Critical Issues Analysis: Lifecycle Approach for Optimized Execution of Capital Projects
- Elizabeth L Green (ERM) | Robin Woolson (ERM)
- Document ID
- Society of Petroleum Engineers
- SPE International Conference and Exhibition on Health, Safety, Security, Environment, and Social Responsibility, 11-13 April, Stavanger, Norway
- Publication Date
- Document Type
- Conference Paper
- 2016. Society of Petroleum Engineers
- 7.2.1 Risk, Uncertainty and Risk Assessment, 7 Management and Information, 7.3.3 Project Management, 7.3 Strategic Planning and Management, 7.2 Risk Management and Decision-Making, 6.3 Safety
- Project Assurance, Risk Management, Capital Projects
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- 73 since 2007
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In an ERM study of 102 projects greater than $500 million in CAPEX, across 8 multinationals, 53% of the projects evaluated had experienced significant project delays. ERM determined that in many cases the delays were due to poorly managed or unanticipated HSSE issues. In addition, a third of delayed projects had multiple causes indicating interlinked risks. Critical Issue Analysis conducted in the early phase of a capital project can provide information to facilitate identification of project optimization opportunities, support decision-making for key project alternatives (e.g. site selection, technologies) and support development of project execution planning and scheduling, thereby enabling optimization of project execution throughout the project lifecycle.
This Critical Issues Analysis process allows for health, safety, social and environmental (HSSE) aspects to be integrated across a project's lifecycle from preliminary siting, due diligence, transaction execution, and alternative selection to facility decommissioning, risk assessment and divestment to support optimal execution of a capital project. HSSE requirements and risk are identified and evaluated early -and at each stage gate to:
quantify the qualitative issues potential impact to the Net Present Value (NPV) of the project;
identify regulatory and social/ risks within project alternatives/options; and
define tradeoffs on cost, schedule and regulatory/social factors.
The strategic output from the Critical Issue Analysis supports decision making to identify and manage: critical inter-dependencies, early data/study needs, priority regulatory and stakeholder engagement, and project optimization opportunities. Delivering multimillion dollar capital projects on time and on budget continues to be a challenge in the oil and gas industry. There are multiple examples of millions of dollars in project cost over runs, in addition to the significant cost resulting from project delays. Although these projects are often run under seemingly well-developed project management systems, projects frequently still do not meet time and budget targets. Early identification of HSSE risks and opportunities that could impact Project design, schedule and cost can arise from factors such as:
stakeholder objections and influences;
complex and onerous approval pathways;
approval thresholds, triggers or conditions;
mitigation measures; and
failure to gain timely approval (internal and external).
The Critical Issues Analysis provides for efficient and sustainable practices to be imbedded throughout the capital project lifecycle in an integrated fashion – providing Value Creation by maintaining (or improving) schedules and return on investment. By intertwining consideration of HSSE strategy, stakeholders, schedule, and execution, a stronger project management program will be developed to ensure a more successful project and improved NPV.
|File Size||1 MB||Number of Pages||7|