Introduction Risk Since time cost money in project management

Introduction

This essay is all about the incident
that happened on the night of the 20th April 2010 when an oil
drilling rig called Deepwater horizon was in operations in the Macondo prospect
in the Gulf of Mexico and exploded due to poor management decisions which result in the death of 11 workers and began the
release of a massive amount of oil into
the Gulf. It is also known as one of the largest spill of oil in the history of
oil drilling operations in the United States
because 4 million barrels of oil flowed from the affected well over a period of 87 days (Environmental Protection Agency, 2017). 

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Identification
of Key Risk

Since time cost money in project
management world, Deepwater Horizon
drilling project was several days behind schedule and the pressure to get the job done as soon as possible played a miserable
role in the disastrous incident. According to movie Deepwater Horizon (2016),
Apart from human error and equipment failure,
there were several risks that management overlooked before performing the final
disastrous test. Management sent team 1 home without doing cement bond log test
and it was so important because it was the only thing in between the safety of
the employees and blowout. In that situation compromising on cement log test means compromising on whole
drilling infrastructure. Even after getting unsatisfactory results from the
gauge of drill line and kill line they
performed the final test without analysing its impact on employee’s security
and safety.

 Risk Breakdown Structure

Level 0

Level 1

Level 2

Level 3

 
 
 
Project Risk

 
Technical

Performance

Equipment may not be fit for
purpose.

Quality

Available materials may be of insufficient
quality

Safety

Safety may not be considered in design

Management

Project Management

Miscommunication

Inaccurate estimates may cause
overspends etc.

Organization

Decision Making

Making decisions without analysing its
impacts.

 

 

 

 

Qualitative and Quantitative assessment of the Risk after the incident.

 

 

 

Level Name

Ranges

Description

Low

0-39%

If something would end up being
nothing more than a bother and easily manageable.

Medium

40-79%

A difficult but manageable
situation.

High

80-100%

If something blowout budget or
delay project substantially.

 

Risk

Category

Assessment

Response

Probability

Impact on company

R1) Upcoming tenders and contracts will be hard to get because
of the Incident.

 
Market

 
     High
(90%)

 
    High

Management has to
overcome this situation as soon as possible to retain the reputation of the
company.

R2) Settlement payments for the injured workers will disturb financial
condition of the company.

Organization

Medium
(40%)

Medium

Instead of paying in cash directly, the company can give
them stock market shares or bonds of the same company.

R3) Employees will feel insecure for working with the company
in future.

Organization

High
(80%)

Low

Need to introduce
new safety arrangement and have to provide awareness about handling emergency
conditions.

R4) There will be huge employees turnover in the oil drilling
industry.

Industry

High
(80%)

Low

Need to convince
current and future employees in terms of security and safety.

R5) Time cost money so rehabilitation time may affect the progress
of the company.

Organization

Medium
(40%)

Medium

Management has to overcome on this for continuous
improvement.

R6) Threat for marine life

Environment

Medium
(40%)

Low

Need to do some
arrangements for saving marine lives by contacting and cooperating with
marine life authorities.

R7) It will Affect Seafood and fishing industry.

Environment

Medium
(40%)

Low

Need to do several
steps to prevent water from toxication.

R8) It will affect tourist industry especially for beaches.

Environment

Low
(10%)

Low

Need to create
awareness among tourists about precautions.

R9) it will cause air pollution

Environment

Low
(10%)

Low

Need to spray
anti-pollution chemicals in the surroundings.

R10) It will disturb the Routes of the Sea Transportation

Industry

Low
(10%)

Low

Need to clear the
spot of the incident to open the routes again for cargo and passenger ships.

R11) it will decrease the interest of the purchaser in real
estate business.

Industry

Low
(20%)

Low

 
————————-

 

 

Tourism

For this reason,
perhaps a reasonable estimate is fifty percent of the lower estimate by Oxford
Economics, which would be $3.8 billion as shown in Exhibit 3.77

 

 

 

High

R3, R4

 

R1,

Medium

R6,R7

R2,R5

 

Low

R8,R9,R10,R11

 

 

Occurrence/
Impact

Low

Medium

High

                                                    
Impact

 

 

 

 

 

 

 

 

 

 

 

 

Discussion

Risk identification is one
of the most sensitive areas in the projects because it requires proper consideration
from each and every point of view.The main sources of the risk could be either
internal to the project or external to the project whereas internal factors of
the risk may arise from people, processes, procedures, organizational culture,
managerial decisions, quality of the equipment etc  (Hilson, 2003).The primary purpose of the
risk management is to increase opportunities and decrease threats by keeping
the focus on objectives and goals of the project (Hillson, 1999).Since Project
management is a combination of teamwork so effective communication plays an important
role throughout the life cycle of the project but Enterprise Technology
Projects (2016) mentioned  4 common miscommunication
mistakes in projects  and one of them is
that we often think that we have done enough communication within teams to
completely understand the nature of the projects and there is a true fact
regarding this is that no amount of communication is ever enough.When Team 2
arrived at the site, there was no proper communication in between the Team 1
and Team 2 about cement bond log test (Deepwater
Horizon, 2016). In Risk Management, before identifying
general or overall risks, it is more important to identify that what events
might be risky against which barrier at what stage. There is no doubt
that most probably same nature of the risks impacts on same objectives which
means that technical risk could influence technical objectives and in the long
run these objectives may disturb overall goals of the project (Jaafari, 2001;
Hillson, 2005). In Deepwater horizon, one of their technical safety officers told them that 10% machinery on board
is not working properly and may cause hazard during the drilling process but
that won’t help in convincing the management to stop from performing the last test. In some cases, performing risk
analysis or mitigation of risk requires more expenses that result in exceeding the current budget up to
20%, but the main thing is that whether the reduction
in the risk worth the additional expenditure? (Morris et al., 1991). That was the main reason behind not doing
cement log test in Deepwater Horizon, management
was already late for 43 days and they were ahead of almost $50 million more
expenditure because they were confident enough about cement log for more
drilling without testing the capability of its current state. If you want your
decision making to be efficient then there is a need to quantify security and
safety risks to enable risk-based assessments of the effectiveness of
protective measures (Stewart et al.2006; Little 2007). Management at Deepwater
Horizon didn’t expect that sort of disastrous blowout, but again not enough
amount of prearrangements was done to protect the workers from the fire. Deepwater Horizon incident took lives of
11 workers just because of management’s immature behaviour and decision-making process. Dangerous waste and
Environmental hazards will always be a concerned for the growing economies, because
of any disastrous situation, the company can’t
deny allegations as an innocent purchaser defence.
They must clean, and they must pay for all the damages (Smith et al., 2011). The estimated damage cost
to British Petroleum, the environment and the United States Gulf coast economy was
about $36.9 billion dollar. In a nutshell, the business
world is all about profit and loss and if investors lost their money
from one project then maybe they find different opportunities in other projects
to get a return on their investment but
the most valuable assets in any organizations are
the lives of the employees because we can’t get it back in case of loss.

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