Tag Archives: project

Every Project Is A Negotiation

One of the challenges of project management is making accurate predictions. But the second challenge is that executives often don’t fully understand project management and very often want delivery faster than your initial plan, regardless of how accurate that initial plan is. If you present an initial plan to a certain kind of executive, they’ll ask for faster or cheaper delivery (or both). So if that’s the case it doesn’t matter how accurate your initial plan is – in fact accuracy is a hindrance. What matters is how much padding you have.

It’s common practice to add buffer to plan for schedule slippage. It might also be worth adding some buffer for that executive review, so you can subsequently over-deliver in accordance with his or her expectations. Not optimal, but a perhaps a better option than having to try and find cuts that simply won’t be there in a completely accurate and well resourced plan.

BP’s Project Management of the Deepwater Disaster

Deepwater Horizon Oil Rig - source: SkyTruth (via Flickr)

The disaster is probably the second largest oil spill in history (after the Lakeview Gusher that occurred between 1910 and 1911 in California). The efforts to address leak can be treated as a project. BP has been widely criticized for its management of the disaster, this post analyzes BP’s sequence of media statements to determine what went wrong at the project level, rather than just their PR efforts. Several factors are apparent.

Firstly, BP initially underestimated the scale of the disaster and overestimated their ability to address it. There was no initial burst of action resembling crisis management. Two days after the explosion BP had mobilized 32 vessels and 4 aircraft, and three days later the number of aircraft had increased by one with the number of vessels unchanged. BP ultimately needed 205 times the number of vessels and 32 times the number of aircraft they initially deployed, the scale of the final response relative to BP’s initial reaction is stark. They went with 32 boats initially and ultimate needed 24x the number of ships in the entire US Navy.

This understated reaction appears to be driven by the belief that the well was leaking 5,000 barrels a day, when the reality was that the leak was 10x that. Of course, estimation is hard at the best of times, but a public underwater feed and panel of experts to analyze the flow rate wasn’t in place until day 31 based on the actions of the government rather than BP.

The apparent focus on repairing the failed the blowout preventer for the first ten days after the explosion delayed innovative ideas for a back-up solution. Secondly, alternative solutions also appear to have been explored sequentially, rather than in parallel which caused further delay, the exception to this is the digging of relief wells which did commence early in the process, but were always known to take months to complete.

Overall, one is left with the impression that BP didn’t understand (or didn’t want to understand) the scale of the project it was involved in, and that continually colored its reaction to the disaster.

Vessels deployed in oil clean up (y axis) vs. time (x axis)

Below are excepts from various press releases issued by BP during the crisis, the comments in bold are mine.

Full Timeline

The first press release came on April 20 (though the rig didn’t sink until 2 days later):

“Transocean Ltd. (NYSE: RIG) (SIX: RIGN) today reported a fire onboard its semisubmersible drilling rig Deepwater Horizon. The incident occurred April 20, 2010 at approximately 10:00 p.m. central time in the United States Gulf of Mexico. The rig was located approximately 41 miles offshore Louisiana on Mississippi Canyon block 252.”

Day 2 – BP mobilizes initial response

BP has mobilized a flotilla of vessels and resources that includes:

  • significant mechanical recovery capacity;
  • 32 spill response vessels including a large storage barge;
  • skimming capacity of more than 171,000 barrels per day, with more available if needed;
  • offshore storage capacity of 122,000 barrels and additional 175,000 barrels available and on standby;
  • supplies of more than 100,000 gallons of dispersants and four aircraft ready to spray dispersant to the spill, and the pre-approval of the US Coast Guard to use them;
  • 500,000 feet of boom increasing  to 1,000,000 feet of boom by day’s end;
  • pre-planned forecasting of 48-hour spill trajectory which indicates spilled oil will remain well offshore during that period;
  • pre-planned staging of resources for protection of environmentally sensitive areas.

Day 5 – BP had added one additional aircraft to the effort:

Equipment available for the effort includes:

  • 5 aircraft (helicopters and fixed wing including a large payload capacity C-130 (Hercules) for dispersant deployment).

Day 6 –  plans for a relief well and undersea investigation were in place:

BP, as lease operator of MC252, also continues to work below the surface on Transocean’s subsea equipment using remotely operated vehicles to monitor the Macondo/MC252 exploration well, and is working to activate the blow-out preventer.

The Transocean drilling rig Development Driller III will arrive on location today to drill the first of two relief wells to permanently secure the well. A second drilling rig, Transocean’s Discoverer Enterprise, is en route.

