Saudi Aramco GI 287.001 FULL COSTING

What this document doesn't explicitly tell you, but every seasoned Aramco finance professional knows, is the sheer pain and effort that went into the 'full costing' process pre-2016. Imagine month-end close for a major facility. You'd have data trickling in from various SAP modules – FI, CO, PM, MM – but then there was a significant amount of manual massaging required to get those costs to 'roll up' and be allocated correctly to specific products or profit centers. It wasn't uncommon for teams to be working late into the night, wrestling with spreadsheets and custom reports, trying to reconcile discrepancies. The old 'cost sheet accountability reporting' mentioned was often a struggle to produce, and by the time it was finalized, the data was already somewhat stale. The real value of the eSight and PCM implementation, beyond just automation, was the enforcement of standardized data structures and allocation rules across the entire company. Before, different departments might interpret cost allocation rules slightly differently, leading to 'ghost' costs or costs that magically disappeared between departments. This new system aimed to eliminate those grey areas. A common unwritten rule back then was to always triple-check your source data, especially anything involving inter-company transfers or shared services, because that's where most of the discrepancies would arise. Another practical tip, learned the hard way, was to build strong relationships with the IT support teams and the accounting policy department. When the system threw up an unexpected error or a cost wouldn't allocate as expected, their insights were invaluable. This wasn't just about pushing buttons; it was about understanding the underlying business logic and how it was translated into the SAP configuration. The transition itself was a massive undertaking, requiring extensive training and a significant cultural shift from manual reconciliation to trusting automated processes. Many feared losing their jobs to automation, but in reality, it freed up finance professionals to focus on analysis rather than data crunching.

Comparing Aramco's approach to cost accounting with international standards like those espoused by the International Accounting Standards Board (IASB) or even internal reporting for majors like ExxonMobil or Shell, you'll find similar principles but often different levels of granular detail and internal control. Aramco, as a national oil company and a key economic driver for Saudi Arabia, has historically had a very strong emphasis on comprehensive cost visibility, not just for financial reporting but also for national economic planning. While other majors might focus on segment reporting for external investors, Aramco's internal drivers often pushed for a deeper dive into the cost of every single operation, down to the cost per barrel from a specific field or the cost of a gallon of desalinated water. The implementation of SAP PCM, in particular, aligns Aramco much more closely with international best practices for activity-based costing and profitability analysis, which many Western IOCs have embraced for years. Where Aramco might be stricter, or at least more detailed, is in its internal allocation methodologies, especially for shared services like IT, HR, or even the sprawling medical services provided to employees. The sheer scale of these internal services means their accurate allocation is critical for understanding true business unit profitability. The 'why' behind this rigor is multifaceted: ensuring accountability across thousands of cost centers, optimizing resource allocation within a vast and complex organization, and providing the Saudi government with precise data for economic planning and revenue forecasting. The cultural aspect also plays a role; there's a strong emphasis on meticulous record-keeping and adherence to established procedures, which translates into a demand for highly detailed and auditable financial data.

Common pitfalls during such a transition, and even after, often revolve around data integrity and user adoption. One major mistake during the implementation of eSight and PCM was underestimating the complexity of migrating historical data and ensuring its consistency with the new system's logic. I recall instances where cost centers were mapped incorrectly, leading to entire departments' expenses being misallocated for months, only discovered during internal audits. The consequence? Inflated or deflated profitability figures for certain business units, leading to flawed operational decisions. To avoid this, rigorous data validation protocols are essential, not just during migration but continuously. Another pitfall is inadequate user training. When users don't fully understand how the new system works, or they try to force old processes onto the new system, you get errors. For example, if a field supervisor doesn't correctly categorize an expense in SAP PM, that misclassification flows through to PCM and eSight, distorting the unit cost for their operation. The solution here is continuous training, clear documentation, and a readily available support structure. Furthermore, month-end closing, even with automated systems, remains a critical checkpoint. Errors often surface when the system tries to 'settle' costs from WBS elements or production orders. A common mistake is not clearing open items or settling internal orders on time, which then prevents the final cost rollup. A proactive approach involves daily monitoring of key cost objects and transaction flows, not just waiting for month-end. Finally, audit findings often highlight discrepancies between reported costs and actual operational activities. This usually stems from a disconnect between the finance system and the physical operations. For example, if a project is physically complete but its WBS isn't technically closed in SAP, costs can continue to accrue, leading to an inaccurate picture. Regular reconciliation between physical progress and financial reporting is key to preventing such issues.

