The Robert Gordon UniversityFaculty of Management

Aberdeen Business School

PROJECT FUNDAMENTALS, 2013

Lenka Tomsova1105518

MSc Project Management

Project Initiation DocumentConsortium

Word count: 3957

ROSEMOUNT GROUP

PROJECT INITIATION DOCUMENT (PID)

ROSEMOUNT GROUP: CONSORTIUM

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ContentsPROJECT INITIATION DOCUMENT (PID)..................................................................................................1

ROSEMOUNT GROUP: CONSORTIUM.................................................................................................1

Project Definition...................................................................................................................................4

Background & rationale......................................................................................................................4

Project scope..........................................................................................................................................8

Consortium project.............................................................................................................................8

SWOT analysis of Rosemount Group’s strategic option.................................................................8

Project scope........................................................................................................................................10

Financial budget of the consortium project.....................................................................................11

Critical success criteria.....................................................................................................................15

Critical success factors......................................................................................................................15

Assumptions of the consortium project...........................................................................................16

Constraints of the consortium project..............................................................................................16

Consideration...................................................................................................................................17

Project management plan................................................................................................................17

Stakeholder analysis.........................................................................................................................26

Risk assessment...............................................................................................................................31

Risk management plan.................................................................................................................31

Recommendations...............................................................................................................................36

References............................................................................................................................................37

Bibliography.........................................................................................................................................37

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Table of figures1) UKCS map 4

2) Competencies required for decommissioning 6

3) Rosemount Group – organizational matrix structure (STRONG) 7

4) Direct cost breakdown structure of the consortium project 13

5) Indirect cost breakdown structure of the consortium project 14

6) WBS – Consortium 18

7) Schedule of the project 20

8) Network schedule of the consortium project 21

9) Gannt chart – milestones of the consortium project 21

10) Decision gates 22

11) Key phases of the consortium project life cycle 24

12) Stakeholder network – Rosemount Group 26

13) Consortium project team 27

14) Stakeholder grid 28

15) Communication lines 29

16) Risk management process 31

17) PIG of the risks 34

List of tables1) UK offshore sites maintained by Rosemount Group 4

2) UKCS decommissioning opportunities 5

3) Rosemount Group – business objectives 6

4) Objectives of the consortium project 10

5) Deliverables of the consortium project 10

6) Financial budget for consortium project 11

7) Approximated incomes and expenses of Rosemount Group in 2014 11

8) Payback period time calculation 12

9) Consortium project – Outline view 19

10) Milestones of the project 22

11) Communication plan for the consortium project 30

12) PESTLE analysis of the consortium project 32

13) Risk log 33

14) Risk matrix with responses 35

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Project Definition

Background & rationaleRosemount Group is focused supplier of engineering, services within project management

and high value consultancy to the world’s energy sector. Company offers wide range of services

which expand from environmental design to engineering further on to project decommissioning at

the end of the asset life cycle.

Rosemount Group was founded in 1970s and since then it operates in 25 countries all over

the world, mainly operating in the UK.

Primary goal of the organisation is the maintenance of number of large offshore sites across

the UK (see table 1 and fig. 1).

Table 1: UK offshore sites maintained by Rosemount Group

Central North Sea Southern North Sea Northern North Sea

Auk Oilfield Hewett Beryl OilfieldClyde Oilfield Dotty Emerald Oilfield

Fulmar Oilfield Viking Columbia Oilfield

Miller Oilfield Vulcan Eider Oilfield

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Fig. 1: UKCS map

However, our aim is to grow the business and increase market presence via opportunities in

UKCS decommissioning. To see the opportunities in the UKCS decommissioning market for

Rosemount Group see table 2.

Table 2: UKCS decommissioning opportunities

Forecast:

475 installations will eventually have to be decommissioned (90%)

Expenditure on decommissioning (2013-2040) = £3.5 billion

Why decommissioning?

There is a shortage of decommissioning facilities and skills in the UK which gives our

company great possibility of gaining valuable experience from number of planned

decommissioning projects (in the next 5-7 years) as projected by Oil and Gas UK, 2013.

