increases because a reduction of random error from each individual recommendation is achieved (Dalal & Bonaccio, 2010). In this way, the workshops allows asset 14

29 managers to understand, explore, and debate the information that is assessed (Mild & Salo, 2009). In which the asset manager can engage in an exploratory and evidence based discussion concerning finding the balance between the costs, risks and performance. The tool data collection checklist can be used during the workshop. This is a generic tool that provides the recommendation for the course of action for a situation. This tool is flexible and customised for every situation, which makes it a powerful tool. This tool outlines the task to take and the output that is required to achieve the requirements, which can be used as guideline during discussing and check if it is taken into account properly (Hambleton, 2007, p. 204). 2.3 SUB-CONCLUSION: THEORETICAL FRAMEWORK This section answers the first sub-question: WHAT FRAMEWORK TO MAKE AN INFORMED ADVICE FOR ASSET ACQUISITION CAN BE DEFINED FROM THE LITERATURE? Based on the literature review to structure an asset acquisition process and assess information, a framework is constructed. This is visualized in Figure 10. The framework consists of a five-step stage-gated approach combined with feedback loops defined from the literature. This framework provides the structure to assess the information to come up with an informed advice by the asset manager towards the decision-maker. The stage-gated approach aims to minimise the changes and rework during the implementation of an asset acquisition project by optimising the information at every gate at the end of a stage. The feedback loops contribute to this to reduce additional requirements to come up during implementation stage of the asset. Each step includes activities to gather the information that is needed for asset acquisition. The steps for asset acquisition are (1) define task and requirements, (2) expert mapping, (3) option development, (4) preferred option(s) analysis and (5) asset recommendation. The activities for each step enable how to gather the information in each step. The stages in which the five steps take place consist of three stages: project initiation, prefeasibility and feasibility stage. The asset acquisition advice is defined by the asset recommendation step that involves the summary of the previous stages. The activities of the framework are discussed below. TRIGGER PROJECT PRE-FEASIBILITY STAGE FEASIBILITY STAGE ASSET INITIATION STAGE RECOMMENDATION STEPS STEP 1 STEP 2 STEP 3 STEP 4 STEP4.A STEP4.B STEP4.C STEP4.D STEP4.E STEP 5 INFORMATION Evaluation Criteria DECISION POINTS WHICH OPTIONS TO SELECT? WHICH OPTION TO RECOMMEND? FIGURE 10. THEORETICAL FRAMEWORK INCLUDING A FIVE-STEP STAGE-GATED APPROACH COMBINED WITH FEEDBACK LOOPS BASED ON THE THEORY OF SE, BC AND FEL. Project initiation stage Step 1: Define the task & requirements The iterative process of SE starts with the users and ends with the user. The aim of the first step is to define the capability that is lacking to achieve the business needs. This is done through a capability gap analysis that analyse the external environment and the capability that is currently available internal. Based on this analysis the requirements needed to fill this gap are determined. The first gate of the project management process defined in FEL-1 is situated here. This first gate identifies why an investment is needed and lays down the requirements that the asset should fulfil. 15

30 Pre-feasibility stage Step 2: Expert mapping The key experts that need to be involved or may be hampered by this proposal should be mapped. This is both emphasised in SE as well as FEL. From SE, the first feedback loop is established to reveal the requirements that are missed in the first step. The determination of these requirements is done through the interaction with the involved experts. From FEL it is emphasised by involving a disciplinary team a more feasible asset acquisition is reached when the information is gathered from different disciplines. This results in fewer changes during the execution phase. Step 3: Option development Several options can be identified within the boundaries of the capability requirement statement defined in the first step. The capability requirement statement defines the boundaries of the project. From the technical process of SE to define the requirements of the experts, it is defined what is to be built. The derived requirements are translated in as many available options as possible. The options need to stay within the boundaries of the capability requirement statement. The second feedback loop consists of defining the options that best meet the requirements defined in the previous steps. From FEL-2 the second gate is placed at the end of this this step. This second gate focus on the selection of the options defined in this step. Several evaluation tools discussed in section can be used for this. The output of this step is a reduction of options in which the preferred options will be analysed in-depth. Feasibility stage Step 4: The preferred option(s) analysis The preferred options are designed and elaborated further into depth. The aim of this phase is to develop the preferred options. This analysis consists of the following activities: Step 4.A: Expected function or effect This step involves describing the operational concept to define how the asset will be used in end-user terms. Next, the technical feasibility is explained to describe how the asset will work in the existing system. Furthermore, the functional and performance specification is discussed to reveal the required function and performance. Finally, the acquisition strategy is searched from the deliver point of view (supplier) to determine the required long-lead items that need to be provided. Step 4.B: Costs The aim of this step is to define the costs of the preferred option/options. This involves Added revenue, value and costs savings. Acquisition and development costs, Net personnel and operating costs or savings. Logistics and through life costs, LCC, Project implementation costs, Required budget, Cash flow analysis, Payback period, net present value (NPV) and internal rate of return (IRR), Return on investment, Contingency, Tax implication, Inflation and Overseas transaction. Step 4.C: Benefits The benefits that can be reached in relation to the objectives a company is aiming for. The categories of the benefits are defined as follows: Financial/business performance objectives; Operational/functional objectives; Product/service objectives; Image enhancement objectives; Internal objectives; Step 4.D: Risk & Impact The risks and impact of the preferred option(s) need(s) to be identified. This involves a risk analysis: (i) Identify risks of doing nothing, (ii) Identify risks to the project succeeding, solution risk, schedule risk, and financial risk, (iii) Identify risks in the longer term, and (iv) Evaluate each option s risk profile. Furthermore, the impact on the environmental, health and safety need to be assessed. Step 4.E: Plan The implementation plan for the option(s). This involves the project activities: in terms of scope of work, project lead-time, acquisition/development strategy and availability of relevant items. Next, the plan for monitoring of the performance need to be established. Furthermore, the proposed in-service date is planned. Asset recommendation Step 5: Recommendation The amount of information needs to be summarised within an AFE and validated with the experts through the third feedback loop of SE resulting in an informed advice at the third gate of FEL. The workshop discussed in section can be used for this step. This summary involves a problem or opportunity statement, aim of proposal, expected function or effect, financial summary: (i) revenue, (ii) costs, and (iii) NPV, main benefits and risks. During this phase the questions of why, what, when, how, where and who are answered. 16

31 Based on the theories of SE, BC and FEL a structure is defined to gather information. This does not provide the specific criteria upon which an asset acquisition is based on. However, to be more precise and optimise the flow of information this is should taken into account. The evaluation criteria are discussed in section These evaluation criteria are used to gather practical knowledge and translate the data collection into the framework. To reveal the flow of information necessary to achieve an informed advice a real-life case study is used for the framework. The real-life case study takes place at the company Allseas Engineering. The next chapter explains the methods used to research the theory in practice. 17

32 3 PRACTICAL RESEARCH METHODS In this chapter the methods for the practical research are explained to conduct the following studies: An explorative study to obtain practical knowledge of the evaluation criteria by executing a survey and translate these data into the framework. An explanatory study to describe why the asset acquisition decision was made of the case, how the information was gathered and with what result, by executing a case study. An explanatory study to explain how the information gathering process can improve the decision-making process using the framework. The research process and quality is first described in section 3.1. Next, the remaining sections of the above-described methods are elaborated on in section 3.2 and THE RESEARCH PROCESS AND QUALITY This section defines the activities to answer the research questions. First an overview is given of the research process in a flow chart. After that, an explanation is given of four assessments to ensure quality for this research RESEARCH PROCESS The process for generating the practical knowledge for this research and to answer research questions 2 and 3 is visualised in Figure 11. Scientific Literature Practical knowledge Determine criteria Determine survey questions Select survey persons Select interview persons Determine interview questions Criteria List with the criteria List with questions List with surveyers List with interviewers List with questions Conduct Survey Conduct Interview Criteria according to experts Asset acquistion process according to experts Criteria according to experts Asset acquistion process according to experts Describe key criteria Describe information flow in detail Answer sub-question 2 = Key criteria Information flow = Answer sub-question 3 FIGURE 11. RESEARCH PROCESS FLOW CHART 18

33 3.1.2 RESEARCH QUALITY Yin (2014, p. 45) defines four assessments to achieve research quality. These assessments ensure to (1) construct validity, (2) internal validity, (3) external validity, and (4) reliability of the research. These are elaborated on below: 1) Construct validity is focused on the data collection through multiple sources of evidence, called data triangulation. First data is searched through a pre-luminary interview, literature and other documentation involved in the subject. Next, a survey is sent and interviews are conducted with experts on this subject to reach multiple sources of evidence of the flow of information on a case. At least three different disciplines are interviewed involved in a different phase of the case. The planned disciplines are department head, project manager and engineer. 2) Internal validity is reached using a logical model (Yin, 2014). For this research a theoretical framework is constructed in section 2.3. Furthermore, pattern matching is used to determine a pattern between the findings of the survey and the case study. This is used to find a relation between the data collection and the theoretical framework. 3) External validity is achieved through replication logic (Yin, 2014). The framework is used in a case and validated with experts to gain insight if it can be used for other cases. 4) Reliability of the research is established by using protocols to document the data collection. The data protocol for the data collection can be found in appendix G. 3.2 SURVEY TO EXPLORE THE KEY INFORMATION The aim of the survey is two-fold by exploring the key criteria according to the experts in the field and to map the current process. The input of the survey is based on the evaluation criteria, discussed in section Furthermore, the current asset acquisition process is identified from a wide range of sources. More in-depth information related to the design of the survey can be found in appendix G.1. The amount of questions that need be answered is based on the respondents involvement in an asset acquisition process. The more experience someone has, the more questions are required to answer. In this way, the information generated from the survey is more comprehensive and reliable. The criteria are ranked based on the rating scale of Likert. With this scale the respondents can specify their opinion of the practical importance on a criteria. Through this way their perception can be captured (Barua, 2013). The Likert scale is an ordinal 5-point scale, in which the first point is related to not at all important and the fifth-point is related to extremely important. The middle point of the scale is defined as neutral. Missing criteria can be added through an addition question. Data can be obtained from the recommendation that subsequently can map the current process through pattern matching. The patterns used are the steps discussed in the theoretical framework in section 2.3. The data obtained from the survey is used to compare the data obtained from the case study. The case study design and use is discussed in the next section CASE STUDY TO EXPLAIN THE FLOW OF INFORMATION A case study is used to generate an in-depth view of a case in a real-life context (Yin, 2014). The aim of the case study it to describe why the asset acquisition decision was made of the case, how the information was gathered and with what result. For more information about the design of the case study see appendix G.2. The people were chosen based on their experience in the asset acquisition process of the case study to provide different data sources. The participants and their perspectives on the case are shown in Figure 12. The focus of the case is on the data that provide: The information that was (not) taken into account prior to the decision made. At what point in the process the decision was made, with what result. 19

34 The implication for the flow of information in the asset acquisition project. Department Head Involved before decision Criteria Process Flow of Information Project Leader Involved after decision Engineer Involved after decision FIGURE 12. PERSPECTIVE VIEW ON CASE STUDY The theoretical framework is used for the case. The steps and related activities are used as labels. In this way a systematic approach is achieved. The interviews are transcribed and coded through the labels. The data is gathered through pattern matching see Table 9. In this way, both data obtained from the survey and the case study can be compared with each other to find the pattern. This is intended to explain how the information gathering process can improve the decision-making process using the framework. TABLE 9. MATRIX USED FOR CASE Theoretical pattern Empirical pattern Example Labels from the theoretical framework Comparison between the theoretical pattern and the citations Citations found in the interviews 20

