Project Report on Project Management- Factors Critical for the Success of Projects in Oil & Gas...

Virtual University of Pakistan

Evaluation Sheet for Final Project

Fall 2011

MGT619: Final Project (MGT)

Credit Hours: 3

Name of Student:

Mohammad Ahmed

Student’s ID:

MC100200142

Topic:

Project Management:

Factors Critical for the Success of Projects in Oil & Gas Sector of Kuwait

Evaluation Criteria Result

Written Work Status

(Final Project) Pass

Presentation & Viva Voce Pass

Final Result Pass

Final Project

Project Management: Factors Critical for the Success of Projects in Oil & Gas Sector

of Kuwait

A PROJECT REPORT SUBMITTED TO THE DEPARTMENT OF MANAGEMENT SCIENCES,

VIRTUAL UNIVERSITY OF PAKISTAN IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR

THE DEGREE OF MASTER IN BUSINESS ADMINISTRATION

Submitted By:

MC100200142

Mohammad Ahmed

Department Of Management Sciences Virtual University of Pakistan

Dedication

“This project report is dedicated to my family, Dr. Naveed Malik, Mr. Imran Ghani and Ms. Ayesha Parveen.”

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Acknowledgement It is a great honor and pleasure for me to work on this project. Apart from the

sincerity and interest that I had in doing this project, there are few people without whom achieving this milestone would not have been possible.

Firstly, Dr. Naveed A. Malik; “Rector” of Virtual University of Pakistan who has

been an inspiration and mentor since the time I enrolled in this university. His continued support, guidance and encouragement have motivated me not only in academic terms but also in all other aspects of life driving me towards a balanced and acknowledged success.

I am also very thankful to Mr. Imran Ghani who supervised me during this

project. His support and interactive guidance coupled with moral support helped me in accomplishing this project successfully.

Lastly, I would like to pay may gratitude to Ms. Ayesha Parveen; “Assistant

Professor” at the English department of Virtual University of Pakistan who has supported me at the start as well as while conducting this research project.

At the end, I believe and would like to state that, without the support from all

these people, this milestone would not have been achieved. I sincerely thank and pay my gratitude and respect to all the people who have been there with me in achieving this milestone.

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Executive Summary

Project management methodology is a set of established guidelines that are used for executing projects in every industry. They are broadly based on initiating, planning, organizing, executing, and monitoring & controlling process group. However, project management is carried out through nine project management knowledge areas i.e. integration, scope, time, cost, quality, human resource, communications, risk and procurement management. Projects are governed by certain factors that have major influence in directing the success or failures. Broadly cost, time & scope have been identified as key important success factors for projects. This research is carried out to identify the critical success factors in EPC/PC projects in Oil & Gas industry of Kuwait and to compare the results with previous established success factors. Previously established researches were used to define the frame work for the research to facilitate in identifying success factors. A questionnaire was developed, based on the nine knowledge management areas, and data were acquired from the selected participants of a particular organization which is operating in the oil & gas industry executing EPC/PC projects. The data were collected based on convenience sampling technique. Acquired data were analyzed through factor analysis technique and critical factors based on these data, acquired from the selected organization, were identified. The findings indicated concurrence with three previously established success factors i.e. scope, time and cost. However, analysis also identified two more factors namely integration and risk. To summarize, the analysis resulted in identifying five critical success factors:

1. Time 2. Cost 3. Scope 4. Communications 5. Human resource 6. Integration.

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Table of Contents

Dedication Acknowledgement

Executive Summary

1. Chapter 1: Introduction……..…………………….……….….Page # 1 1.1 Background…………………………………………Page # 1

1.1.1 Project Phases…………………………………Page # 1 1.2.1 Project Knowledge Areas……………..………Page # 3 1.2.3 Previous Researches…………………………..Page # 7

1.2 Organization’s Business Sector……………………..Page # 11 1.3 Organization’s Introduction………………………...Page # 12 1.4 Objectives…………………………………………...Page # 12 1.5 Significance…………………………………………Page # 13

2. Chapter 2: Data Processing, Analysis & Interpretation…….Page # 14 2.1 Data Collection Resources …………………………Page # 14 2.2 Data Collection Tools / Instruments ………………..Page # 14 2.3 Subject / Participants………………………………...Page # 14 2.4 Data Processing & Analysis……………………....…Page # 15 2.5 Summary………………………………….…………Page # 34

3. Chapter 3: Conclusions, Recommendations & Limitations....Page # 35 3.1 Conclusions…………………………………….……Page # 35 3.2 Recommendations………………………….………..Page # 38 3.3 Limitations………………………………..……...…..Page # 39

