Death Of The

Megaproject?:
How to Solve the
Problems Involved in the
Oil & Gas Industry

In association with

TIM HAÏDAR | EDITOR IN CHIEF | OIL & GAS IQ

INTRODUCTION CONTENTS
The headstone of the oil and gas megaproject is being etched as you read
these words….
Page 2  Introduction
In a world that has seen the price of a barrel of the Black Gold nosedive by
more than 60 per cent in two years, the reality of infrastructure megaprojects
in the energy fold makes for much grimmer reading now than in 2014. Even
in the halcyon days of $100 oil, four out of every five were doomed to failure.
Page 4  What commonalities exist in your mostsuccessful large capital projects?

Oil discoveries have plummeted to 60-year lows , meaning that the number of
developments that cost more than $1 billion - the fundamental definition of a Page 5 What weaknesses have you identified in yourleast successful large capital projects?
megaproject - are set to dwindle concomitantly.

But were we going to see the end of the megaprojects era even if Brent crude
had stayed at record highs? Was it sustainable even for an industry awash with Page 6 Please select the top THREE critical applications that you think make large capital projects
cash to continually fund capital projects that were seemingly fated from their
inception for catastrophic cost creep, scheduling overruns, and, ultimately
failure? Page 7 
 What weaknesses have you identified in yourleast successful large capital projects?
Not only have 78 per cent of megaprojects in the oil and gas sector completed
in the past decade failed in terms of cost and schedule, but two-thirds of these
also fell short of production-attainment goals. More specifically, half did not
Page 8 In the last two years, how many times have projects you’ve been involved in experienced
achieve at least 50 per cent of the targeted production slated for their first 24 budget overruns of over 10%?
months of their operational lives.

According to analysis completed by multinational professional services firm,

Page 9  What is your strategy to ensure that you mitigate such budget overruns for future large
EY, the Middle East was the region suffering from the highest percentage of
projects facing both cost overruns and schedule delays, at 89 per cent and 87 capital projects?
per cent of projects respectively, whilst South America was seeing average
project budget overruns of a chastening 102 per cent.
Page 10  Many companies mitigate capital leakage by having a clearly defined Application for
In the midst of an oil price depression and with a track record of project
delivery abject in its efficacy, the future looks far from bright for the vital Payment (AFP) process to approve the work delivered before the invoice submission. This
energy infrastructure developments that are taking shape in the present day. enables the Contracts team to ensure that the work delivered matches the amount on the
Yet as the epitaph of their demise is being carved, there is still time to knock AFP. Do you follow a similar process?
the mason’s chisel from his hand.

In association with AVEVA ProCon, Oil & Gas IQ have undertaken a wide-
ranging analysis of the project landscape and asked those intimately involved Page 11 What percentage of invoice leakage do you think you have?
in the delivery of large capital projects in the hydrocarbons sector exactly
where their pain points and concerns lie In these testing times. What follows
is a breakdown and dissection of their challenges and grievances, and where Page 12  How many systems do you need to work across to get the information you need? Do you
we think that opportunities for improvement exist on the front lines of the oil
and gas world. have a single system which is able to easily provide management with reports about contract
obligations, contract KPIs, variation management and negotiated cost savings?

Tim Haïdar, Page 13  It is critical to ensure that contractual decisions made in earlier p
 hases are easily available to
Editor In Chief,
Oil & Gas IQ all subsequent phases. With that in mind, from which of the following would you say is your
main challenge when handing over critical contractual decisions?

Page 14  At a time when projects, in certain industries, are losing skilled and experience professional
due to the downturn, do you believe that delivering processes via a system can help bridge
the experience gap and reinforce best practice processes?

Page 15  Conclusion
 always translate into budget overruns and missed deadlines, but the oil and gas
Death Of The Megaproject?: industry has a particularly high rate of project failure.
How To Solve The Problems Involved
In The Oil & Gas Industry. Good working relationship Clearly defined Early warning of Other
with contractors processes potential contract risk (please specify)
In conjunction with AVEVA ProCon, Oil & Gas IQ carried out a wide-ranging survey to
professionals that have worked on oil and gas megaprojects in the recent past. The
What statistics we gathered make for
commonalities both sobering
exist reading, most
in your and form the epitaph for the
successful What weaknesses have you identified in yourleast
Age of the Megaproject…
large capital projects? successful large capital projects?

