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Archive for May, 2010

Water below 32F.

How nice
is ice
for drinks,
methinks.
And for
bad pain.
But not
the lane.

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In my early business life, I used to commute by train from Bryn Mawr, Pa., to Philadelphia on the suburban “Paoli Local” train. Bought the NY Times every morning for the crossword puzzle.

I’d find a seat among all the business suiters with their papers all spread out, checking the sports or the money or even the op-ed. My paper would be folded in a neat quarter to one of Will Weng’s masterpieces.

At first I had to use pencil, and the erasers grew short now and again. Then I started using pen, going light on the guesses and writing over them when I had something certain.

It took 19 minutes and about nine other stops for the train to arrive at 30th Street Station, the west Philadelphia Parthenon, crossroads of the Broadway Limited and east coast Metroliner. In the beginning, I’d have some crossword left for the afternoon.

Then I congratulated myself when 19 minutes became my average and I could toss the paper in the trash on the way downstairs from the train.

But after that came the dreadful moment when I realized I was actually beginning to read the news….

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30 years of success tell me how to write a winning proposal:

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Start by sniffing around similar completed contracts, ask the client directly about funding if possible, and find out how much the job is really worth.

Cut that amount by 5-15%, depending on total, to edge out competition.

Bring in all your players early to assess the job and contribute ideas.

Make a rough project completion chart. Clarify each step and estimate time to completion. Make the most of overlaps between tasks, just like a construction plan. Cut where needed to suit project requirements.

Clarify and/or prenegotiate questions with client whenever possible. Usually, the more communication, the better.  Asking and not getting any answer is better than not asking, and it demonstrates that you are taking an intelligent approach to the proposal.

Figure out the fixed costs (supplies, travel, etc.) and add fair carrying cost (5-20%) to each item.

Figure out the labor.  Add a realistic overhead. Use industry norms to help you. Underestimating overhead can break you.

Subtract from the total any clever/unique technical and financial approaches you can offer to lower the costs.

Allow enough time to polish and deliver the proposal, preferably sans all-nighters.

Negotiate with intelligent questions, forthright answers, good research, and a pleasant eye toward reasonable compromise. Introduce your experts. Refine or re-estimate any tricky items.

Back out if you don’t like the deal. If you do want the job (99% of the time), establish meaningful ties with the client for this and future work.

On receiving a contract, acknowledge immediately. Clarify remaining questions. Get to work right away (sometimes you can even do this in the proposal stage).

ALWAYS discuss and renegotiate with the client immediately when you encounter any obstacles regarding cost overruns. The longer you put this off, the worse it will hurt.

–Sandy Dechert

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Image: http://buyinbg.com/english/useful-info/how-to-buyers-guide/

The author has 30 years’ experience working on $10,000 to multimillion-dollar proposals for Fortune 100 companies, federal, state, and local governments, educational and charitable institutions, and public interest groups.  She credits Phoebe Barsby Booth, Anne Shelmire Jack, B. Fritts Golden, John W. Rogers, and Gene Grace Gilroy for getting her started.

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Photographs (c) Sandy Dechert
Worldwide rights reserved in all media.

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Damage to energy production from natural forces such as hurricanes or incidents in the Middle East is certainly more than regretful.  However, it pales in significance compared to disasters such as the collapse of BP’s Deepwater Horizon oil rig on April 20.

Today’s Washington Post reviews a range of long-term consequences.  High seas could push oil deep into the waterways of southeastern Louisiana. A south wind could send oil to the Mississippi, Alabama and Florida coasts by next week. And the forecast is “likely” that the “loop current” 3,000 feet deep in the Gulf of Mexico, will pull the oil as far as the Florida Straits between the Keys and Cuba, from which it could flow into the Gulf Stream, affecting beaches on the East Coast.

At least two other major oil-producing nations, Norway and Brazil, have used the acoustic switch, a backup wellhead control unit, for over a decade to prevent accidents like this one. Even without government standards, on their own initiative several large oil companies (Royal Dutch Shell PLC and France’s Total SA) routinely use this means of shutting off undersea pumping.  These other states and companies appear to care more than the US and BP do about human life, petroleum waste, and environmental fouling.

In the United States, the Minerals Management Service has regulated petroleum development in the United States since 1982.  It was created during Ronald Reagan’s administration to take the heat off the Interior Department and streamline the drilling process.  MMS was quietly pro-drilling then, during my time as a consultant on a nationwide petroleum information contract mandated by Congress in 1976.

According to the Wall Street Journal, MMS rejected the remote acoustic switch device for oil rigs in US waters in favor of “other back-up plans to cut off a well.”  Indeed, MMS gave the rig’s builder a safety award as recently as last year.  CNN noted several days ago that BP suggested in its MMS-mandated 2009 exploration plan and environmental impact analysis for the well “that an accident leading to a giant crude oil spill and serious damage to beaches, fish and mammals was unlikely, or virtually impossible.”

In the absence of national or international rules to mandate backup protection, and relying on the reputation of the Transocean contractor, who built the rig, as “one of the industry’s most safety-conscious and experienced deep-water drillers,” BP decided the $500,000 cost of the acoustic switch was too high.  (According to the Guardian, BP posted a $5.65 billion first quarter profit this year.)

