TABLE OF CONTENT:

1. INTRODUCTION……………………………………………………………………...... 3
2. OBJECTIVE…………………………………………………………………………….. 4
3. CASE STUDY…………………………………………………………………………... 4
4. CONTENT
4.1. BACKGROUND OF BRITISH PETROLEUM ………………………………… 5
4.2. PROBLEM……………………………………………….………………………. 5
4.3. PROJECT MANAGEMENT ANALYSIS………………………………….…… 7
4.3.1. TIME AND COST MANAGEMENT………………………………….……. 7
4.3.2. RISK MANAGEMENT……………………………………………….……... 7
4.3.3. QUALITY MANAGEMENT………………………………………..…….... 8
4.3.4. KNOWLEDGE MANAGEMENT…………………………………..………. 9
4.3.5. COMMUNICATION MANAGEMENT…………………………………… 10
4.3.6. HUMAN RESOURCE MANAGEMENT………………………………….. 11
4.4. KEY REASONS OF MANAGEMENT FAILURE……………………………. 12
4.5. RECOMMENDATION………………………………………………………… 13
4.6. IMPACT TO WILDLIFE AND FISHERIES…………………………………... 14
4.7. IMPACT TO BRITISH PETROLEUM………………………………………... 14
4.8. AFTERMATH OF THE OIL SPILL …………………...……………………… 16
5. CONCLUSION…………………………………………………………………………. 17
6. REFERENCE………………………………………………………………………….... 18
 INTRODUCTION

A project is a set of activities arranged in such a way that the required goal can be met.
Depending on the amount of work involved, a project will last anywhere from a few days to
several months or even years. Project management concepts aid in the successful completion of
the project. It aids in the analysis of the situation as well as the execution of strategies and the
organization of project-related activities in such a way that the project plan can be implemented
effectively.

Project management is the application of intelligence, expertise and strategies to a wide variety
of project activities in order to fulfill the task objective. Project management necessitates a
unique set of skills and experience. It is accomplished through a series of processes carried out
by project managers and their staff, including initiating, preparing, implementing, overseeing and
closing projects. Project teams oversee assigned task, which includes conflicting demands for
scope, time, financial cost, unexpected risk, and quality from stakeholder with varying needs.

When it comes to incorporating project management in a company, there are many steps to take.
To ensure that the project meets the required business needs, outlining tasks or how targets can
be accomplished, project managers must recognize and identify the project goals and objectives.
To ensure that the project is operated “according to schedule” project teams must develop and
execute a project plan with strict controls – comply with the “essential course”.

This project seeks to ensure that the project is implemented effectively. The slight risk were the
major threats that affected the project. Risk has a significant impact on the project’s overall
timetable. For this case study, it has met an unfavorable situation where the weak management
was the cause of its own demise. (n.n, 2021)

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OBJECTIVE
The primary aim of this assignment is to introduce students to real-world problems by
conducting an in-depth and thorough analysis of this case study and its surrounding background,
especially, the Deepwater Horizon oil rig.

CASE STUDY
In today’s complex and ever-changing world, business organization must embrace and
incorporate new strategies in order to succeed in a constantly changing and competitive
environment. In this case study, we will look at the British Petroleum Oil Spill in the Gulf of
Mexico, which is located in the United State of America. This oil spill has created a situation that
is both serious and unprecedented for any oil company in the world. As a result of the deep oil
spill, it was one of the most costly events in recent history. A circumstance like this necessitated
some highly important strategic management decisions. Finally, we’ll talk about the cause of
management failure and how to find a better solution to the problem.

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 CONTENT

4.1. BACKGROUND OF BRITISH PETROLEUM

British Petroleum or BP is a multinational oil and gas corporation headquartered in London,

England. It was established in 1909 as the Anglo-Persian Oil and Gas Company. It is a vertically
integrated company with interests in exploration and development, manufacturing, marketing
and distribution, petrochemicals, power generation, and trading in the oil and gas industry. It also
has biofuels, wind power, smart gird and solar technology interests in renewable energy. BP
employs over 70,000 people in over 80 countries around the world. BP America, the company’s
main subsidiary has 18,700 service station around the world and produces around 3.7 million
barrels per day. It is one of the oil and gas companies that has made a significant investments in
the creation and implementation of new exploration technologies to locate petrochemicals
underneath the earth’s surface. (Kamiar, 2010)

4.2. PROBLEM

An explosion occurred in the Deep-Water Horizon project on April, 20, 2010, 52 miles southeast
of the Louisiana port of Venice in the Gulf of Mexico. The oil spill that resulted from this
explosion was one of the worst oil disasters in recent history. This incident resulted in the deaths
of 11 workers, the injuries of 17 others and capsized the rig. Two days later, the rig sank on April
22 at which point it ruptured the marine riser. The fire produced clouds of smoke that covered a
30-mile radius, while the spill oil polluted a 5-mile radius around the rig.

