result of the first exploration of crude oil in 1956, at Olobiri and from then onwards, crude On the other

hand, financial risks are the risks coming from the capital structure, credit structure, market structure and cost reporting structure of a project. More than 5 ! of projects usuall" double the estimate cost that was forecasted for them at the on set. #$hittaker, 1991 cited in %afra&'abe(a, et al., ) *+

,ri-ate and public sector operators usuall" are affected b" power pressures in the appointment of contractors, sub&contractors and suppliers. in carr"ing out their operations in /igerian oil and gas projects. not on merit but based on whom the" know. #Ogunsemi and 0je, ) 6+ 1herefore, more costs are incurred on projects during design, construction and operation of facilities as a result of initial. poor 2ualit" materials, poor designs, poor construction works, etc. 0lso, high inflation rates, increases in taxation and -ariation in interest rates for bank loans obtained b" these contractors, inhibit the contractors meeting up with project demands with regards to finance. 3n /igeria, the introduction of 45ue ,rocess6 has made pre2ualification of contractors to gain popularit" recentl" with respect to contract award. 1he 5ue process s"stem was formed to reinstate and uphold a transparent, open, and competiti-e federal procurement s"stem that is dri-en with integrit", sustains spending within project budgets and to ensure that the implementation of projects are done within time schedule, so as to achie-e -alue for mone" outcomes without sacrificing 2ualit" and standards #7udget Monitoring and ,rice 3ntelligence 8nit, ) 0je, ) 2.7.6 6+. External and Internal risks: 9 cited in Ogunsemi and

:xternal risks are those risks that originate from a project;s surrounding en-ironment. 1he" can to some extent be calculable but the" are usuall" be"ond the control of a project #uncontrollable+. :xternal risks take se-eral forms and can be broken down further as follows< .1 3nterest rate risk< 1his is a form of financial risk that occurs because changes in interest rates affect the -alue of assets and liabilities on projects. #=oberts, et al, #) >+ 3n /igeria, due to the high inflation rate and the irregularities in the

banking sector, oil and gas projects experience irregular interest rate increases for, loans and bonds recei-ed. 1his generates increases in costs of machineries and e2uipments for construction and production processes midwa" the duration of projects and ma" e-entuall", lead to budget o-erruns on projects. 0lso interest rates ma" rise. .) 1ime&dependent risks< 1hese are risks relating to items that ha-e a fixed time limit on them. 3n /igeria, most oil and gas projects especiall". offshore projects, are usuall" fast track projects. 5esign works usuall" start immediatel" after the suppl" contracts between bu"ers and operators ha-e been confirmed. with the duration of the project fixed within a stipulated time. #Mohammed 0li and ?ouca, ) 9+ More so, when claims are not made within the timescale before the expir" of insurance policies for premiums paid for insurance co-ers on projects, there is e-er" possibilit" that there will be a net profit loss on the project. 0 t"pical example is the 'he-ron 'orporation subsidiar", 'he-ron /igeria ?td. #'/?+, which completed a @float&o-er installation; at Meji Aas Aathering and 'ompression platform #AA',+ on the :scra-os Aas project ,hase >. 3t was the first of its kind, t"pe of platform being constructed in the region because of the schedule ad-antages compared to installing the usual pre&commissioned, integrated and single piece topsides due to the tight schedule deadline of the project. #Bimmons and 5uhane", ) *+

.> 'ompetitor risks< 1hese risks relate to changes with respect to the competition base. 3t could be minor or major changes which impact on companiesCprojects. ?ack of @due processes; in contract award thereb", making the same compan" to be winning most jobs. /:1'O, a subsidiar" of //,'. #//,', ) *+ due to their strong go-ernment ties wins most of the oil and gas design contracts. 1his can make established competitors to decline suddenl" thereb", seriousl" affecting the successful implementation and deli-er" of their projects. .9 :xposure risks< 1hese are risks associated with cases where oil companies or oil and gas projects depend on few -ariables or on onl" a single -ariable for their sur-i-al. Oil and gas projects are usuall" exposed to financial #mortgages, )

insurance premiums+. ph"sical #machines and e2uipment failures+ and human #injuries, ill health and death of staff+ exposure risks. #1chanko-a, ) )+ 1his is because of the ha(ardous nature of the oil and gas products as well as the -olatile nature of the working en-ironment where oil and gas projects are carried out. .5 Bhareholder risks< 1hese are risks associated with cases where a compan" depends on shareholders e2uit" for the operations. 3n /igeria, organi(ed corruption from politicians and soldiers who ha-e looted go-ernment funds to make fortunes ha-e enabled their owning most of the pri-ate indigenous oil and gas companies especiall" in the downstream sector. #:-uleocha, ) 5+ 3f a major shareholder or a considerable amount of shareholders confidence declines in an" of these companies, and heCshe withdraws there shares, there will be a -er" significant and ad-erse effect on the compan";s projects. 3t ma" e-en lead to closing down most of the projects. .6 ,olitical risks< Ao-ernment of a countr" or of rele-ant neighboring countr";s fiscal policies can be a -er" huge source of risk on projects. Multinational oil companies in /igeria usuall" face the risk of changes in interest rates and high taxation which ma" arise due to changes in go-ernment policies. 1hese risks are usuall" managed b" multinational oil companies -ia strategic alliances, insurance and partnering. #7erlin, et al., ) >+ 1he" are also minimi(ed b" maintaining good relationships with the go-ernment, utili(ing local personnel and suppliers as much as possible and e-ading from geographical concentration. 1his enhances a good economic relationship with the host countr" and increases the compan";s chances of anticipating political and economic future changes. .D ?egislati-e risk< 1hese are risks which projects are exposed to because of the fact that, go-ernment constantl" changes old statutes and introduces new statues due to e-er changing legislati-e decisions. 1he new statutes ma" not be fa-orable on a particular project with respect to the project;s en-ironment. 0ccording to the /igerian constitution, all oil, gas and minerals belong to the federal go-ernment. #:-uleocha, ) 5+ Btatutor" re2uirements like en-ironmental legislation, health and safet" legislations, local content legislation, impose direct charges on oil >

1his is because an attack which is successful on an oil and gas facilit" or its transportation s"stem usuall" results in interruption of gas and oil suppl". 3n /igeria. #7ajpai and Aupta. .companies for making use of landfill waste sites. Oil and gas amenities. communit" clashes or wars. Mohammed 0li. and appropriate emergenc" responses and countermeasures need to be put in place. pipelines. 0ll these ha-e serious economic impact. consuming energ". are conditions relating to explosions and the effects of their occurrence. there ha-e also been regular cases of 4kidnapping and release6 #:weje.s operations. and -er" toxic and contains a lot of energ".M. disposing refuse. 1hus. 1995+ re-eals that the /igerian en-ironmental laws are not strictl" enforced when compared to other international e2ui-alent laws. trucks. etc.* Becurit" risks< 1hese are risks which oil and gas projects are exposed to because of disruption of the project. =. 3nternal risks can be further broken down as follows< 9 . in-ol-ing natural gas and crude oil fields. ) D. =ecentl". transportation #railwa"s. highl" flammable. flaring gases. ) D+ On the other hand. #$orld bank. se-ere economic impact. militants. the risks accruing to the intentional acts b" these militants to oil and gas facilities needs to be accessed. securit" risks on oil and gas facilities are eminent in the /iger 5elta region.. ))*+ of expatriate oil and gas workers on a week basis both onshore and offshore due to political reasons. due to disturbances coming from local communities. internal risks are those risks that originate within a project. ) D+. #) 9+ re-eals that the intrinsic risk in offshore installations in the upstream sector of oil and gas projects. #7ajpai and Aupta. e-en though the oil companies claim that there project acti-ities and operations are carried out with high en-ironmental standards. 3nternal risks are usuall" calculable and the project team has some degree of control o-er them. and ships+. oil spillage. 1his is because petroleum products are highl" -olatile. 1his has generated international attention which seems to ha-e no solution "et. etc. refineries and distribution s"stems are good targets for criminals and terrorists.s en-ironment. pp. injur" to staff or public. fatal outcome and shut down of operations.

/igeria is the countr" that flares the most gas amongst an" other countr" of the world. 199*. #Bhaluf. 1oor and Ogunlana. Elares are primaril" used in oilfields for -enting excess gas and pressure build up coming from oil wells which can cause ha(ardous uncertainties and risks. ?egal risks< 1hese are risks arising from errors in insurance policies and contracts which pro-ide le-els of protection and liabilit" which are not the same as the percei-ed le-els e. #) *+ internal explosion. ) #) *+ Fohn %ink 'ompan". ) *+ Aalbraith. $ith this record. 0 flare stack is a long pipe which projects into the air with an ignition s"stem. 0 t"pical example is the 0lien 1ort 'laims 0ct #01'0+ which gi-es 8B district courts jurisdiction for ci-il actions which are committed in -iolation of 8B laws and treaties when -iolations occur in nations outside 8B0. 3n /igeria. etc+ on oil and gas projects. s"stem obstructions. 5 cited in Bhaluf. #Gieserman. there has not been a major or se-ere flare incident in an" oil field. #Olsen. s"stem obstructions+. a flaring arrow or an oil" rag which is hoisted up the stack on a pulle" and cable s"stem. ) also re-eals that. damages the li-es and the en-ironment of the local inhabitants. ). 5+ states that. a sudden change in statute. ) )+ >. 'alifornia for the deaths of two protesters b" militar" troops and police on 'he-ron. the fi-e common cause of flare incidents are< li2uid carr" o-er. 1he" claimed that 'he-ron being onl" interested the profits the" make. subcontractors. and human errors. 1999+ 1his act was used when a group of /igerian citi(ens charged 'he-ron to a federal court in Ban Erancisco.arabe oil platform. lack of human resources. Buppl" chain risks< 1hese are risks that arise from the acti-ities of the entire suppl" chain #contractors. #) 6+ re-eal that contractor inexperience is among the top 5 . ignition loss and fault" maintenance procedures. effecti-e risk management processes and practices is -ital so as to ensure that the operational process risks which could be generated b" staff #poor maintenance. suppliers. and en-ironmental factors #internal explosion due to air pressure+ are put in check on oil and gas fields. Operational process risks< 1hese are risks which projects are exposed to because of staff una-ailabilit".g. nine miles offshore of /igeria on Ma" )5. production capacit" limit being reached on a project.1. #Fohn %ink 'ompan". s .

#) *+ acknowledges that. most offshore platform designs are made as simple as possible. 'omplexit" risks< 1hese are risks that arise due to the complex nature of projects. 1991+ is neglected. 6 . #1oor and Ogunlana.ten causes of dela"s in construction projects especiall" with traditional t"pe contracts. 3n /igeria. religion. processes and procedures used in carr"ing out projects. 1he more effecti-e the suppl" chain is. will probabl" lead to risks of technological failure which could lead to accidents. contracts are won b" indigenous unskilled companies either because the compan" owners ha-e #ethnic. 1he risk of poor 2ualit" products being deli-ered and the risk of a break in the supplier. group. et al. 9. etc+ ties with the person awarding the contract e. the more the project depends on them. time and budget o-erruns.s production are usuall" experienced in oil and gas projects in /igeria due to incessant power failures and una-ailabilit" of genuine construction materials and e2uipments. ) incompetence of contractors ranked the most rampant problem in the industr". minister. 5e-elopment of complex designs for engineering projects can make buildabilit" -er" difficult because useful time is usuall" wasted in tr"ing to understand the design concept. 'ompetence risks< 1hese are risks due to poor management and emplo"ee competenc" on projects. ?ouca and Mohammed 0li. designs should be kept -er" simple and at the same time the safet" and protection of assets and personnel must be considered. famil". 5astrous. 5. ) * citing Odeh and 7attaneih. s"stems. due to the hostile en-ironment which offshore installations are operated on. #1991+ re-eals that increases in complexit" of e2uipments.. to the detriment of competent multi&national companies with high technical skill and financial patronage. 1hese results to poor 2ualit" jobs being done on projects. that is wh" in /igeria.g. 3nefficient communication can lead to misunderstandings and errors while poor leadership leads to production losses and reduces staff confidence. 1his 9+ where the disco-er" aligns with the results from a sur-e" b" #?ong.. because @due process. ) )+. #Okpala. et al.