24%
Confusion regarding formal
instructions to the contractor

25% 22% 19% 11%

Escalating contract issues which are not
addressed when they first appear 19%
16%
Lack of effective decision making due to
no centralised contractual information
Effective decision Clearly defined No functional Managed
making via availability scope silos contract change
of necessary information
Lack of quality or experience in
project partner personnel 14%
Inadequately prepared contract
documents leaving the door open to
interpretation and disputes 11%
9% 8% 5% 1% Differing contractual interpretation and
expectation between you and the contractor 7%
Lack of process discipline
leading to claims 5%
Good working relationship Clearly defined Early warning of Other
with contractors potential contract risk (please specify)
processes
4%
Dispersed information across multiple
tools with an over-reliance on familiar
desktop-based applications

My view is that project stakeholders still underplay the relative importance of We’re in an industry that’s characterised by inadequate systems to support
building a strong relationship with the contractor. contractor engagement.

32%
24%
Confusion regarding formal based on our stats, that actually, building and
instructions to the contractor maintaining an excellent relationship with the

56% 60%
Tim Haïdar,
Clare Colhoun
contractor is fundamental to the project success. Clare Colhoun ESTIMATING Editor In Chief,
AVEVA ProCon AVEVA ProCon
It is also critical to have a well -defined, structured Oil & Gas IQ

19%
Escalating contract issues which are not process for managing contract change but we do CONTRACT COST
addressed when they first appear not always see this in the projects we support. MANAGEMENT MANAGEMENT

57%
Here, we can see that some of the softer, non-technical I think that this clearly highlights the advocacy There is a contradiction between what we see in the
aspects of project management are very critical to for a formal mechanism rather than an informal first element and then one of the main reasons that
the success Lack
of projects. For example,
making dueatoclear process mechanism for instructing the contractor. This is we see in the second. Here we’re saying that formal
16%
of effective decision
for getting things donecontractual
no centralised so that information
the decision making Tim Haïdar, why, over time, as projects have gotten moreSCHEDULING
and instruction with the contractor is of great importance:
Editor In Chief,
process runs smoothly. This ranks slightly ahead of a Oil & Gas IQ
more complex and larger, our underlying systems a quarter of people believe it’s not working. And yet
well-defined scope. I wasn’t surprised at all that the
.
and processes COLLABORATION 45%
for dealing with that incremental ROBUST
in a previous question, the 40%
CHANGE
relationship is not rated
MANAGEMENT
14%
really important things are around
Lack of quality information
or experience in and complexity haven’t really kept pace.
PLATFORM highly.
project partner personnel
organisation and communication. PROCESS AND
I wasn’t surprised, exactly the same as you, that those We’re in an industry that’s characterised by inadequate Experience showsAPPLICATION
that if you have a strong
If I look at those numbers, I feel the scoring for were the highest priorities for people, but I was a bit systems to support contractor engagement. relationship with a contractor, you actually build the
“good working relationships withcontract
Inadequately prepared contractors” and more surprised that “clearly defined processes” was formal instructions based on that relationship and
documents
“managed contract leaving theare
change” doorlow
open and
to
interpretation and disputes
them to have been higher.
expected
11%
very low. Surely, that’s interlinked with good working
relationships, for example, and then scope creep. I
Large projects have thousands of communications
being issued between contract parties, and it’s
you know how to communicate with them. So, the
people element here and the trust dynamic on both
expected it to be double what it was. essential to distinguish between casual
sides, is of great importance.
My view is that project stakeholders still underplay communications or observations and actual
the relativeDiffering
expectation
contractual interpretation
importance
between you and
of building
the
and a strong
contractor
relationship with the contractor. While we believe, 7% contractual instructions to the contractor to take an
action on something. Particularly if it’s outside of the
original contract scope.