35 4 DATA ANALYSIS The theoretical framework created in chapter 2 defines how to structure an asset acquisition process and assess information. This chapter focuses on gathering practical knowledge through data collection within Allseas Engineering. The purpose of this chapter is answering the following sub-questions: 2. WHAT ARE THE KEY CRITERIA TO ASSESS AN ASSET ACQUISITION PROJECT? 3. HOW IS THE FLOW OF INFORMATION ASSESSED BY ALLSEAS ENGINEERING FOR ASSET ACQUISITION? By answering these sub-questions insight is generated of the information assessment and with what result. This provides insight into the implications of the flow of information in the asset acquisition project. Identifying these implications can explain how the information gathering process can be improved. By including these findings in the framework more precision is reached and this way, the decision-making process can be improved for asset acquisition. As described in chapter 3, the data is collected through a survey and a case study. First, the background information of both the survey and case study is explained in section 4.1. Next, the evaluation criteria are explored to understand what information should be assessed for asset acquisition in section 4.2. After that in section 4.3, the asset acquisition process is explained to understand how the flow of information is assessed. Finally, section 4.4 provides the answers to the sub-questions. 4.1 DATA COLLECTION: BACKGROUND INFORMATION This section focuses on the background information of the practical data that is collected through both methods. First, background information is elaborated on the respondents of the survey. Next, background information is given on the case itself and the roles of the interviewees in this process SURVEY The survey was sent to approximately 94 employees within Allseas throughout different departments to obtain a diversity of expertise. The survey is sent to the functions: management, department head, unit head, project manager, vessel management teams and engineers. These functions relate with the different levels within an organisation. Hence, insight can be generated of the flow of information throughout these levels in an organisation. From the 94 persons, 43 responded. 49% (N=21) had more than 10 years experience which indicates that the group is considered to be experienced. For more explanation about the survey see survey results in appendix H. Furthermore, 72% (N=31) of the respondents had experience with decisions regarding asset acquisition and 29% (N=12) were not at all involved in an asset acquisition process and therefore had no experience with the decisions regarding asset acquisition CASE STUDY The case that is selected is the acquisition project of a welding vessel, called the Bright Spark. The Bright Spark is a floating welding training centre that provides specialist-welding training and procedure qualification facilities for pipeline projects based on Allseas pipelay vessels. The case study is selected based on the involvement of the respondents of the survey, for more explanation see appendix H.1 Figure H.4 and I.1 for an in-depth explanation of the background of the case study. The interviews that are conducted are with the interviewees presented in Table 10. TABLE 10. DATA SOURCE - CASE STUDY Perspective Description Department head Not involved in the process. 21

36 Department head Engineer Project Manager Involved in the case, before the decision was made. Involved in the case, after the decision was made. Involved in the case, during the construction These interviewees had all different roles in the process, which creates a diverse perception on the process. Furthermore, they provide in-depth knowledge how the information was gathered and which information was (not) taken into account and the implication this had on the asset acquisition project. 4.2 KEY CRITERIA This section focuses on which key criteria are required to be assessed from different sources. Through defining the key criteria from the point of view of the asset managers and the experts insight is created of the flow of information between these sources. First, the key criteria are identified to understand what information needs to be assessed in section Next, the outcome of the survey pointed out which information should be assessed during the asset acquisition process. This is explained in section For the analysis to come up with this result can be found in appendix H EVALUATION CRITERIA The survey indicates 17 criteria that are found important to take into account during an asset acquisition process. The identified key criteria from the asset managers and experts are shown in Table 11. TABLE 11. KEY CRITERIA # Criteria Description Asset manager A1. Modification The asset can be placed without major re-work. X A4. Code and Ease of certification. regulation A5. Verification Usability. and testing B3. Lead Time Time required for delivery. X B5. Strategic value Opportunity realisation. X B5.1 Investment Return on capital, payback period. X C1. Functionality and support Increased functionality to perform as required and is the supplier availability for parts and advice during the asset useful life. Improves the company s profit; increases its ability to meet the needs of a company. Efficiency and productivity of the asset. X Expert C5. Needed capability D1. Technological X feasibility D3. Manufacturing High-risk item; being on critical path (schedule risk); X and effective and reliable equipment. deployment D5. Fit for purpose Fit for purpose in the environment; qualified for this use; X extra measure is needed. E1. Material Requirement of special materials or procedures by the X selection client. E3. Maintenance Mandatory maintenance, corrective maintenance, and X preventive maintenance. E4. Complexity Contingency and emergency preparedness; X F1. Technical risk Enabling accident free use; speed of recovery; adequate X redundancy; vulnerability to natural hazard; robustness; failure modes. F2. Failure secure The consequences and uncertainty are determined and controlled by a plan. G1. Supplies A qualified supplier exists and is willing and able to meet the needs; one supplier or many; suppliers and product proven track record. X X X Both X X As Table 11 shows that only two criteria that are claimed to be important for both parties. This indicates that the information is assessed differently in the levels within the organisation. This is explained as follows and shown in Table

37 The area of interest for the asset manager is focussing on a different level of technical information than the experts. For the asset manager more attention is paid to the fit for purpose of the asset in the environment and qualification for the use and less attention is paid on how the asset is used in end-user terms. Furthermore, the asset manager is more focussing on the modification of the asset before it can be used, in which the asset manager is aiming for less rework as possible. The experts focus on how the asset will be used and if the asset can be used efficiently and emphasis on the productivity of the asset. Hence, it can be concluded that the information is assessed differently in the levels of an organisation and summarised in Table 12. TABLE 12. FOCUS AREA OF INFORMATION ASSESSMENT Focus area (1) Criteria Description Asset Manager Fit for purpose Fit for purpose in the environment; qualified for this use; extra measure is needed. Expert Verification and testing Usability. Focus area (2) Asset Manager Modification The asset can be placed without major re-work. Expert Technological feasibility Efficiency and productivity of the asset. The decision-maker revealed to find all these criteria in table 11 important see interviewee_7. However, the decision-maker is not explicitly included in the survey but an explanation can be given concerning the focus area of the asset manager in relation to the decision-maker. The asset manager finds the criteria lead-time, strategic value, investment, and fit for purpose important. This can be supported by the aim to achieve the objective of a company in which the asset should fit within the strategy of the company. The focus area of the decision-maker is on the corporate level that involves profit, accountability and business strategy as discussed in the first chapter. Hence, these criteria form the bridge between the decision-maker and the asset manager ADDITIONAL CRITERIA A possibility was given to indicate if there was any information missing in the survey. Based on this, several criteria were identified as missing information. These are: Safety Safety of equipment; man-machine interface (human factor engineering); occupational health (noise, dust, vibration); safety sustainability; safety engineering. Uniformity of equipment. Capability Market condition; commodity prices; competition Plan Critical path; Schedule Legislation International Marine Organisation (IMO) Specific equipment consumables It was discovered during the survey that the criteria safety was more of less hidden in the survey. Since respondents responded multiple times that the safety criteria was lacking, it is decided to include the safety criteria explicitly in the information flow. Complexity focuses on contingency and emergency preparedness and falls under safety, hence complexity is replaced by safety. Likewise, uniformity of equipment is added as specific criterion as well. Furthermore, the capability can be included in the criterion; needed capability. The criteria critical path and schedule are related to the manufacturing and deployment criterion. The criterion code and regulation can be changed to legislation in which IMO is included. Lastly, material selection can be replaced with specific equipment consumables as this criterion relates to the specific material or procedures required by the client. 4.3 ASSET ACQUISITION PROCESS This section explains how information is gathered and with what result. This provides insight into the implications of the flow of information in an asset acquisition project. Identifying these implications can explain how the information gathering process can be improved. This is done in two-fold: (1) through the survey an overview of the process of asset acquisition in general in the organisation is given and (2) how information for a specific asset acquisition project is gathered and with what result. Only the conclusion of the case is provided in the main text. The in-depth information can be found in appendix I. 23

38 First the data obtained of asset acquisition process through the survey is discussed in section Next, the findings from the survey are elaborated on through the data obtained from the case study in section EXPLORATION IMPLICATIONS OF INFORMATION FLOW The flow of information is based on the structure discussed in chapter 2. A clear overview is given of some relevant information that should be optimised in the decision-making process during asset acquisition. This overview is obtained through the recommendations given in the survey concerning this process. These recommendations are obtained as raw data and translated by coding using the structure of the theoretical framework. Appendix H gives the overview of the coded raw data. The coded data obtained are added up based on theoretical pattern, to explore the implication of the flow of information throughout this process. These results revealed the locations where the process should be improved and are shown in Figure 13 given below: Clear policies and procedures Define task & requirements Expert mapping FIGURE 13. POSITION OF THE IMPLICATION OF THE INFORMATION FLOW (N=43) 1 OpAon development 4 Expected funcaon or effect Costs Risks & impact Plan Asset recommendaaon 3 As can be seen in Figure 13, three steps of the theoretical framework are revealed as implications where the process should be improved. Furthermore, having a structure for asset acquisition revealed to be important and is indicated as having clear policies and procedures, being mentioned 13 times. Next, define task and requirements was mentioned 10 times. Subsequently, the use of expertise was mentioned 14 times and the expected function or effect was mentioned 4 times. This can be explained as follows: Clear policies and procedures; describes the structure of the decision-making process. With structure is meant by respondent_21: clarify how decisions are made for asset selection: new equipment versus replacement of equipment - clarify roles and responsibilities - define who to involve in process - define who to inform in process - consider concept Total Cost of Ownership - consider defining a checklist of aspects to cover in decision making process. The results given in Figure 13 emphasised the relevance of this research. An important related factor in this aspect is the documentation of decisions. By documenting decisions the reasoning for a decision that is made can be explained. Define task & requirements; the performance requirements can often vary and are determined by the client. Followed from this, it was mentioned by respondent_9 to identify the requirements in an early stage, to limit the changes in a later stage. However, the design requirements are changing frequently which makes it a difficult task in practice. However, respondent_13 explained that justifications of the project and reasoning for the decision that is made are sometimes lost. This reveals the importance of defining this such that changes at a later stage can be dealt with up-front minimising the risks. Expert mapping; the information needed to make an informed decision can be of great value to determine possible consequence and impact on forehand. A change may affect multiple people and departments. Therefore respondent_30 mentioned to receive input from the users/operators in the process. This can be done by involving different experts in the decision making process in 24

