Managing for Project Success in the Oil Patch

Neal Ellis Project Management • Energy • 4 minute read

"The first project manager on any big project will always be fired. Try to be the third or fourth. But beware success - you'll be made the first on the next project."

When your boss surprises you with new project requirements, or as the price of oil sinks lower and lower, how do you respond to keep your project on track? Do you have a contingency plan, and when do you need to activate or protect it?

Near the end of 2014 we attended the Canadian Energy Supply Chain Forum, where Professor George Jergeas from the University of Calgary shared his experience and advice on project management for the energy industry.

Anyone who manages projects in Oil & Gas knows that day-to-day tasks, goals, budgets and basic deliverables can often dominate the process, but Jergeas' comments highlight some big-picture priorities that are easily overlooked, and serve as a powerful reminder of why some projects fail or succeed.

There are risks and human factors that define how projects are executed and assessed, where recognition or blame is directed, and what lessons are ultimately carried forward to future projects.

Every risk has a cost

Projects face three major kinds of risks - operational (internal and organizational factors), strategic (corporate objectives and goals), and contextual (market and societal forces). All three must be managed carefully, but it's particularly important to budget and plan for contingencies against the operational risks - those that aren't a result of top-down scope change or external forces. 

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Try to reserve your extra time or money for these operational risks, since it's sometimes easier to justify new resources when faced with the other kinds - the strategic and contextual changes. If you face internal operational problems, the right contingencies allocated in the right way will help you to weather the storm on your own terms and keep projects on track. 

It's also important to recognize that all risk has a cost, and Jergeas emphasized how that burden isn't always fairly shared.

"Risk gets pushed from the top down to contractors, suppliers - the weakest sometimes get the most burden and risk. We need a collaborative model of trust."

James Mahony explains in a Daily Oil Bulletin piece –

"In Jergeas’ view, the result is that suppliers and contractors will still bid for contracts, but will build into their bids a risk premium to offset any potential liability they’re assuming. The end result will be a higher project cost, ultimately borne by the project proponent.
Boiled down, the 'consequential damages' clause is an effort by project owners to shift the cost and risk of project delays to parties like suppliers and contractors, although those parties, because they are often much smaller than the project proponent, may not be able to bear the burden."

Complex and challenging projects will always be confronted by change, but how we deal with it can make all the difference. When challenges arise, it's critical to respond in a thoughtful way that doesn't compromise the process.

Jergeas recommends maintaining an awareness of the big picture to help keep a project steady, and staying honest about your accountability and responsibility as a leader –

"Buy a mirror and keep it at your desk. Every time you want to blame someone, look in the mirror."

Projects are people

It's easy to get caught up in process, logistics, materials and timelines, but ultimately projects are about people working together to achieve a positive outcome. For projects to be successful, people need to be empowered to act, and trusted to deliver. Jergeas explains –

"When a disaster or controversy happens, you can see the lack of empowered decision-makers in affected organizations. For the first week, nobody does anything."
"Ask yourself - how many heart attacks and divorces on a project? What are our real priorities? Protecting yourself leads to better performance, if your health, your family and your life are in a good place. And this also applies to the partners you collaborate with."
“What do we lack? It’s collaboration, co-ordination and working together as a team. We are in this together. My goal is your goal. My interest is your interest. It sounds old-fashioned, but it’s the only way to succeed. Try it.”

Photo courtesy Flickr / Alanpaone.

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