PPMP20012 : Program And Portfolio Management Information Systems

Full Final Report from the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling

Chapter 5: Overarching Failures of Management of the Chief Counsel’s report from the national Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling Other material as you feel appropriate Then you must write an essay describing how these contents address the questions they pose and that explain the relevance of systems thinking to a project and an organisation by using the theories and ideas related to:-

 

General systems management
Organisational structures, forms and culture
Engineering risk, risk management,
Portfolio alignment
Business value
Portfolio management process cycle
Organisational maturity.

 

You should illustrate your arguments by identifying what different systems thinking tools and techniques might aid project managers solve project problems, such as what occurred with Texas City and Deepwater Horizon.

The primary purpose of this assessment item is to help you to be able to define systems thinking and classify the tools and techniques related systems thinking. The secondary purpose of this assignment is to give you the opportunity to enhance your analysis, critical thinking and written communication skills; particularly in the areas of argument development and essay writing.

It should contain an effective introduction, body and conclusion. The introduction should introduce the essay and include your argument. The body should present the evidence you have collected to support your argument, and the conclusion should restate your argument, summarise the evidence and make a conclusion regarding your argument. The essay should contain a coherent, but necessarily restricted review of the academic literature on the topics in question. The literature review should be integrated into the essay, not a separate section. 

Introduction

BP as an organization has had a series of disastrous occurrences that have raised the concerns of the public. The two major ones included; Deepwater horizon oil spill disaster which occurred in 2010 and Texas City Refinery explosion which happened in 2005. When such a disasters occurs we always want to understand the why and how. It is so easy to blame technical failure but the Chief Counsel’s team and U.S. Chemical Safety and Hazard Investigation Board have a different opinion. According to them, the management leadership was the root course of the disaster. Despite the visible cause being technical failure, the management would have done something to prevent the occurrence through proper risk management strategies. Chapter 5 of the Chief Counsel’s report on BP Deepwater Horizon oil spill elaborates the failures of the management that might have led to the great disaster. The failures identified include; poor leadership, communication and training of employees, lack of commitment in the supervision of the employees, poor risk managements and application of inadequate technology (Chief Counsel, 2011). The Investigation board report also shows the management failure to focus on safety of their policies and procedures.

General Systems Management

This is a form of management where most of the decision making is decentralized. The organization is divided into independent departments with their own bosses. According to general systems theory, these departments interrelate when necessary and collaborate with other departments to achieve the overall organization goals(Managing research library, 2018). However, each one of them sets its own goals that of course aim towards benefiting the organization.

BP is almost the opposite of the expectations ofgeneral systems theory. Conflicts between managers of different sections is witnessed. The engineering team leader, David Sim expresses his displeasure in the way they were fighting over decisions with the BP wells team leader John Guide(Chief Counsel, 2011). However, an element of interrelation and collaboration is witnessed when David clarifies that his previous expressions of complains to John was part of coaching. On the other hand, we see John acknowledging the mistake and promising to consult his team in order to make informed decisions.

The organization should adopt Decision Matrix system thinking tool to improve the quality of decision making. This is because it allows choosing from a pool of multiple solutions(Burge, 2016). The probability of choosing the appropriate solution is high. Management flight simulator can also be used alongside decision matrix. It is a powerful system thinking tool that can assist in molding decision makers (Kim, 2018). It simulates an environment where manager can make complex decisions like they are in a real world (Reynolds, 2011). This reduces the chances of the managers experimenting their decision making abilities with critical life situations like the Deepwater oil saga.

Organizational Structures, forms and Culture

Organization structure is the way in which the organization’s authority lines are structured. The centralized structure is where a higher entity has so much authority over the lower entities while decentralized structure is where departments have independence over some decisions.

According to Chief Counsel’s Report, before April, 2010, the business unit structure was centralized. Operations and engineering Personnel reported to one manager. In April BP reorganized business unit leadership structure such that operation personnel reported to John Guide while engineers reported to David Sims. In most cases, competence of an employee is determined by their level of experience in the specific field. The Chief Counsel’s report identifies a case where BP assigns a responsibility to a manager who has little experience on the particular area (Chief Counsel, 2011). Gregg Walz was appointed as the engineering leader yet he didn’t have experience with Macondo well. His lack of experience had resulted to him taking unusually too long to make decisions. BP constantly reorganized its management team without putting into consideration the negative impacts. The reorganization tore the managers apart rather than unifying them and brought distractions. Some of the managers admitted that they were experiencing challenges after the reorganization. They spent a lot of time trying to harmonize the work relationship between operation and engineering teams who were initially reporting to one manager and now reporting to two different entities. The issue here is about the time it took to resume to normal operations after the reorganization. Time is a vital resource in such an industry. A minor delay greatly affects the overall performance of the organization. All these challenges with decision making and poor leadership can be traced down to the organizational structure.