The leadership of the corporate giant did not spring for it on the Deepwater Horizon.  Instead, BP used only one of two other available safeguards (the hard-wired controller and the deadman switch).  The company did not use the industry-preferred controller, and the deadman switch installed on the Deepwater Horizon did not work.  Thus corporate negligence and the failure of the US government to protect our shores cost eleven lives, $6 million a day (current spending by BP alone) to “contain” the spill, and the destruction of the rig, a $560 million investment.

The recent record of this supercorporation seems to have forecast the Deepwater Horizon disaster. In March 2005, an explosion at a Texas refinery damaged the environment, wasted petroleum resources, killed 15 people, and injured 170.  BP accepted full responsibility for this incident. More seriously, four years ago BP caused the first shutdown ever in the largest oilfield in the US.  BP’s inadequate maintenance (failure to “pig,” or measure the wall thickness of the pipe, to locate potential weakness) and failure to mend the affected 16 miles of the 30-year-old Trans-Alaska Pipeline entirely cut off our oil from the immense Prudhoe Bay field.  Conoco Phillips and Exxon Mobil (which caused the 11 million-gallon Valdez disaster) were also implicated.

Turning off the valve stopped almost 10% of the nation’s domestic oil production for weeks. Neglect of the pipeline system caused President Bush to release of oil from the U.S. Strategic Petroleum Reserve, cost the consumer 3 to 5 cents more per gallon, caused an ireversible impact on the fragile tundra, and preceded the rise in petroleum prices to over $100 per barrel.

Alaska holds 30 percent of the nation’s recoverable oil and gas.  The US Geological Survey has estimated that the North Slope of Alaska may hold 163 trillion cubic feet of technically recoverable natural gas remains to be discovered on the North Slope. Point Thomson,  Alaska’s largest undeveloped oil field, has the potential to contribute hundreds of millions of barrels of oil and trillions of cubic feet of natural gas.  Also, tremendous potential exists for responsible oil and gas development of the Alaskan Outer Continental Shelf, which has 27 billion barrels of oil and 132 trillion cubic feet of natural gas. OCS oil could nearly double the amount of oil transported through the TAPS and provide more needed energy for our nation.

What else is new?  The Alaska Gasline Inducement Act, one of the cornerstones of the Sarah Palin administration, has authorized another pipeline.  This one is proposed for natural gas from Alaska’s North Slope, which holds known gas reserves of about 35 trillion cubic feet.

The proposed Denali pipeline, either a joint venture of BP and Conoco-Phillips, or a rival gas pipeline project sponsored by TransCanada and Exxon Mobil, would run about 1,800 miles and will deliver about 4.5 billion cubic feet a day of natural gas to North American markets.  It would come into service in or near 2020.  Cost estimates for these projects range from $32 billion to $41 billion.

The energy, environmental, and military prospects of the nation may depend on statistics like these.  The president must rely on them in charting America’s future.  Industry watchdog Chuck Hamel relates this to the bottom line for the individual:  “You and I are going to still buy our gas, and whatever the price is, we’re going to pay for it.”

President Obama is now caught between national environmental and military concerns and the profits of “supermajor” petroleum companies–a very hard rock and a very hard place.

Will offshore drilling slow the demise of our supply of black gold?  Will the new Alaska gas pipeline result in 250,000 to 303,000 U.S. jobs and $220 – $650 billion in savings for gas consumers, as predicted?  Will the Treasury and the GDP actually gain from these measures?  Will war in the Middle East simmer down with a more self-sufficient American economy?  Will we be able to slow climate change enough if we cancel out use of lower-carbon fuel and renewable resources by allowing outrageous waste, ecological degredation, and profits for the few, and growing fewer?

Our prospects rest unsteadily on suppliers known for gross negligence and driven by greed on a colossal scale.  Naturally, the price of crude oil spikes, oil and gasoline futures rise, and windfall profits occur during each major incident.  Lawsuits by shrimpers and municipalities are mere mosquito bites compared to the big prizes.

Is it true that as in Nero’s time, greedy government and corporate leaders fiddle, while Rome–the Gulf of Mexico, the US, and the rest of our once-green planet–burns?

Sources:

http://online.wsj.com/article/SB10001424052748704423504575212031417936798.html

http://money.cnn.com/2006/08/07/news/international/oil_alaska/index.htm

http://www.reuters.com/article/idUSN0712021020100407

http://gasline.alaska.gov/about.html

http://www.democracynow.org/2006/8/10/did_bp_purposefully_allow_its_alaska

http://www.ktuu.com/Global/story.asp?S=10032914

http://www.usatoday.com/news/nation/2010-04-30-bp-documents-oil-spill_N.htm

http://quicktake.morningstar.com/stocknet/san.aspx?id=333938

http://www.guardian.co.uk/commentisfree/cifamerica/2010/apr/28/oil-rig-deepwater-horizon-disaster

Photo:

http://www.thatsfamous.com/1472-deepwater-horizon-oil-rig-explodes-thick-fire-ensues/


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