Success Factors For Oil And Gas Project.pdf

MASTER OF ENGINEERING IN OIL AND GAS PROGRAMME FACULTY OF ENGINEERING

KOG 11203 OIL AND GAS PROJECT MANAGEMENT AND ECONOMICS

JOURNAL TITLE: SUCCESS FACTORS FOR OIL AND GAS PROJECT DATE OF SUBMISSION 26 DECEMBER 2015

PREPARED FOR MR. ZAKARIA ARIS

PREPARED BY NO 1 2

NAME CHENG WEI YET MUHAMMAD FARUQ BIN BINTING

MATRIC NUMBER MK1512001T MK1512006T

PROJECT MANAGEMENT: SUCCESS FACTORS FOR OIL & GAS PROJECT Abstract The project management is important for every project. It is the methodology which details the process, tools and techniques and defines the tasks required to meet the deliverables of a project and requirements of stakeholders. This project paper focused on identifying the critical success factor of projects in Malaysia Oil & Gas industry based on application of Project Management tools and techniques. Theoretically, project management practise several knowledge areas such as project integration management, scope management, time management, cost management, quality management, human resource management, communication management, procurement management and risk management while the 5 phases of project- initiating, planning, execution, monitoring & controlling and closing phase undergo. The application of above mentioned knowledge areas varies from project to project and lapse in anyone of these can impact success of a project. Hence, it has been inevitable to analyse these established theories, researches and identify the critical success factors of EPCC (Engineering, Procurement, Construction & Commissioning) projects in Oil and gas industry of Malaysia which will give clear insight to project managers in executing projects. The research also compared the critical success factor with precious research finding. The research was carried out by collect opinion from Petronas Carigali technical staff through questionnaire and also by case study of SOGT Project. The questionnaire was developed based on the theoretical framework which is the 9 knowledge area mentioned. The finding shows that it was concurrence with previous research which is risk management and cost management. However, this research identified time management and communication management were same important. To summarize the critical success factors: 1.

Cost

2.

Time

3.

Risk

4.

Communication

Keywords Critical success factor, Oil and Gas project, project knowledge area, EPCC, Project management i

Definition of Terms i.

EPCC – Engineering, procurement, construction and commissioning. It is a type project contract where the risk is on the contractor side.

ii.

CSF – Critical success factor. The elements that required for a project team to achieve the target.

iii.

Knowledge area. It is typically extracted from the 5 project phases. It can include integration, scope, time, cost, quality, human resource, communication, procurement and risk.

iv.

Triple constraint. The constraint that typically a project face, including time constraint, cost constraint, and scope (quality constrain).

v.

Iron octagon. Refer to the integrated triple constrain, as known as future project constrains. It is including cost, time, scope, health and safety, environment, benefit, stakeholder communication and sustainability.

ii

List of Figures Figure No. 2.1

Page

Phases interact in a project

5

iii

List of Tables Table No.

Page

4.1

Descriptive component analysis for Project Integration Management

15

4.2

Cumulative ranking explained for Project Integration Management

15

4.3

Descriptive component analysis for Project Scope Management

16

4.4

Cumulative ranking explained for Project Scope Management

16

4.5

Descriptive component analysis for Project Time Management

17

4.6

Cumulative ranking explained for Project Time Management

17

4.7

Descriptive component analysis for Project Cost Management

18

4.8

Cumulative ranking explained for Project Cost Management

18

4.9

Descriptive component analysis for Project Quality Management

19

4.10

Cumulative ranking explained for Project Quality Management

19

4.11

Descriptive component analysis for Project Human Resource Management

20

4.12

Cumulative ranking explained for Project Human Resource Management

20

4.13

Descriptive component analysis for Project Communication Management

21

4.14

Cumulative ranking explained for Project Communication Management

21

4.15

Descriptive component analysis for Project Risk Management

22

iv

4.16

Cumulative ranking explained for Project Risk Management

22

4.17

Descriptive component analysis for Project Procurement Management

23

4.18

Cumulative ranking explained for Project Procurement Management

23

v

1.0

INTRODUCTION

1.1

Background to the Research

Project management is the art and science of managing all aspects of the projects to achieve the project objective, within the given time, budgeted cost, and desirable quality and specification, ensure working efficiently, effectively, and ethically in the project environments (Alam and Khalifa, 2009). However, the selection and implementation of the required tools and techniques are industry specific and also depend on the project manager executing the project (PMI, 2008). Theoretically, project management has been broadly explained around the world by several diverse professionals from different industries, but practically is yet to be perfected leaving several anxieties for project managers while executing projects. The application of above mentioned knowledge areas varies from project to project and lapse in anyone of these can impact success of a project. Traditionally, project success was assessed on the triple measure set of cost, time, and performance. A project is considered successful if it was completed within its budget estimate, within its initial scheduled time frame, and performed as it was designed to function (PMI, 2008). Nowadays, as the demand of quality and public concern is getting higher, there are several more criteria need to be fulfilled such as health and safety, environment, benefit, stakeholder communication and sustainability. These form the latest project management iron octagon. The oil and gas industry project always involved huge cost, high complexity and always be the public concerns. This megaproject involved large scale investment which typically costing more than billion Ringgit Malaysia. For example of megaproject at Malaysia was Sabah Oil and Gas Terminal, SOGT which was completed by Samsung Engineering costing RM 2.44bn (as per EPCC contract awarded). However, without the proper project management system, the project might be completed with over budget, extended schedules and undesirable quality. Hence, to avoid these problems, proper project management must be practiced and put in order which including a description of the objectives and general approach of the project, its resources and personnel, evaluation methods, and also a project schedule as well as a description of potential problems that may be encountered.

