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Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Fundamentals of Hydrocarbon Project Management Lecture 1

Dr Ebenezer Sholarin, PMP® Lecture_1_Fundamentals of Petr. Proj. Management 1st Semester,

2016

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Module overview • • • • • •

Project Management Conceptualisation Individual and Team Issues Petroleum Project Risk Management Project Organisational Design Project Time Planning and Control Project Cost Planning and Control

Lecture_1_Fundamentals of Petr. Proj. Management

Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Meet Your Lecturer • •

• • • • • • • •

More than 25 years experience in consulting, teaching, R&D, Oil & Gas project planning, implementation and management in Eastern Europe, Africa and Asia pacific region; Designed and implemented course unit: Petroleum economics & project management in 2004, Petroleum economics, risks and project management in 2010, Hydrocarbon economics and project management for Subsea Engineers, 2014. PhD in Petroleum Economics and Management (1989), Gubkin University of Oil and Gas, Moscow, Russia. MSc in Industrial engineering and management (1985) Post Doctoral Diploma in Environmental Impact Assessment, Murdoch University, Western Australia (2010) Accredited Project Management Professional, PMP® since 2005. Book Author: Environmental Project Management: Principles, Methodology and processes, Springer, 2016. Director of Education, Project Management Institute, Western Australian Chapter (2008 – 2010) Member, Society of Petroleum Engineer, USA. Member, Project Management Institute, USA.

Lecture_1_Fundamentals of Petr. Proj. Management

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Outline 1. 2. 3. 4.

Introduction and module overview Basic concepts and Definitions. Projects Versus Operations. Project Management System – – –

Project Organisational Structure Project management framework The triple constraint/PM triangle

5. Management Versus Leadership 6. Engineering, procurement, and construction management (EPCM). Lecture_1_Fundamentals of Petr. Proj. Management

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

1. Introduction & Course overview “The balance between the global supply and demand for crude oil is becoming progressively tighter, increasingly requiring our industry to face new and unique challenges. Our industry of tomorrow will have to address the demands of operating in an adverse environment, development of new technologies and expediting implementation in the field, as well as optimization of processes and enhancing collaborative efforts to reduce cost.” Statement made by former SPE President, Dr Behrooz Fattahi, at his University of Western Australia presentation on “Challenges of the Future”, delivered 7th April, 2011 Lecture_1_Fundamentals of Petr. Proj. Management

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Lecture objectives • At the end of this lecture, you should be able to: – Properly define a project scope and identify key constraints – Recognize basic properties of projects, including their definition. – Differentiate between project management practices and more traditional, process-oriented business functions. – Understand how effective project management contributes to achieving strategic objectives. – Recognize the strength and weakness of three basic forms of organizational structure and their implications for managing projects.

Lecture_1_Fundamentals of Petr. Proj. Management

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Management Without Planning “We will start digging from this side of the mountain. You and your gang start digging from the other side. When we meet in the middle, we will have made a tunnel. And if we don’t meet, we will have made two tunnels!”

Lecture_1_Fundamentals of Petr. Proj. Management

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

When to Use Project Management? • When the scope of the challenge is larger than one normally encounters; • An ad hoc undertaking – unique or unfamiliar organizational challenges; • When change is eminent and inevitable; • When there is need for concurrent or value engineering

Lecture_1_Fundamentals of Petr. Proj. Management

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

What Do we Need? • Innovation and Creativity • Managing Resources with Immersive Visualization, transparency and Control • Employing Integrated Project Management System.

