... Project Management and the Oil and Gas Industry

Project Management and the Oil and Gas Industry

In today’s world of ever-increasing speed, complexity and competitiveness, technicians and managers find themselves with the overwhelming need to achieve absolute efficiency. This need forces them to organize and direct their energies in manners that are more creative. As they surpass one goal, another sets the bar even higher requiring additional improvements. This efficiency is generally a result of taking the experiences and lessons learned and converting it into an improved method or product at the most competitive cost.

Recent forecasts in the oil and gas industry seem to point in the direction of a massive increase in activity over the coming years. This will tend to bring with it a heightened awareness and thus attract more people to the industry. Certainly, there will be shortages of trained and experienced managers and technicians to fill the impending workload, therefore companies will be forced to hire less trained and experienced team members to manage
their programs.

Filling the gap with people is one challenge, the next is to get them prepared to lead. This will require companies to either train, hire experience or be patient with on the job training, which can bring with it varying results in a rapid ramp up mode. The companies most aware and best prepared will survive and thrive by recognizing the need well in advance and then recognizing the steps to project success. Project success is usually the result of good planning followed by good execution, in other words, a good project management program. Companies that
support project managers with the tools to be successful will reap the rewards of efficient costs and improved profits.

Project management helps bring efficiency to our technical challenges. Originating in the days of pyramids and castles, project management has advanced through NASA and the space program onto modern construction processes and into the worlds of IT and manufacturing. Project management is achieving a maturity in virtually every industry requiring products or deliverables. In many organizational environments, the term program management is used to define the management and prioritizing of a multiple of projects, not to be confused with project management.

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At some point in our careers we have all been involved with, been made aware of, or practiced the principles of project management. It is defined as the process whereby you are called upon at the inception of a project or deliverable, to plan, co-ordinate and control all the resources required to complete the project or deliverable through to operation within an allotted time, an agreed budget and to a specific level of quality and safety, at a minimum of risk.

In the early stages of our careers or as specialists, many of us play a role in the overall project management process. A project team may have participants exhibiting planning skills; other members of the team may have more technical or quality skills. Generally, one individual acts as the project manager overseeing the entire process and holding ultimate responsibility and authority. It is human nature to appoint a leader. This position is usually achieved after years of playing several roles in the process gaining knowledge and experience or through formal education.

Occasionally a project manager is assigned this duty at a premature stage in his career development, which can produce less than acceptable project results. It can also leave the project manager disillusioned and wrongfully perceived as an underperformer when in fact a lack of skill sets was the true culprit.

There are countless volumes of literature available to help detail and define the need and application of project management techniques and methods. Many organizations have adopted project management principles and created procedures for their own unique circumstances.

This report highlights the basics of project management and how it relates to daily work assignments for participants of a project team. A well-equipped project manager will possess or be fully aware of the following aspects to a successful project.

Why use Project Management?

As with any task, it makes good sense to create and follow a well thought out game plan. Project management helps create that plan. It helps you focus on your objectives by documenting your requirements and building your deliverable on paper before committing expensive and scarce resources to it. Project management produces information that increases your level of confidence and communicates the expectations. It forces you to plan your resources, and then use them efficiently and productively.

The Project Management Institute founded in 1969 is the custodian of “The Project Management Body of Knowledge.” This document represents years of effort and standardization in the profession of project management. Through education and practice, one can achieve the recognized designation of project management professional (PMP).

Projects can range in size and scope from a new product such as a pipe fitting to a major industrial construction project such as a pipeline. Each deliverable has its own unique set of circumstances. They can be standard products with multiple quantities or as in many cases a custom application. Regardless of how unique the project is, in general all undertakings require some form of control and organization.

Project management is made up of many organizational competencies, however, we will deal with the following six main controls, once mastered will deliver a high incidence of success. These are not in order of importance or significance. Each unique project will have a set of circumstances that will dictate what priority this list should follow.


A scope of work defines what it is you want in detail through written documents or an electronic database. It further serves to avoid interpretations. A well-defined scope provides clear instructions understood to mean the same thing by all who are affected by it. The product scope is the “What” and the project scope is the “How.” A scope can also help to define the work breakdown. The work breakdown reduces the scope or project to easily definable and manageable parts that can be resourced and scheduled. The scope of work or a work breakdown is specific, measurable, attainable, realistic and constructible. Tender documents generally begin with the scope of work. It should address all the major aspects of a project such as time, cost, quality and safety. Generally the more detail found in the scope of work the more efficient the cost and time will be in executing it.

Time Control

Schedules are created to plan, monitor and control that precious commodity, time. The scope of work is usually accompanied by a time restriction. This can be in a macro form or a more detailed micro form. Several forms of time control exist. The worst form of time control being memory or as many of us veterans recall, on the back of a cigarette pack or napkin. Methods that are more effective include lists with dates, day-timers and notes. Modern software now allows us to utilize time scaled charts, specialized computer applications and risk analysis programs.

In essence, time control involves establishing a timeframe or duration and applying it to an item of work breakdown or activity. It should be measurable so that at specific intervals progress can be determined against the base or original plan. These durations are assigned by the use of actual data from previous results or from estimated results. These activities are then linked to other activities via dependencies. These dependencies are called relationships.