1

1.2

Justification for the Research

The research can be justified through several reasons. By conducting the research, the author able to find out the project success factors to ensure the fulfilment of several criteria of project management such as being on-time, on-budget, having acceptable quality, minimizes HSE issues, satisfying stakeholder expectations and so on. By identify the success factors specifically on oil and gas industry project, the company or owner able to define the corrective action plan which could solve the current problems and enhance the future projects. The corrective plan can act as the lesson for the employees at which the solutions to the challenges of past projects can be applied in future projects. It can also provide a valuable source for risk management because all issues and concerns mentioned in a project audit report are the project risks (Ahmad, 2015). Besides that, the success factors can be the recommendations for those companies involve in oil and gas project. Lastly, the result of the result can create the strategies on the issues that reflect the realities of oil and gas project. Hence, the success factors can ensure a framework of good practise is applied consistently as well as improved the efficiency of the project plan (Damiebi, D.F & Nazatul, S. A. R., 2011)

2

1.3

Outline of the Research

The research consists of 5 parts starting with introduction, literature review, methodology, data analysis and conclusion. A brief description for each part is provided as follows: Introduction It explained the background of the research and the justification for conducting the research. Literature review This part presents the theoretical framework and gaps in literature. The framework able to classify the main success factor into sub success factors. This part also review some project management issues related to the oil and gas industry. Methodology This part presents the methodology that used to find out the success factor for oil and gas industry project. It also involves the research design and framework, justification for case study approach and questionnaire survey based on experienced industrial workers, data collection, analysis and the limitation and key assumption used to conduct the method. This project paper has been carried out on participants selected from several departments of Petronas Carigali Sabah Operation (PCSB SBO). Data analysis This part shows the analysed result from questionnaire survey form. The data analysis part wills also ranking the prior factor which contributes to the success of an oil and gas project. Lastly, it will summarize the findings as well as revise the theoretical framework stated on previous part. Conclusion This part will conclude the issue raised above and the specific success factors of a project. This part also explain the implication of for theory, policy and practise, methodology, limitation of this research, the applicability of this research finding toward the other industry.

3

1.4

Chapter Summary

This chapter has reviewed the brief background of project management, the triple constraints which are budget, time and quality as well as the future project management iron octagon. By knowing the overview of the research, reader can figure out the importance of success factors specifically to oil and gas industry related project. Besides that, this project paper will assist readers to understand project management processes, its tools, techniques and factors that are critical for the success of a project. The results established will form a brief guideline for project managers to understand the essence of project management, and understand factors that direct the outcomes of projects and implications of non-compatibility with it in Malaysia environment of Oil & Gas industry. By this research paper, project managers who executing the projects, will be able to grasp the wide scope of project management and observe the role of various factors in influencing the project’s execution. Adapting outcomes of this project paper, project managers will have a broader and different vision of project management and will improve their performance and effectiveness as ‘project manager’ for their projects which will benefit them and their companies.

4

2.0

LITERATURE REVIEW

2.1

Theoretical Framework and Gaps in Literature

According to PMI (2008), a project is a temporary endeavour undertaken to create a unique product, service, or result. A project normally has a finish time and unique. A typical project management involve 5 phases which are initiating, planning, executing, monitoring and controlling, and closing (Figure 2.1).

Figure 2.1

Process group or phases interact in a project, source: PMI (2008)

While for project management, it is a combination of art and skill of achieving a project goal. The goal of a project will be achieved after consideration of budget, resources and other constraints under project management. According to Spinner (1997), project management is the subject that managing and directing time, materials, personnel or labour, and costs to complete a project in an orderly, economical manner as well as to meet the objectives established earlier time. According to Spinner, the project can only be success when there is management in charge of planning, scheduling and controlling. In addition, PMI (2008); Spinner (1997); Lester (2014) also defined the functions of project management required to make a project success. After compilation, this project management functions including change, claim, communication, configuration, conflict, contract, cost, environment, finance, health and safety, human resource, information, integration, leadership, network, procurement, quality, resource, risk, scope, stakeholder, team, time and value. This project management function will be the sub success factor under the main framework of this research. For example, the main success factor project 5

cost management involve the project function like cost, finance, and claim. As mentioned earlier part, a project is considered successful when it achieving the objectives within budget, on time, delivering required quality, satisfying stakeholder and provided value added for all stakeholders. Jaafari (2007) stated that the project success can be influenced by project resources, capability and managerial approach as well as the commercial and physical environment. While for Marques et al (2010), he stated that the risk assessment report is main part of the project success. For the success factor framework, it can be classified into 9 main success factors which are project integration management, scope management, time management, cost management,

quality

management,

human

resource

management,

communication

management, procurement management and risk management. Each of the success factors may involve all or part of the above discussed project phase which are initiating, planning, executing, monitoring and controlling and closing (PMI, 2008). According to the PMI (2008), the project integration management involves standardize and coordination of different project management process. Firstly, a project started with the initiating phase, a project charter is developed by establishing statement which describes the need and purpose of the project. Then, when reach the planning phase, the project management plan is prepared in detail which will state how the project will be execute, monitor, control and closure. Then, the next phase, project executing phase will direct the project team to perform their responsibilities in order to hit the target or objectives. During the project execution phase, monitoring and controlling will be carried out to make sure the project team is on the correct pathway by doing the progress reporting. During the project execution, if there is any change of requirement occurs, an integrated change control will function. Lastly, the project is closed by comparing the result/ product with the objective of the project. For the project scope management, a project can be success provided the company able to deliver the desirable product. This can be achieved by collecting the requirements and then make use of the planning software such as Microsoft Project or Primavera to conduct the work breakdown structure (WBS). With the WBS, the project objectives will be broken down in detail and to be performing by the team accordingly as well as ensuring only the listed small activities in WBS will be conducted. However, if there is any undesirable outcome which unsatisfied the stakeholders after verification, it can be listed down in the punch list or snag list and to be repair. Lastly, the scope of the project can be control. For the project time management, it is dealing with the managing of activities for certain time to 6