Lecture_1_Fundamentals of Petr. Proj. Management Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

How are projects conceived? • Ideas

• Vision

• Business Opportunity Execution

I.Q. Strategy Capability

Leaders

Vision

Focus Values

Culture Current Reality

Commitment

E.Q. Lecture_1_Fundamentals of Petr. Proj. Management

Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

STO Project Management Model Strategic Planning Tactical Planning Operational Planning

Lecture_1_Fundamentals of Petr. Proj. Management

Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

2. Basic Concepts & Definitions • • • • •

What is PMBoK? What is a Project? Project Versus Traditional Business Operations Project, Program, Portfolio Petroleum Project Management definitions – Project deliverables – The Triple Constraints or Project Management Triangle. – Front-end Engineering and Design (FEED) Vs Front-end End Loading (FEL)

Lecture_1_Fundamentals of Petr. Proj. Management

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

PMBOK • What is it? – Project Management Body of Knowledge. A Guide published by the Project Management Institute (PMI), USA. • Shell Petroleum has also developed its own Body of Knowledge. It is called: – Opportunity and Project Management Guide (OPMG)

Lecture_1_Fundamentals of Petr. Proj. Management Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

What is a Project? • Consider the following definitions of projects: – A project is a unique venture with a beginning and end, conducted by people to meet established goals within parameters of cost, schedule, and quality (Buchanan & Boddy, 1992) – Projects are goal-oriented, involve the coordinated undertaking of interrelated activities, are of finite duration, and are all, to a degree, unique (Franem J.D., 1995). – A temporary endeavour with a defined beginning and end (usually time-constrained, and often constrained by funding or deliverables), undertaken to meet a unique goals and objectives, typically to bring about beneficial change or added value. (IPMA, 2006).

Lecture_1_Fundamentals of Petr. Proj. Management

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Project according to PMBoK Guide

“Project is a temporary endeavor undertaken to create a unique product, service or result” Source: PMI, 2013. A Guide to the Project Management Body of Knowledge, PMBoK® Guide. Project Management Institute Inc., Atlanta.

Lecture_1_Fundamentals of Petr. Proj. Management Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Characteristics of a Project A Project has the following attributes: Projects are complex, one-time endeavor (processes) with a specific time frame or finite life span, i.e. temporary. Projects are limited by budget, schedule and resources. Projects are developed to resolve a clear goal or set of goals. Projects are customer-focused. Projects are ad hoc endeavors with a clear life cycle. Projects are building blocks in the design and execution of organizational strategies. Projects are terminated upon successful completion of performance objectives.

Lecture_1_Fundamentals of Petr. Proj. Management Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Interaction with the business and general environment

Alignment of Projects with Corporate Strategy • Time • Budget

Strategic

• Scope

Management • Strategy & finance

Project Management

• Technology (requirements, design, make, test)

• Organizational (structure & people)

• Time

• Human Resources

• Cost

• Communications

• Integration • Scope • Risk

• Commercial (supply chain, procurement, etc.)

Concept

“delivered”

• Quality • Procurement • Stakeholder/Interface

Initiate

Feasibility

Definition

Plan

Execute

Execution

Control

Close Out

Close-out/ Operations

INTEGRATED PROJECT MANAGEMENT involves planning and delivery of projects throughout project life cycle, in a fully integrated and consistent manner that cut across all project elements. Lecture_1_Fundamentals of Petr. Proj. Management

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Example: An Offshore Project

The Galata Project, situated about 20km from the eastern port of Varna, is being developed by Melrose Resources. The Galata gas field is 23km offshore Bulgaria in the Black Sea.The field lies at a water depth of 35m and has gross proved and recoverable reserves of 49 billion cubic feet (bcf), and proved and probable reserves of 81bcf.

Lecture_1_Fundamentals of Petr. Proj. Management

Van Gogh Oil Project, Exmouth Sub-Basin, Australia. FPSO Ningaloo Vision is slightly smaller than other FPSOs in the area, with a storage capacity of 620,000 barrels of oil and an oil-processing capacity of 63,000bpd.

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Example: An Offshore Project (2) Ivar Aasen Field Development Project

An artistic rendition of the Ivar Aasen Field Development.

Lecture_1_Fundamentals of Petr. Proj. Management

An illustration of the Ivar Aasen Platform. The platform will be approximately 230m in height.

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Example: An Offshore Project (3) Kirinskoye Gas and Condensate Field, Sea of Okhotsk, Russian Federation

Polyarnaya Zvezda (Polar Star) semi-submerged drilling rig is currently drilling the first production well at the Kirinskoye field. Lecture_1_Fundamentals of Petr. Proj. Management

Chinguetti Oil Field, Mauritania

The Chinguetti field lies off the coast of Mauritania and will be developed from an FPSO.