Scottish Enterprise, 2013 also discovered significant gap in the capability in the supply

chain.

EEEgr News, 2010 identified the importance for local suppliers to understand their roles

within decommissioning sector. Rigzone, 2013 defined eleven competencies which are required for

successful decommissioning process (fig. 2). We believe that our company is competent in project

management, engineering and planning, permitting and regulating compliance as well as platform

preparation which suggest that our company is not taking advantage of other competencies stated

by Rigzone, 2013. Therefore our vision is to be the preferred partner for EPC activities in the UKCS

and beyond.

EEEgr News, 2010 also stated that it is essentials for suppliers to collaborate so that everyone

gets involved, market intelligence can be shared and it is easier for everybody to gain information

needed which was also defined by DNS, 2011.

Therefore it was decided that Rosemount Group will improve its strategic position in the

decommissioning market by entering into the consortium with companies that possess other

capabilities needed for successful process of decommissioning.

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Oil and Gas UK, 2013

Fig. 2: Competencies required for decommissioning

Table 3: Rosemount Group – Business Objectives

BUSINESS OBJECTIVESOB-1 Capture market share of 15% within 24 months.OB-2 Improve decommissioning capability by entering into the consortium by 28th February 2013.

Given Rosemount Group’s strategy and objectives, the purpose of this PID is to present a

feasible strategy for the commercialization of decommissioning by entering into the consortium and

to provide a basis for assessing the overall success of the project.

Rosemount Group – Organisational structures (see Fig.3)

Strong matrix organisational structure gives Rosemount Group good basis for project

implementation since project managers are in charge of the project, its resources and control and

functional managers provide support to them as well as technical expertise. (Kerzner, 2009). In

favour of Kerzner, 2009; Gray and Larson, 2007 also identified that project manager and his team

requires more autonomy if there are high levels of specific factors according to the project needs

such as size of the project, its importance or need for integration of other departments.

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Fig. 3: Rosemount Group – Organizational matrix (STRONG)

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Chief Executive

Procurement manager

Senior category officer

Category officer

Contracts and procurement

officer

Buyer / support role

Risk manager

Process/facitility engineer

Technical personnel

Supervisors

Production operators

Maintenance staff

Safety personnel

Contractor/supplier personnel

Finance manager

Financial controller

Divisional accountant

Divisional finance officer

Finance officer

Project accountant

Project accountant

Quality assurance manager

QA team member

QA team member

HR manager

HR officer

HR officer

Planning manager

Planning officer

Planning officer

Governance and

accountability manager

Corporate governance

officer

CSR officer

Business ethics officer

Performance and control officer

Manager of PM

Project manager

Project manager

Project manager

Project scope

Consortium projectOur plan is to create an association of five companies with the objective of participating in

the UKCS decommissioning market in order to better fulfil our purposes while remaining as separate

organisations.

We would like to create a lead partner consortium where Rosemount Group will be

nominated as the lead organisation and other companies would work through our company as

separate entities with specifically allocated areas of work based on specialism and capacity defined in

fig.2.

SWOT analysis of Rosemount Group’s strategic option

STRENGTS

Due to established reputation of companies entering the consortium may be perceived as

less risky.

Consortium is easy to form because no formal procedure has to be followed along with no

capital required.

Within consortium already existing management and accountable body systems may be

used.

It is easy to terminate.

Consortium is not directly subject to taxation, only the individual members are.

Members may be undisclosed parties which increases the confidentiality.

It is generally less costly to run consortium than for example joint venture.

Possibility of gaining PM capabilities as well as relevant skills, experience and expertise from

experts in other fields of decommissioning.

Gives Rosemount Group the opportunity to gain experience and competencies that we might

not otherwise have => learning process.

Improves outcomes for beneficiaries thanks to the greater overall capacity.

Risk and liability is likely to be spread across member organisations.

Rosemount Group can gain economies of scale as well as competitive advantage.

Thanks to close cooperation, our supply chain network can increase.

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WEAKNESSES

Lack of autonomy.

Profits are shared.

