Project Procurement Management

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Project Procurement Management

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Project Procurement Management

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The oil industry is facing considerable challenges for selling their products because the sale point of oil has decreased. The only way for the oil industry to gain profit from their business is to increase their efficiency and reduce the wastage of products. The complexity and the risk of the business have also increased because majority of the oil reserve throughout the world has been discovered and the depletion of the resource can affect the economy of the country. The report discusses about the procurement strategy and the risk associated with the oil and gas project. The strategy implemented for sourcing and outsourcing the resources required for increasing the efficiency of the current business process is also discussed in the report.
Procurement strategy         
Different procurement strategies are applied for the advancement of the business process of the oil and gas industries. Contractual workers took after endorsed practices for straightforward outlines, to convey against cost and time objectives. Engineers having high bar for advancements ought to be decided for running distinctive operation of the business. The engineers are appointed for the calculation of the complexity that can be faced by the organization for improving the efficiency of the current business process (Badiru and Osisanya 2016). For example, the working environment of oil and gas industry is analyzed and the technology that can be implemented for the amplifying the production and reducing the cost of production is required to be selected. The resources that are available in the organization and the resources that are required to be outsourced are gathered. A project schedule is required to be prepared for proper management of the project and assigning the resources to the task. The budget is also required to be prepared for increasing the efficiency of the framework of the current business (Salazar-Aramayoet al. 2013). The project manager is responsible for monitoring the progress of the work and should have good communication skills for communicating with the higher level officials and select the best technology to increase the efficiency of the business.
The following structure is required to be followed by the project development team for getting a fruitful result from the oil and gas industry. The choice of the technology is an important factor for the success of the business (Grant 2013). The structures are as follows:

Formalizing the checkpoints and phases of the project
Aligning the current business needs with the requirement of the project
Auditing the progress of the project for elimination of risk associated with the development of the project
Creation of a project budget and maintaining the cash flow for the progress of the project.