Moreover, according to a new-volume draft investigative report published by the US Chemical

Safety Board (CSB), the blowout preventer (BOP) that was supposed to cut off the flow of high-
pressure oil and gas failed to seal the well because drill pipe buckled for reasons the offshore
drilling industry is entirely unaware of. The situation change so quickly that the well head
remained open, resulting in a large amount of oil spill that killed off the region’s marine life,

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with an estimated death toll of 8000 species. After several failed attempts, BP was able to cap the
well on July 15, effectively stopping the flow of crude.

The Deep-Water Horizon was a 9-year-old drilling rig built specifically for offshore drilling. It
was a giant floating structure with a drilling capacity of 9100 meters and the ability to work up to
2400 meter deeps. Hyundai’s heavy industry department designed and built the structure. From
March 2008 to September 2010, BP leased this semi-submersible drilling unit from Transocean,
an offshore oil drilling company, for $502,000 per day.

On the 15th July, BP took three months to fully stop the oil flow into the ocean, but 4.9 million
barrels of oil, roughly equivalent to 780 million liters, had already been poured into the ocean.
Almost 184 million gallons of hydro chemical leaked daily in the Gulf Ocean over the course of
three moths, which is 18 times the volume spilled by the Exxon Valdez. This oil spill had a
negative impact on the environment, disrupting the 40 percent sea food supply in the United
States.

The US government was swift to respond, with President Barack Obama announcing a $20
billion fund to help with the environmental catastrophe. BP also admitted the situation, admitting
that the cleaning cost would be covered by the company. About 30,000 workers worked around
the cost to recover the oil, and primitive steps were taken to save the lives of animals, but the
tragedy was so severe that the spill’s effects are still being felt by the environment.
(Encyclopaedia, 2019)

Figure 1: Satellite images of oil spill taken between April 25 and July 16, 2012

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 4.3. PROJECT MANAGEMENT ANALYSIS

1) TIME AND COST MANAGEMENT

Project time and budget were intertwined in this project, as they were in most others.
The lease on the Deepwater Horizon oil rig cost BP around $502,000 a day. The
Macondo project’s managers were primarily concerned with reducing time and
expenses. According to his supervisor, BP wells Team Leader John Guide
“championed the every dollar counts culture”.

One of Guide’s main project success metrics was achieving well-defined goals for
“less than the Authorization for Expenditure (AFE) expenses”. Engineers at BP were
under constant pressure to always think about “how to drill wells faster”, as well as,
“cost and effectiveness”. While time and cost are critical consideration in high-
capital, high-risk project of this nature, given the risks involved, it is critical to avoid
prioritizing them over all others.

Project success metrics should demonstrate a strong balance between time and cost
with quality and safety to help promote a culture of balance and managers should
continually reinforce the importance of balance with their staff for example through
day-to-day feedback and employee performance appraisal criteria. (Gold, 2010)

2) RISK MAAGEMENT

Risk management deficiency was perhaps one of the most significant “overarching
management failures” in the Macondo Project: a failure to properly assess and
understand the risks involved. Due to a lack of robust risk control protocols, key risk
factors were poorly assessed or overlooked entirely. Following the completion of
Halliburton’s cementing job on Aril 20th, BP began making arrangements for

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temporary well abandonment – the final stage of the well drilling project before
resuming normal operations with a new crew and a smaller rig.

BP made several adjustment to the temporary abandonment procedures in the two

weeks, including changes to the depth of the cement plug that would be placed within
the wellbore, the manner in which the plug would be set and the negative-pressure
test that would be carried out as a primary test for hydrocarbon leaks. Despite these
drastic changes, the BP Oil Spill Commission notes that there is no indication that
these changes underwent any kind of systematic risk assessment.

For example, during the negative pressure test, the type of fluid used to perform the
test (the “space”) was a mixture that had never been used for that purpose before by
anyone at BP and had never been thoroughly tested, according to BP’s instructions.
The risk management strategy should include a thorough and detailed assessment of
risk, as well as a Work Breakdown Structure to ensure that all task are taken into
account. In addition, formal risk management protocols that are specifically
incorporated into design procedures should be included.