Difficulty in establishment of clear identity and brand for the consortium as well as difficulty

to restrict or limit the liability of members.

Time to develop may be considerably increased due to difficulties with liabilities of each

party.

Required high degree of trust and integration.

It may be difficult to gain external relationships and funding especially because of the

unwillingness of third parties to enter into contract with non legal entity.

Lack of permanent structure.

Cost of management may be increased.

As a lead member Rosemount Group will more likely carry out all the risks and liabilities.

Different values and culture from other members which may cause friction.

OPPORTUNITIES

Seamless integrated supply chain.

Long term collaborative supply chain.

Benefits from other alliances members may be part of.

Increased market domination.

Building up relationships with others for future business.

THREATS

Unwillingness of other parties.

Different ways of administration and operations by other members.

Power struggles.

Breakage of supply chain due to power struggles.

Slow integration.

Resistance from employees.

Reluctance of others to share expertise, secrets and patents.

Loss of staff to others companies.

Limiting laws, policies and legal boundaries.

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Project scopeConsortium project scope encompasses of consortium initiation where potential partners are

identified and proposed to enter the association, formation of consortium working group and

development plan, preparation of the due diligence exercise and its conduction as well as actual

signing of the Memorandum of Understanding to form the consortium.

Table 4: Objectives of the consortium project

OBJECTIVES OF THE CONSORTIUM PROJECT

1. To improve market share by 15% within 24 months by developing the consortium.

2. To improve decommissioning capability by entering into the consortium within 1 year from implementation.

3. To identify 4 potential partners to enter the consortium with within 1 month from definition.

4. To identify the risks associated with the delivery of the consortium within 7 days from definition.

5. To identify resources needed for development of the consortium within 7 days from definition.

6. To develop strategy for management of the shareholders within 7 days from definition.

7. To implement safe environmental process to be used while decommissioning within one year from

implementation.

DELIVERABLES OF THE CONSORTIUM PROJECT

1. Memorandum of Understanding – improved competitive advantage in decommissioning sector.

2. Memorandum of Understanding – improved competitive advantage in decommissioning sector.

3. Memorandum of Understanding.

4. Risk management plan.

5. Resource management plan.

6. Stakeholder management plan and communication plan.

Table 5: Deliverables of the consortium project

However consortium project will not define and deliver specific processes within the

consortium such as for example contract management of the consortium or consortium tendering

process, for that reason other meetings with preferred partners will be held. Other meetings will also

be held for the implementation of the safe environmental process which will be used as the

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precedence for other companies while decommissioning to promote environmental best practice in

the sector.

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Financial budget of the consortium projectDirect budgeted cost for this project was established as £24000. To be able to visualise

projected direct costs, cost breakdown structure is used (see fig.4), followed by indirect cost

breakdown structure in fig.5 which equals to £11950. Therefore Rosemount Group financial analyst

appointed for the projection of the financial budget needed for Consortium project suggested that

£35950 should be obtained as an investment for the successful implementation of the project.

Introduced projected budget can be used as one of the monitoring and controlling tools as

defined by Burke, 1999.

Table 6: Financial budget for the consortium project

Financial budget for the consortium project

Direct costs £24000

Indirect costs £11950

Total costs £35950

To be able to define the length of time which is required to recover the cost of the

investment of £35950, payback period calculation was used. Formula for this calculation is defined as

cost of the project / annual cash flows.

To be able to calculate the annual cash flow, incomes and expenses of the year must be

defined. The incomes and expenses for upcoming year 2014 when the project will be initiated were

approximated to the numbers described in the table 8 below based on the historical data of the

company as well as using prediction on UK decommissioning expenditure suggested by Oil and Gas

UK, 2013.

Table 7: Approximated incomes and expenses of Rosemount Group in 2014

INCOMES 2013 EXPENSES 2013

£507 300 £295 800

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Therefore following calculation can be made:

Table 8: Payback period time calculation

Cost of project / annual cash flow Payback period time

35950 / (507300-295800) = 0,17

Result of the calculation tells us that investment in the consortium project will be returned in

0,17 of the year which can be easily recalculated to approximately 2 months. However, as defined by

Burke, 1999 this method does ignore time value of money as well as any benefits that might occur

after they payback period. It also does not measure profitability therefore it is recommended to use

other methods such as NPV, discounted cash flow or internal rate of return as other methods of

capital budgeting for consortium project.

