Background & Challenges
A global petrochemical company faced major cost control & project execution challenges in two joint ventures:
- Project 1: A world-scale ethylene cracker in the United States.
- Project 2: An Olefins unit, integrated with Project 1, requiring complex commercial and cost-sharing agreements.
Key challenges included:
- Weak project control frameworks – No centralized system for cost monitoring.
- Unreliable contractor financial management – Gaps in cash flow forecasting and payments.
- Misalignment between venture partners leading to disputes and inefficiencies.
Strategic Approach
- Established a Project Support Office (PSO) to centralize cost control efforts.
- Negotiated financial payment systems, streamlining contractor cash flow management.
- Implemented cost-sharing models, ensuring financial accountability between partners.
Key Outcomes & Results
- Standardized cost control systems, reducing financial inconsistencies.
- Improved contractor collaboration, minimizing payment disputes.
- Enhanced project forecasting & financial reporting, optimizing execution efficiency.
