Project Management in the Oil and Gas Industry

ID
Des
crip
ti
o
n
O
w
n
er
P
ro
b
ab
il
ity
H> = 50%
= 3 M 10–50% 
 
= 2
L < = 10%
=1
Ov
er
al
l 
co
ns
eq
u
ence
H = > 500K$
= 3 
M = 50–500K$ 
= 2
L< = 50K$ = 1
M
anage
ab
il
ity
L = 3
M = 2
H = 1
Sc
o
re
M
ax 27
$K if 
risk 
co
mes 
tr
u
e
W
eeks 
de
la
y
If risk 
co
mes 
tr
u
e
Ri
sk
 r
ed
uct
io
n
 
ac
ti
o
n
Da
te
Id
entif
y
Da
te
C
los
e
1
m
an
ufac
tur
er 
deli
ve
ry
o
n
tim
e
SCM
1
3
2
6
T
o
mo
ni
to
r 
p
er
fo
rma
nce 
regula
rl
y
2
p
um
p no
t 
ma
tch
wi
th sp
ecs 
re
q
uir
emen
t
ME
1
3
1
3
Re
vie
w sp
ecs 
wi
th
t
h
e 
ma
n
ufac
tu
re
/
cl
ar
ifica
tio
n 
meetin
g wi
th
th
e v
en
d
o
r
3
anc
ho
r b
o
lt
a
n
d 
dimen
sio
n 
p
rob
lem
s 
du
ri
ng
co
n
str
uc
tio
n
CE
1
1
1
1
Re
vie
w
dra
win
gs 
wi
th mac
hine
4
p
er
mi
ts t
o 
work
f
rom
o
p
era
tio
n
CM
1
1
1
1
a meetin
g wi
th
o
p
era
tio
n
T
abl
e 8.4 
Risk A
ss
essmen
t W
eig
h
t a
n
d M
o
ni
to
rin
g S
h
eet.

---

The History of Graphene 309
5
Sh
u
t do
wn p
la
n 
co
o
rdina
tio
n
C
M
33
21
8
M
ee
ti
n
g w
it
h
o
p
era
tio
n
s
6
M
issin
g b
o
lts 
fo
r t
hief
CM
1
1
2
2
se
cu
ri
ty gua
rd
7
w
ea
th
er eff
ec
t 
du
ri
ng
co
n
str
uc
tio
n
(f
og)
CM
2
1
2
4
L
at
e w
o
rk ho
ur
s 
p
ro
ced
ur
e/ 
te
leco
m.
8
H2S le
akag
e in 
pl
an
t
CM
1
1
3
3
P
ro
ced
ur
e t
o
o
ver
time 
p
o
lic
y
9
S
ec
ur
it
y pass t
o
en
ter p
la
n
t
CM/S
D
2
2
2
8
R
ev
ie
w s
ec
ur
ity 
ev
er
y mo
n
th 
wi
th
t
h
e 
co
n
trac
to
r
10
P
ro
cur
emen
t 
ap
p
rov
al
SCM
1
2
2
4
Sign b
y ha
nd/ 
p
res
en
ta-
tio
n
t
o
ma
nagemen
t
11
lak
e in la
b
o
ur 
la
ng
u
age
CM
1
1
2
2
tra
inin
g ma
tr
ix
12
Pum
p tr
uc
k 
ma
no
eu
vr
e
HS
E
1
2
1
2
Dis
cuss mo
vin
g 
b
y lo
ca
tio
n
la
yo
u
t
(Co
n
ti
n
u
ed
)

---

310 
Project Management in the Oil and Gas Industry
ID
Des
crip
ti
o
n
O
w
n
er
P
ro
b
ab
il
ity
H> = 50%
= 3 M 10–50% 
 
= 2
L < = 10%
=1
Ov
er
al
l 
co
ns
eq
u
ence
H = > 500K$
= 3 
M = 50–500K$ 
= 2
L< = 50K$ = 1
M
anage
ab
il
ity
L = 3
M = 2
H = 1
Sc
o
re
M
ax 27
$K if 
risk 
co
mes 
tr
u
e
W
eeks 
de
la
y
If risk 
co
mes 
tr
u
e
Ri
sk
 r
ed
uct
io
n
 
