Project overruns: why are we still getting it wrong?
Gareth D. Lee A B , Simon P. Whitaker A and Martin Wilkes AA RISC Advisory, L2 1138 Hay Street, West Perth, WA 6005, Australia.
B Corresponding author. Email: gareth.lee@riscadvisory.com
The APPEA Journal 57(2) 489-492 https://doi.org/10.1071/AJ16135
Accepted: 28 February 2017 Published: 29 May 2017
Abstract
The issue of poor project performance in the oil and gas industry is not new. It has been discussed since the 1980s and, over the past 30 years, there has been considerable effort put into improving project outcomes. As an industry, we have invested heavily in project management and estimating processes to ensure that reliable data are available for investment decisions.
However, recent experience in Australia and elsewhere in the world suggests that little real improvement has been made.
This presentation critically examines aspects of project performance and decision making by analysing: the commercial impact that recent cost and schedule outcomes have had on Australian projects; common problems associated with setting and managing cost and schedule expectations throughout the project development process; real (anonymous) examples from projects to indicate how biases affect behaviours, decisions and outcomes; and simple ways to build a more realistic assessment of risk and uncertainty into cost and schedule estimates.
We conclude by discussing why this is still important for future Australian projects given the days of complex greenfield megaprojects are likely behind us.
Keywords: bias, costs, decision making, optimism, project management, risk, schedule, uncertainty.
Gareth D. Lee holds a Bachelor of Engineering (Chemical and Process Engineering) degree from Canterbury University in New Zealand. He has worked in the Oil and Gas industry for over 10 years including international positions with Schlumberger and Independent Project Analysis (IPA). Gareth is currently a Senior Consultant at RISC Advisory. After 4 years with Schlumberger, Gareth spent another 4 years with IPA performing evaluations of capital projects for the upstream oil and gas industry. This involved critical analysis and review of project issues and risks with a strong focus on the front-end practices that drive investment success in exploration and production developments. Gareth has a keen interest in the asset level planning practices required to achieve successful outcomes. Gareth also holds a Graduate Diploma in Project Management and a Graduate Certificate of Business Administration. |
Simon P. Whitaker holds a Bachelor of Engineering Geology from the University of Newcastle Upon Tyne in the United Kingdom and a Master of Petroleum Engineering from Imperial College in London. He has over 30 years of experience in the petroleum industry in UK, Egypt, South East Asia and Australia. Simon has a background in petroleum engineering including reservoir and production engineering, well evaluation and varied operational experience. Subsequent career development has involved an MBA, asset management, field development planning and implementation and commercial roles. Simon currently leads the Development Engineering function in RISC. This involves taking responsibility for Drilling & Completions, Facilities, Project performance, Operations and HSE aspects of RISC assignments. |
Martin Wilkes holds a Master of Engineering degree from the University of Newcastle Upon Tyne in the United Kingdom. He has over 25 years’ experience in the international oil and gas industry encompassing upstream oil and gas, LNG and gas technology development with both large and small companies. His experience covers a wide range of roles including business leadership and planning, corporate governance, project development and management, technical training, commercial and contractual agreements, intellectual property management and environmental impact assessment. Martin also holds chartered status as a Chemical Engineer and an Environmentalist. |