. 3n /igeria. or adds negati-e or positi-e -alues to a project. ) >+ 3n /igerian offshore engineering operations. 0lso.g. 1here is alwa"s a possibilit" that there expertise ser-ice will be used against there former compan" as a ri-al competitor in the new compan". hackers and sabotage is another risk which projects dependenc" on 31 is exposed to. D. not using modern practices and processes is an attribute of poor management. disruption in operational capabilit". 1herefore. time losses and can at times increase cost as well reduce the 2ualit" of deli-erables because of the rush to meet up with deadlines to co-er up for lost time. On the other hand.0+ defecti-e hardware. et al. .eople risks< 1hese are risks that arise when important indi-iduals pla"ing major roles on a project lea-es and takes with them specialist operational or management knowledge or contacts #e. 2. #$hittaker. ) . 1he common reasons for s"stems failure in /igeria are power failure. experience potential losses or gains.7 Speculative and static risks: Bpeculati-e risks are those risks that cause projects to. defecti-e software.6. ) *+ 1hese are risks that arise due to the internal risks that new technologies and information technolog" #31+ pose on most modern projects. 1his causes losses of s"stem records. b" constant training should be encouraged b" project managers because it is common that project personnel lea-e before the end date of projects.7. #7harucha and Iolland.0lso. 3nformation technolog" #31+ and technolog" risk< $hittaker. suppliers contacts+ which adds -alue to the project. 1991 cited in %afra&'abe(a. infection b" -iruses.g. Aood @Buccession . e.lanning. the wrong selection of project management team is usuall" a source of people risk because the 31 personnel usuall" used on projects are "oung and ha-e little or no petroleum engineering experience. failure of the s"stem or need for changes can reall" dela" a projects functionalit". 1his can be due to -ariations and changes in D *+ . et al. etc. /:1'O H new designs and softwares. oil and gas engineering design projects rel" so much on 31 and the projects cannot run effecti-el" without it. #/:. #1991+ re-eals that one third of most software related projects were terminated before their nominal completion time. the "oung petroleum engineers with extensi-e engineering field experience usuall" ha-e little or no 31 experience. #=oberts.

s strategic project plan.s 4interdependenc"6 with other risks. et al. #) research and de-elopment. are personnel insurance. etc.8 >+ Risk Management and Pr !ects: :normous literature ha-e been written about project risk management and most of them seem to come to an agreement that risk management is about finding the sources of risks on projects and determining methods b" which these risks can be mitigated on projects. but this will not ha-e practical -alue unless it is used for effecti-e risk management which is a -ital tool for efficient management of projects. #=oberts. share fluctuations. * . an external risk can generate risks that can affect a project at all risk le-els.s business objecti-es. and there are so man" change risks which can generate operational risks that can originate from internal and external changes during the implementation of a the project strateg". 0 clear understanding and knowledge of how risks are interconnected and their interdependenc" is important. ) 2. 0lso. tortuous liabilit" #professional indemnit"+ insurance. :.s objecti-es. in-estment in 3t is important to note that these risk t"pes are interrelated and o-erlap each other on oil and gas projects because strategic risks which can affect project implementation are identified when de-eloping a project. #=oberts.the general market conditions with a potential for making a compan" lose or gain in the compan". 1he wa" good project managers think about risk management is b" focusing on how to mitigate risks so as to achie-e their project.8 Risk interdependency: >+ :.g. 1he next section will briefl" consider the concept risk management and how it is practiced in oil and gas projects.s resilient to risks like go-ernment fiscal polic" changes or sudden statute changes.g. et al. On the other hand. 0 t"pical example is insurance co-er which can change o-er time and the degree of protection of the countermeasures can also differ. 1hese unforeseeable risks can occur because of the particular risk. 2. public liabilit" #conse2uential loss+ and third part" insurance. Mergers and ac2uisitions help spread static risks and increases a project. static risks are those risks that consider potential losses which projects are exposed to. and tr" to find a-enues to protect and safeguard the project so as to minimi(e the losses.7. fire insurance.

which is a major characteristic of oil and gas projects. #) + defines risk management as practiced in a project en-ironment. reduce the likelihood and reduce the impact of risks. it could be argued that it also applies to most oil and gas projects. ) *. 'er-one.s aims and objecti-es. et al. 0-oiding the risks b" ensuring that 2ualit" control procedures and practices are put in place on the project 5ue to time constraints which are a characteristic feature of oil and gas projects. =educing or eliminating the risks b" including the remedies to project issues or problems in the project plan 33. cost and achie-ing high 2ualit" products.M3.. et al. et al. 1his is illustrated in Eigure )&) as follows< 9 .%afra&'abe(a. #) *+ and . risk management process is about unco-ering the weaknesses used in product de-elopment methods -ia a structured wa" in order to initiate timel" mitigation actions so as to a-oid. #%afra&'abe(a. 0bsorbing or pooling the risk b" planning for them 3J. #'aillaud. #Giel. 1999+ 0ustralian =isk Management Btandard #=isk Management Btandard 0BC/%B 9>6 +. as a s"stematic process for identif"ing. transfer. 333. 1ransferring the risk to other acti-ities or to other responsible parties. et al. ) 6+ concurs. ': is the de-elopment of processes and products b" carr"ing out project tasks or functions concurrentl" or simultaneousl" with the aim of reducing time. that all risks can be effecti-el" mitigated or addressed b" using one of following wa"s< 3. anal"(ing and responding to uncertainties which are project&related conditions or e-ents that ha-e the capabilit" to impact undesirable conse2uences on a project. 199* cited in 'er-one. ) 6. .M3. ) + 0nother -iew b" the 0ustralian =isk Management Btandard #=isk Management Btandard 0BC/%B 9>6 +. #1999+ proposes a risk management process which is ideal for most ': projects. #1999+ proposes that. 'oncurrent :ngineering #':+ philosoph" is usuall" used to for o-erlapping design and construction stages.

6-: #. S urce &'S()*S +."igure # $ Representati n % risk management pr cess./ 1 ...

'ommunicate and consult 11 Monitor and =e-iew .

'ommunicate and consult :stablish the context 3dentif" risks 0nal"(e risks :-aluate risks 1) 0ccess risks Monitor and =e-iew .

contractual deli-erables. controlling and monitoring risk related e-ents. 1he risk management process aligns with 'oncurrent :ngineering #':+ projects de-elopment and design because cost is reduced when changes are made during the design stage of oil and gas projects than when changes are made during implementation or construction stages of the projects. how resources will be used. 5esign structure matrix #5BM+ 5. the stakeholders in-ol-ed.# Esta3lis1ing Pr !ect 4 ntext: >a. Risk Management 0ec1ni2ues: D+ 1he -arious risk management techni2ues that are used on most projects will be outlined while describing the stages of the risk management process. anal"(ing risk.s strategic aims and objecti-es.. identif"ing risk. #) risk management process where the project units #process.s time schedule and the purpose of the project with respect to aspects which the project team deems important for the successful deli-er" of the project objecti-es.recedence diagram method #.s budget. 35:E> process modelling 1> D+< . 1his is a -er" essential stage in oil and gas projects because the project risks are accessed from a strategic perspecti-e.. functional. consultation and communication amongst stakeholders... 35:E functional modelling 6. Aenerali(ed acti-it" networks 9. the project.5M+ >. ) 1.roject network diagrams ). 1he project status is represented in numerous forms like. et al. etc+ and the relationships between them are represented. #0hmed. e2uipments re2uired for the project. b+ describes the establishing of context on projects as the stage in 0hmed. e-aluating risk. 2. data. the project. ) 2.. . et al. . how bid preparations will be carried out.1reat risks 1he risk management process comprise of se-en #D+ iterati-e sub&processes which are as follows< establishing risk context. et al. the project.. 1he risk management techni2ues used in for establishing context on projects which are also used as project modeling techni2ues and tools are stated as follows #0hmed.

Ia(ard and operabilit" stud" #I0%O. as the elements of a project. 7rainstormingC'hecklists ). 3t la"s the foundation for the following stages which are. 'ause&and&effect diagrams 5..s en-ironment which can either bring negati-e or positi-e outcomes to the project aims and objecti-es. 0ll the possible sources of risks #losses or gains+ and their indi-idual impacts or conse2uences to a project are identified during this stage. 3nfluence diagrams >. risk anal"sis and risk control. after the identification of risk e-ents. legal en-ironment. ) )+ argues. 3mmediatel" a decision is made in this light. but #$illiams et al.. Risk 'nalysis: D+< 3n oil and gas projects.. 199* cited in 1chanko-a. that the sources of risks on projects are classified into external and internal risks. b" classif"ing sources of risks in a more detailed wa" with respect to the en-ironment in which the risks arise as follows< social en-ironment. cogniti-e en-ironment and economic en-ironment. #1chanko-a. et al. #:lms.. further anal"sis is re2uired to 19 . 199*+ proposes.+ D.2..2 Risk Identi%icati n: =isk identification is usuall" the first stage of risk management on most projects and the same also applies to oil and gas projects. ) 1. 0ll project situations are studied alwa"s so as to determine what could go wrong with regards to the project de-elopment and design.. ) )+ defines sources of risks. 1he common risk identification techni2ues which are used on most projects are stated below as follows #0hmed. operational en-ironment. ph"sical en-ironment. an assessment of the risk characteristics should be carried out so as to determine whether the risk e-ents re2uire further anal"ses.. political en-ironment. Eault 1rees 9. Eailure mode and effect anal"sis #EM:0+ 6. :-ent tree 2.

atterson and /eaile" #) )+ re-eal that the two parameters for measuring risk are. Mills #) below< RI 5 6 x 4 77777777777777 equation 2. conse2uence and probabilit" of a risk e-ent. the 2uantitati-e approach is carried out b" statistical anal"sis of historical data for exact prediction of risk e-ents. risk impact. #0hmed. and determination of risk parameters. the 2ualitati-e approach of determining risk parameters are often more appropriate and is usuall" used for carr"ing out risk anal"sis because subjecti-e assessment techni2ues which range from the relati-e measures of human opinions. the next stage is to determine whether this will be carried out b" 2ualitati-e or 2uantitati-e means. the basic functions which constitute the methodolog" of risk anal"sis or assessment as used on most oil and gas projects are. #0mornsawadwatana. . biases and expertise. ) D+ Measurement metrics are usuall" established and used for anal"(ing risks so as to determine the magnitude of the risks in order to aid the de-elopment of effecti-e mitigation strategies and plans.be carried out on a risk e-ent. 1herefore. to determine and measure the magnitude. feelings and judgments are used for anal"(ing risks as compared to ideal situations. 5e" and Ogunlana #) should also be taken into account. :-en though 2ualitati-e approach ma" be influenced b" personal preferences. it still pro-ides the foundation for risk assessment b" highlighting possible risk e-ents. while risk impact. ) )+ 3n most projects. se-erit" or conse2uence.1 $here. . where the product of the risk conse2uence and probabilit" totals up to gi-e the risk magnitude. the risk se-erit" and likelihood . On the contrar". RI K =isk impact. se-erit" or conse2uence and risk likelihood or probabilit". 15 1+ shows the relationship between these three functions b" using the e2uation 9+ concurs b" affirming that it will be incomplete to access risks based on the criteria of onl" its expected -alue. is the representation of an outcome that spawned from a risk e-ent. 1he likelihood or probabilit" of risk shows the possibilit" that a risk e-ent will occur.

