risk management in oil & gas project.doc

7/24/2019 RISK MANAGEMENt IN OIL & GAS PROJECT.doc

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Risk Management

Methodology Development for Engineering, Procurement and Construction

Projects

A Case Study in the il and !as "ndustry

A research project su#mitted to the faculty of Sikkim Manipal $niversity"n partial fulfillment of the re%uirements for the degree

Master of &usiness Administration


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DEC'ARA(")

" here#y declare that the project report entitled su#mitted on

Risk Management

A Case Study in the Oil and Gas Industry

Partial fulfillment of the requirements for the degree of Master of Business

Administration (MBA) to Sikkim- Manipal University, ndia, is my original !ork

and not su"mitted for the a!ard of any other degree, diploma, fello!ship or any

other similar title or pri#es

Place *+ydera#ad

Course M&A

S"--"M MA)"PA' $)".ERS"(/

SESS") 01230124

Roll )o* 2015133672


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$niversity study center certificate

$his is to %ertify that the pro&e%t report entitled on

Risk Management*

A Case Study in the il and !as "ndustry

Su"mitted "y ''''''' (oll *o+8888889:in partial fulfillment of

the requirements for the degree of Master of Business Administration (MBA) to

Sikkim Manipal University of ealth, Medi%al and $e%hnologi%al s%ien%eshas

!orked under my supervision and .uidan%e and that no part of this report has

"een su"mitted for the a!ard of any other degree, diploma, fello!ship or any other

similar title or pri#es and that the !ork has not "een pu"lished in any /ournal or

Maga#ine

Reg9 )o9 88Certified &y

.uide0 *ame

+

M&A ;


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A12*34567.6M6*$

!ould like to e8press my sin%ere thanks to my 9a%ulty .uide

''''' or guidan%e and support throughout my training er %alm

demeanor and !illingness to tea%h has "een a great help in su%%essfully

%ompleting the pro&e%t My learning has "een immeasura"le and !orking under

him !as a great e8perien%e

also a%kno!ledge heart felt thanks for all those people !ho have made availa"le

tons of information required for my Pro&e%t

9inally, !ould like to thank my nstitute SMA$ for the preparation of this

pro&e%t $he learning from this e8perien%e has "een immense and !ould "e

%herished throughout life

CourseM&A

S"--"M MA)"PA' $)".ERS"(/

(a#le of contents

(a#le of Contents


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: ntrodu%tion

; .ap in the present resear%hes and ne%essity of doing more studies

$heory and Main 1on%epts

? isk

@ Pro&e%t isk

Pro&e%t isk Management

isk in different types of %ontra%ts

:C9i8ed pri%e

::eim"ursa"le D 1ost-plus %ontra%ts

:;1ost-plus %ontra%ts !ith a %ap

:Build-3perate-$ransfer

:?6P1 %on%ept

:@3vervie! of 6P1 %ontra%ts

:Advantages and disadvantage of 6P1 %ontra%ts

:Fuality %ontrol and supervision in 6P1 %ontra%ts

;Cntrodu%ing 6P1 pro&e%t !ith risk perspe%tive

;:eason for the demand of 6P1 %ontra%ts in the market


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;;Pro&e%t risk management implementation in pro&e%t "ase organi#ations

;P*16;

;?SAMPU Model

;@1hapman G 4ard0s

;7ale 1ooper0s

;4eaknesses analysis of %urrent risk management models


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isk feasi"ility Study

Step 0*

7evelopment of stakeholders0 o"&e%tives and e8pe%tation

Step 3*

7evelopment of Annual and pro%edures of the pro&e%t risk management in the

sele%ted s%opes and desired levels

Step 6*

7evelopment of definite time s%hedule for risk

analysis

Step 4*

isk identifi%ation and risk mitigation a%%ording to the time s%hedule and %he%k

lists of risks and risk groups (4BS,

BS)

Step =*

Fualitative risk analysis and develop an integrated risk plan and

s%heduling''''''''''''''

Step 7*

$o develop response plan and analy#e response plan

%ost

Step 5*


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Periodi%al risk monitoring, %ontrolling and

tra%king'''''''''''''''''''''''''''''

Discussion and Conclusion References

Appendi>es

Appendi8 A+ ntervie! Fuestions

'''''''''''''''''''''''''''''''''

''

Appendi8 B+ ntervie!ed Personnel

Positions

Appendi8 1+ 5ist of A""reviations

''''''''''''''''''''''''''''''''

'


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7eveloped methodology suggested "y authors

Chapter "

R"S- Management+

"ntroduction

$he demand for s%ientifi% management in different types of pro&e%ts is %onstantly

in%reasing, espe%ially for pro&e%t "ase organi#ations isk Management, one of

the ne!est %on%epts of pro&e%t management is interesting to fo%us on "e%ause ofits advantages and %apa"ilities 6ngineering, Pro%urement and 1onstru%tion

(6P1) pro&e%ts have "e%ome one of the more popular methods of pro&e%t

e8e%ution "y "oth %lients and %ontra%tors

Utili#ation of Pro&e%t isk Management methodologies, espe%ially in mega-

pro&e%ts or international pro&e%ts %an lead to huge advantages on all aspe%ts of

pro&e%ts0 development t %an also "e implemented as the main referen%e and

"asis for "idding, tendering and e8e%ution (in%luding %ost, time, resour%e, and

quality management)

By risk identifi%ation, assessment and %ontrol, pro"a"le gaps "et!een estimated

and real %ost, time, and quality of pro&e%ts %an "e prevented or de%reased $his

approa%h also provides fa%ilities to predi%t the final %ost and end dates of pro&e%ts

!ith a greater level of %onfiden%e

4hile many and various resear%h studies have "een undertaken on risk

management in several industries, in%luding $, manufa%turing and %onstru%tion

se%tors, there appears to "e a la%k of definitive pro%edures for oil and gas industry

in general

$he %urrently availa"le pro&e%t risk management methodologies tend to "e

generi% and their utili#ation requires that they "e adapted and %ustomi#ed for

spe%ifi% appli%ations, espe%ially in industrial pro%edures !ith unique and highly

spe%iali#ed instru%tions 5a%k of a %ertain methodology in a spe%ifi% industry %an

"ring limitations and needs more efforts to ad&ust and develop it for a %ompany in

a parti%ular industry $his thesis !ill fo%us on a typi%al 6P1 pro&e%t as the %asestudy and !ill attempt to analy#e and ans!er the follo!ing question+


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4hat is the appropriate pattern and pro&e%t spe%ifi% %ustomi#ed

methodology to manage risks of 6P1 pro&e%ts in the oil and gas industryH

!ap in the present researches and necessity of doing more studies

Based on aghnevis and Sa&edi (;CC?) various studies and resear%h studies have

"een undertaken in the field of risk management As a result, there are several

models and methodologies for managing risk o!ever, no spe%ifi% model or

methodology has "een developed to date, !hi%h spe%iali#es or fo%uses on an

individual industry !ith its o!n unique appli%ations, although some %ompanies

have developed their o!n approa%hes to risk management

Most %ommonly used standards and methodologies for risk management %annot"e produ%tively applied to all types of pro&e%ts Most of the resear%h is general or

tend to "e too spe%ifi% and limited (aghnevis and Sa&edi, ;CC?)

1onsequently, there is a need for a frame!ork to "e developed for 6P1

pro&e%ts, !ith a fo%used vie! to!ards oil and .as ndustry

Desired applications from esta#lishing this thesis

$he results of the thesis may "e applied pra%ti%ally and fun%tionally on oil and

gas pro&e%ts

$he thesis is %apa"le of developing an a%%urate and %orre%t "asis of evaluation

and estimation in these types of pro&e%ts

Utili#ation of the results of the thesis should "e very helpful to!ards

developing "etter and more realisti% "ids, tenders and %ontra%ts related to oil and

gas pro&e%ts

$his resear%h is theoreti%ally and potentially a ground!ork for developing pro&e%t

risk management models !hi%h makes it possi"le to implement pro&e%t risk

management in the other industries a%%ordingly

Sin%e ran is an oil-ri%h %ountry and has the se%ond highest volume of gas

reservoirs in the !orld (1A, ;C:


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$he o"&e%tives of the thesis are as follo!s+

$o present a ne! methodology for pro&e%t risk management in a parti%ular

industry

$o %reate "a%kground and foundation of further resear%h in this area and lay

the ground!ork for preparing risk management standards in gas pro&e%ts

$o assist pro&e%t risk management of Bid Boland .as efinery Plant

(%urrently managed "y ranian %ompanies)

$o develop an optimal pro%edure and system for pro&e%t risk

management and intera%tion !ith the pro&e%t management plan

$o determine the roles of stakeholders in 6P1 pro&e%ts (1lient,%onsultant, and suppliers)

Desired applications from esta#lishing this thesis

$he results of the thesis may "e applied pra%ti%ally and fun%tionally on oil

and gas pro&e%ts

$he thesis is %apa"le of developing an a%%urate and %orre%t "asis of

evaluation and estimation in these types of pro&e%ts

Utili#ation of the results of the thesis should "e very helpful to!ards

developing "etter and more realisti% "ids, tenders and %ontra%ts related to oil

and gas pro&e%ts

$his resear%h is theoreti%ally and potentially a ground!ork for developing

pro&e%t risk management models !hi%h makes it possi"le to implement

pro&e%t risk management in the other industries a%%ordingly

Sin%e ran is an oil-ri%h %ountry and has the se%ond highest volume of gas

reservoirs in the !orld (1A, ;C:


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$he term IriskJ does not have a single unanimous definition Based on the 38ford

6nglish 7i%tionary risk is Ithe possi"ility that something unpleasant !ill happenJ

and its origin refers to the talian !ords Iris%oJ, Iris%areJ and Iri%hiareJ from the

:@th %entury (ay-.i"son,

;CC, %ited in 5emieu8, ;C:C, p;CC) n the other hand Althaus states that the term

risk has an origin in Portuguese !ith the meaning of Ito dareJ (Althaus, ;CC>K

ay-.i"son, ;CCK 5emieu8, ;C:C)

isk %an "e theoreti%ally des%ri"ed as any potential deviation from the predefined

target !ith its defined spe%ifi%ations t is normally linked to terms su%h as

un%ertainty, the unkno!n, and unpredi%ta"ility Basi%ally all efforts and

movements of people %ontain risks and un%ertainties 7aily life is fraught !ith

dynami% situations involving unkno!n fa%tors !hi%h %an have pleasant or

unpleasant, and mostly unforeseen and unpredi%ta"le %onsequen%es (Mul%ahy,

;CC


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%an have different aspe%ts (su%h as finan%ial, health and safety, and

environmental goals) and %an apply at different levels (su%h as strategi%,

organi#ation-!ide, pro&e%t, produ%t and pro%ess) isk is often %hara%teri#ed

"y referen%e to potential events and %onsequen%es or a %om"ination of these

isk is often e8pressed in terms of a %om"ination of the %onsequen%es of an

event (in%luding %hanges in %ir%umstan%es) and the asso%iated likelihood of

o%%urren%eJ

I$he quantitative engineering definition of the risk is+ isk (pro"a"ility of

an a%%ident) 8 (losses per a%%ident)J (Agra!al, ;CC, P@)