4
Lack of process discipline
leading to claims 5%
TIM HAÏDAR | EDITOR IN CHIEF TIM HAÏDAR | EDITOR IN CHIEF
57% 58% 49% 5
Lack of consistent information Lack of effective Untracked scope changes due to
across org decision teams change control new instructions from contract buyer

4%
Dispersed information across multiple
tools with an over-reliance on familiar 43%
 Lack of process discipline
5% 57%
45% 40%
Death Of The Megaproject?:
How To Solve The Problems Involved leading to claims COLLABORATION SCHEDULING ROBUST CHANGE
In The Oil & Gas Industry.
PLATFORM MANAGEMENT
4%
Dispersed information across multiple PROCESS AND
tools with an over-reliance on familiar
desktop-based applications
COLLABORATION
PLATFORM
45% 40% ROBUST CHANGE
APPLICATION
MANAGEMENT
Please select the top THREE critical applications that What are the top THREE reasons for budget overruns?
PROCESS AND
APPLICATION
you think make large capital projects
32%

56%
CONTRACT
ESTIMATING
60%
COST
32% 57% MANAGEMENT 58% 49%
MANAGEMENT

across org57%
Lack of consistent information
decision teams 57%
58%
Lack of effective
change control 49%
Untracked scope changes due to
new instructions from contract buyer
56% ESTIMATING
60% Lack of consistent information
across org decision teams
43%
Lack of effective
SCHEDULING
change control
Untracked scope changes due to
new instructions from contract buyer
CONTRACT
MANAGEMENT
COST
MANAGEMENT 43%
COLLABORATION
Poorly defined 45% 40% 43%
ROBUST CHANGE
communication MANAGEMENT
PLATFORM
43%
57%
Lack of best practice
withPoorly defined
supplier(s) PROCESS
governanceANDin
communication Lack of best practice
managing
APPLICATION contracts
with supplier(s)
SCHEDULING 27% governance in
managing contracts
27%
Lack of available
32%
COLLABORATION 45% 40% ROBUST CHANGE
MANAGEMENT
commercial information
Lack
with regard
commercial
to of
theavailable
state 32%
Contract claims
PLATFORM of theinformation
contract
PROCESS AND with regard to the state Contract claims
of the contract
APPLICATION

57% 58% 49%

Lack of consistent information Lack of effective Untracked scope changes due to
Change control and managing
change control change isfrom
becoming
31%
Quite simply, being in control of the contract means being in control of change.
30%
30% 27%
27%the key
across org
31%
Morepriority.
than
decision teams
And12%
12%
new instructions
that’s where firefighting starts.
contract buyer

Fewer than Between

5More
timesthan
43% Never
Fewer than Between Never 43%
57% 58% 49%
3 times 3-5 times 5 times
Poorly defined
Clare Colhoun 3 times 3-5 times communication
20%
Lack of best practice
AVEVA ProCon with supplier(s)
Lack of consistent information
across org decision teams
Lack of effective
change control
Untracked scope changes due to
new instructions from contract buyer
20%
governance in
managing contracts
Lessons learned
This highlights the fact that controlling the project contract management solution itself, I wouldn’t
27% Lessons learned
from
from previous
previous
43%
means controlling the execution of the contract as see them as separate. I think that once you get Lack of available
32% projects
projects
well as controlling thedefined
Poorly schedule and the costs. 43%
into execution mode, controlling and managing
change really falls under the umbrella header of
commercial
withAVEVA
information
Clare Colhoun
regard toProCon
the state Contract claims
communication
Unfortunately, the industry has traditionally Lack of best practice of the contract
with supplier(s) contract management. A lot of what
governance in happens once
prioritised investment in cost and scheduling
the contract is signed on Day Zerocontracts
managing is going to have
tools over a fit-for-purpose contract management In general, coordinating decision making in project teams can be extremely challenging. How do we make
software solution. 27% changed as soon as you get to Day One. Quite
simply, being in control of the contract means being sure that all stakeholders are looking at the same information in order to make critical decisions?
We know thatLack
significant commercial
of available
project
amountinformation
contracts are prone to a
of change, so it’s simply quite
in control of change.
32%
The whole domain is very complex and there are
You can address that at a theoretical level but people revert to type and tend to huddle in functional silos.