39 an early stage to receive input before a decision is made. Communication and time are factors that are related to gathering information, as respondent_31 emphasised improving the process by proper communication regarding an asset and timey involvement of crew/persons. The focus of criteria such as operability and ease of maintenance can be established by clear communication between the people involved in the decision-making process and end-users, mentioned by respondent_20. Expected function or effect; how an asset will be used in the operational phase is the aim of this step. Respondent_20 emphasised the focus on the operability of the asset, as the concepts of the option need be frozen. In this way, the technical feasibility needs to be taken into account to avoid additional modification in the operational phase. Summarising the above, it can be stated that a need for a structure in the decision-making process for asset acquisition is preferable. This is identified by clear policies and procedures. It shows that the steps: define task & requirements, expert mapping and expected function or effect are the three steps that requires optimisation in the decision-making process. Related elements are the lack of communication and documentation, which should be considered. This implies the implication of the flow of information between the different levels in an organisation in which communication is required. By structuring this process, the framework can be provided in which validation can take place with the required experts. This process can be the guideline for documenting the decisions to make. Furthermore, transparency in the decisions in which the motivation and argumentation is established can be achieved. The focus of the next section (section 4.3.2) is the analysis of the case study. This will form a certain validation of the data obtained from the survey to indicate if the high score of steps are also shown in the case study EXPLANATION IMPLICATION OF INFORMATION FLOW The aim of this section is to explain how information for a specific asset acquisition project is gathered and with what result. Only the conclusion of the case is provided in the main text. The in-depth information can be found in appendix I. The information gathering process in the case can be spread throughout three areas of the asset acquisition project. The implications that arise during this case are discussed below: (1) The decision was made without consultation of the operational experts of this asset. This resulted in a failure of the needed capability that was required to fulfil the task. The main focus in this case was the technical state of the asset and ease of modification within time and budget, explains interviewee_6. Based on this information the decision was made to invest in the asset. During implementation it was recognised that the consultation of the experts was involved too late in the process and that certain knowledge was therefore not taken into account. Interviewee_4 explains that there exists a lot of knowledge, however, no input is asked in an early stage. This implicates the flow of information between decision-maker and the experts as all the information and insights available is not used during the process. Although, it was not asked what the experts need to realise this asset, interviewee_8 explains, a better plan can be made at the beginning in terms of an engineering package that is supported. (2) Attendance was made to consult a variety of disciplines after the decision was made, which resulted in additional requirements. This can be explained as followed: a multidisciplinary team was set-up to explore the modification of the case more in-depth, after the decision was made to invest. Interviewee_4 explains that the modification of the asset was a functional difficult task as the functional and performance requirements were not well defined in the front. This had an implication in the operational phase as the asset needed to be adapted because it was not very convenient thought of, explains interviewee_5. This is caused by not explicitly taken the end-user into account. Therefore, a clear definition needs to be established of what is required in end-user terms. 25

40 The question was asked, what exactly is required to realise this asset? However, eventually more input was obtained from the end-users, which resulted in additional requirements. Interviewee_5 Engineer Despite the adaption that needed to be done, another consequence arises, as the front-end of the project was not sufficiently thought of. All procedures that are made for the asset had to be changed, because the existing system in which the asset is placed had changed explained interviewee_4. The preparation of an asset acquisition project can be improved, as interviewee_8 describes that the preparation can be longer than how it is currently done. (3) The asset acquisition project became a success when everyone and everything came into place. The process towards the realisation of the asset was insufficient, as the flow of information between different sources was insufficient. However, in the end when everyone came into place the asset became a success. Interviewee_4 describes the end-result of the asset as an improved facility where flexibility is created. Furthermore, interviewee_5 formulated the asset as a work place that is twice as good. Hence, it can be concluded that within this asset acquisition project the flow of information between the sources is critical for the success realisation of the asset. 4.4 SUB-CONCLUSION: KEY CRITERIA AND IMPLICATIONS OF INFORMATION FLOW The goal of this chapter was to generate practical knowledge of the information assessment and with what result. By including these findings in the framework more precision is reached in the information assessment. The research questions mentioned in the beginning of this chapter are answered here. The practical knowledge that is provided will be used in the next chapter to evaluate the theory. WHAT ARE THE KEY CRITERIA TO ASSESS AN ASSET ACQUISITION PROJECT? Through defining the key criteria from the point of view of the asset managers and the experts insight is created of the flow of information between these sources. Analysing the results revealed the key information embedded in the data. Based on the data collected, it can be concluded that the information is assessed differently in the levels of the organisation. Therefore, this sub-question is answered through the perspective of the asset manager and the experts. Additional criteria that were obtained are included in this answer. Key criteria Asset manager: 1. Modification The asset can be placed without major rework. 2. Lead Time Time required for delivery. 3. Strategic value Opportunity realization. 4. Investment Return on capital and payback period. 5. Functionality and support Increased functionality to perform as required and is the supplier availability for parts and advice during the asset useful life. 6. Fit for purpose Fit for purpose in the environment; qualified for this use; extra measure is needed. 7. Specific equipment consumables Requirement of the special materials or procedures by the client. 8. Planned maintenance Mandatory maintenance, corrective maintenance and preventive maintenance. 9. Failure secure The consequences and uncertainty are determined and controlled by a plan. 10. Supplies A qualified supplier exists and is willing and able to meet the needs; one supplier or many; suppliers and product proven track record. Key criteria Experts: 1. Verification and testing The usability of the asset. 2. Technological feasibility The efficiency and productivity of the asset. 3. Manufacturing and Deployment; High-risk item; being on critical path (schedule risk); effective and reliable equipment. 26

41 4. Technical risk Enabling accident free use; speed of recovery; adequate redundancy; vulnerability to natural hazard; robustness; failure modes. Key criteria Both: 1. Needed capability Improves the company s profit; increases its ability to meet the needs of a company. This also involves market condition; commodity prices; competition. 2. Legislation International Marine Organisation (IMO); ease of certification. Throughout the collected data two criteria were discovered not included but are indicated as important to consider in an asset acquisition process these are: 1. Safety Contingency and emergency preparedness; safety of equipment; man-machine interface (human factor engineering); occupational health (noise, dust, vibration); safety sustainability; safety engineering. 2. Uniformity of equipment. HOW IS THE FLOW OF INFORMATION ASSESSED BY ALLSEAS ENGINEERING FOR ASSET ACQUISITION? The data analysis determined the information flow that is necessary to achieve the best results and reveals that this information flow is critical between the decision-maker and the expert. Practice revealed that within this asset acquisition project the flow of information between the sources is critical for the success realisation of the asset. This is explained below. The flow of information can be divided into three areas of the case: 1) The decision was made without consultation of the operational experts of this asset, which resulted in a failure of the needed capability that was required to fulfil the task. 2) Attendance was made to consult a variety of disciplines after the decision was made, which resulted in additional requirements. 3) The asset acquisition project became a success when everyone and everything came into place. The results have shown that insufficient front-end where the information and insights available is not used during the process affects the implementation and operational stage of the project as changes may appear than originally assessed. This is caused by no clear structure, documentation and communication to gather the information and therefore implicates the flow of information. The first step in an asset acquisition process is to define what the needed capability and hence what is required to achieve the business needs. This is the basis for the whole process. Anticipation of the business can be reached by identifying the requirements that the asset should fulfil. Despite the multidisciplinary team, the involvement took place after the decision was made. It is revealed that it is desirable to determine what information was needed from the different experts and involve them before the decision is made. Furthermore, the process towards the realisation of an asset is insufficient, as the flow of information between different sources was insufficient. Lack of communication and documentation are implications of the flow of information between the different levels in an organisation. Practice revealed the steps that can be optimised in the decision-making process. The steps are define task & requirements, expert mapping and expected function or effect. This is caused by, insufficient justification of the project and reasoning for the decision that is made. This reveals the importance of defining this such that changes at a later stage can be dealt with up-front minimising the risks. In addition, the realisation of an asset is implicated when the flow of information is insufficient between the decision-maker and the experts as all the information and insights available is not used during the process. Therefore, it is emphasised through practice that the effect of improving the information gathering process by providing a clear structure influences the asset acquisition project. 27

42 5 EVALUATE THE THEORETICAL FRAMEWORK WITH THE PRACTICAL RESULTS In the previous chapter, the key criteria and the implications for the flow of information are identified. The aim of this chapter is to explain how the information gathering process can be improved by evaluating the theoretical framework, constructed in chapter 2, with the data collected in practice. In this way, the practical knowledge can be translated into the framework and an improved process is established. The following sub-question will be answered: 4.WHAT ACTIVITIES CAN BE EMBEDDED INTO THE ASSET ACQUISITION FRAMEWORK TO IMPROVE THE DECISION-MAKING PROCESS? TRIGGER PROJECT PRE-FEASIBILITY STAGE FEASIBILITY STAGE ASSET INITIATION STAGE RECOMMENDATION STEPS STEP 1 STEP 2 STEP 3 STEP 4 STEP4.A STEP4.B STEP4.C STEP4.D STEP4.E STEP 5 INFORMATION Key criteria DECISION POINTS WHICH OPTIONS TO SELECT? WHICH OPTION TO RECOMMEND? FIGURE 14. FOCUS POINT OF THIS CHAPTER: PROVIDE IMPROVEMENT ACTIVITIES THROUGH EVALUATING THE THEORY AND PRACTICE AND EMBED THE KEY CRITERIA INTO THE ASSET ACQUISITION FRAMEWORK TO ACHIEVE AN IMPROVED AND CUSTOMISED FRAMEWORK. Figure 14 shows the focus of this chapter. In section 5.1 the theoretical framework is evaluated with the practical knowledge to explain how to embed the key criteria and improve the decisionmaking process. In section 5.2, the improved process is translated into the framework as the previous section defines the activities to be embedded into the asset acquisition framework. This results in development of the customised framework. 5.1 EVALUATE THEORY AND PRACTICE The aim of this section is to explain how the key criteria can be embedded in the framework to improve the process. To establish an improved process the key criteria and the implications of the information flow that are determined in the previous chapter are used. This is done through explaining the key activities in every step combined with the key criteria and the questions identified. Project initiation stage Step 1: Define the task & requirements This step forms the basis for the rest of the asset acquisition process because it defines why an asset acquisition project is needed and lay down the requirements that the asset should fulfil. The first gate of the project management process defined in FEL-1 evaluates this, as it answers the question why the asset acquisition is needed. This is important as justifications of the project and reasoning for the decision that is made are sometimes lost. This reveals the importance of defining this such that changes at a later stage can be dealt with up-front minimising the risks. The importance to identify the requirements is emphasised in practice. The performance requirements can often vary and may be determined by the client. Besides this, the requirements 28

43 are changing frequently, which makes it a difficult task. However, identifying the requirements in an early stage is emphasised in practice as it limits the changes in a later stage. The key criteria strategic value and needed capability can be embedded in this step. The strategic value emphasised the need to assess the information for both the external as the internal environment to define the opportunities and/or problem for a company. This is required to map the current situation of a company and defines why asset acquisition is needed. Furthermore, the needed capability considers the capability that is required to meet the needs of a company to improve the company s profit. The summary of the main findings for the first step is shown in Table 13. TABLE 13. EVALUATION STEP 1 - FINDINGS THEORY AND PRACTICE Findings theory and practice Theory Practice Define task & Identify the requirements in an early stage, to limit requirements the changes in a later stage. First decision gate Why do we need this? Key criteria Needed capability Strategic value Combining the theory with practice the following activities can structure and improve the process, shown in Table 14 below. TABLE 14. ACTIVITIES FOR STEP 1 - COMBINING THEORY WITH PRACTICE Improvement activities (theory and practice) Map the current situation Capability gap analysis: indicate the needs of the external environment and the capability that is currently available internal. Determine the requirements that are needed to achieve the business objectives. What are the strength, weakness, opportunities and treats that currently occur? What is the required external capability? What is the current internal capability? What are the main requirements the asset should fulfil? Pre-feasibility stage Step 2: Expert mapping The aim is to involve the experts that are participating in the process. It is emphasised in theory by both SE as well as FEL that a more feasible asset acquisition is reached when information is gathered from different disciplines as this results in fewer changes during the implementation phase and after. From the data collected in practice this is supported. Additional requirements came up during implementation due to not involving the required experts. Furthermore, additional changes occur during the operational phase when the end-users came into place. Hence, the asset acquisition project became a success when all the experts were involved. The realisation of an asset is implicated when the flow of information between different sources is insufficient. This implicates the flow of information between decision-maker and the experts as all the information and insights available is not used during the process. Therefore, the feedback loop of SE is an improvement as the task and requirements need to be discussed with the key experts. A plenary meeting should be organised with the experts. Through this feedback loop requirements that are missed in the first step are established by means of interaction with the involved experts. TABLE 15. EVALUATION STEP 2 - FINDINGS THEORY AND PRACTICE Findings theory and practice Theory Practice Expert mapping Desirable to involve different sources before the decision is made. Key criteria - Who are the key experts? Combining the theory with practice the following activities can structure and improve the process, shown in Table 16 on the next page. 29