1onsidering the definitions a"ove, a !ide variety of risk des%riptions %an "e

found "ased on the %ir%umstan%es and appli%ations $hese definitions reveal

t!o important aspe%ts of the risk in generalK un%ertainty and %onsequen%es$herefore the o%%urren%e pro"a"ility of the risk and the severity of the

effe%ts are %onsidered as t!o ma&or parameters of defining the risk

All in all, risk is interpreted as a type of unkno!n event !ith unpleasant effe%ts,

although it %an "e a pleasant happening !ith positive %onsequen%es !hi%h !ould

normally "e %onsidered as an opportunity isk analysis fo%uses on "oth pleasant

and unpleasant aspe%ts of the risk

Project Risk

$hompson and Perry (:;, p


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if it o%%urs, it may have one or more impa%tsJ A %ause %an "e %onsidered as

an assumption, %ondition, %onstraint, or a requirement that makes the pro"a"ility

of positive or negative results, and pro&e%t o"&e%tives %onsist of %ost, time,

resour%e, s%ope and quality

Mul%ahy (;CC


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6nhan%e %ompany0s tra%k re%ord and su%%essfully e8e%uted portfolio of

pro&e%ts

Risk in different types of contracts

$he results of dis%ussions in ;< sho! that if risk management starts from the early

stages of the pro&e%t, the "est pro"a"le result !ill "e a%hieved Sin%e the a!arded

%ontra%t of ea%h pro&e%t is the initial fa%tual eviden%e of the s%ope of !ork, it

defines and %larifies the pro&e%t o"&e%tives and %onditions

.iven to the importan%e of risk identifi%ation along !ith detailed spe%ifi%ation of

the %ontra%t terms and %onditions at an early stage, it !ould seem pra%ti%al to

analy#e and study different types of %ontra%ts and the relevant risk level of ea%h

individual pro&e%t

n order to optimi#e the strategy to deal !ith pro&e%t risks, %onstru%tion %ontra%ts

%an "e differentiated "ased on t!o %hara%teristi%s (5oots, ;CC@)

: Payment methods

; 7uties and responsi"ilities of the various dis%iplines of the pro&e%t

ed price contracts

Based on Burke (:) 9i8ed pri%e %ontra%ts, also %alled lump sum, are term

%ontra%ts !ith a %ertain amount of "udget $he "udget is defined at the starting

point of the pro&e%t and %annot "e %hanged during the pro&e%t e8e%ution $his

%hara%teristi% is responsi"le for the risk o%%urring "y adopting this type of %ontra%t

$he fa%tors of %ost and time %annot "e modified after they have "een esta"lished t

should "e noted that there may "e delays due to la%k of information 3n the other

hand this type of %ontra%t %an lead if planned and e8e%uted %orre%tly to a

higher earning potential $o narro! do!n the risks it is essential to plan pre%isely,

to distinguish possi"le se%ondary e8penditures, and to prepare an a%%urates%hedule

Reim#ursa#le Costplus contracts

1ost-plus %ontra%ts are those that a%t in a%%ordan%e !ith %ertain rates of !ork

$hese fi8ed rates e8ist for the !orking time of different o%%upational groups and

other e8penditures $his type of %ontra%t is not very vulnera"le to risks "e%ause it

is used to avoid the pro"lem of un%ertainty at the "eginning of the pro&e%t $he

%omple8ity in pro&e%ts that are set up as %ost- plus is not %aptured entirely from thestart $herefore it may "e advantageous to sele%t this approa%h of %ontra%ting to


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ensure that the prin%ipal %an apply for further terms, %onditions, and "enefits

(Burke, :)

Costplus contracts @ith a cap

n a%%ordan%e !ith Burke (:) %ost-plus %ontra%ts !ith a %ap are an

e8trapolation of the %ost-plus %ontra%t $he main %hara%teristi% of this %ontra%t is

that the "udget is terminated at a %ertain %ost level $he "illing pro%eeds in a

similar manner to the %ost-plus %ontra%t until the e8penses rea%h the ma8imum

limits

$here are t!o options to %onsider in the approa%h to the pro&e%t e8e%ution $he

first is as%ertaining that the duties and responsi"ilities end !hen the "udget

allo%ation is rea%hed $he se%ond is that there may "e %ertain agreements regarding

the detailed s%ope of a%tivities to "e e8e%uted f these agreements have "eennegotiated and a%%epted, it is the responsi"ility of the e8e%utives to %over the

additional %osts in %ase the !ork has not "een %ompleted "efore the transgression

of the "udget (Burke, :)

(urnkey contracts

$urnkey %ontra%ts are an e8trapolation of fi8ed-pri%e %ontra%ts o!ever this type

of %ontra%t has additional %apa%ity sin%e it also %overs elements for %onstru%tion

and "uilding n order to plan these %omponents effi%iently, an e8tensivepreliminary analysis is required to %larify the stipulation and the "udget 9or the

prin%ipal there are some advantages of %hoosing this type of %ontra%t 9irst of all

the "udget is determined at the "eginning of the pro&e%t Se%ond, the preliminary

analysis is %ost-effe%tive, and third, the produ%t or servi%e %an "e supplied

rapidly n%luding %onstru%tion phase into the proposal yields a more %omple8

%ontra%t and therefore a higher risk potential t is diffi%ult to %al%ulate the

e8penditures for designing and %onstru%tion due to the fa%t that the delivera"le

may not "e des%ri"ed %omprehensively n addition the agent and the prin%iple %an

have dissonan%e a"out the responsi"ilities 3n the other hand the %ommitmentsmade "y $urnkey %ontra%ts often lead to a "igger profit margin due to the early

ad&ustments of the %ontra%tual partners (use, ;CC;)

PartnershipBoint .enture

Based on Burke (:), a /oint Eenture is %reated !hen t!o or more parties de%ide

to %olla"orate and !ork together $he /oint Eenture e8ists for a %ertain spe%ified

period of time, mostly for the duran%e of the pro&e%t $he goal of this partnership is

to a%hieve greater e%onomies of s%ale $his should "e o"tained "y the partieshaving a %ommon %ommitment and sharing resour%es su%h as pro%edures,

e8penditures, kno!-ho! and e%onomi% units $here are various partnerships that


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are "uilt on the idea of guarantee 9or /oint Eentures the %hara%teristi% of the

guarantee is that the different parti%ipants hold shares of ea%h other0s interest

Partnerships "et!een t!o or more individuals are %alled /oint Eentures !hen they

&oin together and %olla"orate for a termina"le pro&e%t n this %ase the individuals

are named %o-ventures

As mentioned "efore, /oint Eentures mainly arise for the duran%e of one parti%ular

pro&e%t "ut may "e a lasting partnership as !ell $he one-time /oint Eenture is

kno!n as a %onsortium or a %ooperative agreement 3ne reason !hy a parti%ular

parti%ipant is seeking a partner for a spe%ifi% pro&e%t is that the parti%ipant

%ompany requires resour%es !hi%h the other party %an offer $hese offers may

in%lude proprietary te%hni%al kno!ledge, "rand a!areness, a%%ess to estate and

management %ontra%ting among others After the pro&e%t has "een %ompleted, the

/oint Eenture is normally %losed (Burke, :)

&uildperate(ransfer

Build-3perate-$ransfer (B3$) is a method to finan%e pro&e%ts "ased on

%on%essions $he %on%essions are presented "y a private or pu"li% division to a

private "usiness in order to fund and e8e%ute the pro&e%t, and to manage the

interpretation of the %ontra%t n this !ay it is possi"le for the pro&e%t o!ner to

%over the e8penditures generated "y "uilding and operating the pro&e%t0s o"&e%tive

B3$ pro&e%ts normally run for a longer period of time $herefore there is a need to

make de%isions a"out the %ontra%t0s %ontents at an early stage, usually at the"eginning of the pro&e%t (.rimsey G 5e!is, ;CC=)

A%%ording to 4alker and Smith (;CC=), there are %ertain internal and e8ternal

fa%tors that have an effe%t on the rate of in%rease and internal rate of return for the

%apital spending $he %on%ession given to the private "usiness is for a limited

period of time $his duration is %alled the %on%ession period 7uring the

%on%ession period the e8e%utor finan%es, designs and "uilds the %ontra%t0s su"&e%t

7uring this period, o!nership of the fa%ility "elongs to, and is operated "y, the

private %ompany After the e8piration of the %on%ession, the o!nership ofassetDfa%ilityDsystem is transferred to the private or pu"li% division responsi"le for

the issue of the initial %on%ession

$he adoption of B3$ %an, for the most part, "e !itnessed in pro&e%ts that require

finan%ing sin%e ne!ly "uilt fa%ilities do not normally have revenue support in the

early stages nvestors strive to seek out the most suita"le %ompany to implement

the pro&e%t and ensure that all %onsequent risks are transferred to the appropriate

parties t is essential for the pro&e%t %ompany to find on the one hand other

%ompanies !ith %onstru%tion or operating e8pertise and on the other hand,shareholders !ho have the history of managing these types of pro&e%ts $he

shareholders should ideally "e familiar !ith all aspe%ts of the pro%esses involved,


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in order to minimi#e the risk of B3$ pro&e%ts $he pu"li% or private %ompany

!hi%h inherits the fa%ility after %on%ession period has e8pired !ill "e motivated to

retain the shareholders in the %ompany after the transfer, as they have %ontri"uted

to the su%%ess of the pro&e%t e8e%ution to date Although the operator may have

issued assignments to other %ompanies, the pur%haser !ill "e interested in

retaining the kno!ledge and e8pertise of these firms (7elmon, ;CC)