difficult to with regard with

foresee to the state
100 per cent clarity the final Contract claims It’s a complex area as well because with a lot of projects, a new project team is put in place to deliver the
of the contractat the outset. Managing a lot of IT products that are positioned as point project. People are thrown together in teams who don’t have a history together and you are being introduced
scope of Capex projects
solutions to address specific areas. The challenge
31% 46%
to a project organisation structure where processes are not yet formalised or proven.
34%
34%
30% 27%
these projects will require a significant amount of
interaction between the contractor and the owner or
operator. So there is a clear case and a clear need for a
that customers have is bringing all those products
into their new projects, integrating them, learning
Fewer than
new technologies, new user interfaces, and making Between
More than
12%
Change control and managing change is becoming the Improve
Improve large
key priority. Codify
large And that’s the
thecontractual
where
Codify firefighting starts.
contractual
fit-for-purpose contract management solution to 5 times Never capital
capital project
project processes
processesand
and
them work together. 3 times 3-5 times
manage all of this interaction. scoping
scoping definition
definition procedures
procedures
I think that the “robust change management process
and application” is actually an inherent part of the
20%
27% 31% 12%
Lessons learned
from previous
6 More than TIM HAÏDAR | EDITOR IN CHIEF TIM HAÏDAR | EDITOR IN CHIEF projects 7
Between Never Many companies mitigate capital
3-5 times
5 times Many companies mitigate capital
leakage by having a clearly defined

eYses
leakage by having a clearly defined

4%3%
Application for Payment (AFP) process

57
N
 Death Of The Megaproject?: 43%
How To Solve The Problems Involved
Poorly defined 43%
31%
In The Oil & Gas Industry.
communication
with supplier(s) 30% 27% Lack of best practice
governance
Moreinthan
12%
Fewer than Between managing5contracts Never
times
In the last two years, how many times 27%have projects 3 times What is your strategy to
3-5 times

you’ve been involved in experienced budget overruns

Lack of available ensure32% that you mitigate 20%
commercial information Lessons learned
of over 10%? with regard to the state such budget
Contract claims overruns from previous
of the contract
for future large capital projects

projects?

30% 27% 31% 12% 46% 34%

More than Improve large Codify the contractual
Fewer than Between Never
5 times capital project processes and
3 times 3-5 times scoping definition procedures

20%
Lessons learned
from previous
Many companies mitigate capital
projects Tim Haïdar,
leakage by having a clearly defined
Clare Colhoun

Yes
43%
Editor In Chief,
AVEVA ProCon
Application for Payment (AFP) process Oil & Gas IQ

57%
No
to approve the work delivered before the
When news of cost overruns is made public, there is a Companies are becoming so risk averse in terms of
invoice submission. This enablesIpeople would add to that, I guess, that only a fifth of
the
overruns that they’re tending to review their project talked about incorporating lessons learned
downward pressure on share price of the Investor/Operator portfolio with the Contracts teama tohigher
aim of finding ensure that thefrom
volume workprevious projects. Having done quite a lot of
of smaller, less risky projects where they can use
partner in the project. delivered matches the amount onwork
repeatable processes and they can use repeatable
the here on the Great Crew Change that’s looming
imminently, I can understand why more than a third
AFP.theDocosts
designs, cutting down youoffollow
havingatosimilar process?
redesign of people would want to codify the contractual

l
Manua
and reengineer each project from scratch. processes and procedures.
46% 34%

Systematise
40%
They are trying to get out of the cost overrun spiral by However, I wonder if lessons learned from previous