44 TABLE 16. ACTIVITIES FOR STEP 2 COMBINING THEORY AND PRACTICE Improvement activities (theory and practice) Identify the key experts Plenary meeting: to discuss the task and requirements of step 1. Feedback loop: requirements that are missed can be added during the plenary meeting Who are impacted by this asset acquisition project? What does the expert need to realise the asset? Are there additional requirements missing? Step 3: Option development The aim is finding the different options to achieve the business needs within the boundaries of the capability requirement statement defined in the first and second step. Based on the importance of defining the requirements of the experts by both theory and practice the flow of information to define the boundaries in which the solution should be searched are more sufficient. Based on the technical process of SE it is defined what is to be built in this step. Hence, the second feedback loop of SE consists of finding the preferred options that best meet the requirements defined in the previous two steps. The second decision gate at the end of this step focuses on the selection of the preferred options. Several evaluation tools discussed in section can be used for this. TABLE 17. EVALUATION STEP 3 - FINDINGS THEORY AND PRACTICE Findings theory and practice Theory Practice Option development Look ahead, but don t keep too many options Key criteria - Second decision gate Which options to select? Combining the theory with practice the following activities can structure and improve the process, shown in Table 18 below. TABLE 18. ACTIVITIES FOR STEP 3 COMBINING THEORY AND PRACTICE Improvement activities (theory and practice) Frame: define the boundaries in which the options need to be identified. Brainstorm: define the possible solutions. Feedback loop to shortlist the possible solutions: assess the options along the validated capability requirement statement. How can the main problem or opportunity be solved within a sound framework? What is to be built? What is the asset going to deliver? Where will it be located? Who is going to deliver the asset? How should the objectives be achieved? Feasibility stage Step 4: Preferred options analysis The preferred options defined in step 3 are elaborated more in-depth resulting in an informed advice at the end of step 5. This step consists of the following sub-steps and these are discussed below: expected function or effect, costs, benefits, risk and impact, and plan. Step 4.A: Expected function or effect The aim is to define what is needed to realise the preferred options. The focus area between the different sources of an organisation is most shown in this sub-step. It is emphasised in both theory as well as practice that involving the end-user is important. The aim of SE is that defining the requirements starts and ends with the user. Hence, the different focus area between the levels in an organisation is made explicit in this step to avoid the additional changes during the implementation and/or operational phase. The key criteria defined in Table 19, shown on the next page, are embedded in this sub-step and explained below. This is done by making a distinction of what an asset manager and experts finds important derived from the data collected in practice. It is emphasised in theory that it is important to understand the operational concept in which the preferred options will operate. This requires describing the preferred options in end-user terms. The key criteria that can be embedded in this activity are fit for purpose and verification and 30

45 testing. An asset manager finds the criterion fit for purpose important as this is referring to the qualified use of the preferred options and if no extra measures is needed. However, an expert is more focussing on the usability of the preferred options. The next activity defined in theory is to define the technical feasibility of the preferred options. The focus of this activity is to describe how the asset will work in the existing system. The criteria that can be embedded in this activity are modification and technical feasibility. An asset manager finds the criterion modification important as this is referring to re-work of an asset. However, an expert is more focussing on the efficiency and productivity of the asset. As is described, the asset manager is focussing more on the general technical information and the expert is focussing more on specific technical information, which is a different level of gathering information. Furthermore, the third and fourth activity describe subsequently specific functions and performance, such as requirements of special materials or procedures by the client and the availability of suppliers when needed to deliver spare parts and are able the meet the needs that is required. Interviewee_1 explained, that the quality that is delivered is important to obtain a decent product with good service. TABLE 19. EVALUATION STEP 4.A - FINDINGS THEORY AND PRACTICE Findings theory and practice Theory Practice Expected function or The asset manager is focussing more on the general effect technical information and the expert is focussing more on specific technical information, which is a different level of gathering information. Key criteria Fit for purpose Verification and testing Modification Technological feasibility Planned maintenance Specific equipment consumables Functionality and support Supplies What is required to realise the asset? Combining the theory with practice the following activities can structure and improve the process, shown in Table 20 below. TABLE 20. ACTIVITIES FOR STEP 4.A COMBINING THEORY AND PRACTICE Improvement activities (theory and practice) Operational concept: describe in enduser terms. Verification and Fit for purpose testing Technical feasibility: describe how the asset will work in the existing system. Functional and performance specification: specify specific functions and performance. Acquisition strategy: determine the available suppliers. Modification Technical feasibility Planned maintenance Specific equipment consumables Functionality and support Supplies How will the asset be used? Who will use the asset? Where will the asset be placed in the existing system? How will the asset work in the existing system? Step 4.B: Costs Define the costs of the preferred options. Costs are strongly related to a wide range of aspects. The theory described several costs elements that should be considered in an asset acquisition. In practice these are supported as costs elements that are required to take into account before the decision is made to make a more substantiated decision. The main findings are shown in Table 21. The key criteria that can be embedded in this step are investment and commodity prices. The criterion investment is referring to the payback period and the return on capital. The criterion commodity price is added as additional criterion in practice. In practice is revealed that often only the technical costs are taken into account before the decision. It emphasised in practice that financial input should be considered earlier in process. The importance of documenting is emphasised here in which all costs should be taken into 31

46 account and not only the technical costs, explained respondent_28. An overview of the relevant costs elements defined in theory can give guidance in this process. The costs elements summarised in Table 22 are the input for the financial summary needed to make the informed advice in step 5. The summary consists of revenue, costs and NPV. TABLE 21. EVALUATION STEP 4.B FINDINGS THEORY AND PRACTICE Findings theory and practice Theory Practice Costs Before the decision is made, the technical costs are taken into account but costs such as maintenance are less taken into account. Key criteria Investment Commodity prices Combining the theory with practice the following activities can structure and improve the process, shown in Table 22 below. TABLE 22. ACTIVITIES FOR STEP 4.B COMBINING THEORY AND PRACTICE Improvement activities (theory and practice) Added revenue, value and costs savings Acquisition and development costs Net personnel and operating costs or savings Logistics and through life costs, LCC Project implementation costs Required budget Cash flow analysis Payback period NPV and IRR Return on investment Contingency Tax implication Inflation Overseas transaction Conduct sensitivity analysis Commodity prices Step 4.C: Benefits The aim is to determine the benefits in relation with the objectives of a company. Within theory the categories of benefits are defined: financial/business performance objectives, operational/functional objectives, product/service objectives, image enhancement objectives and internal objectives. The main findings of the objective defined from practice are shown in Table 23. Interviewee_7 explained how objectives are ensured within the organisation. The best long-terms returns are ensured by obtaining as much jobs as possible against reasonable prices. The best service for the clients is strived for in order to ensure that the client prefer to make use of Allseas again. Furthermore, it is aimed for to pursue the best technical solutions for the efficiency and the reputation of Allseas with the clients. These objectives are depending on the decision-making process due to the fact that every project is unique. TABLE 23. EVALUATION STEP 4.C FINDINGS THEORY AND PRACTICE Findings theory and practice Theory Practice Benefits Increasing cash flow or maximise profitability in the long-term to a company. Realising flexibility and high utilisation of an asset in terms of reliability and availability. To be safe, efficient and error-free performance. Key criteria - Improve client satisfaction and developing good and long-term relations with the client by delivering high-quality services and products. To be the leading contractor in the business by innovative and advanced technology. Improve integrity and have skilled and motivated employees. Combining the theory with practice the following activities can structure and improve the process, shown in Table 24 on the next page. 32

47 TABLE 24. ACTIVITIES FOR STEP 4.C COMBINING THEORY AND PRACTICE Improvement activities (theory and practice) Financial/business performance In terms of increasing cash flow or maximise profitability in the long-term to a objectives company. Operational/functional objectives Involves realising flexibility and high utilisation of an asset in terms of reliability and availability. To be safe, efficient and error-free performance. Product/service objectives Improve client satisfaction and developing good and long-term relations with the client by delivering high-quality services and products. Image enhancement objectives To be the leading contractor in the business by innovative and advanced technology. Internal objectives Improve integrity and have skilled and motivated employees. Step 4.D: Risk & Impact The risks and impact of the preferred option(s) are identified here. The theory of BC defines the activity of performing a risk analysis. This analysis should involve (i) identify risks of doing nothing; (ii) identify risks to the project succeeding, solution risk, schedule risk, and financial risk; (iii) identify risks in the longer term; (iv) evaluate each option s risk profile. The key criteria that can be embedded in this activity are failure secure, manufacturing and deployment, and technical risks. The asset manager find the criterion failure secure important. This can be explained as it focuses on securing the consequences and uncertainty through a plan. This is important as this can impact the business objectives described in the previous step. The criteria manufacturing and deployment, and technical risks are revealed as the focus point for the expert. This is explained as focusing on effective and reliable equipment and enabling accident free use, which is again a more specific area of the technique at a more detail level of the asset acquisition. Next, BC defines performing an environmental, health and safety assessment. The key criteria that can be embedded in these activities are legislation and safety. Legislation focuses on the ease of certification concerning the IMO. The safety criterion focuses on safety of equipment, man-machine interface (human factor engineering), occupational health (noise, dust, vibration), safety sustainability, and safety engineering. It is emphasised in practice that by not performing an adequate process for identifying the risks and impact implicates the quality of the end product that is aimed for. Furthermore, lack of communication of the risk and impact implicates the securing plan if the flow of information within the organisation is not communicated properly throughout the organisation. The main findings are shown in Table 25. TABLE 25. EVALUATION STEP 4.D FINDINGS THEORY AND PRACTICE Findings theory and practice Theory Practice Risk and Impact By not performing an adequate process for identifying the risks and impact implicates the quality of the end product that is aimed for. Key criteria Failure secure Manufacturing and deployment Technical risks Legislation Safety Combining the theory with practice the following activities can structure and improve the process, shown in Table 26 below. TABLE 26. ACTIVITIES FOR STEP 4.D COMBINING THEORY AND PRACTICE Improvement activities (theory and practice) (i) Identify risks of doing nothing; (ii) identify risks to the project succeeding, solution risk, schedule risk, and financial risk; (iii) identify risks in the longer term; (iv) evaluate each option s risk profile. Environment, health and safety assessment Failure secure Manufacturing and deployment Technical risks Legislation (IMO) Safety 33

