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Risk Management
Methodology Development for Engineering, Procurement and Construction
Projects
A Case Study in the il and !as "ndustry
A research project su#mitted to the faculty of Sikkim Manipal $niversity"n partial fulfillment of the re%uirements for the degree
Master of &usiness Administration
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DEC'ARA(")
" here#y declare that the project report entitled su#mitted on
Risk Management
A Case Study in the Oil and Gas Industry
Partial fulfillment of the requirements for the degree of Master of Business
Administration (MBA) to Sikkim- Manipal University, ndia, is my original !ork
and not su"mitted for the a!ard of any other degree, diploma, fello!ship or any
other similar title or pri#es
Place *+ydera#ad
Course M&A
S"--"M MA)"PA' $)".ERS"(/
SESS") 01230124
Roll )o* 2015133672
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$niversity study center certificate
$his is to %ertify that the pro&e%t report entitled on
Risk Management*
A Case Study in the il and !as "ndustry
Su"mitted "y ''''''' (oll *o+8888889:in partial fulfillment of
the requirements for the degree of Master of Business Administration (MBA) to
Sikkim Manipal University of ealth, Medi%al and $e%hnologi%al s%ien%eshas
!orked under my supervision and .uidan%e and that no part of this report has
"een su"mitted for the a!ard of any other degree, diploma, fello!ship or any other
similar title or pri#es and that the !ork has not "een pu"lished in any /ournal or
Maga#ine
Reg9 )o9 88Certified &y
.uide0 *ame
+
M&A ;
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A12*34567.6M6*$
!ould like to e8press my sin%ere thanks to my 9a%ulty .uide
''''' or guidan%e and support throughout my training er %alm
demeanor and !illingness to tea%h has "een a great help in su%%essfully
%ompleting the pro&e%t My learning has "een immeasura"le and !orking under
him !as a great e8perien%e
also a%kno!ledge heart felt thanks for all those people !ho have made availa"le
tons of information required for my Pro&e%t
9inally, !ould like to thank my nstitute SMA$ for the preparation of this
pro&e%t $he learning from this e8perien%e has "een immense and !ould "e
%herished throughout life
CourseM&A
S"--"M MA)"PA' $)".ERS"(/
(a#le of contents
(a#le of Contents
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: ntrodu%tion
; .ap in the present resear%hes and ne%essity of doing more studies
$heory and Main 1on%epts
? isk
@ Pro&e%t isk
Pro&e%t isk Management
isk in different types of %ontra%ts
:C9i8ed pri%e
::eim"ursa"le D 1ost-plus %ontra%ts
:;1ost-plus %ontra%ts !ith a %ap
:Build-3perate-$ransfer
:?6P1 %on%ept
:@3vervie! of 6P1 %ontra%ts
:Advantages and disadvantage of 6P1 %ontra%ts
:Fuality %ontrol and supervision in 6P1 %ontra%ts
;Cntrodu%ing 6P1 pro&e%t !ith risk perspe%tive
;:eason for the demand of 6P1 %ontra%ts in the market
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;;Pro&e%t risk management implementation in pro&e%t "ase organi#ations
;P*16;
;?SAMPU Model
;@1hapman G 4ard0s
;7ale 1ooper0s
;4eaknesses analysis of %urrent risk management models
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isk feasi"ility Study
Step 0*
7evelopment of stakeholders0 o"&e%tives and e8pe%tation
Step 3*
7evelopment of Annual and pro%edures of the pro&e%t risk management in the
sele%ted s%opes and desired levels
Step 6*
7evelopment of definite time s%hedule for risk
analysis
Step 4*
isk identifi%ation and risk mitigation a%%ording to the time s%hedule and %he%k
lists of risks and risk groups (4BS,
BS)
Step =*
Fualitative risk analysis and develop an integrated risk plan and
s%heduling''''''''''''''
Step 7*
$o develop response plan and analy#e response plan
%ost
Step 5*
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Periodi%al risk monitoring, %ontrolling and
tra%king'''''''''''''''''''''''''''''
Discussion and Conclusion References
Appendi>es
Appendi8 A+ ntervie! Fuestions
'''''''''''''''''''''''''''''''''
''
Appendi8 B+ ntervie!ed Personnel
Positions
Appendi8 1+ 5ist of A""reviations
''''''''''''''''''''''''''''''''
'
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7eveloped methodology suggested "y authors
Chapter "
R"S- Management+
"ntroduction
$he demand for s%ientifi% management in different types of pro&e%ts is %onstantly
in%reasing, espe%ially for pro&e%t "ase organi#ations isk Management, one of
the ne!est %on%epts of pro&e%t management is interesting to fo%us on "e%ause ofits advantages and %apa"ilities 6ngineering, Pro%urement and 1onstru%tion
(6P1) pro&e%ts have "e%ome one of the more popular methods of pro&e%t
e8e%ution "y "oth %lients and %ontra%tors
Utili#ation of Pro&e%t isk Management methodologies, espe%ially in mega-
pro&e%ts or international pro&e%ts %an lead to huge advantages on all aspe%ts of
pro&e%ts0 development t %an also "e implemented as the main referen%e and
"asis for "idding, tendering and e8e%ution (in%luding %ost, time, resour%e, and
quality management)
By risk identifi%ation, assessment and %ontrol, pro"a"le gaps "et!een estimated
and real %ost, time, and quality of pro&e%ts %an "e prevented or de%reased $his
approa%h also provides fa%ilities to predi%t the final %ost and end dates of pro&e%ts
!ith a greater level of %onfiden%e
4hile many and various resear%h studies have "een undertaken on risk
management in several industries, in%luding $, manufa%turing and %onstru%tion
se%tors, there appears to "e a la%k of definitive pro%edures for oil and gas industry
in general
$he %urrently availa"le pro&e%t risk management methodologies tend to "e
generi% and their utili#ation requires that they "e adapted and %ustomi#ed for
spe%ifi% appli%ations, espe%ially in industrial pro%edures !ith unique and highly
spe%iali#ed instru%tions 5a%k of a %ertain methodology in a spe%ifi% industry %an
"ring limitations and needs more efforts to ad&ust and develop it for a %ompany in
a parti%ular industry $his thesis !ill fo%us on a typi%al 6P1 pro&e%t as the %asestudy and !ill attempt to analy#e and ans!er the follo!ing question+
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4hat is the appropriate pattern and pro&e%t spe%ifi% %ustomi#ed
methodology to manage risks of 6P1 pro&e%ts in the oil and gas industryH
!ap in the present researches and necessity of doing more studies
Based on aghnevis and Sa&edi (;CC?) various studies and resear%h studies have
"een undertaken in the field of risk management As a result, there are several
models and methodologies for managing risk o!ever, no spe%ifi% model or
methodology has "een developed to date, !hi%h spe%iali#es or fo%uses on an
individual industry !ith its o!n unique appli%ations, although some %ompanies
have developed their o!n approa%hes to risk management
Most %ommonly used standards and methodologies for risk management %annot"e produ%tively applied to all types of pro&e%ts Most of the resear%h is general or
tend to "e too spe%ifi% and limited (aghnevis and Sa&edi, ;CC?)
1onsequently, there is a need for a frame!ork to "e developed for 6P1
pro&e%ts, !ith a fo%used vie! to!ards oil and .as ndustry
Desired applications from esta#lishing this thesis
$he results of the thesis may "e applied pra%ti%ally and fun%tionally on oil and
gas pro&e%ts
$he thesis is %apa"le of developing an a%%urate and %orre%t "asis of evaluation
and estimation in these types of pro&e%ts
Utili#ation of the results of the thesis should "e very helpful to!ards
developing "etter and more realisti% "ids, tenders and %ontra%ts related to oil and
gas pro&e%ts
$his resear%h is theoreti%ally and potentially a ground!ork for developing pro&e%t
risk management models !hi%h makes it possi"le to implement pro&e%t risk
management in the other industries a%%ordingly
Sin%e ran is an oil-ri%h %ountry and has the se%ond highest volume of gas
reservoirs in the !orld (1A, ;C:
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$he o"&e%tives of the thesis are as follo!s+
$o present a ne! methodology for pro&e%t risk management in a parti%ular
industry
$o %reate "a%kground and foundation of further resear%h in this area and lay
the ground!ork for preparing risk management standards in gas pro&e%ts
$o assist pro&e%t risk management of Bid Boland .as efinery Plant
(%urrently managed "y ranian %ompanies)
$o develop an optimal pro%edure and system for pro&e%t risk
management and intera%tion !ith the pro&e%t management plan
$o determine the roles of stakeholders in 6P1 pro&e%ts (1lient,%onsultant, and suppliers)
Desired applications from esta#lishing this thesis
$he results of the thesis may "e applied pra%ti%ally and fun%tionally on oil
and gas pro&e%ts
$he thesis is %apa"le of developing an a%%urate and %orre%t "asis of
evaluation and estimation in these types of pro&e%ts
Utili#ation of the results of the thesis should "e very helpful to!ards
developing "etter and more realisti% "ids, tenders and %ontra%ts related to oil
and gas pro&e%ts
$his resear%h is theoreti%ally and potentially a ground!ork for developing
pro&e%t risk management models !hi%h makes it possi"le to implement
pro&e%t risk management in the other industries a%%ordingly
Sin%e ran is an oil-ri%h %ountry and has the se%ond highest volume of gas
reservoirs in the !orld (1A, ;C:
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$he term IriskJ does not have a single unanimous definition Based on the 38ford
6nglish 7i%tionary risk is Ithe possi"ility that something unpleasant !ill happenJ
and its origin refers to the talian !ords Iris%oJ, Iris%areJ and Iri%hiareJ from the
:@th %entury (ay-.i"son,
;CC, %ited in 5emieu8, ;C:C, p;CC) n the other hand Althaus states that the term
risk has an origin in Portuguese !ith the meaning of Ito dareJ (Althaus, ;CC>K
ay-.i"son, ;CCK 5emieu8, ;C:C)
isk %an "e theoreti%ally des%ri"ed as any potential deviation from the predefined
target !ith its defined spe%ifi%ations t is normally linked to terms su%h as