1ontra%t

$ype

ate of

1ontra%tor0s

isk

ate of

1lient0s isk

ate of

9le8i"ility

against the

1hanges

Applied "y the

1lient

Appli%ation

1ost plus 5o! igh igh .enerally this

method is used

!hen the

pro&e%t plan

has not "een

a%%epted $his

method !ill "e

implemented if

the %lient and

%ontra%tor have

strongrelationship

and trust level

Partnership 6qual 6qual 7epend on the

1ontra%t0s

%onditions

Bulky

pro&e%ts, "eing

spe%ifi% in

7ifferent

items, and the

politi%al*e%essity of

the pro&e%t

9i8ed Pri%e igh 5o! 5o! .enerally the

%ontra%tor

sele%ts this

kind of

%ontra%t !hen

all aspe%ts of

the pro&e%t arespe%ified

o!ever, most


19/68

of the time the

%lient sele%ts

this method in

order to

transfer pro&e%trisk to the

%ontra%tor

Unit ates igh 5o! 5o! .enerally this

method is used

!hen pro&e%t

design is not

%ompleted

"efore the

%ontra%t

assignment

time or is used

!hen it is

required to

determine a

limit for the

pri%es in the

"idding

$urnkey igh 5o! 5o! $he %lient does

not havesuffi%ient

staffing to

supervise and

manage the

pro&e%t, or

!hen the

pro&e%t

involves a

spe%ifi%te%hnology

!hi%h is not

availa"le to

everyoneB.O.T (BuildOperate and

Transfer)

igh 5o! 5o! $he 1lient is

una"le to

finan%e

Pro&e%t- $he

pro&e%t appliesa

Spe%ifi%


20/68

te%hnology

!hi%h is not

availa"le to

everyone

9igure : - isk %omparison in different %ontra%ts, adapted from 7elmon (;CC),

use (;CC;), Burke( :)

EPC concept

vervie@ of EPC contracts

A%%ording to 5oots and en%hie (;CC@), 6P1 is a %ommon type of %ontra%tual

arrangement in the %onstru%tion industry n 6P1 %ontra%ts, the %ontra%tor is

responsi"le for engineering and designing the pro&e%t, pro%urement of all

materials, tools and equipment and fa"ri%ation or %onstru%tion of the pro&e%t, either

in house or "y su"%ontra%ting some !ork pa%kages or some phases of the pro&e%t

Sometimes, the %ontra%tor transfers the time or %ost related risks of the pro&e%t to

the su"%ontra%tors !ithin a fi8ed pri%e or lump sum %ontra%t payment

6P1 stands for 6ngineering Pro%urement and 1onstru%tion, "ut it is not

summari#ed in these three phases and the kno!ledge of these three items is not

enough to implement the 6P1 pro&e%t n fa%t the %om"ination of these elements

and their intera%tions, %onsequen%es and their quadruple andDor mutual influen%eson ea%h other is more e8tensive and %ompli%ated that a simple %olle%tion of

engineering, pro%urement and %onstru%tion

9or the most part, %ost "ased %ontra%ts !ill transfer risk to the %lient and pri%e

"ased %ontra%t !ill transfer risk to the %ontra%tor (PM, ;CC)

n 6P1 pro&e%ts, !orking !ith issues su%h as deadlines, %ontrols, mission

statements and su"missions %om"inations, along !ith delivery (!ith defined %ost,

time and quality "y %onsidering risks in the domain of ea%h %ontra%t), all in allmeans management, although the management of an 6P1 %ontra%t must "e

%ommitted for all pre-defined responsi"ilities (use, ;CC;)

Advantages and disadvantage of EPC contracts

Advantages and disadvantages from the %lient0s point of vie!

Advantages*

: More se%urity in e8e%utive %osts


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; 5ess human resour%e requirements, as there is no need for the %lient to

provide links among different %ontra%tors

)

n 6P1 %ontra%ts, the %lient0s representative has the duty of supervision and pro&e%t

%ontrol Basi%ally responsi"ility of the %lient0s representative is primarily to

provide the required quality assuran%e servi%es and is also designated to

assume the %lient0s authorities and po!ers $he %lient0s representative should

also "e qualified and kno!ledgea"le a"out the pro&e%t $herefore, the e8pertise of

engineers !ho have the ne%essary "a%kground and spe%iali#ation in the pro&e%t

!ould "e suita"le %andidates for this position, and %ould e8er%ise leadership role(2angari, :>)


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n this regard, the nternational 9ederation of 1onsulting 6ngineers (971)

"elieves that along !ith the general issues that %onsulting engineers perform

ie, identifi%ation, %odifi%ation of feasi"ility study and design, supervision of

%onstru%tion, they are in a position to provide additional servi%es n the draft of

ne! regulation s%heme provided "y the organi#ation of plan and "udgetary affairs,

these ne! duties have "een dis%ussed in%luding the supervision of %onstru%tion,

pro&e%t management, management of %onstru%tion, pro&e%t %ontrol, %ost

management, %ontemplation and task delegation, %ontra%t termination, legal

affairs, te%hni%al training, risk management analysis, along !ith the evaluation of

value engineering and other related issues (/aeger G Qk, ;C:C)

"ntroducing EPC project @ith risk perspective

Based on 5oots and en%hie (;CC@) pro&e%ts implemented "y the 6P1 method

have spe%ial e8e%utive %hara%teristi%s and %annot "e generali#ed $he fo%al point ofthese %hara%teristi%s is targeted to!ards planning, %ontrol and fa%ilitating

simultaneous a%tivities, along !ith maintaining the performan%e quality $he

%ompanies, !ho have a%%epted to implement the pro&e%t in the 6P1 format, are

also %ommitted to perform a series of parallel a%tivities in the frame!ork of pro&e%t

time s%hedule

n the 6P1 method, the engineering, pro%urement and %onstru%tion phases !ill "e

performed "ased on a single %ontra%t $he approa%h involves the e8e%ution of

engineering and pro%urement a%tivities running %on%urrently !ith required at sitedeliveries timed mat%h the s%hedule for effi%ient %onstru%tion and installation $he

management of the 6P1 pro&e%t has a prominent role in the su%%essful

implementation and delivery of the pro&e%tK therefore, organi#ations that have

su%%essful tra%k re%ords of management and pro&e%t %ontrol are highly

re%ommended Basi%ally a su%%essful %ompany should "e a"le to %ontrol and

manage the engineering and pro%urement phases in a !ay that apart from

maintaining all mentioned referen%e standards in the %ontra%t, they have the a"ility

to minimi#e e8%ess e8penses in the pro%urement phase (5oots and en%hie, ;CC@)

$he supervision is one of the fa%tors %ontri"uting to %osts and s%hedule and is

minimi#ed in the 6P1 methodK a%%ordingly, it is ne%essary to %ompletely

implement quality assuran%e me%hanisms, gate revie!s and hold points in "asi%

design and detailed engineering, %onstru%tion and installation phases

$he pro%urement phase is allo%ated the highest risk in the %ost distri"ution of an

6P1 pro&e%t and, as su%h, it is imperative to ensure a%%urate and %orre%t

%olla"orations "et!een the engineering and pro%urement se%tors

n the annual 971 %onferen%e held in *or!ay in :C, 7esign and Built

%ontra%ts !ere dis%ussed and it !as agreed that 971 should %onsider this


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approa%h for large s%ale multi- tasking pro&e%tsK moreover, risk should "e

partitioned "et!een the %ontra%tor and the o!ner "ased on the 7esign G Built

%ontra%t t is !orth mentioning that re%ent trends indi%ate that the !ord Io!nerJ is

often su"stituted for the !ord I%lientJ, in order to differentiate from the !ord

I%lientJ .enerally, the term I%lientJ does imply all %apa"ilities in a !ay that it

does not need %ontra%tor or %onsulting se%torsK therefore it is re%ommended not to

use this !ord often (/aeger G Qk, ;C:C)

Reason for the demand of EPC contracts in the market

1learly in this %onte8t the first reason for the demand of 6P1 %ontra%ts is the fa%t

that the %lient or the o!ner %an have a realisti% e8pe%tation of the final %ost and

duration of the pro&e%t As the penalties and liquidated damages for involved

parties in the %ontra%t are %onsidera"le, the various parties !ill naturally strive to

avoid these additional %osts and losing the reputation as !ell 1onsequently 6P1s%hedule tend to "e more realisti% and adhered to $he 6P1 %ontra%ts should "e

employed espe%ially !hen a private enterprise is parti%ipating in the pro&e%t

finan%e

Another advantage of 6P1 %ontra%ts is to prevent misleading

dependa"ility and responsi"ility Basi%ally, in 6P1 %ontra%ts all of the

responsi"ilities are assumed "y a single party and %onsequently the %ontra%tor

is responsi"le for performan%e, pra%ti%ality, te%hni%ality, pro%urement and

affe%ta"ility (use, ;CC;)

Project risk management implementation in project #ase organiations

$he main goal of this se%tion is to determine responsi"ilities of risk management

in the organi#ation and the pro&e%t A%%ording to an organi#ation0s hierar%hy, the

163 undertakes the responsi"ility of risk in the %ompany "efore the "oard of

dire%tors and stakeholders 9igure sho!s that risk responsi"ility !ill "e entrusted

to pro&e%t managers to deal !ith pro&e%t risks and also !ill "e entrusted to the

dis%ipline managers to address the risks of their parti%ular divisions $hesemanagers are responsi"le for the implementation of risk management plan that

%onsists of identifi%ation, analysis, response and methods to %ontrol those risks

!hi%h affe%t their !ork s%ope Based on the other management te%hniques, all

managers should "e %onfident that all of their team mem"ers have an a%%urate

grasp and

understanding of the risks e8isting in their !ork s%ope Moreover, they should "e

respondent to the %onsequen%es of their a%tion (Burke, :)

Sometimes unplanned and une8pe%ted events o%%ur in the pro&e%t !hi%h may %ausethe %ompany to %ease some of its a%tivities for a limited time 1onsequently, the

%ompany !ill sustain losses and damages n these %ases, the %ompany requires a


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disaster re%overy plan $he main goal of this plan is, to redu%e the %onsequen%es of

undesired events to an a%%epta"le level A suita"ly qualified and e8perien%ed

manager is appointed !ith the task of preparing and implementing the plan, as a

part of the risk management plan of the %ompany $herefore, in the %ase of an

une8pe%ted unpleasant event, this plan !ill "e implemented and the operational

group !ill follo! and e8e%ute the plan in order to mitigate the %onsequen%es

(Burke, :)

