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Influence of Non-Standard WBS

FEATURED PAPER

The Influence of Non-Standard Work Breakdown Structure on Change Orders and Cost Estimation for Sudan Oil and Gas Projects

By Mohammed El Rashid

Sudan


Abstract

Oil and Gas Projects in Sudan experiences an excessive numbers of change orders (CO) during the projects lifecycle, causes of these CO’s are varying due to many reasons which affect directly the total cost of the project. The author argues that the major reason of the problem is due to the unavailability of standard Work Breakdown Structure (WBS) which led to ambiguous scope. This immature scope led to considerable variations and change orders claimed by the Contractors due to inaccurate project cost estimates in the first place. The author argues that adopting standard WBS can significantly reduce the number of CO per project by bridging all the gaps and tighten the scope of work. In order to arrive to the best WBS, the author establishes a comparison between the non-standard WBS (used in Sudan), the standard WBS and the multi-dimensional (i.e. OmniClass Construction Classification System OCCS, NORSOK) with a use of case study showing the variance in the cost estimation as a result of ambiguous SOW. The paper concludes that the adoption of a standardized multi-dimensional WBS could help refining the scope which help the company and contractors to have better cost estimation and consequently reduce the numbers of change orders per project.

Keywords: Change Order (CO), Work Breakdown Structure (WBS), Standardized/Non-standardized WBS, multidimensional WBS, the Fish Bone Diagram, Variance, Standard Deviation, Coefficient of Variation, Accuracy, wellhead construction WBS, Invitation to Bid (ITB).

  1. Introduction

Sudan Oil and Gas Sector experiences a considerable number of change orders on each project due to many factors, the author argues that one of the major factors is the using of non-standard WBS. The author is exploring how the use of non-standard WBS will resulted in big variance in cost estimate. On the other hand the using of the Standardizes WBS will lead to a clear scope and mature cost estimation.

As per the Best Practices for Developing and Managing Capital Program Costs: “A detailed WBS as much as possible, should be used and refining as cost estimating system matures and becomes more specific and defined. The WBS ensures that no any parts of the estimate is deleted and makes it easier to make similar comparisons for systems and programs.”[1]

The author argues that by adopting the Work Breakdown Structure Standardization for onshore development by selecting the best fitted one, a significant improvement can be made on projects’ cost estimations and consequently reducing the Change orders for better projects performance.

  1. Change Orders and reasons behind them in Sudan

The change order is written order to contractor to change part of scope, duration and or contract price. The Change order is “a unilateral written order to a contractor to modify a contractual requirement within the scope of contract and consistent with the terms of that contract. In another meanings change order is a form used to the construction contractor to change the scope of the work and contract price”[2].

“What are the causes of change orders in Oil and Gas projects in Sudan?” this question was circulated among a group of project practitioners in different types of oil and gas projects. The answers were demonstrated in the below table:

More (with figures and tables)…

To read entire paper, click here

 


 

About the Author

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Mohammed El Rashid

Sudan

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Mohammed El Rashid has studied Engineering and Technology at the university of GAZIRA and MBA of Engineering Management at ALZAEIM ALAZHARI University. He proceeded to work in industrial projects where his first role was a project engineer in industrial company focusing in multi industrial and manufacturing projects. Then, he joined the booming Oil and Gas sector in the capacity of planning and project control engineer in PETROENERGY E&P Co Ltd (one of the leaded Sudanese Oil and Gas companies). He was then promoted to be the head of Projects Control in PETROENERGY.

Recently Mohammed has joined CNOOC-IRAQ (a branch of a leaded Oil and Gas Chinese Company) in the capacity of Planning and Cost Control Supervisor. Mohammed is passionate about project management with extensive demonstrable skills in planning and cost control engineering.  He possesses a proven track record in Oil & Gas Industry in various capital projects as a Planner, Project Control Engineer and Head of Project control for over 14 years. He holds international credential from AACEI as a Certified Cost Professional (CCP).

Mohammed can be contacted at [email protected]