Based on the length of the time which is required for repaying the investment we believe

that we are able to finance the project from the Rosemount Group’s profit with no loans or other

sources of money required.

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Fig.4: Direct cost breakdown structure of the consortium project

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Fig.5: Indirect cost breakdown structure of the consortium project

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Critical success criteriaSuccess of the project will be measured based on following criteria defined by stakeholders

of the consortium project:

1) Total project cost does not exceed the initial budget of £35950.

2) The actual project duration is within the committed duration of 37 days.

3) Market share has increased by 15% by 11th February 2016.

4) Decommissioning capability and knowledge has increased due to successful completion of

decommissioning project increased by 10% within first year from the development of the

consortium.

5) Four consortium partners were identified within first month of the initiation of the

consortium project.

6) Identification and application of environmental processes for successful decommissioning

by 11th February 2015 from lessons learned of previously completed decommissioning projects.

Critical success factorsThere are also critical success factors that need to be considered before implementation of

the project. Those factors are:

1) Completion of the consortium project on time and within budget and scope.

2) Robust due diligence exercise will be implemented to identify critical partners.

3) Each party in the consortium have to be committed to the shared goal of becoming

experts in decommissioning of oil rigs.

4) Project team will be committed and motivated throughout the life cycle of the project.

5) Effective use of stakeholder management, risk management, change management,

communication channels, stakeholder reviewing as well as environmental reviewing will be utilized

throughout the project to increase the probability of successful outcome as suggested by APM, 2006.

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Assumptions of the consortium project

As a company we assume that by using effective negotiation and communication with other

parties we are able to implement the consortium project within 36 days.

We also believe that by using the right contract management we will be able to limit the

liability threat associated with the consortium as well as the threat of not gaining the trust of third

parties in terms of funding and entering the contracts. As a company we are aware of the liability

threat associated with the consortium project, however, we assume that using Memorandum of

Understanding as the final agreement for forming the consortium will give Rosemount Group useful

tool for limiting its liability because Memorandum of Understanding can be made legally binding.

We assume that Rosemount Group has enough funds available to be able to fund the

strategic option with no other financial help such as for example loans.

As a successful growing company with potential we assume that companies as well as their

employees would not mind to work for us as for the leading organisation within the consortium.

In terms of financial return we believe that payback period time of the investment will be less

than 3 months especially because of Rosemount Group still working on projects during the

implementation of the consortium.

Project schedule is based on working weeks only because of the assumption that there will

be nobody willing to work during the weekends.

In terms of budgeting we believe that the estimation of the incomes and expenses for 2014

as well as cost of the project is well defined based on the historical data as well as WBS bottom-up

estimating methodology.

Constraints of the consortium project As defined by Oil and Gas UK, 2013 there is lack of decommissioning knowledge in the sector

therefore it may be difficult for the consortium to become the best and gain new capabilities as well

as knowledge.

There is also lack of collaboration in the decommissioning sector which is defined by EEEgr

NEWS, 2010 as being essential for being successful; therefore it can be assumed that there is lack of

knowledge in terms of forming the consortium for decommissioning projects as well.

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Developing consortium requires high degree of trust and integration from each party

involved therefore it may be difficult to establish the association.

Rosemount Group may lose its position in the market if entering into the consortium with

inappropriate partners for decommissioning process, therefore due diligence process is crucial for

successful implementation of the project.

Different value and culture from other companies entering the consortium can cause friction

and negatively impact Rosemount Group, therefore negotiation of the win-win solution for

everybody is required.

Implementation of consortium might affect long term business relationships with our

preferred partners therefore effective supply chain management is crucial.

ConsiderationUKCS and decommissioning forecasts as described in Oil and Gas UK, 2013 and Scottish

Enterprise, 2013 were considered for carrying out strategic option for improvement of our

decommissioning capability as well as for consortium project defined as one of the preferred options.

