Northwest Oilfield: Standard Cost Trigonometry Standard Cost Control Method

Within China Petrochemical Company, Northwest Oilfield Company is called "Northwest Corps", which is a tough team that can fight tough battles. Its predecessor was Team 226 of North China Geological Bureau of the Ministry of Geology and Mineral Resources, which was established in 1955 and 1978 and entered Xinjiang. Is one of the upstream oilfield enterprises of China Petrochemical Company, mainly engaged in oil and gas exploration and development and oil and gas sales in Tarim Basin. During the Ninth Five-Year Plan period, more than 100 million tons of Tahe Oilfield was discovered, which attracted worldwide attention. During the Tenth Five-Year Plan period, Tahe Oilfield, the largest complex marine carbonate oil and gas field in China, with 65.438+0.2 billion tons, has been basically discovered, and the exploration field is still expanding.

In the words of Liu Baozeng, the chief accountant of Northwest Oilfield, "This is a screaming team brought by semi-militarization. They played' Populus euphratica Spirit' and' Liu Hong Spirit' in the desert, sprinkling youth and blood for China's energy cause. "

At the same time, under the strong background of "catching up and learning" and "total cost target management" of China Petrochemical Co., Ltd., under the correct guidance of the leaders of Northwest Oilfield, drawing lessons from the advanced management experience of brother companies of Oilfield Plate and combining their own production and operation characteristics, Northwest Oilfield innovatively put forward "two-thirds standard cost".

Specifically, "three points and two aspects" and "standard cost" belong to the extension of the concept of activity-based costing (ABC). The former focuses on process management, while the latter focuses on target management, which complement each other and are harmonious and unified. Use standard cost to "benchmark" and use three points to "catch up". Through the combination of three parts and two parts and standard cost, the target cost and refined management of all staff are finally realized. With regard to the effect of cost reduction, Liu Baozeng predicted that the cost would be reduced by about 65.72 million yuan in 20 12 years.

In the eyes of the industry, it is important that it realizes the target management of total cost through this management method. It is not uncommon to carry out full-cost target management in China, but it is very remarkable to instill it into every pore of employees in Northwest Oilfield.

Create background

The cost control method of "dividing standard cost into two" came into being under the background that China Petrochemical vigorously promoted total cost target management and enterprise refined management.

At the working meeting of China Petrochemical Group held at the end of 2009, General Manager Su clearly proposed to vigorously promote total cost target management. Under the market economy, the competition is increasingly fierce, and the role of cost in the competition is increasingly prominent. Competition is price competition on the surface and cost competition in essence. When prices are consistent, profits depend on costs. If the cost is high, the survival of the enterprise will be threatened. The implementation of total cost target management is an urgent need to promote the sustainable and effective development of China Petrochemical and build a multinational energy and chemical company with strong international competitiveness. Based on a comprehensive investigation of the current situation of the cost management of the group company and focusing on the long-term development of the company, the party group of China Petrochemical Company decided to continue to promote the target management of the total cost of the whole system, effectively control the rapid increase of various business costs, and strive to improve the core competitiveness of the enterprise.

At the same time, in 2009, Sinopec Group put forward the strategic policy of "fighting a tough battle in the new area" and building an upstream "longboard". The oilfield plate requires "fine search in exploration, fine carving in development, actuarial calculation in operation and fine work".

On the basis of Sinopec Group's efforts to promote total cost target management and refined management, in recent two years, Northwest Oilfield has fully implemented the overall requirements of the group company to continuously promote total cost target management, closely focused on the development strategic objectives of the group company, with "comparing, learning, catching up, helping and surpassing" as the carrier, cost target management as the core, and "bidding, benchmarking, chasing and creating bidding" as the means to innovate a set of total cost based on ABC classification. Refine the cost control unit, improve the technical and economic index system, optimize the cost control index, establish and improve the cost target management system and incentive and restraint mechanism, and comprehensively improve the cost management level of the bureau and branches.

However, we should also see that the target management of total cost is a long-term work, and it is also a work that all employees participate in and complete together. Cost management is a work that needs long-term persistence and a long-term mechanism needs to be established. It can't be regarded as a sport.