6 K ?ikelihood of risk. ). R K =isk "r K Ere2uenc" of occurrence of risk. et al. 1he total life&c"cle of the project s"stem which represents the project outcome should be taken into account. Bhen. 1he maintenance and operational phases of the project should be included in designing the s"stem 9. the affected acti-ities.1999+.g. 1hese comprise of sources of uncertainties. et al. also bearing in mind all the 16 . 1999+ >. #) D+ proposes that for the de-elopment of an effecti-e anal"sis of risks on projects.s conceptual stage should be made #0l2uier. 0 methodolog" should be de-eloped which will integrate the two main characteristics of risk anal"sis i.2 $here. the following should be considered< 1. and 4 K 'onse2uence of risk. the anal"sis of the main risks and anal"(ing the usual -ariabilit" with respect to project parameters #e. 'agno. the corresponding share of the total project risk should be assigned to each element of risk. the stakeholders that represent the owners of the risks. and Im K 5egree of impact of risk. #$ard. the -ar"ing durations in project acti-ities+. 1he basic elements of the major impending risks should be identified. 1he" proposed the e2uation below< R 5 "r x Im 7777777777777 equation 2. 0 distinction between the risk anal"sis to be carried out during the project. #1999+ concurs that risks ha-e two attributes and used a model to 2uantif" risk as a product of the fre2uenc" of occurrence and the degree of impact. and afterwards. which are the uncertainties that do not threaten the outcome of the project if considered alone.e. #) 1+ and =after".

industr" benchmarks. ) 1. ) D+< 1. different aspects of a project ranging from project strateg". . numerous techni2ues in the risk management literature are being applied in modern da" projects. project budget. et al. suppliers.+ that will be in-ol-ed in the project.+ Risk Evaluati n: D+< 3n projects. 1he common risk anal"sis techni2ues which are used in most projects are stated below as follows #0hmed. project schedule.robabilit" and impact grids ). More so. ) >a+ 0ll these are done so that effecti-e mitigation strategies and plans will be determined and de-eloped for the project concerned. 5ecision tree anal"sis ). etc.. >... and standard practices. are in-estigated on this stage with regards to a risk e-ent occurring so that mitigation options for risks are determined and the most suitable option#s+ chosen and incorporated to produce a project mitigation plan. end users. et al. past project experiences. an e-aluation of the anal"(ed risks are carried out b" prioriti(ing the risks either b" using lessons learnt on pre-ious projects. subcontractors. and the execution stage. Bince the main aim in risk anal"sis in a project s"stem is the determination of risk effects project acti-ities. where the contractual content of the project has reached a stationar" point.stakeholders #contractors. organi(ational or compan" knowledge. :stimation of s"stem reliabilit" >. Eault tree anal"sis 9.. 1he common risk e-aluation techni2ues which are used in most projects are stated below as follows #0hmed. :-ent tree anal"sis 5. Bensiti-it" anal"sis and simulation 2. after the anal"sis of risk e-ents. . etc. best practices. #0mornsawadwatana.ortfolio management< Multiple criteria decision&making method 1D .

. risk mitigation or response because if effecti-e mitigation plans are not de-eloped on oil and gas projects.g. it leads to unsuccessful experiences on projects. Oil and gas construction projects are not left out. 0BC/%B 9>6 . risk mitigation or response actions are produced which can be said to be contingenc" plans which are initiated after risk e-ents e-entuate. risk mitigation actions are initiated based on the probabilit" or chance that a risk e-ent will occur. 1his can be termed a feed back or a reacti-e approach to risk mitigation. some risks like a broken petroleum or crude oil pipeline are -er" sensiti-e that the" need immediate response while some are small that the" can be neglected e.8.2. retaining risks. the pre-ious sections were highlighted because risk response strategies cannot be achie-ed or de-eloped without passing through the pre-ious risk management stages. a water reser-oir with little water leakages.. 0 t"pical example of risk a-oidance usuall" used b" oil companies is b" not 1* . #0hmed. et al. the scope of the research is to determine risk response strategies to effecti-el" mitigate the major risks in oil and gas construction projects. when oil and gas companies get insurance co-er with regards to fire outbreak or other construction risks like death of staff #life insurance+ on their projects.. and transferring risks. reducing the probabilit" of risks. the" are usuall" eliminated or a-oided b" organi(ations. 3n line with the objecti-e of the stud".8 Risk Mitigati n(Resp nse: 1he pre-ious sections ha-e gi-en an o-er-iew of risks and risk management processes which are being used toda" in most projects. ) D+ On the contrar". ) 1+ 0 t"pical example is. 1999+ 1hese following risk mitigating or response techni2ues will be discussed below as follows< 2. the feed forward or the pro&acti-e approach is the approach whereb".. 0 combination of the reacti-e and the pro&acti-e approach is applied to the risk management practices carried out in most contemporar" oil and gas projects for a-oiding risks. 0fter the e-aluation of risk e-ents. reducing the impacts of risks. instead of confronting the risks. .M3 #) 9+ defines risk response as the procedure of considering the possible choices a-ailable on a project and actions de-eloped so as to reduce threats as well as taking ad-antage of the a-ailable opportunities. this section will discuss the final stage in the risk management c"cle.. :-en though.# Risk av idance: 3n this techni2ue. #Gartam and Gartam. #=isk Management Btandard. 3n oil and gas projects.

. 0nother method is b" de-eloping correcti-e actions incase a risk or risks arise on the project. et al. while passi-e retention also known as @non&insurance. the compan" and the go-ernment bod" handling the project ma" be faced with political risks of expropriation and nationali(ation.. especiall" when multinational companies want to in-est in new projects that are outside their home countr". 2.2 >+ and en-ironmental risks. #7aker.8. 1he compan" fulfilling the contract terms is usuall" retain risks on oil and gas projects. #1999+ argues that. is the t"pe whereb" companies deliberatel" manage risks after cautious e-aluation of potential costs and losses from different wa"s of handling risks. ph"sical protection for health and safet" risks. Risk retenti n: 3n this techni2ue. ) 2. risk reduction is a form of risk retention because risks are retained first before actions are de-eloped and pursued for reducing the effects. de-eloping effecti-e project s"stem to ensure consistenc". 1he acti-e retention also known as @self&insurance.. 1he former focuses on the actual causes of the risks for determining the risk likelihood while the latter focuses on the conse2uences for determining the risk impacts. risks are usuall" monitored b" organi(ations b" ensuring that ade2uate back up strategies or plans are pro-ided in case the exposure to the risk changes. et al. not releasing funds for a project the" en-isage will be unsuccessful.. 3n /igeria. oil and gas companies usuall" carr" out risk reduction practices on projects b". absence of decision and ignorance. oil and gas companies de-elop or take pre-enti-e actions so as to decrease the possibilit" of risks occurring on projects. 0nother example is the /igerian federal or state go-ernment. staff training to educate them about potential risks...tendering for construction projects which the" en-isage ma" not turn out to be fa-orable for their compan". 1999+ 2. 1his is because if careful feasibilit" studies are not done.. 7aker.8. #7erlin. et al. 1here are two t"pes of risk retention< the acti-e and passi-e retention. and most times companies tend to retain risks that are fre2uent in occurrence and ha-e small losses..+ Risk trans%er: 19 . arise because of neglect. Risk reducti n: 3n this techni2ue.8. etc...

:. oil and gas companies transfer risks to the best parties that can handle the risks. 0 t"pical example is the risk of a fire outbreak on an offshore platform is transferred to insurance companies and premiums are paid b" the oil compan". 1he acti-it" or the propert" which is responsible for the risk ma" be transferred to a sub&contactor to handle the ha(ardous process. co&insurance. and first loss co-er. #) D+ put forward a risk management framework with respect to the risk management process which is ideal for most projects as shown in Eigure )&> as follows< ) . 1999+ 0hmed. 3t is also known as risk sharing which are of four t"pes namel"< re&insurance. most oil producer sub&contract their drilling acti-ities which is -er" speciali(ed and sensiti-e to oil ser-icing companies like Bchlumberger because of their expertise in the crude oil drilling acti-ities. to retain the acti-it" or propert" responsible for the risk and transferring the financial risk to an insurance compan".3n this techni2ue. et al. #7aker.g.. et al. 0nother techni2ue being used is b" oil and gas companies are. excess or deductible..

S urce &'1med: et al.: "rame9 rk % r risk management t ls.: 2--7/ )1 ."ig 2$.

roject 1eam .3nteracti-e H 'ollaborati-e 3nterface 'ontext :stablishment =isk Model H Luer" Mechanism =isk 3dentification .rior =isk Gnowledge #=epositor"+ =isk 0nal"sis Lualitati-e H Luantitati-e Measures =isk :-aluation )) 5ecision Bupport B"stems =isk Eocused .

#- Summary: 1he chapter clearl" ga-e a background insight into the nature of oil and gas projects. 1he literature re-iew shows that the /igerian oil and gas industr" comprises of the upstream and downstream sector which are filled with a handful of in-estment opportunities which lead to new projects being carried out on a fre2uent basis. and economic en-ironment. 1he findings from the chapter satisfies the aim and objecti-es of the dissertation in -arious wa"s discussed as follows 3t was disco-ered that oil and gas projects in /igeria are -er" sensiti-e because of the -olatile nature of the products and the en-ironment where the operation and processes are carried out. legal en-ironment. operational en-ironment. 0lso. 0ll these acti-ities expose oil and gas projects to different risk factors. operational and unforeseeable risks #risk le-el+. the features and the characteristics of the /igerian oil and gas projects. change.lanning 2. 1he different sources of risks in oil and gas projects in /igeria oil and gas industr" can be classified b" the nature of the en-ironment where the" originate as follows< social en-ironment. time and 2ualit". 1he" are< strategic. ph"sical en-ironment. characteristics or dependenc" of the risks to other risks. cogniti-e en-ironment. speculati-e and static were classified with respect to their characteristics and nature.1reat =isks Mitigation . 1he literature re-iew re-ealed that the concept of risk management -er" essential and needs to be routine so that oil and gas companies can meet with their objecti-es of cost. external and internal. =isk management as )> . =isks in oil and gas projects in /igeria oil and gas industr" can also be classified b" the risk le-el within a project and b" the exact nature. there is interdependenc" between the -arious t"pes of risks as the" take their forms in /igerian oil and gas projects. political en-ironment. with respect to the ha(ardous nature of oil and gas projects. Gnowledge and financial.

risk e-aluation and risk mitigation. the context of the project is established with respect to setting project units. 1he risk e-aluation stage is where the anal"(ed risks are prioriti(ed so that effecti-e risk mitigation plans or strategies can be de-eloped on the project. 3t can also be said to be supplementing for project management practices. and the major sources of risks that emanate in oil and gas projects in /igeria are clearl" understood so that effecti-e mitigation plans or strategies can be de-eloped b" project management teams while carr"ing out risk management practices for the successful deli-er" of oil and gas construction projects in /igeria. at the strategic stage of oil and gas projects. risk identification. risk anal"sis. project risk management in-estigates in details. reduced and transferred. 1he risk mitigation stage is the last and -ital stage of the whole risk management c"cle where all the possible choices a-ailable so as to reduce the project threats are carried out. etc.practiced in oil and gas projects was found to be di-ided into fi-e stages< establishing the project concept. retained. the structure of a project. forms. Einall". products and procedures used in carr"ing out project acti-ities. working relation ships. processes. the project en-ironment #external and internal+. 1he risk identification stage is the stage where all the possible sources of risks and their indi-idual impacts or conse2uences are identified. and strategies are de-eloped to counter these and also explore a-ailable opportunities on the project. 1he chapter has shown that in line with the objecti-es of the dissertation research that it is imperati-e that the different t"pes. Buitable techni2ues used in carr"ing out risk management practices at the -arious stages were highlighted. )9 . 3t was found that risks could be a-oided. 3n /igeria. 1he risk anal"sis stage follows b" a complete assessment of the characteristics of the identified risks #risk probabilit" and conse2uence+ either 2ualitati-el" or 2uantitati-el" so as to determine the magnitude of the risks.

