Revamping The Internal Control System Of Refineries In British Petroleum
Section 1
Background of the company, key markets and activities
BP Inc. is one of the multinational companies in the field of oil and natural in United Kingdom. The company has its headquarters in London and one of the super majors companies in the field of oil and natural gas companies. It is sixth among all the large energy companies in terms of capitalization in the market. Moreover, the company is the 12th largest company in terms of the revenue generation in the market (BP global 2018). The company operates at all areas of the industry so it can be considered as vertically integrated and operates in more than 70 countries all over the world. The company operates in marketing, exploration, and refining, production, distribution, petrochemicals, trading and power generation. The company has more than 18000 service stations all over the world and has considerable amount of holdings in countries like United States and India.
The purpose of the project is revamping the internal control system of refineries in British Petroleum. This project aims to improve the production efficiency of the refinery so that adverse situations can been handled and there is significant increase in the consistency of the production of oil and other byproducts. The project will examine the existing control system and revamp it to develop an innovative system that has higher efficiency and better control aspects for extreme situations. This project is expected to increase the revenue generation of the company by at least 2% in the upcoming 2 years.
The objective of the project are as follows:
- Revamping the control system of the refineries
- To increase the efficiency of the existing control system
- To increase the production output in the refineries
The deliverables in the projects describes the different activities that needs to be performed in order to complete each phase of the project (Kerzner and Kerzner 2017). Deliverables consists of all the tasks that are both tangible and intangible functions responsible for the success of the project. In this current project, the different phases of the project has been described.
|
Outline Number |
Task Name |
Duration |
Start |
Finish |
|
0 |
Revamp of internal control systems in refineries |
116 days |
Thu 20-12-18 |
Thu 30-05-19 |
|
1 |
Project initiation |
9 days |
Thu 20-12-18 |
Tue 01-01-19 |
|
3 |
Project planning |
33 days |
Wed 02-01-19 |
Fri 15-02-19 |
|
5 |
Project execution |
51 days |
Mon 18-02-19 |
Mon 29-04-19 |
|
7 |
Project monitor and closure |
23 days |
Tue 30-04-19 |
Thu 30-05-19 |
Project milestone consists of all the tasks with duration zero and determines the clear sequence of events in the project (Harrison and Lock 2017). The project milestone defines completion of any important phase in the project. In this current study, the project milestone consists of the expected timeline when each of the phases needs to be completed.
|
Outline Number |
Task Name |
Duration |
Start |
Finish |
|
0 |
Revamp of internal control systems in refineries |
116 days |
Thu 20-12-18 |
Thu 30-05-19 |
|
2 |
Milestone 1: project initiation completed |
0 days |
Tue 01-01-19 |
Tue 01-01-19 |
|
4 |
Milestone 2: Project planning completed |
0 days |
Fri 15-02-19 |
Fri 15-02-19 |
|
6 |
Milestone 3: Project executed |
0 days |
Mon 29-04-19 |
Mon 29-04-19 |
|
8 |
Milestone 4: Project completed |
0 days |
Thu 30-05-19 |
Thu 30-05-19 |
|
Name |
Actual Cost |
Remaining Cost |
Baseline Cost |
Cost |
Cost Variance |
|
Project initiation |
$0.00 |
$6,200.00 |
$0.00 |
$6,200.00 |
$6,200.00 |
|
Milestone 1: project initiation completed |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
|
Project planning |
$0.00 |
$22,640.00 |
$0.00 |
$22,640.00 |
$22,640.00 |
|
Milestone 2: Project planning completed |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
|
Project execution |
$0.00 |
$58,080.00 |
$0.00 |
$58,080.00 |
$58,080.00 |
|
Milestone 3: Project executed |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
|
Project monitor and closure |
$0.00 |
$28,560.00 |
$0.00 |
$28,560.00 |
$28,560.00 |
|
Milestone 4: Project completed |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
|
Name |
Cost |
Baseline Cost |
Cost Variance |
|
project manager |
$12,600.00 |
$0.00 |
$12,600.00 |
|
control engineer |
$19,600.00 |
$0.00 |
$19,600.00 |
|
electronics engineer |
$13,720.00 |
$0.00 |
$13,720.00 |
|
electrical engineer |
$10,920.00 |
$0.00 |
$10,920.00 |
|
Mechanical engineer |
$10,920.00 |
$0.00 |
$10,920.00 |
|
software engineer |
$19,320.00 |
$0.00 |
$19,320.00 |
|
Technicians |
$800.00 |
$0.00 |
$800.00 |
|
project board |
$1,600.00 |
$0.00 |
$1,600.00 |
The geographic defines the areas where the firms can gain competitive advantage based on the geographical location (Rai, Agrawal and Khaliq 2017). In this project, the company will implement the project in United Kingdom as it will present the company with geographical advantage.