48 Step 4.E: Plan The aim is to develop an implementation plan for the preferred option(s). The planning depends on the activities that need to be done for the implementation. The theory of BC defines several activities that should be considered in this sub-step. These activities involve the project activities: scope of work, project lead-time, acquisition/development strategy, and availability of relevant items. Next, performance monitoring: level of service required. Lastly, schedule: proposed in-service date. Project lead-time is a very important criterion because interviewee_1 explained that the duration that is needed to make modifications or changes is a relevant criterion that is taken into account when a decision is made. Due to the fact that the time to delivery an asset is important in a dynamic environment such as the oil and gas industry. However, more effort can be made for the determination of the duration of the preparation and implementation phase. Summary is given in Table 27. TABLE 27. EVALUATION STEP 4.E FINDINGS THEORY AND PRACTICE Findings theory and practice Theory Practice Plan The time to delivery an asset is important in a dynamic environment such as the oil and gas industry. Key criteria Lead-time Combining the theory with practice the following activities can structure and improve the process, shown in Table 28 below. TABLE 28. ACTIVITIES FOR STEP 4.E COMBINING THEORY AND PRACTICE Improvement activities (theory and practice) Project activities: scope of work, project lead-time, acquisition/development strategy, and availability of relevant items. Performance monitoring: level of service required. Schedule: proposed in-service date. Lead-time Asset recommendation Step 5: Recommendation - The amount of information needs to be summarised within an AFE and validated with the experts through the third feedback loop of SE resulting in an informed advice at the third gate of FEL. The workshop discussed in section can be used for this step. This summary involves a problem or opportunity statement, aim of proposal, expected function or effect, financial summary: (i) revenue, (ii) costs, and (iii) NPV, main benefits and risks. During this phase the questions of why, what, when, how, where and who are answered. In practice the decision is based on the project initiation stage and the pre-feasibility stage. After the decision is made to acquire the asset, the in-depth analysis of the feasibility stage is established. According to interviewee_1 the recommendation step involves showing the different options by the project team to the asset manager, in which the asset manager will take into account the long-term view and balance the values of the option(s). The informed advice that is aimed for at the end of the last step of asset acquisition is considering the following: The objectives can be achieved and fit within the strategy of the company. The preferred option is the best balance of the costs, risks and performance. The business case is done on a professional basis and is done objectively. Communicate with involved experts. TABLE 29. EVALUATION STEP 5 FINDINGS THEORY AND PRACTICE Findings theory and practice Theory Practice Recommendation The decision is based on the project initiation stage and the pre-feasibility stage. After the decision is made to acquire the asset, the in-depth analysis of the feasibility stage is established. Key criteria - Third decision gate Which option to recommend? 34

49 Combining the theory with practice the following activities can structure and improve the process, shown in Table 30 below. TABLE 30. ACTIVITIES FOR STEP 5 COMBINING THEORY AND PRACTICE Improvement activities (theory and practice) Problem or opportunity statement, aim of proposal, expected function or effect, financial summary: (i) revenue, (ii) costs, and (iii) NPV, main benefits and risks. Feedback loop; validate with the experts and the capability requirement statement. Use workshop Answer why, what, when, how, where and who. 5.2 DEVELOP CUSTOMISED ASSET ACQUISITION FRAMEWORK Based on the defined improvements mentioned in the previous section, the theoretical framework can be translated in the practical customised framework. The framework is visualised in Figure 15 on the next page. 35

50 FIGURE 15. THE ASSET ACQUISITION FRAMEWORK INCLUDING THE ACTIVITIES TO STRUCTURE AND ASSESS INFORMATION BASED ON THEORY AND PRACTICE. 36

51 5.3 SUB-CONCLUSION: THE ASSET ACQUISITION FRAMEWORK The aim of this chapter was to explain how the information gathering process could be improved by evaluating the theoretical framework with the data collected in practice. In this way, the practical knowledge is translated into the framework and an improved customised framework is established, see Figure 15 on p.36. The following sub-question is answered: 4. WHAT ACTIVITIES CAN BE EMBEDDED INTO THE ASSET ACQUISITION FRAMEWORK TO IMPROVE THE DECISION-MAKING PROCESS? There are five steps for the decision-making process that enables to establish an asset acquisition process to make an informed advice towards the decision-maker. Each step includes activities to follow, as well as feedback loops to gather the information that is needed for asset acquisition. The steps for asset acquisition are define task and requirements, expert mapping, option development, preferred option(s) analysis and asset recommendation. These steps include the following activities: The step define task and requirements determine the capability that is needed to achieve the business needs. The output is a capability requirement statement that defines why an asset acquisition project is needed and lay down the requirements that the asset should fulfil. The step expert mapping determines who the key experts are. The aim is to involve the experts that are participating in the process. Through a feedback loop, the requirements that are missed in the first step are established by means of interaction with the involved experts. In this way, the capability requirement statement is validated and the output is a revised capability requirement statement if necessary. The step option development determines how the main problem or opportunity can be solved within a sound framework. The aim of this step is finding the preferred options to achieve the business needs within the boundaries of the capability requirement statement defined in the first and second step. A first filter is established through the second feedback loop. The second decision gate at the end of this step focuses on the selection of the preferred options. Several evaluation tools discussed in section can be used for this. The step preferred option analysis includes several sub-steps resulting in an informed advice. These sub-steps are expected function or effect, financial summary, benefits, risk and impact, and plan. These are described below. o The sub-step expected function or effect search the information to define what is needed to realise the preferred option(s). This involves the activities operational concept, technical feasibility, functional and performance requirements, and acquisition strategy. o The sub-step costs involves the revenue, costs and NPV. To achieve this summary, the financial information that is described in the framework forms the basis to calculate the revenue, costs and NPV. o The sub-step benefits determines the benefits in relation with the objectives of a company. The objectives are depending on the asset acquisition process due to the fact that every project is unique. o The sub-step risk and impact of the preferred option(s) are identified here. This o involves a risk analysis, environmental, health and safety assessment. The sub-step plan develops an implementation plan for the preferred option(s). This involves defining the project activities, performance monitoring and a schedule. The step recommendation develops a summary based on the previous step. This involves problem or opportunity statement, aim of proposal, expected function or effect, financial summary: (i) revenue, (ii) costs, and (iii) NPV, main benefits and risks. This needs to be validated with the experts through the third feedback loop using a workshop resulting in an informed advice at the third decision gate. The activities for each step enable how to gather the information in each step. An organisation can use these activities to structure and assess the information for asset acquisition to improve the decision-making process. 37

52 6 VALIDATION OF THE ASSET ACQUISITION FRAMEWORK The aim of this chapter is to validate the designed framework and to give answer to the following sub-question: 5.IS THE FRAMEWORK USEFUL TO ASSESS AND EVALUATE INFORMATION WITHIN ALLSEAS AND IN GENERAL? This is done by describing the research limitations and the effect on the validity of the created framework in section 6.1. Next, the framework is validated against the current practice of Allseas in section 6.2. Furthermore, an expert panel is used to have an expert view on the established framework and to assess the experts perception on how well this can be applied within Allseas in section 6.3. In additional, suggestions for implementation and a wider perspective are discussed in the same section. 6.1 RESEARCH LIMITATIONS Within this section the assumptions are evaluated through the reflection of the research findings. The research limitations are discussed based on the scope of the research, the data collection process and the specific context of Allseas. The limitations of this research due to the scope demarcation in the beginning of this research is defined and what effects this has on the developed framework: Past decisions The practical research is based on past decisions. To gain insight if changes in the operational stage are minimised the framework should be used in an asset acquisition decision that is not yet made. This was not within the scope of this research. Investment types the practical study is performed on a new asset acquisition project. No practical study is done towards the modification asset acquisition project. Furthermore, the amount of information that should be considered in relation to the type of investment is not taken into account. Specific context The framework is derived for the specific context of Allseas. This limits the generalisation of the framework because other industries are not within the scope of this research. The following research limitations exists due to the process of the data collected: Research approach The approach for this research is based on a content analysis derived from the theory. This may have some limitations, such as bias that the researcher consists of due to the informed nature derived from the theory. This has consequences for the results of the research in which the evidence is more found in the supportive way rather than in a nonsupportive way of the theory (Hsieh & Shannon, 2005). This may impact the trustworthiness and objectivity of the research findings. Recall Bias The data is based on decisions that are made in the past and therefore on historical data. The use of a survey consists of high risks relates to recall bias in contrast to interviews that are used for the case study (Bowling, 2005). This may cause inaccurate results for the information that is captured in the asset acquisition framework. Furthermore, the knowledge generated from the analysis is based on the specific perspective of the participants that is embedded in the actual data that results in a challenge for the understanding of the whole context (Hsieh & Shannon, 2005). However, different techniques are used to gather the data and to maximise diversity. Pattern matching A level of subjectivity exists in pattern matching as relevant information can be missed due to the amount of information provided in the interviews (Saldaña, 2015). Therefore, the data collected may be less accurate if someone else replicated it. The use of the AHP-method The AHP method is used to determine the relevant evaluation criteria. This is done by the researcher and therefore consists of a certain amount of subjectivity. Furthermore, no sensitivity analysis is conducted due to the fact that the weights of the criteria were determined by the survey. These defined limitations of this research are based on the scope, data collection and the specific context in which this research is done. The defined scope in this research has only be looking at 38

53 past decisions. Furthermore, the process for data collection may be inaccurate due to the methods used and information that may be overlooked through the pattern matching. By performing this research specific for Allseas, the information content is customised for Allseas. Hence, the research results concern merely for Allseas. For the application within other companies and industries additional research should be done. 6.2 FRAMEWORK AGAINST CURRENT PRACTICE ALLSEAS The framework is validated against the current practice of Allseas. Through the respondents of the survey and the interviews conducted for the case study the current situation for the decisionmaking process can be identified. This is shown in Figure 16 and explained below: FIGURE 16. FRAMEWORK AGAINST CURRENT PRACTICE ALLSEAS The practical knowledge revealed that the steps indicated with the red boxes could be optimised. In additional, the success realisation of an asset acquisition project is influence by the flow of information as practical revealed how critical the flow of information is between the decisionmaker and the experts. Project initiation stage Step 1: Define the task & requirements This step forms the basis for the rest of the asset acquisition process because it defines why an asset acquisition project is needed and lay down the requirements that the asset should fulfil. This is important as practice revealed that justifications of the project and reasoning for the decision that is made are sometimes lost. The importance to identify the requirements is emphasised in practice as it limits the changes in a later stage. The performance requirements can often vary and may be determined by the client. Besides this, the requirements are changing frequently, which makes it a difficult task. Pre-feasibility stage Step 2: Expert mapping The aim is to involve the experts that are participating in the process. A more feasible asset acquisition is reached when information is gathered from different disciplines as this results in fewer changes during the implementation phase and after. Additional requirements came up during implementation due to not involving the required experts. A decision has been made without consultation of the operational experts, which resulted in a failure of the needed capability of the asset that has been required to fulfil the task. Therefore, the information and insights available is not used during the process as the task and requirements are not discussed with experts and the feedback loop is not used. It can be concluded that the experts were not involved in the process before the decision was made. After step 3, the decision was made to invest in the asset. This indicates that the decision is based on 39