4. Students Introduction…………..………………………………Page # 40 5. Appendix…………………………………………………..…….Page # 41 6. Bibliography…………………………..……………..………….Page # 55

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List of Illustrations

Figure 1..……………………………………………Page # 10

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Section I

Chapter 1: Introduction

Project is a specific activity or process carried out to achieve a specific output which could be a service, specific product or a desired result. Projects are either completed if their purpose is achieved or eliminated during their course of execution. Therefore, the success or failure of projects is governed by the application of project management techniques to keep them in tact with the scope, time and cost. (PMI, 2008) Project Management is the methodology which details the process, tools and techniques and defines the tasks / activities required to meet the deliverables of a project and requirements of stakeholders (PMI, 2008). Project management tools and techniques are applicable on every type of industry. However, the selection and implementation of the required tools and techniques are industry specific and also depend on the project manager executing the project (PMI, 2008). This research is focused on identifying the factors critical for the success of projects in Kuwaiti Oil & Gas industry based on application of Project Management tools and techniques. Theoretically, project management has been widely explained around the world by several distinct professionals from different industries, but its practical application is yet to be perfected leaving several grey areas for project managers while executing projects. The application of above mentioned knowledge areas varies from project to project and a lapse in anyone of these can impact the success of a project. Therefore, it has become inevitable to analyze these established theories, researches and identify the factors that are critical for the success of Engineering, Procurement & construction (EPC) OR Procurement & Construction (PC) projects in Oil & Gas sector in Kuwait which will give clear insight to project managers while executing projects.

1.1 Background

1.1.1

Project Phases

Project management consists of processes of management that can be categorized under five broader management functions namely initiating, planning, executing, monitoring & controlling and closing. Collectively they constitute the project life cycle (PMI, 2008).

1.1.1a Initiating

This stage involves identifying and stating the desires outputs clearly. Project charter is established along with identification of all stake holders

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(PMI, 2008) . This stage also involves defining the boundaries / dimensions of the project, assessing the organization (Wolff, n.d). Project goals, objectives and the concept of accomplishing those goals is specified (Pinto & Slevin, 1988). Most importantly, the person in charge of the project i.e. Project Manager is assigned at this stage (PMI, 2008).

1.1.1b Planning:

Planning involves assessing the requirements to achieve the objectives of project and subsequently devising the methodology and plans to achieve them (Pinto & Slevin, 1988). This stage deals with identifying the activities or processes and sequencing them in line with desired objectives. It involves defining objectives, developing project management plan, defining scope and creating work breakdown structure, defining activities, sequencing them, evaluating resources and developing plan, cost estimation and budgeting, preparing quality plan, human resource plan, communications plan, risk plans and procurement plans. Writing down the plans, identifying and allocating resources, estimating the budgets etc. are all done as part of planning (PMI, 2008)

1.1.1c Executing:

Execution phase is the stage where the plans are physically executed. Building project team, getting them on to work and carrying out the plans is done at this stage. Directing project execution, quality assurance, developing and managing project team, communication and managing stakeholder’s expectations etc. all are part of execution. The objectives of the project are achieved by co-ordination, contribution and effective functioning of both stake holders and project team (PMI, 2008). All resources including material, equipment, human etc. are acquired and the project is developed to achieve the goals (Pinto & Slevin, 1988).

1.1.1d Monitoring & Control:

Monitoring and controlling involves verification of the execution against planned standards which includes project work, change, scope, schedule, costs, quality control, progress reporting, controlling risks, and procurement. Verifying works against scope, costs against budgets and deliverables for quality etc. are all carried out during this phase. (PMI, 2008).

1.1.1e Closing:

Projects are closed or terminated when the desired objectives have been achieved. During this phase all the processes of the project including procurement are ceased. (PMI, 2008). All acquired resources are then released after handing over the project to client with formal acceptance (Pinto & Slevin, 1988).

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Project’s success is governed by managing the above functions successfully (PMI, 2008).

1.1.2

Project Management Knowledge areas

The above five phases of a project’s life cycle are adapted as project management processes through what is known as knowledge area. Each knowledge area may involve all or part of the above discussed five phases ((PMI, 2008).