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

3. Projects Vs Operations E&P Operations

E&P Project

• • • • •

• • • • •

Repeat process or product Several objectives Ongoing People are homogenous Well-established systems in place to integrate efforts • Greater certainty of performance, cost and schedule • Part of line organization • Supports status quo

New process or product One objective One short – limited life More heterogeneous Systems must be created to integrate efforts. • Greater uncertainty of performance, cost and schedule. • Outside of the organisation • Upsets status quo. Source: Graham, R.J. (1992). A Survival Guide for the Accidental Project Manager, Proceedings of the Annual Project Management Institute Symposium, Drexel Hill, PA: PMI, pp. 355-361.

Lecture_1_Fundamentals of Petr. Proj. Management

Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Project/Program/Portfolio • A project is “a temporary endeavor undertaken to create a unique product, service, or result” (PMBOK) • A Program is a group of projects managed in a coordinated way to obtain benefits not available from managing them individually, e.g. CCS program, LNG Program, GTL Program, ANLEC R&D program. • A Portfolio is a set of projects or programs that are selected or prioritized in accordance with the organization's business strategy, e.g. hydrocarbon portfolio comprising 15 projects (6 oil wells and 5 gas wells, 4 NGL projects).

Lecture_1_Fundamentals of Petr. Proj. Management

Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Project management definitions • “PM is the process of managing, allocating, and timing resources in order to achieve a given objective in an expedient manner” (Badiru, et al 2008) • “PM is the art and science of applying skills, knowledge, tools and techniques to all aspects of project to achieve the project mission objective, within the specified time, budgeted cost and predefined quality specification” (Chan, et al 2009). • “PM is the act of collaborating with people using other required resources such that a project is planned, organised, and controlled effectively to accomplish its goals and objectives” (Vaidyanathan, G. 2013) Lecture_1_Fundamentals of Petr. Proj. Management

Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Project Management according to PMBoK Guide

• “The application of knowledge, skills, tools and techniques to project activities in order to meet project requirements” (PMBOK, 2013)

Lecture_1_Fundamentals of Petr. Proj. Management

Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

What is a deliverable?  A unique and verifiable product, result or capability to perform a service that is identified in the project planning documentation, and must be produced and provided to complete the project.  The process of breaking project deliverables down into smaller, manageable components so that project tasks and activities can be planned and estimated is called Decomposition.

Lecture_1_Fundamentals of Petr. Proj. Management

Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Decomposition in Project Management

Lecture_1_Fundamentals of Petr. Proj. Management

Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

4. Project management System • Time • Budget

“delivered”

“given”

• Scope

• Integration • Human Resources

Project Management Knowledge Areas

Initiate

Plan

• Time

• Communications

• Cost

• Quality

• Scope

• Procurement

• Risk

• Stakeholder/Interface

Execute

Control

Close Out

PROJECT MANAGEMENT: “On time, within budget, to scope” execution/ delivery

Lecture_1_Fundamentals of Petr. Proj. Management

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Petroleum Project Management Systems

The Paradigm shift

Future Present

Past Lecture_1_Fundamentals of Petr. Proj. Management Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

4a Project Organisation Structure • Organisation structure depends on three main issues: – Team Mix Requirements • Or who you can get!

– Procurement/Contracting Strategy – Project Challenge

• There are three types of organisational structure: – Functional – Matrix – Project based or “projectised” Lecture_1_Fundamentals of Petr. Proj. Management

Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Types of Organizational Structure 1. Functional Organization

2. Weak Matrix Organization

Functional Managers Functions

Working Level Project Coordinator

People work within their functional organization with little cross-functional coordination

3. Strong Matrix Organization

Liaisons

People work within their functional organizations with the project manager serving as a cross-functional coordinator

4. Project-based Organization

Customers Project Manager

Project Manager has authority to make personnel, budgetary and project decisions and team has direct contact with customers