but also to present a balanced -iew. 1he research dissertation aims at identif"ing the risk factors that affect oil and gas construction projects in /igerian and deri-e suitable risk responses for them. anal"(ed and interpreted so as to increase the researchers understanding of the phenomenon about their interests or concerns. go-ernment agencies #public sector+ to pri-ate indigenous oil and gas construction companies both in the downstream and upstream sector. 2.# Intr ducti n: 1he purpose of the chapter is to describe the s"stematic processes b" which all the necessar" data re2uired for the actuali(ation of the research dissertation objecti-es #to determine the major risks affecting oil and gas construction projects in /igeria so that appropriate mitigation strategies can be proposed to effecti-el" respond to these risks+ as mentioned earlier was collected. not b" just collating the necessar" information a-ailable. #) data is collected.2 Researc1: 5+ defines research as the s"stematic process whereb" information ?eed" and Ormrod. ) 5+< 1. 1he research will be performed in a controlled and s"stematic wa" )5 . the research dissertation will accomplish the three characteristics of research which are stated below as follows #$alliman.: Researc1 met1 d l gy 2. 0fter an extensi-e re-iew of the current literature on the nature of risks and risk management in /igerian oil and gas construction projects was carried out. the next stage was to gather data through extensi-e inter-iews and 2uestionnaire sur-e" with prominent personnel in the /igerian oil and gas industr" ranging from emplo"ees of pri-ate multinational oil companies. 1his aspect was done in an objecti-e wa". 1herefore.41apter . to effecti-el" reali(e this stud".

research methods which are adopted for a research are go-erned b" the research.. Met1 d l gy: *+ put forward 3n order to achie-e the purpose of this research dissertation.). the descripti-e and explanator" approaches to research will be adopted. :xplorator" research is the first t"pe which is used if a researcher.s knowledge of the subject is limited. #) *+ further states that the difference between methodolog" and research methods is that. 0 t"pical techni2ue used here are inter-iews. .s final outcome.. 1hese will be used for anal"(ing the identified risk sources that are present in /igerian oil and gas projects. s"stems and processes that are used to gather data. /aoum. experiences and attitudes of indi-iduals in a particular field. the t"pe of information the author wishes to disco-er and the research. $ith respect to the aim of this research. ke" decisions which are the choices of a methodolog" or appropriate methods were made.+ Researc1 met1 ds: 3n practice there are two t"pes of research methods adopted for carr"ing out research and the" are. $isker. #) D+ further breaks down 2ualitati-e research into two t"pes.. Lualitati-e research is mainl" used for testing for the existence of -ariables instead of testing for their fre2uenc" or number. 3t will be empirical and the results confirmed using the real world situation >. 1herefore.s methodolog". $isker. 1he stud" also focuses on testing concepts into which major risks are present on most oil and gas construction projects. which are usuall" used for data collection and entails the collection of raw data from the exact things the inter-iewee sa"s to the )6 . 3t will in-ol-e rigorous data testing sourced from current literature . 1he research dissertation will be adopting the mixed methodolog" whereb" elements of both the 2ualitati-e and the 2uantitati-e t"pes of research methods will be used. procedures. /aoum. the former is the philosophical assumptions and rationale which underlies a particular stud" while the latter are the medium. #) that decisions are usuall" dictated with respect to the manner b" which the world is interpreted b" the author. -ehicles. the 2ualitati-e and 2uantitati-e methods of research. #) D+ describes 2ualitati-e research as being subjecti-e and focuses on the descriptions.

it will be suitable for this research. 1he target population for the data collection. reliable. 2uantitati-e methods can be argued to possibl" be subjected to bias because of the data context. the 2uantitati-e approach has its limitations. 2uantitati-e approach. originates from a positi-ist methodolog" which utili(es a deducti-e. project managers. 2ualitati-e research method is impressionistic because it entails that the research results should be repeated b" others for -alidation or confirmation since it cannot be -erified using tests. #$isker. 1he primar" data used for the research were gathered b" the use of 2uestionnaires and extensi-e phone inter-iews designed in line with the research objecti-es. opinions and perceptions are e-aluated subjecti-el".inter-iewer. design of the research and the population sample. 3f re2uired information cannot be 2uantified. 0ttitudinal research is the second t"pe which is used when people. 1his will be e-ident in the research objecti-e of determining the major sources of risks that affect oil and gas construction projects in /igeria. pri-ate multinational and pri-ate indigenous oil and gas companies. and the researcher should also ha-e an open mind. 1he respondents were managers. and 2uantitati-e data collection. interpretation for phenomenon and explaining e-ents.s -iews. #/aoum. Fust like the 2ualitati-e research. were the people that are in-ol-ed in oil and gas construction projects acti-ities. #) an obser-er of a particular situation. 1he research dissertation will use the two t"pes of data which are. 1his approach will suit the research dissertation with respect to the research aim of proposing strategies for mitigating the major risks that affect oil and gas construction projects in /igeria. the primar" and the secondar" data. project team members and other significant personnel in go-ernment agencies.. there is difficult" in using this method.ata c llecti n: 5+ are the pieces of information recei-ed b" 5ata as described b" ?eed" and Ormrod. which is objecti-e in nature. 1herefore. and not abstract with countable and tangible measures because statistical anal"sis of the collected data are tested for -alidit" and this can be repeated for similar results to be experienced. ) *+ 1he 2uantitati-e data is hard.8 . risk experts. On the contrar". both in the upstream and downstream sector of /igeria oil and gas industr". 1he secondar" data was collected -ia an in&depth re-iew of current literature into the t"pes )D . 1hus. ) D+ Bocial sur-e"s are used during this t"pe of research and because of the gap between the researcher and the stud" sample and the rigorous testing of concepts. .

1hree methods usuall" used for sur-e"s as identified b" ?eed" and Ormrod.of risks. thereb". 1hus. 1he sur-e" method was emplo"ed for this research because of the simple nature of the design. and -er" competiti-e. their opinions. opinions from experienced personnel are -er" -aluable because of restrictions that are placed on gi-en access to detailed information.e. books.6 Survey researc1: 3n the 2uest to ac2uire information. commerciall". 1he information was sourced from electronic and hard sources. >. 1hese will entail. academic publications and proceedings from conferences while the electronic sources for the data mining process of the of the research was collected from the internet so as to throw more light into the nature and opportunities that are open to in-estors in the /igerian oil and gas industr". information is ac2uired with respect to a group of people in line with the research objecti-es i. 1he hard sources were journals. sources of risks and risk management as practiced in /igerian oil and gas projects. Eace to face inter-iews >. 1he oil and gas industr" is ad-ersarial. -iews towards the major sources of risks in oil and gas projects. 1here ha-e been confidential and commercial restrictions to data pre-iousl" presented in the oil and gas industr" because of the absence of single data sources. characteristics and attitudes to the risk t"pes. 1he reasons for the selection of both the 2ualitati-e and 2uantitati-e methods for the research are as follows< 1. a sur-e" research was conducted into the major risks that affect oil and gas construction projects in /igeria. 'ontractors. contractuall". the /igerian oil and gas construction ke" pla"ers. creating a deficienc" in accessing comprehensi-e data. clients and the go-ernment agencies in the industr" are lacking cohesion. #) 1. Luestionnaires 5+ are< )* . sources and the risk management practice as a whole. 1elephone inter-iews ). it is essential to compare the statements from these organi(ations.. . 3n this t"pe of research. ). thereb".

#) researches made in the construction industr". project managers.s -iews and attitudes to the major risk t"pes and sources that oil and gas construction projects are exposed to. :-en though. pri-ate multinational and pri-ate indigenous oil and gas companies.# 0elep1 ne Intervie9s: D+ that.6. pri-ate sector oil and gas design and construction compan". 3nformation is usuall" collected directl" -ia the responses coming from 2uestions that were asked a group of people. 3t is eas" to design )9 5. postal 2uestionnaires and personal inter-iews are the most suitable form of data collection for 3n the 2uest to ac2uire information and for the accommodation of 2ualitati-e research methods.6. risk expatriates.s issues to be in-estigated and information to be gathered are clear and precise. were inter-iewed. 3t is cost effecti-e ).s ke" pla"er. and a . 1he sources of the 2uestions that were asked the respondents were drawn from extant literature and were in line with the objecti-es of the research.roject manager working with a go-ernment agenc" that inspects all oil and gas acti-ities on projects both in the upstream and downstream sector of the /igerian oil and gas industr". it can also be used for sur-e"s done in small scale pro-ided the researcher. personal in&depth telephone inter-iews were carried out. a . . project team members and other significant personnel of go-ernment agencies. 1he 2uestionnaires will gather factual information with regards to the /igerian oil and gas industr".. 199 + 1he use of 2uestionnaires is appropriate for the research because of the numerous ad-antages stated as follows #$alliman. as was disco-ered from existing literature.2 <uesti nnaires: 1he use of 2uestionnaires is a common method for data collection.1he use of telephone inter-iews and 2uestionnaires will be adopted for data collection in this research which is in line with the proposition made b" /aoum.roject manager working with an indigenous. . $isker. multi&national oil and gas compan"..roject manager working with a pri-ate. 1hree top managers< a . #Munn and 5re-er. 1he respondents to the sent out 2uestionnaires were managers. ) *+< . ) 1. the use of 2uestionnaires is usuall" good for sur-e"s done in large scale.

On the other hand. 1herefore. 3t can be sent to a large number of people 9. 3t was achie-ed b" using simple instructions to describe and guide the respondents on how the" should answer the 2uestions. #) *+ which states that the use of length" 2uestionnaires usuall" makes the respondents irritated and bored.6.>..2.# <uesti nnaire . =isk Management =ationale 1he adoption of this approach assisted in a-oidance of o-ercrowding and unnecessar" duplication of the research 2uestions.esign: Luestionnaire design is -ital in sur-e" research gi-en the fact that people are often put off b" 2uestionnaires. with each of the sections #which were mostl" closed ended 2uestions+ focusing on a -ital area in the stud". leading to low rate of response. so as to eliminate ambiguit". the 2uestions were refined and piloted carefull" before the final 2uestionnaire was generated. #$isker. in order to be sure that a clear understanding of the 2uestions was achie-ed with respect to the sample group. 1he 2uestionnaire la"out was split into two sections. > . . 3t ensures the respondents anon"mit" 5. 1he identified disad-antages related to using 2uestionnaires were taken care of b" the wa" the 2uestionnaires were designed and administrated in the research. the 2uestionnaire in this research was designed to comprise short and precise 2uestions at the fore front followed b" a continuum link to further 2uestions in the research. time spent in anal"(ing the findings and bias which ma" be influenced b" the background of the respondent. 2uestionnaire are imperfect and ha-e the disad-antage of slow response with regards to the respondents. 1his conforms to the proposition b" $isker. AeneralC'ompan" 3nformation ). ) *+ 3t is recommended and essential to thoroughl" pilot the 2uestions that will make up a 2uestionnaire. 3t reduces misrepresentation and misinterpretation of 2uestions because of the standard nature of the 2uestions. time spent in its design. 3n this stud". 1he two sections of the 2uestionnaire ha-e the following headings< 1.