Therefore, in order to continuously promote total cost target management, we should not only take full participation and target management as the guidance, but also implement a cost management system that is optimized and controlled in all aspects in the whole process of production and operation, so as to better guide enterprises to implement total cost target management and refined management.

Under this background, after two years' exploration, Liu Baozeng, together with front-line employees, innovatively put forward a cost control method of "dividing standard cost into two" in combination with the production and operation characteristics of Northwest Oilfield.

Of course, another realistic background is that with the rapid development of Tahe Oilfield, the difficulty of stable oil reservoir production and the investment of measures have increased, the cost per ton of oil has increased year by year, and the cost control situation has become increasingly severe. How to achieve the target control of total cost through refined management has become an urgent management bottleneck for oil production plants.

In the past, the cost management control of oilfield enterprises emphasized "horizontal to edge, vertical to the end", decomposed according to cost financial indicators, subdivided responsibility objectives step by step, and divided costs into "controllable and uncontrollable". However, in practical work, the mismatch between responsibility and ability restricts the promotion of refined cost management, weakens the intensity of total cost control, and makes it difficult to implement cost indicators.

Operation basis

Since 2009, Northwest Oilfield began to establish a total cost target management system, and improved the responsibility system and operation mechanism, which laid a solid operating foundation for the cost control method of "dividing standard cost into two".

It is understood that Northwest Oilfield has established a total cost target management operation system with "ABC classification" as the working idea, "core indicators, management indicators and unit consumption indicators" as the main evaluation contents and "control degree and progress degree" as the evaluation methods through six standardization constructions (cost subject standardization, statistical caliber standardization, basic ledger standardization, report format standardization, cost accounting standardization and cost analysis standardization). According to the controllable degree of cost indicators, 46 management indicators are set, and a four-level total cost target management system covering all different types of oil and gas production units, internal simulation market and cost control is realized horizontally, and covering the responsible departments of branches, secondary unit departments, grass-roots teams and stations and grass-roots teams vertically.

At the same time, through the activities of "comparing, learning, catching up, helping and surpassing", regular assessment and index ranking not only meet the needs of total cost target management, but also reflect the basic requirements of total cost target management for all employees and the whole process, creating a strong management atmosphere of "striving for the first place and carrying the red flag" within the scope of the branch. In the past two years, through the solid development and steady implementation of all the work, not only the production and operation tasks assigned by the headquarters have been successfully completed, but also the branch company has won the second leading position in the world (it is the only company in the oil field that has set an international leading index) and achieved good performance of making the first contribution in the annual total cost target management assessment of the group company in 201/kloc-0. The capital occupation rate of return (34.33%), return on total assets (39.9 1%), operating profit rate (42.05%) and cost profit rate (72.9%) continue to rank first in China Petrochemical Company.

On this basis, we break through the idea of cost management in Northwest Oilfield and boldly practice the cost control method of "dividing standard cost into two". According to the idea of activity-based costing, production leads to activities, products consume activities and activities consume resources. The production process runs through every post of oil and gas production, and the operation of every post involves the cost driver. From this perspective, the cost is controllable. Therefore, as long as the activity-based cost drivers are found in the production process, the nodes of the drivers are accurately located, the influencing factors are analyzed, the safeguard measures are formulated, the post operation is standardized, the financial and non-finance technology indicators are adopted, and the assessment indicators are set to ensure the cost optimization of each node, so that the bottom-up cost control situation of the back-up maintenance team, the team maintenance detachment and the detachment maintenance oil production plant can be formed.

"three points and two sides"

In the cost control method of "standard cost three points", "three points" refers to elements, nodes and grades, and "two points" refers to the whole production process. It takes the oil and gas production process as the main line and the activity-based cost driver management as the starting point, carefully analyzes the causes of cost formation, analyzes the influencing factors through "bidding, benchmarking, bidding pursuit and bidding creation", formulates safeguard measures, standardizes post operation, sets assessment indicators, ensures the cost optimization of each node, and truly achieves the equality of responsibilities and rights, and all costs are controllable.

"Trinity and integration" integrates the concept of refined cost management into every link of production and operation, which coincides with the requirements of total cost target management.

