7115IBA: Managing Complex Projects - Deep Water Horizon Project Case Study Assessment Answer

Internal Code: 1AHJIJ Code: 7115IBA

Deep Water Horizon Project Case Study Assessment Answer

Assignment Task: Deep Water Horizon Project Case Study - 7115IBA This case is about the Deep-Water Horizon Rig project that was 33,000 tons weight and was constructed in the Gulf of Mexico for the oil extraction. The construction had a top deck and 20 stories over it. It involved drilling of 252 Canyon blocks in the Mississippi. For that Macondo well was drilled for extracting oil and gas from the sea bed. The project was proposed at the cost of $96.2 million and was envisaged to be completed in 51 days duration. However, the project got delayed by 43 days and was $58 million over budget. The delays were faced due to some major changes that have to be made along the project execution as engineers had to adjust the designs based on the new geological observations received from the analysis of the construction site. 7115IBA The rig was drilled to the level of 9000 feet below the sea surface and the cement work was completed. The next step was to conduct a cement test but it was avoided to save on project costs and instead negative pressure tests were run at the drill and the kill lines. Upon getting satisfaction from the results of the later pressure test, the project owner decided to go ahead with the opening. The blowout preventer was opened and the pumping was staged. Seawater was pumped down the drill replacing the spacer and the mud from the riser. When spacer reached the rig, the water started to pour on the deck followed by the mud. The mud covered the whole space on the rig and soon reached the gas chamber. The spill happened too fast for anyone to response to and the interference of the mud with gas chamber caused explosion on the deck. The rig had multiple fire explosions and soon got down. 7115IBA Deepwater Horizon project is seen as one of the biggest failures of such large and complex projects in the US history. The rig got spilled over with mud due to the blow out that resulted from the failure of the cement work to sustain the pressure. The whole rig was battered by several blasts that caused the rig to catch a big fire. The rig got blasted causing 11 deaths and several injuries. Over the months after that the damaged rig also caused a major oil spill in the sea. Analysis of PfL - 7115IBA The project can be analysed using concepts from the project managed lessons. An attempt can be made to understand how the project structure was shaped, key people who were involved, how risk management was tackled, how project management cycle was managed, and the value project could bring to the company who was sponsoring it. Stakeholder Management - 7115IBA The project had some key stakeholder and was complicated because of high level of influence from some of the stakeholders. These stakeholders included the project sponsor, project engineers, and the project manager. The project was majorly controlled by the sponsors and the project manager while engineers only had to follow the orders and participate in the execution of the plan. Even the tests that were to be conducted were decided by the top management. The key stakeholders of the project were: 7115IBA Drilling engineer: Brian Morel was the engineer who took care of the drilling at the rig. Project Head: Robert Kaluza was given the responsibility for monitoring the project at the rig and oversee outcomes to take decisions on how the project was to proceed. He had a major say on the project plan. Supervisor: Ronald Sepulvado was responsible for supervising the work at the rig and was guiding the team of engineers in the execution. 7115IBA Team Leader: John Guide was leading the team in performing the day to day activities. He was also responsible for monitoring the site to understand if there were any issues observed and resolving them in the case Operational Manager: David Sims was hired as the operational manager who would give a go ahead to proceed with further stages only after he approved the results of various tests that were planned. Project Owner: Captain Kuchta took major decisions on the project that were related to the planning, progress and major decisions that influenced the project. 7115IBA Chief Mechanic: Douglas Brown would approve the results of the tests and the projects and has a final say on deciding if the project was set to take on the stage of drilling. 7115IBA Crane Operator: Micah Sandwell was managing the crane at the drill site and was responsible to ensure its functioning. Chief Electronic Technician: Mike William was involved in the project for completing the assessment of the site test results and control any damages or risks at the project  (Ingersoll, Locke and Reavis 2012). Each stakeholder has a different level of influence and the influence from the project owner and senior level people was so significant that the engineers and mechanics could not have a major say or take decisions required. Because of this, when a decision was to be taken on whether the cement test was to be conducted the project owner decided to not do it thinking that the cementing was done properly and the team was satisfied. While chief mechanic was not happy with the decision as it would not favour the protocols but the owner still decided to go ahead without it considering the major cost of $128,000 fee, that was needed for Schlumberger’s evaluation, could be saved by avoiding the test. 7115IBA The project owner then decided to instead follow the negative pressure test on the drill line that delivered unconvincing results. Despite the dissatisfying results of the rating, there was no mud flow because of the which BP was in the favour to go ahead and as a last check suggested testing of the rig at the kill line for pressure. The new test gave