The assumptions of the following project are as follows:
- All the stakeholders have clear idea about the different stages of the project
- The purpose of the project has been clearly defined and been communicated to the stakeholders
- The stakeholders has provided full authority for executing the project
The constraints consists of time and budget where it has been mentioned that the project needs to be completed in the next 6 months and the budget of the project is $2,00,000. These constraints has to be taken into consideration while developing the project.
WBS
The project schedule shows that overall time span of the project is 116 days and the project commences on 20th December, 2018 and finishes on 30th of May, 2019. The project has described the time allotted for each activity in each of the phases along with the timeline for each tasks. However, it has been made sure that every phase in the project will be provided with buffer time in case of delays and other risk factors.
|
Outline Number |
Task Name |
Duration |
Start |
Finish |
|
0 |
Revamp of internal control systems in refineries |
116 days |
Thu 20-12-18 |
Thu 30-05-19 |
|
1 |
Project initiation |
9 days |
Thu 20-12-18 |
Tue 01-01-19 |
|
1.1 |
Identify the objective of the project |
1 day |
Thu 20-12-18 |
Thu 20-12-18 |
|
1.2 |
Develop formal document |
2 days |
Fri 21-12-18 |
Mon 24-12-18 |
|
1.3 |
Sent for approval and discuss with the stakeholders |
3 days |
Tue 25-12-18 |
Thu 27-12-18 |
|
1.4 |
Make changes if necessary |
2 days |
Fri 28-12-18 |
Mon 31-12-18 |
|
1.5 |
Documentation |
1 day |
Tue 01-01-19 |
Tue 01-01-19 |
|
2 |
Milestone 1: project initiation completed |
0 days |
Tue 01-01-19 |
Tue 01-01-19 |
|
3 |
Project planning |
33 days |
Wed 02-01-19 |
Fri 15-02-19 |
|
3.1 |
Identify functional requirements |
7 days |
Wed 02-01-19 |
Thu 10-01-19 |
|
3.2 |
Identify user requirements |
5 days |
Fri 11-01-19 |
Thu 17-01-19 |
|
3.3 |
Document the overall requirements |
4 days |
Fri 18-01-19 |
Wed 23-01-19 |
|
3.4 |
Approval and discussion with stakeholders |
1 day |
Thu 24-01-19 |
Thu 24-01-19 |
|
3.5 |
Make amendments if necessary |
1 day |
Fri 25-01-19 |
Fri 25-01-19 |
|
3.6 |
Study existing network |
5 days |
Mon 28-01-19 |
Fri 01-02-19 |
|
3.7 |
Identify new hardware and software requirements |
7 days |
Mon 04-02-19 |
Tue 12-02-19 |
|
3.8 |
identify the network requirements |
3 days |
Wed 13-02-19 |
Fri 15-02-19 |
|
4 |
Milestone 2: Project planning completed |
0 days |
Fri 15-02-19 |
Fri 15-02-19 |
|
5 |
Project execution |
51 days |
Mon 18-02-19 |
Mon 29-04-19 |
|
5.1 |
Develop new control system |
15 days |
Mon 18-02-19 |
Fri 08-03-19 |
|
5.2 |
Modify the existing system for compatibility |
12 days |
Mon 11-03-19 |
Tue 26-03-19 |
|
5.3 |
conduct testing |
10 days |
Wed 27-03-19 |
Tue 09-04-19 |
|
5.4 |
make necessary amendments |
7 days |
Wed 10-04-19 |
Thu 18-04-19 |
|
5.5 |
Implement the control system |
7 days |
Fri 19-04-19 |
Mon 29-04-19 |
|
6 |
Milestone 3: Project executed |
0 days |
Mon 29-04-19 |
Mon 29-04-19 |
|
7 |
Project monitor and closure |
23 days |
Tue 30-04-19 |
Thu 30-05-19 |
|
7.1 |