un%ertainty, the unkno!n, and unpredi%ta"ility Basi%ally all efforts and
movements of people %ontain risks and un%ertainties 7aily life is fraught !ith
dynami% situations involving unkno!n fa%tors !hi%h %an have pleasant or
unpleasant, and mostly unforeseen and unpredi%ta"le %onsequen%es (Mul%ahy,
;CC
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%an have different aspe%ts (su%h as finan%ial, health and safety, and
environmental goals) and %an apply at different levels (su%h as strategi%,
organi#ation-!ide, pro&e%t, produ%t and pro%ess) isk is often %hara%teri#ed
"y referen%e to potential events and %onsequen%es or a %om"ination of these
isk is often e8pressed in terms of a %om"ination of the %onsequen%es of an
event (in%luding %hanges in %ir%umstan%es) and the asso%iated likelihood of
o%%urren%eJ
I$he quantitative engineering definition of the risk is+ isk (pro"a"ility of
an a%%ident) 8 (losses per a%%ident)J (Agra!al, ;CC, P@)
1onsidering the definitions a"ove, a !ide variety of risk des%riptions %an "e
found "ased on the %ir%umstan%es and appli%ations $hese definitions reveal
t!o important aspe%ts of the risk in generalK un%ertainty and %onsequen%es$herefore the o%%urren%e pro"a"ility of the risk and the severity of the
effe%ts are %onsidered as t!o ma&or parameters of defining the risk
All in all, risk is interpreted as a type of unkno!n event !ith unpleasant effe%ts,
although it %an "e a pleasant happening !ith positive %onsequen%es !hi%h !ould
normally "e %onsidered as an opportunity isk analysis fo%uses on "oth pleasant
and unpleasant aspe%ts of the risk
Project Risk
$hompson and Perry (:;, p
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if it o%%urs, it may have one or more impa%tsJ A %ause %an "e %onsidered as
an assumption, %ondition, %onstraint, or a requirement that makes the pro"a"ility
of positive or negative results, and pro&e%t o"&e%tives %onsist of %ost, time,
resour%e, s%ope and quality
Mul%ahy (;CC
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6nhan%e %ompany0s tra%k re%ord and su%%essfully e8e%uted portfolio of
pro&e%ts
Risk in different types of contracts
$he results of dis%ussions in ;< sho! that if risk management starts from the early
stages of the pro&e%t, the "est pro"a"le result !ill "e a%hieved Sin%e the a!arded
%ontra%t of ea%h pro&e%t is the initial fa%tual eviden%e of the s%ope of !ork, it
defines and %larifies the pro&e%t o"&e%tives and %onditions
.iven to the importan%e of risk identifi%ation along !ith detailed spe%ifi%ation of
the %ontra%t terms and %onditions at an early stage, it !ould seem pra%ti%al to
analy#e and study different types of %ontra%ts and the relevant risk level of ea%h
individual pro&e%t
n order to optimi#e the strategy to deal !ith pro&e%t risks, %onstru%tion %ontra%ts
%an "e differentiated "ased on t!o %hara%teristi%s (5oots, ;CC@)
: Payment methods
; 7uties and responsi"ilities of the various dis%iplines of the pro&e%t
ed price contracts
Based on Burke (:) 9i8ed pri%e %ontra%ts, also %alled lump sum, are term
%ontra%ts !ith a %ertain amount of "udget $he "udget is defined at the starting
point of the pro&e%t and %annot "e %hanged during the pro&e%t e8e%ution $his
%hara%teristi% is responsi"le for the risk o%%urring "y adopting this type of %ontra%t
$he fa%tors of %ost and time %annot "e modified after they have "een esta"lished t
should "e noted that there may "e delays due to la%k of information 3n the other
hand this type of %ontra%t %an lead if planned and e8e%uted %orre%tly to a
higher earning potential $o narro! do!n the risks it is essential to plan pre%isely,
to distinguish possi"le se%ondary e8penditures, and to prepare an a%%urates%hedule
Reim#ursa#le Costplus contracts
1ost-plus %ontra%ts are those that a%t in a%%ordan%e !ith %ertain rates of !ork
$hese fi8ed rates e8ist for the !orking time of different o%%upational groups and
other e8penditures $his type of %ontra%t is not very vulnera"le to risks "e%ause it
is used to avoid the pro"lem of un%ertainty at the "eginning of the pro&e%t $he
%omple8ity in pro&e%ts that are set up as %ost- plus is not %aptured entirely from thestart $herefore it may "e advantageous to sele%t this approa%h of %ontra%ting to
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ensure that the prin%ipal %an apply for further terms, %onditions, and "enefits
(Burke, :)
Costplus contracts @ith a cap
n a%%ordan%e !ith Burke (:) %ost-plus %ontra%ts !ith a %ap are an
e8trapolation of the %ost-plus %ontra%t $he main %hara%teristi% of this %ontra%t is
that the "udget is terminated at a %ertain %ost level $he "illing pro%eeds in a
similar manner to the %ost-plus %ontra%t until the e8penses rea%h the ma8imum
limits
$here are t!o options to %onsider in the approa%h to the pro&e%t e8e%ution $he
first is as%ertaining that the duties and responsi"ilities end !hen the "udget
allo%ation is rea%hed $he se%ond is that there may "e %ertain agreements regarding
the detailed s%ope of a%tivities to "e e8e%uted f these agreements have "eennegotiated and a%%epted, it is the responsi"ility of the e8e%utives to %over the
additional %osts in %ase the !ork has not "een %ompleted "efore the transgression
of the "udget (Burke, :)
(urnkey contracts
$urnkey %ontra%ts are an e8trapolation of fi8ed-pri%e %ontra%ts o!ever this type
of %ontra%t has additional %apa%ity sin%e it also %overs elements for %onstru%tion
and "uilding n order to plan these %omponents effi%iently, an e8tensivepreliminary analysis is required to %larify the stipulation and the "udget 9or the
prin%ipal there are some advantages of %hoosing this type of %ontra%t 9irst of all
the "udget is determined at the "eginning of the pro&e%t Se%ond, the preliminary
analysis is %ost-effe%tive, and third, the produ%t or servi%e %an "e supplied
rapidly n%luding %onstru%tion phase into the proposal yields a more %omple8
%ontra%t and therefore a higher risk potential t is diffi%ult to %al%ulate the
e8penditures for designing and %onstru%tion due to the fa%t that the delivera"le
may not "e des%ri"ed %omprehensively n addition the agent and the prin%iple %an
have dissonan%e a"out the responsi"ilities 3n the other hand the %ommitmentsmade "y $urnkey %ontra%ts often lead to a "igger profit margin due to the early
ad&ustments of the %ontra%tual partners (use, ;CC;)
PartnershipBoint .enture
Based on Burke (:), a /oint Eenture is %reated !hen t!o or more parties de%ide
to %olla"orate and !ork together $he /oint Eenture e8ists for a %ertain spe%ified
period of time, mostly for the duran%e of the pro&e%t $he goal of this partnership is
to a%hieve greater e%onomies of s%ale $his should "e o"tained "y the partieshaving a %ommon %ommitment and sharing resour%es su%h as pro%edures,
e8penditures, kno!-ho! and e%onomi% units $here are various partnerships that
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are "uilt on the idea of guarantee 9or /oint Eentures the %hara%teristi% of the
guarantee is that the different parti%ipants hold shares of ea%h other0s interest
Partnerships "et!een t!o or more individuals are %alled /oint Eentures !hen they
&oin together and %olla"orate for a termina"le pro&e%t n this %ase the individuals
are named %o-ventures
As mentioned "efore, /oint Eentures mainly arise for the duran%e of one parti%ular
pro&e%t "ut may "e a lasting partnership as !ell $he one-time /oint Eenture is
kno!n as a %onsortium or a %ooperative agreement 3ne reason !hy a parti%ular
parti%ipant is seeking a partner for a spe%ifi% pro&e%t is that the parti%ipant
%ompany requires resour%es !hi%h the other party %an offer $hese offers may
in%lude proprietary te%hni%al kno!ledge, "rand a!areness, a%%ess to estate and
management %ontra%ting among others After the pro&e%t has "een %ompleted, the
/oint Eenture is normally %losed (Burke, :)
&uildperate(ransfer
Build-3perate-$ransfer (B3$) is a method to finan%e pro&e%ts "ased on
%on%essions $he %on%essions are presented "y a private or pu"li% division to a
private "usiness in order to fund and e8e%ute the pro&e%t, and to manage the
interpretation of the %ontra%t n this !ay it is possi"le for the pro&e%t o!ner to
%over the e8penditures generated "y "uilding and operating the pro&e%t0s o"&e%tive
B3$ pro&e%ts normally run for a longer period of time $herefore there is a need to
make de%isions a"out the %ontra%t0s %ontents at an early stage, usually at the"eginning of the pro&e%t (.rimsey G 5e!is, ;CC=)
A%%ording to 4alker and Smith (;CC=), there are %ertain internal and e8ternal
fa%tors that have an effe%t on the rate of in%rease and internal rate of return for the
%apital spending $he %on%ession given to the private "usiness is for a limited
period of time $his duration is %alled the %on%ession period 7uring the
%on%ession period the e8e%utor finan%es, designs and "uilds the %ontra%t0s su"&e%t
7uring this period, o!nership of the fa%ility "elongs to, and is operated "y, the
private %ompany After the e8piration of the %on%ession, the o!nership ofassetDfa%ilityDsystem is transferred to the private or pu"li% division responsi"le for
the issue of the initial %on%ession
$he adoption of B3$ %an, for the most part, "e !itnessed in pro&e%ts that require
finan%ing sin%e ne!ly "uilt fa%ilities do not normally have revenue support in the
early stages nvestors strive to seek out the most suita"le %ompany to implement
the pro&e%t and ensure that all %onsequent risks are transferred to the appropriate
parties t is essential for the pro&e%t %ompany to find on the one hand other
%ompanies !ith %onstru%tion or operating e8pertise and on the other hand,shareholders !ho have the history of managing these types of pro&e%ts $he
shareholders should ideally "e familiar !ith all aspe%ts of the pro%esses involved,
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in order to minimi#e the risk of B3$ pro&e%ts $he pu"li% or private %ompany
!hi%h inherits the fa%ility after %on%ession period has e8pired !ill "e motivated to