Many oil organizations are justifying their obtainment connections, moving from many shallow connections to less yet more profound ones. For instance, some IOCs are attempting to spend a large portion of their acquirement spending plan with their main 40 merchants, while a couple of years prior that share may have gone to more than 250 organizations (Kelland 2014). Taken in general, these changes could return 5% on cost efficiencies.
Acquisition patterns take after cycles, be that as it may, and the push for neighborhood content necessities could part the acquirement pool once more. On the off chance that nearby substance endeavors are to prevail over the long haul, NOCs and other oil and gas organizations should work with neighborhood providers to manufacture a solid establishment of bolster administrations. Better devices can likewise enhance acquirement (Yusuf et al. 2014). One organization reclassified its agreement work breakdown into related contracting modules, permitting it to reassign some temporary worker occupations and spare 13% on products and enterprises (Al Hammadi and Bernard 2016). Worldwide organizations ought to likewise endeavor to oversee providers at the worldwide level and guarantee that they are working with the provider’s A group, which includes esteem (and lessens dissatisfaction).Preparation of contact with the stakeholders associated with the project and insuring the final product from any disaster can also increase the efficiency of the oil and gas industry.
Strategic sourcing and outsourcing    
The efficiency of the oil and gas industry can be increased and the cost of operation can be decreased by following some of the business procedures such as outsourcing the technical component required for the oil exploration and sourcing the man power for supervising the business resources. Small companies can be contracted for handling the technical component and suppliers must be appointed for delivering the resources.
Outsourcing respects the exchange of merchandise and enterprises generation, already completed inside, to outside suppliers (de Carvalho,Patah and de Souza Bido 2015). The targets of outsourcing concern expenses and capabilities. As respects the previous, outsourcing ?rms go for lessening direct operating costs, although it ought to be noted that cost decreases in the short run are counterbalanced by a reliable cost development because of searching for supplier, setting-up contracts, transferring in-house exercises to the suppliers and managing the progressing contract to maintain a strategic distance from dangers associated with advantage in favor of the outside temporary worker (monitoring, ongoing dealing, authorizing and arrangement of agreement changes, where essential). On account of products, the coordination expenses ought to likewise be incorporated. Different deficiencies are associated with the negative impact on lead and conveyance times and exactness (Ruqaishi and Bashir 2013). As respects abilities, outsourcing ?rms go for spend significant time in center capabilities and substituting non-center skills with contribution from expert suppliers (Yazdani, Ali Soukhakian and Reza Mozaffari 2014). This viewpoint must be precisely dissected by ?rms in their outsourcing choices in view of the dangers they can bring about: on the one side, in the short run, the genuine debilitating of the arrangement of capabilities ?rms have, and, on the opposite side, the undermining to the improvement of new innovative skills later on (Ruck, Plana and Edmunds 2016), so difficult the likelihood of organizing R&D, outline and assembling exercises of providers. These two dangers, if brought about, can undermine ?rms’ abilities to distinguish criteria to choose and screen the best supplier, and additionally to achieve a worthy concurrence on costs and other legally binding terms: in this way, over the long haul, ?rms are required to confront higher data asymmetry issues (due to their difficulties in surveying their potential suppliers) and, therefore, higher perils of pioneering conduct (Ahiaga-Dagbuiet et al. 2017).
Disregarding rising enthusiasm for the openness, inquire about on OI stays awkward in light of the fact that the absence of an acknowledged de?nition of OI prompts to equivocalness (Connicket al. 2014). Surely, writing examinations openness as per alternate points of view; the most researched is the course of openness, yet others were additionally researched: the number/sorts of accomplices and the hierarchical structures to de?ne the connections among partners. As respects the ‘bearing of openness’, three models develop: the inbound, investigation or outside-in process, through which ?rms go for incorporating outer information and increment their ingenuity; the outbound, misuse or back to front process, through which ?rms go for gaining pro?ts by putting up thoughts for sale to the public, offering IP, and duplicating innovation, to quickly put up thoughts for sale to the public, and the coupled procedure that consolidates the two above procedures. There are suggestions regarding capabilities and expenses. As respects abilities, if the obtaining of outer learning is evident for the inbound procedure, it is additionally valid for the outbound procedure in light of the fact that by and large, ?rms remotely uncover their advancements just to evoke cooperation and thoughts trading (Shuen, Feiler and Teece 2014). As respects costs, the inbound procedure suggests obtaining costs, as well as costs associated with the investigation/determination of outside wellsprings of advancement. The outbound procedure suggests costs because of the need to assemble a cognizant methodology to pick what is to be uncovered outside and to put into practice their ability to permit innovations.