Although it is impossi"le to %on%entrate on all risks and de%isions in a spe%ifi%

duty unit or pro&e%t, large %ompanies assign individuals and departments !ith

spe%iali#ed profi%ien%y to handle risk management in the pro&e%t and duty units

$he e8tent and the organi#ation of risk management department depends on the

organi#ation si#e, num"er of pro&e%ts, num"er of departments and the %omple8ity

level of a%tivities and pro&e%ts o!ever, the risk management department hassome dedi%ated personnel !hi%h typi%ally in%lude a risk manager, assistant, and

se%retary $he risk manager and assistant manager play the roles of fa%ilitator in

the risk identifi%ation sessions, "oth in the duty unit and pro&e%ts (Burke, :)

$he position of risk management varies depending on the organi#ational

stru%ture

7uty organi#ational stru%ture+ $he risk management department is

managed independently or may "e under the dire%t supervision of the

pro&e%t management department

Pro&e%t organi#ational stru%ture+ 6sta"lishment of the risk management department

in the pro&e%t organi#ational stru%ture is possi"le in three !ays as follo!s+

A risk management department should "e esta"lished for every pro&e%t

independently

$his %ondition is "enefi%ial and advantageous for Multi-9un%tional%ompanies

An independent risk management department should "e esta"lished

%ompany !ide

$he pro&e%t manager, on%e appointed, ensures that the risk management

pro%ess is applied on the pro&e%t, if deemed ne%essary

$he risk management department provides servi%es to ea%h pro&e%t

under the supervision of planning department, as required


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3rgani#ational stru%ture matri8+ 6sta"lishment of the risk management

department in the matri8 organi#ational stru%ture is possi"le in t!o !ays as

follo!s+

An independent risk management department should "e esta"lishedthroughout the %ompany $he pro&e%t manager ensures that the risk

management pro%ess is applied on the pro&e%t, as required

$he risk management department provides servi%es to ea%h pro&e%t

under the supervision of planning department, if deemed ne%essary

f the s%ope of the pro&e%t is very e8tensive or the type of %ontra%t !arrants, an

independent risk management department !ill "e esta"lished 9or e8ample, in an

oil and gas pro&e%t management %ompany intending to invest in an oil and gaspro&e%t (B3$ type), it is possi"le to esta"lish the risk management department

under the supervision of the investment department of the %ompany, and if

required, provide risk management servi%es to the other pro&e%ts !ithin the

%ompany

Some organi#ations prefer to use %onsultant %ompanies instead of esta"lishing an

in-house risk management department $his depends on the si#e and %omple8ity of

the pro&e%t and the rate of %ompany0s familiarity !ith the risk management pro%ess

(4alker G Smith :>)

Risk Management Models and Methodologies

n order to end up !ith an optimum model of risk management in 6P1 pro&e%ts for

oil and gas industry, it is useful to analy#e and %ompare different methodologies

and models for risk management Although there are plenty of appli%a"le models,

the main fo%us is normally on the most popular models used "y the %onstru%tion

industry (aghnevis and Sa&edi, ;CC?)+

$a"le : isk Models - Adapted from aghnevis and Sa&edi,(;CC?)

Model Rear 7es%ription

Boehm :: dentifi%ation, analysis,

prioriti#ing, risk

management %ontrol, risk

resolution, risk monitoring

planning, tra%king,

%orre%tive a%tion9airley := dentifi%ation of risk

fa%tors, assess risk


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pro"a"ilities and effe%ts,

develop strategies to

mitigate identified risks,

monitor risk fa%tor, invoke

a %ontingen%y plan,manage the %risis, %risis

re%overy

S6 (Soft!are

6ngineering nstitute)

:? dentifi%ation, analysis,

response planning,tra%king, %ontrol

2liem G 5udin :@ dentifi%ation, analysis,

%ontrol, reporting

SAMPU (Shape,

arness and

Manage Pro&e%t

Un%ertainty)

:@ 7efine, fo%us, identify,

stru%ture, o!nership,

estimate, evaluate, plan,

manage

PAM (Pro&e%t risk

analysis and

management)

:@ 7efine, fo%us, assess,

planning, management

Leach 2000 dentify potential risk

events, estimate the

risk pro"a"ility, estimate

the risk impa%t,

identify potential risktriggers, analy#e risks,

prevent risk event, plan

for mitigation, insure

against risk, monitor for

risk triggersIRM/AIRMIC/ALARM (TheInstitute of RisMana!e"ent/TheAssociation of Insurance

and RisMana!e"ent/The #ational$oru" forRis Mana!e"ent in %u&lic'ector)

2002

Strategi% o"&e%tive,

assessment, reporting,

de%ision, response,reporting, monitoring

'"ith Merritt 2002Identification anal*sisprioriti+in!

"appin! response"onitorin!

%MBO,(%ro-ectMana!e"ent (Bod* of

,noled!e)

200 isk management

planning, risk

identifi%ation, qualitativeG quantitative, risk


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response planning, risk

monitoring G %ontrol

PMA($he Pro&e%t iskManagemengt Approa%h

200 1sta&lish contet

identif* riss anal*+e

riss e3aluate risresponse riss re3ie

"onitorin!

co""unication ith

consultants

PMBOK Methodology

This "odel is the "ost fre4uentl* used "ethod in pro-ect "ana!e"ent as

defined &* the %ro-ect Mana!e"ent Institute (%MI). Based on %MBO,5

6uide (%MI 2007) pro-ect ris "ana!e"ent is a process hich consists of

si iterati3e processes &elo8

9. Ris Mana!e"ent %lannin!

2. Ris Identification

. :ualitati3e Ris Anal*sis

. :uantitati3e Ris Anal*sis

;. Ris Response %lannin!


28/68

As defined &* Ca&inet O>ice (2092) %RI#C12 stands for %Ro-ects I#

Controlled 1n3iron"ents hich is a de facto standard adopted and

utili+ed idel* &* the ?, !o3ern"ent and is etensi3el* accepted and

e"plo*ed in the pri3ate sector !lo&all*. It is a non=proprietorial process=

&ased "ethod for pro-ect "ana!e"ent and is reco!ni+ed as the &est

practice in pro-ect "ana!e"ent application in the pu&lic do"ain.

At 9@7@ this "ethodolo!* as pri"aril* esta&lished &* The Central

Co"puter and Teleco""unications A!enc* (CCTA). It as initiall*

intended to &e applied as a ?, 6o3ern"ent standard for "ana!in!

infor"ation technolo!* pro-ects hoe3er after the release in 9@@< as

a !eneric pro-ect "ana!e"ent "odel it &eca"e !lo&all* reco!ni+ed and

accepted.

As it is stated in %RI#C12 (2002) this standard descri&es ho to

di3ide a pro-ect into s"aller "ana!ea&le parts in order to control the

resources and or pro!ress e>ecti3el*. In this "odel ris "ana!e"ent is

defined in to parts and si steps as &elo8

Ris anal*sis8

Ris identification

Ris e3aluation

Ris response

'election

Ris "ana!e"ent8

%lannin! and resource assi!n"ent Tracin! and reportin!

Figure 2 - The risk management yle !PRINCE2"

2##2" $%2&'(

)*+MP, Model


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In accordance ith Chap"an ard (200) 'AM%? is the acron*"

in the pro-ect "ana!e"ent process fra"eor hich stands for8

'hape arness And Mana!e %ro-ect ?ncertaint*. Re!ardin! the le3el of

details this "ethodolo!* can &e presented in three for"s. The si"plest

has three phases and the detailed process in3ol3es nine phases. 'hapin!

the pro-ect strate!* is the first step to &e considered in the strate!ic le3el

of e>orts toards the pro-ect uncertaint* in order to catch producti3it*.

arnessin! the plan is carried out &* de3elopin! a producti3e ris plan

at a tactical le3el in order to harness the uncertaint* outlined at a

strate!ic le3el. Mana!in! the i"ple"entation is considered in four aspects

the planned or "ana!e"ent the action plan de3elop"ent "onitorin!

and control and crisis dealin!.

Cha$man .ard/s Methodology

Based on Chap"an ard (200) the e>ecti3e ris "ana!e"ent "odel

should underline specific sources of uncertaint* on the structure of the

pro-ect life c*cle and consists of phases and sta!es as follo8

Conceptuali+ation (Concepti3e) %lannin! (desi!n plan allocate) eecution

(eecute) Ter"ination (deli3er re3ie support). The sta!es should &e

considered in "ore detailed le3els called DstepsE hich should &e defined

&ased on the nature of the product or ser3ice deli3era&le.

Fale CooperGs ModelCooper et al. (200; p.9;) defines the pro-ect ris "ana!e"ent approach as&elo8

Figure 0 - The $ro1et risk management $roess !Coo$er et al%" 2##" $%'(


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The pro-ect "ana!er should prepare appropriate responses for t*pical

4uestions at each step of the pro-ect ris "ana!e"ent process as

defined &elo (Cooper et al. 200; p.9;)8

Ta3le 2 - 4uestions 5or the $ro1et manager !Coo$er et al%" 2##" $%'(

.eaknesses analysis o5 urrent riskmanagement models

The reference "odels alluded to can &e cate!ori+ed into to!eneral !roups8

6roup A8 These "odels specificall* deal ith ris "ana!e"ent su&-ectsrefer to the details of the processes and pro3ide di>erent case studiesand solutions such as CooperGs Model.

6roup B8 These "odels are parts or su&sets of pro-ect "ana!e"ent

"odels and processes. As a result the* do not !o into detaileddescription and anal*sis of the ris "ana!e"ent processes rathertheir purpose is to descri&e the !eneral and o3erall processes of ris"ana!e"ent. The* do not nor"all* refer to co"plete details of the ris"ana!e"ent process.

Anal*+in! eanesses of ris "ana!e"ent "odels leads to the outco"es as listed&elo8

Most of these "odels ha3e introduced the first step of ris "ana!e"ent asDRisIdentificationE

#one of these "odels relate to a specific industr*. The* are all !eneric"odels as opposed to &ein! industr* custo"i+ed and tailor "aid.

Ris "ana!e"ent process step Mana!e"ent 4uestion

1sta&lish the contet hat are e tr*in! to achie3e

Identif* the riss hat "i!ht happen H

Anal*i+e the riss hat "i!ht that "ean for the

pro-ectGs e* criteria H

13aluate the riss hat are the "ost i"portant

thin!sH

Treat the riss hat are e !oin! to to do a&out

the" H

Monitor and Re3ie o do e eep the ris under

control H

Co""unicate and Consult ho should &e in3ol3ed in the

process H


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There are no sa"ple for"ats nor patterns or ea"ples introduced in the"ecept for %RI#C12 and CooperGs "odel hich use ris classification patterns andsa"ples.

#one of the" introduce a pattern for ris "ana!e"ent in a specific pro-ectt*pe.

