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8over8; helping you manage your contracts

Thursday, May 16, 2013

8over8 of Northern Ireland reports that the company is growing 38 per cent a year producing cloud software to help oil companies manage contracts - and one clientreckons thatthe software saved them $300m through avoided legal costs

8over8, a software and contracts management company based in Northern Ireland, reports that it is making big strides with its software to help oil and gas companies manage their contracts with suppliers, keeping track of what has been agreed and what changes were subsequently made.

The company expanded 30 per cent in 2011, and expects to expand 38 per cent in 2012, with new offices being opened in Australia, Houston and London.

The company has signed a 'global enterprise agreement' with Shell, for Shell to use its 'ProCon' contract management software, to manage all of their contracts across the company.

Shell will use it for the Prelude FLNG project, the Iraq Majnoon project (for one of the world's largest oilfields), and other Shell projects in Qatar, Norway and Malaysia.

One client estimated that he saved 1 per cent of project costs from using the software, on a $30bn project, calculating this number by comparing the total final cost of a project where the software was used, with similar projects over the past 20 years. Most of these savings were from avoiding legal costs, because the usual post project conflicts with suppliers did not arise.

To give an example of the amount of communications involved between an oil company and its contractors, the project to build the platform for the North Sea Buzzard field involved 100,000 e-mails with contractors, says Gerry McGurgan, director and cofounder of 8over8.

One agreement with a contractor included 16 payments to be made when specific milestones were reached, and behind this were 27,000 electronic communications through ProCon.

ProCon software

8over8 produces the 'ProCon' cloud based software, which can be used to keep an online record of exactly what was agreed with suppliers, what the costs are, which milestones have been reached so far, what communications have been made so far, and which deviation requests have been agreed to.

The idea is that everybody involved in the contract, both financial and operations people, can visit the software whenever they want, to understand how everything is progressing, rather than keeping all the details in various peoples' e-mail boxes.

The software is not customised to any customers. It is hosted on the cloud, with either 8over8hosting it, or the oil company hosting it on their own private cloud system.

The contract with a supplier does more than define who does what - it defines how the relationship with a supplier should work, says Mr McGurgan.

It is common for oil companies and suppliers to find themselves in disagreement after a project, with arguments about who is responsible for various cost increases, and people end up suing each other, Mr McGurgan says.

The software ensures that everybody has a clear idea of what has been agreed when, and who any changes to the project which caused cost increases. The software ensures that none of the critical information is tied up in organisational silos.

If a supplier needs to deviate from the original agreement, the software tracks which individuals at the customer company need to approve the changes, and which ones need to be informed about the changes, and can send out automated e-mails to the right people telling them what they need and making sure tasks are completed.

If a supplier requests a deviation to the project and it is not approved, leading to an increase in costs later, this is all recorded.

Most oil and gas companies still use spread sheets for this sort of work. 'Our biggest competitor is the spread sheet,' Mr McGurgan says.

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