Risk Management Process Implementation

The challenge

Oil and gas projects are extremely challenging because of their geological, environmental, technical and organizational complexity. Safety and environmental issues need drastic treatment, but other risks affecting cost, time and revenues can also damage project economics.

These risks have to be addressed continuously over the whole project life cycle:

• as uncertainties during planning;
• as troubles (non-productive time, NPT) during operations;
• as lessons learned during post-project analysis.

Our approach

kwantis developed and implemented an integrated system to manage project risks and the associated cost and time estimates. The process combines several practices:

• Probabilistic models: uncertainties are addressed through quantitative (probabilistic) models, which give more accurate operations planning and an unambiguous definition of contingencies.
• Cost versus benefit: the effectiveness of each mitigation action is measured in terms of costs versus benefits.
• Performance indicators: automatic systems and daily reports are combined to calculate accurate operations performance indicators.
• Lessons learned: actual cost and time variations are monitored against the plan, as a rich source of lessons to be learned.

The outcome

The process is now in use in all Eni affiliates and has been applied to more than 140 projects worldwide. It has proved its value in reducing uncertainty in decision making and in allocating company resources to the most profitable ventures.

The economic benefit of the integrated risk management approach was measured at 1.5% of the overall investment (CAPEX). It comes from more accurate project cost estimates, which reduce the amount of immobilized financial resources and misallocated resources.