Oil and gas development projects on the UK Continental Shelf (UKCS) need clearer definition, simplicity to the extent possible, and improvements in accountability of delivery and cooperation between companies and stakeholders, concludes a study by the Oil and Gas Authority (OGA).
Fewer than 25% of 58 of major projects executed since 2011 were delivered on time, the study found. Start-up delays averaged 10 months.
And projects delivered since 2011 were on average about 35% over budget relative to estimates in field development plans approved by the Department of Energy and Climate Change or its successor, the OGA.
Major projects covered by the study were new fields with stated capital costs at the time of sanction exceeding £50 million for new fields and £250 million for redevelopments.
The OGA estimated the 58 projects represent about 75% of total UKCS capital expenditure over the study period.
The study's general findings about definition, simplicity, accountability, and cooperation emerged in events held for 11 projects with 13 operators and complementary sessions with three key UKCS contractors involved in the projects.
Besides the general findings, the study report identified "lessons learned" in the areas of organization, project management, front-end loading (FEL), execution, and behaviors.
Organizational lessons
The study found that delivery organizations are not always delegated authority sufficient to manage projects effectively.
It also highlighted the value of time spent at the beginning of projects aligning project teams, partners, supply-chain representatives, and regulators.
"Don't wait to develop and deepen relationships until after things go wrong," it recommended.
Continuity of project teams from project to project cuts the FEL burden and increases the predictability of outcomes, the study found.
"Involve the supply chain early, develop cooperation, and strive to work as one team," it suggested. "Building a single, project-wide culture helps deliver successful projects."
Project management, FEL
In the area of project management, the study suggested companies avoid incomplete FEL at sanction. For example, "Use probabilistic costs rather than deterministic costs and schedules at final investment decision (FID)."
It further suggested project managers have "a robust, resourced cascading project schedule created by competent planners" and apply "strict management-of-change" processes for schedule as well as scope.
"Remember the project-management team is ultimately responsible for interface management," the study said. "This is not something that should be delegated."
Among the study's FEL findings is that many projects driven by schedule rather than cost began in 2012-13 with incomplete scope and unclear objectives and priorities and were delivered late and over budget.
The study also identified a high risk of failure to achieve goals if "key resources," such as drilling rigs, diving support vessels, and long-lead material, are not "tied down" at sanction.
It recommended companies assemble new project teams when they choose new or unfamiliar contractors or vendors. And for projects with important first-of-a-kind elements, companies should provide sufficient cost and schedule contingencies at sanction.
Execution, behavior
A recommendation for execution is either to finish front-end engineering and design (FEED) before starting detailed design and finish detailed design before starting construction or to aggressively manage cost-schedule and organizational risks and provide appropriate contingencies.
The study identified an "alternative view" that fast-tracking can be effective if risks and uncertainties are understood and accounted for in estimates and are managed accordingly.
Scope growth from vendor packages, specifically weight control from FEED to detailed design, is a "recurring challenge," the study found.
Calling transition management critical, the study noted that many projects underestimate offshore hook-up and commissioning. "Fabrication is rarely complete when facilities are sent offshore," it said.
And while subsea scope is "largely delivered as predicted," drilling and facilities-especially floating production, storage, and offloading vessels-"present a much larger spread of outcomes in projects."
Among behaviors identified in the study as damaging to projects are a "defer, delay, and do-nothing culture;" aversion to risk and fear of failure; reliance on policy, process, practice, and procedure; centralized functional control; micromanagement, lack of trust, overly optimistic reporting, and focus on management rather than leadership.
The study called on companies to focus on behaviors such as leadership; agility and a sense of urgency; competence and capability; devolved decision-making; accountability, authority, and autonomy; understanding that "best answers win"; and respect, integrity, and trust.