retain the shareholders in the %ompany after the transfer, as they have %ontri"uted
to the su%%ess of the pro&e%t e8e%ution to date Although the operator may have
issued assignments to other %ompanies, the pur%haser !ill "e interested in
retaining the kno!ledge and e8pertise of these firms (7elmon, ;CC)
1ontra%t
$ype
ate of
1ontra%tor0s
isk
ate of
1lient0s isk
ate of
9le8i"ility
against the
1hanges
Applied "y the
1lient
Appli%ation
1ost plus 5o! igh igh .enerally this
method is used
!hen the
pro&e%t plan
has not "een
a%%epted $his
method !ill "e
implemented if
the %lient and
%ontra%tor have
strongrelationship
and trust level
Partnership 6qual 6qual 7epend on the
1ontra%t0s
%onditions
Bulky
pro&e%ts, "eing
spe%ifi% in
7ifferent
items, and the
politi%al*e%essity of
the pro&e%t
9i8ed Pri%e igh 5o! 5o! .enerally the
%ontra%tor
sele%ts this
kind of
%ontra%t !hen
all aspe%ts of
the pro&e%t arespe%ified
o!ever, most
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of the time the
%lient sele%ts
this method in
order to
transfer pro&e%trisk to the
%ontra%tor
Unit ates igh 5o! 5o! .enerally this
method is used
!hen pro&e%t
design is not
%ompleted
"efore the
%ontra%t
assignment
time or is used
!hen it is
required to
determine a
limit for the
pri%es in the
"idding
$urnkey igh 5o! 5o! $he %lient does
not havesuffi%ient
staffing to
supervise and
manage the
pro&e%t, or
!hen the
pro&e%t
involves a
spe%ifi%te%hnology
!hi%h is not
availa"le to
everyoneB.O.T (BuildOperate and
Transfer)
igh 5o! 5o! $he 1lient is
una"le to
finan%e
Pro&e%t- $he
pro&e%t appliesa
Spe%ifi%
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te%hnology
!hi%h is not
availa"le to
everyone
9igure : - isk %omparison in different %ontra%ts, adapted from 7elmon (;CC),
use (;CC;), Burke( :)
EPC concept
vervie@ of EPC contracts
A%%ording to 5oots and en%hie (;CC@), 6P1 is a %ommon type of %ontra%tual
arrangement in the %onstru%tion industry n 6P1 %ontra%ts, the %ontra%tor is
responsi"le for engineering and designing the pro&e%t, pro%urement of all
materials, tools and equipment and fa"ri%ation or %onstru%tion of the pro&e%t, either
in house or "y su"%ontra%ting some !ork pa%kages or some phases of the pro&e%t
Sometimes, the %ontra%tor transfers the time or %ost related risks of the pro&e%t to
the su"%ontra%tors !ithin a fi8ed pri%e or lump sum %ontra%t payment
6P1 stands for 6ngineering Pro%urement and 1onstru%tion, "ut it is not
summari#ed in these three phases and the kno!ledge of these three items is not
enough to implement the 6P1 pro&e%t n fa%t the %om"ination of these elements
and their intera%tions, %onsequen%es and their quadruple andDor mutual influen%eson ea%h other is more e8tensive and %ompli%ated that a simple %olle%tion of
engineering, pro%urement and %onstru%tion
9or the most part, %ost "ased %ontra%ts !ill transfer risk to the %lient and pri%e
"ased %ontra%t !ill transfer risk to the %ontra%tor (PM, ;CC)
n 6P1 pro&e%ts, !orking !ith issues su%h as deadlines, %ontrols, mission
statements and su"missions %om"inations, along !ith delivery (!ith defined %ost,
time and quality "y %onsidering risks in the domain of ea%h %ontra%t), all in allmeans management, although the management of an 6P1 %ontra%t must "e
%ommitted for all pre-defined responsi"ilities (use, ;CC;)
Advantages and disadvantage of EPC contracts
Advantages and disadvantages from the %lient0s point of vie!
Advantages*
: More se%urity in e8e%utive %osts
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; 5ess human resour%e requirements, as there is no need for the %lient to
provide links among different %ontra%tors
)
n 6P1 %ontra%ts, the %lient0s representative has the duty of supervision and pro&e%t
%ontrol Basi%ally responsi"ility of the %lient0s representative is primarily to
provide the required quality assuran%e servi%es and is also designated to
assume the %lient0s authorities and po!ers $he %lient0s representative should
also "e qualified and kno!ledgea"le a"out the pro&e%t $herefore, the e8pertise of
engineers !ho have the ne%essary "a%kground and spe%iali#ation in the pro&e%t
!ould "e suita"le %andidates for this position, and %ould e8er%ise leadership role(2angari, :>)
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n this regard, the nternational 9ederation of 1onsulting 6ngineers (971)
"elieves that along !ith the general issues that %onsulting engineers perform
ie, identifi%ation, %odifi%ation of feasi"ility study and design, supervision of
%onstru%tion, they are in a position to provide additional servi%es n the draft of
ne! regulation s%heme provided "y the organi#ation of plan and "udgetary affairs,
these ne! duties have "een dis%ussed in%luding the supervision of %onstru%tion,
pro&e%t management, management of %onstru%tion, pro&e%t %ontrol, %ost
management, %ontemplation and task delegation, %ontra%t termination, legal
affairs, te%hni%al training, risk management analysis, along !ith the evaluation of
value engineering and other related issues (/aeger G Qk, ;C:C)
"ntroducing EPC project @ith risk perspective
Based on 5oots and en%hie (;CC@) pro&e%ts implemented "y the 6P1 method
have spe%ial e8e%utive %hara%teristi%s and %annot "e generali#ed $he fo%al point ofthese %hara%teristi%s is targeted to!ards planning, %ontrol and fa%ilitating
simultaneous a%tivities, along !ith maintaining the performan%e quality $he
%ompanies, !ho have a%%epted to implement the pro&e%t in the 6P1 format, are
also %ommitted to perform a series of parallel a%tivities in the frame!ork of pro&e%t
time s%hedule
n the 6P1 method, the engineering, pro%urement and %onstru%tion phases !ill "e
performed "ased on a single %ontra%t $he approa%h involves the e8e%ution of
engineering and pro%urement a%tivities running %on%urrently !ith required at sitedeliveries timed mat%h the s%hedule for effi%ient %onstru%tion and installation $he
management of the 6P1 pro&e%t has a prominent role in the su%%essful
implementation and delivery of the pro&e%tK therefore, organi#ations that have
su%%essful tra%k re%ords of management and pro&e%t %ontrol are highly
re%ommended Basi%ally a su%%essful %ompany should "e a"le to %ontrol and
manage the engineering and pro%urement phases in a !ay that apart from
maintaining all mentioned referen%e standards in the %ontra%t, they have the a"ility
to minimi#e e8%ess e8penses in the pro%urement phase (5oots and en%hie, ;CC@)
$he supervision is one of the fa%tors %ontri"uting to %osts and s%hedule and is
minimi#ed in the 6P1 methodK a%%ordingly, it is ne%essary to %ompletely
implement quality assuran%e me%hanisms, gate revie!s and hold points in "asi%
design and detailed engineering, %onstru%tion and installation phases
$he pro%urement phase is allo%ated the highest risk in the %ost distri"ution of an
6P1 pro&e%t and, as su%h, it is imperative to ensure a%%urate and %orre%t
%olla"orations "et!een the engineering and pro%urement se%tors
n the annual 971 %onferen%e held in *or!ay in :C, 7esign and Built
%ontra%ts !ere dis%ussed and it !as agreed that 971 should %onsider this
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approa%h for large s%ale multi- tasking pro&e%tsK moreover, risk should "e
partitioned "et!een the %ontra%tor and the o!ner "ased on the 7esign G Built
%ontra%t t is !orth mentioning that re%ent trends indi%ate that the !ord Io!nerJ is
often su"stituted for the !ord I%lientJ, in order to differentiate from the !ord
I%lientJ .enerally, the term I%lientJ does imply all %apa"ilities in a !ay that it
does not need %ontra%tor or %onsulting se%torsK therefore it is re%ommended not to
use this !ord often (/aeger G Qk, ;C:C)
Reason for the demand of EPC contracts in the market
1learly in this %onte8t the first reason for the demand of 6P1 %ontra%ts is the fa%t
that the %lient or the o!ner %an have a realisti% e8pe%tation of the final %ost and
duration of the pro&e%t As the penalties and liquidated damages for involved
parties in the %ontra%t are %onsidera"le, the various parties !ill naturally strive to
avoid these additional %osts and losing the reputation as !ell 1onsequently 6P1s%hedule tend to "e more realisti% and adhered to $he 6P1 %ontra%ts should "e
employed espe%ially !hen a private enterprise is parti%ipating in the pro&e%t
finan%e
Another advantage of 6P1 %ontra%ts is to prevent misleading
dependa"ility and responsi"ility Basi%ally, in 6P1 %ontra%ts all of the
responsi"ilities are assumed "y a single party and %onsequently the %ontra%tor
is responsi"le for performan%e, pra%ti%ality, te%hni%ality, pro%urement and
affe%ta"ility (use, ;CC;)
Project risk management implementation in project #ase organiations
$he main goal of this se%tion is to determine responsi"ilities of risk management
in the organi#ation and the pro&e%t A%%ording to an organi#ation0s hierar%hy, the
163 undertakes the responsi"ility of risk in the %ompany "efore the "oard of
dire%tors and stakeholders 9igure sho!s that risk responsi"ility !ill "e entrusted
to pro&e%t managers to deal !ith pro&e%t risks and also !ill "e entrusted to the
dis%ipline managers to address the risks of their parti%ular divisions $hesemanagers are responsi"le for the implementation of risk management plan that
%onsists of identifi%ation, analysis, response and methods to %ontrol those risks
!hi%h affe%t their !ork s%ope Based on the other management te%hniques, all
managers should "e %onfident that all of their team mem"ers have an a%%urate
grasp and
understanding of the risks e8isting in their !ork s%ope Moreover, they should "e
respondent to the %onsequen%es of their a%tion (Burke, :)
Sometimes unplanned and une8pe%ted events o%%ur in the pro&e%t !hi%h may %ausethe %ompany to %ease some of its a%tivities for a limited time 1onsequently, the
%ompany !ill sustain losses and damages n these %ases, the %ompany requires a
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disaster re%overy plan $he main goal of this plan is, to redu%e the %onsequen%es of