. Microsoft word was the software used in de-eloping the 2uestionnaire because of the software. 3n the 2uest to seek a high response to the 2uestionnaires from the respondents. knowledge in the business en-ironment. the research utili(ed electronic media -ia email for 2uestionnaire administration due to the fore mentioned ad-antages. 7" so doing. filling out. 3n using this approach. 1hese techni2ues were supported b" ?eed" and Ormrod. #$isker. the forced choice method of the ?ikert scale& t"pe 2uestions was used in determining the fre2uenc" of usage of the different t"pes of risk response techni2ues used in oil and gas organi(ation. 1hus. 0lso. 1hus. . characteristics. ) 1hereb". . sa-ed and sent back to the author.s popularit" and respondents. attitudes towards postal ser-ices. it eliminated the need for respondents to be proficient in computer usage. 1he 2uestionnaire was designed with user friendl" Macros #software program statements+ which were written and added to the Microsoft word file to enhance the filling capabilit" of the respondents b" making use of interacti-e check boxes that the respondents completed electronicall"..2. #) D+ which utili(es the use of numerical rating scale arranged in order of how @high. attaching back to there email addresses before sending back responses was a-oided. beha-iors or other e-ents of *+ concurs interest are to be assessed on a continuum. #) D+ when attitudes. et al. towards the research 2uestions.s email address that was clearl" written in the 2uestionnaire. and respondents. the respondents are more likel" to be focused on the 2uestionnaire. some part of the second section of the 2uestionnaire adopted the fi-e&le-el judgment scale #1hu"et. the length of time in-ol-ed in postages. the time wasted in the respondents..2 <uesti nnaire 'dministrati n: 1he introduction of the internet has assisted in resol-ing the problems related to using 2uestionnaires for data collection in research. printing out. scanning. losses due to mails in transit. . 1he administration of 2uestionnaires -ia electronic media has helped in resol-ing and eliminating the cost issues linked to postal 2uestionnaires administered to large samples..6.3n the 2uest for data collection..s -iew is. a respondent. down to how @low.7 Sample Selecti n: >1 that 2uestions are easier to cipher b" respondents as compared to the open ended 2uestions.

the sample still continues to be a -alid and dependable information source since most of the corporate. in procuring oil and gas construction projects in /igerian oil and gas industr". 8sing this method for the research was chosen because it offers a good representation of the people in-ol-ed acti-el". the choice of telephone inter-iews and the use of an electronic 2uestionnaire was the most suitable media for data collection for the research. et al. #Eellows and ?iu. . /e-ertheless. Et1ical Issues: D+< 1he following ethical issues were considered in carr"ing out the research with respect to the principles stated below as follows #1hu"et.. pri-ate multinational companies and pri-ate indigenous companies. project managers.8 Researc1 . risk experts.Bampling is -er" -ital in research due to the fact that an entire population is almost impossible to examine. project team members and other significant personnel in go-ernment agencies. public and pri-ate sector oil and gas organi(ation in /igeria ha-e internet access. it was recogni(ed that the representation of the entire target population ma" not be repudiated from the respondents -iews because..elimitati ns: 1he risk management process as practiced in /igerian oil and gas construction projects in-ol-es people in the downstream and upstream project groups of public sector go-ernment agencies. onl" the perspecti-es of the target population on major risk sources will be sought. ) >) . 1he distribution and the response order will be represented in the subse2uent chapter. 1hese different groups with their different characteristics ha-e their indi-idual opinion and -iews about the major risks t"pes and sources in oil and gas projects and the mitigation strategies for these risks. not all the operators in the upstream and downstream sector of the /igerian oil and gas industr" ma" ha-e access to internet to facilitate the data collection process. Luestionnaires totaling up to 9 in number were sent out amongst the entire target sample. /e-ertheless. for the purpose of the stud". ) >+ 1he unit for sampling in the research were managers.. . $ith respect to the gap in distance between the author and the target population.. 1herefore. and the time frame which is needed for completing the research. pri-ate multinational and pri-ate indigenous oil and gas companies both in the upstream and downstream sector of /igeria oil and gas industr".

>> . 0non"mit"< 1he respondents were gi-en utmost assurance that their responses will remain pri-ate and their comments or identit" not exposed without the written consent of the respondent or noted otherwise. Ionest"< 1he research was carried out in a manner that is honest. 3nformed consent< 1he respondents which participated in the stud" were notified about the objecti-es of the research and had the choice of not to participate or do participate.1. $hile carr"ing out the research. 9. ). . 1he respondents were also notified of the choice of being informed about the result of the research findings if the" so wish. -arious authors and their ideas which were used in the research were referenced and acknowledged. >.rotection from harm< 1here was no threat or ps"chological harm to the respondents with regards to the wa" the research 2uestions were designed.

0 combination of the 2ualitati-e and 2uantitati-e approaches to data anal"sis will be utili(ed in anal"(ing the collected data that originated from a 2uestionnaire sur-e" and extensi-e phone inter-iews.#. 0 .=+.ata c llecti n and analysis . )..roject Manager working with a multinational pri-ate sector.41apter +: . +. 0 . 0 Bafet" Manager #upstream and di-ision+ working with 5epartment of . 1heir responses was used to de-elop an extensi-e checklist of risks and sent to other respondents #as 2uestionnaires+ in different oil and gas companies both in >9 .# <ualitative 'ppr ac1: 3n&depth telephone inter-iews were carried out with three experienced managers that execute risk management functions as follows< 1.etroleum =esources #5. drilling. oil and gas exploration. the /igerian go-ernment. pri-ate sector oil and gas design and construction compan" that undertake both upstream and downstream oil and gas projects >.# =vervie9 % 'ppr ac1es: 1he purpose of this chapter is to anal"(e and discuss the responses and results from the research data that was collected from respondents in /igerian oil and gas construction companies.s regulator" authorit" and a public sector compan" that inspects oil and gas companies acti-ities.roject Manager working with an indigenous. design and construction compan" that undertake both upstream and downstream oil and gas projects 1he responses to the 2uestions will be anal"(ed so as to gi-e an insight into the wa" oil and gas companies in /igeria respond to the major risks that emanate on oil and gas construction projects.

2 $here. and -alues of . . low.9 to @low.>.s assessment are called the risk score..#. Bhen #) 1+ and =after". which assigns a -alue of .2 <uantitative 'ppr ac1: 1he 2uestionnaire sur-e" data from section twel-e #1)+ of the distributed 2uestionnaire will be anal"(ed b" using the =elati-e index #=3+ techni2ue. @high. medium. 1he attributes were two in number and are< the fre2uenc" of occurrence. 1he respondents were asked to judge the attributes of e-er" risk. @medium. et al.M7OG #) +. . high and -er" high for representing both the degree of impact and fre2uenc" of occurrence of risks. 1his research will appl" -alues as suggested b" .5.the upstream and downstream sectors. 0ll the attributes abo-e will be measured numericall" and the respondents will make their judgments b" using the fi-e le-el scale of judgment which uses -er" low. Rij K =isk Bcore Frij K Ere2uenc" of occurrence for risk i assessed b" respondent j Imij K 5egree of impact for risk i assessed b" respondent j >5 ... 1he model is applied b" con-erting the opinion judgment scale into numerical scales. R K =isk "r K Ere2uenc" of occurrence of risk. represented b" @3m. and will be calculated using the formula 1hu"et. and Im K 5egree of impact of risk. represented b" @Er. 5ata will be collected and the weightings of all the risks from each respondent. and @-er" high.D and .1 $here. respecti-el". 1he 2ualitati-e method will also be used to discuss and for narrating the results from the 2uantitati-e anal"sis. #1999+ represent this using the e2uation below< R 5 "r x Im 77777777777777 equation 4.. +. #) D+< Rij = Frij x Imij7777777777777 equation 4.1 to @-er" low. and the degree of impact..

RI iK =isk&index score for risk i Rij K =isk score assessed b" respondent j for risk i N K /umber of respondents 1he risk ranking will be done b" ordering the risks in increasing numerical order of #1. with the major risk ha-ing the -alue of @1. >MM. 1his is called the @risk&index score. ). +.0n a-erage score for each risk is determined b" calculating the a-erage scores from all the respondents. ) 2uestionnaires were distributed to the pri-ate indigenous companies because there are more companies in this categor" than an" other categor".2 <uesti nnaire survey resp nse: 0 sum of fort" #9 + 2uestionnaires were sent out to four different t"pes of compan" groups that speciali(es both in upstream and downstream acti-ities in oil and gas projects in /igeria as follows< 1 2uestionnaires to public sector companies. +.#. which is used for ranking the risks. 1 2uestionnaires to pri-ate #multinational+ companies and ) to pri-ate #indigenous+ companies. 1able 9&1 shows the details of the distribution and rate of 2uestionnaire responses as presented below< >6 . the second major risk ha-ing the -alue of @).. Araphs and charts will be used as forms of graphical illustration in the research because of their ad-antage of making research results eas" to interpret.. >rap1ical Illustrati ns: .+..3 N $here. Out of 9 2uestionnaires that were distributed.ictorial and graphical presentations will be used as another techni2ue for con-e"ing the results and findings of the research in a non&-erbal manner. 1he risk&index score is then calculated with the following formula< RI = i ∑R j =1 N i j MMMMMMMMMMMMMM equation 4. and so on. > 2uestionnaires were returned.

a deliberate effort was made to incorporate more managers in the research due to the fact that managers will ha-e a more comprehensi-e knowledge about risks and risk management practices in numerous aspects of oil and gas projects. compan" histor" and their general perception to t"pes of risks and the risk effects on risk management as practiced in oil and gas projects in /igeria. Erom the sur-e".6D! #19+ of the respondents were managers >D .0a3le +$#: .. . ) D+ as reali(ed in a related stud". 1he table abo-e also shows the percentage distribution of respondents in the sur-e" as follows< . +..istri3uti n % survey resp nses S/No 1 2 3 Company type Public sector Private( Multinational) Private (Indigenous) Nos of questionnaires Distributed Return 10 10 20 5 7 18 Return rate (%) 50 70 90 Total 40 30 75 1he table abo-e shows that a D5! return rate was recorded in the 2uestionnaire sur-e".ri-ate #Multinational+ companies D ! and .# Resp ndent?s ! 3 p siti n: 3n distributing the 2uestionnaires. Secti n #: >eneral(3ackgr und in% rmati n 3n line with the objecti-es of the research. +.ri-ate #indigenous+ companies 9 !.. 1he rate is high as compared to the lower response of 6 ! #/gu"en.. et al. it was found that 96. 1his establishes a clear insight into the acti-ities of the companies answering the sur-e" 2uestions with respect to their staff experience and number.ublic sector companies 5 !. the first section of the 2uestionnaire will anal"(e the effects of the background and general information of the respondents in the sur-e".

istri3uti n % resp ndents? ! 3 p siti n (isci"line &ngineers 24) Project anagers 35) #a$et% &ngineers 7) Project &ngineers 24) !"eration anagers 3) #a$et% anagers 7) >* . while 5>. 1he figure below shows their distribution< 0a3le +$2: Results % resp ndents? ! 3 p siti n S/No 1 2 3 4 5 ' Respondents job position Project anagers anagers Frequency 10 1 2 7 2 7 ercenta!e (%) 35 3 7 24 7 24 !"eration #a$et% anagers Project &ngineers #a$et% &ngineers (isci"line &ngineers "igure +$#: .which comprised of operations. safet" and discipline engineers. project and marketing managers.>>! #16+ were emplo"ees which comprised of project.

roject managers. >! #1+ are Operation managers. +. D! #)+ are Bafet" managers.2 @ rking experience: 0a3le +$.. >>! #1 + ha-e 6 to 1 "ears working experience. "ears of working experience in the sur-e" are as follows< 1>! #9+ ha-e to 5 "ears working experience. and )9! #D+ are 5iscipline engineers.1he abo-e table and chart #1able 9&) and Eigure 9&1+ shows that the percentage distributions of the respondents. it can be inferred that the respondents to the 2uestionnaire are indi-iduals who make significant contributions to the risk management practices in /igerian oil and gas projects.istri3uti n % resp ndents? years % 9 rking experience 0 to 5 %ears 13) *bove 10 %ears 54) ' to 10 %ears 33) 1he abo-e table and chart #1able 9&> and Eigure 9&)+ shows that the percentage distributions of the respondents. Erom obtained results.roject engineers.: Results % resp ndents? years % 9 rking experience S/No 1 2 3 "ears of #or$in! e%perience 0 to 5 %ears ' to 10 %ears *bove 10 %ears Frequency 4 10 1' ercenta!e (%) 13 33 54 "igure +$2: . and 59! #16+ ha-e abo-e 1 "ears working experience. )9! #D+ are .. job position in the sur-e" are as follows< >5! #1 + are . Erom the obtained >9 .