The "odels do not use %1RT or 61RT "ethods nor pro-ect "ana!e"entand pro-ect ris "ana!e"ent softares.

Mentioned "ethods are "ostl* presented in standard and "odelin! le3els and donot anal*+e details or do not pro3ide instructions or tools for detailed usa!e.Althou!h the nature of "odels and standards is to cope ith principles and!eneral processes and one cannot 4uestion the" for this "atter it is o&3iousthat these "odels are so"eti"es di>icult to &e adopted for use &* eperts and"ana!ers of a specific industr*. This results in less perfor"ance producti3it*

hile i"ple"entation and conse4uentl* poor i"ple"entation. A trend of definin!and creatin! practical "ethods for ris "ana!e"ent in di>erent industries isrecentl* e"er!in! and &ein! de3eloped (as in the pro-ect ris "ana!e"ent"ethodolo!* of 'asol 'outh Africa 'tatoil Michi!an oil and !as) hoe3er in Iranthere is no national or specific "ethodolo!* for ris "ana!e"ent in specifiedindustries. This encoura!es further de3elop"ent.

Methodology and Researh

6esign

'election of the factual ind of research "ethodolo!* is &eneficial for directin! aprosperous case stud*. 'ince this thesis is focused on anal*+in! di>erent "ethodsof ris "ana!e"ent "ainl* %MBO, %RI#C12 Cooper and ai"s to de3elop a"ethodolo!* of ris "ana!e"ent in 1%C pro-ects particularl* in oil and !asindustr* a 4ualitati3e research "ethodolo!* has &een chosen as the ade4uateapproach to perfor" our research. Considerin! that the purpose of this thesis isthe de3elop"ent of a "ethodolo!* for ris "ana!e"ent in 1%C pro-ects 3arious oiland !as co"panies in 'eden and #ora* ere contacted re!ardin! our interesttoards "ethodolo!* de3elop"ent on pro-ect ris "ana!e"ent. As a result of lacof responses it has &een decided to select an on=!oin! Iranian 1%C oil and !aspro-ect called DBid&oland II 6as Treatin! %lantE as a case stud*. The authors of this

thesis had pre3ious -o& eperience on &oth "ain o>ice and construction site of thepro-ect.

Accordin! to 6hauri and 6ronhau! (200;) the pi3otal fact of 4ualitati3e research"ethodolo!* is to accu"ulate aareness 3isions and perceptions and to createtheor*. ith the application of this "ethodolo!* it is possi&le to accu"ulateaareness and shape theoretical clarification in order to approach our researchchallen!es.

In accordance ith Br*"an and Bell (200) 4ualitati3e research is a "ethodolo!*that "ainl* !i3es priorit* to ords instead of calculations and it focuses onthe association a"on! theoretical fra"eor and research. This thesis has

&een conducted ith "aterial "ainl* o&tained fro" the pro-ect and theco""unications e had ith the indi3iduals orin! there. This "ethod of data!atherin! for research fro" or!ani+ations and indi3iduals has &een supported &*


32/68

1risson and ,o3alainen (2007) ho ha3e stated that "ost researchers usin!4ualitati3e research "ethodolo!* concentrate on co"panies and indi3iduals assources of data.

)heme o5 ResearhThe strate!* and desi!n of a research is !enerall* part of a researchsche"e. The o3erall 3ie of the research is pro3ided &* the researchstrate!* for instance if the research is intended to clarif* a pro&le" or if itis focused on findin! an anser and pro3idin! reco""endations. Theresearch strate!* also assists in la&elin! the concentration of the stud*. Onthe other hand research desi!n deli3ers a !eneral plan and approach to!ather infor"ation. %hilli&er et al. (9@70) state that research desi!npro3ides !uidelines of the research. It also pro3ides responses andsolutions to areas of research 4uestions appropriate infor"ation and"ethod of collectin! and anal*+in! the contents.

One of the "ain focuses of this thesis is to direct an in3esti!ati3e researchand to concentrate on a specific case stud* ith the ai" of creatin! a tailor"aid "ethodolo!* hich can &e i"ple"ented in si"ilar pro-ectsparticularl* in the oil and !as industr* and in 1%C pro-ects

6ata 7atheringe ha3e utili+ed to di>erent steps for data !atherin! one for theoreticalfra"eor and the other for the e"pirical or

6ata gathering 5or theoretial 5rame8orkIn order to ac4uire an understandin! of the su&-ect of ris "ana!e"ent3arious &oos ha3e &een studied. To o&tain an etended understandin! ofthis field scientific articles fro" the data&ases 1"erald and Business'ource %re"iere ha3e also &een studied. $irst the result of the literaturere3ie concernin! the ris ris "ana!e"ent !eneral procedures andrelated topics is presented. This is folloed &* co"parison of di>erent"ethodolo!ies of ris and the process of data !atherin! is presentin! in thestep &elo.

6ata gathering 5or em$irial 8ork

A"on! the different possi&ilities the appropriate "ethod for our thesis asthe case stud* "entioned pre3iousl*. Accordin! to 6hauri and 6ronhau!(200;) a case stud* is an eplanation of controllin! and "ana!in!circu"stances includin! infor"ation !atherin! fro" se3eral sources.

In this thesis e used 3arious a*s to !ather infor"ation. Our pri"ar*source as inter3ies ith the pro-ect tea" personal eperience in si"ilarpro-ects or!ani+ations e& pa!es di>erent reports and docu"ents fro" theor!ani+ation. ?sin! the ad3anta!e of prior -o& eperience in the pro-ect andnoin! the sta> conductin! infor"al con3ersations pro3ided us ith a

&roader idea of the challen!es and possi&le solutions.


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Other research "ethods use a &roader focus hich leads to a less in depthanal*sis of pro&le"s. In our case since e used case stud* research"ethod it focuses on one specific concern or pro&le" and then anal*+es itin depth. To stren!then the state"ent a&o3e ,othari (200) indicates theidentical approach in his article &* characteri+in! this process of stud* hich

uses depth rather than &readth. B* usin! our earlier noled!e and eistin!theories data !atherin! as carried out 3er* cautiousl* and its assess"entas carefull* ea"ined.

Accordin! to Bechhofer and %aterson (2000) data collection &* inter3ie isa "ethod that re4uires co""unication. Jarious t*pes of inter3ies eistith their ad3anta!es and disad3anta!es. This places the responsi&ilit* onthe researcher to decide hether an inter3ie is the proper a* to collectinfor"ation. The reason for selectin! the inter3ie "ethod as our researchprocedure is our accessi&ilit* to the top "ana!e"ent of pro-ect or!ani+ationas a result of our pre3ious or and also as it is a practical a* to !ather

useful infor"ation fro" the appropriate personnel. 'i"ilarl* 1risson and,o3alainen (2007) stress the fact that "utual "oti3ations of inter3ieusa!e in 3arious researches is that the* are ell=or!ani+ed capa&le realand practical techni4ues to !ather data that are not easil* accessi&le inarticles and &oos.

To possi&le inter3ie techni4ues ere useful for our research na"el* these"i=structured inter3ie and the structured inter3ie. $ro" those totechni4ues e selected the se"i= structured inter3ie "odel hichpro3ided the possi&ilit* and sufficient freedo" to !ather "ore data that ledus to produce a solution to our research pro&le". It is 3er* i"portant thatthe respondents are co"forta&le ith the 4uestions and the inter3ieer andin this re!ard e decided to conduct the inter3ies in the %ersian lan!ua!e.

This led to co"prehensi3e responses in a friendl* at"osphere. %hilli&er etal. (9@70) states that it is essential to ha3e a


34/68

pleasant and approacha&le "anner durin! the inter3ie. The* also stressthe fact that the use of ac4uainted lan!ua!e helps respondents rela.

The ai" of conductin! the inter3ies as to create a data&ase fro"opinions of those eperts in3ol3ed in the oil and !as industr* of Iran and of

the Bid&oland !as treatin! plant pro-ect. The !oal as to &uild a &asis forfurther anal*sis re!ardin! ris situations ithin the pro-ect and the industr*as a hole alon! ith e>ecti3e ris or!ani+ation "ethodolo!*de3elop"ent lessons learned and their related eperiences.

Thirteen "ana!ers a"on! Bid&oland II staff ere selected for Inter3ies.The* &elon! to di>erent "ana!erial le3els so"e are located at "ain o>ice(Tehran Iran) and so"e are site residents (Beh&ahan Iran). 'ince this asauthorsG pre3ious orin! en3iron"ent and the respondents ere fa"iliarith the inter3ieer inter3ies &ooed easil* and approi"atel* one houras allocated to each inter3ie. Inter3ie 4uestions handed in a fe

da*s in ad3ance to !et &etter results. Furin! the inter3ies short notesere ept for later anal*sis. Appendi A and B contain the list of inter3ie4uestions and inter3ieed personnel.

$urther"ore the process trian!ulation techni4ue as selected as a suita&leapproach for co"parison of the !athered infor"ation. Trian!ulation is asi!nificant techni4ue for co"parison and co"ple"entar* e3aluation of sa"esituation in 3arious 3ersions (Altrichter et al. 2007). Infor"ation !atheredfro" 3arious "ethods "entioned a&o3e includin! e& pa!es inter3iesand or!ani+ation reports enhanced trustorthiness and consistenc* of theinfor"ation.

Appendi A and B contain the list of inter3ie 4uestions and inter3ieedpersonnel.

6ata +nalysishen all of the data is collected the final and essential step is data anal*sis.It in3ol3es treatin! "ana!in! and anal*+in! of all infor"ation !athered inpre3ious phases particularl* in data collection. In "ost cases of4ualitati3e research "ethodolo!* the infor"ation !athered is in ordshich create co"plications for a researcher. Accordin! to Miles andu&er"an (9@@) infor"ation !athered throu!h 4ualitati3e research isa"orphous and &ul* considerin! the fact that it usuall* consists of tets.It follos that the "ain responsi&ilit* falls on the researcher to e3aluate thecollected data and present it in an appropriate "anner.

Em$irial 9ndings and +nalysisCase 6esri$tion

Pro1et name: Bid&oland II 6as Treatin! %lant Client: #ational Iranian 6asCo"pan* (#I6C) ;oation: Beh&ahan 'outh est of Iran Contrat $rie:

. Billion ?'F6uration o5 8ork: "onths


35/68

Pro1et desri$tion:

1%C phases of the 6as Treatin! %lant ith capacit* of ;< MMM/d ("illioncu&ic "eters per da*) of !as processin! for production of C9 C2 #aphthaand Li4uefied %etroleu" 6as (L%6) and also pipelines facilities. The pro-ect

is on turne* &asis.

