Project Management - the Next Step of the Challenge
Innovator: Along with Drilling, Geoscience, Reservoir Engineering and Wellwork, Project Management is one of the scarce skills critical to the Company’s long-term success. How would you describe the major projects impact on TNK-BP’s future?
Мarat Atnashev: TNK-BP as a large oil and gas company can only ensure its future through operational excellence and major projects. Overtime, natural resources tend to decline and we are to find new oil, develop it and bring it to the market, thus creating value for the Company and for the country. Therefore one can’t underestimate the impact of the major projects on TNK-BP’s longterm success.
In the past we were mostly focusing on operational excellence to extract more from the existing assets, bring new technologies to extend the life of those fields, maintain the existing infrastructure and bring it to the right standards, and this strategy was quite successful. Although operational excellence remains important, in the next 10 years about 30 percent of the oil will come from the new major projects. We are expecting a shift of activity and capital investments towards major projects both in the Upstream and the Downstream.
Innovator: TNK-BP has brought on stream three Major Projects in eight months – Verkhnechonskoye (VC), Uvat Eastern Hub, Kamennoye Northern Hub. What are the common issues across the Projects currently being implemented?
Atnashev: We as a company understand that the challenge of the major projects is continually increasing. The first major projects were effectively the incremental production projects such as Ust-Vakh or Kamennoye with substantial parts of the field adjacent to the existing operations. These were tough projects involving huge capital investment, but clearly the new projects that we are doing today such as VC or Uvat are representing the next step of the challenge. The challenges of the future are even one step ahead. Those are developing fields in the remote Yamal area with very difficult permafrost environment. These tasks are moving the frontier of our operations forward. But that makes it more appealing for many people because professionals like the challenge.
Downstream as well is facing substantial challenge of new projects. The country is eager to reach European environmental standards and we ought to bring new technologies to our refineries. We have to upgrade effectively all of our refineries, and this implies substantial investments in the coming decade. Let’s bear in mind that we will install brandnew facilities while the whole plant keeps operating. This presents quite a different type of challenge.
Innovator: In order to meet the Company’s long-term development plans and improve ongoing projects performance Project Management capabilities are to be developed systematically and sustainably. What is the current level of Project Management capability inside the Company? What is to be done to ensure the required Project Management skills in TNK-BP?
Gary Jones: There has been great success with the projects that have been recently implemented by TNK-BP: we’ve fundamentally met deadlines and the commitments we had made to the government.
That is a result of excellent work from our project teams. What we found out though is that generally we lack depth in Project Management experience as well as standard approaches across the projects. The solution may be in building organizational capability, thereby providing access to the needed resources, integrating the different disciplines, learning to handle some Project Management fundamentals such as management of change, risks analysis and cost forecasting.
We’ve had training programs in Project Management since 2006, yet there is no structured development program in place. People tend to self-select on to courses. What we need to do is put together the formal training, job placement and exchange of experience between the different projects to develop personal skills thus improving the overall competency as well as benefiting business. We tended to rely on people’s individual experience and training, and now we need to do projects in a world-class manner and that implies standardizing our approaches rather than inventing solutions for each project individually.
Yet another issue is that there was continuous reliance on the external Project Management resources. If we keep relying heavily on the external resources for our projects it will be very difficult to get the internal competence. We are now facing the task of building our own in-house resource pool to have Project Management capability available to initiate new projects of the future.
Atnashev: In terms of capital efficiency TNK-BP is probably the leader amongst Russian oil majors. But if we compare ourselves to the best international practices there is a big opportunity to improve our capability. TNK-BP strategy is based on the major projects, therefore the success of this strategy relies on how well we overcome this gap in capabilities.
Project Management capability probably doesn’t go as a pure stand-alone discipline but it is rather something we want our staff in all disciplines to be aware of. We do not need just people who are familiar with the Project Management tools but what we actually need is sound professionals in their own disciplines with very strong Project Management capability.
In the long term about half of the Company will be dealing constantly with major projects – not only the classical project managers, but all the disciplines – Drilling, Geoscience, Reservoir Engineering, Wellwork, as well as accountants and legal staff. People will be dealing with a Company where the business model is different. It’s quite important for us to make sure that the people involved master Project Management capabilities whatever discipline they are in.
While implementing the recent projects we’ve had some interesting learnings and now as a Company we adopt certain organizational principles that sound quite basic but are really important to implement. One is introducing Single Points of Accountability (SPA) for each project to be responsible to deliver the project. The SPA needs professional people capable of delivering the project, and that links us to the principle that we need to have the required resources for the Project Management teams. The next principle is continuity of the projects. Projects typically tend to last five to ten years, and we start to understand that to achieve success we need to make sure that the knowledge basis and the management of the projects are sustainable. Finally we work on a principle of assurance. This includes both technical assurance and the Project Management assurance.
We want to make sure that our solutions are optimal, standardized, and safe and we also want to make sure that the Project Management process that exists in the Company is constantly followed.
Innovator: One of the key objectives of the newly established Project Management Community is to share best practice acquired within highly effective major project developments. What means of experience exchange are there for TNK-BP project managers?
Jones: We are planning a conference towards the end of July bringing together top 30 of the Project Management leadership to discuss exchanges between projects within TNK-BP, look at best practices within our existing projects, and look at possible exchanges with international projects. Another idea is holding workshops to specifically target issues like changes in legislation or planning and scheduling standardization taught by world-class experts in that particular aspect and following that up by putting people into the regions to coach people on the job.
The Project Management Community has a pyramid structure. For example, for Upstream projects there are about five general managers, then come 20 discipline managers including chief geologists, chief engineers, wells directors, who need to be thinking in the Project Management mentality. Then come 50 specialists in particular disciplines who need to be thinking in an integrated way as opposed to a headway ‘drill-my-well’ approach. And then come about a hundred people more generally acknowledged as project discipline staff and contractors. The concept of the Project Management Community is to support our people in continually developing their Project Management skills when they are working on major projects.
People from different disciplines are going to be linked into the delivery of major projects. It’s like an iceberg: on the surface you see a project, beneath the surface are all the people that are linked into the decision making. The awareness of the overall economics of the project and its value opportunities is very important for all disciplines. So I think the training and the awareness will spread much wider than people who have the project title.
Innovator: Another cornerstone of the Project Management Community strategy is to introduce capability development programs to provide experience and development to those involved. Will this provide for the establishment of the Project Management discipline as a career development option?
Jones: In terms of staff development we intend to rely heavily on our existing resources which are primarily located in the regions, using experienced professionals that we already have to mentor the and coach the next generation of project managers through targeted job placement across our portfolio of projects. As I’ve mentioned we need a structured program for development of our project managers. Downstream has made a particularly impressive attempt so far. Since 2007 it has been developing a pool of professionals whom it’s taking through a three-year development program.
Our intention is to structure the training over a three-year period of time. We are now assessing the existing competence of our people, looking for the gaps – not to identify weakness but to find out where to focus our attention to provide well-rounded professionals in three years. Similar processes are well established within the drilling and the subsurface disciplines, for example. The difference is that we will take people who already have a core skill in one of the ‘traditional’ disciplines and who are looking to be project managers in the future.
Innovator: Speaking of a ‘motto’ for the Project Management Community – what could it be?
Atnashev: There is a saying, draw not your bow until the arrow is fixed. That is what the Project Management is about.
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