.. 7sc and 7eng+. Msc. it implies that risk management practices in /igerian oil and gas sector in-ol-es people who ha-e high industr" experience...50 +ears Frequency 2 12 3 7 5 1 ercenta!e (%) 7 40 10 23 17 3 9 .. 1his implies that the decision makers who are in-ol-ed in carr"ing out risk management practices in /igerian oil and gas projects are educated.+ Resp ndents age gr up: 0a3le +$+: Results % resp ndents? age gr up S/No 1 2 3 4 5 ' Respondents a!e !roup 25 to 30 +ears 31 to 35 +ears 3' to 40 +ears 41 to 45 +ears 4' to 50 +ears . Educati nal 2uali%icati n: 1he 2uestionnaire results obtained with respect to educational 2ualification show that each of the respondents possessed at least a form of higher educational 2ualification #M70. +. +.results.

3t can be inferred that a considerable number of managers are acti-el" in-ol-ed in risk management practices in /igerian oil and gas industr".50 +ears 3) 4' to 50 +ears 17) 25 to 30 +ears 7) 31 to 35 +ears 40) 41 to 45 +ears 23) 3' to 40 +ears 10) 1he abo-e table and chart #1able 9&9 and Eigure 9&>+ shows that the percentage distributions of the respondents. +.istri3uti n % resp ndents? age gr up . it was noticed that the age group with the highest fre2uenc" #modal age group+ were between >1 to >5 "ears of age."igure +$.8 0ypes % pr !ects executed 3y resp ndents: 91 . and >! #1+ are abo-e 5 "ears. 0lso. Erom the obtained results.: . 1 ! #>+ are >6 to 9 "ears.. )>! #D+ are 91 to 95 "ears. 9 ! #1)+ are >1 to >5 "ears.. 1D! #5+ are 96 to 5 "ears. all the respondents from 91 "ears and abo-e were managers. age groups in the sur-e" are as follows< D! #)+ are )5 to > "ears.

9 ! #)D+ carr" out both upstream and downstream project acti-ities. 3t can be inferred that risk 9) .nstrea 10) !nl% u"strea 0) 1he abo-e table and chart #1able 9&5 and Eigure 9&9+ shows that the percentage distributions of the respondents.ot/ 90) !nl% do. working with companies that engage in retail and marketing of petroleum products carr"out onl" downstream project acti-ities while others #designCconstruction. and drillingCexploration+ companies. where the" carr" out their projects acti-ities are as follows< >! #1 + carr" out onl" downstream project acti-ities.1he /igerian oil and gas industr" was identified from extant literature to be di-ided into two sectors and as indicated in the 2uestionnaire. with respect to the oil and gas sector. Erom the obtained results. it was noticed that onl" respondents. respondents were re2uested to select the sector where the" carr" out their project acti-ities. 0a3le +$8: Results % pr !ect types executed 3y resp ndents S/No 1 2 3 Type of projects e%ecuted by respondents !nl% u"strea !nl% do-nstrea . carr" out their project acti-ities in both sectors which ma" be offshore or onshore. inspection.istri3uti n % pr !ect types executed 3y resp ndents . and none of the companies carr" out onl" upstream acti-ities. 1able 9&5 shows the sur-e" results.ot/ Frequency 0 3 27 ercenta!e (%) 0 10 90 "igure +$+: .

=.management practices carried out on most of the projects in both the upstream and downstream sectors of /igerian oil and gas industr". 0a3le +$6: Results % pr !ect services rendered 3y resp ndents S/No 1 2 3 4 Type of projects ser&ices rendered by respondents Ins"ection (esign0construction 1etail0 ar2eting (rilling0e3"loration Frequency 4 18 4 4 ercenta!e (%) 13 '1 13 13 "igure +$8: . /igerian go-ernment owned public sector companies like 5. respondents were re2uested to select the t"pe of projects ser-ices that their indi-idual organi(ations where the" carr" out their project acti-ities. 61! #1*+ are in-ol-ed in design and construction acti-ities. 1>! #9+ are in-ol-ed in retail and marketing acti-ities. and 1>! #9+ are in-ol-ed in drilling and exploration acti-ities.. it was gathered that. Erom the obtained results and from in&depth telephone inter-iews. +. render in /igerian oil and gas industr".6 Services rendered 3y rganiAati ns: 3n the 2uestionnaire sur-e". 9> . were in-ol-ed in inspecting and regulating the wa" the other companies #designCconstruction.istri3uti n % pr !ect services rendered 3y resp ndents 13) 13) 13) Ins"ection (esign0construction 1etail0 ar2eting (rilling0e3"loration '1) 1he abo-e table and chart #1able 9&6 and Eigure 9&5+ shows that the percentage distributions of the respondents. with respect to the ser-ices that their indi-idual organi(ations render in /igerian oil and gas industr" are as follows< 1>! #9+ are in-ol-ed in inspection acti-ities. 1he table below shows the sur-e" results..

) *+ 1his boosted the springing up of new design and construction companies. +. 1his the" do b" gi-ing them guidelines on the risk assessment methodolog" and when to use them on projects. ) *+ 1his is because of the inabilit" of the pri-ate indigenous companies. 61! distribution was comprised of mostl" the pri-ate indigenous companies that carr" out most design and construction projects which were sublets from the multinational companies. #5. it can be inferred that risk management practices carried out b" the -arious companies in /igerian oil and gas projects are regulated and monitored under strict guidelines b" /igerian go-ernment bodies responsible for ensuring that project risks are effecti-el" managed and responded to. $ith respect to the objecti-es of the research.6 =rganiAati ns years % experience: 0a3le +$7: Results % resp ndents? rganiAati ns years % experience S/No 1 2 3 3 Respondents or!ani'ations years of e%perience 4ess t/an 5%rs 5 to 10%rs 10 to 20%rs 20%rs and above Frequency 0 2 ' 22 ercenta!e (%) 0 7 20 73 "igure +$6: . lack of finance and expertise to carr" out these high technolog" and huge capital intensi-e projects.'.inspection.=. ) 6+ 1he retail and marketing companies were pri-ate indigenous companies that carr" out their project acti-ities onl" in the downstream sector.. #//.. Most of the drilling and exploration companies were pri-ate multinationals that ha-e joint -entures with //.istri3uti n % resp ndents? rganiAati ns years % experience 99 . #/wachukwu.' #the owner of and /igerian go-ernment representati-e. and drillingCexploration+ carr" out risk management practices in both upstream and downstream oil and gas projects. in all oil and gas projects+. at the -arious ke" stages of oil and gas projects. 1his large percentage is because of the new /igerian ?ocal content polic" to carr" out D ! of all design and construction projects in the oil and gas sector b" the "ear ) 1 .

it can be inferred that most of the organi(ations that partook in the sur-e" are -er" experienced in oil and gas projects. 1wo companies in-ol-ed in design and construction were in the 5 to 1 "ears of experience range. 1he rest had abo-e 1 "ears experience in the /igerian oil and gas industr". ) ! #6+ ha-e 1 to ) "ears. 1hus.73) 4ess t/an 5%rs 5 to 10%rs 10 to 20%rs 20) 7) 0) 20%rs and above 1he abo-e table and chart #1able 9&D and Eigure 9&6+ shows that the percentage distributions of the respondents.. +. indi-idual organi(ations "ears of experience in /igerian oil and gas industr" are as follows< D! #)+ ha-e 5 to 1 "ears.. it can be seen that most of the companies ha-e been operating in the oil and gas sector for long. and D>! ha-e abo-e ) "ears of experience.istri3uti n % resp ndents? rganiAati n?s empl yee siAe 95 . $ith respect to the organi(ations that participated in the research sur-e".7 Empl yee siAe: 0a3le +$8: Results % resp ndents? rganiAati n?s empl yee siAe S/No 1 2 3 4 5 Respondents or!ani'ation(s employee si'e 1 to 100 100 to 250 250 to 1000 1000 to 5000 *bove 5000 Frequency 0 0 4 18 8 ercenta!e (%) 0 0 13 '0 27 "igure +$7: .

and )D! emplo"ees. 0ll also agreed that the identified risks are stored in a risk management database either b" recording the risks in a risk register.# =rganiAati ns and risk management system: 3n the 2uestionnaire sur-e" results. public sector go-ernment organi(ations and retail and marketing companies N emplo"ees. 1his will be further anal"(ed so as to determine suitable response strategies for these risks. 1his is because these large si(ed organi(ations ha-e been in existence for man" "ears and carr" out oil and gas projects in their subsidiaries which are spread around the nation. +. Medium si(ed design and construction companies were the + emplo"ees.+ Secti n 2: Risk management rati nale 3n line with the objecti-es of the research. this section of the 2uestionnaire will be used to anal"(e the risk management practices carried out b" the respondents in the sur-e".*bove 5000 27) 250 to 1000 13) 1000 to 5000 '0) 1he abo-e table and chart #1able 9&* and Eigure 9&D+ shows that the percentage distributions of the respondents. indi-idual organi(ations emplo"ee si(e are as follows< 1>! #9+ ha-e )5 to 1 ha-e abo-e 5 emplo"ees. the risk response techni2ues the" use. and an anal"sis of the major risks that emanate in /igerian oil and gas projects will be carried out so as to determine the fi-e major risks that impede the projects. +. documenting 96 . all the respondents agreed that their indi-idual organi(ations maintained a risk s"stem. it can be inferred that since the large si(ed organi(ations constitute a total of *D! of the sur-e". the" are more organi(ed and ha-e abundance of emplo"ees who carr" out risk management on their -arious oil and gas projects.+. 6 ! #1*+ ha-e 1 to 5 emplo"ees. 1hus. while large si(ed indigenous respondents in the third categor" #)5 to 1 had from 1 to 5 multinationals. 1he 2uestions seek to find out how organi(ations identif" the sources of risks.

2 Risk ranking % r )igerian il and gas c nstructi n pr !ects: 3n the 2uestionnaire sur-e". inside computer hard discs. 1his is similar to a stud" carried out b" 1hu"et et al. the respondents which were thirt" #> + in number. or b" storing them as folders electronicall". +. 1he 2uestionnaire results can 9D . #) be shown in table 9&9 as follows< D+. 1his implies that oil and gas organi(ations pa" significant attention to risk management practices so as to effecti-el" mitigate risks on projects. RI i K =isk&index score for risk i Rij K =isk score assessed b" respondent j for risk i 30 = /umber of respondents 1he ranking of the identified top twent" #) + risks was carried out with respect to the risk index score so as to determine the top fi-e #5+ major risks so as to further anal"(e and de-elop suitable mitigating strategies for these risks in line with the research objecti-es.and storing them as hardcop" files. flopp" dri-es or compact discs.4 30 $here.+. 1he a-erage risk scores from the > respondents was used to deri-e the risk index score b" putting the numerical -alues as proposed earlier in e2uation 9.>. 1his is represented with the formula below< 30 RI = i ∑R j =1 i j MMMMMMMMMMMMMM equation 4. were asked to rate a list of twent" #) + risks which were identified from extensi-e phone inter-iews to be the most common sources of risks that emanate in /igerian oil and gas projects..