Activities can be linear or in series or they can be in parallel with one another. By creating this network of interdependencies a critical set of activities emerges which helps to determine critical path and thus priorities. By knowing your priorities (critical path), you are better informed as to where you need to address your efforts in order to meet the contractual timeline. A project manager that doesn’t know his critical path will inevitably waste his time on non-essential and non-critical activities further exacerbating the critical activities. Inevitably, the schedule will slip and delays will occur strictly due to the lack of understanding about criticality. With accurate input of actual progress (physical percent complete) the schedule acts as a tool to determine status and predict future results.

Cost Control

Similar to time control, cost control assigns value to the scope of work. Individual items within the scope can be valued and then further dissected to a work breakdown item or cost code. Ideally, time control and cost control should support the same basic work breakdown structure thus providing a basis for measure. This basis serves as the initial cost plan. The value or cost of an item of work can be determined by using historical data, estimated results or through research analysis. Cost is generally broken down into labour and material with possible contingencies where they apply.

Controlling costs involves careful procurement and assignment of resources and materials within the scope budget or estimate. Any deviation from the scope or changes in work is a major source of cost overruns. Change management becomes a key function in controlling these unplanned costs. Comprehensive documentation is the basis of a well-managed cost and change control program. With increased regulations, industry may find itself squeezing margins in order to maintain eligibility and competitiveness. To control these non-productive costs requires finding more efficiency in resources.


Quality can be defined as the ability of features and characteristics of a product or service to satisfy stated and implied needs.

This takes on a more technical approach to the management of work and the level of expectations in product or process. A good quality program starts with a well defined need through clear and concise scope documents, specifications and drawings. It includes such factors as material specifications, dimensioning, tolerances, welding procedures, codes and regulations. In the case of personnel it involves levels of skill, expertise or, certification and professional designation. Quality programs should be recognized and uniform. Many organizations have adopted recognized international standards of quality control such as ISO. Quality involves inspections and the documentation of results, which are compared to the specified needs, which may in turn lead to non-conformance and corrective actions. The fewer non-conformances encountered the more successful the project in terms of cost and time. Doing the job right the first time reduces cost and helps maintain credibility.


Resources include all the elements required to execute or deliver the project such as labor, material, money, equipment, tools and time. It involves procuring and assigning these resources at the point of need in the project in order to avoid waste or delay. Resources introduced too early, too late or inadequately become inefficient or non-productive thus driving cost and time beyond the plan or budget. The key to efficient use of resources is to determine the optimum quantity and applying them at the optimum time.

Procurement of resources, managing, human and labor relations also become key functions in a project in order to ensure adherence to quality, time and cost. Resources too can be planned in the same manner as cost and time applied to items on the schedule. By applying resources to the schedule, histograms and cumulative curves are generated providing early resource management capabilities. With advances and improvement of automation tools and mechanization, installation techniques have improved to reduce work effort and thus increase efficiency and reduce accidents and repetitive movement injuries. It also serves to help reduce the cost of construction. In many cases, these savings offset the additional costs that are a result of new regulations in safety and competency.


As a mature, industrialized economy and society, we have developed safe guards to ensure that people can work at their vocation with a level of confidence in their personal safety. Today, unfortunately there continues to exist economies, which lag behind in basic worker safety practices. Eventually education will help to create a global minimum safe work standard.

The goal of a safe project is to perform and complete the scope of work within a specified time, cost and quality without injury or incident. This begins with a complete safety policy and procedure. The policy and procedure adheres to or exceeds Government regulated standards of safety. These policies and procedures must be communicated to all the project participants via several media methods. These include orientation, training, regular reminders, visual and audio awareness techniques. Safety records and reporting are an integral part of a good safety program, which generates statistics and lessons learned thus injury avoidance. Safety audits to ensure compliance are necessary as complacency can easily result in an injury to a worker. Another widely used safety technique is the task plan, which documents the task process and highlights the potential dangers and the techniques used to avoid or reduce the risk of injury. Each participant in the task reviews the documented plan and acknowledges his understanding prior to the work. This communication helps to unify the group’s responsibilities and identifies the expectations.

To achieve a competitive edge it is necessary to take an organized approach when embarking on a project. Project management can help to achieve that success by providing techniques and guidance through each stage of a project’s development. Each of the above controls does not act alone. They each relate to one another in a project. If one of the controls is not managed adequately, it will manifest itself on some other control item. For instance, a badly defined scope will increase costs and duration due to excessive contingency allowances. A poorly executed safety program can result in serious injury, which produces emotional and tragic results but also causes resource inefficiencies and increased costs or time delay. Conversely, poor quality or product can force a project into reworking non-conformances utilizing additional unplanned resources.

In conclusion, it makes good sense to consider the fundamentals of project management in your assignment. When a project is small in nature a project manager may be on their own to perform all the major functions of control. On larger projects, the function of the project manager may be leader and coach guiding a team of experts. Using project management does not guarantee perfect results in all cases. If applied and executed properly, project management will reduce the risk of failure and increase the rate of success as you gain confidence and experience from project to project.

Robert Mattia is an applied science technologist (A.Sc.T) for The State Group Industrial.