Company Background
The company is a leading global provider of
integrated engineering, procurement,
construction, and installation (EPCI) services for the
energy sector. With a rich history spanning over
a century, the company has developed a reputation for
executing complex offshore and onshore
projects, particularly in the oil and gas industry. It
specialises in delivering innovative and sustainable
solutions for its clients, focusing on offshore
platforms, subsea infrastructure, and energy transition
initiatives. The firm operates a diversified portfolio,
serving both traditional fossil fuel markets and
emerging renewable energy sectors. With a global
presence, it leverages its extensive experience
and technical expertise to deliver large-scale projects
that meet the evolving demands of the energy
landscape.
Problem Statement
The company, being an EPCI (Engineering, Procurement, Construction, and Installation) firm, undertakes numerous projects for some of the largest oil and gas companies globally. A critical responsibility of the treasury team is ensuring the successful execution of both prospective and awarded projects by effectively managing bank guarantees. Key issues include:
Bank Guarantees and Asset Pledging
- Bank guarantees are issued by financial institutions against the pledged assets of the company.
- The guarantee limit is determined by the value of the pledged assets and is subject to a cap specified by the issuing bank.
Monitoring Guarantee Utilisation
- It is essential to closely monitor the utilisation levels of guarantee facilities provided by banks to ensure that sufficient guarantees are available for both current and future projects.
Challenges Due to Manual Tracking
- The company currently relies on manual tracking for managing issued Letters of Credit (LCs), bank facilities, project completion stages, and timelines for prospective project awards.
- This manual process has led to significant discrepancies in treasury reporting, including:
- Defaults in the issuance of guarantees for awarded projects.
- Loss of potential project awards due to the inability to issue new guarantees in a timely manner.
Solution
Collaboration for Forecasting
The optimal way to track bank guarantee needs is through collaboration between projects and commercial/sales teams, ensuring each phase’s requirements are forecasted accurately.
Data Integration
Data from project accounting, commercial/sales, and treasury teams are siloed, hindering analysis of bank facility utilisation. The solution is an enterprise data platform for unified analytics.
Analytics and AI Implementation
The integrated platform enables forecasting models that factor in project status, sales, and facility utilisation. AI will use historical data to improve prediction accuracy for bank guarantees, optimising facility use.
Benefits
40%
Improved Utilisation
Improved Adherence to Bank Guarantee Utilisation
Achieves a 40% improvement in adherence to bank guarantee utilisation guidance provided by the treasury team to project teams.
50%
Reduced Manual Effort
Reduced Manual Effort
Reduces manual effort across multiple teams by 50%, simplifying the process of preparing management reports.
40%
Faster Report Preparation
Faster Report Preparation
Decreases the time required for preparing statutory reports by 40%, leading to more efficient compliance and reporting processes.
20%
Optimised Bank Guarantee
Optimised Bank Guarantee and LC Utilisation
Results in a 20% reduction in overall bank guarantee requirements due to better tracking and AI-driven predictions, which optimise the utilisation of Letter of Credit (LC) facilities.
Technology Levers