Supply Risk
There are different risk associated with the company if it does not improve its process and the effect of the risk is equally harmful for the society and the environment. Overseeing danger and opportunity is a nonstop procedure that obliges organizations to consider the most widely recognized dangers, as well as to have encounter alleviating surprising occasions. In the oil and gas industry, it’s never been more imperative to oversee wellbeing, security and natural dangers, given the rising many-sided quality of operations and the investigation by controllers and partners (Parra and Bono 2016). Identification of the risks and assessment is a nonstop procedure all through a project life cycle and over the venture portfolio, considering a systemic point of view for the project, their stages and important dangers.
The oil and gas industry is currently facing problem because most of the oil reserves throughout the world has been discovered and it confront steady difficulties, particularly as far as free market activity. More focus should be given on the supply chain of the oil and gas industries and the industry must supply according to the requirement or demand in the market. Focus must be given on the resource administration and reserving the oil and gas for maintaining the business (Silvestre and Gimenes 2017). Information system must be implemented for maintaining the records of the clients and their demands and their invoice in the current system of the organization. Acquirement and production network techniques can also be implemented in the front line for resolving the basic issues arising in the management of the organizational framework. It also helps in decreasing the production cost and increase the profit percentage of the current system
The oil and gas industry is vigorously subject to providers to give complex administrations and basic gear to bolster continuous tasks and operation. Moreover, contract administration and customer relationship administration can collect information for the reputation or the financial damage caused by the supplier. To enhance provider relationship administration, organizations ought to receive a technique for provider benchmarking (Francis 2015). The strength of the oil and gas industry can be increased with collaborating with the other industries and maintaining a transparency in the current business. The uneven production of the oil and gas makes the price of the oil and gas volatile and thus it have an effect on the supply chain.
The transaction cost of the produced oil and gas is required to be calculated using the total cost of ownership model and it helps the organization to calculate the exact value of the produced oil and gas (Olaniran et al. 2015). The cost model is used for the calculation of different expenses of the company related with the supplier. On account of the TCO advance it is more reasonable for long term sustainability and basic resources serious gear), the distinctive expenses, consists of securing expenses, operation and support expenses, are touched base at before picking the correct provider at the focused cost.
Most of the oil and gas companies have embraced measures, for example, the TCO and cost models, but all the oil and gas industries are required to be using the model for proper calculation of the production and transaction cost (Bergh et al. 2014). The areas of the supplier relationship management is required to be analyzed and shrewd approach is required to be applied for determining the influence for deciding the correct contracting and acquisition procedure.
Despite the fact that innovation is oiling and gas organizations to discover and separate more oil, the supply chain network is required to be considered and the procure management that give extra genuine esteem. The Enterprise Resource Planning (ERP) frameworks can be applied in the business information system for analyzing the supplier and manage the supply chain easily (Williams, Kilanski and Muller 2014). These ERP frameworks ought to oblige request estimating, stock administration, contractual worker administration, e-obtainment and ace information administration. Request determining or combination of the demand with the production is an important factor for increasing the efficiency of the current supply chain of the oil and gas industry. ERP frameworks with an oil and gas framework oriented design can be used for managing the supply chain of network and keeping track on the organizational assets used in the oil and gas industry (Ablo 2015). There has been an outlook change in the procedure that the oil and gas organizations had grasped such as; e-acquisition and demonstrated enthusiasm for e-obtainment frameworks.
Indeed, even with the application of the best-in-class production network measures and frameworks, it is believed, without a group of opportune individuals, best-in-class store network rehearse can’t be maintained, nor can the full advantages of inventory network truly be delighted in. Likewise with some other industries, oil and gas industries additionally needs redefine its thinking procedures and find the deficiency of production network and acquisition ability because of a maturing workforce and developing aptitude deficiencies(Olaniran et al. 2015). A portion of the measures that can be viably received are preparing and prepping of ability in basic store network capacities, foundation of an inventory network focus of magnificence and industry/the scholarly world joint effort to support production network ability.
To enhance and convey best-in-class inventory network hones, IOCs/NOCs can adjust or potentially execute a portion of the down to earth measures recorded beneath:

