Executive viewpoint

The plummeting oil price has forced companies to identify areas where costs can be cut and savings made.

The battle to sure up finances and compensate for the loss of revenue means the industry is seeking innovative ways to streamline operations and work more efficiently.

In the management consulting and technology services arm of Hitachi Ltd., we have worked on offshore oil and gas projects around the globe, and have had considerable success adapting the business models of key industry players to meet the challenge of a lower oil price.

As V.P. of EMEA for Hitachi Consulting’s oil sector, I’ve been able to survey the industry landscape and pinpoint the top 10 offshore inefficiencies that companies must tackle, if they are to remain lean and competitive.

1. ‘Wrench-times’ of between 30% and 40% have been reported consistently across the industry—a range that amounts to a significant loss in labor efficiency. The causes include poor planning and work preparation, quality of supervision and a reduction in management oversight.

Tackling the problem requires an industry-wide strategy to address ‘systemic’ issues, including taking a unified approach to measuring ‘wrench-time’, sharing data and working collaboratively.

2. The impact of poor planning is two-fold. First, it impacts productivity, reducing work execution capacity. Secondly, it is a contributing factor in cases of job over-runs, which can impact production output.

Poor planning is often the result of a lack of detail and understanding. Shortfalls become apparent during execution, resulting in delays to job completion.

In the short-term, there is a need to better scrutinize planning quality, and to make better use of experienced personnel. Long-term, there is a need to develop more explicit standards for planning quality that would form the basis of an industry-wide education program.

3. Offshore working practices can vary considerably from crew to crew. Examples include the number and timing of meetings, the purpose of those meetings, and the issuing of permits. All of which effect how work is planned and prepared.
4. The timely issue of permits has been a longstanding issue for many operators. It continues to impact ‘wrench-time,’ due to delays in getting work-fronts underway in a timely manner.

The majority of PTW systems can provide data on permit issuing; however, few operators scrutinize this data to better understand work execution performance.

5. The industry is not alone in falling into the ‘meetings’ trap. The problem is often expressed as ‘too many meetings,’ however, the number of meetings held is not always the problem, but rather the design and effectiveness of them. Too often they either lack purpose, clear objectives, or suffer from a lack of discipline.
6. There are two areas of inefficiency when looking at materials management. The first, operational, deals with impact on the plan when materials are not available on time, especially if resources have been scheduled to commence work in anticipation of materials arriving. It consumes time and effort, and is largely avoidable if good processes are in place and adhered to.

Poor discipline in the materials issuing process can also be responsible for some inefficiency, particularly when materials have been shipped in for a specific job, but are consumed through ‘free issue.’ There is a need to adopt more of a lean approach to materials management, and to increase sharing of stock across the industry.

7. The causes of production flaws are many and varied, however, the causes of prolonged or repeat losses can be more easily tackled.

Problems often boil down to one or both of the following. First, the lack of credible data with which to diagnose production related losses. Secondly, the absence of a systematic approach to problem solving and resolution. Although there is rarely a shortage of data on losses, clear and concise categorization is often lacking.

8. Behaviors are possibly the most overlooked source of inefficiency, as the majority of inefficiencies are, to some extent, self-inflicted and the result of poor compliance.

We have been conditioned to believe that inefficiencies can be eliminated only through design of better processes, use of more sophisticated tools, adoption of best practices and so on.

However, getting the best from the best process tool and practice depends entirely on users fully engaging in the use of processes, and using tools in the way they were intended to be used. Best practices should be embedded into the fabric of the operation.

9. Organization improves efficiency. However, one aspect of organization is particularly worth mentioning, and that is to do with roles having unclear responsibilities.

The way to address this is through individual performance contracts, making sure that with responsibility, there is corresponding authority and adequate resources to deliver on what is expected.

10. Organizations that consistently achieve high levels of efficiency do so through focused, systematic effort. It is down to
management to achieve improvement efforts and to mobilize resources to systematically root out inefficiencies, whenever and wherever they may be.