A framework for implementation of IPD principles in oil & gas projects

Investment in the global Oil and Gas sector is huge. In 2014, the cumulative investment in between 2014 and 2035 was estimated to be US$22.4 trillion, equivalent to an average annual spend of more than US$1 trillion. A high percentage of Oil & Gas projects go over budget, however, because of poor performance and major schedule delays. Many of these can be traced to problems originating in the design phase. This phase is typically carried out by experienced design consultants, followed by tendering and then execution, involving large construction organisations. Project delivery methods in the sector vary, with 57% using Design-Bid-Build, 38% Design-Build, and 5% Construction Manager at Risk. These methods provide no clear integration or collaborative approaches to ensure stakeholders involvement early during the design phase. This research examines the potential for using Integrated Project Delivery (IPD) as a new approach to improve collaboration by engaging full project teams from early in the design phase. It addresses the following questions: How do current practices in the Oil & Gas sector influence project performance? What are the factors behind poor project performance, and how can project performance be improved by the implementation of IPD? The aim of this research is to create a conceptual framework to implement IPD principles in Oil & Gas projects as a way of improving their performance. This framework will help project stakeholders to be involved during the design phase, which in turn will help to deliver high quality projects, where schedule and costs are tightly controlled. An extensive literature review found 1,056 factors affecting performance, of which 85 could be resolved if addressed at the design phase. A total of 55 factors were related to communication, project management, planning and design problems. A conceptual framework was created to equip stakeholders with a tool to implement IPD effectively. This framework was validated using case studies of very large Oil & Gas projects. This confirmed the criticality of the factors identified, and that they occurred during particular project stages. The framework was structured by plotting the major project stakeholders on one side and the project phases on the other (design phase, tendering, and construction), followed by the performance factors related to project management, planning, design and communication. For each factor, the stakeholders responsible were identified. The research concluded that the Oil & Gas industry suffers from poor performance and the current practices and execution strategies are influencing project delivery. There is a clear gap between the design and construction phases. The conceptual framework developed here will help to improve project performance by bridging the gap and involving all the stakeholders during the design phase, making sure that all the identified poor performance factors can be managed by all those affected, at the most suitable time. The framework is also expected to resolve other factors related to resources, procurement, environment and contracting which are linked to design, planning and project management factors.