Running head: PROJECT RISK MANAGEMENT IN THE US HEALTHCARE AND OIL/GAS
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PROJECT RISK MANAGEMENT IN THE US HEALTHCARE AND OIL/GAS SECTORS 16
Project Risk Management in the US Healthcare and Oil/Gas Sectors
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Abstract
Every project is a risk that a company of individual face to achieve a greater outcome. However, many projects fail to see their accomplishments because of several hidden factors that many project implementers traditionally ignore: risk management. The project risk management hardly forms part of many project executions because many people usually focus on the positive side of the project objectives at the expense of the uncertain eventualities. With a robust risk management system is the leading problem-solving tool wherever they arise during the implementation process. Recent researched blames many project fails on poor risk management. Accordingly, many economies have suffered several financial meltdowns, deadly environmental disasters, and eventual project fails. Exploring various strategies of risk management will be the focus of this report drawing from the Healthcare and Oil and Gas industries. Succinctly, the HealthCare.gov and The Trans Mountain Pipeline Expansion projects constitute the blueprints for the study.
Contents
1.0 Introduction 4
2.0 Healthcare.gov Website Project 5
2.3 Usability Awareness 6
3.0 Trans Mountain Pipeline Expansion Risk Analysis 7
3.0 Shipping 8
3.1 Spills risk 8
3.1.2 Spills Response 8
3.1.3 Spills recovery 9
3.2 Pipeline safety and integrity 9
3.2.1 Risk analysis 10
3.2.2 Spill preparedness and response 10
3.3.0 Greenhouse gas emissions 11
4.0 Conclusion 12
5.0 References 15
Project Risk Management in the US Healthcare and Oil/Gas Sectors
1.0 Introduction
Projects are always ambitious initiatives that aim at producing an outstanding improvement to human being’s life. They entail various aspects and components including resource mobilization, the project planning, execution, and evaluation. All the elements are always working towards the delivery of the ultimate success. Many experts believe that a proper and secure project risk management system can take care of 75-90 percent of project management problems. However, the system must blend well with the robust project management blueprints, a well-defined project scope, as well as change and communication management. Additionally, a good risk management strategy not only reduces project execution problems but also eliminates unexpected project risks and surprises (Fernández-Diego, 2012).
In the United States, the estimates of projects that fail by cancellation or get excessively delayed have risen in the past one decade. In fact, projects that get completed in time are less than one third. De Bakker, Boonstra, and Wortmann (2010) state that this clearly shows that there are several project planning, implementation or evaluation mistakes that either delay or stall the project to the terminal end: cancellation. Wherever this happens, the economy of the US is badly hurt. Apart from the multi-million dollars that end up wasted, several employees are rendered jobless. To emphasize the role of risk management in the massive project malfunction in the US, the author will delve in two industries: the Healthcare and Oil/Gas industries.
2.0 Healthcare.gov Website Project
In 2013, the US government unveiled an ambitious project that would create an online platform to draw and enroll approximately seven million users in a half a year. Unfortunately, the take off failed hence leading to numerous debates on the viability of IT projects in the US Healthcare industry. Two months following the October 1 release, the website had only attracted 29000 users due problems such as bad calculations, poor accessibility, poor authentication, missing as missing data. While the project failure was not a new phenomenon in IT, various factors facilitated the collapse (Chambers, 2014). For instance, the project was marred with poor engineering and poor management. Accordingly, various risks were ignored from the procurement, project management, and usability campaign/awareness.
2.1 Poor Procurement
The project contracted incompetent IT personnel as clearly indicated in the poor results. Cheap contractors may at the time blind many projects procuring teams without evaluating the risk of getting the whole project crumbled. According to Kendrick (2009), the interest of the project should be represented through the entire process of procurement. Accordingly, hiring a project supplier whose success record is in dismay is the first step to project failure.
“More importantly, the success of a procurement project critically depends on the contractor’s project management and quality control capabilities.” (Chen, Xu, & Whinston, 2010).
