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Swot Analysis - Case Study On Oil and Gas Projects, The Piping Process

The document discusses integrating procurement management into critical chain project management (CCPM) for oil and gas projects. It analyzes the strengths, weaknesses, opportunities, and threats. Specifically: The strengths of CCPM include using buffers to account for uncertainty and avoid schedule disruptions. However, traditional scheduling methods like PERT/CPM are ineffective at handling resource limits and uncertainty. Weaknesses of contractors include unrealistic schedules, poor material management, and not considering limited resources like welders. There are opportunities to use CCPM to better manage resources and uncertainty to avoid delays. Threats include the downturn in the oil/gas market leading to fewer contracts and project cancellations.

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Roselyn San Diego Pacaigue
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222 views

Swot Analysis - Case Study On Oil and Gas Projects, The Piping Process

The document discusses integrating procurement management into critical chain project management (CCPM) for oil and gas projects. It analyzes the strengths, weaknesses, opportunities, and threats. Specifically: The strengths of CCPM include using buffers to account for uncertainty and avoid schedule disruptions. However, traditional scheduling methods like PERT/CPM are ineffective at handling resource limits and uncertainty. Weaknesses of contractors include unrealistic schedules, poor material management, and not considering limited resources like welders. There are opportunities to use CCPM to better manage resources and uncertainty to avoid delays. Threats include the downturn in the oil/gas market leading to fewer contracts and project cancellations.

Uploaded by

Roselyn San Diego Pacaigue
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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SWOT ANALYSIS

Integrating a Procurement Management Process into Critical Chain Project


Management (CCPM):
A Case-Study on Oil and Gas Projects, the Piping Process

STRENGTH

A contingency and scheduling float, referred to as a buffer in CCPM and this article, is
an important aspect in predicting a project's cost and schedule. This buffer enables for
unforeseeable and/or unplanned events to occur without disrupting the schedule. There
are two traditional methods used by Korean oil and gas contractors for estimating a
buffer size: cut and paste and square root methods. In the cut/paste method a “safe
estimate” (includes duration to account for uncertainty) is cut and half of the duration is
attached to the end of all tasks. In the root square error method, uncertainty is
calculated through the difference of the safe and average estimate. The square root of
the sum of squares is then used to compute the uncertainty. Unlike the previous
method, the CCPM buffer computation is unique. First, unlike CPM's critical path,
CCPM has a resource-constrained critical path, referred to as the critical chain. To
handle uncertainty, the CCPM critical chain accounts for resource competition (resource
loaded) and incorporates duration buffers, which are non-work schedule activities.

WEAKNESSES

One of the most common reasons of mega-EPC project overruns is poor schedule
management. The standard scheduling management technique, Program Evaluation
and Review Technique/Critical Path Method (PERT/CPM), has been found to be
ineffective, particularly in dealing with resource limits and project uncertainty.

What make matters worse, these contractors frequently have poor project results. The
following are the primary sources of losses and damages: (a) inadequate estimates
resulting in a bid/contract amount insufficient to meet project cost; (b) inadequate
project management, control, and engineering due to inexperience/lack of
understanding; (c) schedule delays and related penalties; and (d) poorly managed
claims, disputes, legal remediations, and other issues.

Piping construction accounts for more than 40% of the total work volume in an onshore
EPC project, with welding being the most important activity. The primary reasons for
piping construction delays were identified to be resource restrictions, lack of material
management, and unrealistic work durations, based on the lessons gained and
experience of recently completed oil and gas EPC mega projects interviewed by the
researchers. Welders, welding materials, and welding equipment are key resources for
pipeline construction. Although some resources, such as qualified welders, are in short
supply, many simultaneous tasks will necessitate welding. The most typical mistake
made by Korean mega-project EPC oil and gas contractors is not taking this limited
resource into account. This is frequently created by neglecting resource restrictions
when utilizing the classic Critical Path Method (CPM). Welders must be mobilized
without restriction to fulfill their set schedules, which is unfeasible for most onshore EPC
project locations.

The next major project management blunder is a material management plan that is
insufficient or non-existent. As previously noted, piping activities, as well as the
purchase of pipeline materials, are on the critical route [6]. Typical schedules just
provide milestones for when pipeline materials are expected to arrive. As a result, the
contractor is only alerted to a problem when the material supply is delayed. The
contractor does not notice the problem until it has already caused a delay. This process
is insufficiently managed by neither the PERT/CPM nor the CCPM approaches.

Finally, schedulers frequently create unrealistic job durations throughout the estimating
phase. This has a detrimental influence on contractor efficiency and/or capacity to
achieve contractual deadlines. The most common blunder, according to this study, is
the use (or misuse) of schedule contingency/float. Schedulers frequently "hide" these
variables within activities, limiting project management teams' ability to properly control
the resulting float. The CCPM scheduling technique, which incorporates the "buffer"
notion, is presented as a solution to this problem.
OPPORTUNITIES

With low earnings due to low project availability and poor project performance, it is
becoming increasingly vital for EPC contractors to avoid schedule delays and shorten
project durations. Despite the fact that there are numerous operations, none is more
important than pipeline installation, specifically the procurement of pipeline supplies. As
a result, this paper discusses how Critical Chain Project Management (CCPM) was
utilized to create a pipeline construction delay prevention methodology that incorporates
material procurement processes for EPC megaprojects in order to avoid project delays
on mega-EPC projects and increase contractor profitability.

As a result, this research suggests a Critical Chain Project Management (CCPM) that is
better equipped to deal with resource restrictions and offers a more visible uncertainty
management methodology.

THREATS

Due to this dramatic downturn, this market has seen a significant drop in investments
and the cancellation of capital projects during the last few years. Oil and gas EPC firms
have gone to considerable efforts to optimize their complete business portfolio,
including effective partnership and complementary skillsets, in reaction to the crisis.
Profit fluctuation and project instability have been experienced by Korean oil and gas
EPC contractors working globally, similar to worldwide patterns. Variables such as the
drop in oil prices, the global economic downturn, and so on have contributed to this.
Over the previous few years, the overall number of international onshore and offshore
contracts completed by Korean EPC contractors has decreased significantly. The loss
of work in floating or fixed-platform oil and gas production facilities exacerbates the
problem. While big offshore EPC projects used to account for a substantial amount of
Korean EPC contractors' foreign profit, they now account for a big amount of their
losses (fabrication of oil and gas production facilities).

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