IntroductionThis essay is all about the incidentthat happened on the night of the 20th April 2010 when an oildrilling rig called Deepwater horizon was in operations in the Macondo prospectin the Gulf of Mexico and exploded due to poor management decisions which result in the death of 11 workers. It is alsoknown as one of the largest spill of oil in the history of oil drillingoperations in the United States because 4million barrels of oil flowed from the affectedwell over a period of 87 days (Environmental Protection Agency, 2017). Identificationof Key Risk The Macondo Prospect drilling contract wasseveral days behind schedule and time certainly is money in industrialoperations. Pressure to “get the job done” as soon as possible may have contributedto the fatal accident. Several key human error factors were also involved: One test wasconducted on the main well pipe and the second was conducted on the smaller”kill line.”According to movie Deepwater Horizon (2016), there were several risks that managementoverlooked before performing the final disastrous test.
Management sent team 1home without doing cement bond log test and it was so important because it wasthe only thing in between the safety of the employees and blowout. In thatsituation compromising on cement log testmeans compromising on whole drilling infrastructure. Even after getting unsatisfactoryresults from the gauge of drill line and kill linethey performed the final test without analysing its impact on employee’ssecurity and safety. Risk Breakdown Structure Level 0 Level 1 Level 2 Level 3 Project Risk Technical Performance Equipment may not be fit for purpose. Quality Available materials may be of insufficient quality Safety Safety may not be considered in design Management Project Management Miscommunication Inaccurate estimates may cause overspends etc. Organization Decision Making Making decisions without analysing its impacts. Qualitative and Quantitative assessment of the Risk after the Incident.
Level Name Ranges Description Low 0-39% If something would end up being nothing more than a bother and easily manageable. Medium 40-79% A difficult but manageable situation. High 80-100% If something blowout budget or delay project subsitabtially. Risk Category Assessment Response Probability Impact on company R1) Upcoming tenders and contracts will be hard to get because of the Incident. Market High (90%) High Management have to overcome this situation as soon as possible to retain the reputation of the company. R2) Settlement payments for the injured workers will disturb fiancial condition of the company. Organization Medium (40%) Medium Instead of paying in cash directly, company can give them stock market shares or bonds of the same company. R3) Employees will feel insecure for working with the company in future.
Organization High (80%) Low Need to introduce new safety arrangement and have to provide awareness about handling emergeny conditions. R4) There will be huge employees turnover in the oil drilling industry. Industry High (80%) Low Need to convence current and future employees in terms of security and safety.
R5) Time cost money so rehabilitaion time may effect progress of the company. Organization Medium (40%) Medium Management have to overcome on this for continous improvement. R6) Threat for marine life Environment Medium (40%) Low Need to do some arrangements for saving marine lives by contacting and coperating with marine life authorities. R7) It will Affects Seafood and fishing industry. Environment Medium (40%) Low R8) It will affects tourist industry specially for beaches. Environment Low (10%) Low R9) it will cause air pollution Environment Low (10%) Low R10) It will disturb the Routes of the Sea Transportation Industry Low (10%) Low High R3, R4 R1, Medium R6,R7 R2,R5 Low R8,R9,R10 Occurance/ Impact Low Medium High Impact Discussion Risk identification is oneof the most sensitive areas in the projects because it requires proper considerationfrom each and every point of view.The main sources of the risk could be eitherinternal to the project or external to the project whereas internal factors ofthe risk may arise from people, processes, procedures, organizational culture,managerial decisions, quality of the equipment etc (Hilson, 2003).The primary purpose of therisk management is to increase opportunities and decrease threats by keepingthe focus on objectives and goals of the project (Hillson, 1999).
Since Projectmanagement is a combination of teamwork so effective communication plays an importantrole throughout the life cycle of the project but Enterprise TechnologyProjects (2016) mentioned 4 common miscommunicationmistakes in projects and one of them isthat we often think that we have done enough communication within teams tocompletely understand the nature of the projects and there is a true factregarding this is that no amount of communication is ever enough.When Team 2arrived at the site, there was no proper communication in between the Team 1and Team 2 about cement bond log test (DeepwaterHorizon, 2016). In Risk Management, before identifyinggeneral or overall risks, it is more important to identify that what eventsmight be risky against which barrier at what stage. There is no doubtthat most probably same nature of the risks impacts on same objectives whichmeans that technical risk could influence technical objectives and in the longrun these objectives may disturb overall goals of the project (Jaafari, 2001;Hillson, 2005). In Deepwater horizon, one of their technical safety officers told them that 10% machinery on boardis not working properly and may cause hazard during the drilling process butthat won’t help in convincing the management to stop from performing the last test. In some cases, performing riskanalysis or mitigation of risk requires more expenses that result in exceeding the current budget up to20%, but the main thing is that whether the reductionin the risk worth the additional expenditure? (Morris et al., 1991). That was the main reason behind not doingcement log test in Deepwater Horizon, managementwas already late for 43 days and they were ahead of almost $50 million moreexpenditure because they were confident enough about cement log for moredrilling without testing the capability of its current state.
If you want yourdecision making to be efficient then there is a need to quantify security andsafety risks to enable risk-based assessments of the effectiveness ofprotective measures (Stewart et al.2006; Little 2007). Management at DeepwaterHorizon didn’t expect that sort of disastrous blowout, but again not enoughamount of prearrangements was done to protect the workers from the fire. Deepwater Horizon incident took lives of11 workers just because of management’s immature behaviour and decision-making process.
In a nutshell, the business world is all about profit and loss andif investor lost their money from one project then maybe they find differentopportunities in other projects to get a returnon their investment but the most valuable assets in any organizations is the lives of the employees because we can’tget it back in case of loss. (Financial aspects aftermaths )