A study charter/ policy is a declaration – before commencing any work – that aligns the study to the corporation’s strategic goals, outlines the terms of reference and scope of work to be established, and defines study boundaries (inclusions/exclusions, also sometimes called ‘battery limits’). Essentially a study charter is like a compass – it sets direction and accountability.
Study charters must have a good strategic fit with the business objectives – things like sovereign risk, commodity, size, complexity, funding strategy, technology and so on – and are tailored to each project.
The results and findings of a good study places decision-makers in a position to consider the project’s value proposition – technical and economic viability – and risk profile. Poor project delivery happens all too often, with flow-on detrimental effects on the business and its reputation, and decision-makers need to be accountable for directions they take. So, it’s critical to do the right thing – thorough assessment – first, before trying to do anything the right way.
The interface between the business case, study team and operations is often where problems arise. A clearly communicated business case ensures that all aspects are well understood and that there’s good alignment between the study parts. While every project is unique, it’s important to adhere to a predefined set of minimum standards or guidelines but also adopt a flexible approach in applying these. The business case being thoroughly understood by relevant stakeholders relies on full transparency – this is critical.
A value proposition presents the technical and economic viability (or otherwise) of a study and links to the study charter. Presentation of the value proposition must ensure there’s transparency, and messaging needs to be done in a balanced and audience-matched way, using an appropriate level of detail.
While owners accept that risk is inevitable – transparency is key – it’s about having sound mitigation strategies that minimise impact (supported by adequate budget and resources). It’s always better to understand risk early on than to get nasty surprises later. It’s reasonable to expect that the level of accuracy will be different for different aspects of the study and that in places, the level of accuracy will fall short. Gaps should be addressed as part of a forward works plan.
A sustainable business case is one that optimises sustainable project economics (long-term sustainability trumps short-term investment returns), manages external factors, aligns with stakeholder expectations, meets regulatory requirements and demonstrates sound understanding of the market.
Learn more about what a study charter is and why is it important to have one?
Learn more about how we can support in planning and developing projects using the Enthalpy Capital Investment System.