Lecture_1_Fundamentals of Petr. Proj. Management

People report directly to the project manager, team members have minimal non-project responsibilities and may be co-located, team member keep functional organizations informed about project progress Adapted from PMBOK Guide® 2013

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Responsibility Assignment Matrix (RAM) PARIS Chart/ RAM PHASE Concept & Initiation Design & Development Implementation & Control Commissioning & Handover LEGEND

PERSON Ben

James

John

Ann

David

S

R

A

P

P

S

A

A

P

P

R

A

P

S

A

P

P

A= Accountable

R=Review Required

I=Input Required

S=Sign-off Required

S

P= Participant

Lecture_1_Fundamentals of Petr. Proj. Management

Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

4b Project Management Framework Define

Measure

Analyze

Improve

Control

ASSESSMENT PHASE

SELECTION PHASE

DEVELOPMENT PHASE

EXECUTION PHASE

Initiating Processes

Planning Processes

Executing Processes

Controlling Processes

Scope Management

Time Management

Quality Management Communications Management

Lecture_1_Fundamentals of Petr. Proj. Management

Close-out Processes

Cost Management

Integration Management Risk Management

OPERATION PHASE

Human Resource Management Procurement Management

Stakeholder Management Adapted from PMI® 2013

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

DMAIC: Methodology for Managing Hydrocarbon Projects •

For each product or process answer the following questions: Define

What are customers expectations of the process?

Measure

What is the frequency of the defects?

Analyze

Why, when and where do defects occur?

Improve

How can we fix the problem or process?

Control

How can we maintain the gain?

Lecture_1_Fundamentals of Petr. Proj. Management

Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Iterated Links of PM Processes Measure/Plan

Define

Planning Processes

Initiating Processes Improve/Check

Control/Review

Controlling Processes (arrows represent flow of information)

Executing Processes Celebrate Closing Processes

Lecture_1_Fundamentals of Petr. Proj. Management

Analyze/Do

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

ISO 9001 Project Management Model DO

CHECK PLAN

RECOGNITION Lecture_1_Fundamentals of Petr. Proj. Management

REVIEW Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Five Steps of Project Management IMPLEMENTATION

PLANNING

5. CLOSE

1. DEFINE

2. PLAN

3. ORGANIZE

4. CONTROL

State the Problem/o pportunity

Identify project activities

Determine Personnel Needs

Define Management Style

Obtain Client Acceptance

Identify Project Goal

Estimate time and cost Quality and Communi cation managem ent

Identify Project Champion Recruit Project Team

Establish Control Tools

Install Deliverables and Commissioning

List the objectives Determine Preliminary Resources Identify Risks and stakeholders Success criteria

Write Project Proposal

Organize Project Team Bidding Assign Work Packages

Prepare Status Reports

Document the Project

Review Project Schedule, cost, team report Issue Change Orders

Issue Final Report Conduct PostImplementation Audit

Deliverables Project charter

WBS Project network/ Critical Path Project proposal

Lecture_1_Fundamentals of Petr. Proj. Management

Recruitment Criteria Define Work packages Assign work packages

Variance Reports Status Reports

Final Report Audit Reports

36

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Project Phases Define

Plan

Organise

Control

Scouting Study (30%)

Decision #1 Design Preparation ( 30% confirmed)

Decision #2 Basic Design (20%)

Decision #3 Project Definition

Project Spec’s

incl. 10% estimate

Tender & evaluate

Decision #4 = Final Investment Decision Detailed design Procurement Construction Commissioning & Start-Up

Performance Testing Acceptance

Lecture_1_Fundamentals of Petr. Proj. Management

Close

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Phase-Gate Project Management

Lecture_1_Fundamentals of Petr. Proj. Management

Adapted from Woodside Petroleum OPREP Material.

Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Project Management Body of Knowledge • •

Who are my stakeholders? What are their expectations?

• •

• •

10. Stakeholder Management

2. Scope Management

7. Human Resources Management

Who do I need for my project? Where do I get them from?

Are the technical standards being met?