complete. Once the duration of the project estimated, the resource can also be estimated. This can be done through by developing project schedule with the written down of specifically date it start and finish. The preparation for the milestone of a project is also considered as the project time management. The milestone can used to compare the actual progress of the project with the planned schedule. For the project cost management, it is the monitoring and controlling of the cost or budget to ensure no additional cost incurred unless for those changes made which going through integrated change control process. For the project quality management, the quality assurance will be performed by some certain technique to ensure the quality is monitored and controlled. For the human resource management, it is about the developing of human resource plan which will decide who going to commit in the project. The plan can also monitor the team performance and make sure what they do is compliance to project objectives. For project communication management, it can be done through either verbal or written. The main objective of communication is to acquiring, storing, transferring information related to the project. Firstly the stakeholders will be identified. Then with the communication plan, all the information will be share to authorized stakeholders. The benefit of the communication plan is to get feedback from them so that change can be made earlier. For project risk management, the risk can be identified by performing quality risk analysis using statistical tools. By doing this risk analysis, the impact such as cost and time impact can be identified and reduce. During the risk analysis, it is also required to do monitoring and controlling for the effectiveness of project risk management. For project procurement management, it is dealing with the procedure for procurement. The objective is to make sure the product or services needed to complete the project can be sourcing from outside and in line with the project requirement. The procurement also needs to be planned so that the incurred costs within the budgeted cost. In conclude, the framework is made up of 9 main success factors which are project integration management, scope management, time management, cost management, quality management, human resource management, communication management, procurement management and risk management, each with a small group of sub success factor. Based on Dicky (2011) in his research, there is a gap between the interest of the project owner and contractor. The gaps exist in both the scope of work, cost and time. The most dominant focus of the project owner and contractors are either fall in cost and time or quality and time. The project owner will be willing to spend more to have the product 7

completed on time and well quality. For example, they need to pay more for the cost of rig rental which is extremely costly. Lang (1990) describes that the project owner as being over ambitious in spending in term to get the desired quality on time. This may lead to overruns resulted from the inefficient way of working and the contractors made money at the project owner expenses. For example, the construction was allowed begins before the overall design is completed. This leads to the major changes over time and the project owner ended up paying double of the original price. While contractors are more likely to put their interest on profit and keeping business running. Zedan (1998) stated that the system of bid evaluation dominated by the principle of acceptance of the lowest price. He also explained that there are some contractors offer the lowest bid in order to get the award. This proves that contractors are more concerned in securing many projects and to stay in the business. They are more focus on the cost and time rather than quality and time. This contradicts with the project owner interest. 2.2

Research Issues

The research encountered issues such as the lack of variation in measure of the importance of success factors. The recent oil and gas projects share the set of basic factor or having a routine of good practise which is transferable to most of the project environment. Another issue is that the framework contains several main success factors which lead to project success. However, the single factor is dispensable to success the certain project. The unique of the project make some specific factor more important in different case. 2.3

Chapter Summary

This chapter review the theoretical framework and the gap exists in project management. The framework is designed to be followed to achieve project success. This including the project integration management, scope management, time management, cost management, quality

management,

human

resource

management,

communication

management,

procurement management and risk management. While the gaps present during a project execution was studied. It was found that, the communication gap is the major factor to determine a project whether it can be success or not. The different role or stakeholders will definitely have different interest to a project. To satisfy their interest, communication is the crucial part to overcome this problem.

8

2.4

Chapter Conclusion

In conclusion, based on the literature review, the research found that, different project have different critical success factor. However, there are some basic success factors required to be followed so that the project able to go on smoothly.

9

3.0

METHODOLOGY

3.1

Introduction

This chapter will present and discuss on the adopted methodology for the study and the method of data collection and analysis are being defined. The choice of the method is choose based on appropriate (best practise of project management) and the most effective method to generate and collect information for this research. The qualitative research method is important which would most likely produce accurate and fast result of the recognized problem. The methodology can be separated into several stages which are processing, analysis and interpretation. 3.2

Research Outline

The research project can be divided into several steps. The step 1 is to conduct the comprehensive literature review for critical success factors in an oil and gas project. Step 2 is to develop an evaluation conceptual model at which it comprises of some success factors extracted from the best practise. This evaluation conceptual model will be used to design the questionnaire sheet. Step 3 is to collect the data or opinion from experts by distributes the questionnaire. Step 4 is to process and analyse the questionnaire form based on the principal component analysis. The last step is to select the top 3 most effective factors to lead a project to be success. 3.3

