Progress and Lessons Learned on the Risk Management Journeyecrisponsor.org/presentations/ho18 1-5...
Transcript of Progress and Lessons Learned on the Risk Management Journeyecrisponsor.org/presentations/ho18 1-5...
›Progress and Lessons Learned on the Risk Management Journey
› Borys Yarosh Vice President, Risk Management, Global Projects Support
›November 2018
A global fully integrated professional services & project management company leader
2 1 Per S&P and DBRS.
SNC-Lavalin is a global fully integrated professional services and project management company, and a major player in the ownership of infrastructure
From offices around the world, SNC-Lavalin’s employees are proud to build what matters, providing comprehensive end-to-end project solutions to clients in six industry sectors
Founded in
1911
Employees
50,000+
Revenue
~$10B
Listed on TSX
“SNC” Since 1986
Investment Grade Credit Rating1
BBB
49%
23%
9%
19%
Operating in 4 regions across the world
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Breadth of geographic exposure
Americas 16,000
Europe 12,000
Asia Pacific 5,000
Middle East
& Africa 18,000
2018 YTD Revenues1
$9.3B
Americas Middle East & Africa Asia Pacific Europe
1For the nine-month period ending September 30, 2018.
Canada 28% USA 17% Latin America 4%
26%
21% 32%
9%
3% 6% 1%
2%
Nuclear
EDPM
Clean Power
37%
21%
18%
8%
5% 4%
4% 3%
Nuclear
A diversified business model
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2017 Revenues
Oil & Gas
Infrastructure
EDPM
Mining & Metallurgy
Capital
$9.3B
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1 Includes only 6 months of Atkins revenues, as it was acquired on July 3, 2017. 2 ~35% of Nuclear revenues relate to decontamination, decommissioning and waste management projects.
74% Reimbursable &
Engineering Service Contracts
26% EPC Fixed-
price Contracts
Clean Power
Thermal Power
YTD 2018 Revenues (9 months)
Oil & Gas
Infrastructure
Mining & Metallurgy
Thermal Power Capital
$7.5B
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Enhanced value chain
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A comprehensive end-to-end service offering
› Arrange financing, invest equity, undertake complex financial modelling and manage our infrastructure investments for optimal returns
› Concept, feasibility and design services
› Human-centered innovative digital design tools and techniques
› End-to-end offering, from initial regulatory approvals to final build
› 20+ years of experience offering simulation consultancy and advice
Construction & Project
Management
Operations & Maintenance
Procurement Design & Engineering
Digital & AI Capital Sustaining Capital
Consulting & Advisory
› Expert consultancy covering the full lifecycle
› Plan, design and enable major capital projects
› Extensive engineering and master planning capabilities
› Digital products and tools to enhance delivery
› IoT, mobility services and strategic digital asset management solutions
› Procurement Management
› Contract Administration
› Purchasing › Expediting › Material
Management › Logistics › Quality
Surveillance › Inspection,
Material Control
› Multi-disciplinary construction and technical field services
› Construct, commission, maintain, and enhance assets
› Self-performed construction using and a qualified labour force
› Consultancy services and entire program management
› Business change programs
› Around-the-clock support for mission-critical activities
› Operate and maintain major public-private partnership (P3) projects
› In-depth review of end-to-end operations, asset portfolios and value chain
› Asset management and solutions to reduce costs and improve productivity
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~$2.0B revenue business with
~6,000 employees Infrastructure
Ability to address full infrastructure life cycle from equity investment and arranging financing, to EPC and O&M Awarded joint venture for EPC and Rolling Stock, Systems and Operations and Maintenance contracts for the Réseau Express Métropolitain (REM) Project, Montreal Integrated infrastructure engineering solutions for more than a century and on every continent Strong track record of completing complex projects such as light rail transit projects, bridges, highways and buildings Leader in Canadian PPP projects
Rail & Transit Highways & Bridges Buildings & Facilities Environment & Geoscience Industrial Airports & Aviation Defense and Logistics Ports & Harbours Municipal infrastructure Water & Wastewater
New Champlain Bridge Corridor Canada
Eglinton Crosstown Light Rail Transit Project Canada
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~$3.2B revenue business with
~18,000 employees