Day 7 – work starts on using non-traditional means to stop the leak, and the number of surface response vessels had doubled. Interestingly the amount of boom available has reduced relative to the estimate given two days after the spill, perhaps due to coordination and communication problems two days after the incident:

In parallel with these offshore efforts, advanced engineering design and fabrication of a subsea oil collection system has started onshore. This will be the first time this proven shallow water technology has been adapted for the deepwater. It is expected to be ready for deployment within the next four weeks.

  • More than 100,000 feet of boom (barrier) has been assigned to contain the spill. An additional 286,760 feet is available and 320,460 feet has been ordered.
  • 69 response vessels are being used including skimmers, tugs, barges and recovery vessels.
  • 76,104 gallons of dispersant have been deployed and an additional 89,746 gallons are available.

Day 10 – the problem with the blowout preventer is becoming apparent and it is realized oil may reach the shore:

BP has called on expertise from other companies including Exxon, Shell, Chevron and Anadarko to help it activate the blow out preventer, and to offer technical support on other aspects of the response.

BP announced today it has launched the next phase of its effort to contain and clean up the Gulf of Mexico oil spill, with a significant expansion of onshore preparations in case spilled oil should reach the coast.

And the estimate of the oil leak was very low (about 8-14% of the actual figure the technical group subsequently estimated)

Efforts to stem the flow of oil from the well, currently estimated at up to 5,000 barrels a day, are continuing with six remotely-operated vehicles (ROVs) continuing to attempt to activate the blow out preventer (BOP) on the sea bed.

Day 14 – work on the relief well starts and plans to cap the well are in place:

BP today announced that work has begun to drill a relief well to intercept and isolate the oil well that is spilling oil in the US Gulf of Mexico. The drilling began at 15:00CDT (21:00BST) on Sunday May 2.

Rapid progress is also being made in constructing a coffer dam, or containment canopy. A 14 x 24 x 40 foot steel canopy has already been fabricated and other-sized canopies are under construction and being sourced. Once lowered over the leak site and connected by pipe, the canopy is designed to channel the flow of oil from the subsea to the surface where it could be processed and stored safely on board a specialist vessel.

Day 15 – one of the three leaks is blocked:

BP today announced that it has stopped the flow of oil from one of the three existing leak points on the damaged MC252 oil well and riser in the Gulf of Mexico. While this is not expected to affect the overall rate of flow from the well, it is expected to reduce the complexity of the situation being dealt with on the seabed.

Day 20 – the large containment dome has failed, a smaller containment dome and “top kill” are cited as the next tactics

The containment dome that was deployed last week has been parked away from the spill area on the sea bed. Efforts to place it over the main leak point were suspended at the weekend as a build up of hydrates prevented a successful placement of the dome over the spill area.

In addition, further work on the blow out preventer has positioned us to attempt a “top kill” option aimed at stopping the flow of oil from the well. This option will be pursued in parallel with the smaller containment dome over the next two weeks.

Day 23 – 530 surface vessels are now working on the spill (a 16x increase over the initial response)

Work continues to collect and disperse oil that has reached the surface of the sea. Over 530 vessels are involved in the response effort, including skimmers, tugs, barges and recovery vessels.

Day 27 – 650 surface vessels are now in use

Work continues to collect and disperse oil that has reached the surface of the sea. Over 650 vessels are involved in the response effort, including skimmers, tugs, barges and recovery vessels.

Day 28 – 750 surface vessels are now in use

Work continues to collect and disperse oil that has reached the surface of the sea. Over 750 vessels are involved in the response effort, including skimmers, tugs, barges and recovery vessels.

Day 30 – 930 surface vessels are now in use

Work continues to collect and disperse oil that has reached the surface of the sea. Over 930 vessels are involved in the response effort, including skimmers, tugs, barges and recovery vessels.

Day 31 – underwater live feed added and government appoints a team to measure flow rate

BP has been providing a live feed to government entities over the last two weeks – including the US Department of the Interior, US Coast Guard, Minerals Management Service (MMS) through the Unified Area Command center in Louisiana – as well as to BP and industry scientists and engineers involved in the effort to stop the spill.

The US government has created a Flow Rate Technical Team (FRTT) to develop a more precise estimate. The FRTT includes the US Coast Guard, NOAA, MMS, Department of Energy (DOE) and the US Geological Survey. The FRTT is mandated to produce a report by close of business on Saturday, May 22.

Day 34 – 1,100 surface vessels are now in use

Work continues to collect and disperse oil that has reached the surface of the sea. Over 1,100 vessels are involved in the response effort, including skimmers, tugs, barges and recovery vessels.

