75 VALUE CREATION AT YINSON RISKS AND OPPORTUNITIES PROJECT COST OVERRUN Definition and impact of the risk on Yinson With active project exploration and acquisitions in the FPSO and renewables segments, Yinson is bonded to contractual obligations and expected to deliver the required scope of work within the agreed contract value. However, there are potential circumstances where the risk of project cost overrun arises due to unprecedented events or poor execution, which may impact the cash flow and profitability of respective projects. How we manage or mitigate the risk • Continuous review and improvement of project cost management. • Enhancement and improvement of the Project Standard Procedure for better screening, which can be utilised for reference for future projects. Moving forward (opportunities) • Exploring potential frame agreements with major suppliers to achieve better pricing. • Explore technical optimisation to reduce project costs. PROJECT DELAY Definition and impact of the risk on Yinson In the FPSO business, the entire project phase, starting from approvals of the Front-End Engineering Design (“FEED”), preparation and review of procurement schedule and project budget, contract review and signing and finally, the construction and commissioning, is required to progress according to the project timeline which has been committed to the client. A major delay of more than 30% of the project timeline is considered as extreme and may result in significant consequences to the Company. The inability to complete the required deliverables as per the stipulated timeline may lead to penalties, Liquidated Ascertained Damages (LAD) charges or potential contract termination, which can cause reputational damage to Yinson. How we manage or mitigate the risk • Establishing a Responsibility Assignment matrix, which is the Responsible, Accountable, Consulted, Informed (RACI) matrix for each department within the projects that outlines tasks, milestones, key decisions and roles. • Efficiency through partnership with AVEVA, in which data and analytics from assets are integrated with our project management systems, such as the Completion Management System (CMS) and Computerised Maintenance Management System (CMMS). Moving forward (opportunities) • Exploring potential frame agreements with major suppliers to achieve better delivery lead time. • Exploring technical optimisation to reduce delivery lead time.
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