3) QUALITY MANAGEMENT

BP had a mandatory drilling engineering policies but no plan in place to ensure

enforcement during the drilling process. There appears to be no quality strategy in
place to provide quality assurance and ensure adherence to BP’s drilling standards.
BP engineers placed major restrictions on Halliburton’s design for pouring cement to
set the steel casing in the days leading up to the accident, in order to reduce the
possibility of triggering rock fractures that would later leak oil.

Firstly, they restricted the passage of drilling mud (used to cool the drill bit and retain
well pressure during drilling) through the well bore before cementing started – this

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saved time and minimized the risk of inflicting damage at the well’s bottom but it
also prevented the wellbore from being properly cleaned and engineers from testing
for leaks at the well’s bottom.

Secondly, BP told Halliburton that it needed to pump cement at lower pressure than
the average. Finally, the amount of cement that could be pumped down the well was
reduced. This most recent design update complied with government safety 8
requirements but not with BP’s own internal guidelines (which were twice as
stringent).

Many of these design choice turned out to be flawed, favoring cost, time and quality.
Any of these fatal errors could have been avoided with a quality control strategy that
explicitly laid out guidelines for audit procedures to ensure work was being
performed according to established guidelines.

Quality management plans should be developed early in the project and should
include quality assessment protocols, minimum quality requirements and a strategy to
ensure that these procedures and standards are implemented.

4) KNOWLEDGE MANAGEMENT

BP’s onshore design team was constantly catching up with the rig activities in order
to include procedures such as design and testing that should have been available
before the work began. Prior to the blowout, BP’s vice president of drilling and
completions expressed concern about problems resulting from delayed well plan
execution in a leadership meeting. BP’s corporate culture appeared to shun processes
in favor of focusing solely on results as the path to success.

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If the rig team had been given information for the crucial negative pressure test in a
timely manner, for example, the crew would have recognized warning signs of a
blowout and reacted accordingly. As a result, instruction and protocols for essential
knowledge/information transfer should be understood and addressed to the team early
on in the project for any complex task to be accomplished successfully.

5) COMMUNICATION MANAGEMENT

In complex project like the Macondo project, which included complex functional
groups of on-shore and off-shore personnel and contractor, accessing the right
information at the right time is crucial. BP had a communication strategy in place to
direct interaction between the 11 project team member, such as advising the rig crew
on when and how to consult for technical matters. However, the strategy failed. The
rig crew did not contact onshore personnel when the negative pressure test results
came back abnormal due to a lack of a concrete strategy to implement which led to
the blowout.

The improvements to the testing conditions were not announced by Halliburton.

Halliburton is mostly to blame for the breakdown of communication, but BP should
have kept open lines for communication to obtain and understand test results prior to
cementing. To maintain effective communication channels between all project
stakeholders and comprehensive, user-friendly communication plan should be
developed and all stuff trained in it use.

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6) HUMAN RESOURCE MANAGEMENT

The efficient use of human resources is critical to the project’s progress. A well-
structure team of people with adequate technical experience and clear division of
responsibilities is critical, especially for a complex technical project involving
multiple functional departments and contractors. In the late stages of the Macondo
project, a badly timed staff reorganization resulted in a slow, untimely decision
making. To prevent clashes between the Macondo projects operations and
engineering leads, the team was divided into two functional groups: Engineering and
Operations.

Where once one person was in charge of both engineering and operations, there were
now two, each with their own supervisor. When the new engineering team leader was
named in April 2010, he had no prior experience or knowledge of the already
troubled Macondo project, others noticed that he was taking longer to make decisions
and struggling to keep up with this new task. For the transfer of key project staff, BP
bypassed a structured a Management of Change (MOC) process in another case.
Multiple approvals/sign-offs from different managers are usually needed.

BP’s Well Site Leader (Ronald Sepulvado) was taken out of the project near the end
to undergo on-shore training that should have been delayed. Bypassing the MOC
method, he was replaced by another leader (Bob Kaluza), who was unfamiliar with
the project. Major workforce reorganization should be carefully considered and
handled during the project to prevent misunderstandings about roles, needless
distractions and delays. At crucial stages of a project, reorganization should be
avoided. If it is not possible to prevent it, a transitional time should be included to
avoid information gaps. (Bloomberg, 2013)

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4.4. KEY REASONS FOR PROJECT FAILURE

1. Geographically extreme location

According to Transocean, the Deepwater Horizon drilled to a depth of 35,000 feet in
early 2010 despite having a rated drilling depth range of 30,000 feet. It’s also possible
that the explosion’s such as a fire or explosion, rises by 8.5 percent for every 100 feet of
depth added.