60%
reducing the risk profile of the kind of projects that projects and recording those is going to be more
Improve large Codify the contractual
they’re involved with. And this is evident right across important going forward, given the fact that there is
Clare Colhoun
Tim Haïdar,
Editor In Chief,
capital project processes
the industry as we and Is this
see several process
of the systemised
IOC’s move in going to be such a dearth of qualified professionals
AVEVA ProCon
Oil & Gas IQ scoping definition this direction, away
proceduresfrom or
the carried
riskier out manually?
megaprojects. in this space. I wonder if only a fifth of people saying
d
that as a major objective is quite short-sighted.
I think the shale revolution, where companies can use
the same techniques over and over again and can
I am actually surprised that there are people who Personally, I believe that 12 per cent we see here is
apply lessons from one well to the next, is a case in
have never experienced overruns, given how endemic fallacious. I can’t believe that there are people who
point. Operators see that getting into shale, which is
they are across the industry. A recent IOC sponsored have been working in megaprojects over the last 24
dominated by smaller projects, has a certain appeal
study of major oil and gas projects undertaken months that haven’t experienced overruns.
and attraction in a world of declining oil prices and a
between 2007 and 2010 found that only eight per
cent of projects came in on time and on budget. So Many companies mitigate capital
The question then becomes “why has that 12 per cent fear of cost overruns. Companies are becoming so risk
averse in terms of overruns that they’re
46%
chosen not to be so honest about it?” Is it because
that’s maybe just another contrasting study. leakage by having a clearly defined 37%
If you look at the link between cost overruns and
Yes
When news of cost overruns is made public, there is
it would reflect badly on them or their organisation?
Application for Payment (AFP) process
It would be interesting to delve deeper into the 43%credit ratings, a lot of these projects need to get
4-6
tending to review their project portfolio
1-3
project finance, and the cost of project finance is

57%
a downward pressure on share price of the Investor/ reasoning behind this segment of respondents. with the aim of finding a higher volume

Operator partner in the project. Therefore, the
increasing incidence of overruns is finally beginning
to get the attention of CFOs. And my own hope is
that CFOs will be some of the champions of pushing
for better processes, better systems and better
analytics so that we can have better advance warning
indicators of potential overruns and trends before
they actually hit the project bottom line and hit the
No
inextricably linked to the risk profile of a project.
to approve the work delivered before the of smaller, less risky projects where they
For example, there was a recent project at Sabine
invoice submission. This enables the can use repeatable processes and they
Pass in Louisiana where they raised a $1 billion note
can use repeatable designs, cutting
Contracts team to ensure that the work to fund the project. And they got a very favourable
credit rating. And that credit rating was directly down the costs of having to redesign
delivered matches the amount on the 9% 8%
linked to the fact that they had had a good history
up to that point of not having cost overruns. But
and reengineer each project from 61%
AFP. Do you follow a similar process? that came with6-10the caveat thatMore
thisthan 10 change in
could scratch.
39%
l

share price of the companies that are involved. future. then the credit rating would change.
Manua

Systematise
40%

8 TIM HAÏDAR | EDITOR IN CHIEF TIM HAÏDAR | EDITOR IN CHIEF 9

60%

YES NO

Is this process systemised

 Death Of The Megaproject?:
How To Solve The Problems Involved
In The Oil & Gas Industry.
YES NO

Many companies mitigate capital leakage by having a What percentage of invoice leakage do you think
clearly defined Application for Payment (AFP) process you have?
to approve the work delivered before the invoice
46%
submission. This enables the Contracts team
that the work deliveredImprove
matches the amount
34% to ensure
on the
large Codify the contractual
AFP. Do you follow a similar process? processes and
capital project
scoping definition procedures

Is this process
systemisedor
Many companies
carried out mitigate capital
manually?
leakage by having a clearly defined
Yes
43%
Application for Payment (AFP) process 30% 1-5% 38% 5-10% 19% 10-15% 13% More than 15%

57%
No
to approve the work delivered before the
invoice submission. This enables the
Clare Colhoun
AVEVA ProCon

Contracts team to ensure that the work

delivered matches the amount
applicationon
for the
I’m surprised to see any project or company not
following a structured payment