Research Design and Framework

The research design and framework is based on descriptive approach at which the questionnaire form that distributed to panellist was based on the theoretical framework of this research. It is also known as the implementation of the all-inclusive literature review. The questionnaire consists of 9 main success factors and each of the main factors comes with several sub factors. The panellist will required to give their opinion on how the project can be success based on their industrial experience. The 9 success factors were chosen based on the best practise by referring to PMI (2008). The 9 success factors including project integration management, scope management, time management, cost management, quality

management,

human

resource

management,

procurement management and risk management. 10

communication

management,

3.3.1 Data Collection The data in this research were collected from employees of Petronas. The information includes their understanding, perception and experiences from previously executed projects in order to identify the factors that are critical for the success of project. A questionnaire survey form designed on Likert scale was developed for collecting the respondent’s idea. It consisted of the demographic information of participants and their feedback on the nine project management success factors. Each of the main success factors comes with sub success factors. 3.3.2 Data Collection Tools/ Instrument The data collection tool is the survey form at which it consists of a structured questionnaire designed on Likert scale. It is used to collect participant’s response. It consisted of the demographic information of participants and their feedback on the nine success factors. The question were ranked from strongly disagree to strongly agree. Each element of the scale was coded as strongly disagree (1), disagree (2), neutral (3), agree (4) and strongly agree (5). The reason for using questionnaire comes by the fact that project management varies from project to project and also depends on the professional skills of individuals who supervise or involves in a project regardless directly or indirectly. 3.3.3 Subject/ Participants As this research is aimed at project management and generally covers the projects executed in oil and gas industry of Malaysia, the target population was the employees of Petronas Carigali that have been involved in projects at various levels of project management like project managers and project engineers working in Oil & Gas upstream and downstream who have executed several projects in oil and gas industry of Malaysia. The sampling technique employed for collection of primary data was convenience sampling due to lack of time available to complete the project. Convenience sampling was used and participants that were readily available at the company office were approached for acquiring data.

11

3.3.4 Data Processing and Analysis Extraction method used to analysis the critical success factor in this research is principal component analysis. The primary data obtained from participants were analysed with the help of SPSS using factor analysis technique. The responses in the collected data were assigned values as strongly disagree (1), disagree (2), neutral (3), agree (4) and strongly agree (5). This factor analysis technique was used to identify the critical factors for success oil and gas projects. Firstly, factor analysis was carried out on each main success factors to reduce the number of items and sub factors of each main factor were identified. Also, nine new variables were formulated representing nine success factors. In second phase, factor analysis was applied on the nine new variables to identify the critical success factors. 3.4

Justification for a Case Study Approach

The case study can be defined as an empirical research method that used to investigate a contemporary phenomenon, focusing on the dynamics of the case, within its real life context (Yin, 2003). In this research paper, the case study taken is SOGT project at which it has become one of the significant success oil and gas project in Malaysia. The success factors of SOGT project can be find out by some research question such as how the project completed on time and why the project can be completed on time. It is focuses on contemporary events and does not require control of behavioural events. Since the SOGT project owner is Petronas, and the contractor is Samsung Engineering, it is close related to the questionnaire panellist. The case study was taken from Samsung Engineering regarding their roles playing in the SOGT project. The questionnaire approach used to trace the project owner opinion while the case study approach studies the contractor opinion. This makes the researcher able to compare both the project owner side opinion and contractor opinion regarding the success factors. Other than that, case study able to overshadow the limitations of statisticsbased research methods like questionnaire. It helps to resolve the problem of getting panellist to conduct the questionnaire from contractor side. In conclusion, Case study method could effectively fill the void that exists due to the lack of a formal method of conducting systematic research.

12

3.5

Limitations and Key Assumptions

The study only makes relevance to the Petronas Carigali Company at which the questionnaire paper only able to distribute to one company. Instead, to make the generalisation for the whole oil and gas project, further research has to be conducted in other company to confirm that the finding can be universally applied. Besides that, the time constraint for the data collecting is another limitation at which the authors only able to collect 20 valid feedback. Another limitation is that the panellist might not fully involve throughout the whole project lifetime. In other words, they might be not expertise in project management field instead they only professional in their technical field. 3.6

Chapter Summary

This chapter reviewed the methodology used to conduct the research. It also shows the research design framework and the justification for the different type of methodology. Lastly, the limitation and key assumptions encountered when conducting the research have also been listed down.

13

4.0

4.1

DATA ANALYSIS a.

Questionnaire

b.

Case study

Introduction

The primary data, in this project paper, were collected from employees of Petronas Carigali Sabah Operation (PCSB SBO). The information includes their understanding, awareness and experiences from previously executed projects in order to identify the factors that are critical for the success of project. The reason for using questionnaire comes by the fact that project management varies from project to project and also depends on the professional skills of individuals who supervise projects. For case study, SOGT project was taken as a part of this research. SOGT able to overcome the challenge and completed on time was due to the early planning with the fulfilling the criteria such as assigned the project team early, placed the right project delivery strategy, implemented right managing risk plan, as well as used specific policies and procedures to be match with the constraints of SOGT project. Samsung Engineering makes use of project management body of knowledge (PMBOK) standards for SOGT project. According to the PMBOK standard, the project management of process of a project involve initiating process group, followed by planning process group, executing process group, monitoring &controlling group and end with the closing process group.

