project management

Deepwater Horizon Incident Case Analysis

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Deepwater Horizon Incident Case Analysis

Key Issues Identified in the Case

Despite BP best efforts to maintain security at the rig, repairs at the Deepwater Horizon rig were intentionally delayed. The company failed to comply with best practices relating to the safety of rigs, which significantly increased the risk of the rig malfunctioning, which could result in a major security incident. Key parts of the rig were for example never taken to dry land for checks and repairs, despite the fact that a number of employees working on the rig pointed out this fact to management (Ingersoll, Locke, & Reavis, 2010). Instead, the company selected to rely on workarounds for needed repairs, which could not be a long term solution that could guarantee safety. In addition to the hardware problems that were being experienced by the rig, employees at the rig also reported a number of software problems to management that were not addressed. BP as the managing organization for the risk selected to withhold repairs for the rig, which significantly increased the risk of key sections of the rig failing and resulting in a major safety incident.

BP also adopted an overly aggressive operations strategy that selected to ignore a number of operating risks at the rig that could adversely affect operations. Operations at the Macondo Well were considered to be highly risky due to the elevated levels of gas at the well that posed major challenges to drilling. Despite the fact that BP was aware of this, they still selected to proceed with drilling, choosing instead to use modern technology as a way of minimizing the possibility of a security incident (Ingersoll, Locke, & Reavis, 2010). Risk management was therefore not a key concern for the company, despite the key safety risks that were facing the company and its operations. The company also ignored key risks in the design of the well, for example, the process of cementing the well that was supposed to take hours was completed in only 30 minutes, and safety checks that were supposed to confirm the integrity of key structures were intentionally ignored, despite being recommended by employees. In addition, the company did not have an effective disaster management plan, as shown by the ineffective response by the company to the incident.

The management of operations at the rig was also not efficiently conducted, which in a major way contributed to the disaster. Despite BP’s ownership and managing interests in the project, key decisions about the different aspects of the project were supposed to be made by the eleven different organizations involved in the project. Unfortunately, there were no clear consultation processes as relates to decision making on key aspects of the project, despite the fact that decisions made by one company affected those of others as well as the overall functionality of the project. Additionally, most of the managers that were tasked with making decisions about the project were not overly familiar with deepwater drilling, which was quite new back then, and had occupied the positions they were in for a short period of time. This significantly increased the risk of uninformed decisions being made that could affect the safety and effectiveness of the entire project.

The company also selected to prioritize cost reduction over safety. Instead of investing in methods and equipment that substantially reduced the risk of the rig malfunctioning, the company instead selected to use cheaper equipment that would significantly increase the risk of carrying out the project. The company for example selected to use the long string casing method, despite the fact that it could not offer better protection against gas leaks that may be experienced during drilling. In addition, the company also selected to use cheap centralizers when cementing the rig that were quite risky in terms of security.

Proposed Solutions

The company could have totally prevented the incident if it had made a commitment to routinely check the rig and make repairs where necessary. The company intentionally decided not to do this, and instead to use temporary workarounds. To minimize the possibility of the incident taking place again, the company should encourage employees to provide information they collect about the condition of the rig to management, after which the company should conduct a safety audit and carry out repairs where necessary. This would also aid the company to avoid delays in repair that would take place if the company only relied on its occasional safety audits. By giving employees working at the rig a voice, the company will also be able to find out new information that can be used to improve the safety of the work environment as well as the employee motivation and morale. Additionally, the company should also adopt best practices as relates to the safety of both its equipment as well as employees. BP selected to ignore recommended practices such as occasionally taking the rig to dry land for inspections and repairs. By improving security at the rig, the company would have substantially reduced the probability of safety incident taking place and would have as a result avoided the heavy losses in personnel and equipment that resulted from the incident. A key disadvantage of this initiative is that it will increase the operating costs of the company, although the company would benefit in the long term.

The company should have also put in place an effective risk management strategy, which could have aided in the identification of existing weaknesses that could pose a threat to the operations of the rig. The failure to prioritize risk management resulted in the company avoiding key risks that if detected early, would have been properly mitigated and prevented from affecting operations. The company, for example, decided to ignore the natural environmental conditions that made drilling risky, in addition, the company also ignored key risk in the design of the well and ignored suggestions by employees on security checks. A comprehensive risk management plan should, therefore, be designed by the company that would aid in minimizing the possibility of these risks affecting the company’s operations again. A key advantage of effective risk management is the improvement in the use of resources as well as better coordination of operations, regulatory compliance effective disaster management (Kreiser, 2013). A key disadvantage of a risk management process is that it will increase the operating of the business in the short term.

To improve the efficiency of operations at the rig, BP should have also identified a clear management structure that would have aided in the speed and efficiency of decision making in the organization. In the course of the project, there were numerous companies tasked with decision making for the project, which in a way contributed to confusion and the lack of consensus that caused major flaws in operations that led to the incident. A comprehensive project management team should have been identified for the project that would have included experts from each of the different organizations. This would have significantly aided in coordination and communication within the project and minimized the possibility of uninformed decision making (Hill, 2018). In addition to improving coordination and the quality of decisions made, this would have also enabled the company to implement best practices and as a result, avoid some of the flaws that existed in the project. On the downside, this would have increased the time it takes for the company to make key decisions regarding operations.

Effective strategic planning would have enabled the company to identify the right priorities for the project and as a result, avoid the short term priorities that led to some of the challenges experienced by the project. The organization selected to focus on the short term instead of long term goals by prioritizing cost savings over the security of the project. Instead of putting in place much more secure equipment that would have minimized the possibility of an incident, the BP instead settled for cheaper equipment that had a higher risk of failure. The company should have instead focused on the long term future of the rig and installed safer equipment, even if this resulted in higher operating costs. This could have been achieved through effective strategic planning that could have focused on both the short term and long term future of the project. This would have aided in risk minimization, and as a result ensured the safety of the project (Edmunds, 2018). A key disadvantage of this is that it would have resulted in higher operating costs.

References Edmunds, S. A. (2018). What Are the Benefits of Long-Term Strategy & Retreats? Retrieved from Chron: https://smallbusiness.chron.com/benefits-longterm-strategy-retreats-12871.html Hill, B. (2018). The Importance of a Good Organizational Structure. Retrieved from Chron: https://smallbusiness.chron.com/importance-good-organizational-structure-3792.html Ingersoll, C., Locke, R. M., & Reavis, C. (2010). BP and the Deepwater Horizon Disaster of 2010. MIT Sloan Management. Kreiser, J. (2013). Five Benefits of Enterprise Risk Management. Retrieved from CLA: https://www.claconnect.com/resources/articles/five-benefits-of-enterprise-risk-management