)9D9 .56)1 .oor project feasibilit" studies 3nefficient and poor performance of constructors =educed 2ualit" in procured materials .)1)5 .1> =1).: Risk ranking % r )igerian il and gas c nstructi n pr !ects =ank 1 ) > 9 5 6 D * 9 1 11 1) 1> =isk 'ode =1).1* =1).19 =1).D =1).6 =1).oor and inade2uate tendering 3nade2uate project organi(ation structure 'hanges in design 3nade2uate budgeting and poor project planning .11 =1).))D* .1965 .)95* .9 =1).)*11 .1D69 .)>D* .oor coordination amongst sub&contractors and contractors 5amage to work b" third part" 9* =3 .> =1).1 =isk factors Becurit" threats from neighboring residents 3ncompetence of project team members .0a3le +$.5 =1).1 =1).oor designs ?ate internal appro-als from clients .) 9* .>*)> .)D99 .15 =1).>D5 .1D =1).

1665 . 01e analysis % t1e t p ten risks in )igerian il and gas c nstructi n pr !ects: 3n line with the objecti-es of the stud".oor relationship with go-ernment bodies ?ate pro-ision or deli-er" of materials $orking conditions deferring from contract specification ?ack of experience in design and construction .159) .195) .195) . characteristics and causes.19 15 16 1D 1* 19 ) =1).) =1).9 =1). the mean of occurrence and the mean of impact degree for each indi-idual risk identified b" the respondents where determined. in ascending order of their o-erall impact on oil and gas projects in /igeria. 1he top ten risks will then be anal"(ed further to determine their features.. +.16 =1).16>* . so that ade2uate strategies can be proposed to mitigate the risks.+.1 *6 0 comprehensi-e list of the ranked risks as deduced from a combination of in&depth telephone inter-iews and 2uestionnaire sur-e" is shown in the table abo-e. 1he twent" #) + risks are sorted accordingl". 1his can be seen as shown in table 9&1 as follows< 99 .1) =1).111) .* =1).19 7ureaucratic project and go-ernment appro-al procedures 5ifferences in practices between local and foreign contractors :n-ironmental protection pressure of other groups . 3n order to anal"(e these top ten major risks. the top ten major risks in /igerian oil and gas projects will be anal"(ed thoroughl".) =1).

>D5 .11 planning =1).9)6D .65>> .6 6D .1D =1).))D* .59>> .15 =1).)D99 .>*)> .)1)5 .)>D* .56)1 .9)6D .)6 .1965 =ank 1 ) > 9 5 6 D * 9 1 11 1) =isk code =1).0a3le +$#-: 0 p ten risks statistics % r )igerian il and gas c nstructi n pr !ects Mean of Mean of Occurrence 3mpact Ere2uenc" 5egree #Er+ #3m+ .D6 .)9D9 .56 .5>>> .oor coordination amongst sub& contractors and contractors 5 .5 =1).19 =1).9)6D .9* .9*>> .9 =1).1> =1).5)6D .966D .51>> .9)6D .)*11 .oor and inade2uate tendering 3nade2uate project organi(ation structure 'hanges in design 3nade2uate budgeting and poor project =1).>)6D =isk 3ndex Bcore #=3+ .) 9* .9*6D .9) .95>> .99>> .6 =1).1 =isk Eactors Becurit" threats from neighboring residents 3ncompetence of project team members .9D>> .> =1).D =1).1* 3mproper project feasibilit" studies 3nefficient and poor performance of constructors =educed 2ualit" in procured materials .)95* .oor designs ?ate internal appro-als from clients .D .6* .

1he" are as follows< 51 .)D>> .195) . $ithin this limits were risks which also occupied high positions in the risk ranking and were associated with the management acti-ities of the client. @late internal appro-als from clients.>D5+.1 *6 =1).oor relationship with go-ernment bodies .)9>> .> 6D .D+. ) D+ 1he second to the fifth risks are as follows< @3ncompetence of project team members. and sabotage #fire and explosion of oil and gas facilities+.)D>> .966D .>* . to become the risk with the highest risk score&index.)5>> .1) =1). it can be deduced that @securit" threats from neighboring residents.1> 19 15 16 1D 1* 19 ) =1).D6+ and the highest mean of occurrence fre2uenc" # .195) .)5>> . -andali(ing of oil and gas pipelines. Erom the second down to the tenth #)nd to 1 th+ ranking risks are all internal risks.) contract specification ?ack of experience in design and =1).* =1).>1>> .1D69 . risk take up the first position with a risk&index score # .111) .99>> .1665 .) =1). with a risk&index score # . #Ogedengbe.)*11+. alwa"s generates crisis in the area.16 ?ate pro-ision or deli-er" of materials $orking conditions deferring from =1).9 6D .. 1his is an external risk and has both the highest mean of impact degree # .16>* . with a risk&index score # .)9D9+.9 5amage to work b" third part" 7ureaucratic project and go-ernment appro-al procedures 5ifferences in practices between local and foreign contractors :n-ironmental protection pressure of other groups .56)1+.)>>> .1 =1). 3t was gathered from the conducted inter-iews that the main causes of this risk were disturbances from the local residents and militants in the /iger 5elta region in the form of assault and kidnapping of oil and gas companies emplo"ees.D .>*)>+.19 construction Erom table 9&1 abo-e. and @poor and inade2uate tendering.>9 . 3t implies that oil and projects in /igeria are highl" prone to this major risk.56 . with a risk&index score # . 3t was also gathered that due to lack of compensation pa"ment which was supposed to be paid to the poor rural dwellers of these oil rich regions for the compulsor" ac2uisition of their lands for oil and gas exploration. @poor designs. with a risk&index score # .>) .159) .

and found their places as the >rd and Dth in the top ten risk ranking were associated with the designs. thus. 0 little flaw in a design can cause enormous changes in the construction phase and in allocating resources.65>>+. organi(ing. as the )nd. structure and incompetent workers being used on projects. and planning oil and gas projects. design standards are put in place to enable regulators. @inade2uate budgeting and poor project planning. abilities and knowledge as well as emplo"ees capabilities. there should be a focus on impro-ing clients. 1o curb these risks. with a risk&index score # . management skills. Erom the inter-iews. it was re-ealed that the reason for these lapses accrue to lack of a defined s"stem in projects. as the 9th. 1his is because design works which are done at the earl" stages of oil and gas projects ha-e a -er" huge impact on the total outcome of projects.9* as the mean of impact degree and this implies that changes in design in /igerian oil and gas projects ha-e a medium effect or impact on the o-erall project outcome. 3t usuall" occurs in the construction phase of /igerian oil and gas projects. with a risk&index score # . in order to manage these risks. scope changes and poor 2ualit" designs..oor designs. 1hus. 3t is worth noting that two risks which had high risk ranking. @inade2uate project organi(ation structure. risk is common in oil and gas projects and the earlier it occurs. reducing 2ualit" and causing cost and time o-erruns on projects. 1he" are< @poor designs. as the 6th. it was gathered that this risk is usuall" caused b" changes in design specifications. ) *+ 5) . clients and contractors to reach a mutual understanding about the wa" to carr" out designs. #1hu"et. the lesser it has impact on the total project outcome. as the *th and @improper project feasibilit" studies. it can be inferred that. had the second highest mean of impact degree # . @late internal appro-als from clients.)95*+. and @changes in design. 1his risk had . risk although occupied the o-erall third position. moti-ating emplo"ees. 1he fact that these management associated risks ha-e high ranking signifies that clients and emplo"ers in /igerian oil and gas construction projects are failing in their duties of directing. et al. as the 9 th.@3ncompetence of project team members.>D5+. Erom the inter-iews conducted. controlling. #Bnell. @. ) D+ @'hanges in design.

were the causes of contractors poor performance on projects. 'lients.9)+. not on merit but based on whom the" know. 3ncompetent and unreliable contractors end up winning bids due to inade2uacies in the e-aluation processes and selection criteria which lacked @due processes.5>>>+. 2ualitati-e method of research was used -ia telephone inter-iews with experienced personnel of the /igerian oil and gas industr".oor and inade2uate tendering.)1)5+. 1his risk was identified to be a -er" sensiti-e risk that needs to be addressed in /igerian oil and gas industr". mean of impact degree # .. with a risk&index score # .)*11+. /igeria oil and gas projects which are usuall" large and complex. +. Erom the inter-iews. #Ogunsemi and 0je. attracts multinational companies. it was re-ealed that risks associated with tendering in oil and gas projects in /igeria are attributed to poor contractor selection b" clients. 3n&depth inter-iews re-ealed that lack of sufficient e2uipments and technolog". dela"s in time.@. 7esides.8 Risk resp nse strategies % r mitigating t1e ma! r risks 6+ 1his makes contactor and client ethics during contractor selection and e-aluation processes a complex 3n the pre-ious section.5)6D+ and mean of occurrence fre2uenc" # . 'onse2uentl". poor 2ualit" ser-ices and decreased producti-it" due to poor performance on the contractor side. contractors are appointed b" public and pri-ate sector clients. conflicts that impede project successes are often generated due to the differences in technolog" know how between the emplo"ees of multinational and indigenous companies. and efficient management skills. projects often end up suffering from o-erruns in cost. to find out the characteristics and causes as well as to propose efficient strategies to effecti-el" mitigate onl" the fi-e major risks on the risk 5> . 1he 1 th risk @inefficient and poor performance of constructors. the top ten major risks in /igerian oil and gas projects were identified with their fre2uenc" of occurrence and degree of impact. trained emplo"ees. appropriate experience.9D>>+. a-ailable resources. 1his means that this risk has a se-ere impact on project outcomes. modern technologies and e-er changing up to date construction methods. with a risk&index score # . 3n line with the objecti-es of the stud" and due to the time constraints and limits of the research. risk had the ranking position as 5th. good 2ualit" construction methods. ) and sensiti-e issue "et to be addressed in /igerian oil and gas projects. and mean of occurrence fre2uenc" # . 1hus. financial capabilit". re2uiring huge capital in-estment. mean of impact degree # .

ranking de-eloped from the 2uantitati-e anal"sis because of the se-ere impacts the" ha-e on oil and gas projects in /igeria. 1his section will focus on anal"(ing each indi-idual risk thoroughl". +.8.# Security t1reats %r m neig13 ring residents &R#2.#8/

1he risks accruing to securit" threats from neighboring residents on /igerian oil and gas projects are enormous. 1hese are external risks that inhibit the achie-ement of a project;s cost, time and 2ualit" objecti-es. 3t was gathered from the conducted inter-iews that the agitating "ouths and militants acti-ities on oil and gas fields in the form of assault and kidnapping of oil and gas companies emplo"ees #:weje, ) D+. -andali(ing of oil and gas pipelines. and sabotage #fire and explosion of oil and gas facilities+. 3t was also gathered that due to lack of compensation pa"ment which was supposed to be paid to the poor rural dwellers of these oil rich regions for the compulsor" ac2uisition of their lands for oil and gas exploration. alwa"s generates crisis in the area. #Ogedengbe, ) D+

3n this light, the respondents to the inter-iew that were carried out proposed se-eral strategies which include< 1. 1he compulsor" land use act should be amended so that ade2uate compensation fees should be paid to the owners of the ac2uired lands b" oil and gas companies or the federal go-ernment. ). 'orporate social responsibilit" #'B=+ #:-uleocha, ) b" oil and gas companies. >. 1he federal go-ernment of /igeria should seek to enforce stringent laws on waste disposals so as to stop the oil spillages from acti-ities from oil and gas construction acti-ities. #:ssoka, et al., ) 6+ 9. 1he ?/A production should be introduced full" so as stop the flaring of gases which cause harm to human, animals and the entire ecological en-ironment in the /iger 5elta region. #Aalbraith, ) +.8.2 *+ 5+ should be enforced b" the federal go-ernment so as to increase the de-elopment of these oil rich communities