54 the project initiation and pre-feasibility stage instead of the whole process including the feasibility stage. This implies that not all the steps of the framework were taken into account. In addition, this had an impact on the subsequence step: Feasibility stage Step 4.A: Expected function or effect The aim is to define what is needed to realise the preferred options. The focus area between the different sources of an organisation is most shown in this sub-step. Practice revealed that through consultation of a variety of disciplines after the decision made, additional requirements arose. This is caused by the difference of gathering information within the levels of an organisation. The asset manager is focussing more on the general information whilst the expert is focussing more on specific information. The requirements of the end-user were not well defined that resulted in additional requirements in the operational phase. The case needed to be adapted because the requirements from the enduser were not sufficient taken into account. However, when all sources came into place a more successful asset acquisition project has been achieved. Because the first steps were insufficient taken into account it is assumed that this has an impact on the subsequent activities with the subsequent steps: costs, benefits, risk & impact, plan and recommendation. 6.3 FRAMEWORK APPLICATION The main findings of this research are presented to experts in this field. The aim of this section is to validate the research findings and to determine the applicability of the framework in practice. To obtain this information, interviews are conducted with the vice president operations and unit head of the continuous improvement department, as they are experts in this field. The description of the interviewees is given below: TABLE 31. DESCRIPTION INTERVIEWEES # Perspective Description 1 Operations Involved in the decision-making process and gives the advice. 9 Continuous improvement Responsible for the improvement of processes and procedures. In appendix G.2.4, the questions that are asked are defined. The subsection describes the usability of the framework. Next, in subsection the implementation is elaborated. Finally, a wider perspective is described for the framework, to evaluate if it can be used in a more general context USABILITY WITHIN ALLSEAS Within the Allseas Integrated Management System (AIMS), procedures are defined such as the Corporate Management of Change procedure (MoC). This process is explained in the introduction of this research and focus on the process of a change such as an investment in an asset. Currently, it is not defined within this procedure how information should be determined, only that information should be gathered before a decision can be made. Therefore a gap exists in this procedure. According to interviewee_10, the framework can be linked to the Corporate MoC in AIMS in which it can be used as guideline to understand how a change can be determined through this framework to substantiate decisions. In the opinion of interviewee_10 the framework gives the overview of the aspects to consider and is therefore very useful and practical. Hence, this framework gives an additional grip to do an analysis for the investment of an asset. The steps within the framework are logical in terms that the steps go from broad to more in-depth. The questions within the framework are very concrete which makes the framework understandable. This would be a perfect guideline along with the Corporate MoC procedure. It is a very useable tool to obtain grip on such processes. It is certainly understandable because it involves concrete questions you have to ask. Interviewee_10 vice president operations at Allseas Engineering 40

55 However, to make this framework user-friendly the steps of the framework should be elaborated in detail in which it is explained what the questions are that should be answered and the tools that can provide it. This is stated as follows: Pre-selection step & level distinction An additional step before the input of the process should be defined. In this step prerequisites are stated that describes when to start this process and what information should be gathered. This depends on the type of investment. The types of investments that exists within Allseas are: type I; large projects, type II; medium project, and type III, small projects. A pre-selection can be made to determine when to start this process and what aspects should be taken into account. Furthermore, who is responsible for which type of investment needs to be defined. Plan To start such a process people, resources and funds are needed to follow this process. Hence, two types of plans should be defined. Standardisation A standard template should be made such that it can be placed within AIMS. Integration Procedures exists with standard templates in AIMS that can be referred within the framework. In this way the framework can be integrated within the system of Allseas. Based on the interview with interviewee_10 it can be stated that the framework is a valuable tool that can be used within Allseas. However, further research is required that defines the abovementioned remarks. This framework would be used most within the technical department, capital projects department and innovations. The next, subsection focus on the implementation of this framework in the area of the investment projects FRAMEWORK IMPLEMENTATION This framework function as a business improvement process for the large investments decisions of pipelay equipment within Allseas. The improvement of business processes and procedures within Allseas is the main focus of the continuous improvement unit. Furthermore, this framework applies most to the management as they manage such processes and give the advice towards the decision-maker. The steps for implementation are discussed with interviewee_9, responsible for process improvement at continuous improvement, and interviewee_10, who gives advice towards the decision-maker. As interviewee_9 explained, before the framework can be used in the area of investment projects the continuous improvement cycle of Plan, Do, Check, Act should be followed: PLAN Inform the people of a change Key players The key players are people who were involved in the establishment of the Corporate Management of Change procedure (Corporate MoC) and consists of (1) the originator; the person who create it, (2) the reviewer; the person who reviewed it, and (3) the person who approved the procedure. These people should be gathered in a meeting. Within this meeting, the proposal for implementation of the framework in the existing procedure is discussed. An agreement should be accomplished on how to implement the framework. DO Update procedure and give a workshop Workshop The second step is to set-up a workshop with the vice presidents of the departments, the department heads and the senior project managers. Within this workshop, an elaboration is given of the procedure and to explain how the procedure can be used. The aim of this workshop is to gain insight if the procedure is understandable. An exercise can be done in which a fictive project is worked out through the steps of the procedure. This provides the insight to the participants, that it is not a difficult task to do. However, to generate willingness to do this process, it should be showed through an old project, such as the bright spark, how it influences the advice that can be given. By explaining what the consequences were of the information that was not taken into account it can be made tangible and explained why the process is important. In addition, recognition is created within the company towards the Corporate MoC procedure. CHECK Guide the first person in this process and check if the tool is working properly. 41

56 Through the guidance insight is generated of the aspects that are lacking in the tool. In this way it can be checked if it is understandable and if it is properly working for the purpose it is written for. It may occur that more clarification is needed on how to use the procedure. ACT Change tool and update procedure The changes that should be made should be discussed and the procedure should be updated. Next, the procedure should be discussed with the involved first person to determine if the procedure is clarified and feedback is given whether it works properly. The plan, do, check, act cycle is ensured by updating the procedure and inform the people. This framework is a capital specific action plan that is very useful for the capital project department and should be controlled by them. After the above steps are made, the framework can be used for investment in an asset that is yet to be made. When a practical tool is in place such as a template, the framework can be used step by step. For every process it can be determined what information should be taken take into account based on the type of investment that is defined in the pre-selection step. According to interviewee_10 people are thinking about these steps, however it is not made explicit. Therefore, the integration of this framework within the system of Allseas is important. After implementation this framework can be used within the different levels of the organisation. When smaller decisions need to be made, than a department head can use the framework and the vice-president of the department can make the decision THE FRAMEWORK FROM A WIDER PERPECTIVE By performing this research specific for Allseas, the information content is customised for Allseas. Hence, the research results concern merely for Allseas. For the application within other companies and industries additional research should be done towards the flow of information. However from a wider perspective, it can be explained already that some changes are required. The criteria that are embedded in the framework are company specific. Furthermore, the benefit step is also customised as it involves the mission statement of Allseas. However, the structure involving the stage-gated approach combined with the feedback loops are the basis for optimising the flow of information for asset acquisition. Depending on amount of asset acquisition project this can be adapted accordingly. To increase the validity, more research has to be done in other organisations than Allseas, as Allseas is not the only contractor in the oil and gas industry. In addition, to generalise the research more this research should be applied in other industries as well. In this way the difference between organisations and industries can be investigated and gain understanding whether asset acquisition should established or managed differently related the type of investment, industry and organisation. In this way it can be determined how the framework should be adapted accordingly. 6.4 SUB-CONCLUSION: FRAMEWORK VALIDATION The goal of this chapter was to validate the framework and to gain insight if the framework is applicable within Allseas and from a wider perspective in a general context. 5.IS THE FRAMEWORK USEFUL TO ASSESS AND EVALUATE INFORMATION WITHIN ALLSEAS AND IN GENERAL? The practical knowledge revealed that the steps: define task and requirements; expert mapping; and expected function or effect could be optimised. In additional, the success realisation of an asset acquisition project is influence by the flow of information as practice revealed how critical the flow of information is between the decision-maker and the experts. It can be concluded that the experts were not involved in the process before the decision was made. After step 3, the decision was made to invest in the asset. This indicates that the decision is based on the project initiation and pre-feasibility stage instead of the whole process including the feasibility stage. Practice revealed that through consultation of a variety of disciplines after the decision made, additional requirements arose. The case needed to be adapted because the requirements from the end-user were not sufficient taken into account. However, when all sources came into place a more successful asset acquisition project has been achieved. 42

57 Therefore, the developed five-step stage-gated framework provides a clear structure to assess information and evaluate the information. In addition, structuring the information flow by following the framework provides the means to evaluate the information needed. Due to general structure involving the stage-gated approach combined with the feedback loops in the five-step framework, this framework can be applied to other asset acquisition projects. However, depending on amount and type of the asset acquisition project the framework can be adapted accordingly as the research results concern merely for Allseas. To increase the validity for the application within other companies and industries additional research should be done. For the implementation to make the framework applicable for Allseas some adaptions and additional research is required. To make the framework user-friendly, the steps of the framework should be elaborated in detail in which it is explained what the questions are that should be answered and the tools that can provide it. This is stated as follows: Pre-selection step A pre-selection can be made to determine when to start this process and what aspects should be taken into account based on the type of investment. Therefore a level distinction of the type of investments should be defined. Furthermore, who is responsible for which type of investment needs to be defined in the pre-selection step. Plan To start such a process people, resources and funds are needed to follow this process. Hence, an additional plan should be defined. Standardisation A standard template should be made such that it can be placed within AIMS. Integration Procedures exists with standard templates in AIMS that can be referred within the framework. In this way the framework can be integrated within the system of Allseas. Before the framework can be used in the area of investment projects the continuous improvement cycle of Plan, Do, Check, Act should be followed: PLAN Inform the people of a change. DO Update procedure and give a workshop. CHECK Guide the first person in this process and check if the tool is working properly. ACT Change tool and update procedure. The plan, do, check, act cycle is ensured by updating the procedure and inform the people. 43

58 7 CONCLUSION AND RECOMMENDATION This chapter discuss the conclusion, where section 7.1 and answers the research question. Next, the recommendations for Allseas and future research are given in section CONCLUSION This section answers the main research question defined in section 1.5. To answer the main research question, several sub-questions are provided in the beginning and answered throughout this research. Sub-section provides the main answer of the research question and subsection gives the answers of the sub-question to support the main answer given to the research question GENERAL CONCLUSION This research has been focussing on the development of a framework that can optimise the information flow required for asset acquisition. The operational environment of capital-intensive asset companies is dynamic that results in an additional layer of complexity added to the decision-making process of companies. In an asset acquisition project, information needs to be gathered to make a substantiated decision. This flow of information influences the asset acquisition project and therefore more precision is required in the decision-making process. Based on the results the research question can be answered: HOW CAN THE DECISION-MAKING PROCESS FOR ASSET ACQUISITION BE IMPROVED BY OPTIMISING THE FLOW OF INFORMATION WITHIN AN ORGANISATION FROM AN ASSET MANAGER PERSPECTIVE? It can be concluded that it is of great importance that all information and insights available are considered during the process such that changes at a later stage can be dealt with up-front, minimising the risks. The flow of information can be optimised using the framework designed for this research. The framework is shown in Figure 15 on page 36. The results have shown that an insufficient flow of information negatively influences the operational stage of a project. The information flow can be optimised by a clear structure, documentation and communication. The framework provides this by indicating which and with what process the information should be gathered during asset acquisition. This way, a guideline to manage the information flow by the asset manager is provided. In addition, structuring the information flow by following the framework provides the means to evaluate the information needed. The advantage of a stagegated approach that consists of feedback loops, is that it makes the information gathering process more precise. It establishes a more informed advice based on a comprehensive set of information that is validated throughout the stages as well. The role of the asset manager is to manage the information flow between the decision-maker and the experts. As the asset manager is positioned between these parties and therefore has the information to combine the technical, economical and business areas within an organisation. This research reveals how the information flow is critical between the decision-maker and the expert as this influence the success realisation of a project. However, the interest area for information is different within the levels of an organisation. The asset manager is focussing more on the general information and the expert is focussing more on specific information. Therefore, the developed five-step stage-gated framework aims to create a comprehensive set of information through the flow of information between the levels of an organisation. In this way, a well defined front-end is created as more precision is achieved through the use of the framework and therefore improves the decision-making process. The asset acquisition can be informed based on the three stages: project initiation, pre-feasibility and feasibility stage. The asset acquisition is defined by the asset recommendation step that involves the summary of the previous stages. This includes, the problem or opportunity statement, aim of acquisition, expected function or effect, financial summary, main benefits, risks and implementation plan. This summary is conducted through a stage-gate approach that 44