ac
ti
o
n
Da
te
Id
entif
y
Da
te
C
los
e
13
cra
ne 
mob
iliza
tio
n
C
O
NT
2
3
2
1
2
Chec
k wi
th
t
h
e 
cra
ne
14
la
te o
f co
ncr
et
e 
deli
ve
ry
C
O
NT
1
2
1
2
C
o
nfir
m wi
th
t
h
e 
co
n
trac
to
r
W
h
er
e: CM is t
h
e co
n
str
uc
tio
n ma
nag
er
SCM su
p
p
ly
c
h
ain ma
nag
er
C
O
NT is t
h
e co
n
trac
to
r
SD
s
ec
u
ri
ty depa
rtmen
t
HS
E he
al
th, s
af
ety a
n
d en
vir
o
nmen
t depa
rtmen
t
ME mec
h
anical en
gineer
in
g depa
rtmen
t
CE Ci
vil en
gineer
in
g depa
rtmen
t
T
abl
e 8.4 
(C
o
n
t.)

---

The History of Graphene 311
When looking at the project, everyone may jump to conclusions and 
define what he or she is afraid might occur during the project. In fact, 
when we go through the meeting using brainstorming, we may find the 
output from the following table.
8.9 Operations 
risk
In some old oil and gas companies, due to the mature facilities, their target 
project may switch to a maintenance project. If we make a comparison 
between Project and Maintenance Organization and Culture, it is clear that 
the concept of a project differs fundamentally from that of daily or routine 
operations and maintenance; it follows that a number of principles and 
conceptions of project management must also diverge from those followed 
in the realm of maintenance management.
In maintenance management, we tend, generally, to focus on maintain-
ing the facilities’ reliability during its lifetime production.
Project management may be defined as the planning, organization, 
direction, and control of all kinds of resources in a specific time duration 
for achieving a specific objective comprised of various financial and non-
financial targets.
This should help clarify the difference in outlook of the project man-
ager and the maintenance manager. The project manager’s goal is to finish 
the project on time. Then, he evaluates where he will relocate after finish-
ing the project. On the other hand, the maintenance manager never wants 
daily production to stop and cannot dream of work stopping as distinct 
from the project manager’s goal of overall task completion.
The challenge here is in case of a major rehabilitation project, which is 
a major maintenance project or “brown field” project. So my question: Do 
the engineers in engineering on the construction phase in a brown field 
project have the same competency as the new, “green field” project?
Sure this is a big difference and an example of that. A big construc-
tion contractor performed very big projects in oil and gas, but when he 
obtained a maintenance contract, the company failed because the team and 
his organization is project oriented rather than maintenance oriented. 
The project scope should be defined clearly and any deviations have a 
major control from the site. The project management technique is mainly 
different in new construction from the brown field. As in the brown field, 
the scope cannot be defined precisely, as when you do the construction 
scope, unforeseen circumstances may happen as you are working in mature 
facilities, so change of scope shall happen. Therefore, you should have a 

---

312 
Project Management in the Oil and Gas Industry
management system that overcomes the changes smooth and fast. On the 
other hand, the construction team should have an experience in mainte-
nance and, practically, they do not have this experience. In most cases, the 
team can be easy to work with in construction, but to do the visa versa you 
will fail. Any engineer can work in new construction, but for brown filed 
or maintenance, it depends on experience.
8.10 
Methods of Risk Avoidance
There are many ways to reduce the risk in general and these methods 
depend on eliminating the source of risk or transferring the risk to a third 
party. If this is done with a firm fixed-price contract, the risk is effectively 
transferred to the vendor.
Generally, in firm fixed-price contracts, the vendor will always raise the 
price of the service to compensate for the effect of the risk. In addition 
to that, the warrantees, performance bonds, and guarantees are additional 
methods for transferring risk.
The following techniques can be used to reduce and avoid risks:
• Clarifying requirements and objectives
• Improving 
communication
• Obtaining 
information
• Acquiring 
expertise
• Changing 
strategy
• Reducing 
scope
• Adopting familiar approach
• Using proven methods, tools, and techniques
You can transfer risk by transferring liability and ownership through the 
following:
Financial means:
• Insurance
• Performance bond, warranty
Contractual means:
• Renegotiate contract conditions
• Use subcontractor in parts of the project
• Joint ventures/ teaming
• Risk-sharing partnership with client