monitor the new developed system |
10 days |
Tue 30-04-19 |
Mon 13-05-19 |
|
7.2 |
identify the drawbacks |
7 days |
Tue 14-05-19 |
Wed 22-05-19 |
|
7.3 |
Make changes if necessary |
2 days |
Thu 23-05-19 |
Fri 24-05-19 |
|
7.4 |
project review document |
3 days |
Mon 27-05-19 |
Wed 29-05-19 |
|
7.5 |
Member sign off |
1 day |
Thu 30-05-19 |
Thu 30-05-19 |
|
8 |
Milestone 4: Project completed |
0 days |
Thu 30-05-19 |
Thu 30-05-19 |
|
Type of risk |
Risk Description |
Probability |
Impact |
Risk reduction Strategy |
Contingency Plan |
||||
|
|
|
High |
Medium |
Low |
Performance |
Cost |
Time |
|
|
|
Internal |
Scope creep |
Yes |
Yes |
Yes |
Yes |
The organization should clarify the objectives and project specification before proceeding and the limitation of changing the specification in different phases needs to be communicated to the stakeholders |
The project should use agile methodology so that changes can be made in every stages of the project. |
||
|
External |
Delay in hardware delivery |
Yes |
Yes |
It is essential to communicate all the requirements and acquire all the items before the starting of the activity. |
Developing effective communication plan so that all the stakeholders both internal and external has knowledge about the project plan and activities. |
||||
|
Internal |
Accidents |
Yes |
Yes |
Yes |
Yes |
Develop effective safety measures to reduce the chances of any mishaps |
.The organization should develop safety plan for educating the project participants regarding the project. |
|
R I S K |
LOW |
MEDIUM |
HIGH |
EXTREME |
|
|
|
0
ACCEPTABLE
|
1
ALARP (as low as reasonably practicable)
|
2
GENERALLY UNACCEPTABLE |
3
INTOLERABLE |
|
|
|
OK TO PROCEED
|
TAKE MITIGATION EFFORTS |
SEEK SUPPORT Scope creep Delay in hardware delivery
|
PLACE EVENT Accidents |
|
|
|
S E V E R I T Y |
||||
|
ACCEPTABLE |
TOLERABLE |
UNDESIRABLE |
INTOLERABLE |
||
|
LITTLE TO NO EFFECT ON EVENT |
EFFECTS ARE FELT, BUT NOT CRITICAL TO OUTCOME |
SERIOUS IMPACT TO THE COURSE OF ACTION AND OUTCOME |
COULD RESULT IN DISASTER |
||
|
L I K E L I H O O D |
|
|
|
|
|
|
IMPROBABLE |
LOW |
MEDIUM |
MEDIUM |
HIGH |
|
|
RISK IS UNLIKELY TO OCCUR |
– 1 – |
– 4 – Delay in hardware delivery |
– 6 – |
– 10 – |
|
|
POSSIBLE |
LOW |
MEDIUM |
HIGH |
EXTREME |
|
|
RISK WILL LIKELY OCCUR |
– 2 – |
– 5 – |
– 8 – Scope creep
|
– 11 – |
|
|
PROBABLE |
MEDIUM |
HIGH |
HIGH |
EXTREME |
|
|
RISK WILL OCCUR |
– 3 – Accidents |
– 7 – |
– 9 – |
– 12 |
Therefore, it is essential to take into the scope creep as it will have the constraint such as time and budget of the project. Therefore, it is essential to use agile methodology instead of the waterfall methodology so that project scope can be changed at every stage of the project as per the needs of the stakeholders (Varma, Satyanarayana and Kumar 2018). Moreover, an effective communication plan needs to be developed so that every project member and stakeholder has updated information regarding the progress of the project. In this case, supplier management is one of the key aspect of the project where it is essential for the project manager to manage inventory effectively for avoiding delays.