59 consists of feedback loops between the stages. This has an advantage as the information gathering process is made more precise through this approach and establishes a more informed advice based on a comprehensive set of information that is validated throughout the stages. Finally, the framework ensures the flow of information in the organisation and improves the decision-making process of asset acquisition. Therefore, the main objective of this research considering reducing the risks in the decision-making process is achieved SUB-CONCLUSIONS This sub-section summarise the answers of the sub-conclusions given throughout this research to support the general conclusion of the previous sub-section. WHAT FRAMEWORK TO MAKE AN INFORMED ADVICE FOR ASSET ACQUISITION CAN BE DEFINED FROM THE LITERATURE? Based on the literature review to structure an asset acquisition process and assess information, a framework is constructed. This is visualized in Figure 10 on page 15. The framework consists of a five-step stage-gated approach combined with feedback loops defined from the literature of SE, BC, and FEL. This framework provides the structure to assess the information to come up with an informed advice by the asset manager towards the decision-maker. The stage-gated approach aims to minimise the changes and rework during the implementation of an asset acquisition project by optimising the information at every gate at the end of a stage. The feedback loops contribute to this to reduce additional requirements to come up during implementation stage of the asset. Each step includes activities to gather the information that is needed for asset acquisition. The steps for asset acquisition are (1) define task and requirements, (2) expert mapping, (3) option development, (4) preferred option(s) analysis and (5) asset recommendation. The activities for each step enable which information to gather in each step. The stages in which the five steps take place consist of three stages: project initiation, prefeasibility and feasibility stage. The asset acquisition advice is defined by the asset recommendation step that involves the summary of the previous stages. WHAT ARE THE KEY CRITERIA TO ASSESS AN ASSET ACQUISITION PROJECT? Through defining the key criteria from the point of view of the asset managers and the experts insight is created of the flow of information between these sources. Analysing the results revealed the key information embedded in the data. Based on the data collected, it can be concluded that the information is assessed differently in the levels of the organisation. Therefore, this sub-question is answered through the perspective of the asset manager and the experts. Additional criteria that were obtained are included in this answer. Key criteria Asset manager: 1. Modification The asset can be placed without major rework. 2. Lead Time Time required for delivery. 3. Strategic value Opportunity realization. 4. Investment Return on capital and payback period. 5. Functionality and support Increased functionality to perform as required and is the supplier availability for parts and advice during the asset useful life. 6. Fit for purpose Fit for purpose in the environment; qualified for this use; extra measure is needed. 7. Specific equipment consumables Requirement of the special materials or procedures by the client. 8. Planned maintenance Mandatory maintenance, corrective maintenance and preventive maintenance. 9. Failure secure The consequences and uncertainty are determined and controlled by a plan. 10. Supplies A qualified supplier exists and is willing and able to meet the needs; one supplier or many; suppliers and product proven track record. Key criteria Experts: 1. Verification and testing The usability of the asset. 45

60 2. Technological feasibility The efficiency and productivity of the asset. 3. Manufacturing and Deployment; High-risk item; being on critical path (schedule risk); effective and reliable equipment. 4. Technical risk Enabling accident free use; speed of recovery; adequate redundancy; vulnerability to natural hazard; robustness; failure modes. Key criteria Both: 1. Needed capability Improves the company s profit; increases its ability to meet the needs of a company. This also involves market condition; commodity prices; competition. 2. Legislation International Marine Organisation (IMO); ease of certification. Throughout the collected data two criteria were discovered not included but are indicated as important to consider in an asset acquisition process these are: 1. Safety Contingency and emergency preparedness; safety of equipment; man-machine interface (human factor engineering); occupational health (noise, dust, vibration); safety sustainability; safety engineering. 2. Uniformity of equipment. HOW IS THE FLOW OF INFORMATION ASSESSED BY ALLSEAS ENGINEERING FOR ASSET ACQUISITION? The data analysis determined the information flow that is necessary to achieve the best results and reveals that this information flow is critical between the decision-maker and the expert. Practice revealed that within this asset acquisition project the flow of information between the sources is critical for the success realisation of the asset. This is explained below. The flow of information can be divided into three areas of the case: 1) The decision was made without consultation of the operational experts of this asset, which resulted in a failure of the needed capability that was required to fulfil the task. 2) Attendance was made to consult a variety of disciplines after the decision was made, which resulted in additional requirements. 3) The asset acquisition project became a success when everyone and everything came into place. The results have shown that insufficient front-end where the information and insights available is not used during the process affects the implementation and operational stage of the project as changes may appear than originally assessed. This is caused by no clear structure, documentation and communication to gather the information and therefore implicates the flow of information. It is emphasised through practice that the effect of improving the information gathering process by providing a clear structure influences the asset acquisition project. WHAT ACTIVITIES CAN BE EMBEDDED INTO THE ASSET ACQUISITION FRAMEWORK TO IMPROVE THE DECISION-MAKING PROCESS? There are five steps for the decision-making process that enables to establish an asset acquisition process to make an informed advice towards the decision-maker. Each step includes activities to follow, as well as feedback loops to gather the information that is needed for asset acquisition. The steps for asset acquisition are define task and requirements, expert mapping, option development, preferred option(s) analysis and asset recommendation. These steps include the following activities: The step define task and requirements determine the capability that is needed to achieve the business needs. The output is a capability requirement statement that defines why an asset acquisition project is needed and lay down the requirements that the asset should fulfil. The step expert mapping determines who the key experts are. The aim is to involve the experts that are participating in the process. Through a feedback loop, the requirements that are missed in the first step are established by means of interaction with the involved experts. In this way, the capability requirement statement is validated and the output is a revised capability requirement statement if necessary. The step option development determines how the main problem or opportunity can be solved within a sound framework. The aim of this step is finding the preferred options to 46

61 achieve the business needs within the boundaries of the capability requirement statement defined in the first and second step. A first filter is established through the second feedback loop. The second decision gate at the end of this step focuses on the selection of the preferred options. Several evaluation tools discussed in section can be used for this. The step preferred option analysis includes several sub-steps resulting in an informed advice. These sub-steps are expected function or effect, financial summary, benefits, risk and impact, and plan. These are described below. o The sub-step expected function or effect search the information to define what is needed to realise the preferred option(s). This involves the activities operational concept, technical feasibility, functional and performance requirements, and acquisition strategy. o The sub-step costs involves the revenue, costs and NPV. To achieve this summary, the financial information that is described in the framework forms the basis to calculate the revenue, costs and NPV. o The sub-step benefits determines the benefits in relation with the objectives of a company. The objectives are depending on the asset acquisition process due to the fact that every project is unique. o The sub-step risk and impact of the preferred option(s) are identified here. This o involves a risk analysis, environmental, health and safety assessment. The sub-step plan develops an implementation plan for the preferred option(s). This involves defining the project activities, performance monitoring and a schedule. The step recommendation develops a summary based on the previous step. This involves problem or opportunity statement, aim of proposal, expected function or effect, financial summary: (i) revenue, (ii) costs, and (iii) NPV, main benefits and risks. This needs to be validated with the experts through the third feedback loop using a workshop resulting in an informed advice at the third decision gate. The activities for each step enable which information to gather in each step. An organisation can use these activities to structure and assess the information for asset acquisition to improve the decision-making process. IS THE FRAMEWORK USEFUL TO ASSESS AND EVALUATE INFORMATION WITHIN ALLSEAS AND IN GENERAL? The practical knowledge revealed that the steps: define task and requirements; expert mapping; and expected function or effect could be optimised. In additional, the success realisation of an asset acquisition project is influence by the flow of information as practice revealed how critical the flow of information is between the decision-maker and the experts. It can be concluded that the experts were not involved in the process before the decision was made. After step 3, the decision was made to invest in the asset. This indicates that the decision is based on the project initiation and pre-feasibility stage instead of the whole process including the feasibility stage. Practice revealed that through consultation of a variety of disciplines after the decision made, additional requirements arose. The case needed to be adapted because the requirements from the end-user were not sufficient taken into account. However, when all sources came into place a more successful asset acquisition project has been achieved. Therefore, the developed five-step stage-gated framework provides a clear structure to assess information and evaluate the information. In addition, structuring the information flow by following the framework provides the means to evaluate the information needed. Due to general structure involving the stage-gated approach combined with the feedback loops in the five-step framework, this framework can be applied to other asset acquisition projects. However, depending on amount and type of the asset acquisition project the framework can be adapted accordingly as the research results concern merely for Allseas. To increase the validity for the application within other companies and industries additional research should be done. For the implementation to make the framework applicable for Allseas some adaptions and additional research is required. To make the framework user-friendly, the steps of the framework 47

62 should be elaborated in detail in which it is explained what the questions are that should be answered and the tools that can provide it. This is stated as follows: Pre-selection step A pre-selection can be made to determine when to start this process and what aspects should be taken into account based on the type of investment. Therefore a level distinction of the type of investments should be defined. Furthermore, who is responsible for which type of investment needs to be defined in the pre-selection step. Plan To start such a process people, resources and funds are needed to follow this process. Hence, an additional plan should be defined. Standardisation A standard template should be made such that it can be placed within AIMS. Integration Procedures exists with standard templates in AIMS that can be referred within the framework. In this way the framework can be integrated within the system of Allseas. Before the framework can be used in the area of investment projects the continuous improvement cycle of Plan, Do, Check, Act should be followed: PLAN Inform the people of a change. DO Update procedure and give a workshop. CHECK Guide the first person in this process and check if the tool is working properly. ACT Change tool and update procedure. The plan, do, check, act cycle is ensured by updating the procedure and inform the people. 7.2 LIMITATIONS The defined limitations of this research are based on the scope, data collection and the specific context in which this research is done. The defined scope in this research affects the comprehensive set of information that is captured in the framework. However, due to the fact that two separate studies are conducted for the information flow, the bias is reduced. Furthermore, the information flow is based on new assets but can also be used for the modification of an asset. Past decisions The asset acquisition framework is based on decisions made in the past. Levels of decisions The different levels of decision-making has not been included in the scope. This related to the different types of investment decisions that can be made. Specific context The content of the framework is derived for the specific context of Allseas. This limits the generalisation of the framework because other industries are not within the scope of this research. However, the steps of the framework are constant and applicable in other industries. In addition, the content of the framework, with some changes it is wider applicable. Research approach The approach for this research is based on a content analysis derived from the theory. A more supportive way can be searched rather than a non-supportive way that influences the trustworthiness and objectivity of the research findings. Recall Bias In the method of the survey consist a risk relates to bias in contrast to interviews. This may cause inaccurate results for the information that is captured in the asset acquisition framework. However, different techniques are used to gather the data and to maximise diversity Pattern matching The method of coding and pattern matching is used. This involves a certain level of subjectivity and may therefore be less accurate if someone else replicates it. Also relevant information may be missed due to the amount of information assessed in an interview. The use of the AHP-method The weights of the criteria are based on the ranking output of the survey. This is done by the researcher and therefore consists of a certain amount of subjectivity. 48