Any IT vendor who fails to interrogate the details of the project to gain the best understanding of the scope of the project is a sign of failure. Certificates alone are not enough, but the vendors must undergo proper grilling to ensure they are fit for the project before signing the contract.
2.2 Mistrusting the Project Manager(s)
The project manager is the steering wheel behind the project implementation process. Accordingly, the project client or financier should trust and cooperate with him/her. The project manager ensures that the project execution process is flawless from the beginning to the final day. Unfortunately, the US government, particularly the Department of health did not create a harmonious corporate relationship with the project managers. The project, therefore, fell to the risk of laxity and bitter contest regarding crucial decisions. Confusion ensued on phase prioritization, stakeholder communication, and resource allocation. Eventually, the whole project lost its scope of operations. However, individuals manning projects like the HealthCare.gov should be people of strong experience while also having a concrete understanding of the framework of the whole project. Leaving a project t under the command of incapable people is the worst risk assumption that ought to occur (Lemal & Merrick, 2013). To mitigate the risk, a trusted and outstanding IT project manager should steer key decision-making essentials of the project be it a small website design of a whole government initiative.
2.3 Usability Awareness
It is odd to spend several days creating a website or any IT package and then throw it to the public without conducting an awareness campaign. As a new initiative, the project must be published way before its launch so that the intended users are comfortable and confident enough to interact with it. Every IT project has its unique essentials which are sometimes sophisticated. No matter the scenario, all the projects aim at not only meeting their customer expectations but also exceeding them.
To achieve this challenging goal, usability principles must supersede other interests. Proper execution of the policies leads to the development of robust IT products that are all appealing to the eyes as well efficient and effective. According to Sivaji, Abdullah, and Downe, (2011), embarking on the creation of a new software system is both daunting and challenging. Unfortunately, the US government did not perform adequate usability campaign to acquaint its citizens with the interface and the general interaction with the HealthCare.gov website. Besides, websites should be easy to recognize and understand and use simple language to facilitate effective communication. While websites should mainly allow easy access through minimal clicks and have a consistent appearance, the HealthCare.gov had many blank drop downs including the account creation page. Consequently, user experience became unpredictable with numerous fails.
3.0 Trans Mountain Pipeline Expansion Risk Analysis
Trans Mountain Pipeline Company is owned and operated by Kinder Morgan Canada Inc. It has been operating in Canada for over sixty years supplying British Columbia and the USA with a wide variety of crude oil products. In 2013, the Company unveiled a massive 12 billion pipeline expansion project that will begin from Burnaby to Edmonton while also serving Washington and California states (Morgan, 2013). While the company is trying to broaden its business scope, it is inevitable to understand comprehensively and mitigate the various risks and environmental implications before it starts. According to Al-Majed, Adebayo, and Hossain, (2012), crude oil poses numerous disasters to both environment and human being right from its point of production, transportation, all the way to storage and consumption. Accordingly, the author of will critically analyzes the project’s shipping spillage risk, greenhouse gas emissions and pipeline safety and integrity.
3.0 Shipping
The massive pipeline expansion project reflects a big increase in the number of tankers to transport oil and bitumen thus escalating the spill risk along the proposed route.
3.1 Spills risk
Spills risk connotes the tendency of oil and petroleum products leaving their containment into the open as well as the incident’s related consequences. With massive expansion injecting 348 new tankers into its business annually, the risk will be higher than before calling for better mitigation plans. According to the HIS Special Report 2013, state agencies and oil companies have used technology to forestall the reoccurrence times and the likelihood of an average to huge marine spills since the Exxon Valdez spill of 1989. They have utilized radar surveillance, pilots and tugs, proper fatigue management, GPS, and electronic charts alongside appropriate regulations (Assessing Maritime). The oil sands export from Vancouver, for instance, will rise to 408 reflecting a ten-fold increment. Nevertheless, TMEP has a comprehensive evaluation blueprint to counter this situation. The assessment commences with the planning, material selection, and the engineering stages (Morgan, 2013, p. 30). Additionally, it has designed regular check-ups on its marine transportation vessels and management systems.
