What is the project gap? Do you have one, or more, in your offshore development project? The best explanation of the project gap is the difference between what the project was desired to achieve and what it actually delivered. This is not evident in the shape of the project. In almost every case that will end up being almost as it was designed. So the outward appearance, the platform structure, the wind tower, the tidal generator and the pipelines and cables all look just like they did on the plan. No, in order to find the project gap you must look at the intangibles, and those are time and cost. Yes, there will most probably be physical indicators that a gap occurred in your project intentions – a pipeline that did not go quite in the same place as the design, or some materials that were not quite as specified – but such things are only the scars, not the cause.
The intangibles are time and cost, but these are not known until after the project is completed and the numbers added up. In most cases projects are completed within time and budget, but often that is due to revised scheduling or absorption of the contingency in the budget. In some cases, however, the whole project budget has to be increased and the developer has to go back to the stakeholders for more money, simply because of the project gap.
So what are these gaps, and how do you find them? Unfortunately, for the most part, they are invisible. Not because they cannot be seen, but because the project’s owners cannot see them. They are the issues that arise during project execution that were not planned for, or mitigated against. They are revealed, as they drop out of the project execution, as design errors, installation errors, contractual issues and dissynergies. For the most part they can be avoided, or at least mitigated against, as long as you are expecting them. Their effect can be catastrophic to the intangibles, cost and time, but mainly costs, because time overruns in a project have a cost effect on long-term profitability. You can never get back the losses from missing first production targets.
The bottom line is the profitability of the project and, whilst the object may be the extraction of oil and gas or the generation of electricity, the reason that a project even exists is so that the shareholders in the exploration and production (E&P) or operating company make a profit. Project gaps erode that profitability. “Hang on a minute,” you may say, “all projects have contingency in the budget, both in time and cost for this!” “Yes, true,” I would answer, “but contingency is not there to cover for inadequate design, bad planning or poor execution.” Confused? Since I have just said that these project gaps are invisible?
To read full article please click here.
|
