BP is one of the biggest companies in the world in oil and gas industry. BP was founded in 1990 and holds the fifth position in the world in terms of annual revenue generation. The major field of operation of BP is exploration, production, refining, distribution and marketing of the hydrocarbon products. The company operates in 80 countries throughout the world; establish a greater presence in the international markets. Unlike other organizations, BP was also changing with the dynamics of today’s business environment and was adopting new business strategies and management practices (BP and Verenium announce pivotal biofuels agreement, 2010). With this changing environment, the company faced an accident in the Gulf of Mexico situated in United States of America where 11 workers were dead. This is one of the biggest failures in the history of modern era, which cost near about 43 billion dollar and is continuing. Due to this disaster, company has to pay huge amount of fine to various authorities. This essay discusses about the situations of the company and tries to reveal what are the reasons are responsible for this failure. The details of the system failure are also discussed in this essay. Along with the discussions about the failure, the recommendations are also given in this essay (Alvania, 2011).
In the Gulf of Mexico BP was operating their oil production unit, which faces the biggest disaster in April 2010. There were several reasons, which can be categorized as technical failure and decisional failure for this disaster from the companies end (Bozeman, 2011).
Extreme Geographic Location – BP was operating their production in Gulf of Mexico, which was located in the middle of the Pacific Ocean. It was very difficult to manage this kind of disaster in the middle of the sea, as the availability of support was very less. Only few rescue ships were able to reach within time so most of the employees were evacuated to take them in a safe place. Immediate action was not there from the companies end due to that extreme location (Cai et al., 2015).
Week Risk Management – Company was not very well equipped with their risk management decision. The managers never emphasizes on the risk management for that production unit which resulted in such a failure. Few maintenance department of that unit was outsourced where they never monitored to find the risk of an accident.
Lack of Timely Decision – One of the managers of that company was assuming that there could be a situation like this because he feels that management was not emphasizing on these issues. The decision by the management was very slow particularly in the safety issues where there was no return on investment. This kind of managerial decision is the main reason. Other employee has to suffer for their decision, which is wrong (Choi, Lee and Do, 2011).
Sluggish Response in Critical Situation – The management of BP was not honest to conduct programs about those safety situations. The employees were not well trained about the process to fight against the incident. BP management never thought that they have to face such situation. Since the employees were not well trained so they was unable to understand the situation how to control it. Since there was, less emphasis on the safety measures so the maintenance of the safety equipment was not done properly this becomes the factors to respond sluggishly during the critical situation.
Undermining the Situation – The situation was unthinkable to the employees of BP. When there were minor faults and indications, they did not manage the situation with proper guidance. Different teams did the small problems and there was no communication between them, which remain unnoticed, and the situation was unpredictable for the management and the safety workers.
Lack of Planning – There was a lack of planning by the safety workers, as they never faced such situation. The monitoring process was very bad and there was no communication with different safety team members. This lack of communication was the major failure for the incident. When there was a failure with the well, sealing team there was no backup ready to support those (Gold, 2015).
There are several technical failures were found for the disaster which was happened in the Gulf of Mexico. The reason for that technical failure was low maintenance and lack of risk management by the company. The technical failures are discussed below.
Hydrocarbons were not isolated by annulus cement barrier – in the previous day of the accident cement was pumped down in the production pipe to prevent the entrance of the hydrocarbon in the wellbore from the reservoir. Quality of the cement was light which was not up to the mark and the cement was full of nitrogen. The breakout of those nitrogen helps to migrate the hydrocarbon in the wellbore. There was a failure with the quality assurance team to find out the weakness of the cement design and testing (Ladd, 2011).
Shoe track barriers did not isolate hydrocarbon – When cement fail to isolate the hydrocarbon it started to pass through the shoe track, which was installed in the bottom of the casing. This was happened because both the shoe track was failed to prevent the entry of the hydrocarbons into the production line. The second barrier of the hydrocarbon was float collar, which also fails to prevent the entry.
Negative pressure test was accepted – Before the well was temporarily abandoned a negative pressure test was conducted about the verification of mechanical barriers. The test was conducted by replacing heavy drilling of mud in the controlled condition. The negative pressure test indicates the flow path communication with the reservoir, which was an indicator of the failure and signifies that the barrier integration was not achieved (Run to failure: BP and the making of the Deepwater Horizon disaster, 2012).