undesired events to an a%%epta"le level A suita"ly qualified and e8perien%ed
manager is appointed !ith the task of preparing and implementing the plan, as a
part of the risk management plan of the %ompany $herefore, in the %ase of an
une8pe%ted unpleasant event, this plan !ill "e implemented and the operational
group !ill follo! and e8e%ute the plan in order to mitigate the %onsequen%es
(Burke, :)
Although it is impossi"le to %on%entrate on all risks and de%isions in a spe%ifi%
duty unit or pro&e%t, large %ompanies assign individuals and departments !ith
spe%iali#ed profi%ien%y to handle risk management in the pro&e%t and duty units
$he e8tent and the organi#ation of risk management department depends on the
organi#ation si#e, num"er of pro&e%ts, num"er of departments and the %omple8ity
level of a%tivities and pro&e%ts o!ever, the risk management department hassome dedi%ated personnel !hi%h typi%ally in%lude a risk manager, assistant, and
se%retary $he risk manager and assistant manager play the roles of fa%ilitator in
the risk identifi%ation sessions, "oth in the duty unit and pro&e%ts (Burke, :)
$he position of risk management varies depending on the organi#ational
stru%ture
7uty organi#ational stru%ture+ $he risk management department is
managed independently or may "e under the dire%t supervision of the
pro&e%t management department
Pro&e%t organi#ational stru%ture+ 6sta"lishment of the risk management department
in the pro&e%t organi#ational stru%ture is possi"le in three !ays as follo!s+
A risk management department should "e esta"lished for every pro&e%t
independently
$his %ondition is "enefi%ial and advantageous for Multi-9un%tional%ompanies
An independent risk management department should "e esta"lished
%ompany !ide
$he pro&e%t manager, on%e appointed, ensures that the risk management
pro%ess is applied on the pro&e%t, if deemed ne%essary
$he risk management department provides servi%es to ea%h pro&e%t
under the supervision of planning department, as required
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3rgani#ational stru%ture matri8+ 6sta"lishment of the risk management
department in the matri8 organi#ational stru%ture is possi"le in t!o !ays as
follo!s+
An independent risk management department should "e esta"lishedthroughout the %ompany $he pro&e%t manager ensures that the risk
management pro%ess is applied on the pro&e%t, as required
$he risk management department provides servi%es to ea%h pro&e%t
under the supervision of planning department, if deemed ne%essary
f the s%ope of the pro&e%t is very e8tensive or the type of %ontra%t !arrants, an
independent risk management department !ill "e esta"lished 9or e8ample, in an
oil and gas pro&e%t management %ompany intending to invest in an oil and gaspro&e%t (B3$ type), it is possi"le to esta"lish the risk management department
under the supervision of the investment department of the %ompany, and if
required, provide risk management servi%es to the other pro&e%ts !ithin the
%ompany
Some organi#ations prefer to use %onsultant %ompanies instead of esta"lishing an
in-house risk management department $his depends on the si#e and %omple8ity of
the pro&e%t and the rate of %ompany0s familiarity !ith the risk management pro%ess
(4alker G Smith :>)
Risk Management Models and Methodologies
n order to end up !ith an optimum model of risk management in 6P1 pro&e%ts for
oil and gas industry, it is useful to analy#e and %ompare different methodologies
and models for risk management Although there are plenty of appli%a"le models,
the main fo%us is normally on the most popular models used "y the %onstru%tion
industry (aghnevis and Sa&edi, ;CC?)+
$a"le : isk Models - Adapted from aghnevis and Sa&edi,(;CC?)
Model Rear 7es%ription
Boehm :: dentifi%ation, analysis,
prioriti#ing, risk
management %ontrol, risk
resolution, risk monitoring
planning, tra%king,
%orre%tive a%tion9airley := dentifi%ation of risk
fa%tors, assess risk
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pro"a"ilities and effe%ts,
develop strategies to
mitigate identified risks,
monitor risk fa%tor, invoke
a %ontingen%y plan,manage the %risis, %risis
re%overy
S6 (Soft!are
6ngineering nstitute)
:? dentifi%ation, analysis,
response planning,tra%king, %ontrol
2liem G 5udin :@ dentifi%ation, analysis,
%ontrol, reporting
SAMPU (Shape,
arness and
Manage Pro&e%t
Un%ertainty)
:@ 7efine, fo%us, identify,
stru%ture, o!nership,
estimate, evaluate, plan,
manage
PAM (Pro&e%t risk
analysis and
management)
:@ 7efine, fo%us, assess,
planning, management
Leach 2000 dentify potential risk
events, estimate the
risk pro"a"ility, estimate
the risk impa%t,
identify potential risktriggers, analy#e risks,
prevent risk event, plan
for mitigation, insure
against risk, monitor for
risk triggersIRM/AIRMIC/ALARM (TheInstitute of RisMana!e"ent/TheAssociation of Insurance
and RisMana!e"ent/The #ational$oru" forRis Mana!e"ent in %u&lic'ector)
2002
Strategi% o"&e%tive,
assessment, reporting,
de%ision, response,reporting, monitoring
'"ith Merritt 2002Identification anal*sisprioriti+in!
"appin! response"onitorin!
%MBO,(%ro-ectMana!e"ent (Bod* of
,noled!e)
200 isk management
planning, risk
identifi%ation, qualitativeG quantitative, risk
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response planning, risk
monitoring G %ontrol
PMA($he Pro&e%t iskManagemengt Approa%h
200 1sta&lish contet
identif* riss anal*+e
riss e3aluate risresponse riss re3ie
"onitorin!
co""unication ith
consultants
PMBOK Methodology
This "odel is the "ost fre4uentl* used "ethod in pro-ect "ana!e"ent as
defined &* the %ro-ect Mana!e"ent Institute (%MI). Based on %MBO,5
6uide (%MI 2007) pro-ect ris "ana!e"ent is a process hich consists of
si iterati3e processes &elo8
9. Ris Mana!e"ent %lannin!
2. Ris Identification
. :ualitati3e Ris Anal*sis
. :uantitati3e Ris Anal*sis
;. Ris Response %lannin!
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As defined &* Ca&inet O>ice (2092) %RI#C12 stands for %Ro-ects I#
Controlled 1n3iron"ents hich is a de facto standard adopted and
utili+ed idel* &* the ?, !o3ern"ent and is etensi3el* accepted and
e"plo*ed in the pri3ate sector !lo&all*. It is a non=proprietorial process=
&ased "ethod for pro-ect "ana!e"ent and is reco!ni+ed as the &est
practice in pro-ect "ana!e"ent application in the pu&lic do"ain.
At 9@7@ this "ethodolo!* as pri"aril* esta&lished &* The Central
Co"puter and Teleco""unications A!enc* (CCTA). It as initiall*
intended to &e applied as a ?, 6o3ern"ent standard for "ana!in!
infor"ation technolo!* pro-ects hoe3er after the release in 9@@< as
a !eneric pro-ect "ana!e"ent "odel it &eca"e !lo&all* reco!ni+ed and
accepted.
As it is stated in %RI#C12 (2002) this standard descri&es ho to
di3ide a pro-ect into s"aller "ana!ea&le parts in order to control the
resources and or pro!ress e>ecti3el*. In this "odel ris "ana!e"ent is
defined in to parts and si steps as &elo8
Ris anal*sis8
Ris identification
Ris e3aluation
Ris response
'election
Ris "ana!e"ent8
%lannin! and resource assi!n"ent Tracin! and reportin!
Figure 2 - The risk management yle !PRINCE2"
2##2" $%2&'(
)*+MP, Model
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In accordance ith Chap"an ard (200) 'AM%? is the acron*"
in the pro-ect "ana!e"ent process fra"eor hich stands for8
'hape arness And Mana!e %ro-ect ?ncertaint*. Re!ardin! the le3el of
details this "ethodolo!* can &e presented in three for"s. The si"plest
has three phases and the detailed process in3ol3es nine phases. 'hapin!
the pro-ect strate!* is the first step to &e considered in the strate!ic le3el
of e>orts toards the pro-ect uncertaint* in order to catch producti3it*.
arnessin! the plan is carried out &* de3elopin! a producti3e ris plan
at a tactical le3el in order to harness the uncertaint* outlined at a
strate!ic le3el. Mana!in! the i"ple"entation is considered in four aspects
the planned or "ana!e"ent the action plan de3elop"ent "onitorin!
and control and crisis dealin!.
Cha$man .ard/s Methodology
Based on Chap"an ard (200) the e>ecti3e ris "ana!e"ent "odel
should underline specific sources of uncertaint* on the structure of the
pro-ect life c*cle and consists of phases and sta!es as follo8
Conceptuali+ation (Concepti3e) %lannin! (desi!n plan allocate) eecution
(eecute) Ter"ination (deli3er re3ie support). The sta!es should &e
considered in "ore detailed le3els called DstepsE hich should &e defined
&ased on the nature of the product or ser3ice deli3era&le.
Fale CooperGs ModelCooper et al. (200; p.9;) defines the pro-ect ris "ana!e"ent approach as&elo8
Figure 0 - The $ro1et risk management $roess !Coo$er et al%" 2##" $%'(
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The pro-ect "ana!er should prepare appropriate responses for t*pical
4uestions at each step of the pro-ect ris "ana!e"ent process as
defined &elo (Cooper et al. 200; p.9;)8
Ta3le 2 - 4uestions 5or the $ro1et manager !Coo$er et al%" 2##" $%'(
.eaknesses analysis o5 urrent riskmanagement models
The reference "odels alluded to can &e cate!ori+ed into to!eneral !roups8
6roup A8 These "odels specificall* deal ith ris "ana!e"ent su&-ectsrefer to the details of the processes and pro3ide di>erent case studiesand solutions such as CooperGs Model.
6roup B8 These "odels are parts or su&sets of pro-ect "ana!e"ent
"odels and processes. As a result the* do not !o into detaileddescription and anal*sis of the ris "ana!e"ent processes rathertheir purpose is to descri&e the !eneral and o3erall processes of ris"ana!e"ent. The* do not nor"all* refer to co"plete details of the ris"ana!e"ent process.
Anal*+in! eanesses of ris "ana!e"ent "odels leads to the outco"es as listed&elo8
Most of these "odels ha3e introduced the first step of ris "ana!e"ent asDRisIdentificationE
#one of these "odels relate to a specific industr*. The* are all !eneric"odels as opposed to &ein! industr* custo"i+ed and tailor "aid.
