The Preliminary Specification Part CVIII (PA Part XII)
Lets be clear, what People, Ideas & Objects are proposing in the Preliminary Specifications Partnership Accounting module is nothing like any other joint venture accounting system. When we begin to account for the Joint Operating Committee as the key organizational construct. Align all of the frameworks of the producer and the JOC together. And then unleash the innovativeness in both the producer and the JOC, the accounting becomes a torrent of activity where no transaction is the same as any other. A little poetic license helps my writing style.
Some of the processes that we have described in the Preliminary Specification have been comprehensive and involve multiple organizations, over multiple accounting periods. Whether that’s the development of capabilities that begins in the Research & Capabilities module, touches on the Resource Marketplace and Financial Marketplace modules, and passes through to the Knowledge & Learning module. Some of these processes carry transactions that are as complex and as difficult to quantify as the process. Some will be for the joint account, some will be for the producer to incur on their own and as we learned in the Financial Marketplace module some transactions might be as a result of an investment being made by an investment group.
We discussed the Work Order system that was able to control the costs associated with a project. The projects contained within a Work Order might be funded by an AFE or a budgeted account, and as a result will be able to control the costs of the project, monitor them and maintain a governance through the use of the Military Command & Control Metaphor of the People, Ideas & Objects system. The Work Order system will be able to designate the ability to charge out the costs to the appropriate owners of the projects at the initialization of the Work Order. Since the Work Order is a multi-organizational system, that is members of a Joint Operating Committee or members of the field services industries will be able to participate in a Work Order, which means they will then have the ability to pre-approve and participate in the project. The accountant working within the Partnership Accounting module won’t therefore be running around trying to seek approval from partners to approve the expenditures to projects that didn’t get approved properly. If everyone within the industry only works to a chargeable work order, and all work orders are approved by those who will be financially responsible for the charges, then the accountants job in chasing their tail is over.
The point of the Work Order system is hopefully not lost on others in the industry. Some may feel that the Work Order duplicates the attributes of the AFE, and I would argue that they are fundamentally different. The AFE approves spending for field level and construction projects of a capital nature. The Work Order system is a means to deploy the capabilities of the producer or JOC in an authorized manner. When we are able to extend the Work Order system across multiple producers, JOC’s and suppliers, the ability to deploy the capabilities of multiple organizations will facilitate the innovativeness that we are seeking in the oil and gas industry. The Work Order may take budget dollars from multiple AFE’s and assign them to a team of engineers that are asked to develop the process necessary to make their firm more capable. Or, departmental budget dollars from two producers may be contributed to a Work Order for their Geologists to attend a conference and conduct research on some promising development. The simple point being that no one does any work without a Work Order to charge their time to, and no Work Order can collect charges that hasn’t had their budget pre-approved.
This will make the Partnership Accounting module workable from the point of view of controlling the costs of the multitude of different arrangements being made within the organization. If the accountants are tasked with trying to put together the costs and determine who is to be charged after the fact, this is how they become the annoying bothersome people they can become. By imposing the Work Order system in this fashion, within the Partnership Accounting module, the arrangements are pre-made and the authorizations are required before the charges can be incurred. Making the accounting for the deployment of capabilities systematic as opposed to problematic.
For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.
Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle and begin building the community for the development of the Preliminary Specification.