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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Pennsylvania's Hidden Abandonment Legacy

Neal Ellis Environment • Energy • 1 minute read

Interesting story in The Guardian about Pennsylvania's incredible number of abandoned, undocumented wells - roughly estimated to be 200,000 - and their impacts. Their state Department of Environmental Protection is working to find and track the wells, but it's a monumental task that is progressing slowly - only an estimated 5% have been logged so far.

"No one knows exactly how many abandoned oil and gas wells litter Pennsylvania or the US. The state’s Department of Environmental Protection estimates the number is close to 200,000. Some estimates are a little lower, some much higher. Across the country, the number could be more than a million. Most of the wells are relic of of a time when states didn’t bother to regulate much of what happened on private land, including oil and gas drilling, and when most Americans didn’t think twice about a seemingly esoteric issue like the environment." - The Guardian


Since 1984 new regulations in the state have required oil and gas companies to register and plug abandoned wells, but the legacy of prior drilling is a stark reminder of the importance of forward-looking environmental stewardship for today's O&G industry.

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The Cloud for Oil and Gas

A great piece from UK-based Oil & Gas consultancy Progressive, about the benefits of cloud computing for the O&G industry. While many businesses are embracing a new generation of cloud-based software and services, O&G companies (and their environmental consultants) are uniquely situated to see major benefits from moving to the cloud.

"...whilst being amongst the sectors that stand to gain most from cloud technologies, the adoption rate within Oil & Gas is slower than other sectors. Largely due to sensitivities around data security; safeguarding trade secrets and protecting intellectual property, but are these perceived threats real or just a hangup from the past? What specific advantages could Oil & Gas companies gain from the implementation of a cloud based IT system?"

"Early adopters will see the benefits, reap the rewards, free up time, be more productive, open their operations to expert consultants and gain a significant competitive advantage. As comfort grows around hosting IT in the cloud, opportunities to extend the benefits will be recognised and we’ll see companies continue to invest until our devices are simply portals."

"Knowledge transfer and collaborative working is vital to the efficient utilisation of expensive human resources. Cloud networks maximise productivity, providing a platform for real-time collaboration across your entire workforce and network of consultants."

Read Chris Walcot's whole piece over at the Oil Council website.

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