Project life cycle and risk prevention

The application of risk management systems such as RBI, HAZID and HAZOP in most companies, especially foreign ones such as Chevron, Shell, BP, Exxon and others, is mandatory when managing large investment projects with high levels of financial costs, and strategic projects regardless of the overall level of capital expenditure and risks.

In particular, when implementing large investment projects in the Arctic. High economic costs combined with the attractiveness of activities in the Northern latitudes determine the feasibility of deploying large projects capable of maximizing the effects of economies of scale of operations. Such projects carry significant environmental, social and technological risks, therefore having the nature of pilot experimental production. The concept of "project" appears here not only as one of the main objects of management activity, but also is the essence of modern management, possessing basic parameters. The life cycle, as one of the project parameters, depends on the formulation of the project goal. It is understood as the period of time from the moment of project idea initiation to the moment of achieving the project goal.

Life Cycle Stages

For example, the general view of the project life cycle for field development includes many stages, at each of which risks are managed using various methodologies. Some of these stages are:

• Pre-investment (initial) studies and justification of investment attractiveness of the project.
• Planning of the main stages of the field development project.
• Development of design and estimate documentation for the construction of oil and gas production facilities, well drilling, commissioning works.
• Execution of construction and installation works.
• Execution of oil and gas well drilling works.
• Execution of commissioning works.
• Commissioning.
• Operation of the facility, raw material extraction.
• Equipment repair, expansion and development of production (extraction), exploration and construction of new enterprises.
• Equipment dismantling, facility conservation (project closure).

With regard to Arctic and continental shelf field development projects, the number of stages and phases of their implementation can be significantly increased. Each stage and phase is characterized by corresponding indicators of costs, risk and uncertainty. In turn, large projects may include several dozen phases that are implemented in accordance with risk management system requirements. Some examples of these phases:

1. Analysis of conditions for implementing the initial concept, development of project concept.
2. Environmental justification.
3. Internal and external expertise.
4. Planning of the main stages of the field development project.
5. Issuance of terms of reference for feasibility study development and feasibility study development.
6. Coordination, expertise and approval of feasibility study.
7. Development of design and estimate documentation.
8. Development, coordination and approval of the project (working documentation).
9. Development of logistics and transport support schemes at the project implementation stage.
10. Issuance of terms of reference for work execution plan development.
11. Execution of construction and installation works and oil and gas well drilling works.
12. Development of operational construction plan.
13. Development of machinery and equipment work schedules.
14. Quality monitoring and control, etc.

Manageable Project Parameters

Project risk management involves using a whole complex of techniques and methods that allow solving issues that go beyond the usual scheduling or work planning. This creates the possibility of analyzing new issues such as material and technical project preparation, change management, human aspects of management, technological risk management. In most cases, everything comes down to individual functions.

Within the framework of manageable parameters of the industrial facility construction process, the following should be considered:

• types of work and their scope from all phases of the project life cycle;
• cost, expenses, project costs;
• time parameters that include deadlines, reserves and work duration;
• material, technical, human resources, as well as resource quantity limitations;
• used quality of design solutions or applied resources, as well as project components.

Risk prevention in the implementation of large capital construction is of utmost importance, since information about project problems is often delivered to the Operator and Investor with great delay or is deliberately concealed, which often negatively affects project implementation and leads to significant financial and time costs.

In the obvious absence of proper risk analysis, projects typically lack "end-to-end" quality control and as a result traceability and continuity of results from each stage: errors at the design stage or equipment production lead to increased cost and project timelines at the construction stage. Therefore, the main task in project implementation is to minimize project risks, provide early warning of possible problems to ensure its successful and timely implementation.