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Project FailuresWhat the BP Disaster Can Teach Us About Management

David Gritz

September 2011

At a Glance Disasters mark a spot in time upon which those directly affected and the greater society can reflect. The BP oil spill is an event of that magnitude. From the rising action and terminus of the event, there are lessons to be learned about management

The BP Deep Horizon StoryThe oil spill in the Gulf created more than $40 billion in direct damages. It was a culmination of a lack of leadership and repeated failures that can be linked back to organizational culture.

People Cause Failure, Plain and SimpleIt is only logical to link culpability to the people in charge of a situation. Project managers should participate in training and mentorship as they gain experience. Project failure can be averted by focusing on people first.

Leadership is Vital to Project SuccessBeyond people, leadership is essential to ensure success. Integrity, honest communication, focus on strength, and effective planning are elements of the leadership solution. By building a leadership culture, disaster can be mitigated or eliminated.

Major disasters and cataclysmic events on Earth have a profound effect on society.

People feel the influence of events occurring thousands of miles away; and the world opens up with compassion. In these brief moments, time slows down as the world marks and reflects on these events. Almost everyone can remember where they were and what they were doing on the day Kennedy was shot or on the morning of 9/11. These historic pauses open a new existential recourse for society to heal its wounds.

However, opportunities to evaluate and learn from disaster should not be limited to a finite period around the event. Instead leaders should continually reflect on situations to learn where they stand and where they are going. This whitepaper seeks to discover what the BP oil spill can teach us about project management.

The BP Deep Horizon StoryFew environmental disasters reach the sheer impact of the BP Deep Horizon oil spill. The catastrophe has amounted to a direct cost of over $40 billion and an indirect cost that amounts to an economic crater in thousands of livelihoods. Out of the ruins, there exists the opportunity to study and learn the lessons of people and leadership.

Studying the postmortems of senior managers, rig operators, and surrounding culture, it is clear that there was a lack of integrity. A Harvard Business Review analysis found that “CEO Tony Hayward presided over an organisational culture that sanctioned extreme risk-taking, ignored expert advice, overlooked warnings about safety issues and hid facts.” Further, a 17-month study released by Bureau of Ocean Energy Management found that BP was the sole actor responsible for 21 of 35 contributing causes to the well blow-out. This series of fatal decisions combined with collective human frailty led to the initial explosion, the PR disaster, and numerous failed attempts at early containment and cleanup.

Stepping back from this disaster and back into the shoes of a program or project manager, it is easy to say “this will not happen to me” or “we have a better culture than that.” However, it is important to dissect the abstract causes of failure, people, and leadership in order to understand how your organization can avert project failure.

People Cause Failure, Plain and SimpleWhen it comes to organizational failure, it does not make sense to blame computers or the environment. People run organizations, and therefore people cause failure. The two major reasons people fail is that they are inexperienced or inadequately trained. The risk of a spill could be greatly reduced if rig operators, like project managers in your organization, were required to go engage in thorough training.. Historic oil spills such as the Exxon Valdez and Ixtoc I spills form a body of knowledge from which operators can educate themselves.

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This same body of knowledge exists for project managers and is known as the Project Management Body of Knowledge (PMBOK). Yet, just because the captains on the Athos I, which spilled on the Delaware River in 2004 , may have learned about the three previous spills in the 30 years prior, it is not enough. Experience is essential to project managers’ success. Experienced managers should act as mentors to younger managers to educate them on the specifics of the organization and contextual knowledge, such as dealing with organizational politics.

Leadership is Vital to Project SuccessLikewise, leadership is an essential element to success. The BP spill was a breakdown of leadership on a number of levels. The dealings in the disaster highlight four core areas to stress: personal integrity, honest communication, leading from strength, and effective planning.

Looking at the fallout of the disaster, it is easy to recognize Tony Hayward’s void of integrity. Decomposing an early PR blunder, Hayward’s statement “There’s no one who wants this thing over more than I do, I’d like my life back,” shows the need for your organization to be willing to stand by its decisions. As Peter Drucker says, “For the organization to perform to a high standard, its members must believe that what is it doing is, in the last analysis, the one contribution to community and society on which all others depend.” It is therefore necessary to ask, ‘Are we maintaining integrity in our project?’ Building on integrity is the need for honest communication. It is not a good indicator of future success if you are communicating(e.g. “There aren’t any plumes”) to the press and the opposite to your engineers and lawyers. Team members should be aware of their personal performance and direction of the project. Being aware of your strengths and weaknesses is the first step toward improvement.

The biggest strength that BP failed to capitalize on was the willingness of American citizens to alleviate the situation. Fishermen, boaters, and ecologists were more than willing to help with the clean-up, yet BP did not capitalize on that willingness. By focusing on your strengths, you can achieve much more. The strengths of the project team are the talents that can be most leveraged to successfully lead and complete a project. Former president Eisenhower said, “You do not lead by hitting people over the head – that’s assault, not leadership.”

Standing on strength starts with effective planning. The plan must include understanding of requirements, the lifecycle, the methods, the schedule, the risks, and other relevant elements. It is not enough to have a “shut-off valve” that has never been tested. Further there should be a quick way to adjust for plan deviations to get back on another critical path. The reason BP had so many failed attempts to seal the well is because they did not have enough free capacity to quickly address the problem.

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And, they did not know where there next critical path was. For Hayward, there was no critical path to remain CEO.

Prevent your Next Disaster

Taking these lessons to heart, it is important to draw actionable lessons from the BP Disaster. Considering the effects of incremental lack of leadership and trained people, it is important the combat those problems. Many organizations have established project management and leadership training programs to accelerate their employees’ growth. However, other software alternatives exist that have the capability to recognize missing elements in project leadership or experience. These software tools allow organizations to make mid-course corrections and add additional experienced resources if a problem is predicted. Using predictive analytics and software, companies can maximize their existing capabilities in the short-term and develop a track from long-term success.

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About the AuthorDavid Gritz is a research specialist in the Allentown, PA, office of Computer Aid, Inc. You may contact him at david_gritz@compaid.com.

Article ResourcesWinters, Frank. "The Top 10 Reasons Projects Fail." Gantthead.com, 2004.

Corkindale, Gill. "Five Leadership Lessons from the BP Oil Spill." Harvard Business Review, 28 June 2010.

Matta, Nadim F. "Why Good Projects Fail Anyways." Harvard Business Review. Sept. 2003.

“History's Worst Oil Spills,” The History Channel website, 2011.

Staff. "Tony Hayward Quotes: BP CEO Gaffes Or Remarks That Wents Wrong." NowPublic.com | The News Is NowPublic. A&E Television Network, June 2010.

USA. Bureau of Ocean Energy Management. Regulations and Enforcement. Macondo Well Blowout. By Michael Bromwich. Sept. 2011.

For Further ContactIf you would like to discuss this report, please contact Peter Lechner at peter_lechner@compaid.com.