Dear Mike,

A lot of the needs listed in Tim's memo will also be needed in NY, but on a 
smaller scale.  I'll put a resource requirement memo together by the end of 
the week and then we can determine who would fit these requirements and where 
these people should come from (London/Houston).

I think this project would be a great opportunity for some 
analysts/associates (of course working under experienced personnel).

Regards

Shona
 




Mike Jordan@ECT
08/14/2000 02:56 AM
To: Tim Poullain-Patterson/LON/ECT@ECT
cc: Richard Sage/LON/ECT@ECT, Fernley Dyson/LON/ECT@ECT, Andrew 
Cornfield/LON/ECT@ECT, Shona Wilson/NA/Enron@Enron 

Subject: Re: MG Integration : Resource Requirements  

A good tee up - and one we should regularly reassess - here goes some initial 
feedback which you should push back on :-

Valuation review - resource requirement to be defined in detail by Andy in 
his new role - I think the offer from Eric of finding some Analysts and 
Associates for the short term assessment may be the immediate answer.

Balance Sheet substantiation - at present I assess the power and gas 
substantiation process as priority - although we should review the resources 
coming free from Global ( Chris and Rashpal ) as they may not be easily 
useable by Raewyn - Chris is free at present and Rashpal promised for 
Thunderball. Whilst I am as concerned as you are we should reassess level of 
risk because
AA would have done ( could do more ? ) some substantive / due diligence on 
balance sheet
The trade accountants at MG had a simplistic entity structure based around an 
infrastructure where the AS400 did both the DPR and account posting  - unlike 
our own systems - so inherent risk is lower ( excluding inventory )
we must make certain our efforts are aligned to Fin Ops !

Inventory - interesting one this - it should be very accurately controlled 
already ( it is the business ??? ) yet the problem is that it is not 
transparent at the consolidation level. I would like you to get David Tregar 
to assess the level of risk with you ( and discuss with me and Philip Lord 
the current securitisation of inventory ) before we put an action plan in 
place for this balance sheet category

Integration / Controls - you should continue your efforts to bring the MG 
priority to the functional stripe leaders' agenda - after Friday's meeting 
they know the effort required are that recruitment is key

SAP - we will look to Michael Heap on this ( but we did identify some key 
business analysis work for Kevin Rhodes to be done ASAP - we should track 
this )

Remote offices - continues to be the dog that has not barked ( YET ) - 
Richard, you and I need to rethink where we are  - particularly with South 
America

Overall - we both agree more resources are required but they have to be 
scoped quite precisely !

Thanks for the note




Tim Poullain-Patterson
11/08/2000 18:59
To: Mike Jordan/LON/ECT@ECT
cc:  

Subject: MG Integration : Resource Requirements

Mike,

As you know we still have a very full issues list and we are spreading the 
few resources we have on ground pretty thinly, leaving a residue of partially 
completed tasks that will need to be revisited at some point. Also, though we 
are leveraging MG staff where we can, we have already made an assessment that 
their support infrastructure is very lean - this is being stretched to 
breaking point by the RW acquisition and various Enron integration 
initiatives, e.g. establishing functional teams.

At present we have the following resources on the ground:



We are continuing to identify issues that add to our assessment of 
operational risk. If we are to reduce this risk to an acceptable level we 
need to commit additional resources to the project. 

I assess our current resource needs as follows:

Valuation Review : the valuation review that Andy and I performed prior to 
"effective control" date identified a number of complex valuation issues that 
require further quantitative analysis. Also, there is imbedded optionality in 
a lot of the physical business transacted throughout MG which should be 
modelled to determine the correct valuation and accounting treatment (and if 
there is any extra value to be extracted - Eric Gadd has recently prioritised 
this!). Requirement - risk manager with developed quantitative/modelling 
skills.

Balance Sheet Substantiation : a comprehensive validation of balances 
including a review of reconciliation's, evidence of account ownership 
(detection of "88888"'s accounts etc...) is overdue. Requirement - lead 
accountant plus two juniors.

Inventory : a lot more analysis is required of the global inventory balances 
- see earlier note to Eric Gadd. Requirement - one/two risk manager(s).

General Integration : having now identified the functional leads for MG in 
London,  we are now due to involve the "stripe leaders" in the process of 
creating the functional groups, including identifying gaps in resourcing. I 
will not prejudge the outcome beyond saying that each functional group will 
need extra staff that I am expecting the "stripe leaders" to provide. 
Requirement - to be determined by "stripe leaders".

SAP : ??? Requirement - to be determined by SAP project team.

Remote Offices : the above requests relate to the London office only. Having 
identified Enron Controllers for the offices in the Far East I do not 
envisage significant issues integrating those offices. However, I have 
minimal understanding of what our requirements in the US and South America 
are, and propose deferring that discussion to another time...

Regards,
Tim