Project Complexity Requires Enterprise Thinking
The failure rate among megaprojects across industries ranges from 35% to 65% or higher. The oil and gas industry’s exploration and production (E&P) megaprojects often top that range. What role does the complexity of a project play in sustaining the high failure rate? Is there a limit to the degree of complexity that we are capable of effectively managing?
These were among the questions discussed at the fourth annual Projects, Facilities, and Construction (PFC) dinner held at the recent 2015 SPE ATCE in Houston. Howard Duhon, systems engineering manager at GATE and SPE PFC technical director, moderated a panel comprising Jeff Edwards, project manager at Shell; James R. Deaver, engineering adviser with Oil Field Development Engineering; and Neeraj Nandurdikar, director, oil and gas practice, with Independent Project Analysis.
Duhon said that complexity is a condition that does not seem to require a definition because “we know it when we see it.” However, the term does encompass a continuum of systems and conditions. Simple and complicated complexity are linear and predictable, while complex and chaotic complexity are nonlinear and unpredictable.
The size of the project may not be the culprit. “Projects are not complex because they are simply large. We can deal with large projects,” Nandurdikar said. “Two-thirds of a project until cutting steel is not physical. It’s moving information. A complex information flow creates complex projects. And the number of ways you can fail increases exponentially with complexity,” he said.
The ability to make sense of complex data and “pull it all together” to understand it is lacking. Edwards said, “We’ve lost the skill set of knowing how all the pieces fit together.” The extent of specialization within project teams is contributing to the inefficiencies caused by compartmentalization.
Operators’ front-end loading teams are now two-and-a-half times larger than they were approximately 20 years earlier, and execution teams are three times larger. Because of the number of people and specialties involved in a project team, “when things fail, we don’t get a bad project, we get a cascading failure,” Nandurdikar said. “Complexity, it seems, is directly proportional to the number of functions in an organization and indirectly proportional to functional cooperation.”
Deaver said the runaway specialization in project teams results in special interest groups. “Do you need 15 people to do risk analysis?” This often leads to study after study being done to satisfy each group, extending the project delivery time.
In another example of the sometimes extreme effects of specialization, Edwards said that, within a 44,000-page book of health, safety, and environmental standards, there were 40 pages of driving standards, one of which discussed how windshield resistivity affected the transmission of sunlight.
The panel agreed that complexity is an organizational problem more than anything else. And while there are no easy answers, rethinking at the enterprise level is necessary. While specialization has its place in projects teams, there must be an approach to understand the interconnectivity of the efforts and to make sense of the informational flow. “It’s a paradox: The more complex your project is, the more simple your management must be,” Duhon said.
Prudent Ways to Restart Big Projects in Post-Pandemic World
Delays and disruptions have stymied project plans in the past few months. How will companies prevent current stresses from morphing into catastrophic issues?
Eni Launches Revamped Platform for Suppliers
The Italian oil company has redesigned its dedicated portal for suppliers. The company’s Supplier Portal and Collaboration Environment, which it calls eniSpace, is a platform combining communication, collaboration channels, and open innovation instruments with traditional procurement processes.
KBR and NIPI Neftegas Form JV in Kazakhstan
The JV continues KBR’s work history in Kazakhstan. The company has worked on various projects in the country since 1993.
Don't miss out on the latest technology delivered to your email every two weeks. Sign up for the OGF newsletter. If you are not logged in, you will receive a confirmation email that you will need to click on to confirm you want to receive the newsletter.