2. Weak risk management

Last-minute adjustments to well design and procedures were not properly identified or
addressed by BP. BP changed its plans several times, often at the last minute, creating
confusion and dissatisfaction among BP employees and rig crew members. When BP did
submit orders and procedures to rig crews, they were often lacking in detail and direction.

3. In a critical situation, employee had a sluggish response

Out of the 126 people on the rig that day, the majority were most likely experiencing it
for the first time, resulting in uncontrollable stress and anxiety, causing everyone to
become sluggish.

4. Endangering the situation

Employees were too sloppy in their work due to a lack of good management. As a result,
they are most likely underestimating the rig’s risk and threat.

5. Inadequate preparation
Transocean failed to properly train its staff in emergency procedures and kick detection
and failed to remind them of key lessons learned from similar near-miss drilling incident
that occurred recently.

6. Faulty materials
It was eventually revealed that Halliburton knew the cement mixture they used for the
concrete core was flawed. Halliburton’s concrete cores was mixed together using a

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“quick-dry” method, which caused the cement to collapse under intense pressure. Not to
mention the blowout preventer (BOP), which was supposed to automatically close the
valves when it lost contact with the surface, failed. As a result, the blowout preventer
failed to close. (Garcia, 2011)

4.5. RECOMMENDATIONS FOR BRITISH PETROLEUM

1) Workers must be educated according to their job roles before beginning of any
project so that they can perform their duties correctly.
2) Line managers and upper-level managers must collaborate to ensure that all quality
levels are met.
3) An organization must assign an appropriate number of experts to each project who
can collaborate with experienced staff and provide guidance to ensure the project’s
success.
4) Every project must have a consistent hierarchy so that decisions can be made as easily
as possible in a critical situation.
5) At regular intervals, the accuracy of all electronic equipment used in the project must
be tested.
6) For projects in remote areas, there must be some quick transportation services that
can be used in an emergency to reduce employee casualties.
7) The organization must establish a community in which workers are aware of their
duties and the dangers of making poor decisions.
8) Since the difficulty in executing the essential task is one of the most common causes
of project failure, proper standard operating procedures (SOP) must be established for
such task.

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 4.6. IMPACT TO WILELIFE AND FISHERIES

Lung disease deeply disturbed half of the area’s bottlenose dolphins in 2011. “Toxic
exposure to oil” causes this form of disease. Almost a quarter of the people were in
such a bad shape that they weren’t supposed to survive. More than 1,700 sea turtles
were discovered stranded between May 2010 and November 2012. This compares to
the 240 that are usually discovered each year. In addition, 930 stranded dolphins and
whales were discovered between February 2010 and April 2013. This state is
normally only found 20 times a year. Not only that but also 79,000 acres of
cultivated and unused rice fields have been intentionally flooded to replace lost
forging habitat for ducks and other migratory birds. Furthermore, the killifish, a
common baitfish at the bottom of the food chain, had its cellular function impaired
by the oil spill. It stunted the growth of larger fish like mahi-mahi and reduced the
number of juvenile Bluefin tuna by 20%.

4.7. IMPACT TO BRITISH PETROLEUM

In the end, a judge in New Orleans ruled that BP was the main culprit. According to Time
Magazine, US district judge, Carl Barbier, attributed each parties involved:-

 67% of the blame to British Petroleum

 30% to Transocean, which operated the Deepwater Horizon drilling rig
 3% to Halliburton, the cement contractor

Nevertheless, BP was not the only one making risky decisions and the oil spill occurred
as a result of years of cost-cutting. The entire oil industry attempted to distance itself
from BP to “make the disaster appear to be a one-time occurrence” Over 40 oil spills
have occurred in US water since 1969 and even small spills can cause significant
damage.