Ris "ana!e"ent process step Mana!e"ent 4uestion
1sta&lish the contet hat are e tr*in! to achie3e
Identif* the riss hat "i!ht happen H
Anal*i+e the riss hat "i!ht that "ean for the
pro-ectGs e* criteria H
13aluate the riss hat are the "ost i"portant
thin!sH
Treat the riss hat are e !oin! to to do a&out
the" H
Monitor and Re3ie o do e eep the ris under
control H
Co""unicate and Consult ho should &e in3ol3ed in the
process H
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There are no sa"ple for"ats nor patterns or ea"ples introduced in the"ecept for %RI#C12 and CooperGs "odel hich use ris classification patterns andsa"ples.
#one of the" introduce a pattern for ris "ana!e"ent in a specific pro-ectt*pe.
The "odels do not use %1RT or 61RT "ethods nor pro-ect "ana!e"entand pro-ect ris "ana!e"ent softares.
Mentioned "ethods are "ostl* presented in standard and "odelin! le3els and donot anal*+e details or do not pro3ide instructions or tools for detailed usa!e.Althou!h the nature of "odels and standards is to cope ith principles and!eneral processes and one cannot 4uestion the" for this "atter it is o&3iousthat these "odels are so"eti"es di>icult to &e adopted for use &* eperts and"ana!ers of a specific industr*. This results in less perfor"ance producti3it*
hile i"ple"entation and conse4uentl* poor i"ple"entation. A trend of definin!and creatin! practical "ethods for ris "ana!e"ent in di>erent industries isrecentl* e"er!in! and &ein! de3eloped (as in the pro-ect ris "ana!e"ent"ethodolo!* of 'asol 'outh Africa 'tatoil Michi!an oil and !as) hoe3er in Iranthere is no national or specific "ethodolo!* for ris "ana!e"ent in specifiedindustries. This encoura!es further de3elop"ent.
Methodology and Researh
6esign
'election of the factual ind of research "ethodolo!* is &eneficial for directin! aprosperous case stud*. 'ince this thesis is focused on anal*+in! di>erent "ethodsof ris "ana!e"ent "ainl* %MBO, %RI#C12 Cooper and ai"s to de3elop a"ethodolo!* of ris "ana!e"ent in 1%C pro-ects particularl* in oil and !asindustr* a 4ualitati3e research "ethodolo!* has &een chosen as the ade4uateapproach to perfor" our research. Considerin! that the purpose of this thesis isthe de3elop"ent of a "ethodolo!* for ris "ana!e"ent in 1%C pro-ects 3arious oiland !as co"panies in 'eden and #ora* ere contacted re!ardin! our interesttoards "ethodolo!* de3elop"ent on pro-ect ris "ana!e"ent. As a result of lacof responses it has &een decided to select an on=!oin! Iranian 1%C oil and !aspro-ect called DBid&oland II 6as Treatin! %lantE as a case stud*. The authors of this
thesis had pre3ious -o& eperience on &oth "ain o>ice and construction site of thepro-ect.
Accordin! to 6hauri and 6ronhau! (200;) the pi3otal fact of 4ualitati3e research"ethodolo!* is to accu"ulate aareness 3isions and perceptions and to createtheor*. ith the application of this "ethodolo!* it is possi&le to accu"ulateaareness and shape theoretical clarification in order to approach our researchchallen!es.
In accordance ith Br*"an and Bell (200) 4ualitati3e research is a "ethodolo!*that "ainl* !i3es priorit* to ords instead of calculations and it focuses onthe association a"on! theoretical fra"eor and research. This thesis has
&een conducted ith "aterial "ainl* o&tained fro" the pro-ect and theco""unications e had ith the indi3iduals orin! there. This "ethod of data!atherin! for research fro" or!ani+ations and indi3iduals has &een supported &*
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1risson and ,o3alainen (2007) ho ha3e stated that "ost researchers usin!4ualitati3e research "ethodolo!* concentrate on co"panies and indi3iduals assources of data.
)heme o5 ResearhThe strate!* and desi!n of a research is !enerall* part of a researchsche"e. The o3erall 3ie of the research is pro3ided &* the researchstrate!* for instance if the research is intended to clarif* a pro&le" or if itis focused on findin! an anser and pro3idin! reco""endations. Theresearch strate!* also assists in la&elin! the concentration of the stud*. Onthe other hand research desi!n deli3ers a !eneral plan and approach to!ather infor"ation. %hilli&er et al. (9@70) state that research desi!npro3ides !uidelines of the research. It also pro3ides responses andsolutions to areas of research 4uestions appropriate infor"ation and"ethod of collectin! and anal*+in! the contents.
One of the "ain focuses of this thesis is to direct an in3esti!ati3e researchand to concentrate on a specific case stud* ith the ai" of creatin! a tailor"aid "ethodolo!* hich can &e i"ple"ented in si"ilar pro-ectsparticularl* in the oil and !as industr* and in 1%C pro-ects
6ata 7atheringe ha3e utili+ed to di>erent steps for data !atherin! one for theoreticalfra"eor and the other for the e"pirical or
6ata gathering 5or theoretial 5rame8orkIn order to ac4uire an understandin! of the su&-ect of ris "ana!e"ent3arious &oos ha3e &een studied. To o&tain an etended understandin! ofthis field scientific articles fro" the data&ases 1"erald and Business'ource %re"iere ha3e also &een studied. $irst the result of the literaturere3ie concernin! the ris ris "ana!e"ent !eneral procedures andrelated topics is presented. This is folloed &* co"parison of di>erent"ethodolo!ies of ris and the process of data !atherin! is presentin! in thestep &elo.
6ata gathering 5or em$irial 8ork
A"on! the different possi&ilities the appropriate "ethod for our thesis asthe case stud* "entioned pre3iousl*. Accordin! to 6hauri and 6ronhau!(200;) a case stud* is an eplanation of controllin! and "ana!in!circu"stances includin! infor"ation !atherin! fro" se3eral sources.
In this thesis e used 3arious a*s to !ather infor"ation. Our pri"ar*source as inter3ies ith the pro-ect tea" personal eperience in si"ilarpro-ects or!ani+ations e& pa!es di>erent reports and docu"ents fro" theor!ani+ation. ?sin! the ad3anta!e of prior -o& eperience in the pro-ect andnoin! the sta> conductin! infor"al con3ersations pro3ided us ith a
&roader idea of the challen!es and possi&le solutions.
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Other research "ethods use a &roader focus hich leads to a less in depthanal*sis of pro&le"s. In our case since e used case stud* research"ethod it focuses on one specific concern or pro&le" and then anal*+es itin depth. To stren!then the state"ent a&o3e ,othari (200) indicates theidentical approach in his article &* characteri+in! this process of stud* hich
uses depth rather than &readth. B* usin! our earlier noled!e and eistin!theories data !atherin! as carried out 3er* cautiousl* and its assess"entas carefull* ea"ined.
Accordin! to Bechhofer and %aterson (2000) data collection &* inter3ie isa "ethod that re4uires co""unication. Jarious t*pes of inter3ies eistith their ad3anta!es and disad3anta!es. This places the responsi&ilit* onthe researcher to decide hether an inter3ie is the proper a* to collectinfor"ation. The reason for selectin! the inter3ie "ethod as our researchprocedure is our accessi&ilit* to the top "ana!e"ent of pro-ect or!ani+ationas a result of our pre3ious or and also as it is a practical a* to !ather
useful infor"ation fro" the appropriate personnel. 'i"ilarl* 1risson and,o3alainen (2007) stress the fact that "utual "oti3ations of inter3ieusa!e in 3arious researches is that the* are ell=or!ani+ed capa&le realand practical techni4ues to !ather data that are not easil* accessi&le inarticles and &oos.
To possi&le inter3ie techni4ues ere useful for our research na"el* these"i=structured inter3ie and the structured inter3ie. $ro" those totechni4ues e selected the se"i= structured inter3ie "odel hichpro3ided the possi&ilit* and sufficient freedo" to !ather "ore data that ledus to produce a solution to our research pro&le". It is 3er* i"portant thatthe respondents are co"forta&le ith the 4uestions and the inter3ieer andin this re!ard e decided to conduct the inter3ies in the %ersian lan!ua!e.
This led to co"prehensi3e responses in a friendl* at"osphere. %hilli&er etal. (9@70) states that it is essential to ha3e a
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pleasant and approacha&le "anner durin! the inter3ie. The* also stressthe fact that the use of ac4uainted lan!ua!e helps respondents rela.
The ai" of conductin! the inter3ies as to create a data&ase fro"opinions of those eperts in3ol3ed in the oil and !as industr* of Iran and of
the Bid&oland !as treatin! plant pro-ect. The !oal as to &uild a &asis forfurther anal*sis re!ardin! ris situations ithin the pro-ect and the industr*as a hole alon! ith e>ecti3e ris or!ani+ation "ethodolo!*de3elop"ent lessons learned and their related eperiences.
Thirteen "ana!ers a"on! Bid&oland II staff ere selected for Inter3ies.The* &elon! to di>erent "ana!erial le3els so"e are located at "ain o>ice(Tehran Iran) and so"e are site residents (Beh&ahan Iran). 'ince this asauthorsG pre3ious orin! en3iron"ent and the respondents ere fa"iliarith the inter3ieer inter3ies &ooed easil* and approi"atel* one houras allocated to each inter3ie. Inter3ie 4uestions handed in a fe
da*s in ad3ance to !et &etter results. Furin! the inter3ies short notesere ept for later anal*sis. Appendi A and B contain the list of inter3ie4uestions and inter3ieed personnel.
$urther"ore the process trian!ulation techni4ue as selected as a suita&leapproach for co"parison of the !athered infor"ation. Trian!ulation is asi!nificant techni4ue for co"parison and co"ple"entar* e3aluation of sa"esituation in 3arious 3ersions (Altrichter et al. 2007). Infor"ation !atheredfro" 3arious "ethods "entioned a&o3e includin! e& pa!es inter3iesand or!ani+ation reports enhanced trustorthiness and consistenc* of theinfor"ation.
Appendi A and B contain the list of inter3ie 4uestions and inter3ieedpersonnel.
