Workforce-related risks in oil and gas projects: identification and analysis

Michelle Smidt and Karen Becker

September 1, 2014

As investment in oil and gas projects is set to continue globally, it becomes increasingly relevant for the organizations managing such large scale developments to take measures to limit and prevent schedule and budget overruns. There are concerns that not being able to get the right people at the right time for the right cost could inevitably threaten the overall project delivery.

Risk assessments and registers are by no means new to the industry, or to the people running these projects, however, to date, such assessments have taken a very technical approach and also a limited view of what “risk” encompasses. In fact, many project managers will tell you that at the core of any project delay or project overspending is a personnel issue.

It is these workforce-related risks that our research at Queensland University of Technology (QUT), in collaboration with Air Energi, intended to document in more detail. By doing so, we hoped that more organizations would consider such risks as part of their current assessment process.

Although many of our findings may be unsurprising to those with extensive industry experience, they do confirm the importance and continued impact of these risks, and break them down in a way that hasn’t been done before.

In brief, through in-depth interviews with industry experts, our research documented six key areas of people-related risk: project appeal, recruitment, onboarding and induction, retention, demobilization, and compliance. Each of these was further explored to reveal a subset of risks (To read the full findings of the report titled, “Workforce-related project risks,” visit the Air Energi website:

Project appeal: The attraction of candidates will depend on the attractiveness of the project itself. This includes factors such as duration of project, remuneration and benefits, location, employer brand of operating company, roster, and the phase of the project.

Recruitment: This depends on factors such as clarity of needs, necessary processes and procedures, whether skills are available to meet demand, quality of local talent, reference checks, expectations, and internal client policies and requirements.

Induction & Onboarding: Key issues here are use of a formal induction process, organizational cultural alignment, time requirement, upskilling and training, as well as industry experience.

Retention: Several key issues with retention deal with loyalty, management support and style, career development opportunities, poaching, alignment with company culture, equity, staff versus contractor benefits, personal circumstances and taxation.

Demobilization: This stage presents the highest risk in terms of resources and time invested. Key issues are project completion, continuity, client/labor hire agency relationship, identifying skills and capabilities for future use, succession planning, reputation control, confidentiality and sabotage.

Compliance: Such factors include complying with the legal requirements of the location and country but also internal organizational policies.

However, identifying these risks is just the first step. A critical outcome from the research is the ability for those managing a project to be able to identify the specific issues that present the biggest risks, and proactively take steps to mitigate them wherever possible.

From the findings, we developed a survey to identify which of the six key risk areas are likely to apply to a specific project. The results of the survey combine to produce a results report and an interactive map that illustrates in a very simple way the low, medium and high workforce-related risk areas. It also identifies those areas where there is a high level of uncertainty within the management team about the critical workforce-related risks.

This tool, entitled PREP™ (people risk evaluation of projects), is currently under development, but it is the intention that it will greatly improve how projects are managed and mitigate risks, by not only broadening the view of organizations to consider not only workforce-related issues and technical risks, but encourage them to adapt their current approach to risk assessment in order to better get to the heart of workforce issues. By doing this we believe that many of the current schedule and cost overruns experienced by many of today’s oil and gas projects can be significantly reduced.

Michelle Smidt
serves as a research project officer at QUT. She recently worked on a research project jointly funded by the Australian government and Air Energi investigating people-related risks on LNG projects involving a contract workforce. Michelle was responsible for gathering and analyzing the data which enabled the development of the PREP™ tool. Michelle completed a Bachelor’s in English and employee communications in 2011 from Copenhagen University and a Master’s of Business HRM at QUT in 2012.

Karen Becker is an associate professor, researcher and lecturer at QUT Business School. Karen is an active researcher in the area of strategic HRM, learning and development, innovation and change in the workplace, and prior to joining academia spent 12 years in corporate HRM and HRD roles, and as an HR consultant. Karen has published over 40 peer-reviewed journal articles and conference papers relating to her research.