Project Management in the Oil and Gas Industry

8.1 Introduction
In Chapter 2, risk assessment for a project is discussed from an economic 
project of view. In this chapter we will focus on defining, controlling, 
and mitigating the risk during project execution, especially in the case of 
construction on site. However, this risk assessment technique can also be 
used at the last stage of the engineering.
When studying risk assessment for a project from an economic point 
of view, the probabilistic studies and Monte-Carlo simulation techniques 
are key in this assessment, which is called quantitative risk assessment. 
But, this method of analysis and assessment requires special software with 
specialized skills. We will discuss applying risk assessment in the execu-
tion phase using qualitative risk assessment tools in detail in this chapter. 
This assessment method does not require a special skill set or software, as 
the main player in this method is the project team members with a project 
8
Practical Risk Management for 
Oil and Gas Projects

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Project Management in the Oil and Gas Industry
leader or facilitator who have experience with the qualitative risk assess-
ment in similar projects.
The risk management of a project is the process of identifying risks that 
could affect the project and how to control them. We must trust that we can 
overcome these risks well, if they are studied scientifically.
In general, risks are events that, if they occur, would affect the outcome 
of a project and, consequently, not satisfy the stakeholder. To be specific, 
there are events or activities that can be performed in a poor manner, thus 
increasing the project cost or time or affecting the quality.
As shown in Figure 8.1, the uncertainty is like the black box, in which 
no one can know what will happen. So, we can say that objectives are 
things that must happen, while uncertainties are things that might 
happen.
Risk management is an ongoing process during the implementation of a 
project until the end of that project. The potential risk is substantially less 
at the completion of the project.
The risks can be classified in two categories:
• Project risks are the risks that can happen during a project 
due to technical mistakes that can occur during construction.
• Process risks are the risks that can occur during the project 
due to procedural mistakes, poor communication between 
the project team, or poor team performance.
In general, there are many sources of uncertainties, especially in the main 
elements of a project, which are cost, time, quality, and HSE as presented in 
Figure 8.1. Our target is to control these uncertainties, try to predict what 
could happen, and avoid it in a reasonable time.