AFP. Doapplications
you follow
process because
a similarcomplex
these
are horrendously process?
payment approval
and detailed.
l
Manua

So much so that the large consulting companies, have

Systematise
actually made a business out of providing a service
40%

Clare Colhoun
to the oil and gas projects whereby they audit the AVEVA ProCon
historical invoice payments at the handover stage of
60%

a project, and find all of the erroneous payments and

No central location for all
32%
take a % of the savings as their fee.
Is this process systemised
Those adopting a manual process is very high at 40
These statistics tell of damaging costs to the industry, even to have 1 per cent leakage is going to be a big cost
contractual decisions made
in an industry that’s investing north of $900 billion a year on capital projects.
orcent.
per carried
The costout manually?
of manual processing is so high
on megaprojects, where you may have thousands
d It’s something that we just quite simply need to get better at because the project stakeholders have entrusted

No audit trail or tracking of

the executive team to manage this process.

60%
of invoices coming daily, so it is surprising that you
would find diligent individuals able to approve the There really shouldn’t be any invoice leakage, and there’s probably no need for there to be invoice leakage
work that has been done, or identify work that hasn’t
been done, and correctly pay hundreds or thousands
decisions made
either in an age of technological sophistication. We just need to get our act together on this.

of subcontractors. There is a real need here for

education around the cost savings that can be made None of the above
8%
through automation.
There really shouldn’t be any invoice leakage, and
there’s probably no need for there to be invoice leakage
% 37% Tim Haïdar,
Editor In Chief,
4-6
Oil & Gas IQ
either in an age of technological sophistication.

It seems nonsensical, potentially dangerous to the

bottom line of a company, to put such a laborious
and intensive process into the hands of a team of
individuals that could then leave a company due to
attrition or otherwise.

% 10
8% 61%
TIM HAÏDAR | EDITOR IN CHIEF TIM HAÏDAR | EDITOR IN CHIEF 11

More than 10
39%
 Application fordelivered
Payment matches the amount on the
(AFP) process

Y
4

57%
Death Of The Megaproject?:
AFP.
workDo you follow a similar
the process?

No
to How
approve
In the
To Solve The Problems
The Oil & Gas Industry. delivered
Involved
before

l
Manua
invoice submission. This enables the

Systematise
40%
Contracts team to ensure that the work

60%
How many
delivered matchessystemsthe amount on dothe Do you
Is this process systemised have a single It is critical to ensure that contractual decisions made
AFP. Do you
you need to work follow a similar process?
across
or carried out manually? in earlier phases are easily available to all subsequent
system which is able

l
d

Manua
to get t he information phases. With
30% 1-5%that 38%
in m ind, from which13%
ofMore
the thanfollowing

Systematise
to easily provide

40%
5-10% 19% 10-15% 15%

you need? would you say is your main challenge when handing

60%
management with
Is this process systemised over critical contractual decisions?
or carried out manually? reports about contract d
obligations, contract KPIs,
46% 37% variation management
1-3 4-6 and negotiated cost
savings? No central location for all
46% 37% contractual decisions made 32%
1-3 9% 4-6 8% 61% No audit trail or tracking of
decisions made 60%
6-10 More than 10
39%
None of the above
8%
9% 8% 61%
YES NO

6-10 More than 10

39%

Clare Colhoun
AVEVA ProCon
These stats do not surprise me. Traditionally, a lot
of oil and gas organisations would have centralised
supply chain departments, . From inception until
the time of contract award, most of the contract
related business processes are supported by central
supply chain systems. Then when the contracts are
awarded, because they’re being executed in remote
areas of Africa or Kazakhstan or 1-5%
Russia, the contract
30%
management responsibility is handed over to a
38% 5-10%
geographically remote team. This team may not have
YES NO
We’re still frequently seeing an ad hoc approach as each new
project comes on board, rather than repeatable processes that are
embedded into the systems and made available to project teams.
information on how things were going on the project,
they went to the scheduling team to get a progress
update on the project schedule, or they went to the
cost management team to find out about changes to
the budget or the forecast etc. So the project contract Clare Colhoun
team ends up pulling information from central head AVEVA ProCon
office systems, and then from project-based tools
that sat outside of their own organisation.
19% 10-15% 13% More than 15%
A lot of the contract professionals just relied on a
bunch of unwieldy spreadsheets and emails and
The fact that the overwhelming majority of people, Yes
insights into what happened during the early phases