For someone applying this change in their daily work, the first thing is to understand that the 'black box' of full costing has been opened and, in theory, made more transparent. You need to leverage eSight. Don't just look at the high-level numbers; drill down. Understand how your department's costs are being allocated within PCM. If you're a field supervisor, this means ensuring your requisitions and work orders are correctly coded, as this directly impacts the cost of your operations as reported in eSight. If you're in finance, it means trusting the system's automated allocations but also knowing how to trace a cost from its origin to its final destination in the product unit cost. Always remember that while the system automates, garbage in, garbage out still applies. The accuracy of your product unit costs and operational statements in eSight is directly proportional to the quality of the data entered upstream. Engage with the Business Intelligence Solutions Department (BISD); they are the new custodians of this process and can provide invaluable insights into how costs are now being determined. For month-end, actively monitor your cost centers and internal orders throughout the month, don't wait for the last week. Use the standard SAP reports and dashboards to identify anomalies early. The goal is to move from reactive problem-solving at month-end to proactive cost management throughout the cycle. This GI isn't just a historical footnote; it represents Aramco's commitment to cutting-edge financial intelligence, enabling better decision-making from the wellhead to the corporate boardroom, and ultimately, contributing to a more efficient and safer operation.

* **Old World (Pre-2016, with GI 287.001 active):** You'd likely go to the project's cost accountant or financial analyst. They would pull data primarily from SAP's FI/CO modules, potentially generating a 'cost sheet' or similar report that detailed the full cost of operating that specific plant area. Your justification would then tie into those numbers, showing how the safety investment reduces 'full costs' like incident rates, downtime, or regulatory fines. * **New World (Post-2016, GI 287.001 cancelled):** The traditional 'cost sheet' you knew is gone. Now, when you need detailed unit cost or activity-based costing information, your primary source isn't directly from SAP FI/CO. You'll need to engage with the Business Intelligence Solutions Department (BISD) or a dedicated financial analyst who is proficient in **eSight** and **SAP Profitability & Cost Management (PCM)**. This is a critical distinction. Simply asking for 'the full cost' from someone who still thinks in the old SAP module structure won't get you far. You need to frame your request in terms of 'product unit cost determination' or 'operating statement analysis' within eSight. Your justification should now align with how eSight presents operational costs and how your safety investment will positively impact those specific metrics.

**Scenario 2: You're a Field Safety Supervisor investigating a near-miss incident that involved equipment failure, and you suspect maintenance budget cuts might have played a role.**

* **Old World:** You might have asked for maintenance cost breakdowns directly from SAP, looking at specific work orders and associated material/labor costs. You'd try to connect these to the 'full cost' of operating that piece of equipment. * **New World:** Again, the data source has shifted. While SAP still holds transactional data, the consolidated, 'full cost' view is now primarily in eSight. You'd need to work with your superintendent or a financial contact to access the relevant **eSight operating statements** for that equipment or department. These statements supersede the old cost sheets. The key here is understanding that the 'Profitability & Cost Management' system is where the 'full costing' logic now resides, managed by BISD. So, your questions around budget cuts and their impact on equipment reliability need to be directed towards how these elements are reflected in eSight's operating statements and PCM's cost allocations.

**Scenario 3: You're auditing a contractor's safety performance and need to understand the 'true cost' of their operations to assess their financial commitment to safety.**

* **Old World:** You'd ask the contractor (and verify with Aramco finance) for their full cost breakdown, including direct and indirect costs, and how safety line items were integrated. This was often a convoluted process. * **New World:** While contractors still have their own internal costing, for Aramco's internal project cost accountability, the focus is on the **eSight operating statement**. This means when you're looking at the project's financial health from Aramco's perspective, eSight is the authoritative source. If you're trying to gauge the contractor's *actual* safety spending from Aramco's cost records, you'll be looking at how those costs are captured and reported within the eSight framework, which now handles the 'full costing' aspect. It's less about a direct 'full cost' report from SAP and more about interpreting the data presented in eSight, which reflects the new PCM logic.

**Key Takeaway for the Field:** The term 'Full Costing' isn't dead; it just lives in a different house. That house is primarily **eSight** for reporting and **SAP PCM** for the underlying logic, both managed by **BISD**. Your go-to person for detailed, consolidated cost information is no longer necessarily the traditional SAP FI/CO expert. You need to connect with those who understand eSight and PCM. This change was about efficiency and more accurate profitability analysis, but for those of us in the field, it means knowing where to knock on the door for the data we need to make informed, safety-critical decisions.

This shift also highlights the increasing integration of IT and finance. Understanding the basic architecture – SAP's transactional data feeding into PCM for cost allocation, which then populates eSight for reporting – is more valuable than trying to navigate old SAP transaction codes for 'full cost' reports that no longer exist in their previous format. Always ask for the 'eSight operating statement' when you need a comprehensive view of costs related to an operation or project.