|
Outline Number |
Task Name |
Resource Names |
Cost |
|
0 |
Revamp of internal control systems in refineries |
$115,480.00 |
|
|
1 |
Project initiation |
$6,200.00 |
|
|
1.1 |
Identify the objective of the project |
project board ,project manager |
$1,400.00 |
|
1.2 |
Develop formal document |
project manager |
$1,200.00 |
|
1.3 |
Sent for approval and discuss with the stakeholders |
project manager |
$1,800.00 |
|
1.4 |
Make changes if necessary |
project manager |
$1,200.00 |
|
1.5 |
Documentation |
project manager |
$600.00 |
|
2 |
Milestone 1: project initiation completed |
$0.00 |
|
|
3 |
Project planning |
$22,640.00 |
|
|
3.1 |
Identify functional requirements |
control engineer ,electrical engineer ,electronics engineer, Mechanical engineer |
$7,840.00 |
|
3.2 |
Identify user requirements |
software engineer |
$1,400.00 |
|
3.3 |
Document the overall requirements |
control engineer ,electrical engineer ,electronics engineer, Mechanical engineer ,software engineer ,Technicians |
$6,400.00 |
|
3.4 |
Approval and discussion with stakeholders |
project board ,project manager |
$1,400.00 |
|
3.5 |
Make amendments if necessary |
control engineer ,electrical engineer ,electronics engineer, Mechanical engineer ,software engineer |
$1,400.00 |
|
3.6 |
Study existing network |
software engineer |
$1,400.00 |
|
3.7 |
Identify new hardware and software requirements |
software engineer |
$1,960.00 |
|
3.8 |
identify the network requirements |
software engineer |
$840.00 |
|
4 |
Milestone 2: Project planning completed |
$0.00 |
|
|
5 |
Project execution |
hardware [1],instruments [1],software [1] |
$58,080.00 |
|
5.1 |
Develop new control system |
software engineer ,electrical engineer ,electronics engineer, Mechanical engineer |
$16,800.00 |
|
5.2 |
Modify the existing system for compatibility |
control engineer ,electrical engineer ,electronics engineer, Mechanical engineer ,software engineer |
$16,800.00 |
|
5.3 |
conduct testing |
control engineer ,software engineer |
$5,600.00 |
|
5.4 |
make necessary amendments |
control engineer ,software engineer |
$3,920.00 |
|
5.5 |
Implement the control system |
control engineer |
$1,960.00 |
|
6 |
Milestone 3: Project executed |
$0.00 |
|
|
7 |
Project monitor and closure |
hardware [1],instruments [1],software [1] |
$28,560.00 |
|
7.1 |
monitor the new developed system |
control engineer ,electronics engineer, project manager |
$11,600.00 |
|
7.2 |
identify the drawbacks |
control engineer |
$1,960.00 |
|
7.3 |
Make changes if necessary |
control engineer |
$560.00 |
|
7.4 |
project review document |
control engineer |
$840.00 |
|
7.5 |
Member sign off |
project manager |
$600.00 |
|
8 |
Milestone 4: Project completed |
$0.00 |
|
Cost Benefit Analysis |
Revamp of a |
|
|||||||
|
Option 1: |
Control system in refineries |
|
|||||||
|
20 December 2018 |
|||||||||
|
Key Assumptions: |
|
||||||||
|
Discount Rate |
8.00% |
||||||||
|
Appraisal period (years) |
5 |
years |
|||||||
|
Summary of the Results of the Analysis: |
|
||||||||
|
Capital Costs |
$0 |
||||||||
|
Whole of Life Costs |
$19,39,320 |
||||||||
|
Present Value of Benefits |
$35,16,674 |
||||||||
|
Present Value of Costs |
$10,06,124 |
||||||||
|
Benefit Cost Ratio |
3.50 |
||||||||
|
Net Present Value |
$25,10,551 |
||||||||
|
0 |
1 |
2 |
3 |
4 |
1000 |
1000 |
1000 |
8 |
|
|
Year |
|
|
|
|
|
|
|
|
|
|
Discount factor (mid-year) |
0.96225 |
0.89097 |
0.82497 |
0.76387 |
0.70728 |
0.00000 |
0.00000 |
0.00000 |
0.51987 |
|
Discount factor (start of year) |
1.00000 |
0.92593 |
0.85734 |
0.79383 |
0.73503 |
0.00000 |
0.00000 |
0.00000 |
0.54027 |
|
Benefit 1-minimising the problems |
$4,00,000 |
$5,00,000 |
$6,00,000 |
$7,00,000 |
$8,00,000 |
$9,00,000 |
$10,00,000 |
$11,00,000 |
$12,00,000 |
|
Benefit 2 <reduction of fuel cost |
$1,00,000 |
$1,00,000 |
$1,00,000 |
$1,00,000 |
$1,00,000 |
$1,00,000 |
$1,00,000 |
$1,00,000 |
$1,00,000 |
|
Total Benefits (mid-year) |
$5,00,000 |
$6,00,000 |
$7,00,000 |
$8,00,000 |
$9,00,000 |
$10,00,000 |
$11,00,000 |
$12,00,000 |
$13,00,000 |
|
Present Value of Benefits (mid-yr) |
$4,81,125 |
$5,34,584 |
$5,77,482 |
$6,11,092 |
$6,36,555 |
$0 |
$0 |
$0 |
$6,75,836 |
|