)o$e o5 8ork:

Re3ie of en!ineerin! and necessar* a"end"ents for the ne !as feed.

%rocure"ent.

Construction of ci3il "echanical electrical instru"entation controlroo" (FC' K

Fistri&uted Control '*ste") and sitch roo".

Co""issionin! and start=up.

Target Prodution:

#aphtha ;0000 tons/*ear

L%6 9


36/68

!ases such as ethane &utane propane and seet !as for ho"e usa!e. Thisproducts ill &e transported to Mahshahr %ort in %ersian 6ulf 3ia pipelines.

The pri"ar* contract as si!ned in une 200; &eteen #I6C (the client) anda consortiu" of four en!ineerin! and construction co"panies8 Costain (?,)

Fra!ados ('pain) 'a+eh (Iran) and ahanpars (Iran) ith the re!istrationnu"&er of @2. The first ad-ust"ent of the contract as si!ned in an200 &eteen the client and the 'a+eh=ahanpars consortiu" due to thefact that Costain and Fra!ados left the pro-ect. 1arl* or a!ree"ent of thepro-ect as si!ned in 'ep 200 and '#C La3alin (Canada) %rosernat(Mala*sia) and RI%I (Iran) co""enced the $ront 1nd 1n!ineerin! Fesi!n($11F). Rou!h !radin! of the plant as assi!ned to the consortiu" as a3ariation order of 202@@2 A"erican dollars and the e>ecti3e date of thecontract as on Fec 9th 200.

$i!ure = $eed and %roducts %ipeline Bloc Fia!ra"

The pro-ect consists of three parts referred to as the paca!es8 A B and C.

%aca!e A8 6as Treatin! %lant

%aca!e A includes a !as treatin! plant hich is aarded to 'a+eh=ahanparsconsortiu"s.

%aca!e B8 MahshahrGs pipelines and facilities

%aca!e B includes MahshahrGs pipelines and facilities hich is aarded toTehran onoo&= CBI consortiu".

%aca!e C8 Infrastructures


37/68

%aca!e C consists of 3arious co"ponents includin!8 1lectrical suppl* atersuppl* non= industrial &uildin!s access roads residential &uildin!co""unication s*ste" and -ett*.

All contractors are super3ised and "ana!ed &* the 1I1F Co"pan* ho has&een assi!ned the role of direct representati3e of the client.

Risk management and insurane in oil and gas and

$etrohemial industry

The insurance industr* as an econo"ic su&section is responsi&le for

accu"ulation of the capital and to increase ecita&ilit* of production

factors "ost e>ecti3el* in order to reduce the ris costs of the econo"ic

acti3ities. At the present ti"e the insurance industr* of na"e countr* isnot a&le to respond to de"ands for lia&ilit* co3era!e especiall* in the

ener!* transport industries and "inin! sections. Conse4uentl* it is

una&le to e>ecti3el* participate in the eistin! econo"ic cli"ate (BI

200


38/68

6reat !ap &eteen consu"ers and

producers in this area.

Contracts related to these industries are lon! ter" and are usuall*lon!er than the tenure of states and !o3ern"ents.

Non-$ayment and


39/68

lia&ilit* co3era!e in the oil and !as industr* fro" 29 in 200 to .9erin! 3arious insurance co3ers. Insurers

need to co"pensate da"a!es occurrin! in the eploration "inin!

technolo!* and suppl* riss steps resultin! fro" eplosions Nres

earth4uaes contractors e4uip"ent and "achiner* installation in addition

to lar!e econo"ic in3est"ent the oil industr* re4uires ad3anced

technolo!*. To use this technolo!* the pro3ision of professional andsilled "anpoer is ine3ita&le (BI

200


40/68

$i!ure ; = Fe3eloped "ethodolo!* su!!ested &* authors

Risk Feasi3ility study

Main In$ut:

%lan or pro-ect feasi&ilit* stud*

Ma1or +ti


41/68

Ris feasi&ilit* %aca!e

Ma1or +ti


42/68

%repare for"s docu"ents and procedures re4uired for

infor"ation circulation.

%ro3ide re4uired RB' (Ris Breadon 'tructure) alon! ith

the pri"ar* chec list.

Main Out$ut:

Ris "ana!e"ent "anual throu!h 3arious phases.

)te$ &:To consider and de3elop a deNnite schedulin! (de3elop a

distinct plan)

The plannin! di3ision is responsi&le for this step. $urther"ore this

unit ill &e considered as the Main Input too.

Main out$ut:

FeNnite pro-ect plan(Ti"e schedule should &e prefera&l* !i3en to

le3el or .Also process of ris anal*sis "ust &e applied on the

or paca!es le3el).

'tep ;8 Ris identiNcation and ris "iti!ation accordin! to the

schedulin! plan and chec lists of riss and ris !roups (B' RB')

(or Breadon 'tructure Ris Breadon 'tructure)

Main in$uts:

%ro-ect ti"e schedule

RB' and chec list of riss

Ris "ana!e"ent annual and procedures


43/68

Ma1or +tiecti3e and prioriti+ed riss.

List of secondar* and uncertain riss.

)te$ =: :ualitati3e ris anal*sis and de3elop"ent of an

inte!rated ris plan and schedule

Main In$uts:

Co"plete list of crucial e>ecti3e and prioriti+ed riss.

%ro-ect ti"e schedule

Ma1or +ti


44/68

Ris "ana!e"ent annual and procedures throu!h di>erent

phases of the pro-ect

Ma1or +ti


45/68

%eriodical update of ris lists and ris plan

%eriodical ris reportin!

Recordin! lessons learned a&out riss durin! the pro-ect

i"ple"entation

Main Out$ut:

?pdated ris plans

Im$lementing methodology in Bid Boland II gas treating

$lant $ro1et

In order to anal*+e and test this "ethodolo!* e ha3e focused on

di>erent steps of the "ethodolo!* throu!h the pro-ect.

)te$ ': Risk 5easi3ility )tudy

%ro-ect ris "ana!e"ent strate!ic plannin!

In the case of eecutin! pro-ect strate!ic "ana!e"ent it is

possi&le to "ae utili+e the outco"es and results of the strate!ic

"ana!e"ent at this le3el. The results o&tained of 'OT anal*sis

are especiall* useful at this le3el. Otherise i"ple"entin! ris

"ana!e"ent in the pro-ect ill &e dependent upon ide=ran!in!

'OT anal*sis and epertsG inter3ie. In this pro-ect 'OT

anal*sis has &een carried out in a co"prehensi3e "anner. After

!atherin! co""ents and holdin! inter3ie sessions the folloin!

results ha3e &een collected8


46/68

Accordin! to these factors inspectin! riss in the pro-ects are

necessar*8

S #ature of the pro-ect is consortiu" &ase

S This pro-ect is an 1%C and the riss eistin! in the

en!ineerin! procure"ent and construction phases a>ect the other

phases.

S The pro-ect has &een &id for a second ti"e &ecause of

cancellation of the Nrst &id due the eit of to of the consortiu"

parties (out of four).

S Considera&le increase of internal !as de"and hich has "ade

it a critical product.

S The countr*Gs uni4ue position of possessin! the second

lar!est reser3oirs of natural !as in the orld and desire to eport.

Considerin! to the pro-ect life c*cle status (&oth &efore and after

contract)

The scope of the pro-ect is clearl* deNned and the pro-ect is

on!oin!. Therefore the need for a detailed and co"prehensi3e

anal*sis is o&3ious.

+naly>ing the $ro1et/s organi>ational hierarhy !$ri


47/68

$urther"ore the pro-ect is to &e acco"plished &* a consortiu"

and ill &e eecuted &* "ulti corporations. Conse4uentl* the

eecuti3e "ana!e"ent of the consortiu" should follo the

contract fra"eor of ti"e cost and

4ualit* and pro3ide "ore proNt to the related co"panies

throu!h an e>ecti3e ris "ana!e"ent process.

Considering to the $ro1et im$lementation method !EPC" in

house" 6B" 6BB?(

The "ethod of pro-ect i"ple"entation is 1%C and all phases

consistin! of desi!n purchase &uild and operate are under the

"ana!e"ent and control of the consortiu" contractor.

Conse4uentl* en!ineerin! phase riss ill ha3e an e>ect on

the procure"ent and construction phases and procure"ent riss

ill inuence the other phases.

Considering to the $ro1et ontrat and $ayment method

!lum$ sum-ost $lus?(

The pa*"ent "ethod of the pro-ect contract is lu"p su" .This

"ethod ill increase the ris of the contractor and ill necessitate

the i"ple"entation of a ris "ana!e"ent "odel in the pro-ect.

Therefore the contractor "ust i"ple"ent ris "ana!e"ent in the

pro-ect in order to decrease the costs.


48/68

Contrators" onsultants and inect on the pro-ect.

Pro1et analysis at the $ort5olio leation"

ministry" ountry and region(

The pro-ect ill &e anal*+ed at the contractorGs or!ani+ation le3el.

The consortiu" "ana!e"ent ill atte"pt to decrease the costs

throu!h ris "ana!e"ent and create "ore proNts for the pro-ect


49/68

the "ana!e"ent ill stri3e to deli3er the pro-ect on ti"e and

ithin the deNned speciNcation to the client.

&%=%'%A 6eision making a3out desired le


50/68

Ris "ana!e"ent at the o3erall le3el of the pro-ect

Ris "ana!e"ent alon! ith allocatin! an epert

ris "ana!e"ent tea" e3aluatin! details and de3elop ris

procedure

Accordin! to the ac4uired score it &eco"es o&3ious that

i"ple"entin! ris "ana!e"ent is an essential and necessar*

"atter.

)te$ 2: 6e


51/68

)te$ 0: 6e


52/68

The "ethodolo!* applied on the pro-ect is a co"&ination of

'ha"po %MBO, and %rince2 "odels. $urther"ore all

re4uire"ents and needs related to the 1%C pro-ects and oil and !as

pro-ects ha3e &een taen into consideration.

The tools used in this model are listed as 5ollo8s:

Brain stor"in! "ethod ris response 4ualitati3e ris response

4uantitati3e anal*sis ris si"ulation etc.

S Applied softare8 %ri"a3era %ert"aster

S Re4uired for"s and procedures

S %repare re4uired RB' alon! ith pri"ar* chec lists.

