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Capital projects across the oil and gas industry are facing intense scrutiny given the recent pressures on commodity prices and resultant reductions in annual spend. To combat this period of fiscal austerity, organizations large and small are actively deferring capital projects. For those critical projects that are underway or must be initiated, companies are exploring ways to reduce and control capital spend, achieve key delivery dates, and meet shareholder expectations in a compressed market.
Options commonly pursued include selecting vendors with a track record of success, hiring staff with requisite experience, and even narrowing project pursuits to “low-risk” options with high-yield potential. The challenge, however, is that the long-term value of these techniques can vary greatly and do not always lead to measurable improvements.
A proven method that can accelerate control is also one of the most cost-effective ways to account for risk and uncertainty of all types: integrate the project control disciplines—cost, schedule, and risk—and set standards in your project management processes that engender adoption across your portfolio.
“Our consultants can increase the efficiency of your project processes so that you don't have to reinvent the wheel on every oil and gas project.”
Why is this so important? Oil and gas companies, customers, and shareholders can no longer afford to watch large projects come in behind schedule and over budget. Existing improvement initiatives, such as mandating project management training, are not effecting the level of positive control required for sustainable success.
One leading cause is that many O&G organizations still “stove pipe” the cost, schedule, and risk analysis functional teams—each is managed independently of the others. Despite efforts to improve the decision-making process, the data feeding decisions still lag in quality and insight because they lack clear regard for potential follow-on consequences and impacts (and even opportunities).
Integration helps solve this issue by not only identifying correlations among the data sets, but also by improving team communications via requiring functional experts to collaborate throughout the process. Combining this with standardization across the management of the project, organizations can remove variability from the reporting process to improve the flow of information for communicating performance, risk and other project information.
Although there are several methods to reclaim control over capital spend, Booz Allen’s approach is yielding material savings with measurable results for our current clients. Many recognize that integration and effective knowledge transfer are not just important but critical to their success, and being able to provide the right information to the right people at the right time improves performance, decision-making, collaboration and organizational learning. Our goal is to harnesses knowledge as a valuable (and often untapped) organizational resource, like time or money, to support strategic objectives and business needs.