Various stakeholders had to be considered within and out-with the project for successful

identification of the project scope, objectives and deliverables.

Project management planFollowing project management plan was used for documentation of the planning process as

well as for management of the project. Project management plan was implemented to sequence the

tasks which need to be achieved in order to accomplish project objectives.

Fig. 6 shows WBS of the consortium project which was used as a part of the scope

management to define the work required to produce consortium project deliverables described in

table 5; followed by table 9 describing project in outline view, fig. 7 showing the schedule of the

consortium project in terms of tasks involved for successful completion and fig.8 highlighting the

network schedule of the consortium project. Another Gannt chart (see fig. 9) is used to highlight

milestones and decision gates of the project (see fig. 10).

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Fig.6: WBS - Consortium

Table 9: Consortium project – Outline view

Outline view of the Consortium project1. Consortium initiation1.1 Identification1.1.1 Contact potential partners1.1.2 Proposal of the idea1.1.3 Invitation for meeting1.2 First meeting1.2.1 Election of the chairs1.2.2 Sharing of the information1.2.3 Exploring of the options1.2.4 Agreement of the future steps1.3 Preparation of the board report2. Consortium working group2.1 Form the working group2.1.1 Meeting with representatives2.1.2 Draft of terms of reference of Membership Agreement2.1.3 Appointment of the chair, vice-chair and secretary2.1.4 Agreement2.2 Consortium development plan2.3 Agreement of the development plan2.4 Preparation of the second board report3. Due diligence3.1 Preparation of the third board report3.1.1 Outline of the need for due diligence3.1.2 List of recommended questions3.1.3 Approval of the questions by the board3.1.4 Introduction of the membership application4. Consortium4.1 Conduct due diligence exercise4.1.1 Preparation of the fourth board report4.1.1.1 Findings4.1.1.2 Recommendation whether to proceed or not4.2 Memorandum of Understanding4.2.1 Preparation4.2.2 Signature

Outline view of the Consortium project was included as a part of the document to ensure

that every project shareholder is able to understand the project work breakdown structure as long as

WBS graphs are no suggested as easy graphs to read by Kerzner, 2009.

It is projected that Consortium project will start on 6th January 2014. Scheduled work is more

described in fig.7 (see below). Project finish date was established for 11th February 2014.

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Fig.7: Schedule of the project

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Fig.8: Network schedule of the consortium project

Fig.9: Gannt Chart – Milestones of the consortium project

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Fig. 9 describes milestones or in other words an event that receives special attention. In the

consortium project there are 6 project milestones that are used to mark completion of specific work

packages and phases; for more detailed information see table 10 below.

Table 10: Milestones of the project

Milestone

Phase / Work packages

1. End of the identification phase of the project – 8.1.

2. Formation of the working group done – 9.1.

3. End of the pre-consortium working group phase – 20.1.

4. End of the due diligence phase – 29.1.

5. Due diligence exercise conducted – 30.1.

6. Consortium formed – 11.2.

Fig. 10: Decision gates

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Picture above (fig. 10) highlights four decision gates taking place in the consortium project.

Gate 1 takes place after the end of the initiation phase. Following questions have to be asked:

1) Is the gate 1 finalized?

2) Are all the potential partners identified?

Decision gate 2 takes place after the end of formation of working group. After reviewing this

phase in terms of successful implementation of working group, it is important to approve the project

to move towards the other phase.

1) Is the working group elected? ´

2) Are chair, vice-chair and secretary appointed?

3) Is consortium development plan developed and approved by the board?

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Gate 3 taking place after the drafting of due diligence exercise is placed into the Gannt chart

so that review of the phase can be managed. Questions to be asked:

1) Is due diligence exercise properly drafted?

2) Is due diligence exercise approved by the board?

And the last gate 4 takes place after the consortium development by signing the

Memorandum of Understanding. In this section, questions to be asked are:

1) Is the consortium formed?

2) Did everybody agree and sign the Memorandum of Understanding?