Xie Hongyong, vice president and chief financial officer of Tahe No.3 Oil Production Plant in Northwest Oilfield, participated in the whole process of exploring the method of "three points and two roads". In his view, "three points and two roads" is a way for Northwest Oilfield to base itself on its own reality, break through the cost management ideas, boldly practice the current management model, and realize the target management of all staff costs. According to the idea of activity-based costing, production leads to activities, products consume activities and activities consume resources. The production process runs through every post of oil and gas production, and the operation of every post involves the cost driver. From this perspective, the cost is controllable. Therefore, as long as the activity-based cost drivers are found in the production process, the nodes of the drivers are accurately located, the influencing factors are analyzed, the safeguard measures are formulated, the post operation is standardized, the financial and non-finance technology indicators are adopted, and the assessment indicators are set to ensure the cost optimization of each node, so that the bottom-up cost control situation of the back-up maintenance team, the team maintenance detachment and the detachment maintenance oil production plant can be formed.

Xie Hongyong, taking Tahe Oil Production Plant No.3 in Northwest Oilfield as an example, pointed out that Tahe Oil Production Plant No.3 mainly took the following measures at the implementation level:

1, set the target. Divide the expenses into various departments according to the responsible subject and concentrate them according to the important expenses; Key cost, key control; General expenses, daily management as the principle. Scientifically set up cost control nodes: primary node 13, important node 6, key node 5, general node 2, and secondary node 47, in which important node 19, key node 12 and general node 16.

Moreover, at the beginning of this year, the oil production plant signed a target responsibility letter with the departments and detachments, and the detachment signed a target responsibility letter with the team, which realized that the cost management of the oil production plant has goals at all levels, and the responsibility for cost control is implemented step by step, extending the source of cost control to the source of production.

2. Leaders take the lead. The oil production plant has set up a project management committee headed by the factory leader and a special management team headed by the factory director and department heads, which are respectively responsible for the overall promotion and the implementation of the special cost element node work.

3. Put it away. In order to ensure the smooth implementation of activity-based cost driver control management, No.3 Oil Production Plant has steadily promoted total cost target management from three aspects: node, factor, control, organization, system, analysis, target, standard and evaluation.

The application of "three points and two roads" in Tahe No.3 Oil Production Plant has changed the extensive management mode in the past, played an increasingly important role in production and operation, and various economic and technical indicators have also shown the momentum of gradual improvement. 20 12 1? In June, the cost operation of No.3 Oil Production Plant was generally stable, with the cash operating cost lower than the annual budget 1.29 percentage points and the cash operating cost per ton of oil lower than the annual target of 5.48 yuan/ton. Focus on financial management in 20 12 years. In the first half of the year, the cost and fees were reduced by 52%, and the potential income was 5 1%. The main financial indicators have achieved the expected results.

"standard cost"

In the cost control method of "dividing standard cost into two parts", "standard cost" refers to the cost that should occur under normal production conditions and efficient operation, is the standard of human and financial resources consumption around business objectives and various production and operation activities, is the yardstick to realize the most economical and optimal cost input of enterprises, and is the forefront of the work of "establishing, benchmarking, chasing and creating standards" for all staff cost target management. The standard cost building is ".

Since 2009, Northwest Oilfield has standardized the consumption of single well, single station and single equipment, implemented the cost target to departments, teams and posts, regularly analyzed the difference of cost consumption, found out the reasons, scientifically evaluated and effectively encouraged, and realized the transformation from post analysis to pre-control in management.

The standard cost system refers to the cost control system which is designed around the relevant indicators of standard cost, integrates the cost standard into the whole process of operation, and organically combines the feedforward control, feedback control and budget function of cost. Through the construction of standard cost, all departments and units pay more attention to the reasons why various operations and facilities deviate from the standard. Through the analysis of cost drivers, we can more accurately grasp the root causes of differences, change the past concept of focusing only on results and not on drivers, and truly achieve targeted management and specific measures in place. Insist on starting from the source, organically link cost management with all links and factors that affect costs, infiltrate cost management into all links of production and operation, carry out systematic management, continuously improve the economic benefits of oil fields, and gradually realize two changes, that is, from the local control of the financial department in the past to the overall management control, and from the traditional concept of "saving, saving" to the concept of efficiency. The full implementation of total cost target management has changed the previous mode of focusing on cost mainly by management and created a good atmosphere of "everyone has indicators on his head and everyone has responsibilities on his shoulders".

