Recovering large Brownfield projects in distress

Abstract

A large body of knowledge exists about how to plan and establish projects for success; from project management guidelines to staged gate-execution methodologies. Despite such prescriptive means to guarantee project success, the upstream oil and gas industry has a poor track record for delivering large projects. Little guidance exists on how to restore delivery assurance to partially executed projects in distress. Furthermore, recovery efforts for large brownfield projects, mid-way through their execution, are further complicated and highly constrained.

Operators and contractors alike are understandably concerned about the high failure rate of projects, particularly as Australia competes for global capital in the final investment decision for a project’s development. Issues cover the full spectrum of safety, cost, schedule, start-up and operability. Furthermore, unanticipated issues such as industrial relations, resourcing, project controls, estimate basis and design changes all play a central role in why projects find themselves in distress.

In a recent case study, a structured recovery approach restored delivery assurance to a $900 m upstream brownfield project. Despite the numerous challenges encountered during the recovery efforts, the project went on to deliver ahead of its revised cost and schedule commitment, while also achieving outstanding safety performance. The self-governance program was instrumental in restoring delivery performance through responsive decision making that was robust, repeatable and preserved free calendar time for early intervention on high value recovery issues. The journey of recovery also restored a fractured client and contractor relationship by fostering a project delivery environment that was highly collaborative.