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CONTRACT MANAGEMENT IN SHELL

NEVI Contract Management Dag

14 March 2013

Amersfoort

Amersfoort

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DEFINITIONS AND CAUTIONARY NOTE

The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this announcement "Shell", "Shell Group" and "Royal Dutch Shell" are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words "we", "us" and "our" are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. "Subsidiaries", "Shell subsidiaries" and "Shell companies" as used in this announcement refer to companies in which Shell either directly or indirectly has control, by having either a majority of the voting rights or the right to exercise a controlling influence. The companies in which Shell has significant influence but not control are referred to as "associated companies" or "associates" and companies in which Shell has joint control are referred to as "jointly controlled entities". In this announcement, associates and jointly controlled entities are also referred to as "equity-accounted investments". The term "Shell interest" is used for convenience to indicate the direct and/or indirect (for example, through our 23 per cent. shareholding in Woodside Petroleum Ltd.) ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.

This announcement contains forward looking statements concerning the financial condition, results of operations and businesses of Shell and the Shell Group. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management's current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Shell and the Shell Group to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward looking statements are identified by their use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect", "goals", "intend", "may", "objectives", "outlook", "plan", "probably", "project", "risks", "seek", "should", "target", "will" and similar terms and phrases. There "expect", "goals", "intend", "may", "objectives", "outlook", "plan", "probably", "project", "risks", "seek", "should", "target", "will" and similar terms and phrases. There are a number of factors that could affect the future operations of Shell and the Shell Group and could cause those results to differ materially from those expressed in the forward looking statements included in this announcement, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell's products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such

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CONTRACT MANAGEMENT IN SHELL



Introduction



How contract management fits within procurement



Shell’s contract management principles

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(5)

Contract

Management

Business

Needs

Market

Analysis

Supply

Chain

Cost

Modeling

Strategy

Selection

Sourcing

&

Award

Planning

And

Appraisal

Delivery

Commitment

Delivery

CATEGORY MANAGEMENT & CONTRACTING PROCESS

Resources

(Staff & Budget)

Requirement

(wants & needs)

Suppliers

Value &

improvements

Delivery

options

Contract

Mgmt

Plan

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CONTRACT MANAGEMENT PROGRAMME

Key principles:

o

Efforts fully integrated with the Business

o

Aligned/integrated with parallel category & supplier management programmes

Four primary contract management themes:

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CONTRACT SEGMENTATION

Segment and manage contracts

to efficiently deliver contracted

value

Segment and manage

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ROLES IN CONTRACT MANAGEMENT



Contract Owner

- resourcing, budget



Contract Holder

- accountable for all elements of contract

management

Contract Management Team to support

Contract

Owner

Contract

Holder



Contract Management Team to support

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CONTRACT MANAGEMENT TOP QUARTILE

Five Top Quartile elements:



Shell resourcing



HSSE management



Contract Management actions



Commercial housekeeping



Contractor delivery

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MODEL CONTRACTS LIBRARY



Introduction of a Group wide Model Contracts Library (rather than

>10,000 different contract forms)



Compulsory for all contracts related to purchases of goods and

services, including complex projects



Kept centrally and updated once per annum for any major

changes



Exceptions will require approval from Legal

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Good

Effective Contract Management will make a difference

it’s up to you!

CONTRACT MANAGEMENT PERFORMANCE

Va

lu

e

Poor result due to improper

Performance & Relationship

Management

Good

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