Project Feasibility, Stakeholder Management, and Investment Appraisal

Part 1: Project Feasibility and estimating project costs/budgetary requirements

Project Feasibility and estimating project costs/budgetary requirements Considering the above. If an organization is thinking of commencing operations in a foreign jurisdiction - how useful do you feel a PESTLE analysis is for collecting/collating information to inform a feasibility study and therefore be a progenitor to a project business case?

Wto what degree do you think that 'stakeholder management' is a bit of a 'lip service' 'buzzword' - when we consider how a project's control system (i.e. monitoring; reporting; ownership/accountability and communication protocols) operates - in reality how much attention is actually paid to watching the environment and understanding shifts in stakeholders (who they are, what they want, etc.) - so that an organization doesn't get caught 'napping?' Have a look at the Brent Spar debacle.

I think that a crucial part of any stakeholder management plan should be to verify and continually update stakeholder expectations - to ensure that key parties (whomever they may be) are fully aware of project costs - why do you think misalignment of stakeholder expectations is crucial for project cost management?

1. Discounted Cash Flow, it's calculation and NPV. techniques such as ARR and payback - what do all of these things mean to project investment appraisal? What about sources of finance - what are the alternatives available to an organization?

2. Stakeholder management and knowledge management - how/what do these mean to projects and their management?

3 the project lifecycle - various components such as planning/scope, dealing with change

I would like to raise the issue of 'corporate knowledge management' - without being cynical and jaded - why does it seem (by and large) particularly within the International Oil and Gas Industry that this appears to be a 'lip service' exercise. I had conversations last year with several operators and asked them to show me their project 'lessons learnt' documents - an incredible response - 1 sent me tons of information relative to purchasing and schedule, and the way the other 2 handled this surprised me in the extreme!

Surely - the concept of 'what did we do right/wrong?' What does this tell us - how can we avoid this? is worth spending some time on. Here's a simple example (no names, no pack drill)

A company decides to drill a well (being very simplistic here) - they decide that they will need 500 lengths of drill pipe. So they raise a PO and purchase it. Then they discover at some later date that they actually had 200 joints left in inventory. A while later there's another well being drilled, they need 400 lengths of drill pipe - so they purchase them. A little while later they discover that they already had 350 joints in inventory from past projects. what does this say about so many things?? Believe it or not guys - I see this kind of stuff on projects all over the world all the time - waste and therefore cost like the fishing tool rented out per day - used 1 afternoon for a few hours- drill crew tidies up drill floor - someone puts tool out of the way under the V door - found 6 months later - rental invoice settled every month

Another aspect of this worthy of discussion is to consider what the nature of/difference is between data, knowledge and information

Estimating project costs as we have established the 'Iron Triangle' tends to be representative of the constraints under which a project operates. Again, as discussed we realize that a significant operational setback is often due to a stakeholder (client) deciding to make a change to the project scope - perhaps for something more, something less or a different specification (i.e. quality specification) - what in your opinion do you feel are some of the other factors that might cause an estimation of project costs to escalate?