The One McDermott Way – evolution in best business practice

McDermott’s Senior Vice Presidents of its four global regions all came together in London to talk to Pipeline Magazine’s Julian Walker about the evolution of project execution and how the company’s One McDermott Way was the focal point of this revolution

Integrating global operations to provide the very best level of expertise to any specific project is the thought process, which has led to ‘One McDermott Way’.

Four of the company’s Senior Vice Presidents got together to explain how the approach is revolutionising the way it does business – and the advantages it brings to customers.

It was a unique opportunity to get Ian Prescott, SVP for Asia Pacific, Tareq Kawash, SVP for Europe, Africa, Russia and Caspian, Mark Coscio SVP for North, Central and South America and Linh Austin, SVP for Middle East and North Africa, and all in one room to outline the firm’s way forward.

Prescott said: “In terms of the One McDermott Way and our one team approach, the four of us work very closely.” He then went on to explain the practicalities of the execution model – and how it brings the company’s operations together.

“Many of our projects are run as Multiple Office Project Execution (MOPEX) to leverage our global expertise, and in practical terms, Asia Pacific is really the engine room of our organisation. We’ve got two significant engineering offices in India, with over 2,000 personnel, that cover both onshore and offshore projects, and in Kuala Lumpur, we’ve got around 1,000 people in our offshore and subsea Centre of Excellence, as well as a subsea and onshore Centre of Excellence in Perth. We also have two large fabrication facilities in Qingdao, China and Batam, Indonesia.

“The ‘One McDermott Way’ looks to enhance our execution structure to ensure we bring the right expertise to that project, but also optimise the economics to deliver value to our customers.

“In Asia Pacific, we have our own customers and projects, but we are also very active in delivering work for projects for the US, the Middle East and Europe too. There is a considerable interface, particularly in terms of engineering, supply chain and fabrication, and we believe with this model we bring a lot of value to our customer’s projects, which is reflected in our US$21 billion in backlog.

“In terms of Chennai and Gurgaon, both offices are well established. Historically, Gurgaon focused on onshore projects globally and Chennai focused on offshore projects. For example, in the Chennai office, we are doing engineering work on Saudi Aramco’s TP10 Project. The Gurgaon office is working on multiple opportunities across the globe, as well as supporting Asia Pacific projects in Australia and India. We are now cross pollinating to ensure both offices have the capability to work share and execute both onshore and offshore projects.

“Our joint venture yard, QMW in China, delivers high quality onshore and offshore modules and FPSO construction. We also have over 120 hectares at Batam, which fabricates both traditional and floating offshore, subsea structures and the growing onshore LNG module market. These yards do a huge amount of construction for projects across the globe too.”

Global nature

Kawash, the SVP of Europe, Africa, Russia and Caspian, emphasised the global nature of the operations.

He said: “As part of my region, we have a Centre of Excellence for LNG in London and Downstream in The Hague and Czech Republic. Those offices serve the globe and the way we do it is through the One McDermott Way, which is really a way to standardise project delivery across the globe.

“It ensures that we have a defined holistic approach, not only for executing projects but negotiating projects, winning projects and then executing projects. So, it provides consistency across the organisation and ensures that we have common discipline.”

Cooperation is a key factor in the One McDermott Way as Austin, the SVP for the Middle East and North Africa explained: “For us it is clear that One McDermott Way was fundamental to our success in winning the award for Saudi Aramco’s Marjan Increment mega-project for packages 1 and 4. These awards are great examples of our MOPEX model at work: project management in Dubai and KL; engineering in Chennai, Dubai, Al Khobar, KL, and fabrication in Batam, Jebel Ali, Dammam and China.  The scale of the projects that McDermott is working on necessitates this integrated way of managing and executing them. For Austin, it is key that they take full advantage of the experience and expertise the company has in their offices around the world. This globally integrated approach applies across both our onshore and offshore projects, large or small in size and also across our matrix-based functional value-chain. This is how we give confidence to our customers and certainty in project execution and delivery.