14

4.2

Analysis of the Research

4.2.1 Questionnaire Finding a.

Project Integration Management

Table 4.1 Descriptive component analysis for Project Integration Management Component Total Analysis Mean Score Number In my organization, we use to develop Project Charter 33 10 3.3 Project Charter should be developed for each project

35

10

3.5

In my organization, Project Management Plan is 39 formulated for each project

10

3.9

I think there are some projects that do not need 29 Project Management Plan

10

2.9

I manage the projects without project management 26 plan 26 Projects are successful without making necessary update/changes in the project 33 When project is closed, we prepare a snag list

10

2.6

10

2.6

10

3.3

Cumulative Ranking Explained Table 4.2 Cumulative ranking explained for project Integration management Component Total Mean Variance Standard Ranking Score Deviation 1 33 3.3 0.61 0.781 3 2

35

3.5

0.45

0.671

2

3

39

3.9

0.09

0.30

1

4

29

2.9

1.49

1.221

5

5

26

2.6

0.44

0.663

7

6

26

2.6

1.05

1.025

6

7

33

3.3

0.41

0.64

4

This analysis indicates top three critical factors from the knowledge area of Project Integration Management. The factors are:

15

1. In my organization, Project Management Plan is formulated for each project – Total of 39 points. 2. Project Charter should be developed for each project – Total of 35 points. 3. In my organization, we use to develop Project Charter – Total of 33 points.

b.

Project Scope Management

Table 4.3 Descriptive component analysis for Project Scope Management Component Total Analysis Score Number Collecting the requirements of stakeholders is not 22 10 important Scope need not be established prior to of the project

Mean 2.2

24

10

2.4

Scope acceptance criteria can be developed as the 32 project progresses

10

3.2

I always prefer to breakdown the scope into specific 39 doable activities

10

3.9

Project deliverables verification is not necessary as 20 the project activities are carried out as planned.

10

2.0

I tend to accept minor variations to the project scope 36 if they are not having any major effect on the project

10

3.6

I do not accept major variations in the project scope

10

2.8

28

Cumulative Ranking Explained Table 4.4 Cumulative ranking explained for Project Scope Management Component Total Mean Variance Standard Ranking Score Deviation 1 22 2.2 0.36 0.60 6 2

24

2.4

1.84

1.356

5

3

32

3.2

0.76

0.872

3

4

39

3.9

0.40

0.632

1

5

20

2.0

0.60

0.775

7

6

36

3.6

0.36

0.60

2

7

28

2.8

0.96

0.980

4

16

This analysis indicates top three critical factors from the knowledge area of Project Scope Management. The factors are: 1. I always prefer to breakdown the scope into specific doable activities – Total of 39 points. 2. I tend to accept minor variations to the project scope if they are not having any major effect on the project – Total of 36 points. 3. Scope acceptance criteria can be developed as the project progresses – Total of 32 points.

c.

Project Time Management

Table 4.5 Descriptive component analysis for Project Time Management Component Total Analysis Score Number All of the activities involved in a project must be 32 10 sequenced

Mean 3.2

An activity can be completed at the given time if the 35 required resources are readily available

10

3.5

Resources can be acquired based on the progress of 34 activities

10

3.4

I strictly follow the time allocated for every activity.

28

10

2.8

Developing schedule is a good practice for monitoring 44 project’s progress

10

4.4

Unexpected changes can be accommodated by 36 deploying additional resources leaving the project schedule unchanged

10

3.6

Cumulative Ranking Explained Table 4.6 Cumulative ranking explained for Project Time Management Component Total Mean Variance Standard Score Deviation 1 32 3.2 0.96 0.980

Ranking 5

2

35

3.5

1.25

1.118

3

3

34

3.4

0.44

0.663

4

4

28

2.8

0.76

0.872

6

5

44

4.4

0.44

0.663

1

17

6

36

3.6

1.04

1.020

2

This analysis indicates top three critical factors from the knowledge area of Project Time Management. The factors are: 1. Developing schedule is a good practice for monitoring project’s progress – Total of 44 points. 2. Unexpected changes can be accommodated by deploying additional resources leaving the project schedule unchanged – Total of 36 points. 3. An activity can be completed at the given time if the required resources are readily available – Total of 35 points.

d.

Project Cost Management

Table 4.7 Descriptive component analysis for Project Cost Management Component Total Analysis Score Number Resource planning is an essential part of project cost 43 10 management

Mean 4.3

Costs associated with activities can be known only 22 after the activity has been completed

10

2.2

I always aim to meet the allocated budget for the 35 project 40 Additional costs, resulting from changed scope or other reasons, should be accommodated in the allocated budget

10

3.5

10

4.0

Cumulative Ranking Explained Table 4.8 Cumulative ranking explained for Project Cost Management Component Total Mean Variance Standard Score Deviation 1 43 4.3 0.61 0.781

Ranking 1

2

22

2.2

0.69

0.831

4

3

35

3.5

1.45

1.204

3

4

40

4.0

1.00

1.000

2

This analysis indicates top three critical factors from the knowledge area of Project Cost Management. The factors are: 1. Resource planning is an essential part of project cost management – Total of 43 points. 18

2. Additional costs, resulting from changed scope or other reasons, should be accommodated in the allocated budget – Total of 40 points. 3. I always aim to meet the allocated budget for the project – Total of 35 points.

e.

Project Quality Management

Table 4.9 Descriptive component analysis for Project Quality Management Component Total Analysis Score Number My organization has a clear quality policy and quality 36 10 management system

Mean 3.6

We use to monitor overall project performance on a 40 regular basis to ensure that the project will satisfy the relevant quality standards

10

4.0

Quality control is not required if the output is visibly 19 acceptable

10

1.9

Cumulative Ranking Explained Table 4.10 Cumulative ranking explained for Project Quality Management Component Total Mean Variance Standard Ranking Score Deviation 1 36 3.6 1.44 1.200 2 2

40

4.0

0.56

0.748

1

3

19

1.9

0.49

0.700

3

This analysis indicates top three critical factors from the knowledge area of Project Quality Management. The factors are: 1. We use to monitor overall project performance on a regular basis to ensure that the project will satisfy the relevant quality standards – Total of 40 points. 2. My organization has a clear quality policy and quality management system – Total of 36 points. 3. Quality control is not required if the output is visibly acceptable – Total of 19 points.

