AGL's Sustainable Procurement: A Case Study in Project Integration

This case study provides an analysis of AGL Energy Limited's sustainable procurement journey through the lens of project integration. It begins by describing the Australian gas market, highlighting its regional divisions and structural changes. The study then examines future trends in the gas market, emphasizing cost reduction, digitalization, and talent development. AGL's sustainable procurement practices are outlined, focusing on their supplier code of conduct and risk management processes. The impact of new technologies, such as IoT and digital labor, on end customers and gas producers is explored, along with the effects of Australian LNG's strong position and regulatory uncertainties. Finally, the study proposes a project integration management plan with a focus on procurement, emphasizing clear accountabilities and integrated project teams. This analysis aims to provide insights into how AGL integrates sustainability into its procurement processes within the evolving energy landscape.

Running head: PROJECT INTEGRATION
Project Integration
(AGL’s Sustainable Procurement Journey)
Name of the student:
Name of the university:
Author Note

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1. Description of the gas market in Australia:
Integration management deals with a collection of methods to assure different elements of
projects that are coordinated. This has included the creation of trade-offs taking place among various
alternatives and objectives. This helps in exceeding and meeting the expectations and needs of
stakeholders. Here, AGL Energy Limited is chosen as the case study to understand project
integration. The organisation is involved in distributed energy services, solar PV, electricity and
gases. This is done to more than amount 3.5 million customers present across South Australia,
Victoria, New South Wales and Queensland. They have concentrated over delivering new, integrated,
and innovative offerings for meeting the change in requirements of various customers. This takes
place under the ever-changing scenario of energy. Here, the gas market in Australia is described. The
future trends are analysed. Sustainable procurement practices for the above organisation is outlined.
The effects of innovations over end customers are examined. Lastly, a project integration plan is
demonstrated in this study.
The domestic gas market in Australia has comprised of three different regions. They are
separated on the ground-stone of pipeline and gas basis that supply them. The first one is the eastern
gas region. It is the interconnected gas grid that has been connecting the southern and eastern
territories and states. These gas basins have been supplying the market containing about one-third of
gas reserves of Australia (Mehreen & Underschultz, 2018). Though focusing on domestic sales
conventionally, the market has been going through structural changes on the Queensland gas export
industry that have been developed. Then there is a gas region in the west. This basin of gas of western
gas market has comprised of fifty per cent of gas reserves of Australia. It has been highly focusing on
exports and supplying domestic consumption to the West side of Australia. Then there is the northern

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gas region. This is the smallest producer. This has provided gas to export and use of domestic market
in Northern territory.
Besides, there are various other wholesale gas markets in Australia. It has also consisted of
short-term marketing hubs of trading located at Adelaide, Sydney and Brisbane. Then there are
declared gas market for wholesale in Victoria (Towler et al., 2016).
2. Future trends of the gas market in Australia:
Continuation for managing the complete portfolio has possessed much lower break-even cost.
This is irrespective of real-world oil prices. It is divested that most of Athabasca oil sand business has
been lying on the ground of poor economic having a lesser rate of oil. In future that would only go for
new projects that are profitable at less than about 40 dollars/bbl.
Staying course on cost reduction, collaboration and standardisation: This must ensure that
inefficiencies never creep in back. Supporting high level flow of free cash is vital for gas and oil
operators. Capital will be flowing to AGL delivering positive returns of any commodity price
scenario (Dissanayake, Xia & Wu, 2015).
 Refocusing on investment and efforts on asset maintenance:
Since the price of oil prices has been rising. The operators can be tempted to push various
equipment that is more complicated than to create that. However, having the age of different kinds of
resource, gas and oil companies have been ensuring multiple funds. This is to keep the supply system
with a rapid mode of repair.
 Replacing different owner-operator model along with “owner-only” approach:

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Here the separate returns are a significant priority. Companies with various other sectors that
have gone through the same kinds of downturns. These are forced to evolve and can turn into agile,
healthier and to win volatile markets (Halliday et al., 2016).
 Double down over digitalisation:
Performing operations by leveraging various advanced kinds of digital tools. This is to drive
multiple affectivities. This has also been opening latest scopes.
 Developing talent for the newest era of technology:
Talent profile of industry has been altering. Conventional disciplines like surface engineering
and subsurface have been vital. This has been kept balanced against the latest demand to act in
different kinds of digital operations (Macatangay, 2018). Here, the organisations have been building
various capabilities under the area of software engineering and data science. Thus, for example,
different senior executives under talent management has required to figure out the proper weighting
of technical or engineers with technological or different data scientists and software engineers
employees. This has also included the way how the area has been attracting the latter ones.
 Considering the process in which an overall business should be evolving:
Under long terms, provided with megatrends that have been shaping that sector, AGL must be
focusing to find and perform resilient future-proof strategy. This has been for their distinct
capabilities. Here, the entry into the latest operations of energy is a type of avenue. Further, some
Australian oil companies are found to be investing in different low-carbon plays (Towler et al., 2016).
This has been ranging from conventional renewable energy to more current acquisitions that are
involved in the infrastructure of an electric vehicle.

