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25 Jul 2023

Digital Project Delivery and Managing Dynamic Risk: A New Paradigm for Energy Companies

Michael Deighton Banner

The art of identifying risks and proactively addressing them bears a striking resemblance to teeing off a golf ball. A minute misalignment of your aim at the onset may go unnoticed until you find yourself 250 yards down the fairway, helplessly witnessing the consequences. Similarly, when risks are disregarded or underestimated, their true magnitude materialises only when it's too late to execute meaningful countermeasures. Thus, akin to correcting your tee shot promptly to enhance your odds of triumph, the utmost importance lies in recognising and mitigating risks at the project's inception, safeguarding the path to triumphant outcomes.

Introduction

In today's rapidly evolving global energy landscape, marked by the surge in renewable energy sources and digital advancements, the oil and gas industry is experiencing a seismic shift. Energy companies must now contend with an uncertain and dynamic environment, placing greater emphasis on delivering sustainable and cost-effective services. This article delves into the critical role of digital project delivery and proactive risk management in navigating this landscape, highlighting the benefits of embracing digital technologies and establishing performance triggers for effective risk mitigation.

Project Risk: An Evolving Landscape

Project risk is far from static, evolving for numerous reasons, including market conditions, stakeholder dynamics, and unforeseen events. To effectively manage dynamic risk, companies must adopt a continuous risk assessment and monitoring process. Regularly reviewing projects to identify changing risk factors and adjusting risk classification is crucial. By consistently identifying, classifying, and tracking these changes, companies can mitigate risks proactively, allocate resources effectively, make informed decisions, and drive project success.

The Power of Digital Project Delivery

Digital innovation has revolutionised project management, equipping it with powerful tools and technologies that facilitate data-driven decision-making. In the energy industry's ever-changing landscape, these advancements play a pivotal role in optimising resources, early risk identification, and mitigation through insightful analysis, ultimately driving efficient and sustainable outcomes. Digital project delivery involves embracing new digital approaches, relying on accurate and centralised data, and leveraging AI engines for sound analysis and performance inferences.

Leveraging Digital Advancements

The rapid advancement of digital solutions and low-code applications, such as MS PowerApps and PowerBI, alongside widespread AI and ML availability, empowers the establishment of smart project workflows and data-driven dashboards. This enables accurate measurement of project performance, efficient detection, and resolution of deviations from project baseline. Such digital capabilities are especially beneficial for project portfolios with large datasets, making Digital Project Delivery an indispensable component of any project management strategy.

Critical Indicators for Effective Risk Management

A digital approach to project management provides the means to swiftly identify deviations from the project baseline, classify emerging risks, and respond effectively. This is where critical performance indicators come into play. By setting up indicators that automatically flag when specific criteria are met, companies gain a powerful tool for early identification of emerging risks and timely mitigations. Proactive measures are essential, particularly for project portfolios with large datasets, to prevent risks from materialising and becoming costly to address.

Implementing Effective Corrective Action

To address identified performance triggers, energy companies should deploy appropriate corrective action plans. Regular project reviews allow for the early detection of emerging risks and ongoing assessment of risk mitigation strategies. Engaging external experts for peer reviews brings valuable insights and unbiased perspectives, identifying best practices and innovative solutions. Furthermore, providing project teams with the necessary tools, resources, and training enhances risk minimisation and overall project performance.

Embracing the Digital Future

By embracing the strategies outlined and leveraging the available technologies and digital solutions, energy companies can navigate the complexities of the new energy landscape with confidence. They will be well-positioned to overcome uncertainties and achieve sustainable growth in a rapidly changing industry.

Conclusion

In the face of an ever-changing energy industry, digital project delivery and proactive risk management offer a new paradigm for energy companies. By embracing digital innovations, establishing performance triggers, and deploying effective corrective action plans, these companies can navigate uncertainties, optimise project performance, and drive successful outcomes in the dynamic energy landscape of the future.

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