Understand the aggregate estimation of major spend classifications. This requires altogether recognizing expenses and choices over the production network for every class and deciding suitable mediations (e.g., looking for new provider, evolving determinations, changing contract terms).
Building custom-fit acquirement forms which have better lucidity and connect with providers ahead of schedule simultaneously (Francis 2015). In addition, complete to implementation and operation.
Managing chances over the whole expense associated with the production of oil and gas and the individual activities or items, or expenses related with the operation.
Proactive dealings with the supplier and selection of applicable providers, concentrating on the manageability and arrangement and providing guarantee to the organization proprietorship and responsibility is required to be clear to providers (Ablo 2015).
Automation of the organizational framework capacities is required for increasing the efficiency of the current production and minimizes the wastage of the resources. The resources must be utilized for increasing the productivity and the automation of the system reduces the changes of errors in the system.

Going ahead, it is understood that, despite the fact that a portion of the inventory network best practices have streamed through the oil and gas industry, there is dependably scope for further change. Better request arranging and upgraded stock administration can help oil and gas organizations keep up oil and gas gear uptime, and thus advantage from enhanced profitability(Silvestre and Gimenes 2017). Enhanced spend classification administration and shared provider relationship administration, combined with expanded automation of exchange handling, prompts to sourcing reserve funds and distinguishing proof of optional sparing open doors.
We trust that the organization of inventory network best practices, combined with the usage of a solid programming arrangement, is the route forward for oil and gas organizations to decrease expenses, and concentrate on oil and gas generation and investigation in the most improved way. It will be truly intriguing to perceive how oil and gas organizations can viably oversee nearby substance sourcing joined with the reception of best-in-class inventory network hones in 2017.
From the above report it can be concluded that analyzing the procurement strategy for the oil and gas company can help the company to choose the best strategy. The implemented strategy is required to be aligned with the current business process of the organization and the risk associated with the implementation of the strategy is required to be analyzed. The risk can arise in the oil and gas companies are documented in the report, the risk mitigation strategies are also documented which helps the organization to face multifaceted challenges. A good project management skill is required for the management of the risk and maintain a sustainable growth for the organization.
Ablo, A.D., 2015. Local content and participation in Ghana’s oil and gas industry: Can enterprise development make a difference?. The Extractive Industries and Society, 2(2), pp.320-327.
Ahiaga-Dagbui, D.D., Love, P.E., Whyte, A. and Boateng, P., 2017. Costing and Technological Challenges of Offshore Oil and Gas Decommissioning in the UK North Sea. Journal of Construction Engineering and Management, p.05017008.
Al Hammadi, N. and Bernard, J.P., 2016. Key Performance Indicators for Assessing Project Peformance in the Oil and Gas Industry of the United Arab Emirates.
Badiru, A.B. and Osisanya, S.O., 2016. Project management for the oil and gas industry: a world system approach. CRC Press.
Bergh, L.I.V., Hinna, S., Leka, S. and Jain, A., 2014. Developing a performance indicator for psychosocial risk in the oil and gas industry. Safety science, 62, pp.98-106.
Connick, S., Pedroni, P.M., Terry, S., Nguessan, L., Johnston, M. and Romer, R.F., 2014, March. A Biodiversity and Ecosystem Services Management Framework for the Oil and Gas Sector. In SPE International Conference on Health, Safety, and Environment. Society of Petroleum Engineers.
deCarvalho, M.M., Patah, L.A. and de Souza Bido, D., 2015. Project management and its effects on project success: Cross-country and cross-industry comparisons. International Journal of Project Management, 33(7), pp.1509-1522.
Francis, A., 2015. Analyzing the Environmental Impact Assessment Process for Sustainable Development of the Oil and Gas Industry in Trinidad and Tobago.
Grant, R.M., 2013. The development of knowledge management in the oil and gas Industry/El desarrollo de la direccióndelconocimientoen la industria del petroleo y gas. Universia Business Review, (40), p.92.
Kelland, M.A., 2014. Production chemicals for the oil and gas industry. CRC press.
Olaniran, O.J., Love, P.E.D., Edwards, D.J., Olatunji, O. and Matthews, J., 2015. Chaotic Dynamics of Cost Overruns in Oil and Gas Megaprojects: A Review. World Academy of Science, Engineering and Technology, International Journal of Civil, Environmental, Structural, Construction and Architectural Engineering, 9(7), pp.911-917.
Parra, G. and Bono, R., 2016. Modularization of Electrical Systems in the Oil and Gas industry in the North Slope of Alaska. IEEE Transactions on Industry Applications.
Ruck, P., Plana, J.O.L. and Edmunds, P., 2016, April. Sharing Information on Oil and Gas Activity in Marine Environments Using the IPIECA Marine Geospatial Bibliography. In SPE International Conference and Exhibition on Health, Safety, Security, Environment, and Social Responsibility. Society of Petroleum Engineers.
Ruqaishi, M. and Bashir, H.A., 2013. Causes of delay in construction projects in the oil and gas industry in the gulf cooperation council countries: a case study. Journal of Management in Engineering, 31(3), p.05014017.
Salazar-Aramayo, J.L., Rodrigues-da-Silveira, R., Rodrigues-de-Almeida, M. and de Castro-Dantas, T.N., 2013. A conceptual model for project management of exploration and production in the oil and gas industry: The case of a Brazilian company. International Journal of Project Management, 31(4), pp.589-601.
Shuen, A., Feiler, P.F. and Teece, D.J., 2014. Dynamic capabilities in the upstream oil and gas sector: Managing next generation competition. Energy Strategy Reviews, 3, pp.5-13.
Silvestre, B.S. and Gimenes, F.A.P., 2017. A sustainability paradox? Sustainable operations in the offshore oil and gas industry: The case of Petrobras. Journal of Cleaner Production, 142, pp.360-370.
Williams, C.L., Kilanski, K. and Muller, C., 2014. Corporate diversity programs and gender inequality in the oil and gas industry. Work and occupations, 41(4), pp.440-476.
Yazdani, A., Ali Soukhakian, M. and Reza Mozaffari, M., 2014. Evaluation of critical success factors in total quality management implementation and prioritization with AHP-case study: Pars Oil and Gas Company. European Online Journal of Natural and Social Sciences: Proceedings, 2(3 (s)), pp.pp-1624.
Yusuf, Y.Y., Gunasekaran, A., Musa, A., Dauda, M., El-Berishy, N.M. and Cang, S., 2014. A relational study of supply chain agility, competitiveness and business performance in the oil and gas industry. International Journal of Production Economics, 147, pp.531-543.

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