“One McDermott Way brings together what we believe to be a high quality and very efficient model for the customer, maximising and maintaining our position as a global Onshore, Offshore and Technology business. Our aim is to give our customers what we believe to be the most robust, highest quality and effective solution and that requires thinking outside a specific geographical region,” Austin added.

Push in the Americas

MOPEX is also a large focus for the North, Central and South America area within McDermott, as explained by Mark Coscio, SVP for the region. “In regard to the One McDermott Way, you’ve heard from all my counterparts that we have strong and genuine talent in certain parts of the world that we leverage. So, it’s really the integrated model that we use in our projects. At the end, on one project, we can engineer, fabricate, and provide procurement packages in controlled environments other places around the world, to support projects in the Americas.”

Coscio also touched briefly on the Freeport facility that McDermott is working on.

“The facility has exported two LNG cargoes, which is fantastic. In regard to the customer stating when the facility will become operational, we’ll let them take that lead. I’m hopeful that it’s in the near future. But what I can say is that we are making LNG on site for export.”

India opportunity

Prescott explained that the ‘One McDermott Way’ means the company inherently has strong interaction and integration skills with projects, and the associated internal and external stakeholders around the globe.

Prescott said, “McDermott sees significant opportunities in India. There is demand for increasing domestic supply of LNG, as well as a boom in refining and petrochemicals. We are probably the most significant offshore player on the east coast of India, where we work with Reliance and ONGC. With the combination of CB&I and McDermott, we’ve also got a strong track record to deliver on the numerous and significant opportunities in refining and petrochemical development.

“In terms of our Chennai office, we’ve got a very significant project in India for ONGC, 98/2. It’s a consortium project with Baker Hughes and Larsen and Toubro. We are very proud that we have made that project a ‘Made in India’ project. From the project director through to the vast majority of the project management team and engineering, they have all been delivered by the Chennai office.

“India’s population is growing. In addition, India’s middle class is projected to grow by about 41 percent by 2025. The country is obviously thriving and becoming self-sustainable.  Our CEO, David Dickson, met The Honourable Prime Minister of India, Narendra Modi, at a CEO roundtable in Houston in September, and he emphasised the importance of our India operation going forward.”

Asia growth

Prescott talked about the diverse pool of opportunities, both onshore and offshore in South East Asia, which provides McDermott employees interesting projects to work on and avenues to expand and grow their careers.

“Asia Pacific is quite diverse as it stretches from the west coast of India to the east coast of China, encompassing South East Asia, Papua New Guinea, Australia and New Zealand. Australia and New Zealand are interesting markets, as Australia is currently investing heavily in the LNG sector. A term which gets used frequently in Australia is ‘We’ve built the beasts – we now need to feed them’. We are seeing a lot of offshore developments, particularly in the north west of Australia, to provide gas for these LNG plants. We are working closely with quite a few customers on the early phase of these projects in this area.”

In terms of South East Asia, it’s a massive consumer of LNG. We are seeing a variety of opportunities, from LNG regasification projects, to onshore petrochemical, where the leverage of our Lummus Technology brand, is extremely important in our technology-led engineering and construction strategy.

Leveraging technology

Technology is an important part of the One McDermott Way, said Kawash: “We will be able to bring together projects via the implementation of new technologies with our One McDermott Way. An example is digitization. We are heavily investing in that and we rolled it out on a few projects already and we will have to further invest to roll it out globally.

Through our Lummus Technology group, we have a number of other initiatives which are being worked on across the globe in different parts of the industry, offshore and onshore, downstream and so on, to add value to the hydrocarbon value chain. Having our own Technology group brings us in early to project and provides us an opportunity to pull through the next phases of the project, engineering, procurement, fabrication and construction. We continue to invest in our Technology group such as the recently acquired Siluria Technologies and we continue to explore new technologies to increase our portfolio to produce high value products.”

It is clear from all the SVPs that McDermott is heavily invested in new technologies.

Prescott said: “In India we have our digitalisation office, which is in Pune. That office effectively supports the global digitization initiative, so we can apply that skillset to our global offices for engineering and projects.

“This is on a global basis to interact with our project personnel, looking for opportunities where we can apply digital technology to improve our execution and improve what we deliver to our customers. It’s a relatively new area for the industry and what we are seeing is that our customers are in the process of defining how they want to use digital technology.

