University of technology

chemical engineering department

oil refining branch

Risk Management for

Oil and Gas Projects

Edited by : Ali Hussein Whaieb

Supervisor : Dr. Alaa Mashiel

Academic year
2020 – 2021

I
Abstract

In this report I will focus on defining, controlling, and mitigating the

risk during project execution, especially in the case of construction
on site. However, this risk assessment technique can also be
used at the last stage of the engineering.

II
Content

Topics Page number

Introduction 1
The risk management process 3
Project risks 3
Risk assessment 7
Risk identification 8
Methods of defining risk 9
Risk monitoring and control 9
References 11

III
1- Introduction

The risk management of a project is the process of identifying risks

that could affect the project and how to control them. We must trust
that we can overcome these risks well, if they are studied
scientifically.
In general, risks are events that, if they occur, would affect the
outcome of a project and, consequently, not satisfy the stakeholder.
To be specific, there are events or activities that can be performed in
a poor manner, thus increasing the project cost or time or affecting
the quality.

As shown in Figure 1, the uncertainty is like the black box, in which

no one can know what will happen. So, we can say that objectives
are things that must happen, while uncertainties are things that
might happen. Risk management is an ongoing process during the
implementation of a project until the end of that project.
The potential risk is substantially less at the completion of the
project.

The risks can be classified in two categories :

• Project risks are the risks that can happen during a project
due to technical mistakes that can occur during construction.
• Process risks are the risks that can occur during the project
due to procedural mistakes, poor communication between
the project team, or poor team performance.

1
In general, there are many sources of uncertainties, especially in the
main elements of a project, which are cost, time, quality, and HSE
as presented in Figure 1 . Our target is to control these
uncertainties, try to predict what could happen, and avoid it in
reasonable time.

Figure (1) Sources of Uncertainty

2
2- The Risk Management Process

The Project Management Institute (PMI) uses the systems approach

to risk management found in the Guide to the PMBOK. The risk
process is divided into six major processes:
1. Risk management planning
2. Risk identification
3. Risk assessment
4. Risk quantification
5. Risk response planning
6. Risk monitoring and control

3- Project Risks
After completing the time schedule, the potential risk will be more
obvious. Knowledge of the risks that may be faced during the
project is extremely important for the project manager, as he or she
is responsible for identifying the activities of higher risk impact on
the overall project implementation, which will either increase the
duration or the cost. Therefore, the project manager should review
the planning schedule
and identify areas of planning that contain high risks, as known
from the following:

1. Tasks on the critical path

2. Tasks that need a long time period in which to be executed
3. Tasks that have little overtime
4. Activities that start with the beginning of other activities
5. Tasks that need many individuals for their execution
6. Complex tasks
7. Activities and tasks that need condensed training
8. Tasks that need new, advanced technology
3
There are many areas in the project that are not specific and these
are sources of risks, which can be any of the following:

 Activities of a long period of time and on the critical path

 A lack of identification of the project objectives
 A non-competent project manager
 An inaccurate cost estimate
 A bad atmosphere, in general, in the project
 Achieving customer satisfaction
 A rapid change in resources during time periods, as shown
in Figure 2

Figure ( 2 ) Change in staff volume during a project

4
The success of the project means that the project team succeeded in
achieving the objectives of the project on a specific time schedule
and budget. It is known that there is nothing specific in nature. For
example, specific costs, the time period, and the objectives of the
project can increase and decrease. It is worth mentioning, that these
three elements affect each other, so the success of the project
requires each element of the project to work cohesively, as presented
in Figure 3

Figure ( 3 ) Point of project success

5
The list below can be our guide as a checklist for defining
uncertainty risks in our project. In general, the common sources of
uncertainty in a project are as follows:

• Scope of work
• Quality of estimates
• False assumptions
• Technological novelty
• Changes in technical specs
• User interface
• Staffing
• Staff productivity
• Skill levels
• Contractor performance
• Subcontractor performance
• Approvals and funding
• Market share
• Competition
• Economic climate
• Inflation and exchange rate
• Site conditions, such as soil characteristics
• Weather, as it has a high impact in the case of offshore projects
• Transportation logistics
• Change in law
• Political environment
• Public relations
• Customers
• Extensive software development

6
4- Risk Assessment

The risk assessment procedure is shown in Figure 4 The first step is

to define the expected risks during the project execution and then
analyze this risk. The last step is to prioritize these risks. Each
project has a risk, no matter what the project is. We focus on the
risks affecting the management of the project and, by knowing these
risks, we can set priorities to develop solutions for those risks and to
mitigate them.

In order to assess these risks, we must answer the following

questions accurately and impartially:

• What is the risk exactly?

• How do these risks affect the project?
• What can be done to reduce the impact of the risks?

Figure ( 4 ) Risk assessment tools

7
5- Risk Identification

The identification of risks is very important. Each item must be

described in detail so that it will not be confused with any other risk
or project task that must be done. Each risk should be given an
identification number.
During the course of the project, as more information is gathered
about the risk, all of this information can be consolidated.

Table 1 will be the basic document of the project

8
6- Methods of Defining Risk

There are many ways to discover and identify risks. but, to be clear,
brainstorming is the most traditional and practical method .
However, the others can also be used in special circumstances:

• Brainstorming
• Delphi technique
• Nominal group technique
• Crawford slip
• Expert interviews
• Root cause identification
• Strengths, weaknesses, opportunities, and threats (SWOT)
analysis
• Checklists
• Analogy
• Documentation reviews

7- Risk Monitoring and Control

Risk monitoring and control is the process of keeping track of all the
identified risks and identifying new risks, as their presence becomes
known and residual risks that occur when the risk management
plans are implemented on individual risks. The effectiveness of the
risk management plan is evaluated on an ongoing basis throughout
the project.

9
Figure 5 presents the steps of risk monitoring and control

Figure ( 5 ) Steps in controlling the risks

10
8- References

Project Management in the Oil and Gas Industry

Mohamed A. El-Reedy , published by WILEY , 2016 .

11