6ata +nalysishen all of the data is collected the final and essential step is data anal*sis.It in3ol3es treatin! "ana!in! and anal*+in! of all infor"ation !athered inpre3ious phases particularl* in data collection. In "ost cases of4ualitati3e research "ethodolo!* the infor"ation !athered is in ordshich create co"plications for a researcher. Accordin! to Miles andu&er"an (9@@) infor"ation !athered throu!h 4ualitati3e research isa"orphous and &ul* considerin! the fact that it usuall* consists of tets.It follos that the "ain responsi&ilit* falls on the researcher to e3aluate thecollected data and present it in an appropriate "anner.
Em$irial 9ndings and +nalysisCase 6esri$tion
Pro1et name: Bid&oland II 6as Treatin! %lant Client: #ational Iranian 6asCo"pan* (#I6C) ;oation: Beh&ahan 'outh est of Iran Contrat $rie:
. Billion ?'F6uration o5 8ork: "onths
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Pro1et desri$tion:
1%C phases of the 6as Treatin! %lant ith capacit* of ;< MMM/d ("illioncu&ic "eters per da*) of !as processin! for production of C9 C2 #aphthaand Li4uefied %etroleu" 6as (L%6) and also pipelines facilities. The pro-ect
is on turne* &asis.
)o$e o5 8ork:
Re3ie of en!ineerin! and necessar* a"end"ents for the ne !as feed.
%rocure"ent.
Construction of ci3il "echanical electrical instru"entation controlroo" (FC' K
Fistri&uted Control '*ste") and sitch roo".
Co""issionin! and start=up.
Target Prodution:
#aphtha ;0000 tons/*ear
L%6 9
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!ases such as ethane &utane propane and seet !as for ho"e usa!e. Thisproducts ill &e transported to Mahshahr %ort in %ersian 6ulf 3ia pipelines.
The pri"ar* contract as si!ned in une 200; &eteen #I6C (the client) anda consortiu" of four en!ineerin! and construction co"panies8 Costain (?,)
Fra!ados ('pain) 'a+eh (Iran) and ahanpars (Iran) ith the re!istrationnu"&er of @2. The first ad-ust"ent of the contract as si!ned in an200 &eteen the client and the 'a+eh=ahanpars consortiu" due to thefact that Costain and Fra!ados left the pro-ect. 1arl* or a!ree"ent of thepro-ect as si!ned in 'ep 200 and '#C La3alin (Canada) %rosernat(Mala*sia) and RI%I (Iran) co""enced the $ront 1nd 1n!ineerin! Fesi!n($11F). Rou!h !radin! of the plant as assi!ned to the consortiu" as a3ariation order of 202@@2 A"erican dollars and the e>ecti3e date of thecontract as on Fec 9th 200.
$i!ure = $eed and %roducts %ipeline Bloc Fia!ra"
The pro-ect consists of three parts referred to as the paca!es8 A B and C.
%aca!e A8 6as Treatin! %lant
%aca!e A includes a !as treatin! plant hich is aarded to 'a+eh=ahanparsconsortiu"s.
%aca!e B8 MahshahrGs pipelines and facilities
%aca!e B includes MahshahrGs pipelines and facilities hich is aarded toTehran onoo&= CBI consortiu".
%aca!e C8 Infrastructures
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%aca!e C consists of 3arious co"ponents includin!8 1lectrical suppl* atersuppl* non= industrial &uildin!s access roads residential &uildin!co""unication s*ste" and -ett*.
All contractors are super3ised and "ana!ed &* the 1I1F Co"pan* ho has&een assi!ned the role of direct representati3e of the client.
Risk management and insurane in oil and gas and
$etrohemial industry
The insurance industr* as an econo"ic su§ion is responsi&le for
accu"ulation of the capital and to increase ecita&ilit* of production
factors "ost e>ecti3el* in order to reduce the ris costs of the econo"ic
acti3ities. At the present ti"e the insurance industr* of na"e countr* isnot a&le to respond to de"ands for lia&ilit* co3era!e especiall* in the
ener!* transport industries and "inin! sections. Conse4uentl* it is
una&le to e>ecti3el* participate in the eistin! econo"ic cli"ate (BI
200
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6reat !ap &eteen consu"ers and
producers in this area.
Contracts related to these industries are lon! ter" and are usuall*lon!er than the tenure of states and !o3ern"ents.
Non-$ayment and
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lia&ilit* co3era!e in the oil and !as industr* fro" 29 in 200 to .9erin! 3arious insurance co3ers. Insurers
need to co"pensate da"a!es occurrin! in the eploration "inin!
technolo!* and suppl* riss steps resultin! fro" eplosions Nres
earth4uaes contractors e4uip"ent and "achiner* installation in addition
to lar!e econo"ic in3est"ent the oil industr* re4uires ad3anced
technolo!*. To use this technolo!* the pro3ision of professional andsilled "anpoer is ine3ita&le (BI
200
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$i!ure ; = Fe3eloped "ethodolo!* su!!ested &* authors
Risk Feasi3ility study
Main In$ut:
%lan or pro-ect feasi&ilit* stud*
Ma1or +ti
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Ris feasi&ilit* %aca!e
Ma1or +ti
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%repare for"s docu"ents and procedures re4uired for
infor"ation circulation.
%ro3ide re4uired RB' (Ris Breadon 'tructure) alon! ith
the pri"ar* chec list.
Main Out$ut:
Ris "ana!e"ent "anual throu!h 3arious phases.
)te$ &:To consider and de3elop a deNnite schedulin! (de3elop a
distinct plan)
The plannin! di3ision is responsi&le for this step. $urther"ore this
unit ill &e considered as the Main Input too.
Main out$ut:
FeNnite pro-ect plan(Ti"e schedule should &e prefera&l* !i3en to
le3el or .Also process of ris anal*sis "ust &e applied on the
or paca!es le3el).
'tep ;8 Ris identiNcation and ris "iti!ation accordin! to the
schedulin! plan and chec lists of riss and ris !roups (B' RB')
(or Breadon 'tructure Ris Breadon 'tructure)
Main in$uts:
%ro-ect ti"e schedule
RB' and chec list of riss
Ris "ana!e"ent annual and procedures
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Ma1or +tiecti3e and prioriti+ed riss.
List of secondar* and uncertain riss.
)te$ =: :ualitati3e ris anal*sis and de3elop"ent of an
inte!rated ris plan and schedule
Main In$uts:
Co"plete list of crucial e>ecti3e and prioriti+ed riss.
%ro-ect ti"e schedule
Ma1or +ti
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Ris "ana!e"ent annual and procedures throu!h di>erent
phases of the pro-ect
Ma1or +ti
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%eriodical update of ris lists and ris plan
%eriodical ris reportin!
Recordin! lessons learned a&out riss durin! the pro-ect
i"ple"entation
Main Out$ut:
?pdated ris plans
Im$lementing methodology in Bid Boland II gas treating
$lant $ro1et
In order to anal*+e and test this "ethodolo!* e ha3e focused on
di>erent steps of the "ethodolo!* throu!h the pro-ect.
)te$ ': Risk 5easi3ility )tudy
%ro-ect ris "ana!e"ent strate!ic plannin!
In the case of eecutin! pro-ect strate!ic "ana!e"ent it is
possi&le to "ae utili+e the outco"es and results of the strate!ic
"ana!e"ent at this le3el. The results o&tained of 'OT anal*sis
are especiall* useful at this le3el. Otherise i"ple"entin! ris
"ana!e"ent in the pro-ect ill &e dependent upon ide=ran!in!
'OT anal*sis and epertsG inter3ie. In this pro-ect 'OT
anal*sis has &een carried out in a co"prehensi3e "anner. After
!atherin! co""ents and holdin! inter3ie sessions the folloin!
results ha3e &een collected8
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Accordin! to these factors inspectin! riss in the pro-ects are
necessar*8
S #ature of the pro-ect is consortiu" &ase
S This pro-ect is an 1%C and the riss eistin! in the
en!ineerin! procure"ent and construction phases a>ect the other
phases.
S The pro-ect has &een &id for a second ti"e &ecause of
cancellation of the Nrst &id due the eit of to of the consortiu"
parties (out of four).
S Considera&le increase of internal !as de"and hich has "ade
it a critical product.
S The countr*Gs uni4ue position of possessin! the second
lar!est reser3oirs of natural !as in the orld and desire to eport.
Considerin! to the pro-ect life c*cle status (&oth &efore and after
contract)
The scope of the pro-ect is clearl* deNned and the pro-ect is
on!oin!. Therefore the need for a detailed and co"prehensi3e
anal*sis is o&3ious.
+naly>ing the $ro1et/s organi>ational hierarhy !$ri
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$urther"ore the pro-ect is to &e acco"plished &* a consortiu"
and ill &e eecuted &* "ulti corporations. Conse4uentl* the
eecuti3e "ana!e"ent of the consortiu" should follo the
contract fra"eor of ti"e cost and
4ualit* and pro3ide "ore proNt to the related co"panies
throu!h an e>ecti3e ris "ana!e"ent process.
Considering to the $ro1et im$lementation method !EPC" in
house" 6B" 6BB?(
The "ethod of pro-ect i"ple"entation is 1%C and all phases
consistin! of desi!n purchase &uild and operate are under the
"ana!e"ent and control of the consortiu" contractor.
Conse4uentl* en!ineerin! phase riss ill ha3e an e>ect on
the procure"ent and construction phases and procure"ent riss
ill inuence the other phases.
Considering to the $ro1et ontrat and $ayment method
!lum$ sum-ost $lus?(
The pa*"ent "ethod of the pro-ect contract is lu"p su" .This
"ethod ill increase the ris of the contractor and ill necessitate
the i"ple"entation of a ris "ana!e"ent "odel in the pro-ect.
Therefore the contractor "ust i"ple"ent ris "ana!e"ent in the
pro-ect in order to decrease the costs.
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Contrators" onsultants and inect on the pro-ect.
Pro1et analysis at the $ort5olio leation"
ministry" ountry and region(
The pro-ect ill &e anal*+ed at the contractorGs or!ani+ation le3el.
The consortiu" "ana!e"ent ill atte"pt to decrease the costs
throu!h ris "ana!e"ent and create "ore proNts for the pro-ect
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the "ana!e"ent ill stri3e to deli3er the pro-ect on ti"e and
ithin the deNned speciNcation to the client.
&%=%'%A 6eision making a3out desired le
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Ris "ana!e"ent at the o3erall le3el of the pro-ect
Ris "ana!e"ent alon! ith allocatin! an epert
ris "ana!e"ent tea" e3aluatin! details and de3elop ris
procedure
Accordin! to the ac4uired score it &eco"es o&3ious that
i"ple"entin! ris "ana!e"ent is an essential and necessar*
"atter.
