ADL: Merge procurement, IT and project management

Consulting firm Arthur D. Little has released a whitepaper which suggests that companies in the energy sector should combine their projects, technology and procurement organizations into one division. According to the strategy consulting firm, a combined unit can improve performance by achieving better control, project cost reduction and the opportunity to achieve performance leadership through technology.

In its study, called “The Projects, Technology & Procurement Organization”, the consulting firm assessed several oil & gas firms and conducted interviews with executives in the energy sector.

Since getting projects running involves increasingly more purchasing and technology choices, it would make sense to combine the areas into one functional unit. Arthur D. Little calls this new organizational structure “PTP”, which stands for projects, technology and procurement. The new (global) organizational division ideally becomes end-to-end responsible for the delivery of all types of projects. “The combination of PTP functions into a single division offers some key advantages in successful project delivery, with reduced costs and improved deployment of technology”, says Ben Thuriaux-Aleman, principal in Arthur D. Little's Energy Practice.

The firm found in its assessment that best-in-class firms, in particular Shell and Statoil, have already adopted a PTP structure. “So far Shell and Statoil are working along the lines of the PTP structure and there is considerable interest from other companies. However, there are some organizational and structural challenges which need to be considered such as the implementation and management of the new organization”, continues the ADL consultant.