The integration of the hydrocarbon was not recognized until it raises its level. Due to the negative pressure test result and implication, the well was over balanced, which prevent the further influx of the hydrocarbon in the well. Since the well was abandoned it was filled with the sea water resulted it to underbalanced which remain unnoticed. The drill pipe pressure was more and crew took action before 40 minutes of the disaster. The hydrocarbons were rapidly flowing to the sea surface, which remains unnoticed by the crew, and no action was taken on that.
Well control response was failed – the control of the first well was failed to close the diverter and routing was done to separate the gas which increases the release of the fluid in the surface. If the release of the fluid was stopped then it might provide more time to control the situation (Echols et al., 2015).
Since the route was diverted into the mud gas separator it started to release the flammable gas into the surface. This release of the gas was the major risk factor of that disaster. The gas reaches the ignition source and there was no time to control the situation any more (Stigall and Dugan, 2010).
Hydrocarbon migrated into the deep water horizon where there was a potential risk of ignition to reach there. The ventilation system and the air-conditioning system further transfer a mixture of the gas to the engine room, which increases the risk of ignition.
Emergency team did not seal the wells – Emergency team was not successful to seal those wells. There were three methods, which fails simultaneously during the process. The explosion and fire was so heavy that it destroy the primary method for sealing and throws it out of the well to disconnect it from the crew. Then there was automatic method to seal the well without the help of BOP personnel which again fail because of the failure of the two BOP control pod. The first control pod was not well charged to perform the activity and the second control pod was not working because there was a problem with the critical solenoid valve. The remotely operated vehicle was the third system to seal the well in such situation which also a failure at that time (TORRICE and VOITH, 2010).
It was very clear by all the reports about the incident of Gulf of Mexico that there was a overall failure by the company. The company was very strict about their management and with their business but they never emphasized on the safety parts of the production unit. There were not only technical failures, which are responsible for the disaster situation, but other reasons are also equally responsible. The wrong management decision was more responsible for this, which was the initiator of the technical failure.
Employee Training- for running any new project it is very important to ensure that whether the employees are quite sure about the new system (Dr. Roslina Ibrahim, 2013). Every project differs from one other. Thus the system also differs. The fact is that it may be quite ensuring that a particular individual may be very much active in the previous project, but he may not be active in other projects. This is because he was well equipped with the previous system. Thus it is very necessary for the organization to handle the employees who will be associated with new project management. Proper training schedule has to be incorporated. The employees need to be given proper ideas about the project. The aim of the project is to be clearly delivered along with its objectives. This will help the new members in the team associated with the project to get a clear idea of the project leading them to be productive in deliver tasks in time.
Ensuring Quality Standards- upper level managers along with the line managers have to ensure the quality standards associated with the project (ElKhatib & Srivastava, 2013). The components of project quality plan are-
Responsibility Management- this ensures that how the management is solving its responsibility for achieving the project quality. The management needs to delegate the responsibilities among the managers effectively where the tasks needs to be mutually exclusive and totally segregated.
Document management- the project management should be properly documented. The progress and failures needs to be taken care of. Daily reports have to be properly documented and a track of record has to be maintained.
Requirements Scope- the materials that are need for the progress needs to be maintained earlier. The advance material management makes time management.
Design Control- projects mainly fail because for improper designing. Changes in design need the consideration of others.
Adequate experts- the organization must place exact number of experts for all the projects. This can coordinate with the rest of the members who are also skilled enough. At several times it is seen that though the members are quite skilled by they does not get proper guidance to deliver tasks (Grossard, Martin & Pacheco, 2014). This mainly happens as they do not know what they are required to do. So it is the responsibility of the skilled managers to maintain the track of tasks that who are doing what. If anyone faces problem it is the responsibility of the experts to guide them to accomplish the tasks.
Clear Hierarchy- at critical times, the decisions needs to be handled properly with patience (Hovorka, Meckel & Treviño, 2013). And for this it is very important for organization to maintain an hierarchy. Proper delegation of tasks needs to be segregated in all level. This must be ensured that the tasks that are in need for higher level consideration, hierarchy must be maintained. This will lead to develop better strategies and criticality can be handled efficiently. Maintaining hierarchy will lead in quick decision.
