BP plans overhaul after ‘dreadful’ results

Business Materials 22 October 2007 04:03 (UTC +04:00)

BP is developing standard operating processes in the hope of reducing complexity and improving costs after years of inadequate performance.

Details of the procedural overhaul emerged as BP prepared to unveil third-quarter results on Tuesday that will reflect "dreadful" operating performance.

"We have established a set of high quality common processes for each of the most critical technical activities,'' said Andy Inglis, head of exploration and production, in a confidential e-mail to staff, seen by the Financial Times.

"Strategic performance unit leaders will be expected to set a standard for operating excellence and implement those common processes which are most important to delivering that business performance.''

Mr Inglis's e-mail sought to give staff detail about how Tony Hayward, the new chief executive, intended to restore BP's competitive edge. Safety lapses in recent years in the US have shown the oil major's decentralised approach had made it unwieldy and unmanageable.

He repeated Mr Hayward's admission to staff that performance had fallen short in a competitive sense, and cited inconsistent execution and erosion of individual accountability. The company had become inefficient and too complex, he said.

Many business units which had enjoyed considerable autonomy under Mr Hayward's predecessor Lord John Browne, will be "progressively eliminated" in favour of strategic performance units. BP would "standardise more of what we do", Mr Inglis said.

Strategic performance unit leaders will be accountable for performance delivery. Formerly, dozens of people signed off on any action and responsibility was unclear.

BP is also developing "centres of expertise" in Houston, Texas, and Sunbury in the UK to pool resources and leverage the company's skills base. This contrasts with the current situation where, according to an unnamed employee, experts are spread all over the organisation and nobody is sure whom to contact.

In addition, Mr Inglis said, BP would invest in training and teaching, neglected for years. according to documents that have emerged from the many assessments of BP's US safety lapses. ( FT )