Inc mpetence % pr !ect team mem3ers &R#2.8/

59

Erom the phone inter-iews, it was gathered that the /igerian oil and gas projects lack indi-iduals with skills, knowledge and abilit" to perform their duties efficientl". :-en though most project team members possessed at least one form of higher education degree, there is still that lack of insufficient skills needed to manage oil and gas projects. 3n this -iew, the following strategies were proposed b" the inter-iewees as follows< 1. :ffecti-e teamwork should be enhanced -ia staff training to update them with the new technologies and industr" skills. ). Aood staffing b" effecti-el" matching project team members to the right projects where the" can function efficientl" to achie-e optimum producti-it". +.8., P r designs &#2.6/

1he risks of poor designs b" contractors in /igerian oil and gas projects are enormous, and usuall" cause the non&achie-ement of projects; cost, time and 2ualit" objecti-es. $ho absorbs the extra cost of incomplete or unclear scopes and specifications, ambiguous design and designers; incompetenceO 1his 2uestion usuall" causes a lot of conflict between clients and contractors. 3n /igeria, indigenous companies ha-e little experience in design of oil and gas facilities, thus there exists a dominance of foreign multinational companies that ha-e more experience but still run into design difficulties due to the complex nature of the designs in the industr". 3n this light, the respondents to the inter-iew that were carried out proposed se-eral strategies which include #1hu"et, ) D+<

1. 3ndigenous companies partnering with the multinationals to impro-e cost effecti-eness. efficienc". 2ualit" of products and ser-ices. transparenc" and transfer of technolog", long term commitment and enhanced opportunit" for inno-ation. ). 'ontractor selection to be based on experience and pre-ious performance so that competent and experienced manpower will be carr"ing out design works efficientl". >. 8sing concurrent engineering to impro-e constructabilit" and time sa-ings. 9. 5esign standards put in place to enable regulators, clients and contractors to ha-e a mutual understanding about the wa" to carr" out designs. #Bnell, ) *+

55

+.8.+

6ate internal appr vals %r m clients &#2.7/

1his is an internal project risk that usuall" originates in clients organi(ation. 1he inter-iew respondents re-ealed that this risk emanates on /igerian oil and gas projects due to managers lacking the authorit" to sol-e problems and lack of emplo"ee commitment. ,roject managers are usuall" faced with the problem of slow responses from the top management to pressing project issues e.g. allocating resources. 1his leads to time and at times lead to cost o-erruns on projects. #1hu"et, ) strategies< 1. 8sing 1LM #1otal Lualit" Management+ practices for enhancing the in-ol-ement of all project emplo"ees to share in the project -ision and goals. ). :mpowering project managers with appro-als authorit" so as to make on time and faster decisions which enhances inno-ation and successful deli-er" of projects. *+ 3n this light, the respondents to the inter-iew that were carried out proposed the following

+.8.8

P r and inade2uate tendering &#2../

1he risk accruing to poor and inade2uate tendering usuall", can de-iate a project from meeting up with its objecti-es. Oil and gas projects usuall" adopt one of the following methods. restricted tendering, open tendering, restricted accelerated, competiti-e negotiated, competiti-e negotiated accelerated tendering and dialogues. #,alaneeswaran and kumaraswam", ) 1+ 1he inter-iews re-ealed that lack of @due processes; #unethical attitudes of bidders+ and @inade2uate e-aluation criteria; are the main sources that pose tendering risks in /igerian oil and gas industr". ,ublic sector clients often accept lowest price tender so as to show accountabilit" and in defense for criticisms. #$ong, et al., ) + Moreo-er, these bidders submit low prices to win and after winning, the" negotiate with clients at later stages to mark&up their tender. 0nother identified source is the collusion of bidders like withdrawal, briber", and false inflation of co-ering and tender prices. 3n this light, the respondents to the inter-iew that were carried out proposed the following strategies< 1. 1he techni2ue, M'5M #Multiple criteria decision making+ should be used for e-aluating contractors. 56

compact discs and flopp" dri-es. >.) ?ate internal appro-als from clients 9.) . 1he second part the 2uestionnaire re-ealed that all organi(ations in /igerian oil and gas industr" maintain a risk management s"stem as well as store identified risks in a risk management database either as hard copies or electronic copies in computer hard dri-es.) 3nefficient and poor performance of constructors 5D . 1he top ten major risks that emanate on oil and gas construction projects both in the upstream and downstream oil and gas sectors are< 5.). Most of the organi(ations ha-e experience in oil and gas acti-ities because the" ha-e been in existence long enough in the industr".oor designs *. educated.) 3mproper project feasibilit" studies 19.) 'hanges in design 1).) Becurit" threats from neighboring residents 6.oor and inade2uate tendering 1 .6 Summary 1he 2uantitati-e and 2ualitati-e approaches were used to assess the major risks that emanate in /igerian oil and gas construction projects.) 3ncompetence of project team members D.) 3nade2uate project organi(ation structure 11. 'lients using selecti-e tendering b" in-iting onl" credible and professional contractors +. 'lients increasing legal enforcement of collusion b" impro-ing the detection of bidders during pre2ualification and final stages of e-aluation. and mostl" carr" out projects in both upstream and downstream sector.) 3nade2uate budgeting and poor project planning 1>.) . 1he findings from results from the background information of the 2uestionnaire sur-e" re-eals that risk management practices in /igeria oil and gas industr" in-ol-es people with high industr" experience. with ade2uate staff strength.

# 4 nclusi n: 3n recent times. 5* . the practice is still new during the implementation of projects in de-eloping countries. in a constantl" changing d"namic en-ironment which is exposed to enormous risks. as well as mitigating strategies were de-eloped to curb the top fi-e major risks that emanate on /igerian oil and gas projects. which includes /igeria. that is keen on utili(ing risk management practices during the implementation of projects because of the -olatile nature of products and characteristics of the project en-ironment where the operation and processes are carried out. /e-ertheless. 1he causes and characteristics of the top fi-e major risks. the concept of risk management is an essential process that cannot be neglected in the management of projects in de-eloped countries. to further anal"(e the top fi-e major risks due to their high mean of impact degree and high risk index score thoroughl". 1hus. this research is -er" significant and timel" considering the fact that the oil and gas sector is the most important contributor to the total re-enue of the /igerian econom". Onl" the /igerian oil and gas sector seems to be the sector amongst others.Lualitati-e method was used -ia in&depth telephone inter-iews. 41apter 8: 4 nclusi n and rec mmendati ns +.

3mproper project feasibilit" studies 1 . it is essential that a thorough examination of the major risks affecting a project is examined. 3nefficient and poor performance of constructors 8. major risks in oil and gas construction projects in /igeria. 'hanges in design *. literature and in&depth inter-iews were carried out in the research and were used to proffer appropriate practical strategies which where proposed for the top fi-e most ranked. . ?ate internal appro-als from clients 5.2 Rec mmendati ns Eor the successful deli-er" of projects. 3ncompetence of project team members >. 1he research proposed recommendations to effecti-el" mitigate the top&fi-e major risks as follows< 59 . 3n the 2uest to de-elop strategies to effecti-el" mitigate the identified major risks. 3nade2uate budgeting and poor project planning 9. 0 closer assessment -ia a 2uestionnaire sur-e" was s"stematicall" used to determine the fre2uenc" of occurrence and the degree of impact of the major sources of risks that emanate in oil and gas construction projects in /igeria.oor designs 9.1he research dissertation which aimed at identif"ing the risk factors that affect oil and gas construction projects and to deri-e risk responses for them was accomplished -ia reali(ing the following research objecti-es< 1he different t"pes of risks as well as the different en-ironments where these risks originate in oil and gas projects where identified from an extensi-e literature re-iew. 1he results of the research -ia the risk scores of the major risks re-ealed that the top ten major risks in oil and gas construction projects in /igeria were< 1. .oor and inade2uate tendering 6. Becurit" threats from neighboring residents ). 3nade2uate project organi(ation structure D.

1he ?/A production should be introduced full" so as stop the flaring of gases which cause harm to human. 8sing concurrent engineering to impro-e constructabilit" and time sa-ings. 19. 11. 1he compulsor" land use act should be amended so that ade2uate compensation fees should be paid to the owners of the ac2uired lands b" oil and gas companies or the federal go-ernment. 'orporate social responsibilit" #'B=+ should be enforced b" the federal go-ernment so as to increase the de-elopment of these oil rich communities b" oil and gas companies. *. animals and the entire ecological en-ironment in the /iger 5elta region. 5esign standards put in place to enable regulators. >. long term commitment and enhanced opportunit" for inno-ation. M'5M #Multiple criteria decision making+ should be fre2uentl" used for e-aluating contractors. 6. 6 . 1). 1 . 'lients increasing legal enforcement of collusion b" impro-ing the detection of bidders during pre2ualification and final stages of e-aluation. :ffecti-e teamwork should be enhanced -ia staff training to update them with the new technologies and industr" skills. clients and contractors to ha-e a mutual understanding about the wa" to carr" out designs. 1he techni2ue. 2ualit" of products and ser-ices. :mpowering project managers with appro-als authorit" so as to make on time and faster decisions which enhances inno-ation and successful deli-er" of projects. 9. 8sing 1LM #1otal Lualit" Management+ practices for enhancing the in-ol-ement of all project emplo"ees to share in the project -ision and goals.1. 5. efficienc". ). 1>. D. 9. transparenc" and transfer of technolog". Aood staffing b" effecti-el" matching project team members to the right projects where the" can function efficientl" to achie-e optimum producti-it". 'ontractor selection to be based on experience and pre-ious performance so that competent and experienced manpower will be carr"ing out design works efficientl". 1he federal go-ernment of /igeria should seek to enforce stringent laws on waste disposals so as to stop the oil spillages from acti-ities from oil and gas construction acti-ities. 3ndigenous companies partnering with the multinationals to impro-e cost effecti-eness.

'lients should be using selecti-e tendering b" in-iting onl" credible and professional contractors 8. public and pri-ate sector oil and gas organi(ations in /igeria ha-e internet access.+ Rec mmendati ns % r %uture researc1 Ia-ing undertaken the research on risk management in oil and gas construction projects in /igeria. 6imitati ns % researc1 $ith regards to the gap in distance between the author and the target population.15. 61 . 8. in-estors. not all the operators in the upstream and downstream sector of the /igerian oil and gas industr" ma" ha-e access to internet to facilitate the data collection process. it was recogni(ed that the representation of the entire target population ma" not be repudiated from the respondents -iews because. /e-ertheless. the sample still continues to be a -alid and dependable information source since most of the corporate. researchers and all stakeholders that ha-e interest in the /igerian oil and gas industr". the choice of telephone inter-iews and the use of an electronic 2uestionnaire was the most suitable media for data collection for the research. opportunities are open for future research to be aimed at using the ascertained major sources of risks and recommended strategies proposed in the research dissertation. for de-eloping a practical risk management model for future use b" clients.. Iowe-er. and the inflexible time schedule re2uired for completing the research.

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8sing a risk&based approach to project scheduling< 0 case illustration from semiconductor manufacturing.. /uro.$orld 7ank #199D+. 'amacho. Corld 7e0elo. $orld 7ank.E. #) *+. 0.%.ort.erational %e!earch... :.ean ournal o" -. =idao. 6* . M. 19 . 5' %afra&'abe(a.ment %e. D *&D)>. pp. $ashington.0.

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