It is also important to define the key phases of the consortium project life cycle. See fig.11.

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Fig. 11: Key phases of the consortium project life cycle

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More specifically, concept phase of the consortium project defines the opportunity for

Rosemount Group in decommissioning of UKCS. Rosemount Group responded with three strategic

options with the aim of increasing its market position. Feasibility study for each of the proposed

option was conducted so that project’s fit with organisation’s strategic objectives could be

considered. Financial appraisal of the option is undertaken as well as business case for the chosen

strategic option.

Initiation phase of the project further evaluates and optimises preferred strategic option –

implementation of the consortium. Risk management plan as well as quality plan and

communication plan are prepared. Process is put in the place, identifying specific tasks needed for

implementation of the project as well as allocation of resources.

Execution phase is used for effective execution, monitoring and controlling of the project

management plan identified in the previous phase. Project manager monitors all the implementation

activities via earned value management and produces regular reports which are then communicated

to the project team and stakeholders.

Handover and closeout phase in consortium project occurs during the signing of the

Memorandum of Understanding, deliverables of the project are handed over to the sponsor and

users. Audit has to be in place to review if the deliverables met the acceptance criteria, therefore

project is ready to be formally accepted.

Each of the phases is accompanied with effective reviews of stakeholders and environmental

impacts which might have an effect on the project completion.

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Stakeholder analysisFig. 12: Stakeholder network – Rosemount Group

Based on the stakeholder analysis network by Gray and Larson, 2007.

It is important for Rosemount Group to determine the needs and expectations of

stakeholders so that project manager in charge of the consortium project can create an environment

where stakeholders can contribute their skills for the successful completion of the project. (Burke,

1999).

Internal stakeholders of the project are functional managers, more specifically -

procurement, risk, planning, finance, quality assurance, HR and governance and accountability

managers who can influence the project as well as project team, top management, administrative

support, project sponsor and project manager himself.

More specifically, project team consists of individual members under each functional

manager. (See fig. 13).

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Fig.13: Consortium project team

External stakeholders for consortium project are other companies such as Rosemount

Group’s competitors in decommissioning as well as companies trying to enter the consortium or

other associations.

Our main external stakeholders are the potential partners particularly because of the aim or

entering the consortium with us, therefore partnership with them as with key stakeholders must be

built and nurtured as suggested by Kerzner, 2009.

Our company has to consider government agencies such as DECC as the stakeholder as well

as UK government and other international agencies while building consortium focussed on

decommissioning. Special attention should be paid to the Office of Fair Trading (OFT) and

Competition Commission while setting up consortium because of the threat of affecting competition

law.

Rosemount Group also has to be aware of its customers and their expectations as well as

contractors and environmental pressure groups which might have an impact on the project.

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Fig.14: Stakeholder grid (applied from APM, 2006).

AGAINST PROJECT FOR PROJECT

HIGH POWER

LOW POWER

HIGH LOW LOW HIGH

INTEREST

To be able to determine stakeholder management actions, stakeholder grid was used to

evaluate stakeholder’s position in relationship to the project as proposed by APM, 2006. Project

sponsor needs to manage stakeholders to ensure their positive interest in the project.

It is not recommended to give project manager the responsibility of stakeholder

management because of the potential conflict of interest as suggested by Kerzner, 2009.

As a tool for successful management of stakeholders communication plan can be used.

Communication lines for consortium project are introduced below in fig.15, followed by

communication plan in table 11.

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Environmental groups Other organizationsOFTCompetition commission

Functional managersProject teamUK governmentContractors

Administrative supportCustomers

Top managementProject sponsorProject managerConsortium partners

Fig.15 : Communication lines

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COMMUNICATION PLANStakeholders Information

required by project

Frequency Information disseminated from project

Frequency Format Responsible

Top management

PID Once MilestonesReports

Every 2 weeks

EmailMeeting

PMSenior man.

Sponsor / Shareholders

PID Once ReportMilestones

Every 2 weeks

Meeting PMSenior man.

Project team PID Once ReportMilestones

Every 2 weeks

Meeting PMSenior man.