---

The History of Graphene 313
• Target-cost
• Note limit to which risk can be transferred 
• Note that transfer usually involves a price tag
Quiz
1. Which of the following describes the BEST use of historical records?
• Estimating, life cycle costing, and project planning
• Risk management, estimating, and creating lessons learned
• Project planning, estimating, and creating a status report
• Estimating, risk management, and project planning
2.
At which step of risk management does a determination of risk 
mitigation strategies take place?
• Risk 
identification
• Risk 
quantification
• Risk response planning
• Risk response control
3.
By which of the following techniques can you calculate the risk 
assessment?
• Arrow diagramming method
• Network 
diagramming
• Critical path method
• Program evaluation and review technique
4. One of the risks your team has discovered is a high probability that the 
separator you are constructing will not perform safely under operation 
pressure. In order to handle this risk, you have chosen to test the sepa-
rator materials and review design. This is an example of risk:
• mitigation
• avoidance
• transference
• acceptance
5. Which part of the risk management process uses data precision as an 
input?
• Risk 
management
• Qualitative risk analysis
• Quantitative risk analysis
• Risk response planning

---

---

315
Bourdaire J.M., R.J. Byramjee & R. Pattinson, 1985, “Reserve assessment under 
uncertainty - a new approach”; Oil & Gas Journal June 10, 135–140.
Cozzolino, J., 1977. A Simplified Utility Framework for the Analysis of Financial 
Risk, Economics and Evaluation Symposium of the Society of Petroleum 
Engineers, Dallas, Texas. Paper 6359.
J. Davidson Frame, Project management competence, J. Davidson Frame and 
Jossey-Bass Inc., 1999. John P. Kotter, Leading change, Harvard Business School 
Press, 1996.
Market P., Gustar, M., and Tikalsky, P. J. (1993) “Monte-Carlo Simulation Tool For 
Better Understanding of LRFD”, J. of Struct., Div., ASCE, Vol. 119, No.5, May, 
pp. 1586–1599.
Michael W. Newell “Preparing for the Project Management Professional (PMP) 
Certification Exam”, AMACO, 2005.
Nikolaos Plevris, Thansis C. Triantafi llou and Daniele Veneziano, (1995) 
“Reliability of RC Members Strengthened With CFRP Laminates”, J. of Struct 
Div., ASCE, Vol. 121, No. 7, July, pp. 1037–1044. Project Management Institute 
Standards Committee. A Guide to the Project Management Body of Knowledge. 
Upper Darby, PA: Project Management Institute, 2000.
Project Management Institute Standards Committee. A Guide to the Project 
Management Body of Knowledge. Upper Darby, PA: Project Management 
Institute, 2004.
“The Modified Delphi Technique - A Rotational Modification,” Journal of 
Vocational and Technical Education, Volume 15 Number 2, Spring 1999, web: 
VT-edu-JVTE-v15n2: of Delphi Technique developed by Olaf Helmer and 
Norman Dalkey.
Rashedi, M.R. (1984), “Studies on Reliability of Structural Systems,” Ph.D. Thesis, 
Western Reserve University, Cleveland, Ohio. Ray Tricker (1997).
“ISO 9000 for Small Business,” Butterworth-Heinemann, 1997.
Rescher(1998): Predicting the Future, State University of New York Press, 1998.
References

---

316 
References
Richard Freeman, (1993) “Quality Assurance in Training and Education,” Kogan 
Page, London.
Sackman, H. (1974), “Delphi Assessment: Expert Opinion, Forecasting and Group 
Process”, R-1283-PR, April 1974.
Brown, Thomas, “An Experiment in Probabilistic Forecasting”, R-944-ARPA, 
1972 - the first RAND paper. Stephen Grey “Practical Risk assessment for 
Project Management”, John Wiley & Sons, 1995.5
Turner, J. Rodney (1993). The handbook of project-based management. McGraw-
Hill, London. “The Building Commissioning Guide,” U.S. General Services 
Administration Public Buildings Service Office of the Chief Architect, April 
2005.

---