Breakdown Structure

Test Your Knowledge

Quiz: Breakdown Structures in Oil & Gas

Instructions: Choose the best answer for each question.

1. Which of the following is NOT a primary type of Breakdown Structure used in the oil and gas industry? a) Work Breakdown Structure (WBS) b) Organizational Breakdown Structure (OBS) c) Cost Breakdown Structure (CBS) d) Risk Breakdown Structure (RBS)

2. What is the primary focus of a Work Breakdown Structure (WBS)? a) The project's organizational hierarchy b) The project's budget and cost elements c) The project's deliverables and tasks d) The project's risks and mitigation strategies

3. Which type of Breakdown Structure clarifies the project's reporting lines and team responsibilities? a) Work Breakdown Structure (WBS) b) Organizational Breakdown Structure (OBS) c) Cost Breakdown Structure (CBS) d) All of the above

4. Which of the following is NOT a benefit of implementing Breakdown Structures in oil and gas projects? a) Enhanced clarity of project scope b) Improved communication between stakeholders c) Increased project costs due to extra planning d) Better resource allocation and management

5. What is the primary advantage of using a Cost Breakdown Structure (CBS)? a) Accurate cost tracking and management b) Clear definition of project deliverables c) Effective communication between stakeholders d) Improved risk assessment and mitigation

Exercise: Building a WBS

Scenario: You are a project manager tasked with developing a new offshore oil platform.

Task: Create a basic Work Breakdown Structure (WBS) for this project, outlining the main stages involved in the construction and installation of the platform.

Note: Your WBS should include at least 4 main stages, each with 2-3 sub-stages. Use a hierarchical format with indentations to illustrate the breakdown.

Techniques

Breaking Down the Complexity: Breakdown Structures in Oil & Gas

Chapter 1: Techniques for Developing Breakdown Structures

This chapter details the practical techniques used to create effective Work Breakdown Structures (WBS), Organizational Breakdown Structures (OBS), and Cost Breakdown Structures (CBS) in the oil and gas industry.

1.1 Work Breakdown Structure (WBS) Development Techniques:

• Top-down approach: Starting with the overall project goal and progressively decomposing it into smaller, more manageable work packages. This is often the preferred method for large, complex projects. Techniques include mind mapping, decomposition diagrams, and hierarchical charts.
• Bottom-up approach: Identifying individual tasks and then aggregating them into larger work packages. This approach is useful when the project scope is less defined at the outset.
• Hybrid approach: Combining top-down and bottom-up approaches to leverage the strengths of both. This often results in the most comprehensive and accurate WBS.
• Decomposition techniques: Using various methods like functional decomposition (breaking down by function), object-oriented decomposition (breaking down by object), and activity-based decomposition (breaking down by activity) to ensure thorough and logical structuring.
• WBS Dictionary: Creating a comprehensive document that describes each work package in detail, including its deliverables, resources required, timelines, and responsible parties. This ensures clarity and consistency across the project team.

1.2 Organizational Breakdown Structure (OBS) Development Techniques:

• Alignment with WBS: The OBS should align closely with the WBS, clearly assigning responsibility for each work package to specific organizational units or individuals.
• Responsibility Matrix: Using a matrix to visually represent the responsibilities of different organizational units for various work packages. This helps clarify roles and avoid overlaps or gaps in responsibility.
• Communication Channels: Defining clear communication channels within the OBS to facilitate effective information flow and collaboration.
• Considering Expertise: Matching work packages to organizational units possessing the necessary expertise and skills.

1.3 Cost Breakdown Structure (CBS) Development Techniques:

• Cost Estimation Techniques: Employing various cost estimation techniques, such as parametric estimating, analogous estimating, and bottom-up estimating, to accurately estimate the cost of each work package.
• Cost Coding System: Developing a consistent cost coding system to track costs effectively and accurately.
• Integration with WBS and OBS: Aligning the CBS with the WBS and OBS to ensure traceability of costs to specific work packages and organizational units.
• Contingency Planning: Incorporating contingency reserves to account for unforeseen costs and risks.

1.4 Integration of WBS, OBS, and CBS:

Successful project management often relies on the effective integration of these three structures. Techniques for achieving this include using integrated project management software and creating a common project database.

Chapter 2: Models for Breakdown Structures in Oil & Gas

This chapter explores various models and frameworks that underpin the development and application of breakdown structures within oil & gas projects.

2.1 Project Life Cycle Models: How different project life cycle models (e.g., waterfall, agile) influence the structure and application of breakdown structures. Discussing the need for iterative refinement in agile projects.

2.2 Risk Management Integration: Showing how risk identification and assessment are incorporated into the breakdown structure, with specific examples of how potential risks are assigned to work packages and organizational units.

2.3 Earned Value Management (EVM): Explaining how breakdown structures are integral to EVM, enabling progress tracking and performance measurement at different levels of the project hierarchy.

2.4 Resource Allocation Models: Describing models and techniques for optimally allocating resources (personnel, equipment, materials) based on the breakdown structures. This could include critical path analysis and resource leveling techniques.

Chapter 3: Software for Breakdown Structure Management

This chapter examines the software tools commonly used for creating, managing, and analyzing breakdown structures in oil & gas projects.

• Project Management Software: Discussion of popular project management software packages (e.g., Primavera P6, MS Project, Asta Powerproject) and their features relevant to breakdown structures. This includes capabilities like WBS creation, task assignment, resource allocation, cost tracking, and reporting.
• Enterprise Resource Planning (ERP) Systems: How ERP systems (e.g., SAP, Oracle) can integrate with project management software to provide a comprehensive view of project costs, resources, and schedules.
• Data Analysis and Visualization Tools: Software used for visualizing breakdown structures and analyzing project data (e.g., Power BI, Tableau).
• Specialized Oil & Gas Software: Mentioning any specialized software packages designed for the oil and gas industry that offer enhanced capabilities for managing breakdown structures in this specific context.

Chapter 4: Best Practices for Breakdown Structure Implementation

This chapter focuses on best practices to ensure the effective implementation and use of breakdown structures.

• Early Involvement of Stakeholders: Emphasizing the importance of involving all key stakeholders in the development of the breakdown structures to ensure buy-in and alignment.
• Regular Review and Updates: Highlighting the need for periodic review and updates to the breakdown structures to reflect changes in project scope, schedule, or resources.
• Clear Communication and Training: Stressing the importance of clear communication and training to ensure all team members understand and use the breakdown structures effectively.
• Version Control: Implementing a version control system to track changes and maintain consistency across the project team.
• Integration with other project management processes: Showing how breakdown structures should integrate seamlessly with other project management processes such as risk management, quality control, and communication management.

Chapter 5: Case Studies of Breakdown Structures in Oil & Gas

This chapter presents real-world examples of how breakdown structures have been successfully implemented in oil and gas projects. Each case study should detail the specific type of project, the breakdown structure used, the challenges faced, the solutions implemented, and the outcomes achieved.

• Case Study 1: Example: Offshore platform construction project utilizing WBS, OBS, and CBS. Highlighting successful aspects and areas for improvement.
• Case Study 2: Example: Oil pipeline installation project focusing on the OBS and its role in coordinating different contractors.
• Case Study 3: Example: An upstream exploration project emphasizing the role of the WBS in managing complex geological surveys and drilling activities.
• Case Study 4: Example: A project highlighting the use of breakdown structures in mitigating risks and responding to unforeseen circumstances.

This expanded structure provides a more comprehensive and detailed approach to the topic of Breakdown Structures in the Oil & Gas industry. Each chapter can be further expanded with specific examples and illustrations to enhance understanding and application.