72%
access to central systems, and/or the latter may not almost double the next statistic, said that there was of the project.
Word documents. I would say that the figures we no audit trail or tracking of decisions really highlights
be fit for purpose for actual contract execution. It’s a big problem and a big challenge for the industry.
have here represent a fair reflection of the state of the lack of good processes and systems during the
Now combine that with the fact that, until recently, the industry. It is not an aspirational state for the As these projects became more and more complex
execution phase of the contract.
the project based contract team often didn’t really industry, but certainly a true-to-life snapshot of the you need robust systems and well defined business
30%
have their 1-5%
own system. When 5-10% wanted19%
38% they 10-15%status13%
to get quo. More than 15% We’re still frequently seeing an ad hoc approach processes. No
28%
as each new project comes on board, rather than
The lack of a clear audit trail and process is one of
repeatable processes that are embedded into the
the reasons why we see problems escalating through
systems and made available to project teams. The
the life of the project, culminating in very expensive
industry is suffering from a lack of continuity as the
Traditionally, a lot of oil and gas organisations would have centralised supply claims. We know there are still organisations out
chain departments.No central location for all
project team leaves the project and they head off on
there managing big projects with spreadsheets.
32%
to the next venture. The project is handed over to the
contractual decisions made operating team and the operating team is bereft of

No audit trail or tracking of

12
decisions made 60%
TIM HAÏDAR | EDITOR IN CHIEF TIM HAÏDAR | EDITOR IN CHIEF 13

No central location for all

None of the above
 None of the above
8%
Death Of The Megaproject?:
How To Solve The Problems Involved
In The Oil & Gas Industry.

At a time when projects, in certain industries, are

losing skilled and experience professional due to the
downturn, do you believe that delivering processes
via a system can help bridge the experience gap and
reinforce best practice processes?

Yes
72%
No
28%

Clare Colhoun
AVEVA ProCon

I am surprised that 100 per cent of respondents didn’t say “yes” to this question.
Clearly, there must be an imperative for enhanced processes in an industry that’s experiencing a demographic
time-bomb, a “Silver Tsunami” as it has been called, where the percentage of industry veterans is getting
older all the time. Common sense would indicate that we need better processes embedded in systems so that
we can mitigate against that loss of skills.
Conclusions
I don’t think the results of this survey are telling us anything new that we haven’t already found in working with the industry. But it
reaffirms for us that there are a lot of process improvements and underlying system enhancements that are needed in the industry
to really get it to start emulating other industries like manufacturing where they have embraced process improvements.
I think there’s plenty of upside out there to be had from better processes, better systems. And I think, strangely enough, of late,
because of the squeeze in the margins, it has forced a bit of a wake-up call in the industry to pay attention to some of the basic

Clearly, there must be an imperative for enhanced groundwork.

We shouldn’t be an industry that’s more focused on the rocket science of horizontal or deep water drilling, these amazing feats of

processes in an industry that’s experiencing a engineering, whilst neglecting some of the more basic competencies. In lean times, the fundamentals get the attention and then,
hopefully, as prices rise, you’ve got an industry that’s better placed and stronger to be able to grow from it.

demographic time-bomb, a “Silver Tsunami. Now, in a downturn with the current oil prices, we think that many organisations are scrutinising every cost element within the
organisation, and the drive for cost efficiency is underway. We’ve seen some stats showing that while the manufacturing industries’
profitability nearly doubled in the last 15 years, the productivity in the oil and gas was static. People are starting to learn from this.

14 TIM HAÏDAR | EDITOR IN CHIEF TIM HAÏDAR | EDITOR IN CHIEF 15

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