)te$ 2: 6e
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)te$ 0: 6e
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The "ethodolo!* applied on the pro-ect is a co"&ination of
'ha"po %MBO, and %rince2 "odels. $urther"ore all
re4uire"ents and needs related to the 1%C pro-ects and oil and !as
pro-ects ha3e &een taen into consideration.
The tools used in this model are listed as 5ollo8s:
Brain stor"in! "ethod ris response 4ualitati3e ris response
4uantitati3e anal*sis ris si"ulation etc.
S Applied softare8 %ri"a3era %ert"aster
S Re4uired for"s and procedures
S %repare re4uired RB' alon! ith pri"ar* chec lists.
$riority is
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S 'ince the pro-ect ti"e schedule is 3er* detailed it "a* &e
dicult or 3er* ti"e consu"in! to etract and anal*+e riss &ased
on this plan. It is i"portant to note that the 4ualitati3e ris anal*sis
step a suita&le ti"e schedule is re4uired for 4ualitati3e anal*sis.
'ince the pro-ect ti"e schedule consists of 3arious acti3ities a
li"ited section has &een selected to anal*+e. This schedulin! plan
has &een prepared &* the contractor and has &een 3eriNed &* the
client and pro-ect MC (Mana!in! Contractor).
Main output8
FeNnite pro-ect plan(Ti"e schedule should &e prefera&l* !i3en to
le3el or .Also process of ris anal*sis "ust &e applied on the
or paca!es).
)te$ : Risk identi9ation and risk mitigation aording to
the time shedule and hek lists o5 risks and risk grou$s
!.B)" RB)(
Main in$uts:
S Ti"e schedule
S RB' and chec list of riss
S Ris "ana!e"ent re!ulations
Ma1or +ti
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into di>erent disciplines hich ere intended to eecute di>erent
sets of tass. ith the aid of &rain stor"in! epert "ethod Felphi
"ethod and the other tools each discipline as in3ol3ed to identif*
the ris of the pro-ect. ?sin! the RB' in parallel ith the ti"e
schedule could possi&l* raise the pro&le"s of o3er allocation
resource li"itation unforeseen dela*s need for etra "one* o3er
or and the use of su&contractors. As a result ris re!ister
ere de3eloped after !atherin! concludin! and "iti!ation of
riss. I"portant riss ill &e transferred to the net step.
S Ris IdentiNcation8 Brain stor"in! 1pert "ethod Felphi
"ethod are "ost fre4uentl* used durin! ris identiNcation step.
S Ris "iti!ation
Main Out$uts:
S Co"plete list of crucial e>ecti3e and prioriti+ed riss.
S List of secondar* and uncertain riss.
'tep
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S Appl* riss on schedulin! process. The co"plete ti"e
schedule as re3ised considerin! to hi!h ris tass and re4uired
lead la! etra resources crashin! fast tracin! etc. As Mulcah*
(200) descri&ed tass ith "ore predecessors are "ore ris* than
tas ith sin!le or less predecessors. These identiNed tass in the
detailed le3el of the pro-ect ere atte"pted to &e ris="iti!ated &*
appl*in! di>erent techni4ues of plannin! and schedulin! acti3ities
in parallel ith 3arious resources. Another approach at the top
le3el of the schedule as to consider su""er* acti3ities
or hi!h ris "ilestones and atte"pt to consi!n the" to a loer
le3el of ris than the re3ised planGs initial de3elop"ent. $ast
tracin! and crashin! hich are to tools used to free+e the ti"e
schedule ere in this case utili+ed to appl* the riss to the
schedule.
S Cost anal*sis of riss. $inancial conse4uences of ris ere
anal*+ed &ased on the ti"e schedule and also on the contin!enc*
plans. Riss ith "ore se3ere conse4uences anal*+ed and planned
to &e treated e3en ith hi!her cost approaches.
Main Out$ut:
S Ris plan (re3ised ti"e schedule &* appl*in! the ris on the
pri"ar* plan of the pro-ect)
)te$ : To dee res$onse
$lan ost
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Main In$uts:
S Ris plan (re3ised ti"e schedule &* appl*in! the ris on the
pri"ar* plan of the pro-ect)
S Ris "ana!e"ent re!ulation throu!h di>erent phases of 1%C
pro-ect
Ma1or +tiecti3e solution for di>erent t*pes of riss.
S There as a need for a re3ision of the pro-ect plan and
anal*sis of the "ain plan &efore and after the ris reduction
hich as one of the "a-or acti3ities acco"plished in this step.
S Appro3e and Nnali+e the pri"ar* response plan de3elop
schedulin! and indicate eecuti3e responsi&le. Ris response plan
ere de3eloped and proper responsi&le resources ere assi!ned to
acti3ities. The pri"ar* ti"e schedule as re3ised to loer the ris
le3el and to &e coordinated ith the ris response plan. As e3er*
plan re4uires resources 3arious t*pes of resources ere assi!ned
to these referred plans.
Main Out$uts:
S Ris response plan
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S Cost anal*sis on the ris response plan
S Re3ised ti"e schedule and eecuti3es resource assi!n"ent
)te$ A: Periodial risk monitoring" ontrolling and traking
Main Inputs8
S Ris response plan
S Cost anal*sis on the ris response plan
S Re3ised ti"e schedule and eecuti3es resource assi!n"ent
Ma-or Acti3ities8
S B* eecutin! the plan as the ti"e schedule is !raduall*
&ein! i"ple"ented the ris response plan is &ein! i"ple"ented in
parallel
S ?pdatin! the ris re!ister and the ris response plan as an
iterati3e and continuous tas is considered and folloed
S %eriodical ris reportin! pla*s an i"portant role for collectin!
the re4uired feed&ac and perfor"in! the correcti3e actions.
S Record lessons learned a&out riss durin! the pro-ect
i"ple"entation
Main Output8
S ?pdated ris response plans contin!enc* plans &acup plans
S ?pdated ti"e schedule
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S Recorded lessons learned
Im$lementing methodology in Bid Boland II gas treating
$lant $ro1et
In order to anal*+e and test this "ethodolo!* e ha3e focused on
different steps of the "ethodolo!* throu!h the pro-ect.
)te$ ': Risk 5easi3ility
)tudy
Pro1et risk management strategi
$lanning
In the case of eecutin! pro-ect strate!ic "ana!e"ent it is possi&le to"ae utili+e the outco"es and results of the strate!ic "ana!e"ent at this
le3el. The results o&tained of 'OT anal*sis are especiall* useful at this
le3el. Otherise i"ple"entin! ris "ana!e"ent in the pro-ect ill &e
dependent upon ide=ran!in! 'OT anal*sis and epertsG inter3ie. In this
pro-ect 'OT anal*sis has &een carried out in a co"prehensi3e "anner.
After !atherin! co""ents and holdin! inter3ie sessions the folloin!
results ha3e &een collected8
Accordin! to these factors inspectin! riss in the pro-ectsare necessar*8
#ature of the pro-ect is consortiu" &ase
This pro-ect is an 1%C and the riss eistin! in the en!ineerin!
procure"ent and construction phases a>ect the other phases.
The pro-ect has &een &id for a second ti"e &ecause of
cancellation of the first &id due the eit of to of the consortiu"
parties (out of four).
Considera&le increase of internal !as de"and hich has "ade it a
critical product.
The countr*Gs uni4ue position of possessin! the second lar!est
reser3oirs of natural !as in the orld and desire to eport.
Considering to the project life cycle status (both before and
after contract)
The scope of the pro-ect is clearl* defined and the pro-ect is on!oin!.
Therefore the need for a detailed and co"prehensi3e anal*sis is o&3ious.
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Analyzing the projects organizational hierarchy (private,
governmental)
It should &e considered that the pro-ect is &ein! carried out &* the pri3ate sectorhich increases the i"portance of the issue. $urther"ore the pro-ect is to &e
acco"plished &* a consortiu" and ill &e eecuted &* "ulti corporations.Conse4uentl* the eecuti3e "ana!e"ent of the consortiu" should follo thecontract fra"eor of ti"e cost 4ualit* and pro3ide "ore proNt to therelated co"panies throu!h an e>ecti3e ris "ana!e"ent process.
Considering to the $ro1et im$lementation method !EPC" in house" 6B"6BB?(
The "ethod of pro-ect i"ple"entation is 1%C and all phases consistin! of desi!npurchase &uild and operate are under the "ana!e"ent and control of theconsortiu" contractor. Conse4uentl* en!ineerin! phase riss ill ha3e ane>ect on the procure"ent and construction phases and procure"ent riss ill
inuence the other phases.
Considering to the $ro1et ontrat and $ayment method !lum$ sum-ost$lus?(
The pa*"ent "ethod of the pro-ect contract is lu"p su" .This "ethod ill increasethe ris of the contractor and ill necessitate the i"ple"entation of a ris"ana!e"ent "odel in the pro-ect. Therefore the contractor "ust i"ple"ent ris"ana!e"ent in the pro-ect in order to decrease the costs.
6isussion and Conlusion
1"er!in! "e!a=pro-ects e3er "ore co"ple and hi!hl* technical are addressin!ne challen!es ithin the Neld of pro-ect "ana!e"ent. %ro-ect ris "ana!e"ent asone of the latest areas of pro-ect "ana!e"ent has &eco"e "ore pro"inent inrecent *ears as pro-ect "ana!ers increasin!l* reali+e the e>ects of ris"ana!e"ent on deli3erin! a pro-ect on ti"e ithin the &ud!et ith predeNned4ualitati3e and technical characteristics. 1%C pro-ects hich are !enerall*considered to utili+e one of the "ore co"ple i"ple"entation "ethods ha3e three"ain phases and in3ol3e 3arious inds of contactors and su&=contractors. Theseparticipants "a* &e t*picall* fro" en!ineerin! a!ents procure"ent &odiesconstruction or co""issionin! contractors. The nature of 1%C pro-ects consideredith pa*"ent "ethods can introduce 3arious t*pes of riss to the pro-ect atdi>erent le3els. Most of the ad3anced co"panies &e!in the pro-ect ris"ana!e"ent process at the earl* steps of tenderin! e3en thou!h there is no!uarantee that the tender ill result in a contract aarded. the* start the pro-ectris "ana!e"ent process as the part of pro-ect "ana!e"ent ors. %ro-ect ris"ana!e"ent thus &eco"es an inte!ral part of the o3erall "ana!e"ent philosoph*fro" the initial pro-ect proposal. This can &e 3er* &eneNcial to a co"pan* as at anearl* sta!e it "a* so"eti"es identif* pro-ects hich ha3e feer added 3aluesthan epected and are not feasi&le.