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f.

Project Human Resources Management

Table 4.11 Descriptive component analysis for Project Human Resource Management Component Total Analysis Mean Score Number My organization’s defined Human Resource Plan is 28 10 2.8 readily used as Human Resource Management Plan for the projects I have a fixed project team that is used for all types 26 of projects

10

2.6

Training the project team always helps in improving 35 the performance of project execution

10

3.5

Project team’s performance should be evaluated once 37 the project is complete

10

3.7

Team members should not be replaced even if their 26 performance is not satisfactory

10

2.6

Cumulative Ranking Explained Table 4.12 Cumulative ranking explained for Project Human Resource Management Component Total Mean Variance Standard Ranking Score Deviation 1 28 2.8 0.69 0.831 3 2

26

2.6

0.64

0.800

4

3

35

3.5

0.25

0.500

2

4

37

3.7

0.61

0.781

1

5

26

2.6

1.44

1.200

5

This analysis indicates top three critical factors from the knowledge area of Project Human Resources Management. The factors are: 1. Project team’s performance should be evaluated once the project is complete – Total of 37 points. 2. Training the project team always helps in improving the performance of project execution – Total of 35 points. 3. My organization’s defined Human Resource Plan is readily used as Human Resource Management Plan for the projects – Total of 28 points.

20

g.

Project Communication Management

Table 4.13 Descriptive component analysis for Project Communication Management Component Total Analysis Mean Score Number In my organization, project goals and plan are 38 10 3.8 effectively communicated to the project team My company relays the information only to selective 24 personnel

10

2.4

Project progress reporting to the stakeholders is not 22 necessary

10

2.2

Discussions with stakeholders do not benefit the 19 project’s progress

10

1.9

I conduct progress review meetings with my team in 35 routine

10

3.5

I often conduct progress review meetings with the 34 stakeholders

10

3.4

Minor changes or variations can be transferred 31 informally

10

3.1

Communication lapse cannot delay the project

10

2.0

20

Cumulative Ranking Explained Table 4.14 Cumulative ranking explained for Project Communication Management Component Total Mean Variance Standard Ranking Score Deviation 1 38 3.8 0.56 0.748 1 2

24

2.4

1.04

1.020

5

3

22

2.2

0.76

0.872

6

4

19

1.9

0.49

0.700

8

5

35

3.5

0.89

0.943

2

6

34

3.4

0.64

0.800

3

7

31

3.1

0.69

0.831

4

8

20

2.0

0.80

0.894

7

This analysis indicates top three critical factors from the knowledge area of Project Communication Management. The factors are: 21

1. In my organization, project goals and plan are effectively communicated to the project team – Total of 38 points. 2. I conduct progress review meetings with my team in routine – Total of 35 points. 3. I often conduct progress review meetings with the stakeholders – Total of 34 points.

h.

Project Risk Management

Table 4.15 Descriptive component analysis for Project Risk Management Component Total Analysis Score Number Risks are always associated with projects and cannot 17 10 be controlled perfectly, therefore there is no need for risk planning

Mean 1.7

I hold team discussions at the start of a project to 38 identify potential risks

10

3.8

I use to measure the probability and consequences of 39 risks and estimate their implications for project objectives

10

3.9

I use my experience to identify potential risks

40

10

4.0

I always devise an action plan to handle crucial risks

40

10

4.0

Minor risks can be ignored as they do not have any 21 major impact on the project

10

2.1

Impact of risks can be controlled by an effective risk 38 plan

10

3.8

Cumulative Ranking Explained Table 4.16 Cumulative ranking explained for Project Risk Management Component Total Mean Variance Standard Score Deviation 1 17 1.7 0.41 0.640

Ranking 7

2

38

3.8

0.56

0.748

4

3

39

3.9

0.36

0.600

3

4

40

4.0

0.40

0.632

1

5

40

4.0

0.40

0.632

1

6

21

2.1

0.49

0.700

6

7

38

3.8

0.56

0.748

4

22

This analysis indicates top three critical factors from the knowledge area of Project Risk Management. The factors are: 1. I always devise an action plan to handle crucial risks – Total of 40 points. 2. I use my experience to identify potential risks – Total of 40 points. 3. I use to measure the probability and consequences of risks and estimate their implications for project objectives – Total of 39 points.

i.

Project Procurement Management

Table 4.17 Descriptive component analysis for Project Procurement Management Component Total Analysis Mean Score Number Procurement planning is very crucial to get a timely 43 10 4.3 availability of required materials We procure the products just in time

25

10

2.5

We make formal contract with each vendor

43

10

4.3

We always obtain quotations, and ask for bids and 41 offers to procure

10

4.1

Once an order or contract is in place, it is suppliers’ 22 responsibility to meet their commitments and no further monitoring is required by the project manager

10

2.2

10

2.3

We always procure additional material to be on safer side even if it exceeds the allocated budget

23

Cumulative Ranking Explained Table 4.18 Cumulative ranking explained for Project Procurement Management Component Total Mean Variance Standard Ranking Score Deviation 1 43 4.3 0.41 0.640 1 2

25

2.5

0.65

0.806

4

3

43

4.3

0.41

0.640

1

4

41

4.1

0.29

0.539

3

5

22

2.2

1.36

1.166

6

6

23

2.3

0.61

0.781

5

23

This analysis indicates top three critical factors from the knowledge area of Project Procurement Management. The factors are: 1. Procurement planning is very crucial to get a timely availability of required materials – Total of 43 points. 2. We make formal contract with each vendor – Total of 43 points. 3. We always obtain quotations, and ask for bids and offers to procure – Total of 41 points.