Present Value of Benefits |
$35,16,674 |
||||||||
|
Cost 1 <description> |
-$1,15,480 |
-$1,15,480 |
-$1,15,480 |
-$1,15,480 |
-$1,15,480 |
-$1,15,480 |
-$1,15,480 |
-$1,15,480 |
-$1,15,480 |
|
Cost 2 <description> |
-$1,00,000 |
-$1,00,000 |
-$1,00,000 |
-$1,00,000 |
-$1,00,000 |
-$1,00,000 |
-$1,00,000 |
-$1,00,000 |
-$1,00,000 |
|
Total Costs (mid-year) |
-$2,15,480 |
-$2,15,480 |
-$2,15,480 |
-$2,15,480 |
-$2,15,480 |
-$2,15,480 |
-$2,15,480 |
-$2,15,480 |
-$2,15,480 |
|
Capital Costs (at start of year) |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
|
Total Costs |
-$2,15,480 |
-$2,15,480 |
-$2,15,480 |
-$2,15,480 |
-$2,15,480 |
-$2,15,480 |
-$2,15,480 |
-$2,15,480 |
-$2,15,480 |
|
Total Capital Costs |
$0 |
||||||||
|
Total Whole of Life Costs |
-$19,39,320 |
||||||||
|
Present Value of Costs (mid-year) |
-$2,07,346 |
-$1,91,987 |
-$1,77,766 |
-$1,64,598 |
-$1,52,405 |
-$0 |
-$0 |
-$0 |
-$1,12,022 |
|
Present Value of Costs (start year) |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
|
Present Value of Costs (by year) |
-$2,07,346 |
-$1,91,987 |
-$1,77,766 |
-$1,64,598 |
-$1,52,405 |
-$0 |
-$0 |
-$0 |
-$1,12,022 |
|
Present Value of Costs |
-$10,06,124 |
||||||||
|
Net Cash Flows |
$2,84,520 |
$3,84,520 |
$4,84,520 |
$5,84,520 |
$6,84,520 |
$7,84,520 |
$8,84,520 |
$9,84,520 |
$10,84,520 |
|
Net Present Value (by year) |
$2,73,779 |
$3,42,597 |
$3,99,717 |
$4,46,495 |
$4,84,149 |
$0 |
$0 |
$0 |
$5,63,814 |
|
Cumulative NPV |
$2,73,779 |
$6,16,376 |
$10,16,093 |
$14,62,588 |
$19,46,737 |
$19,46,737 |
$19,46,737 |
$19,46,737 |
$25,10,551 |
Measures and Mechanisms
It is essential to take into the scope creep as it will have the constraint such as time and budget of the project. Therefore, it is essential to use agile methodology instead of the waterfall methodology so that project scope can be changed at every stage of the project as per the needs of the stakeholders. Moreover, an effective communication plan needs to be developed so that every project member and stakeholder has updated information regarding the progress of the project. In this case, supplier management is one of the key aspect of the project where it is essential for the project manager to manage inventory effectively for avoiding delays.
The key performance indicator will consist of increasing the production percent by 2.
Therefore, it is recommended that the project manager should develop an effective communication plan in order to avoid delays and use the agile methodology to provided flexibility in the project. The current project has developed the project purpose, objectives, deliverables, schedule, budget, assumptions and constraints. The project is expected to be a success if all the given and forecasted methods are followed for executing the project.
References and Bibliography
Bergmann, T. and Karwowski, W., 2018, July. Agile Project Management and Project Success: A Literature Review. In International Conference on Applied Human Factors and Ergonomics (pp. 405-414). Springer, Cham.
BP global 2018 . Home | BP. [online] BP global. Available at: https://www.bp.com/ [Accessed 20 Dec. 2018].
Cleden, D., 2017. Managing project uncertainty. Routledge.
Harrison, F. and Lock, D., 2017. Advanced project management: a structured approach. Routledge.
Heagney, J., 2016. Fundamentals of project management. Amacom.
Kerzner, H. and Kerzner, H.R., 2017. Project management: a systems approach to planning, scheduling, and controlling. John Wiley & Sons.
Nicholas, J.M. and Steyn, H., 2017. Project management for engineering, business and technology. Routledge.
Rai, A.K., Agrawal, S. and Khaliq, M., 2017. Identification of Agile Software Risk Indicators and Evaluation of Agile Software Development Project Risk Occurrence Probability. In Proceedings of 7th International Conference on Engineering Technology, Science and Management Innovation (ICETSMI-2017).
Varma, K.V.V.S., Satyanarayana, P.V.V. and Kumar, P.V., 2018. Implementation of agile project management for improving productivity. TRANS Asian Journal of Marketing & Management Research (TAJMMR), 7(2), pp.62-70.
Walker, A., 2015. Project management in construction. John Wiley & Sons.