In addition, the employees were not provided adequate training and support by the management. It is very ironical how we expect quality performance from our employees yet we do not give them the necessary requirements. Junior drilling engineers responsible for making critical decisions concerning the design of the site did not receive any support. Careful reasoning would have shown the management that the role played by the engineer was vital for the success of the entire project. Every employee is equally important but there are those who play the most critical roles that act as the heartbeat of the project (Ulrich, 2002). Giving a little bit more focus on the critical areas of a project without necessarily neglecting the other parts is important for the success of the project (Managing Research Library, 2018).  The critical areas are like the root of a tree while the other areas are the branches and the leaves. If the root dies, the entire tree also dies. It is therefore the role of management to identify its root and give it more attention. The management could use tree diagram system thinking tool to determine its roots (Burge, 2016). The tree diagram allows logical breaking down of a project into sub units. The tree diagram could also be used to structure the organization to suit the company objectives(Wikiversity, 2018).

Communication is an essential culture for the success of any company. Feedback as part of communication is a driver to decision making. According to system thinking, feedback ensures that the management does not repeat the decision making mistakes experienced in the past (White, 1995). Past knowledge can only be obtained if there is an active communication and consultation among the leaders and employees. In the Texas City Refinery, there was no clear structure of reporting and thus learning from previous experiences was made complex(U.S. Chemical Safety and Hazard Investigation Board, 2007). Poor communication between onshore engineers and the critical decision makers of BP is explained in the Chief Counsel’s report. Onshore engineers failed to communicate the risks involved in their work to the management despite their good knowledge of it (Chief Counsel, 2011). If they had passed the information, the risks would have been mitigated. Additionally, if BP had learnt from the Texas explosion the impact of the Deepwater horizon oil spill would have been reduced (National Commission, 2010). The Counsel’s report explains that some decisions at BP were made based on incomplete information due to lack of consultation with the experts. Experts were greatly underutilized. Their main role was to give advice on the best way to do things but the decision makers ignored their importance. BP Bad decisions were made in Transocean and BP because the decision makers didn’t have enough information about the past mistakes. Maybe if they were well trained on the system thinking tools, they would have done better (INCOSE, 2012).Systems archetype tool can be used to ensure that lessons from the past experiences are utilized. It is a tool that tracks system behaviors including the solutions that failed and recurring occurrences (Kim, 2018). Poor communication and the oil disaster that have been directly linked with management failure is as result of the structure of the organization.

Engineering Risk, Risk Management

In life, we are surrounded by risks and even most of the great things that we have done were as a result of taking risk. In most cases, projects that involve low risk returns are either slow or low. However, having a project that has completely no risk is close to impossible. For this reason, risk management is a vital process for every organization that has a vision of great accomplishment. Oil Refinery in Texas City and drilling of wells at Macondo involves a lot of risks. There is the risk of losing human life and destroying nature.

If BP had enforced robust risk management strategies, the probability of the oil spill disaster occurrence would have been lowered. Additionally, the impact of the oil spill would have also been significantly decreased. Systems thinking is very important when coming up with a robust risk management strategy (Burge, 2016). It attempts to show the interrelationship between all the parts of the projects. For example, its shows impacts of risk mitigation on one part at on other parts of the system. Casual loop diagram can be used to understand the interrelationship between several factors at BP that are likely to have cause the disasters (Kim, 2018).

Business Value

A team leader must understand the business value of the organization in order for them to focus on what really matters. A good project manager focuses on the activities that promote business value, otherwise, the project is deemed to be useless for the organization (Koch, 2011). In the 18 word statement, purpose part clearly defines the expected business value in general terms. Increasing the business value should be the core objective of any team that is working on a project. Drifting away from the activities and practices that promote business value results to an automatic failure of the project (Phylipy, 2014). This can be avoided by providing well defined procedures to the employees. BP gave procedures to the rig crew and the site leaders but they did it all in rush. The procedures didn’t cover all the details that the team required. In the report, Murry Sepulvado, a site leader is quoted requesting for procedures for T and A work and cementing at a last minute. The procedure was constantly changed within the 8 days before the disaster. There was no explanation why the procedures had not been polished yet were being applied. Casual loop diagrams can be used to balance interrelated process in order to establish equilibrium and hence business value.

Portfolio Management Process Cycle and Portfolio Alignment

Planning is an essential role of the leaders in an organization that seemed to be missing in BP leadership. With a good plan, they would have reviewed their priorities and delivered the procedures in time. It is from such small failures that resulted to the largest oil spill disaster in the world. Planning is only but the second part of the portfolio management process cycle. It is often preceded by preparing which involves identifying activities and grouping them accordingly (Tenstep, 2018). With this, one can evaluate and select, prioritize and balance which are the main components of planning. The next stage is the execution stage where the practical activities take place. The last stage greatly depends on the performance of all other stages; the harvest stage (Tenstep, 2018). This is where the sower reaps what they sowed whether good or bad. It is the stage that exposed BP weaknesses to the whole public. According to the expressions in the report, the entire portfolio management process is at the center of its failure. There was no clear plan on the activities of the project that is why they were still allocating and restructuring project leadership the last minute.