One of the world’s most respected design, engineering and project management consultancies, comprising the Atkins and Faithful+Gould businesses, bought bySNC-Lavalin in 2017
Over 75 years helping clients to plan, design and enable major capital projects and providing expert consultancy across the full project lifecycle
Value created through long term relationships as trusted advisers to major clients and governments
Now creating additional value by harnessing data and digital technology to better design, deliver and manage the built environment for a decarbonised, climate resilient future
EDPM (acquired July 3, 2017)
Burj Al Arab Project UAE
London Crossrail UK
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Relationship-based repeat business with core blue-chip IOCs & NOCs Agility to offer services and resources specific to client needs World-class expertise at every phase of an asset life cycle Consolidation in offshore offering increases end to end services and scale A partner for clients in increasing efficiency and production from existing assets Increased contribution from lower risk, higher margin services
~$2.5B revenue business with
~20,000 employees Oil & Gas
Heavy Oil Offshore LNG Unconventional O&G Refining & Petrochemicals Gas Processing Sustaining Capital Pipelines Carbon Capture and Utilization
Cardon IV Natural Gas Production Facilities Venezuela
Gorgon LNG Project Australia
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Positioned to lead and grow from within a transformed Nuclear business. Now one of most complete nuclear service companies in the world Providing consulting services, technology & products, project management, and site management for new generation, nuclear plant operating life, decommissioning and waste management Exclusive licensee of CANDU nuclear reactor technology with a focus on realizing its potential Participating in Canada’s two largest clean energy infrastructure projects: Bruce Power & OPG Partner in CDI, a US-based JV between SNC-Lavalin and Holtec, for the execution of nuclear reactor decommissioning work in the USA
~$1B revenue business with
~4,000 employees Nuclear
New Builds Life Extension & Upgrades Decommissioning Site M&O Waste Management Services Operations Support
Darlington Retube and Feeder Replacement Canada
Embalse NGS Argentina
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~$500M revenue business with
~1,000 employees Clean Power
More than a century of experience with 413,000 MW, 2,500 substations, 114,000 km transmission and distribution (T&D) lines. Enough capacity to power 35 cities the size of New York and enough T&D lines to circle the globe almost 3 times. End-to-end life-cycle capabilities in power generation and transmission, including renewable projects World leader in hydropower projects and owners of the first PPP hydroelectric power project in Canada Unique digital utility transformation offering including in-house intelligent networks and substations capabilities and cybersecurity Partner in Linxon, a JV between SNC-Lavalin and ABB, for the execution of turnkey electrical AC substation projects
Hydropower Transmission and Distribution Renewables Energy Storage Digital Grid Solutions Intelligent Networks and Cybersecurity Digital Utility Transformation
John Hart Project Canada
Stockyard Hill Wind Farm Australia
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~$500M revenue business with
~1,300 employees Mining & Metallurgy
Five decades of combining global-caliber expertise with deep local capabilities to provide tailored solutions for projects of any size, scope or complexity
Proven ability of reducing clients’ capital and operating costs, improving mine and processing plant efficiency, and providing project and quality assurance
One-stop-shop capabilities, deep know-how, and flexible execution models for clients around the world
Track record of safely and successfully delivering studies, sustaining capital services and major projects in 35 countries
Aluminium Gold Copper Iron Ore Nickel Fertilizers Sulphur Products
Ambatovy Nickel Project Madagascar
EMAL Project UAE
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Portfolio of value creating
assets Capital
SNC-Lavalin’s investment and asset management arm Portfolio of 15 investments in 5 countries, including: - highways, bridges and rail/LRT - power plants / generating stations - health centres New infrastructure vehicle created in 2017 - transfer of majority value of certain mature assets into fund - SNC-Lavalin retains long-term management of assets - SNC-Lavalin acts as General Partner and Manager of partnership Our star investment = 407 ETR, a fully automated toll highway which travels 67 miles across the Greater Toronto Area
Highway 407 Canada
