UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ HOANG TUYET MAI PERIODICAL REVIEW POLICY AND PROCEDURE FOR THE SMOOTH OPERATION MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City – Year 2019 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ HOANG TUYET MAI PERIODICAL REVIEW POLICY AND PROCEDURE FOR THE SMOOTH OPERATION MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: DR. LE THI THANH XUAN Ho Chi Minh City – Year 2019 Hoang Tuyet Mai _ Thesis for Master of Business Administration Page 2 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com TABLE OF CONTENT EXECUTIVE SUMMARY. WORK CONFLICTS AND UNSATISFIED EMPLOYEES. Policy and procedure development.
Problem definition and consequence. Initial effect map. Problem during initial policy and procedure development of the division. Lack of periodical review, update of policy.
Updated cause and effect map. Final cause and effect map. Improve analysis and research and enhance communication. Improve too general policy and procedure.
Periodical review, update of the policy. 76 Hoang Tuyet Mai _ Thesis for Master of Business Administration Page 3 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com EXECUTIVE SUMMARY Policy and procedure is an important part of each company, it contributes to success of the company. Policy and procedure help the company work smoothly, it is the manual for every employees and through all departments. It is the guideline and the effective training for newcomers.
Developing and implementing policy is a process of continuous improvement, there is never a moment because the company continues developing. Policy and procedure periodic review is as important as preparing period. The company with out of date policy and procedure is as no policy and procedure. The thesis focuses on researching the policy and procedure of the external division of AB Petroleum Company.
From interviewing managers and employees as well as studying reports, policy and procedure of the division and the company, the author has found out serveral problems during the period of policy development of the Division as well as the lack of periodic review of the policy and procedure. Based on study literatures, researches as well as interview relating personnel, author has given solutions (i) the company should establish a preparing and reviewing team of policy and procedure to enhance communication as well as knowledge share during period of policy development and periodic review (ii) policy and procedure should be detailed to guide users from various departments (iii) set the procedure for periodic review of policy and procedure to always update changes to ensure adequacy and effectiveness. Hoang Tuyet Mai _ Thesis for Master of Business Administration Page 4 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ACKNOWLEDGEMENTS I would like to acknowledge all who supported me during my study without whom I would not be where I am today. I would especially like to thank my supervisor – Dr.
Le Thi Thanh Xuan and professors of ISB for all their advices and guidance. Without their help, this could not have been possible. I also would like to show my gratitude to my colleagues at work and classmates at ISB for their continuous supports. I also send my sincere thankfulness to my parents and friends for their support and encouragement.
Hoang Tuyet Mai _ Thesis for Master of Business Administration Page 5 LUAN VAN CHAT LUONG download : add luanvanchat@agmail. INTRODUCTION There are many challenges for organization when they want to expand their business. The organization needs to identify the appropriate organization structure and operating mechanism as well as prepare their new policy and procedure for the best management control system. If not, it will impact on the existing operation of the organization.
Good new vision and mission allows the organization growth on the right way. Good organization structure equips the organization with the best skilled personnel as well as. Good procedure and policy helps organization always compliant with law and consistent with existing policies and procedures of the company. Moreover, policies and procedures are an essential component of any organization.
Policies address important issues, such as what constitutes acceptable behavior by employees. Procedures, on the other hand, clearly define a sequence of steps to be followed in a consistent manner, such as how the organization will respond to any policy violations. All these readiness help the companies succeed to gain their goals and objectives. Hoang Tuyet Mai _ Thesis for Master of Business Administration Page 6 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.
BACKGROUND INFORMATION AB Petroleum operating company (ABPOC), who was established in 2009, is a branch of Petro Vietnam and an operator of AB project invested by two parties of Petro Vietnam (PVN) and Gazprom International (GP) for exploration, development and operation of gas and condensate offshore Vietnam. In operation period, AB company has two positions as the operator and PVN’s branch. The below chart shows potions of AB company and agreements in which the company must comply during their operation. ABPOC ABPOC as an operator of ABPOC as the branch of PVN PVN and GP for block A&B Product sharing contract External Service Division (PSC) Joint Operation Agreement Authorization Service (JOA) Contract contracts Authorized Sole Risk Joint operation Operation Operations (if any) Source: Created by Author based on function of AB Company Figure 1: ABPOC’s operation position chart Hoang Tuyet Mai _ Thesis for Master of Business Administration Page 7 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.
