Cause and Impact Analysis of Cost and Schedule Overruns in Subsea Oil and Gas Projects – A Supplier’s Perspective

Abstract

Abstract. This paper identifies drivers for cost and schedule overruns in subsea production system projects from a supplier’s point of view. Subsea Production Systems connects subsea wells to offshore vessels, and enable efficient and safe hydrocarbon production. Using root cause analysis, cause and effect diagram, and Pareto charts in a specific company we identified three main drivers of cost and schedule overruns: qualification of products, changing vendors frequently, and project management. Detailed analyzes of a reference project found that the supplier identified about half of the technology gaps during the tender phase. Technology qualification programs of key components were not included in the bid, although the project had to pay for related cost overruns. In summary, the project could have eliminated more than two thirds of the cost escalation related to qualification costs by capturing all technology gaps in the early tendering phase, and as a result significantly increased the profitability.