Project Management – Organizational Relationships
Authors: Frankhouser H. S. 
Published: February 2012

This paper presents a contractors view of project management, including the relationships and interfaces within and between the operator and contractor organizations involved in major North Sea developments.

Generally, an operator needs the services of a project management contractor or contractors to supplement and to assist the operator's internal resources.

During the development period, from the time a field is declared commercial until production is started, the following basic project management activities must be performed either by the operator alone or by co-ordinated teams of operator and contractor personnel:

– Engineering, including initial studies and investigations, conceptual work, detailed design, weight control, quality assurance and quality control, assistance to fabrication sub-contractors and project documentation. – Procurement activities consisting of purchasing, expediting, traffic and material control, as well as all aspects of sub-contract administration. – Supervision of fabrication and installation subcontractors, involving progress and quality control monitoring, co-ordination with home office engineering and procurement departments, and on-site contract administration. – Project Control consisting of overall and specific planning, scheduling, estimating and cost activities. – Administration, including accounting, personnel, office services, legal and data processing functions.

The size, technical complexity and costs of major North Sea developments have increased significantly during the last ten years. Therefore, there is a definite need to optimize the organizational relationships and procedures between the operator and the project management contractor in order to efficiently perform these basic activities.

As a further complication and management challenge, the most efficient organization for one specific project is not necessarily the correct organization for another project due to the following variable and, at times, very significant factors:

– Operator's approach to project management, his experience, resources and corporate requirements. – Contractor's experience and resources, along with possible requirement to work in a joint venture. – Schedule requirements emphasize the need for efficiently managed and controlled front-end engineering and procurement in order to avoid compression of fabrication programs and concurrency of engineering and fabrication.

This paper expands on the elements of the basic activities to be performed and the variable factors which can be unique to a project.

The operator and contractor interface can range from separate operator and contractor teams to a fully integrated team totally under direct detailed control of the operator. In the paper, some of the types of organizational relationships are reviewed.

It is concluded that the optimum organizational relationships for a specific project must include consideration for the unique and sometimes very significant variable factors, as well as consideration for the performance of the basic activities common to all major North Sea projects.