1.1.2.1 Project Integration Management: Project integration management involves unification and co-ordination of various project management processes. This knowledge area is focused on the interaction between project phases (PMI, 2008). A project charter is developed by establishing a statement that describes the need or purpose of a project. Organizational status and infrastructure are also acknowledged while developing the project charter (PMI, 2008). A detailed project management plan is devised which states down how the project will be executed, monitored, controlled and finally closed. In addition, various plans including, but not limited to scope, procurement, schedule, cost, quality, process, human resource, communications and risk are developed to manage the project effectively taking into consideration, all constraints, limitations and expectations of the stakeholders (PMI, 2008). Projects executions are directed and managed by acquiring, training and deputing the project team to perform their responsibilities in order to target and achieve project objectives. Assessing risks, managing them, procuring and meeting project plans including budgets, scope, quality, time etc. (PMI, 2008). During execution, monitoring and controlling is carried by comparing the progress with the plans and corrective, preventive or rectification actions are devised. Progress reporting is carried out to keep hawks eye on the developments of the project (PMI, 2008). An integrated change control is exercised during the project execution based on the change of requirements that may occur depending on the situation or an additional or different requirement requested by stakeholder. The control is made by incorporating the approved changes into various plans that are associated with the project to reflect the changes (PMI, 2008). At the end, projects are closed by finalizing and freezing the process to mark the completion of a project. Achieved results are compared with desired objectives to acknowledge their acceptance by stakeholders. Learning gained through the project can be recorded as a reference document and established documents can be converted to templates for future projects (PMI, 2008).

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1.1.2.2 Project Scope Management: Project objectives are detailed and broken down into small and workable activities which, if performed as sequenced, will deliver the desired outcomes. Defining the workable activities and ensuring that only these are executed is known as project scope management (PMI, 2008). Project requirements are collected by specifying and quantifying them in co-ordination with stakeholders to ensure that the resources and plans needed to achieve them could be developed accurately (PMI, 2008). Detailed scope is defined in a summarized form to specify the required deliverables, constraints and acceptance criteria (PMI, 2008). WBS or work breakdown structure is created through planning software such as Primavera and MS-Project etc. which is composed of a sequenced list of quantified, measurable and doable activities that if performed as planned will deliver the project objectives (PMI, 2008). Achieved results are verified against scope to ensure that stakeholder’s expectations have been met. Any undesirable result can be listed down as snag list or punch list for repair or improvement (PMI, 2008). Scope is controlled to ensure that it remains unchanged. Any changes, if required are implemented through integrated control change technique and subsequent updation to WBS and plans are made whenever required (PMI, 2008).

1.1.2.3 Project Time Management: Project time management deals with effectively managing the time for activities and ultimately the total duration for project completion (PMI, 2008). Defining activities involves developing or detailing specific actions that are to be performed as planned in order to achieve desirables of the project (PMI, 2008). Once defined, they are sequenced by creating relationship between activities where and as required in terms of predecessors and successors. These relationships are time bound and help in identifying the critical path. Activities can be overlapped through lead or lag to operate multiple activities at any given time (PMI, 2008). Upon sequencing, resources are estimated to complete each activity, which may include human resource, financial resource, equipment, tools etc. Estimating resources facilitates in assessing project needs and deciding if additional resources are to be acquired. (PMI, 2008). Time required for each activity is evaluated and specified and includes contingency where ever deemed necessary bearing in mind the total project duration (PMI, 2008). Sequenced and time defined activities are used to develop project schedule with specific start and finish dates for each activities as well as milestones wherever applicable. (PMI, 2008). Actual progress of the activities is compared with the planned schedule and a control is established. (PMI, 2008).

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1.1.2.4 Project Cost Management: Estimating the costs for each project activity, project budgeting and monitoring and controlling them is known as project cost management (PMI, 2008). Monetary resources to carryout activities of project are estimated and are based on the knowhow and information available at time of estimation. These include human resource, equipments, tools, services, facilities, contingency and any other direct or indirect costs associated with activities. (PMI, 2008). Costs for individual activities collectively form the project’s budget. However, contingency costs are excluded as they are required only when an anticipated risk. Actual costs when compared to budgeted costs constitute one of the key factor for assessing project success (PMI, 2008). During execution, costs are monitored and controlled, and no additional cost can be incurred for any change without going through integrated change control process and subsequent updation to plan and budgets. (PMI, 2008).

1.1.2.5 Project Quality Management: Project’s quality is managed by evaluating the accuracy of the results in line with the quality policy and objectives. Quality is managed by implementing quality at every level of the project. Tools and techniques are employed for evaluating the quality and managing it through every process (PMI, 2008). Quality is planned by identifying the requirements of quality and devising clear and written procedures including tools and techniques to achieve them. (PMI, 2008). Quality assurance is performed by managing quality tools and techniques to ensure effective implementation of quality plans with the aim of continuous improvement. Quality plans are frequently audited during this phase (PMI, 2008). Quality is monitored and controlled by evaluating the results against quality plans and appropriate actions are taken to ensure compliance with the plans. Any change is incorporated through integrated change control (PMI, 2008).