Electronic Equipments involvement- as technology has progressed much further from the past decades; new electronic equipments have been developed. These equipments are though effective but one needs to know the procedures that how to handle those. For this proper training schedules need to be incorporated so that all the members get familiar in using the devices. This will lead in time minimization as well as the tasks can be accomplished with least cost (James, 2013). This should also be taken care of that the accuracy of the electronic equipments are verified in regular intervals. With the progress, the electronic equipments become so critical and vital that if those stop working the tasks gets delayed.
Transport Resources- some projects are located in the remote areas. As those areas are much beyond the border, transport system lacks there. So it is the responsibility of the organization to provide quick transport resources for the workers who face emergency problems (Khalfan, 2003). If workers fail to work then the whole project will be delayed. Thus satisfaction of the workers has to be taken care of. If workers get what they want then they can be productive. Employees who are in remote areas are more prone to loss of life. In case of emergency, transport vehicles are required a lot.
Organizational Culture- At several times it is seen that the employees are not properly organized. They know what they are required to do but eventually intentionally they delays tasks. Thus behaving with a culture is very important where the individuals will get to understand what they need to do and deliver their responsibilities. Casual and unreliable employee in a project has to be cultured to maintain the rules and regulations (Mbat & Eyo, 2013). When one works in coordination with other while ensuring the responsibilities, total effectiveness will be maintained and there will be least possibility of derailing the tasks. Employees are required to know their responsibilities and potential risks which are associated with them if they do not accomplish tasks.
Proper standard operating procedure (SOP) - SOPs details the recurring work progress regularly that are too followed and conducted within the organization. SOPs reduce the variation and generate quality by the implementation of consistent process though there may be permanent or temporary changes in personnel. The major project failure was due to ineffective SOP. Communication was not properly ensured. Documentation was not regulated at the end of each day. Even though there were effective use of historical data still the current progress was not coordinated with the previous data. This meant there was improper resource handling. For any mega project, SOP must be properly organized so that at critical times information can be shared in all levels (Rwelamila & Ssegawa, 2014).
Risk management- risk management techniques must be properly accomplished. At critical times there is lack of time and moreover there is pressure from the management (Tang, Jing & Wang, 2013). Thus it happens to derail the project from its schedule when techniques are not mentioned properly. Therefore it is recommended to ensure proper risk management techniques quite earlier than the starting of the project. If methods are predefined, then it becomes easier for the management mitigate the criticality.
Control System- ignorance is one of the major reason for derailing the project. It has been found that the managers understand that the project is derailing but they do not change the control system. Changing the control system for mega project is much complicated but still it is by far the most important factor that must be taken in concern (Wan, 2013). Prevention is better than cure. In case of mega projects cure accounts to heavy loss in finance and time.
Poor testing- it has been found that the tests were not planned in regards to the system. Most of the tests were done by such users who were not so much experienced. Thus any fault that arrived was not able to be measured. Thus it is recommended that tests must be performed by experts and adequate time must be provided (Zhang, 2013). Properly formulation and planning makes a project perfect.
External environment suitability- cases delivers the fact that environment was not suitable as geographic location was not so much suitable. It is recommended that management at the very first moment must find out the pros and cons of the geographical area. According to that the necessary suitability provided from external means has to be incorporated. This needs to be ensured about the financial part for accomplishing the suitability.
Decision- the project lacked proper segregation of tasks among the individuals. This resulted in lack of decision. When situation raised to be critical, involvement of the managers and experts was found to be lacking. Thus it is recommended to ensure experts who are not only experienced but also knows their responsibility and have the capability of quick decision.
Ignorance in critical situation- most of the experts and managers lacked in total involvement. They were ignorant at times of criticality. It is recommended to have dedication on what the managers are doing where the leadership roles must also be effectively ensured to keep a track of record (Zhang, Gao & Tang, 2013).
Every project involves risk. Risk can be mitigated by total participation of associated individuals. Project derailing occurs mainly due to system failure, lack of motivation, lack of communication and improper standard operating procedure. According to these facts providing recommendations are quite easy. But the fact is that in practicality more severe issues are generated. Such issues cannot be theoretically maintained. At times of criticality these issues has to be managed in practical sense according to the situation. But for this a mare experienced expert who is having a great personal knowledge along with patience having the accountability of quick decision needs to be associated. At most of the cases it is found that such a kind of experienced person is lacking. Total involvement of management having sound experts have to be integrated with managerial tasks. In this essay the reasons for the failure of British Petroleum has been shown but perfect recommendations vary from case to case.
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