Functional managers

WBS, Resources

Twice WBSGannt chart

Every 1 week

Meeting PM

Other organizations

PID Once MilestonesReports

Every 2 weeks

Meeting PM,Senior man.

Other organizations

Board reports Four times Reports Every 1 week

Email PM

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Risk assessmentRisk assessment was used as a part of this document especially because of the statement of

Loosemore et al., 2006 and other researchers who defined neglection of risk identification process as

one of the reason for project failure.

Risk management planTo be able to identify, analyze and manage associated risks with the consortium project,

following risk management process was implemented:

Fig.16: Risk management process

Remodeled from: APM, 2004

It is useful tool for recording and monitoring of the risk management activities throughout

the life cycle. (APM, 2006).

To be able to identify most of the risks associated with the implementation of the consortium

project, project scope and objectives need to be identified as well as stakeholders of the project and

environmental factors which might affect project throughout the lifecycle. Project scope and

objectives are identified in table 4 and stakeholder analysis was performed in fig.12 therefore

environmental factors need to be identified.

To be able to identify environmental factors which might have an impact on the consortium

project, PESTLE analysis was used. (See table 12).

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Table 12 : PESTLE ANALYSIS OF THE CONSORTIUM PROJECT

PESTLE ANALYSIS OF THE CONSORTIUM PROJECT

POLITICAL DECC , UK government, OFT and Competiton Commission.

ECONOMIC Current economic crisis, inflation and interest rate, economic growth of the

country.

SOCIAL Cultural trends (waste disposal, protection of environment), little knowledge of

companies about decommissioning, collaboration of companies in

decommissioning sector.

TECHNOLOGICAL No procedures for successful development of consortium were introduced as

well as no procedures to follow while decommissioning oil rigs. Technology

requirements for decommissioning might differ from the requirements of the

jobs done by Rosemount Group at the moment. Also our partners might prefer

to use other technology and processes within the consortium.

LEGAL In terms of decommissioning: National governments obligations, Petroleum Act

1998, Health and Safety regulations, licensing required for decommissioning. In

terms of development of the consortium: acts and regulations developed by

OFT and Competition Commission.

ENVIRONMENTA

L

UKCS location – environmental protection.

Following table highlights the risk identified in the identification phase of the risk

management process. Risk categories are based on project objectives, stakeholders and factors

affecting the project described in table above. (See table 13).

Risk log table is followed by probability impact grid (PIG)(see fig.17), which was used for the

purpose of risk response planning. There are four possibilites of how to repond to the risks defined in

the risk log (table 13): avoid, mitigate, accept or transfer. It is recommended that risks within yellow

and red zones are assigned to the project team members. Therefore all of the risks identified in the

risk management process will be assigned to specific person in the project team to be reviewed and

mitigated.

After the third part of the process (responding to the project risks), project risks reviewing

needs to be done throughout the project life cycle so that mitigation as well as other responses to

them can be up to date.

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Last table was introduced as the third part of the risk process and it defines responses made

to the risk identified in the risk log which can be seen in table 14. Four types of responses can be

implemented, mitigation, accepting, avoding and transfering. Three types of the responses were

used as a part of the risk management, specifically mitigation, accepting and avoiding the risks.

Table 13: Risk log

RISK CATEGORY DESCRIPTION PROBABILITY

IMPACT

1. Market share Difficulty of establishing an identity of the consortium MEDIUM 42. Market share Inability to develop trust and integration LOW 53. Market share Affection of future due to other parties‘ failure MEDIUM 44. Scope Ineffective negotiation – less time effective MEDIUM 45. Partners Inability to restrict/limit liability MEDIUM 36. Partners Inability to attract 3rd parties MEDIUM 37. Partners Lead company liable for everything MEDIUM 38. Stakeholders Inability to motivate project team MEDIUM 39. Stakeholders Lack of contribution of functional managers LOW 310. Stakeholders Regulation of government agencies LOW 411. Economic Economic crisis make costs bigger MEDIUM 212. Economic Inflation might cause loss of value of money MEDIUM 213. Social factor Entering consortium with companies with lack of

knowledge of decommissioning process MEDIUM 5

14. Social factor Using different processes within consortium MEDIUM 415. Legal factor Regulations for decommissioning MEDIUM 2