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There have never been a challenge that they couldn’t handle financially, even if they met
reactively, before the Deepwater Horizon disaster. On April 20th, 2010, BP took the risk
too far. Here are some of the cost BP has had to bear since then:

 On June 25, 2010, the price of BP’s stock dropped to US$2702. By the end of the
year, their stocks had lost $30 billion in value. (Ciura, 2015)
 Paid $53.8 billion in civil court penalties and $18.7 billion in federal and state
claims as of July 2015, including US$5.5 billion in civil courts fines and US$18.7
billion in federal and state claims. They are also dealing with over 60,000 private
sector lawsuits. (Huddleston, 2015)
 Sold properties worth $45 billion to help pay for cleanup efforts.
 Had net loss of US$17 billion in 2010.
 CEO Tony Hayward was forced to resign after being “a walking public relation
disaster”.
 Negative impact on the BP brands. The Deepwater Horizon incident is closely
associated with the BP brand and the negative reaction is long lasting.
(Interbrand, 2010)
 All operation in the Gulf of Mexico were forced to half for 18 months before
being able to resume in October 2011. This marked a 12% reduction in output.
 Transocean lost the Deepwater Horizon rig, which was worth US$350 million.
(n.n, UNT Digital library , 2011)
 BP and Transocean have pleaded guilty to 4 criminal charges.
 The most devastating of all is that Transocean lost 10 men and BP lost 1 man.

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 4.8. AFTERMATH OF DEEPWATER HORIZON OIL SPILL TO THE
ENVIRONMENT

Many animal and human populations in the region are still suffering from the impacts of
the BP oil spill ten years later. Many of the symptoms experience by wildlife species,
such as dolphins, are replicated in human population across the Gulf of Mexico,
including heart problems, respiratory disease, higher rates of reproduction failure and
death.

More than 100 million gallons of oil are believed to have fallen on the seafloor and
researchers are still uncertain if the oil is resuspended into the water and impacting
cetacean’s food ten years after the spill.

BP secured 24 oil contracts from United Stated in 2014, just days after a year-long ban
was lifted. No legislation to increase the company’s responsibility for the oil spill has
been introduced as of 2020 and the Trump administration relaxed or reversed existing
safety reforms in 2019. BP has also denied that the oil ever made it to Mexico, but ten
years later, fishing communities in Mexico are still suffering the consequences of
decimated fish stocks and have not earned a single cent in compensation. (Amadeo,
2020)

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CONCLUSION

The Macondo Deepwater drilling project’s disastrous failure could have been prevented
and was largely caused by a systemic failure in project management especially by BP as
the project owner but also by its subcontractors and the federal government agency in
charge of regulating the work.

This tragedy has taught us a number of important project management lessons. The
importance of cultivating an international organization culture of balancing cost/time
with quality and safety, as well as, integrating practical contingencies into the project’s
budget and schedule, are two of the most important of these; correctly evaluating the
magnitude of threats and thoroughly identifying, monitoring and updating the effect of
project risks in a timely manner; establishing periodic peer reviews and phase gated
quality inspections into detail quality plans and procedures: establishing protocols for
transferring vital information within the project and disseminating lessons learned from
previous projects: establishing comprehensive and efficient communication channels
between project stakeholders: providing independents and rigorous regulatory
supervision, as well as, carefully controlling staff organization and monitoring during the
project.

The Macondo project would have been a success if these project management practices
had been incorporated. To avoid the possibility of this disaster, it is important that these
lessons be effectively disseminated to and applied by stakeholder in future projects of this
scale, complexity and risk.

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 REFERENCE

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gulf-oil-spill-facts-economic-impact-3306212
2. Encyclopaedia, E. o. (2019, January 31). Britannica. Retrieved from
https://www.britannica.com/topic/BP-PLC
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https://logosconsulting.net/bp-a-failure-of-leadership-and-management-on-a-massive-
scale/
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https://www.counterpunch.org/2010/06/16/a-short-history-of-bp/
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management-assignment
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294623-5%2Finvestigation-deepwater-horizon-explosion-ronald-sepulvado-testimony

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horizon-site-leaders/
8. Hermenn, L. (2010). LAS vegas sands Corp., a Nevada corporation, PLAINTIFF, v.
Uknown registrants Of Www.wn0000.com, Www.wn1111.com, WWW.WN2222.COM,
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https://www.wsj.com/articles/SB10001424052748704026204575266560930780190

10. West, L. (2019, March 08). liveaboutdotcom. Retrieved from

https://www.liveabout.com/deepwater-horizon-facts-1203711
11. Ciura, B. (2015, Febuary 8). The Motley Fool. Retrieved from
https://www.fool.com/investing/general/2015/02/08/is-bp-plcs-high-dividend-yield-too-
good-to-be-true.aspx
12. Huddleston, T. (2015, July 14). fortune. Retrieved from
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