$riority is


53/68

S 'ince the pro-ect ti"e schedule is 3er* detailed it "a* &e

dicult or 3er* ti"e consu"in! to etract and anal*+e riss &ased

on this plan. It is i"portant to note that the 4ualitati3e ris anal*sis

step a suita&le ti"e schedule is re4uired for 4ualitati3e anal*sis.

'ince the pro-ect ti"e schedule consists of 3arious acti3ities a

li"ited section has &een selected to anal*+e. This schedulin! plan

has &een prepared &* the contractor and has &een 3eriNed &* the

client and pro-ect MC (Mana!in! Contractor).

Main output8

FeNnite pro-ect plan(Ti"e schedule should &e prefera&l* !i3en to

le3el or .Also process of ris anal*sis "ust &e applied on the

or paca!es).

)te$ : Risk identi9ation and risk mitigation aording to

the time shedule and hek lists o5 risks and risk grou$s

!.B)" RB)(

Main in$uts:

S Ti"e schedule

S RB' and chec list of riss

S Ris "ana!e"ent re!ulations

Ma1or +ti


54/68

into di>erent disciplines hich ere intended to eecute di>erent

sets of tass. ith the aid of &rain stor"in! epert "ethod Felphi

"ethod and the other tools each discipline as in3ol3ed to identif*

the ris of the pro-ect. ?sin! the RB' in parallel ith the ti"e

schedule could possi&l* raise the pro&le"s of o3er allocation

resource li"itation unforeseen dela*s need for etra "one* o3er

or and the use of su&contractors. As a result ris re!ister

ere de3eloped after !atherin! concludin! and "iti!ation of

riss. I"portant riss ill &e transferred to the net step.

S Ris IdentiNcation8 Brain stor"in! 1pert "ethod Felphi

"ethod are "ost fre4uentl* used durin! ris identiNcation step.

S Ris "iti!ation

Main Out$uts:

S Co"plete list of crucial e>ecti3e and prioriti+ed riss.

S List of secondar* and uncertain riss.

'tep


55/68

S Appl* riss on schedulin! process. The co"plete ti"e

schedule as re3ised considerin! to hi!h ris tass and re4uired

lead la! etra resources crashin! fast tracin! etc. As Mulcah*

(200) descri&ed tass ith "ore predecessors are "ore ris* than

tas ith sin!le or less predecessors. These identiNed tass in the

detailed le3el of the pro-ect ere atte"pted to &e ris="iti!ated &*

appl*in! di>erent techni4ues of plannin! and schedulin! acti3ities

in parallel ith 3arious resources. Another approach at the top

le3el of the schedule as to consider su""er* acti3ities

or hi!h ris "ilestones and atte"pt to consi!n the" to a loer

le3el of ris than the re3ised planGs initial de3elop"ent. $ast

tracin! and crashin! hich are to tools used to free+e the ti"e

schedule ere in this case utili+ed to appl* the riss to the

schedule.

S Cost anal*sis of riss. $inancial conse4uences of ris ere

anal*+ed &ased on the ti"e schedule and also on the contin!enc*

plans. Riss ith "ore se3ere conse4uences anal*+ed and planned

to &e treated e3en ith hi!her cost approaches.

Main Out$ut:

S Ris plan (re3ised ti"e schedule &* appl*in! the ris on the

pri"ar* plan of the pro-ect)

)te$ : To dee res$onse

$lan ost


56/68

Main In$uts:

S Ris plan (re3ised ti"e schedule &* appl*in! the ris on the

pri"ar* plan of the pro-ect)

S Ris "ana!e"ent re!ulation throu!h di>erent phases of 1%C

pro-ect

Ma1or +tiecti3e solution for di>erent t*pes of riss.

S There as a need for a re3ision of the pro-ect plan and

anal*sis of the "ain plan &efore and after the ris reduction

hich as one of the "a-or acti3ities acco"plished in this step.

S Appro3e and Nnali+e the pri"ar* response plan de3elop

schedulin! and indicate eecuti3e responsi&le. Ris response plan

ere de3eloped and proper responsi&le resources ere assi!ned to

acti3ities. The pri"ar* ti"e schedule as re3ised to loer the ris

le3el and to &e coordinated ith the ris response plan. As e3er*

plan re4uires resources 3arious t*pes of resources ere assi!ned

to these referred plans.

Main Out$uts:

S Ris response plan


57/68

S Cost anal*sis on the ris response plan

S Re3ised ti"e schedule and eecuti3es resource assi!n"ent

)te$ A: Periodial risk monitoring" ontrolling and traking

Main Inputs8

S Ris response plan

S Cost anal*sis on the ris response plan

S Re3ised ti"e schedule and eecuti3es resource assi!n"ent

Ma-or Acti3ities8

S B* eecutin! the plan as the ti"e schedule is !raduall*

&ein! i"ple"ented the ris response plan is &ein! i"ple"ented in

parallel

S ?pdatin! the ris re!ister and the ris response plan as an

iterati3e and continuous tas is considered and folloed

S %eriodical ris reportin! pla*s an i"portant role for collectin!

the re4uired feed&ac and perfor"in! the correcti3e actions.

S Record lessons learned a&out riss durin! the pro-ect

i"ple"entation

Main Output8

S ?pdated ris response plans contin!enc* plans &acup plans

S ?pdated ti"e schedule


58/68

S Recorded lessons learned

Im$lementing methodology in Bid Boland II gas treating

$lant $ro1et

In order to anal*+e and test this "ethodolo!* e ha3e focused on

different steps of the "ethodolo!* throu!h the pro-ect.

)te$ ': Risk 5easi3ility

)tudy

Pro1et risk management strategi

$lanning

In the case of eecutin! pro-ect strate!ic "ana!e"ent it is possi&le to"ae utili+e the outco"es and results of the strate!ic "ana!e"ent at this

le3el. The results o&tained of 'OT anal*sis are especiall* useful at this

le3el. Otherise i"ple"entin! ris "ana!e"ent in the pro-ect ill &e

dependent upon ide=ran!in! 'OT anal*sis and epertsG inter3ie. In this

pro-ect 'OT anal*sis has &een carried out in a co"prehensi3e "anner.

After !atherin! co""ents and holdin! inter3ie sessions the folloin!

results ha3e &een collected8

Accordin! to these factors inspectin! riss in the pro-ectsare necessar*8

#ature of the pro-ect is consortiu" &ase

This pro-ect is an 1%C and the riss eistin! in the en!ineerin!

procure"ent and construction phases a>ect the other phases.

The pro-ect has &een &id for a second ti"e &ecause of

cancellation of the first &id due the eit of to of the consortiu"

parties (out of four).

Considera&le increase of internal !as de"and hich has "ade it a

critical product.

The countr*Gs uni4ue position of possessin! the second lar!est

reser3oirs of natural !as in the orld and desire to eport.

Considering to the project life cycle status (both before and

after contract)

The scope of the pro-ect is clearl* defined and the pro-ect is on!oin!.

Therefore the need for a detailed and co"prehensi3e anal*sis is o&3ious.


59/68

Analyzing the projects organizational hierarchy (private,

governmental)

It should &e considered that the pro-ect is &ein! carried out &* the pri3ate sectorhich increases the i"portance of the issue. $urther"ore the pro-ect is to &e

acco"plished &* a consortiu" and ill &e eecuted &* "ulti corporations.Conse4uentl* the eecuti3e "ana!e"ent of the consortiu" should follo thecontract fra"eor of ti"e cost 4ualit* and pro3ide "ore proNt to therelated co"panies throu!h an e>ecti3e ris "ana!e"ent process.

Considering to the $ro1et im$lementation method !EPC" in house" 6B"6BB?(

The "ethod of pro-ect i"ple"entation is 1%C and all phases consistin! of desi!npurchase &uild and operate are under the "ana!e"ent and control of theconsortiu" contractor. Conse4uentl* en!ineerin! phase riss ill ha3e ane>ect on the procure"ent and construction phases and procure"ent riss ill

inuence the other phases.

Considering to the $ro1et ontrat and $ayment method !lum$ sum-ost$lus?(

The pa*"ent "ethod of the pro-ect contract is lu"p su" .This "ethod ill increasethe ris of the contractor and ill necessitate the i"ple"entation of a ris"ana!e"ent "odel in the pro-ect. Therefore the contractor "ust i"ple"ent ris"ana!e"ent in the pro-ect in order to decrease the costs.

6isussion and Conlusion

1"er!in! "e!a=pro-ects e3er "ore co"ple and hi!hl* technical are addressin!ne challen!es ithin the Neld of pro-ect "ana!e"ent. %ro-ect ris "ana!e"ent asone of the latest areas of pro-ect "ana!e"ent has &eco"e "ore pro"inent inrecent *ears as pro-ect "ana!ers increasin!l* reali+e the e>ects of ris"ana!e"ent on deli3erin! a pro-ect on ti"e ithin the &ud!et ith predeNned4ualitati3e and technical characteristics. 1%C pro-ects hich are !enerall*considered to utili+e one of the "ore co"ple i"ple"entation "ethods ha3e three"ain phases and in3ol3e 3arious inds of contactors and su&=contractors. Theseparticipants "a* &e t*picall* fro" en!ineerin! a!ents procure"ent &odiesconstruction or co""issionin! contractors. The nature of 1%C pro-ects consideredith pa*"ent "ethods can introduce 3arious t*pes of riss to the pro-ect atdi>erent le3els. Most of the ad3anced co"panies &e!in the pro-ect ris"ana!e"ent process at the earl* steps of tenderin! e3en thou!h there is no!uarantee that the tender ill result in a contract aarded. the* start the pro-ectris "ana!e"ent process as the part of pro-ect "ana!e"ent ors. %ro-ect ris"ana!e"ent thus &eco"es an inte!ral part of the o3erall "ana!e"ent philosoph*fro" the initial pro-ect proposal. This can &e 3er* &eneNcial to a co"pan* as at anearl* sta!e it "a* so"eti"es identif* pro-ects hich ha3e feer added 3aluesthan epected and are not feasi&le.

The oil and !as industr* in3ol3es "an* of pro-ects ith hi!h &ud!ets usin! co"pletechnolo!ies. These pro-ects ith lar!e a"ount of acti3ities 3arious in3ol3ed

parties and 3aried resources are the "ain focus of this thesis. The Iranian oil and!as industr* has so"e uni4ue and challen!in! ris areas than the other co"paniesaround the orld due to its !eo= political issues. The pro-ects deNned in Iran are


60/68

considered as serious contenders of ris "ana!e"ent s*ste"s hich arecusto"i+ed to &e applied easil* and e>ecti3el*.