1. Project Integration Management •

• •

•

4. Cost Management

6.. Risk Management • •

• •

How do I get what I need? Who are the contractors/suppliers?

Lecture_1_Fundamentals of Petr. Proj. Management

What are the costs involved? How will I get the funding I need?

What project plans do I need? How do I get every team member to do this?

8. Communication Management How do we collaborate to work together? What are the processes for sharing work? How many communication channels do I have?

How long will it take? How will it fit into the FDP?

•

•

•

• •

3. Time Management

5. Quality Management •

What are we going to do? What needs to be done?

Is the Project worth doing? What are the road blocks?

9. Procurement Management Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

4c

The Triple Constraint or PM Triangle

• 3-Dimensions of Project Goal S Scope Goal (Target)

• • • •

Projects must be within cost. Projects must be delivered on time. Projects must be within scope. Projects must meet customer quality requirements.

Budget

C

Time

T (Schedule) Lecture_1_Fundamentals of Petr. Proj. Management

Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Some Examples of a Project Goal • Saudi Aramco Haradh Gas Project: – Objective - To create a $2 billion facility, which will be used to gather, process and distribute natural gas, tapped from 87 gas wells, to satisfy the domestic Saudi market within 37 months.

• NASA Autonomous Rotorcraft Project: • Objective – To develop an unmanned helicopter (rotorcraft) that would operate with decision-making skill of a piloted aircraft.

Task: Can you identify the scope (target), time (schedule) and Cost (budget) from each objective?

Think and develop 3D objectives related to your PM group project. Lecture_1_Fundamentals of Petr. Proj. Management

Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Dimensions of Scope, Time & Budget Step 1: Define Scope (Develop WBS or ABS)

Step 2: Sequence The Work (Scheduling)

Step 3: Allocate the Resources (Budgeting) 300

80 75 65 80 25 20 35 5 10 10 5 5

SCOPE Lecture_1_Fundamentals of Petr. Proj. Management

TIME

COST Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Project Interface Management

Interface management: “the management of common boundaries between people, systems, equipment, or concepts” (Nooteboom 2004). Lecture_1_Fundamentals of Petr. Proj. Management

Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Project Stakeholder Management Stakeholder

Roles performed

Client

• • •

Person or organisation that ‘owns’ the project Provides the financial resources, in cash or in kind, for the project May initiate project changes

Sponsor

• • •

Initiate the project Champions project from a position of authority Supports project team’s most senior members

Performing Organisation

•

Enterprise, whose employees are most directly involved in doing the work of the project

Project Manager

• •

Person responsible for the management of the project on a daily basis Single point of responsibility for achievement of project objectives

Project Team Members

• •

Responsible for performing project tasks Provides and applies technical skills

Suppliers/ Contractors

• •

Delivers goods and services to the project as required Provides logistical support

User

•

The person or organisation that will make use of the project product.

Lecture_1_Fundamentals of Petr. Proj. Management

Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Project Communication Management Communications Channels = n(n-1) 2 What is the CC?

Lecture_1_Fundamentals of Petr. Proj. Management Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Project Scope Management

HOW THE CUSTOMER EXPLAINED IT…

HOW THE PROJECT MANAGER UNDERSTOOD IT…

HOW THE ENGINEERS DESIGNED IT…

AND WHAT THE CUSTOMER REALLY NEEDED WAS ………… WHAT OPERATIONS TEAM ACTUALLY INSTALLED…

HOW THE SALES EXECUTIVES DESCRIBED IT…

Lecture_1_Fundamentals of Petr. Proj. Management

Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Project Scope Management

HOW THE CUSTOMER EXPLAINED IT…

WHAT OPERATIONS TEAM ACTUALLY INSTALLED…

HOW THE PROJECT MANAGER UNDERSTOOD IT…

HOW THE ENGINEERS DESIGNED IT…

HOW THE SALES EXECUTIVES DESCRIBED IT…

Lecture_1_Fundamentals of Petr. Proj. Management

Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Project Scope Management Definition: “Project Scope Management includes the processes required to ensure that the project includes all the work required, and only the work required, to complete the project successfully.” PMI PMBoK Guide®, 2013, pp. 105

Lecture_1_Fundamentals of Petr. Proj. Management

Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Scope Creep Vs. Gold Plating • Scope Creep – uncontrolled changes or added objectives in a project’s scope. This phenomenon can occur when the scope of a project is not properly documented, defined, or controlled. It is generally considered a negative occurrence, and thus, should be avoided. Scope creep often comes from the customer or stakeholder

• Gold Plating – continuing to work on a project or task well past the point where the extra effort is not worth the value it adds. Gold plating often comes from the project manager or team members.