McGill University Health Centre (MUHC) Canada
Redefining SNC-Lavalin
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2012 - Crisis › SNC-Lavalin turns
documents to authorities › Investigations › Lawsuits › Allegations
2013 - New Beginning › Change senior leadership
& culture › Develop new strategy with
focus on growth opportunity in Resources
2014 – Expand Resources Capabilities › Kentz acquisition › Expand O&G capabilities › Grow O&G revenues from $500M (2013) to $4B (2015) › Position SNC-Lavalin as a top 10
O&G player
2015 - Step Change and Operational Excellence › Adjust cost structure to the
resources market slowdown › Target $200M in G&A savings
& Deliver
2016-2018 - Focus › Atkins acquisition to expand
Services offering, regional breadth and Infrastructure and Nuclear expertise
› Deliver on operational excellence › Deliver a client-centric organization › Deliver a performance-driven culture
2020 - Vision › Reposition SNC-Lavalin on a path
of strong profitable growth › Balance portfolio across sectors
geography risk profile
Incr
ease
d fo
cus
on
Eth
ics
& C
ompl
ianc
e
Crisis
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Crisis
ECRI Sponsors Meeting, June 2014
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Excerpt from SNC-Lavalin’s CEO, Bob Card’s Presentation to ECRI
ECRI Sponsors Meeting, June 2014 – Bob Card
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Excerpt from SNC-Lavalin’s CEO, Bob Card’s Presentation to ECRI
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Journey to Ethics Excellence
Redefining SNC-Lavalin
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2013 – New Beginning › Change senior leadership & culture › 90-Day amnesty program › Global compliance organization › Anti-corruption manual › Business partner policy + due
diligence
2014 – Expansion of capabilities › Kentz acquisition › Political contribution policy › Gift & hospitality › Facilitation payments › Global E&C risk assessment
2016-2017 – Focus and solidification › Atkins acquisition › Redesign of governance framework › Deviation + Levels of authority policies › Project and investment approval procedure › CCO monthly blog › Conflict of interest procedure
2018 – Moving forward › New Integrity App › New Compliance procedure › Values (Integrity) › E&C to Integrity
2012 – Crisis › Documents to authorities › Investigations › Lawsuits › Allegations
2015 - Operational excellence › Antitrust policy › Duty to report › Hiring of government officials
procedure › United Nations Global Compact
Redefining SNC-Lavalin – What we’ve done
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100 New Management
% 100 New Board
As of December 2017
% NEW
COMPANY Culture
Business Mix
Repositioning the company by divesting non-core businesses
Balancing the sector portfolio and derisking the business model
Creating of a global organization
Integral to our activities
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› Tone from the top › Due diligence of third parties › Governance framework › Compliance risk assessment › Training and communication
› Control measures › Compliance review › Reporting line › Global investigations team
› Disciplinary sanctions › Unbiased consequences › Remediation of systematic deficiencies › Prevention of recurrence › Compensation
Putting the past behind us
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2015 2016 2017 2018
Agreements Public Works and Government Services
Canada – Integrity Regime
Quebec’s Voluntary Reimbursement
Program
Settlement
Administrative Agreement
Commissioner of Canada Elections
Ordre des ingénieurs du Québec Settlement
Shareholders class action lawsuit
2014
Authorization
Autorité des marchés financiers (AMF)
Redefining SNC-Lavalin – What we’ve found
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Change Footer here: Insert > Header and Footer (delete if none)
Our key stakeholders believe this is limited and “fixable”: We have their trust and respect that we’re on the right track. We have been able to retain & build financial strength
despite these issues Secured major government contracts Costs and management distraction have been significant through 2013 to 2016
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Journey to Risk Management Excellence
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Governance (reviews)
Methodology (business processes,
P&P)
Systems Implementation
(supported by IT)
Operational Excellence (GPS functions)
Functional Leadership and
Support
Risk Management
Project reviews Project risk management excellence Risk monitoring and Board reporting Enterprise risk management
Processes and procedures Risk management toolkit
Training Knowledge sharing Functional capability