International pro-ects utili+e 1%C t*pe of contractin! and the unillin!ness ofIranian co"panies to e"&race 1%C contracts "a* &e one of the reasons for lac ofparticipation in international contracts. The root cause can &e related to lesstechnical facilities and capa&ilities.

Iranian co"panies need to consider ne arran!e"ents and re4uiredstrate!ies for participatin! in 1%C tenders. The* need to co"pete on theinternational le3el ith the other co"panies ho ha3e &een usin! 1%C contracts for"an* *ears. Clearl* ithout a "ore a!!ressi3e approach Iranian co"panies illfail to in tenders and ill &e una&le to esta&lish a "aret leadershipposition or the* can !ain the position of second hand contractors in the &estcase scenario.

In Iran Nrst $IFIC t*pe contracts ere used in the !o3ern"ental or!ani+ation ofplannin! and &ud!etar* a>airs &* ac4uirin! loans fro" the orld Ban in9@ect on the pro-ect. As a !eneral rule in pro-ect ris "ana!e"entliterature riss hich happen in the earl* sta!es of a pro-ect should &e anal*+ed in!reater detail as the* can ha3e an enor"ous e>ect on the o3erall pro-ect lifec*cle.

The conse4uences of these e>ects can lead to unpredicted situations ithadditional ti"e "one* and resources allocated as a result of unforeseen chan!esin the pro-ect.

Man* factors such as pro-ect location en3iron"ent current political situationpa*"ent "ethod and ter"s Nnancial sta&ilit* of the client and contractors alon!ith the current "acro=econo"ic conditions the a&ilit* to use &anin! ser3ices forLetter of Credit (LC) ors contractors technical !rade and eperience on the Neldof !i3en pro-ects and pro-ect or!ani+ation should &e considered as i"portant factorsto &e e3aluated in the earl* sta!es of the pro-ect &ecause the* "a* create so"eriss and there should &e proper strate!ies selected to handle the riss that are

e"er!in! &ecause of these characteristics. Insurance and lia&ilit* co3era!e is alsoan i"portant factor to &e considered.


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There are di>erent approaches to "ana!e pro-ect ris as deNned &* 3arious sourcesand or!ani+ations. The reason for the de3elop"ent of di3erse "ethodolo!ies can&e attri&uted to the 3arious 3iepoints toard ris. hile the "ain !oal of the ris"ana!e"ent "odels is to "ana!e the ris issues and "iti!ation of the se3erit* andconse4uences their "ethod of achie3in! this !oal "a* di>er. The depth and thele3el of focus on processes related to di>erent steps of "ana!in! the ris aredi3erse.

'o"e ris "ana!e"ent "odels are a su&set of lar!er pro-ect "ana!e"ent "odelhich atte"pts to anal*+e and control the ris in a "ore !enerali+ed a*. In so"e!roups there are "odels hich are desi!ned speciNcall* for the application of ris"ana!e"ent. These !roups tend to consider the ris at a "ore detailed le3el. Thisthesis epress that none of these "odels are custo"i+ed for a speciNc industr* andfurther"ore do not introduce a pattern for a speciNc pro-ect t*pe. Most of these"odels do not use sa"ple for"ats and patterns. One of the "ost i"portant issuesith these "odels is that the* do not appl* so"e of "ost fre4uentl* used "ethodsand softare paca!es a3aila&le to application of the ris and pro-ect "ana!e"ent

techni4ues such as %1RT 61RT or Mont Carlo. These issues !eneratesucient "oti3ation to adopt a "ethodolo!* de3elop"ent hich can &e easil*applied &* "ana!ers of speciNc industries. This should lead to hi!her perfor"anceand producti3it* ashas &een the case ith so"e lar!e co"panies ho &e!an to de3elop their on ris"ana!e"ent "ethodolo!ies &ased on their indi3idual re4uire"ents and&usiness en3iron"ent. 1a"ples are 'tatoil Michi!an oil and !as and 'asol.

The authors su!!ested "ethodolo!* has &een de3eloped &ased on discussion itheperts lessons learned in the oil and !as industr* and Nnall* aco"&ination of !eneral "ethodolo!ies of "ainl* %MBO, %RI#C12 Cooper ith ane*e on stren!ths and eanesses of eistin! "ethodolo!ies.

#or"all* related "odels in this Neld &e!in ith the ris "ana!e"ent procedure andris identiNcation. The su!!estion in this proposal "ethodolo!* is that the initialstep should &e ris feasi&ilit* stud*. This approach ill encoura!e the co"pan* totae an in depth loo at the co"pan*Gs strate!ic plan pro-ect life c*cle structurei"ple"entation "ethod pa*"ent "ethod portfolio and or!ani+ation alon!ith desired ris le3el and contractors circu"stances and suita&ilit*. It illalso "ae it possi&le to &e!in the ris "ana!e"ent processes prior to settin! up atender "eetin!. %re=tender and tender steps are i"portant steps in the pro-ectlifec*cle. These steps are often o3erlooed or i!nored. The eperience in Bid&olandII !as treatin! plant pro-ect de"onstrated that so"e of co"panies scheduled toattend to the tender "eetin! decided a!ainst doin! so after perfor"in! a hi!hle3el ris anal*sis on the pro-ect en3iron"ent and the clients Nnancial situation.Ma-or a>ectin! factor on their anal*sis as pro-ect en3iron"ent hich as deepl*a>ected &* !eo=political issues and the Nnal conclusion reached as that there asnot enou!h trust in the client to &e a&le to support the pro-ect Nnanciall* &ased onthe contract t*pe.

'taeholderGs anal*sis in order to disco3er detailed re4uire"ents is a necessar*step hich can re3eal "ain riss desired ris le3el and also help creatin! there!ulations and procedures of the pro-ect ris "ana!e"ent.

As ris "ana!e"ent has a foot on pro-ect plannin! outco"es it is necessar* to

anal*+e the ti"e schedule ith ris outloo to ease ris identiNcation and ris"iti!ation e>orts. In Bid&oland ith the ti"e schedule of ei!ht* thousand acti3itiesplanned to &e eecuted ithin fort* four "onths lots of detailed riss ere


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identiNed &* anal*+in! the ti"e schedule ith the assistance of discipline"ana!ers. The nu"&er of predecessors of an acti3it* can &e an eas* spotli!ht todisco3er acti3ities ith hi!her riss. B' and RB' are useful tools in this step.

?nlie "ost of the other "odels 4uantitati3e ris anal*sis is o"itted in presented"ethodolo!* &ecause of the structure of the "odel pro-ect t*pe and enou!he"phasi+e on 4ualitati3e ris anal*sis. Ris response plan is a set of actions &asedon their strate!ies to or on selected riss of the pro-ect considerin! to costs ofthe conse4uences and a3aila&le &ud!et throu!h the hole pro-ect life c*cle.Fe3elop"ent of ris response plan re4uires appl*in! so"e chan!es on the "ainschedule of the pro-ect. Then the ne schedule ill ha3e a loer ris le3elco"parin! to the pre3ious one. Althou!h "ain schedule of the pro-ect is a su&-ectof cost anal*sis &* responsi&le parties in the pro-ect tea" the ris response planneeds to &e treated the sa"e. In Bid&oland II !as treatin! plant pro-ect authors didnotperfor" cost anal*sis and also Nnali+in! the ris response plan de3elop"entdue to &oundaries of this research.

To eep the ris "ana!e"ent process ali3e there is a need to perfor" a periodicalris "onitorin! controllin! and tracin! on the ris response plan its costs andre3ised ti"e schedule. Mentioned step !uaranties ha3in! updated ris re!ister andha3in! an opportunit* of disco3erin! secondar* riss.

To conclude the "entioned research 4uestion has &een ansered &* de3elopin! a"ethodolo!* for ris "ana!e"ent in 1%C pro-ects. This "ethodolo!* is custo"i+edfor oil and !as industr*. The "ethodolo!* is ea"ined and anal*+ed in Bid&oland II!as treatin! plant pro-ect. The result of this thesis can &e applied in the other oiland !as pro-ects to "ana!e the pro-ect riss in "ore functional and producti3e"ethod fro" pre=tender till post= co""issionin! phase.

This thesis can &e considered as the !roundor for &uildin! the pro-ect ris"ana!e"ent s*ste" for a sin!le pro-ect in the oil and !as industr* and further"ore de3elopin! di>erent "ethodolo!ies for 3arious industries.

Re5erenes

A!raal R.C. 200@. Ris Mana!e"ent. aipur8 6lo&al Media.

Althaus C.1. 200;. A disciplinar* perspecti3e on the episte"olo!ical status of ris.

RisAnal*sis. 2;() pp. ;


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Bo*ce T. 200. %ro-ect Ris Mana!e"ent8 The Co""ercial Fi"ension.London8 Thoro!ood %u&lishin!.

British 'tandards Institution 2002.I'O/I1C 6uide 82002. Ris "ana!e"ent3oca&ular* = 6uidelines for use in standard. London8 B'I.

Br*"an A. and Bell 1. 200. Business Research Methods. 2nd ed. Oford8Oford?ni3ersit* %ress.

Bure R. 9@@@. %ro-ect Mana!e"ent8 %lannin! Control Techni4ues. rd ed. #eVor8 ohn ile* and 'ons.

Ca&inet Oce 2092. WOnlineX a3aila&le at8Yhttp8//.ca&inetoce.!o3.u/resource= li&rar*/&est="ana!e"ent=practice=portfolioZ W2092=0;=9;X

Central Intelli!ent A!enc* (CIA) 209. WOnlineX a3aila&leat8Yhttps8//.cia.!o3/li&rar*/pu&lications/the=orld=fact&oo/ranorder/[email protected]"l Z W209=0;=9;X

Chap"an C.B. and ard '. 200. %ro-ect ris "ana!e"ent8 processestechni4ues and insi!hts. 2nd ed. Chichester8 ohn ile* 'ons Ltd.

Co""erce Oce of 6o3ern"ent 2002. Mana!in! 'uccessful %ro-ects ith%RI#C12. rded. London8 T'O (The 'tationar* Oce).

Fel"on . 2007. %ri3ate 'ector In3est"ent in Infrastructure8 %ro-ect $inance %%%%ro-ects and Ris. 2nd ed. The #etherlands8 ,luer La International.

Forofee A.. aler .A. Al&erts C.. i!uera R.%. Murph* R.L. illia"s R.C.9@@


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a*=6i&son #.J. 200@. A ri3er of ris8 a dia!ra" of the histor* and historio!raph*of ris Mana!e"ent. The #orthu"&ria orin! %aper 'eries8 Interdiscipli

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