“We are working with our customers to try and understand these requirements and we are working closely with our project teams and our vessels, to ensure we can improve our delivery, and make sure that we are optimising the use of digital technology across the organisation.”

Austin added: “The challenge around AI, AR, and Big Data is that we need to understand how this impacts our business - how do we track, how do we monitor? We are starting to look at the market to see how AI underpins what we do, and we are quite excited by the potential of where that can go.

“We are working on real applications in AI and Big Data and the early signs internally show that technology can bring about significant efficiency gains.”

Middle East success

A major aspect of McDermott’s approach is its Multi Project Office Execution, which allows it to harness resources globally. Austin said: “One McDermott Way and our MOPEX model allows a standardised execution approach, helping us in all aspects of project execution.

“One of the big benefits we have here is that we can provide a full suite of offerings locally to the UAE and wider Middle East markets with our fabrication yard, global support resources and project management teams in Jebel Ali. But there is a certain amount of expertise that resides outside of the MENA region when we think of downstream technology requirements.

“What we want to be able to do is enhance our local expertise with specialist capability from outside MENA, whether it’s in London, The Hague or Houston, to support us as we get into some of the more challenging downstream projects. So, for us, it’s not just about being able to drive a MENA project locally, it’s about being able to bring the global scale of McDermott to support some of the more complex projects being executed throughout the UAE. That’s how the model has shifted for us across the last 12 to 15 months to bring that global offering.

“Now our onshore operation is a key part of how we are supporting ADNOC and our Jebel Ali yard is very strong in supporting us. We also now have a pipe shop in Abu Dhabi and we have been exploring how we globalise both areas, but with local hires, local training and expertise.

“We are heavily investing to make sure that we grow in Saudi Arabia with the centrepiece being our new fabrication facility in Ras al-Khair, which is located near the Jubail Industrial City on the Kingdom’s east coast. This is a big commitment from us and we will be able to support the rest of the GCC as well from this facility.”  

Deepwater push in the Americas

Operations in the Western hemisphere are also benefitting from the One McDermott Way approach as well.

As Coscio explained: “In regard to other geographic expansions, in our area, the Americas, we are seeing a lot of excitement around Mexico and Brazil. We are going to be focusing on deepwater, which is taking center stage again in the Americas. And what is exciting for us is that we have a new vessel, the Amazon, which is being converted to an ultra-deepwater J-Lay vessel as we speak, and it will really differentiate us in the marketplace.”

Burgeoning Africa market

Africa is also a key area of focus and Tareq explained the firm’s work on the mega LNG project in Mozambique is a shining example of how they are leveraging expertise from their offices all over the world.

“The Mozambique Area 1 LNG project in Mozambique is a joint venture with Saipem. The project from the McDermott side is being run from our London office. The office in Gurgaon has a big part to play in its execution and we are also utilising some expertise from our Czech office in order to support it.

“In terms of One McDermott Way, the project needs leadership because of its size and complexity, so we called on expertise from around the world. We have people working on the project from the U.S., Peru, and Australia to provide a real global experience. I would say that the project is really a model in terms of how we execute a project in the One McDermott Way.”

LNG future

Coscio sees a shift towards LNG and natural gas around the world in the future.

“Natural gas is the fastest growing and cleanest hydrocarbon, making it part of the global environmental solution.  Even as renewables continue to increase in the energy mix, natural gas will continue to play a significant part for many years to come. LNG is the fastest growing segment of the natural gas market, and McDermott is very well positioned to be a major player in this industry.”

Global approach

It is clear that McDermott’s leadership is committed to this One McDermott way.

Kawash summed up how the company evolved.

“Very early on, we aligned our approach and decided that the only way forward was to bring in a global approach. Although we have different operating regions, we all share the burden and work to help each other out.

“We have progressed very well on cultural integration. It’s about aligning ourselves, agreeing to a common culture and values. We have had a big involvement from across the globe in the integration, it wasn’t a top-down approach. I think that has been critical in that we have made a success of pursing what we call One McDermott Way. We are all aligned and working as one team.”