Lecture_1_Fundamentals of Petr. Proj. Management

Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Take home message (1)… Defining the scope of a project at the outset is crucial to its success. If you don’t have a fixed Scope, you have nothing to manage against

Lecture_1_Fundamentals of Petr. Proj. Management

Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

5.

Management Vs Leadership

• Management: – Ability to complete work through the efforts of others.

• Leadership: – Ability to motivate others to produce the work willingly. “Management – getting people to do what needs to be done; Leadership – getting people to want to do what needs to be done” Warren Bennis (1994) On Becoming a Leader

Lecture_1_Fundamentals of Petr. Proj. Management

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Characteristics of an Effective Leader •

•

Ability to: • Develop vision; • Set clear objectives and targets; • Put in place appropriate organizational structure, methods and processes, Roles and Responsibilities; • Maintain team focus; • Challenge status quo and accept constructive challenge; • Obtain team buy-in; • Get the best out of people by support, mentoring and coaching • Prepared to let people “get on with it” Enthusiasm, drive and determination consistently displayed.

Lecture_1_Fundamentals of Petr. Proj. Management

Prepared by Dr Ebenezer A. Sholarin, PMP®

Improving technical competence with business and leadership skills Competent Petroleum/Subsea Engineer

Technical skill

Leadership skill

Adding value

Business skill Value chain

Explore - Develop - Produce - Transport - Sell Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

So Who is a Project Manager? •

•

• •

PM coordinates and integrates activities and resources across multiple, functional lines; PM plans, organises, evaluate, directs and controls the execution of the project to meet the time, cost and performance objectives PM understands the company’s organisational structures and behavior PM possesses strong communication and interpersonal skills and familiar with the hydrocarbon E&P operations “A Project Manager is distinguished by his knowledge, known by his method and identified by his tools”

Lecture_1_Fundamentals of Petr. Proj. Management Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Your Role as a Project Manager Petroleum Geologist Business/ Risk Analyst

Applying the skills, knowledge, tools and techniques to project activities to successfully complete project objectives.

Lead Engineer

Engineering Manager

Lecture_1_Fundamentals of Petr. Proj. Management Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Project Manager Vs Line Manager Project Manager

Lead Engineer/Manager

What is to be done?

How will the task be done?

When will the task be done?

Where will the task be done?

Why will the task be done?

Who will do the task?

How much money is available to do the task?

How well has the functional input been integrated into the project?

How well has the total project been done?

Who deserves promotion for doing the task well?

Project Managers get things done by working through others. Lecture_1_Fundamentals of Petr. Proj. Management Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Where are you in this pyramid?

Challenging projects, opportunities for innovation and creativity, learning and creating at a high level.

Important projects, recognition from others, prestige and status. Acceptance, be a part of a group, identification with a successful team Physical safety, economic security, freedom from threats Physical survival needs: water, food, sleep, warmth, exercise, etc.