Organizational Maturity

Each organizations strives to attain the highest level organizational maturity (Curtis, William, Sally, 2002). There are three levels of organizational maturity; initial, managed and defined levels. Despite BP being a large and powerful organization, it depicted the characteristics of an initial level characteristic in the oil spill saga according to the Chief Counsel report. These include; unmotivated workforce, poor allocation of responsibilities and inconsistency (Chief Counsel, 2011). Inconsistency is evident where the procedures kept changing up to the last minute when the blowout occurred. Additionally, the managers did not seem to understand their specific roles. Management flight simulator can be used to train the managers in order to improve the way the organization is run.

Conclusion

Generally, organization’s major failures is a sign of a problem with its management (Friedmann, 1987). With good leadership, the probability of major failures in an organization. Some can be directly evident in the management behavior like the way BP leaders had direct conflicts at a personal level (Chief Counsel, 2011). The oil spill problem is as a result of technical failure but it was traced back to the management even if they are directly linked to them. It has also been linked to the structure of the organization and portfolio management process. All the problems facing an organization are always traced back to its leadership. 

References

Burge S. (2015). The Systems Thinking Tool Box: Tree diagram. Retrieved from: https://www.burgehugheswalsh.co.uk/Uploaded/1/Documents/Tree-Diagram-v2.pdf

Burge S. (2015). The Systems Thinking Tool Box:Decision Matrix and other Evaluation and Selection Tools. Retrieved from: https://www.burgehugheBswalsh.co.uk/Uploaded/1/Documents/Decision-Matrix-Tool-v2.pdf

Chief Counsel. (2011). Macondo: The Gulf of oil Disaster:  Report on National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling. Retrieved from:https://www.wellintegrity.net/documents/ccr_macondo_disaster.pdf

Diana White, (1995) "Application of systems thinking to risk management::a review of the literature", Management Decision, Vol. 33 Issue: 10, pp.35-45,https://doi.org/10.1108/EUM0000000003918 Friedmann, J. (1987). Planning in the Public Domain: from Knowledge to Action. New York: Princeton University Press.

INCOSE. 2012. INCOSE Systems Engineering Handbook: A Guide for System Life Cycle Processes and Activities, version 3.2.2. San Diego, CA, USA: International Council on Systems Engineering (INCOSE), INCOSE-TP-2003-002-03.2.1

Kim D. (2018). Management flight simulators: Flight Training for managers (part 1). Retrieved from:https://thesystemsthinker.com/management-flight-simulators-flight-training-for-managers-part-i/ Kim D. (2018). Management flight simulators: Flight Training for managers (part 1). Retrieved from:https://thesystemsthinker.com/palette-of-systems-thinking-tools/

Koch, A. S. (2011). Quality = business value: Part 2: Business value as the measure of quality. Retrieved from:https://blog.projectconnections.com/alan_koch/2011/03/quality-business-value-2.html

Managing research library. (2018). General Systems Theory. Retrieved from: https://managingresearchlibrary.org/glossary/general-systems-theory

National Commission. (2010). National Commission on the BP DeepWater Horizon Oil Spill and Offshore Drilling. Retrieved from:https://www.nrt.org/sites/2/files/GPO-OILCOMMISSION.pdf

Phillipy, M. A. (2014). Delivering business value: The most important aspect of project management. Paper presented at PMI® Global Congress 2014—North America, Phoenix, AZ. Newtown Square, PA: Project Management Institute.

Reynolds, M. (2011). Critical Thinking and Systems Thinking. Critical Thinking. C. P. Horvath and J. M. Forte. New York, Nova Science Publishers: 37-68 Rouse M. (2005). Systems Thinking. Retrieved from:https://searchcio.techtarget.com/definition/systems-thinking

 

SEBoK. (2015). Guide to the Systems Engineering Body of Knowledge. Retrieved from:https://www.sebokwiki.org/wiki/Systems_Thinking

 

Tenstep. (2018). PortfolioStep Process Overview. Retrieved from:https://www.portfoliostep.com/300.3PortfolioStepProcessOverview.htmUlrich, W. (2002). Boundary Critique the Informed Student Guide to Management Science. H. G. Daellenbach and R. L. Flood. London, Thomson Learning: 41f.

U.S. Chemical Safety and Hazard Investigation Board (2007, March). BP Texas City Refinery Explosion and Fire:Final Investigation Report . Retrieved From:https://www.csb.gov/file.aspx?DocumentId=5596

Wikiversity. (2018). Risk Management/Systems Thinking and Risk. Retrieved from: https://en.wikiversity.org/wiki/Risk_Management/Systems_Thinking_and_Risk