Systems engineering is critical to subsea projects and is a key activity in their management, says one leading international contractor.
Systems engineering addresses the integration of all the elements that make up a subsea development: reservoir; well drilling and completion; subsea facilities; flowlines; reception facilities and export facilities.
The subsystems that make up these elements must work together as a total system to deliver the required production.
According to Halliburton/Brown & Root, all these aspects of the design can be managed separately on segmented projects but are more easily provided by an integrated contractor. In a paper given at the Subsea '99 Conference organized by Subsea Engineering News, Halliburton/Brown & Root said interfaces of complex projects represent substantial risks to the development, typically through miscommunication or delays in transferring information. Using a single contractor, where possible, will reduce the complexity of handling interfaces, according to the paper.
"Integrated contracting organizations have the capability to deliver the complete project or at least the subsea elements to operator requirements. The combination of a full range of capabilities and the resource base available to these organizations makes them a reliable choice for any project," it said.
The organization and commercial approach adopted for a subsea project depends on the nature of the development. Low-risk projects using proven technology with high-definition work scopes may well be executed using a highly segmented approach on a lump-sum basis.

Integrated contractor
High-risk projects, such as major deepwater developments using new technology, with low-scope definition and complex interfaces, are however best executed by an integrated contractor approach, according to Halliburton/Brown & Root.
These high-risk projects may be executed best on a reimbursable basis with lump-sum elements and key performance indicators as a basis for incentives and penalties. Projects that fall between these extremes may be best executed using an intermediate approach.
Key factors, said the contractor, to determining the organization and commercial approach on subsea projects are:
l review design basis and determine confidence in critical design parameters and philosophies (ie. readiness to execute project with minimum change and risk);
l assess complexity of the project in terms of new technology and interfaces;
l jointly develop cost estimate and schedule;
l identify and quantify risk, including cost and schedule;
l determine key performance indicators;
l develop joint execution strategy with agreed incentives based on key performance indicators, realistic schedule and project organization.
"We believe that the contracting community is better able to undertake larger integrated scopes of work than previously recognized.
"Much has been learned in the early to mid-'90s where large scopes were awarded to subsea contractors and alliances. The time has come to build on this competence for the next generation of projects," according to the company.
The contractor also outlined the perceived risks associated with a subsea development, both from the traditional perspective and also from a future risk-sharing point of view based on integrated subsea development contracts (Tables 1 and 2). These are outlined in the two tables above.

Managing the risk
An effective approach to managing the risk, according to the contractor, is to:
establish operator and contractor relationships at the start of a development;
partner where possible for areas of weakness;
use proven technology;
ensure contracting strategy is appropriate;
use proven teams and a proven contractor;
minimize interfaces with contracts that cover total scope - subsea, reception facilities and drilling; and
ensure that risk management receives high-level management attention.