3.1.2 Spills Response
Another looming obstacle to the TMEP endorsement is the company’s ability to respond to risk (CRED, 2013). Response to an oil spill requires a well-organized structure with minimal time wastage. However, the company has a slow response history. For example, the National Energy Board affirmed that the company did not detect the 2011 Sumas 110,000 terminal leakage in time, leading to a delayed response. Nonetheless, its current proposal has an inclusive emergency management strategy that adheres to the NEB regulatory terms and the present guidance criteria. It has an emergency response equipment, valid emergency management systems, field deployment and regular training (Morgan, 2013, p. 30).
3.1.3 Spills recovery
Marine oil spill recovery is a complex task that can never be a 100% guaranteed. Essentially, recovering both pure and diluted bitumen is one of the most uncertain endeavors in the oil transporting industry as they are heavy, volatile and viscous in nature (CRED, 2013). For instance, the Erika spill recovery only recovered 5% of the total spills. Accordingly, the company will contract The Western Canada Marine Spill Response Corporation (WCMRC) and The Western Canada Spill Services (WCSS) to manage its maritime oil spills recovery (Morgan, 2013, p. 34). Besides, it vows to perform extensive experimentation on better systems of spill response and retrieval. According to the Assessment Maritime report, spills assessment, mitigation, and intervention approaches are distinct to countries thus, can hardly work across the board (Assessment Maritime). The company can integrate mechanical and biological mechanisms to conduct a full shoreline oil spills recovery.
3.2 Pipeline safety and integrity
The Trans Mountain Expansion Project aims at doubling the number of its pipelines. Although the pipeline transport appears a safe method of transporting fluids, it still poses multiple spill risks (Morgan, 2013). Accordingly, the company is planning to audit its engineering designs from formulation to their implementation stage to reduce the risks involved (CRED, 2013). It will ensure proper material selection, and avoid geotechnical hazards while identifying any flaws to provide an appropriate avenue for mitigation.
According to DNV and Muhlbauer (2012), a good risk assessment strategy should uphold impartiality by considering both the company and the public’s interests. Therefore, the company has incorporated significant features of risk assessment systems and specific risk statistics in its planning to analyze pipeline spills risk in verifiable terms. The move has eliminated dishonesty that may hinder its approval (Veritas, 2010).
3.2.1 Risk analysis
Pipeline oil spills come from faulty pumps, valves, fixtures and pipe fractures along her various pipeline systems. While the expansion project is introducing an additional 987 km pipeline, the average spillage volume will tremendously increase. Currently, Canadian pipelines report an average of 3.4 million liters leakage annually (CRED, 2013). Trans Mountain Company’s risk assessment scope takes the paths below (Swift et al., 2011).
Fig. 1.0 Kinder Morgan Canada’s Risk Assessment Process (Morgan, 2013)
3.2.2 Spill preparedness and response
It is worth noting that spill preparedness and the response is essential in the risk analysis of this industry. The company’s present seven response terminals, which are 2-3 hours drive apart, cannot sufficiently serve its current and future pipeline business. It must therefore intensely integrate internal with external emergency apparatus such as Federal governments, the Ministry of Environment, Transport Canada as well as the Coast Guard Federal bodies. Nonetheless, the TMEP still poses serious challenges as far as the preparedness and mitigation plan are concerned due to its massiveness.
3.3.0 Greenhouse gas emissions
The United States is already a warming nation that does not need more carbon emissions. With the inception of the TMEP, a big environmental worry is looming in the US. If the proposed Trans Mountain expansion takes effect, it will augment the quantity of carbon and other greenhouse gas emissions. As Erickson and Lazarus (2013) postulates, the increase will be detrimental to the journey of achieving green energy in the US economy. Greenhouse gas emissions in the oil and gas industry start at the land clearing stage all the way to the combustion stage in various car engines. Concisely, the GHG emissions sequence is a product of the land use, upstream fuels, capital equipment, upstream fuels, upgrading, extraction, crude product transportation, refining, wastes, processed product transportation, and combustion (Fig. 2). The endless chain of oil and petroleum production releases GHG at all the platforms. Collectively, the GHG emission is very immense.