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Fig.17: Probability Impact Grid of the risks

Impact

5 2 13

4 10 1, 3, 4, 14

3 9 5, 6, 7, 8

2 11, 12, 15

1

Low Medium High

Probability

Impact on achievment of objectives: Impact rating:High 5

SIGNIFICANT Scale: 4 - 5 Moderate 4

MODERATE Scale: 2 - 3 Medium 3

MINOR Scale: 1 Minor 2

Low 1

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Table 14: Risk matrix with risk responses

RISK MATRIX WITH MITIGATION ACTIONS

RISK CATEGORY DESCRIPTION PROBABILITYIMPACT RESPONSE NEW PROBABILITY NEW IMPACT

1) Market share Difficult to establish an identity MEDIUM 4 Memorandum of understanding MEDIUM 32) Market share Inability ti develop trust / integration LOW 5 Memorandum of understanding MEDIUM 43) Market share Affection of future due to other's failure MEDIUM 4 Liability limited MEDIUM 34) Scope Time consuming if not negotiated MEDIUM 4 PM negotiation skills improved LOW 45) Partners Difficult to restrict / limit liability MEDIUM 3 Memorandum of understanding LOW 36) Partners Inability to attract 3rd parties MEDIUM 3 Memorandum of understanding LOW 37) Partners Lead company liable for everything MEDIUM 3 Memorandum of understanding MEDIUM 38) Stakeholders Inability to motivate project team LOW 3 Communication plan LOW 29) Stakeholders Lack of constribution of functional managers LOW 3 Communication plan LOW 210) Stakeholders Regulation of government agencies MEDIUM 4 Accept MEDIUM 411) Economic Econominc crisis make costs bigger MEDIUM 2 Accept MEDIUM 212) Economic Inflation - loss of value of money over the time MEDIUM 2 Accept MEDIUM 213) Social Entering consortium with companies no capabilites MEDIUM 5 Due diligence exercise LOW 314) Social Using different processes MEDIUM 4 Avoid MEDIUM 415) Legal Regulations for decommissioning MEDIUM 2 Accept MEDIUM 2

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RecommendationsThis project initiation document identified strategic option of developing the consortium

with the aim of improving market position in the decommissioning market for Rosemount Group.

High level business case was introduced, project scope, deliverables and objectives were

identifed as well as any assumptions, considerations and constraints of the project. Financial budget

of the proposed project was introduced with estimated pay off time. Critical success criteria and

factors were defined followed by project management plan using WBS, Gannt Chart, milestone and

decision gates to show the sequences of the tasks and their importance. Key phases of the project

life cycle were evaluated and stakeholder analysis as well as risk assessment were conducted.

Therefore recommendations need to be made.

It is recommended for project manager to use Microsoft Project as a useful tool for project

planning, monitoring and controlling which is essential for successful project completion as defined

by Kerzner, 2009.

It is also recommended that project manager is not involved with dealing with project

stakeholders because of the posibility of conflict of interest.

It is also essential for project manager to regularly scan and review stakeholders,

environmental impacts and risks as long as it is critical for successful completion of the project.

Specific people need to be assign for risk mitigation process as defined in the last section of

the project iniation document.

Further research and meetings should be held to identify specific processes taking place in

the consortium such as contract management and so on as long as consortium project defined by

Rosemount Group is only used for implementation of the consortium, not for setting up specific

processes and rules within the association.

Project manager also needs to define quality management as well as change control process

for this particular project so that any changes required can be mitigated and therefore project is not

affected on time and budget.

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BURKE, R., 1999. Project Management: Planning and Control Techniques. 3rd ed. West Sussex, UK:

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EAST OF ENGLAND ENERGY GROUP, 2010. Platform decommissioning will be big business. EEEgr News. [online]. 1, pp.24. Available from: http://www.eeegr.com/uploads/DOCS/november-2010-newsletter.pdf [Accessed 14 December].

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