Lecture_1_Fundamentals of Petr. Proj. Management

Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

6. Engineering Procurement & Construction Management (EPCM) • Contracts are sought and entered into: – Where services can be obtained economically in the local or international market; – Where the equipment involved is costly, services required is temporary or where exceptional skills are indispensable; – To meet temporary peak requirements either in manpower and/or in equipment. – Another word for procurement is outsourcing

• EPCM contracts commonly used for the construction or expansion of large-scale heavy engineering facilities in the petroleum, mining and power sectors. • In an EPC contract, the owner defines the scope and specifications, quality, duration and cost. Lecture_1_Fundamentals of Petr. Proj. Management

Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Procurement and Outsourcing Strategies • Outsourcing components have increased progressively over the years. • Some industries have been outsourcing for an extended time – Fashion industry • Nike – all manufacturing outsourced

– Electronics Industry • Cisco (major suppliers across the world • Apple (over 70% of components outsourced) – Taiwanese companies now design and manufacture most laptop sold around the world. – PalmOne collaborate with Asian suppliers on the design of their personal digital assistance (PDA)s

Lecture_1_Fundamentals of Petr. Proj. Management

Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Type of Contract • Lump sum turnkey (LSTK) – Contractor is given defined starting and finishing points and undertakes to perform the whole of the specified work at a fixed price, bears the risk of any cost overruns and benefits from any savings that can be made (e.g., EPC contracts).

• Bills of Quantities – Lump sum contracts with detailed bills of quantities forming precise definition of the scope of work.

• Schedule of Rates – This type of contract permits a degree of control over the final cost of the job, without the need to define the SoW at the tender stage

• Reimbursable Cost Plus Profit Fee (RCPPF) – This type of contract should be avoided at all cost because there is no incentive for the contractor to perform apart from his/her desire to establish or maintain a good reputation (e.g., EPCM contracts).

Lecture_1_Fundamentals of Petr. Proj. Management

Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Successfully Closing The Project Project Closeout checklist template Project Name:

Project Control No.:

Preparer Name:

Preparer Signature:

Customer:

Customer Contact:

contact Phone:

Date Prepared:

Closeout Activity 1. Obtain sign-off for deliverables 2. Update project plan for transfer to next project manager 3. Provide project staffing plan for reduced resource requirements if applicable 4. Write project turnover memo to all stakeholders 5. Perform postproject review (lesson learned): ... What worked well? ...What did not work well? ...What can be done to improve the next project? 6. Update project history file 7. Give individual performance feedback to team members 8. Close project accounts and finalize all billing 9. No claims or audits are pending on this project 10. All customer-provided equipment returned

Lecture_1_Fundamentals of Petr. Proj. Management

Planned Closeout Yes N/A No Closeout Date Complete Date

Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Where to get more information • • • • • • • •

A Guide to the Project Management Body of Knowledge, PMBOK Guide®, 5th edition, PMI, 2013. SPE publications: Journal of Petroleum Science and Engineering, JPT, AAPG, etc. Havranek, Timothy J., Modern Project Management Techniques for the Environmental Remediation Industry, St. Lucie Press, Florida, 1999. Kerzner, Harold. Project Management: A systems Approach to Planning, Scheduling & Controlling, 10th edition, 2009. Avraham Shtub, et al, Project Management: Processes, Methodologies and Economics, Pearson, 2nd edition, 2005. Virine, L., Trumper, M., Project Decisions: The Art and Science, Management concepts, 2008. Pinto, Jeffrey K., Project Management: Achieving Competitive Advantage, Pearson, 3rd edition, 2013. Vanhoucke, Mario. Integrated Project Management and Control: First Comes the Theory, then the Practice, Springer, 2014.

Lecture_1_Fundamentals of Petr. Proj. Management

Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Take home message (2)… “...Never accept a project you did not define. Nor accept a project you have not defined. It is a recipe for disaster...”

Lecture_1_Fundamentals of Petr. Proj. Management

Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Project Planning Techniques Lecture 2

Lecture_1_Fundamentals of Petr. Proj. Management Prepared by Dr Ebenezer A. Sholarin, PMP®

Hydrocarbon Economics & Project Management (PEEN4001/Econ 6007)

Questions for self-assessment 1. 2. 3. 4. 5.

How do you define a project? Why do petroleum companies do projects? What are the triple constraint in project management? How do you identify deliverables in a project? Mention three types of organisational structure discussed in the lecture. 6. Project Management consists of how many knowledge areas? Mention 7 of them. 7. If your project team consists of 15 members, how many communication channels do you require?

Lecture_1_Fundamentals of Petr. Proj. Management