Project approval systems Risk management / simulation software Systems integration
Global Projects Support - Risk Management
Risk ID, Assess, Prioritization Risk Management
Board
ExCom Meeting
Integrated Workshops
Global Functions
+ Business Lines
Top Risk Theme Owners
Top Risk Theme Owners
Mitigation Strategies Design, Implementation
and Reporting
Actions
Bot
tom
-up
Top-
Dow
n
Tone from the Top
Accountability
Monitoring and Review
Follow-up
Enterprise Risk Management
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Strategic/ BD Financial Operational Compliance Hazards Projects
Risk Universe
Risk Checklist
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Structured Approach to Early Risk Assessment and Review
1. STRATEGIC PLANNING & POSITIONING 2. OPPORTUNITY ASSESSMENT 3. CAPTURE 4. PROPOSAL PLANNING 5. PROPOSAL PREPARATION 6. OPPORTUNITY CLOSING PROCESS PHASES
& DURATION
1. INTEREST 2. PURSUIT 3. PRELIMINARY BID/NO BID 4. BID/NO BID 5. SUBMIT PROPOSAL
Go/No-Go* Bid/No-Bid
Risk Checklist (validate)
Advance Executive Review
ReviewsApApproval
Project Reviews &
Country Position Country Position
(validate)
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Number of projects reviewed and approved by CEO has more than quintupled since introduction of new Levels of Authority (LoA) in 2016
41 30 15 5 11
200
414 12
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2013 2014 2015 2016 2017BIACs (Corporate) BIACs (Group+) Escalated Level 4 Approval Formal Level 4 Approval
# CEO / CFO Project Approvals, by Year
Setting Expectations
Knowledge Networks
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Risk Management Journey – Key Accomplishments
› Effective governance of bidding activity and approvals
› Gaps in risk management framework addressed
› Early engagement of executive management on select bids
› Adoption of recognized industry standard methodology
› Tool-agnostic methodology and process
› Quarterly reporting to Board on mitigation actions and status
› Independent start-up reviews on major projects
› Progress towards risk management culture and active COP
› Processes and systems aligned with business models
› Consistent and unwavering tone from the top
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Risk Management Journey – Lessons Learned
›1. Establish clear position. Set expectations early.
› Levels of authority
› Contracting principles (accepted position and controls)
› Country positions (security, corruption, specific risks and considerations)
› Rules of engagement and organization’s risk tolerance understood by all stakeholders in the process
› Playbook is followed, resulting in improved efficiency and focus
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Risk Management Journey – Lessons Learned ›2. Building risk management capacity – much more than it appears ›a).Talent recruitment and development
› Visibility of job function › Recruitment - career path vs. career development / rotation › Commitment to develop and retain › Required skillset
›b). Risk management function › Knowledge building – commitment to collaborate, sharing of lessons learned and toolkit › Building a cohesive community of peers and SMEs
›c). Value proposition › Perception of project management and team › Ability of risk manager to sell, and create value
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Risk Management Journey – Lessons Learned
›3. Structured Approach to Early Risk Assessment and Ongoing Dialogue
› Iterative process, requiring continuous discussion and feedback
› Few major gates are counterproductive to the target outcome
› Maintain ongoing discussion around risk
› Integration into existing workflows and processes is key
› Risk as a language, risk management as a value
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Risk Management Journey – Lessons Learned
›4. Keep it simple
›Focus on your top risks, manage them exceptionally well (Pareto)
›Overprescribing may be counterproductive to ownership and effective solutions
›Keep the balance right. Process should be commensurate with business model, project complexity and exposure level.
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To be continued..
Our values are the essence of our company’s identity. They represent how we act, speak and behave together, and how we engage with our clients and stakeholders.
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We do the right thing, no matter what, and are accountable for our actions.
We put safety at the heart of everything we do, to safeguard people, assets and the environment.
We redefine engineering by thinking boldly, proudly and differently.
We work together and embrace each other’s unique contribution to deliver amazing results for all.
Our values