The organizational structure used on a hydrocarbon project will vary with time across the opportunity phases, moving from a reservoir engineering emphasis (and marketing, if a gas project) to a well engineering and facilities engineering emphasis and then to an operating engineering emphasis. This change of emphasis with time does not mean that well, facilities and operations engineers are not required in the early stages of the opportunity nor that reservoir engineers, well engineers and facilities engineers are not required during the operating stage of the project. In fact, it is vital that all disciplines are involved or engaged in the project from the very outset and thereafter throughout its realization.
The design of the organizational structure (Organization Breakdown Structure (OBS)) in any phase of an opportunity will depend primarily on three issues:
- Work Breakdown Structure (WBS)
- Contracting Strategy.
- Project Challenge (location, size, complexity)
The WBS needs to be developed as early as possible and, during the early phases of the opportunity, will include both hardware headings (e.g. wells, topsides, etc.) and nonhardware headings (e.g. marketing, government/JVP approvals etc.). Later, the WBS will primarily be hardware driven.
Contracting strategy (the numbers and types of contracts) derived from the WBS is unlikely to have a significant influence on the organizational structure before the completion of the Basis for Design. After this, it will a primary factor in the shape of the organization.
The project challenge (the maturity of the area in which the asset will be located, government requirements, size, complexity) will influence the contracting strategy and, through this, and also directly, influence the organizational needs.
The OBS can be created in a similar manner to the WBS and mapped over the WBS and the contracting strategy. The OBS addresses the following aspects:
- work organisation establishment
- roles and responsibilities definition
- required competencies definition
- team members selection
- external resources identification.
Activities and sub-activities vary in their criticality to the success of the project. For instance, use of a totally new technology or inexperienced staff will require more management attention than a well-tried and tested technology or experienced staff. Similarly critical path activities in the project plan need more attention than activities with substantial float, and so on. Thus the activities and sub-activities need to be examined for all of their criticalities, such as safety, cost, schedule, resources, quality, etc. and the organisation structure and responsibilities shaped to manage these.
There are two basic types of organisation:
- The Matrix Organisation, in which the manpower resources required for the project are supplied on demand by the various line functions and the project manager coordinates their contributions. This is the most common approach for small jobs where a full-time, dedicated team per job is not justified.
- The Project Organisation (a dedicated project team), in which the manpower resources are dedicated to the project and are under the direct control of the project manager. This is common for larger activities or projects where a full-time presence can be justified.
Both matrix and project types of organization have their advantages and disadvantages. The matrix organization tends to suffer from poor communications and increased
interfaces, but for smaller jobs it utilizes manpower more efficiently. Project organizations
are more focused towards a single goal, leading to higher motivation and better
communication between project team members. However their relative independence
from the rest of the OU organization can create other problems, e.g. standardization, and
integration with other corporate plans. The choice between matrix and project
organizations requires judgement. It is normally based upon previous experience with
similar size, and type of activities and on the project risks in relation to other OU
activities. The size and type of the project team organization also depends on the
particular stage of project evolution/execution, and on the contracting strategies adopted.
The organization structure should be planned to evolve, where necessary, during the life
of the project to meet the requirements of the various project phases. Frequently the
organization might begin as a matrix, become a project and then revert to a matrix.
Key areas of potential weakness in opportunity/project execution are interfaces and
continuity. They need to be carefully examined. Interfaces typically occur between
different disciplines within the company or between different contractors involved in the
Execution Phase, and should be addressed in the organisation structure and control put in
place to manage it.
Opportunity/Project teams, especially in their earlier phases, and towards handover,
normally experience many staff changes. Continuity of knowledge can be a critical factor,
despite well ordered data management systems. The continuity aspect should be
incorporated into the organization design.
Critical activities and interfaces appear at different times during the project execution.
Therefore the organization should have the flexibility to evolve and change and be ready
to address the new circumstances whenever they occur.
There is no simple generic solution to the question of organisational structure but
there are some considerations to be kept in mind:
- Classical business management theory indicates that more than seven reportees create difficulties for a manager – the span of control becomes too great.
- How will engineering and operations thinking be incorporated into the opportunity during ORP Phases 1 and 2?
- When will the opportunity team become a project team and what organizational changes result from this?
- Will the organization be:
- A full time, dedicated team?
- Partly dedicated, partly matrix?
- Wholly matrix under a coordinator or manager?
- No individual manager should be overloaded with responsibilities. (E.g. Combination of design and construction in a single management position on any significant project will probably lead to overload).
- Is there new technology required to make the opportunity viable, the development of which needs managing as a project in its own right?
- What is the extent of the project manager’s responsibility? E.g. does it extend to construction management, i.e. direct interface with construction contractors and the project resident engineers? Does it extend to safety management, i.e. direct responsibility for safety management planning and implementation without an HSE Manager reporting to him/her.
- Alliance contracting leads to integrated Operator/Contractor organisations. Duplication of Operator and Contractor positions are to be avoided.
- Given the importance of planning and cost to project outcomes, it needs to be questioned whether it is valid to adopt the traditional solution of placing both (even if only functionally) under a Project Services Manager and having their management at a relatively low job level and, often, without engineering qualifications. Any significant project should consider placing a senior, experienced engineer to head the planning/cost position, reporting directly to the opportunity/project leader.
- The design of the project organisation and the individual’s responsibilities need to take cognisance of the need for performance improvement. Projects should consider the need for senior management coordination of the improvement process.