Function Activity Planning Flow (FAPF) Enables Annual Business Planning in Matrix Organizations: PDO Engineering Function as a Case Study

Abstract Objectives/Scope The purpose of this paper is to contribute to the body of knowledge by providing a business planning process called Function Activity Planning Flow (FAPF) which was developed inhouse. This FAPF is aimed to overcome a key business challenge especially in a matrix-type organization of having different Key Performance Indicators (KPIs) that should serve the same organizational purpose between Engineering Function and its business operations (i.e. Assets and Project delivery). This challenge always led to inefficiencies and lack of leadership commitments on what matters most to the organization. The scope of this work is including the engineering function within PDO, its core business operations (Assets) and project delivery directorate as key stakeholders. The engineering function of the largest oil and gas company in Oman, Petroleum Development Oman (PDO), is taken as a case study to share the learnings and lessons. Methods, Procedures, Process In this work, misalignment between the engineering Function and core business units is analyzed, challenged, and improved through the development of the Function Activity Planning Flow (FAPF) as part of the annual Business Planning (BP) process. FAPF was developed after analyzing the challenges from the past three years, going through a sequential explanatory methodology. The primary design was inspired by Hoshin Kanri HK (Jolayemi, 2008) and was followed by multiple iterations of development within PDO over 6 months to eventually endorsed by the engineering executive director. Results, Observations, Conclusions The primary purpose of this FAPF was to link functional business delivery to the corporate strategic goals and resolve Function versus Assets misalignment. However, after implementation, many additional benefits were discovered and achieved. For example, business planning activities became smoother and more seamless, resulting in a reduction of the Business Plan cycle time by almost two months, leading to major improvements in process efficiency and effectiveness (full-time-equivalent savings). Another key observation during this business plan cycle was the clarity and line-of-sight provided by the newly developed flow to all relevant stakeholders. Moreover, it helped quantify the annual Function contributions to the core business units (Assets business plans) and facilitated the formation of a digitalized business planning tool called "An-Namuw" (Arabic for "Growth"), a powerful tool designed to follow-up and track the execution of the annual approved functional activities. This had a significant impact on making informed decisions and driving strategic discussions. Novel/Additive Information The Function Activity Planning Flow (FAPF) considers both vertical and horizontal alignment by design. The top-down alignment creates a direct line connection between the engineering teams' KPIs and PDO's ultimate purpose, while the horizontal alignment enhances integration across the engineering domain to achieve the intended results. This Flow was developed in a practical manner, leveraging an existing approach and adding critical alignment elements that perfectly fit a Function/Asset Matrix organization. No such framework has been thoroughly designed and implemented in the region with proven practical outcomes.