True Line of Business: Drilling Project Management
Authors: Dupuis D. 
Published: December 2007

D. Dupuis
IADC Member

Summary
During the late eighties and the nineties operators decreased their staff and consequently were obliged to out source services which were previously performed internally.
After 1986, operators were led to decrease their operating costs, avenues were explored in order to review contracting habits, and slim down their operating structures.
Contracting habits evolved around two concepts:–Integration of services where one contractor acts as "A General Contractor" and–Performance incentive contracts where the operator is pushing the contractor to perform more efficiently.
The evolution matured recently into the integrated project management approach, where by a service company is vested a large number of up and down stream responsibilities inclusive of engineering supervision and full reporting.
An analysis assesses the compulsory tasks to be performed and the necessary skills in respect of engineering, operating ability, reporting to achieve the goals, true limit of risks to be borne by such management company, and also to establish one channel of command and contractual links which rule relations between the players pointing out its independence vis a vis operator, services companies and drilling contractor.
The analysis of implementation of such service shows its contribution to the global cost reduction of a well with due consideration given to both time and quality constraints. Recent history and evolution of the relationship between the players involved in a well construction.
Historically, certain operators had their own equipment and personnel to perform drilling operations: rigs, barges, MODU'S, mud, logistics, this is still the case with some state companies such as PDVSA, ONGC, YPF, Eastern countries state organisation. This approach tends to evolve and disappear through denationalization, and the relative low price of services out sourced and the complexity of the technology utilised.
Before the mid eighties most services were contracted on a day rate or quantity (consumables) basis. Some development wells particularly in the USA were drilled in the turnkey mode of remuneration.
Efforts to stimulise, rationalize and therefore to reduce costs led (as with other industry ie like civil engineering or car manufacturing) to three main line of thoughts, of which we shall analyze the benefits:–integration of services–incentives (carrot and stick)–alliance (mainly in the US)

INTEGRATION OF SERVICES
Aim. One contractor delivers by contract several services previously sold independently to the operators by a number of contractors.
The number of different services on board an offshore of a rig is over 20, there was an obvious necessity to decrease the number of contracts, in order to reduce the cost associated with their respective implementation, i.e. commercial, legal, administration. The effect of this integration of services was for the operator a saving in its G&E expenses and also as expected due to the reduced based costs which resulted from the synergy between the contractors. Rapidly the contractor involved faced technical challenges to control such services and implement a reporting scheme acceptable to operators (SPE paper 25681 D.W. Halkeft-Integrated services on a dynamically positioned drillship Amsterdam 1993).
P. 507^