Fig. 2 Source: CRS (Erickson, & Lazarus, 2013)
This long chain can also divide into Well to Refinery (WTR), Well to Tank (WTT), Tank to Wheel (TTW) and Well to Wheel (WTW) as illustrated in fig. 2. The March 2013 WTW emissions hit 90gCO2e MJ LHV and 91gCO2e MJ LHV in United States of America and Canada respectively (Erickson, & Lazarus, 2013). The statistics put the US in the forefront as the leading carbon producer hence a warming nation.
4.0 Conclusion
Since every project is a process of risk-taking, risk management is, therefore, inevitable in the process. While many project managers, evaluators, and planners may regard risk management as a simple and less important aspect, the neglect has derailed countless projects across the world. Risk management is crucial in time management, developing a robust project plan, project scheduling as well as its cost estimation. Most importantly, risk management is not an event in the project execution process. It runs all the way; from the start to the final stage of a project. Risk management must always be seen as the only way of identifying and tackling, correcting, and utilizing problems that emerge and can paralyze the successful completion of a project. For one to achieve this, project managers and stakeholders must understand the nature of every project, the industry it fall in and the general state of the economy.
5.0 References
Al-Majed, A. A., Adebayo, A. R., & Hossain, M. E. (2012). A sustainable approach to controlling oil spills. Journal of Environmental Management, 113, 213-227. doi:10.1016/j.jenvman.2012.07.034
Chambers, L. (2014). Case Study: Saving Obamacare. Retrieved from Chambers and Associates Pty Ltd website: www.chambers.com.au
Chen, J., Xu, L., & Whinston, A. (2010). Managing Project Failure Risk Through Contingent Contracts in Procurement Auctions. Decision Analysis, 7(1), 23-39. doi:10.1287/deca.1090.0155
CRED. (2013). Assessing the risks of Kinder Morgan’s proposed new Trans Mountain pipeline. Retrieved April 13, 2016, from credbc.ca/assessing-the-risks/
De Bakker, K., Boonstra, A., & Wortmann, H. (2010). Does risk management contribute to IT project success? A meta-analysis of empirical evidence. International Journal of Project Management, 28(5), 493-503. doi:10.1016/j.ijproman.2009.07.002
Erickson, P., & Lazarus, M. (2014). Impact of the Keystone XL pipeline on global oil markets and greenhouse gas emissions. Nature Climate Change, 4(9), 778-781. doi:10.1038/nclimate2335
Fernández-Diego, M. (2012). Project Risk Management. Project Management for Environmental, Construction and Manufacturing Engineers, 75-90. doi:10.1007/978-94-007-4476-9_6
Kendrick, T. (2009). Identifying and managing project risk: Essential tools for failure-proofing your project. New York: AMACON.
Kinder Morgan Canada Inc. (KMC). (2013). Ecological risk assessment of Marine transportation spills Technical Report for the Trans Mountain Pipeline ULC Tariff (92). Compiled by Brenda McClellan and Issued by Heather Mark, Kinder Morgan Canada Inc. Issued May 14, 2013; Effective July 16, 2013.
Lemal, M., & Merrick, J. (2013). Health risk communication. New York: Nova Science Publishers.
Muhlbauer, W. K. (2004). Pipeline risk management manual: Ideas, techniques, and resources. Amsterdam: Elsevier.
Sivaji, A., Abdullah, A., & Downe, A. G. (2011). Usability Testing Methodology: Effectiveness of Heuristic Evaluation in E-Government Website Development. 2011 Fifth Asia Modelling Symposium, 68-72. doi:10.1109/ams.2011.24
Swift, A., Shope, E., Casey-Lefkowitz, S., Sierra Club, National Wildlife Federation, Pipeline Safety Trust, & Natural Resources Defense Council. (2011). Tar sands pipelines safety risks. New York, NY: Natural Resources Defense Council.