Operator position ABPOC is nominated, with consent of GP, as the operator of PVN under Product sharing contracts (PSC) between PVN and GP to operate the block A&B offshore. ABPOC operations based on contracts and agreements including The main activities of ABPOC as an operator are management and conduct of all joint operations, sole risk operation and authorized operations (if any) in the joint operating agreement (JOA) as permitted and required by the parties based on a principle of no-gain and no losses, within the scope of JOA and PSCs. Subject to respective PSCs provisions, all joint property (except petroleum), all joint petroleum allocated to the contractor and all costs and obligations incurred in conduct of the joint operations shall be owned and borne by the parties in proportion to their respective participating interests which at the date are as follows: PVN: fifty one percent (51%) GP: Forty nine percent (49%) Joint operations are all petroleum operation includes management, maintenance and exploiting petroleum (gas and accompanied condensate). This operation is in line with the provisions of PSC and JOA for and on behalf of all the Parties.
The cost of this operation shall be chargeable to the joint account. Authorized operations are the operations, other than joint operations which parties authorize the Operator to carry out and on Parties’ behalf. Currently, ABPOC is authorized by Parties (PVN and GP) to the management of gas and condensate selling operation. For avoidance of misunderstanding, costs relating to such operations shall not be directly charge Hoang Tuyet Mai _ Thesis for Master of Business Administration Page 8 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com to the joint account, but shall be monitored on another account.
Profit for authorized operations after deducting of all obligations with government will be transferred to Parties’ accounts. Sole risk operations are operations and activities carried out by less than all Parties. The cost of which are chargeable to the account of Sole Risk Party. Sole risk party is a party who participates in the sole risk operations.
Currently there is no sole risk operations carried out by parties. To enable operator to maintain the joint operation, on or before the 28th day of each month, the operator shall furnish each party with a cash call request the advances for month following the next month (“cash call month”). The amount requested in a cash call shall be the Operator’s estimate of the amount required from each Party to enable the Operator to defray the net cash payment, being cash payment less cash receipts, due in cash call month under obligations properly incurred by operator in connection with the joint operations, authorized operations and sole risk operations (if any) separately. This thesis only focuses on the joint operation.
Figure 2: ABPOC development stages 2009 2012 2013 2017 2033 Exploration period Development period Drilling period Operation period Source: created by Author based on operation periods of ABPOC Hoang Tuyet Mai _ Thesis for Master of Business Administration Page 9 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com The development period started in 2009 with the main scopes including feed design, engineering, procurement, construction, installation, commissioning, tie-in and hook-up of 02 drilling platform, 01 processing overhead platform, 03 subsea pipelines and 01 floating storage offloading (FSO) Drilling period started in 2012 with the main scopes including drilling of 16 oilfields. Operation period started in 2013, the products of the project including gas and accompanied condensate. Gas exploiting from oil field after being proceed at overhead platform is transferred to export pipeline for selling. Accompanied condensate after exploiting is directly transferred to FSO for selling.
Exploration period works through the project time to (i) provide instruction and information on seismic or geological to drilling campaign and exploiting operation as well as (ii) explore new oilfields. Branch of PVN - External Service Division In 2011, ABPOC was authorized by PVGAS to conduct a 26 inch gas export pipeline system from BDPOC platform to 2nd Nam Con Son Pipelines with 3% management fee which are paid after completion of the scope of work. In 2016, authorization contract came into closing out and making payment. In the same year, ABPOC with an approval from PVN established an External Service Division as the branch of PVN which the main purposes are (i) To solve remaining issues to close the authorization contract Hoang Tuyet Mai _ Thesis for Master of Business Administration Page 10 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com (ii) To seek for opportunities for external supplying service contracts.
Company will hire its engineers which have 3 weeks off after completing 3 week working offshore for external call-out jobs. (iii) To optimize internal resources. For example, use internal manpower instead of out-sourcing for maintenance works. Company will hire its engineers which have 3 weeks off after completing 3 week working offshore for internal call-out jobs.
Operating costs for this division will be from 3% management fee of authorization contract. The yearly profit after deducting all costs and tax will be transferred to PVN. Financial statement In the role of branch of PVN, AB has established the external division which began to operate since 2015 and had its own financial reports since 2016. Looking at the income statement of the division for three year 2016, 2017 and 2018, they all show that the division had no direct expenses (especially labor cost and material cost), the reports only presents indirect expenses including travelling expense, workshop expense, etc.
According to the research of Gunn12 on the goal of tax accounting, the reports of the company may violate the principle of matching of costs and revenues. For this reason, it can be said the financial statement of the external division does not correctly reflect the actual expenses of the division. Hoang Tuyet Mai _ Thesis for Master of Business Administration Page 11 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Contract 2016 2017 2018 name Reven Expense (mil Revenue Expense (mil Reven Expense (mil ue VND) (Mil VND) ue VND) (mil Direct Indirect VND) Direct Indirect (Mil Direct Indirect VND) expens expense expense expense VND) expense expense e Authoriza 4,000 0 2,864 1,500 0 532 884 0 232 tion contract Service 1,000 0 0 contract Total 4,000 2,864 3,500 0 532 884 0 232 Source: created by Author based on financial statements year 2016, 2017 and 2018 of ABPOC Table 1: Data of revenue and expenses 2.