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3. Outlining sustainable procurement practices:
Having a supply base exceeding 5000 suppliers, the sustainability performances are
influenced by suppliers. Sustainable Procurement program of AGL can be regarded as a total
company-wide approach. This has also been designed for receiving sustainable principles to different
practices of a supply chain. Moreover, AGL has also created a supplier code of conduct in 2014. This
outlines some set of perquisites that the suppliers must have adhered to while getting engaged to
business with AGL. Here, the code has been considering corporate ethics and governances, managing
of risks, policies of labours, discrimination and human rights. Here this code of conduct has also been
supporting systems of AGL procurements (Ali, Suryadi & Weller, 2015). This new framework is
created for aligning better on how various parts of business procure services and goods having
sustainable procurement is an element in supplier risk analysis and processes of supplier selection.
Every supplier, irrespective of results of sustainability threat analysis ate needed to get compiled with
obligations as per AGL supplier code of conduct and finish supplier code of conduct questions
(Maloney, 2015).
4. Impact of latest technologies on end customers of gas and AGL:
Implications for gas:
 Internet of Things or IoT:
It demonstrates how machines, software and devices have been interacting with or speaking to
others in spite of any involvement of human beings. A smart home can be considered here. Here the
sensors have been automatically adjusting the light. Heat and various other functions instead of any
homeowner doing anything. These smart devices are the most widely used applications of energy of

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IoT. The gas and oil industries are adopting IoT to develop their maintenance and monitoring of
facilities (Mehreen & Underschultz, 2017).
 Digital Labor:
This indicates robots and artificial intelligence in replacing human workers to rousingly sober
activities. Most of the gas and oil businesses are found to use digital labour for centralising business
operations and make them more effective. It is the initial area where digital works comprise of
significant effect on this area. Here the utilities can also use digital labour to customer service centres
(Elbarbary et al., 2015). This decreases the wait times. It then increases the accuracy of the responses
and resolves an issue of customers very fast. Thus it is also possible to predict types, timing and
numbers of problems that the customers would base on the severity and type of storms, relative
humidity and temperature.
 Platform companies:
It is the latest method to perform business in the age of the Internet. A conventional business
model can be regarded as the pipeline. Here organisations create services and products and sell them
to respective clients. This occurs linearly. However, on the other hand, the platform model has been
based digitally and allowing businesses to have access to a system and create services and products.
This is adding values. However, how oil and gas would work is still not clear. However, the
platforms are coming (Huddlestone-Holmes et al., 2018). Here, these utilities have been already
utilising that. It has been allowing smart energy market devices for connecting power grids. However,
this area has been facing lots of competitions from external energy sources. Hence this has been
uncertain how much amount on a platform has been providing utilities to that edge.

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Impact on AGL:
AGL has announced commitment over ten years towards their EIP or US-based Energy
Impact Partners in a global coalition. It must be providing the leading edge innovations and strategic
international partnerships. This would take place with other energy associations that are collaborated
with a rising in revenues, cost reduction and deliver customers with smart energy solutions with the
help of innovation (Pour, 2017). Change has been the key to their growth and focused on customers
and investments would provide access to various ideas business models and technologies. It is
beneficial for customers having a higher voice with more customer-intuitive energy solutions and a
decrease in carbon footprint with the evolving technologies of lower-emissions.
5. Effect of new technologies on gas producers:
Effects Discussion
The strong position
of Australian LNG
Here more than two hundred billion is invested in Australian LNG
projects. The expertise affords operators are unique scopes to turn into
world class leaders in maintenance and LNG operations.
Notable traditional
resources
It shows enormous portions of a total perspective of Australian gas
resources.
Substantial untapped
contingent resources
and unusual
perspective
Australia can capitalise on those trends through creating potentially
significant untraditional resources perspective.
Proximity towards
the Asian market
The location has been providing primary benefits on various gas and oil
jurisdictions. It is adequately situated over oil and gas to Asian markets.
High-cost Production and exploration costs in Australia has been high. Here the