satisfying results with no pressure and the decision was taken to go ahead with the drilling procedure. However, when the actual procedure was started, mud started to flow on the rig and soon damaged the entire construction. Business Value - 7115IBA Cynefin model can be used to understand how project was set to generate the value for the company. As per the model, situations and changes in a project cannot be managed using a single approach but the teams have to keep on adapting to the changing needs and thus, be aligned. According to this model, there can be some situations on a project that can influence decisions people take. The knowledge that these people have about the situation would serve as a formal tool for deciding on how to solve a problem at hand. The model categorizes project situations into five domains that have cause and effect relationships among them. These relationships influence how decisions are taken finally. The situations encountered can be ordered like a daily routine or unordered that appears at a time without expectations  (Azim 2010). A logical approach to decision making to respond to a situation would be sense-categorize-respond. However, in the situations that look simply to handle, managers do not prefer to use such a long and formal approach and take decisions based on their gut feelings. In the currently discussed project, a situation of testing cement was an ordered situation which was already planned earlier. There was a direct relationship between the test results and the rig performance such that only good results could mean good performance of the rig. However, the citation of the project going over budget was not ordered but had influence on the decision that was to be taken about the test. The test was costly and thus, if the project went over budget, the owner decided to not take the test. An obvious response to the situation of the need for cement testing would have been conducting attest and finding out if there were any flaws in the construction. However, alternate route was taken by the project head. The team trusted the work performed by the cement layers and avoided the obvious situation resulting into disbalance and a chaos  (Sperling 2015). 7115IBA If Mike had taken the standard approach defined in the model of sense-analyse-respond then the cement tests would have been conducted. With the rest results, the team could have discovered problems with the cement work and could have taken proactive actions to repair which could have prevented the major damage. After the first drill line test, the results were not very clear and no decision could be taken which demanded another test to be taken at the kill line. At this point a decision could have been taken to run some more tests to find out the problem that had given inaccurate results which could have been the standard decision as per this approach. However, the decision was taken to go ahead failing to consider the consequences it could have  (Shane, Strong and Gransberg 2012). Project Management Cycle - 7115IBA The first stages of the project involved planning and evaluation of geological formations based on which there were modifications made in the designs of the rig. These changes caused delays in the execution that could not be controlled. On 20th April 2010, the cementing work was completed and cement test was the next course of action to be followed. Drilling was done till the 9000 feet level below the surface and the only thing that was saving the rig from any blowout was the cement that was laid. The test for the cement was much in need and could have confirmed if the work was sound and safe for the rig. However, the team was confident about the stability of the cement work and believed that they could proceed with the drilling work. The project had exceeded the initial budget by $58 million and was also delayed by six weeks. Because of this, the project head were under pressure to complete the work fast to save on the costs and time of the project. Risk Management - 7115IBA The diamond model can be used to understand the project risks and how they were handled in this case. As per this model, there can be four risk dimensions including technology, pace, complexity, and novelty. Novelty is about to understand night initial objectives of the project and the value it brings to the customer. The initial requirements of the project were to complete the work within budget and within defined schedule. So, the project was at the risk of losing time and money which it did due to delays in design work. The risk could not be managed and the project faced major challenges on this front. Technologies could also cause problems on a project. The system used latest technologies for drilling and other major work. However, there were 390 systems that needed attention for repair that demanded 3,545 man power of work that was revealed by the BP safety audit conducted in 2009. These repairs were avoided as they were not causing any major trouble to the project. Moreover, the standard tests that were to be conducted on the cement work was a major deal and yet avoided to save on project costs. The risk of the consequences of the failure of the cement was not considered. The company could not keep up with the pace of the project because of huge complexities involved in decision making and technical considerations. Thus, it can be said that the project did not have proper risk management procedures in place. 7115IBA The project can be analysed using concepts from the project managed lessons. An attempt can be made to understand how the project structure was shaped, key people who were involved, how risk management was tackled, how project management cycle was managed, and the value project could bring to the company who was sponsoring it. 7115IBA

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