The standard cost has three characteristics. First, comprehensive. Taking each operation unit of the oil production plant as the control object, a four-level control network of department-unit-team-post is established, and working standards are formulated at each management level, forming a cost management network covering all employees. It covers all operational processes and cost elements, and realizes the all-staff, all-process, all-factor and all-round management of costs, which is all-round. The second is stability. When the level of production technology changes little, the standard can be used continuously without frequent revision. The third is motivation. Based on the cost of each activity, it can be used as a measure to evaluate the performance of the activity, set the goal for which employees strive, and constantly benchmark, chase and create standards.

In the construction of standard cost, the experience of Northwest Oilfield is that building a team, determining the structure, exploring methods, sorting out the process and establishing the mechanism are the important secrets of its success.

To form a team, the attention of company leaders is the key. Northwest Oilfield has established an executive body under the guidance of the headquarters leaders, and the leaders of each factory are personally in charge, ensuring the high efficiency of implementation.

Quota structure and standard cost broaden the new idea of total cost management, improve the management level of cost control, improve the management level of enterprises, and improve the economic benefits of production and operation. In order to implement it smoothly, the standard cost construction must first formulate the management structure. (Chart 1)

Exploring methods, the core of standard cost is standard, so the establishment of standards must first explore various methods. (Chart 3)

Sort out the process, on the basis of standard cost formulation method, sort out the operation process to ensure impartial implementation. (Chart 2)

In the construction of standard cost, the establishment of working mechanism is the guarantee. In terms of coordination, the project team should organize special meetings regularly to understand the progress and solve key and difficult problems. In terms of assessment, the project team conducts assessment and acceptance of the work at each stage, gives timely feedback, urges rectification, and promotes benign operation.

Deepen application

Using ABC activity-based costing for reference, Northwest Oilfield not only locates it in the cost accounting system, but also relies on the decomposition of activities and the analysis of cost drivers, which makes the cost management sink to the front line of enterprise production, closely analyzes what activities caused the activities around the actual business, and uses it as a method and tool for analysis, evaluation and performance appraisal by measuring the quality of completed activities and whether the resources consumed by the activities are appropriate.

In the northwest oilfield, the method of "dividing standard cost into two" is not only used for cost control, but also for reservoir management, and has achieved good results.

For example, in the aspect of reservoir management, the factors causing decline are divided into four aspects: reservoir, wellbore, mechanical production management and ground factors, totaling 9 categories, 28 subcategories and 88 subcategories. According to the dynamic characteristics of 88 subclasses, the corresponding prevention countermeasures are formulated, the node control method of fractured-vuggy reservoir element system is put forward, and the node decline control manual of natural elements in old wells is compiled and quickly popularized. It has realized the transformation from extensive management to fine management, effectively controlled the decline of oil fields, and the decline rate has steadily decreased.

It is understood that Northwest Oilfield adopts the method of "dividing the standard cost into two" to analyze information, improve the business chain, and try to carry out it in the fields of business management, production management, cost reduction and efficiency improvement, corrosion control of ground systems, and employment optimization of oilfield professional service teams, and all of them have achieved good results.

In addition, "the standard cost is divided into two parts" deepens the comprehensive budget management and truly implements the budget.

Rome was not built in a day. The application of the method of "dividing standard cost into two" has played an important role in improving the cost management of Northwest Oilfield, but one point cannot be ignored, which is also repeatedly emphasized by Liu Baozeng. This point cannot be separated from the attention of several "top leaders" in Northwest Oilfield (including Jiao Fangzheng, former general manager of Northwest Oilfield, now vice president of China Petrochemical Co., Ltd., director of oilfield exploration and development division, and Liu Zhongyun, current general manager of Northwest Oilfield). Without the foresight of leaders, there will be no continuous improvement of the system and the establishment of a long-term mechanism.