7PROJECT INTEGRATION
environment cost of drilling over onshore exploration has been are rising factor. Taken
together, cheaper competition and high prices of a game have been
indicating that Australia has been missing out ion next waves of gas and
oil investment (Janssens-Maenhout et al., 2014).
Uncertainty on
regulatory
Periodically, gas and oil sectors of Australia is of the enormous
success that has been attracting investing because of a stable economy of
Australia with drastic demographic changes. At first, constraints over
onshore explorations has been deterring development and discovery of
unconventional resources of Australia.
Establishment of
social license in
operating
Achieving social permit in producing is a vital activity around offshore
and onshore operations. This loss of social license has been manifesting
the delays in investment and project cancellations. This has hindered
domestic energy securities, damaging Australia’s image as a smart
destination for investment. This has slowed down the financial growth of
Australia (Makhijani & Doukas, 2015).
Declining explosion,
commoditization and
low prices
Having low oil prices and current commoditization of LNG with
investments in upstream gas and oil globally have decreased in current
years. More precisely, lack of exploration investment has delayed
development appraisal of critical unconventional assets of Australia.
6. Creating a project integration management plan focusing on procurement:
Project integration includes developing trade-offs taking place among competing alternatives
and objectives for meeting and exceeding expectations and stakeholders needs. Huge projects on gas
and oil sectors have been facing the same kinds of challenges. This has been turning out to be

8PROJECT INTEGRATION
rousingly complicated and demanding regarding technology (Foster, Wagner & Liebman, 2015).
Here contractors in oil and gas have been following different practices that are prescribed as far as
simple designs are concerned. This is to deliver the goals of time and costs. At AGL, the project has
been facing a network of stakeholders, and thus it is in construction industries and various general
industries.

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 Clear accountabilities under integrated project teams:
This project needs efficient decision making for being successful. They have clear roles and liabilities
with shared interests in project aims. This assures accountability.
 Checking and balancing between project team members and central functions:
This is advisable for AGL to deploy the latest technology, and talented project engineers and talents
had experience over the years, and the previous ones have been retiring. Here the second rate of
ability to that project has been approaching with higher scope and complexities. This helps in
avoiding severe mistakes that delay the longer than intended (Lloyd-Smith, 2016).
 Competency development around capability:
Here a recommendation for a capable system if highly needed. However, this has been not adequate
to satisfy a demand for essential projects in AGL. The business should continuously develop common
project management stakeholder requirement, technical needs, schedules and skills. This is also done
by coordinating between the project team and functional centre. The various areas that are vital and
listed below.
 Engineering
 Risk and scope
 Local content
 Procurement
The procurement has been generally related to vendors. Here some of them has been
rationalising procurement relationships. They have been moving from various shallow relationships

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to lesser to in-depth ones. The grammatical term indicates that different oil companies disengaged
into various multiple contracts having some of the prior vendors. However, there is a maintenance of
relationships having severe vendors that have been delivered efficiently. It indicates the AGL must
hire vendors for executing a project (Beal et al., 2018). For instance, AGL can serve as the vendor to
other gas and oil companies or industries. These sectors are the procurement teams that has been
striking proper balances. Taking place among short-term reduction of cost and optimisation in long-
terms.
 Developing an active culture of cost-consciousness:
Since the pressure of damage has been rising, various procurement teams have been attacking
discretionary spending with cutting small luxuries like coffee machines and reducing training. Here, a
more vital role regarding procurement has involved fostering of culture such that employees can
make proper decisions for themselves. It starts with transparency of systematic cost. Here, the staffs
who have been specifying services and products, who have been purchasing that using that has been
distinct people (Arrhenius et al., 2015). This makes purchasing for complicated. They are to be better
assure that all those categories specifying, buying and using has been staying involved to obtain
decisions and see and understand value and expenses.
Further, procurement teams of AGL have been considering the overall expense of ownership.
Moreover, they have often been overlooking short-term savings. This has been mainly under lean
times. Different applications of total costs of property have been complicated. This is because this has
needed a holistic view over pending around time and functions. Hence, AGL should be involved
earlier as in front-end engineering has been allowing procurement for participating decisions that has
locked most of the expenses (Meng et al., 2018).

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Some of the procurement solutions to be used are highlighted below.
 Using artificial intelligence powered with a resolution of spend analysis:
This is to develop upgraded and granular visibility in every category to spend worldwide and
manage the spending of global commodity movements of market-price.
 Using strategic sourcing:
This is to accelerate complicate sourcing and supplying initiatives of network design strategically.
 Using contract management:
This creates, execute and negotiate creative contracts very fast. This has been comprising of
needed terms that are related to risk avoidance, policy compliances and safety regulations.
 Using supplier management:
This is to accelerate and expand supplier discovery with onboarding and managing complex
supplier audits, safety credentials and certifications.

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