Day 35 – alternative to the top kill method are considered

Being progressed in parallel with plans for the top kill is development of a lower marine riser package (or LMRP) cap containment option. This would first involve removing the damaged riser from the top of the BOP, leaving a cleanly-cut pipe at the top of the BOP’s LMRP. The LMRP cap, an engineered containment device with a sealing grommet, would be connected to a riser from the Discoverer Enterprise drillship and then placed over the LMRP with the intention of capturing most of the oil and gas flowing from the well and transporting it to the drillship on the surface. The LMRP cap is already on site and it is anticipated that this option will be available for deployment by the end of May.

Additional options also continue to be progressed, including the option of lowering a second blow-out preventer, or a valve, on top of the MC 252 BOP

Day 36 – “Top kill” starts

BP started the “top kill” operations today to stop the flow of oil from the MC252 well in the Gulf of Mexico.

Day 38 – 1,300 surface vessels are now in use

Almost 1,300 vessels are now involved in the response effort, including skimmers, tugs, barges and recovery vessels.

Day 39 – “Top kill” fails

Despite successfully pumping a total of over 30,000 barrels of heavy mud, in three attempts at rates of up to 80 barrels a minute, and deploying a wide range of different bridging materials, the operation did not overcome the flow from the well.

Day 41 – Lower Marine Riser Extended

BP announced today that, after extensive consultation with National Incident Commander Admiral Thad Allen and other members of the Federal government, it plans to further enhance the lower marine riser package (“LMRP”) containment system currently scheduled to be deployed this week with further measures that are expected to keep additional oil out of the Gulf of Mexico.

Day 42 – 1,600 vessels are now in use

Over 1,600 vessels are now involved in the response effort, including skimmers, tugs, barges and recovery vessels.

Day 42 – 2,600 vessels are now in use

More than 2,600 vessels are now involved in the response effort, including skimmers, tugs, barges and recovery vessels.

Day 50 – 3,600 vessels are now in use

Almost 3,600 vessels are now involved in the response effort, including skimmers, tugs, barges and recovery vessels.

Day 52 – additional containment cap in place

BP announced today that oil and gas is flowing through a second containment system attached to the Deepwater Horizon rig’s failed blow out preventer (BOP).

Day 59 – 4,500 vessels are now in use, 1,330 miles of containment boom

Approximately 37,000 personnel, more than 4,500 vessels and some 100 aircraft are now engaged in the response effort.

The total length of containment boom deployed as part of efforts to prevent oil from reaching the coast is now almost 2.8 million feet (530 miles), and about 4.2 million feet (800 miles) of sorbent boom also has been deployed.

Day 68 – 5,000 vessels in use

Over 39,000 personnel, almost 5,000 vessels and some 110 aircraft are now engaged in the response effort.

Day 75 – 6,563 vessels in use

Approximately 44,500 personnel, more than 6,563 vessels and some 113 aircraft are now engaged in the response effort.

Day 89 – 6,470 vessels in use

Approximately 43,100 personnel, more than 6,470 vessels and dozens of aircraft are engaged in the response effort.

Day 91 – sealing cap in place

Following approval from the National Incident Commander, BP began replacing the existing lower marine riser package (LMRP) containment cap over the Deepwater Horizon’s failed blow-out preventer with a new sealing cap assembly.

Day 97 – CEO steps down

BP today announced that, by mutual agreement with the BP board, Tony Hayward is to step down as group chief executive with effect from October 1, 2010. He will be succeeded as of that date by fellow executive director Robert Dudley.

Which is worse: under-estimation or over-estimation?

For any project task, it is unlikely that your estimate of how long it will take will be perfect. So, is it worse to overestimate the time it will take to complete a task or underestimate it?

Cost of overestimation

Overestimation creates the problem that the estimate become self-fulfilling. The task takes longer than it would have done with a more accurate estimate in place. There are two ideas behind this linked to how people behave. Firstly, Student’s Syndrome states that people often won’t start working until very close to a deadline. Secondly, Parkinson’s Law states that work expands to fill the time available. Therefore, if you have a task with overestimated length, the impact is the task might take longer than it ‘should’ do.

Costs of underestimation 

If a task is assumed to take long time than it actually needs, one of two things will happen. Either the task gets done at lower quality, or the task doesn’t get done on time and any tasks dependent on it are pushed out.

Which is worse?

Whilst obviously accurate estimates are the best outcome, over-estimation is less bad than underestimation. Underestimation can impact dependencies and the overall quality of the project. Overestimation may be wasteful for the resources on a particular task, but it is less likely to impact other tasks or overall quality.

Of course, a third option following the critical chain methodologies is to consider adding buffers to the schedule to allow for some underestimation at the individual task level.