FACT: Most oil and gas projects fail. Why does this happen? “Because complexity has caught up with us and our projects are simply too complex to manage,” said Projects, Facilities and Construction Technical Director Howard Duhon in his recent SPE Web Event, “Managing Project Complexity.”
“Our projects must be complex because the environment we work in is complex.”
Complexity is generally used to characterize something with many parts where those parts interact with each other in multiple ways.
IPA Project Success metrics:
- Cost overrun < 25%
- Schedule overrun < 25%
- Initial 2-yr. Production > 80%
Oil and gas project complexity comes from a combination of both a Complex Physical System (CPS), i.e. the project design, and a Complex Adaptive System (CAS), i.e. the design organization. Duhon said As the CAS size increases, coordination losses increase, i.e. “if you double the number of humans, you do not double the work … you may get less work done!”
Project management is based on positivist philosophy, reductionist techniques, and control, he explained, and that we are taught to break apart problems. This apparently makes complex tasks more manageable, but we pay a hidden, enormous price.
Duhon said the oil and gas industry needs to study the various components which make our projects complex in order to achieve the right level of complexity. Requisite project design complexity may be approached through either Zero-Based design or Design Simplification, with careful consideration of the design objectives. Additionally, the suitability of the design organization needs to be assessed with Design Organization Gap Analysis.
The consequences of the fact that most oil and gas projects fail is that vast sums of project money are wasted, projects become uneconomical, companies become unviable, industry health suffers, and society suffers. Duhon said our projects must be complex because our work environment is complex. However, much of the added complexity is expensive and unnecessary to safely produce oil and gas. Affordable energy is critical to society. The industry has changed the world and it must be able to provide affordable energy.
View the on-demand web event: Managing Project Complexity