24

4.2.2 Case Study Finding SOGT project is a mega project involves huge cost, high complexity as well as high risk. It required improved project management controls. Of course the mega project cannot be success if there is only Samsung Engineering 1 party. Besides than assigning core team with specific roles at right time, it is also important to show accountability, transparency and responsibility. Samsung Engineering partnered with Malaysian construction company Naim Cendera (NCSB Engineering) to execute the project. Naim is responsible for the construction of support infrastructure such as roads, bridges, earthworks and site offices. Besides that, RNZ Integrated, a division of the RNZ Group, was involved in the design and engineering of the terminal between October 2006 and February 2009. KASI (Malaysia) conducted a comprehensive review of the design. While the Sabah-Sarawak pipeline construction contract was awarded to a consortium of Punj Lloyd, Dialog E&C and Petrosab Logistik in 2008. The consortium was led by Punj Lloyd. For Chemsain Konsultant, it carried out the environmental impact assessment and quantitative risk analysis (QRA) for the integrated project. Lastly, the proposal to build a new oil and gas terminal at Sabah (SOGT) was put forward in 2005. This is considered as the early planning and was organized by the project authorization. The early plan was able to get the green light from the project ownerPetronas Carigali to be executed. The early planning also enables the contractor to set a course for the SOGT project and do correction accordingly as needed. The project’s ambitious timeline, along with challenges like resource shortages, working around existing plants and government delays, forced us to look beyond traditional project management practices,” said Samsung Engineering’s representative. “With the help of PMBOK standards, which led to successful implementation practices – particularly regarding

risk

management,

communication

management

and

human

resource

management – the project team continually surpassed expectations. Samsung Engineering cited project risk management, project communications management and project human resources management as instrumental in the successful delivery of this project. The SOGT project team overcame these challenges by applying concurrent engineering techniques to shorten the engineering process, which enabled them to start construction early. Leveraging all nine Knowledge Areas from A Guide to the Project Management Body of Knowledge (PMBOK Guide), the team also implemented the following integration methods including: 25

i.

Combined the project teams from the SOGT project and other projects to minimize interfacing discrepancies, which are common when dealing with multiple adjacent projects during the 11 months hiatus period.

ii.

Integrated multiple construction contracts and subcontractors, including shared equipment, fabrication yards and manpower to increase efficiency.

iii.

Integrated the construction workforce with the facility’s operational staff to form a task force that allowed uninterrupted operations of the adjacent facilities during the construction period and during the pre-commissioning and commissioning phases.

26

4.3

Summary of Findings

a.

Questionnaire

Finally, factor analysis run on these 9 variables and identified their respective importance on the basis of percentage factor from the total accumulate point based on every questions in each categories as follows: Component Cost

Percentage Factor % 70.00

Time

69.67

Risk

66.57

Procurement

65.67

Quality

63.33

Integration

63.14

HR

60.80

Scope

57.43

Communication

55.75

Above data analysis indicates that Human Resource, Scope and Communication were found to be least important because their respective percentage factor as per above table. While ‘Cost’ was found to be the most important factor with a percentage of 70.00% suited with current world crude oil price. Then comes ‘Time Management’ with percentage factor 69.67%. Next comes ‘Risk Management’ with percentage factor of 66.57% followed by ‘Procurement Management’ with percentage factor 65.67%. At the end comes ‘Quality Management’ and ‘Integration Management’ with percentage factor 63.33% and 63.14% respectively. b.

Case Study

Samsung Engineering cited project risk management, project communications management and project human resources management as instrumental in the successful delivery of this project.

27

4.4

Revised Theoretical Framework

From the previous research finding, it was found that the risk and resource planning is the top concern for every project of oil and gas industry. These 2 factors became the critical success factors for every project. However, as mentioned before, each project holds the different scope of work, budget, time constraint, desirable quality and is unique. So, the requirements or project success factors will also be different. The theoretical framework in this research is made up of 9 main success factors which are project integration management,

scope

management,

time

management,

cost

management,

quality

management, human resource management, communication management, procurement management and risk management. From the data analysis result, it was found that the cost (resource) and risk management still remain in the top ranking of critical success factors. While due to the rapid development and change of the oil and gas industry world, everything has to be complete in very short period. The time constraint became a big problem for the oil and gas industry contractors. Hence, after the collected data analysis, it was found that the time management become as important as the cost and risk management. The failure of completing a project on time could result in huge amount of lost and definitely required high amount of compensation. In short, all of the 9 main factors should get concerns from project management team at which every factor play an important role to make project success. The ranking of the critical success factor was just to shows how important of the factor. 4.5

Chapter Conclusion

In conclusion, from both the questionnaire survey and case study of oil and gas related project, it was found that the most important critical success factors are cost management, time

management,

risk

management,

human

communication.