The oil and !as industr* in3ol3es "an* of pro-ects ith hi!h &ud!ets usin! co"pletechnolo!ies. These pro-ects ith lar!e a"ount of acti3ities 3arious in3ol3ed
parties and 3aried resources are the "ain focus of this thesis. The Iranian oil and!as industr* has so"e uni4ue and challen!in! ris areas than the other co"paniesaround the orld due to its !eo= political issues. The pro-ects deNned in Iran are
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considered as serious contenders of ris "ana!e"ent s*ste"s hich arecusto"i+ed to &e applied easil* and e>ecti3el*.
International pro-ects utili+e 1%C t*pe of contractin! and the unillin!ness ofIranian co"panies to e"&race 1%C contracts "a* &e one of the reasons for lac ofparticipation in international contracts. The root cause can &e related to lesstechnical facilities and capa&ilities.
Iranian co"panies need to consider ne arran!e"ents and re4uiredstrate!ies for participatin! in 1%C tenders. The* need to co"pete on theinternational le3el ith the other co"panies ho ha3e &een usin! 1%C contracts for"an* *ears. Clearl* ithout a "ore a!!ressi3e approach Iranian co"panies illfail to in tenders and ill &e una&le to esta&lish a "aret leadershipposition or the* can !ain the position of second hand contractors in the &estcase scenario.
In Iran Nrst $IFIC t*pe contracts ere used in the !o3ern"ental or!ani+ation ofplannin! and &ud!etar* a>airs &* ac4uirin! loans fro" the orld Ban in9@ect on the pro-ect. As a !eneral rule in pro-ect ris "ana!e"entliterature riss hich happen in the earl* sta!es of a pro-ect should &e anal*+ed in!reater detail as the* can ha3e an enor"ous e>ect on the o3erall pro-ect lifec*cle.
The conse4uences of these e>ects can lead to unpredicted situations ithadditional ti"e "one* and resources allocated as a result of unforeseen chan!esin the pro-ect.
Man* factors such as pro-ect location en3iron"ent current political situationpa*"ent "ethod and ter"s Nnancial sta&ilit* of the client and contractors alon!ith the current "acro=econo"ic conditions the a&ilit* to use &anin! ser3ices forLetter of Credit (LC) ors contractors technical !rade and eperience on the Neldof !i3en pro-ects and pro-ect or!ani+ation should &e considered as i"portant factorsto &e e3aluated in the earl* sta!es of the pro-ect &ecause the* "a* create so"eriss and there should &e proper strate!ies selected to handle the riss that are
e"er!in! &ecause of these characteristics. Insurance and lia&ilit* co3era!e is alsoan i"portant factor to &e considered.
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There are di>erent approaches to "ana!e pro-ect ris as deNned &* 3arious sourcesand or!ani+ations. The reason for the de3elop"ent of di3erse "ethodolo!ies can&e attri&uted to the 3arious 3iepoints toard ris. hile the "ain !oal of the ris"ana!e"ent "odels is to "ana!e the ris issues and "iti!ation of the se3erit* andconse4uences their "ethod of achie3in! this !oal "a* di>er. The depth and thele3el of focus on processes related to di>erent steps of "ana!in! the ris aredi3erse.
'o"e ris "ana!e"ent "odels are a su&set of lar!er pro-ect "ana!e"ent "odelhich atte"pts to anal*+e and control the ris in a "ore !enerali+ed a*. In so"e!roups there are "odels hich are desi!ned speciNcall* for the application of ris"ana!e"ent. These !roups tend to consider the ris at a "ore detailed le3el. Thisthesis epress that none of these "odels are custo"i+ed for a speciNc industr* andfurther"ore do not introduce a pattern for a speciNc pro-ect t*pe. Most of these"odels do not use sa"ple for"ats and patterns. One of the "ost i"portant issuesith these "odels is that the* do not appl* so"e of "ost fre4uentl* used "ethodsand softare paca!es a3aila&le to application of the ris and pro-ect "ana!e"ent
techni4ues such as %1RT 61RT or Mont Carlo. These issues !eneratesucient "oti3ation to adopt a "ethodolo!* de3elop"ent hich can &e easil*applied &* "ana!ers of speciNc industries. This should lead to hi!her perfor"anceand producti3it* ashas &een the case ith so"e lar!e co"panies ho &e!an to de3elop their on ris"ana!e"ent "ethodolo!ies &ased on their indi3idual re4uire"ents and&usiness en3iron"ent. 1a"ples are 'tatoil Michi!an oil and !as and 'asol.
The authors su!!ested "ethodolo!* has &een de3eloped &ased on discussion itheperts lessons learned in the oil and !as industr* and Nnall* aco"&ination of !eneral "ethodolo!ies of "ainl* %MBO, %RI#C12 Cooper ith ane*e on stren!ths and eanesses of eistin! "ethodolo!ies.
#or"all* related "odels in this Neld &e!in ith the ris "ana!e"ent procedure andris identiNcation. The su!!estion in this proposal "ethodolo!* is that the initialstep should &e ris feasi&ilit* stud*. This approach ill encoura!e the co"pan* totae an in depth loo at the co"pan*Gs strate!ic plan pro-ect life c*cle structurei"ple"entation "ethod pa*"ent "ethod portfolio and or!ani+ation alon!ith desired ris le3el and contractors circu"stances and suita&ilit*. It illalso "ae it possi&le to &e!in the ris "ana!e"ent processes prior to settin! up atender "eetin!. %re=tender and tender steps are i"portant steps in the pro-ectlifec*cle. These steps are often o3erlooed or i!nored. The eperience in Bid&olandII !as treatin! plant pro-ect de"onstrated that so"e of co"panies scheduled toattend to the tender "eetin! decided a!ainst doin! so after perfor"in! a hi!hle3el ris anal*sis on the pro-ect en3iron"ent and the clients Nnancial situation.Ma-or a>ectin! factor on their anal*sis as pro-ect en3iron"ent hich as deepl*a>ected &* !eo=political issues and the Nnal conclusion reached as that there asnot enou!h trust in the client to &e a&le to support the pro-ect Nnanciall* &ased onthe contract t*pe.
'taeholderGs anal*sis in order to disco3er detailed re4uire"ents is a necessar*step hich can re3eal "ain riss desired ris le3el and also help creatin! there!ulations and procedures of the pro-ect ris "ana!e"ent.
As ris "ana!e"ent has a foot on pro-ect plannin! outco"es it is necessar* to
anal*+e the ti"e schedule ith ris outloo to ease ris identiNcation and ris"iti!ation e>orts. In Bid&oland ith the ti"e schedule of ei!ht* thousand acti3itiesplanned to &e eecuted ithin fort* four "onths lots of detailed riss ere
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identiNed &* anal*+in! the ti"e schedule ith the assistance of discipline"ana!ers. The nu"&er of predecessors of an acti3it* can &e an eas* spotli!ht todisco3er acti3ities ith hi!her riss. B' and RB' are useful tools in this step.
?nlie "ost of the other "odels 4uantitati3e ris anal*sis is o"itted in presented"ethodolo!* &ecause of the structure of the "odel pro-ect t*pe and enou!he"phasi+e on 4ualitati3e ris anal*sis. Ris response plan is a set of actions &asedon their strate!ies to or on selected riss of the pro-ect considerin! to costs ofthe conse4uences and a3aila&le &ud!et throu!h the hole pro-ect life c*cle.Fe3elop"ent of ris response plan re4uires appl*in! so"e chan!es on the "ainschedule of the pro-ect. Then the ne schedule ill ha3e a loer ris le3elco"parin! to the pre3ious one. Althou!h "ain schedule of the pro-ect is a su&-ectof cost anal*sis &* responsi&le parties in the pro-ect tea" the ris response planneeds to &e treated the sa"e. In Bid&oland II !as treatin! plant pro-ect authors didnotperfor" cost anal*sis and also Nnali+in! the ris response plan de3elop"entdue to &oundaries of this research.
To eep the ris "ana!e"ent process ali3e there is a need to perfor" a periodicalris "onitorin! controllin! and tracin! on the ris response plan its costs andre3ised ti"e schedule. Mentioned step !uaranties ha3in! updated ris re!ister andha3in! an opportunit* of disco3erin! secondar* riss.
To conclude the "entioned research 4uestion has &een ansered &* de3elopin! a"ethodolo!* for ris "ana!e"ent in 1%C pro-ects. This "ethodolo!* is custo"i+edfor oil and !as industr*. The "ethodolo!* is ea"ined and anal*+ed in Bid&oland II!as treatin! plant pro-ect. The result of this thesis can &e applied in the other oiland !as pro-ects to "ana!e the pro-ect riss in "ore functional and producti3e"ethod fro" pre=tender till post= co""issionin! phase.
This thesis can &e considered as the !roundor for &uildin! the pro-ect ris"ana!e"ent s*ste" for a sin!le pro-ect in the oil and !as industr* and further"ore de3elopin! di>erent "ethodolo!ies for 3arious industries.
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Althaus C.1. 200;. A disciplinar* perspecti3e on the episte"olo!ical status of ris.
RisAnal*sis. 2;() pp. ;
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Bo*ce T. 200. %ro-ect Ris Mana!e"ent8 The Co""ercial Fi"ension.London8 Thoro!ood %u&lishin!.
British 'tandards Institution 2002.I'O/I1C 6uide 82002. Ris "ana!e"ent3oca&ular* = 6uidelines for use in standard. London8 B'I.
Br*"an A. and Bell 1. 200. Business Research Methods. 2nd ed. Oford8Oford?ni3ersit* %ress.
Bure R. 9@@@. %ro-ect Mana!e"ent8 %lannin! Control Techni4ues. rd ed. #eVor8 ohn ile* and 'ons.
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a*=6i&son #.J. 200@. A ri3er of ris8 a dia!ra" of the histor* and historio!raph*of ris Mana!e"ent. The #orthu"&ria orin! %aper 'eries8 Interdiscipli