63 7.3 RECOMMENDATIONS Recommendations are given in this section specific for Allseas and for the research in terms of future research. First, the recommendations for Allseas are discussed in Next, the future research recommendations are given in RECOMMENDATIONS FOR ALLSEAS For Allseas it is recommended to use this framework to improve the corporate management of change procedure. In this way, how information should be gathered is added to the procedure and a more consistent approach can be achieved. Next, it is recommended to involve more disciplines before the decision is made in order to reduce and minimise changes during the implementation and operational phase. Furthermore, an organisation should be set-up to understand what is expected from whom to make the asset economically viable and avoid missmanagement by creating responsibility. However, time is an important aspect as using this framework is more time consuming. This influences the process of asset acquisition and is not always beneficial in some situations. Therefore this should be taken into consideration. The recommendations are more discussed below: Create alignment in the organisation It is recommended to strive for an alignment in the organisation. Through an alignment, understanding of the business objectives can be created. From these objectives the expectations and the requirements in the operational phase can be subtracted. In this way, the development phase and construction phase can anticipate on the business needs. This was shown from the case study, that the objectives, expectations and requirements were not well defined which resulted in more modification in the operational phase. The business goals should be translated in the AM goals that subsequence be translated in the requirements the asset should fulfil. Clear communication should be established between the asset manager and the experts to minimise changes in a later stage. By using the framework a first step in this direction can be established. The aim of this framework is to create a comprehensive set of information through the flow of information between the levels of an organisation. Involve more disciplines In order to create a better understanding on what the requirements are that the asset should fulfil, a plenary meeting of the disciplines should be established. During this discussion consultation can take place to obtain the knowledge and experience that is required. Through this consultation it can be determined what need to be taken into account following the structure of the framework. Because every investment is unique, the impact of such decisions differs. The consequences are very depending on the type of investment and what information should be gathered. Establish continuous improvement Holding continuous improvement in mind, the lessons learned of investment decisions should be captured in terms of additional information that can be added to customise the framework more. It is recommended that the framework can be used for the evaluation of the investment decisions in which it can help to understand the value of information and therefore the exact value of the asset acquisition. This can provide lessons learned for future decisions. Recommendation for implementation at Allseas In section recommendations are discussed to make the framework user-friendlier for Allseas. These recommendations are briefly summarised here. Pre-selection step A pre-selection can be made to determine when to start this process and what information should be taken into account. This is in relation with the Level distinction Type of investments needs to be defined. This involves defining the information that is bound to the type of investment. For a simple investment it is not required to go through the same depth of analysis as a large investment. Furthermore, this also involves the recommendation of Responsibility Determined who is responsible for which type of investment. This should all be captured in the pre-selection step. In this way, an organisation can be set-up to understand what 49

64 is expected from whom to make the asset economically viable and avoid miss-management by creating responsibility. Plan To start such a process people, resources and funds are needed to follow this process. Hence, an additional project plan should be defined. Standardisation A standard form that is added to the corporate MoC should be made such that it can be placed within AIMS. Create a useable template that follows the structure of the framework. The project teams or management, depending on the kind of investments, can use this in which they present their ideas to management/decision-maker. In this way uniformity is created. The creation of a useable template can also be used to demonstrate why a decision is made and shows the motivation behind it. In this way the template will be used to communicate the reason behind an investment. This will provide the documentation for in future why a decision was made and for external auditor that the corporate MoC is followed. Integration The existing procedure of the corporate MoC outlines the needs to determine the information that represents the impact of acquiring a new asset and to give an advice about this impact. The corporate MoC can be adapted in which this framework represent how the information should be determined. The use of the framework is a cultural challenge because it is difficult and time consuming; however it can be a valuable tool in the process of managing the asset investment itself. In addition, procedures exist with standard templates within AIMS that can be referred within the framework. In this way the framework can be integrated within the system of Allseas. To manage the change of the procedure and create acceptance, the continuous improvement cycle of plan, do, check, act can be used RECOMMENDATIONS FUTURE RESEARCH There is always room for improvement to make this research more complete and obtain more generalised conclusions. This research has focussed on improving the decision-making process for asset acquisition by improving the flow of information at Allseas Engineering. More possibilities for further research can be found in the application to other assets within other industries to gain insight whether such an asset acquisition should be managed differently related to the type of investment, industry and organisation. In this way, it can be determined how the framework should be adapted accordingly. Some recommendations for future research are discussed below: Apply in other organisations and industries For this research, a contractor in the midstream sector of the oil and gas industry have been investigated. The research is based on one organisation to understand what information is required to form the bridge between the business objectives and day-to-day activities. This reduces the validity of the set of information that the framework captures. To increase the validity, more research has to be done in other organisations than Allseas, as Allseas is not the only contractor in the oil and gas industry. In addition, to generalise the research more this research should be applied in other industries as well. In this way the difference between organisations and industries can be investigated and gain understanding whether asset acquisition should established or managed differently related the type of investment, industry and organisation. In this way it can be determined how the framework should be adapted accordingly. Type of investment Further research can be done to make a distinction between the types of investments and how this can be embedded in this framework. This is also one of the recommendations given for Allseas before implementation of the framework. The type of investment determines the information that should be gathered. A pre-selection step can be added before step 1 that indicates the information elements to consider per investment type. Relation between framework and companies performance For this research it is assumed that following the steps and the information that is captured in this will make a more informed decision. It can be interesting to investigate if the use of the framework has a positive impact on the investment decisions. In this way, the relation between the performance of a company and asset acquisition can be investigated. 50

65 Tools and Software For this research some tools were provided such a multi-criteria analysis tools and workshops. However, more research can be done towards software tools that can support the decision-making processes. 51

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68 Van der Weijde, Gerbert. (2008). Front End Loading in the Oil and Gas Industry. Unpublished diss., Delft University of Technology. Van Houten, TP, & Zhang, Linda L. (2010). Managing assets in the infrastructure sector. International Journal of Engineering Business Management, 2(2), Van Putten, Bart-Jan. (2013). Supporting Reuse in Business Case Development: Springer Science & Business Media. Verschuren, Piet, Doorewaard, Hans, Poper, RL, & Mellion, Michelle. (2010). Designing a research project (Vol. 2): Eleven International Publishing The Hague. Waris, M, Liew, Mohd Shahir, Khamidi, Mohd Faris, & Idrus, Arazi. (2014). Criteria for the selection of sustainable onsite construction equipment. International Journal of Sustainable Built Environment, 3(1), Wasson, Charles S. (2015). System Engineering Analysis, Design, and Development: Concepts, Principles, and Practices: John Wiley & Sons. Yasseri, Sirous. (2012). Subsea technologies selection using analytic hierarchy process. Underwater Technology, 30(3), Yazdani-Chamzini, Abdolreza. (2014). An integrated fuzzy multi criteria group decision making model for handling equipment selection. Journal of Civil Engineering and Management, 20(5), Yilmaz, Burcu, & Dağdeviren, Metin. (2011). A combined approach for equipment selection: F- PROMETHEE method and zero one goal programming. Expert Systems with Applications, 38(9), Yin, Robert K. (2011). Applications of case study research: Sage. Yin, Robert K. (2014). Case study research: Design and methods (fifth edition ed.): Sage publications. 54

69 APPENDIX 55

70 A CORPORATE MANAGEMENT OF CHANGE PROCEDURE The Corporate Management of Change (MoC) procedure structures a change such as an investment in capital-intensives assets within the Allseas Integrated Management System (AIMS). The procedure is given below. FIGURE 17 CORPORATE MANAGEMENT OF CHANGE PROCEDURE (ALLSEAS, 2016) 56

71 B B.1 LITERATURE ON SYSTEM ENGINEERING SEARCH PHRASES B.2 System Engineering System Engineering Methodology System Engineering Process System Engineering AND Business Case System Engineering AND Asset Management SYSTEM ENGINEERING METHODOLOGY INCOSE developed a very in-depth definition of SE (Bishop, 2015) as an interdisciplinary approach and means to enable the realization of successful systems. It focuses on defining customer needs and required functionality early in the development cycle, documenting requirements, and then proceeding with design synthesis and system validation while considering the complete problem: operations, cost and schedule, performance, training and support, test, disposal, and manufacturing. Systems engineering integrates all the disciplines and specialty groups into a team effort forming a structured development process that proceeds from concept to production to operation. Systems engineering considers both the business and the technical needs of all customers with the goal of providing a quality product that meets the user needs (p.261). Derived from the above definition it can be mentioned that SE defines the activities needed to develop a system in which it begins and ends with the user (Wasson, 2015). The life cycle of asset development consists of four phases; (1) Concept Exploration & Definition Phase, (2) Development Phase, (3) Production & Deployment Phase, (4) Operation, Support & Disposal Phase. The life cycle provides the processes and activities of asset development. A lot of SE processes exist in the literature and for the purpose of this research two models are discussed: DAU SE Process Model and ISO SE Process Model as these are most used. B.2.1 DAY SE PROCESS MODEL This model, visualised in Figure 18 provides an iterative approach to the development of an asset derived from the Defense Acquisition University (Wasson, 2015). FIGURE 18 DAU SE PROCESS MODEL The input of the model begins with the determination of the requirements through interaction with involved stakeholders. The derived requirements are translated in 57

72 functional requirements in the section step of functional analysis. However, requirements can be missed and therefore a feedback-loop exists to an additional requirement analysis. The third step, the function are translated to physical architecture through the design loop. Within this process, a two-fold function exists. First, other additional requirements can be added and second, the design can be verified to gain insight if the design meets the requirements of its function. Technical processes refer these three processes. An additional process is added, System analysis and control, to structure these processes, which is referred as technical management process. Within this process alternatives are analysed against these processes. B.2.2 ISO SE PROCESS MODEL INCOSE also developed a model for SE processes, called the V-diagram this is shown in Figure 19. FIGURE 19. ISO SE PROCESS MODEL The left side of the V-diagram shows the technical processes which are also described in the DAU model. The technical process defines the requirements of the stakeholders and defines what is to be built. When the asset development is complete, the asset is verified and tested. Both models complement each other in a certain way. The technical process of DAU and ISO provide the process in which the detail is established. Furthermore, the System Analysis and Control process of DAU maps the technical management process for ISO Therefore, combining both models a iterative process with detail is reached, see Figure 20 (Bishop, 2015). FIGURE 20. SE THROUGH THE LIFE CYCLE (BISHOP, 2015) 58