28

resource

management

as

well

as

5.0

CONCLUSION

5.1

Introduction

In the effort to conduct this research, there are 2 main objectives have been achieved and the results obtained are satisfactory. This study was completed using modern methodology including literature review, questionnaire and case studies. The first objective in this study is to identify the critical success factors which have to be concerned from the initiating phase until the closing phase. It is achieved by distribute the questionnaire survey form with a list of success factor selection. In this research, the data collected were ranked to shows the degree of importance of a success factor. At the end of the research, the top 3 ranking of the success factor were found out. While for the case study, SOGT project was chosen and the success factors were identified through the company portfolio. The second objective in this study is to compare the critical success factor from the literature review, which are identified by previous researcher from different oil and gas project. The author assume that the overlapping success factors will be the critical success factors for every project from previously until now and maybe in the future, while for those new added critical success factor, it is either due to the unique of the oil and gas project or due to the project management requirement nowadays. 5.2

Conclusion about the Research Issues

Although the research was lack of variation in measure of the importance of success factors, but with the basic success factor as the design framework used in the questionnaire, the critical factor can be found out. The higher ranking means higher importance of success factor. In this research, the top 3 rank of success factor are cost, time, and risk management. While for the other success factor like procurement, scope, integration, communication, human resource and quality management are important as well to make sure the project success. Both of them were required and there is no independent factor that makes project to success.

29

5.3

Conclusion about the Research Question

The research encountered time constraint to complete. The research questionnaire was unable to distribute to more panellist. Another problem is that the panellist who attended the survey has only average experience in the industry. To solve the problem, more time is required and more experienced worker needed for conducting the research survey to get other critical success factor that are not listed in the paper. The authors also suggested that the questionnaire survey form used to find out the critical success factors should be put it online so that other experiences worker from other oil and gas project can give contribution but not only fixed for only one company opinion. 5.4

Implications

5.4.1 Implications for Theory Theoretically, the critical success factor should be always the best practise as listed in the project management body of knowledge by PMI, 2008. The best practise stated that there are 9 main success factors can be extracted from knowledge area which are project integration management, scope management, time management, cost management, quality management, human resource management, communication management, procurement management and risk management. However, some other factor might be important for certain project because every project is unique. The finding of the result has match opinion in the critical success factor with previous researcher in other oil and gas project. 5.4.2 Implications for policy and practice The policy and practise for a project success is to follow the PMBOK standard at which the project management of process of an oil and gas project involve initiating process group, followed by planning process group, executing process group, monitoring & controlling group and end with the closing process group. The PMBOK standard able to led to success implementation practise and hence a project can be success.

30

5.4.3 Implications for methodology The methodology used in the research is modern methodology which involves literature review, questionnaire and case studies to identify the critical success factor for an oil and gas industry project. This method is suitable and fastest way to be applied in this research condition at which the authors have time constraint and other limitation like industrial link. 5.5

Limitations of this Research

The study only makes relevance to the Petronas Carigali Company at which the questionnaire paper only able to distribute to one company. Instead, to make the generalisation for the whole oil and gas project, further research has to be conducted in other company to confirm that the finding can be universally applied. Besides that, the time constraint for the data collecting is another limitation at which the authors only able to collect 20 valid feedback. Another limitation is that the panellist might not fully involve throughout the whole project lifetime. In other words, they might be not expertise in project management field instead they only professional in their technical field. 5.6

Applicability of this Research to an industry other than oil and gas

The finding of the research is applicable for any other industry. This is because it was designed based on the basis success factor of the project. All of the factors were extracted out from the PMBOK standard at which every phases of the project from initiating to closing give contribution to the theoretical framework design. The ranking part of the finding has to be carefully used for other project other than oil and gas. This is because for other type of industry, the cost might not be the major factor of success. The oil and gas project involve huge cost, so, the cost management is extra important to make the project to be success. 5.7

Directions for Further Research

The research can be further conducted in term of questionnaire design. It should be more internationally. This can be solved by putting it online for everyone to view and give their precious opinion. Other than that, the critical success factor for oil and gas project can be further categorized according to downstream, midstream and upstream. Different stream has different constrains and factors to be taken into account. 31

5.8

Chapter Conclusions

This chapter reviewed the theory, practise, policy and methodology used to in this research. This chapter also shows how the authors deal with the research issues and questions. Lastly, some limitations for this research were listed out for future improvement.

32

BIBLIOGRAPHY

Muhammad Faruq was born in Sabah, Malaysia, on 17th February 1989. He got his Bachelor of Manufacturing Engineering (hons.) degree from Department of Manufacturing & Material Engineering, Faculty of Engineering, International Islamic University Malaysia, Kuala Lumpur, Malaysia on year 2013. Currently he is under contract of Intergraph Process Power & Offshore (M) Sdn Bhd and serve as Data Management System Executive for Technical Data department, Technical Global of Petroliam Nasional Berhad (PETRONAS). He is Author’s formal currently working on Petronas engineering data management system (P-EDMS) project for Petronas Carigali Sabah Operation. Previously he works as Project Engineer for maintenance photo works at Petronas Chemical Methanol, FT Labuan Malaysia. Muhammad Faruq is a member of the following professional bodies: Board of Engineers Malaysia (BEM).

Cheng Wei Yet was born in Johor, Malaysia, on 27th December 1992. He got his Bachelor of Science in Geology (hons.) degree from Faculty of science and Natural Resources, Universiti Malaysia Sabah, Sabah, Malaysia on year 2015. Currently he is full time postgraduate student studying Master of Engineering in Oil and Gas at Universiti Malaysia Sabah. Previously he works as trainee reservoir geologist for Carigali Hess Operating Company (CHOC) & Malaysia Thailand Joint Authority (MTJA). Cheng Wei Yet is a member of the following professional bodies: Institute of Geology Malaysia (IGM). Author’s formal photo

33

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APPENDIX

36