1.1.2.6 Project Human Resource Management: Projects human resources are the project team developed or built in line with the requirements of the project. Managing this resource requires a well devised human resource management plan which should facilitate continuous monitoring of team’s performance for compliance to project objectives (PMI, 2008). A well defined plan that defines the complete requirement of human resources, their positions, responsibilities, job descriptions & specifications and the relationship between the staff along with the authority constitutes human resource plan (PMI, 2008). Based on the plan, competent project team is required which can be organized based on nature or location of work. (PMI, 2008). Acquired team is developed by training and providing them with team working environment to execute

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the project effectively (PMI, 2008). The team is managed by evaluating their performance frequently and taking appropriate actions to get their performance in line with project requirements. (PMI, 2008).

1.1.2.7 Project Communications Management: Acquiring information, storing, retrieval and transfer of information is performed through communications management. Communications can be verbal or non-verbal, oral or written, formal or informal, internal or external, vertical, horizontal, unilateral or bilateral. All forms of communications are managed effectively through communications management (PMI, 2008). Stakeholders are to be identified in order to transfer appropriate information to the parties concerned with the project (PMI, 2008). This transfer of information needs an effective communication plan which details the stakeholders along with the type of information, time, frequency, resources and approach of transferring the information. (PMI, 2008). Based on the plan, information is distributed or transferred to the stakeholders in forms of reports, presentations, records, feedbacks, discussions etc. (PMI, 2008). During communication with stakeholders, a change in their expectations from the projects might be observed due to a change in plan, or an area of improvement observed during the project or even a feedback. Therefore, it is important to manage stakeholder’s expectations in order to build trust, positive relationships and environment of support to overcome any resistance. (PMI, 2008). Performance reporting is carried out is by converting assessment of actual results against desired results into a meaningful report and transferring them to stakeholders. (PMI, 2008).

1.1.2.8 Project Risk Management: Projects are always associated with risks that may occur during the life cycle of a project. These can have positive and negative impacts on the project. Therefore, it is vital to plan for such events. Risk management involves identification of various risks that could be associated with a project based on the information available at the time of planning. Risks should be identified and appropriate possible response to tackle such risks if occurring should be planned. The purpose of risk management is to be prepared for such events in order to reduce their negative impact on the project thereby making the project move in positive direction (PMI, 2008).

Planning risk is the first and foremost step in risk management which includes bringing in all possible areas where risk may occur and devising a clear approach and methodology of handling these risks (PMI, 2008). Various stakeholders meet in order to discuss and identify the risks expected based on the information available so far. The risks and their possible responses are documented (PMI, 2008). Performing quality risk analysis is the process of approaching identified risks in details. The process deals with analyzing risks, evaluating the probability of their

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occurrence and updating and confirming the reliability of the proposed responses to tackle these risks. (PMI, 2008). Quality risk analysis is made more meaningful by quantitative risk analysis approach using statistical tools in order to assess the extent of their impact on the project. It enables identification of the costs and time impact associated with the risks. (PMI, 2008). Based on the results derived from risk analysis, risk response plan is developed to reduce the impact of these risks. (PMI, 2008). When the risks come live, the planned responses are implemented for handling these risks. The implementation of response is continuously monitored and controlled for its effectiveness. (PMI, 2008).

1.1.2.9 Project Procurement Management: Projects may need certain products or services which the project organization itself may not be offering. Therefore, these products or services are sourced from outside the organization depending on the project needs. Procurement management deals with establishing the procedures for procurement, carrying out procurement and their administration in line with project requirements. All of these activities are to be managed. (PMI, 2008) Every project has specific needs to be sourced from outside the organization and needs a plan. Planning procurement involves documented procedures for acquiring these products or services (PMI, 2008). Through the plan, procurements are actually conducted. (PMI, 2008). The process of conducting procurement requires administration which involves follow up, monitoring their progress, to ensure compliance to requirements, payments etc. (PMI, 2008). After acquiring the required products or services, procurements are formally closed by acknowledging the acceptance of products and services and finalizing claims if any. Incurred costs are compared with budgeted costs. (PMI, 2008).

1.1.3 Previous researches

Success criteria of projects differ on several bases such as size, nature of project, industry, complexity. Therefore, a single set of factors cannot characterize success of all types of projects. However, there are elements that influence the outcomes of a project and are related in terms of success directors. (Westerveld, 2003). Critical success factors are the dimensions of project management whose influence contributes successful outcomes of a project. (Bakkar, Razak, Abdullah, & Awang, n.d)

“Success factors are those inputs to the management system that lead directly or indirectly to the success of project or business”. (Cooke-Davies, 2002)

Projects are considered to be successful if they are carried out on schedule (time), within the budget (cost), deliver the desired output (scope) and are acknowledged by client (customer satisfaction) (Pinto & Slevin, 1988). Cost, time and quality is called as “Iron Triangle” (Atkinson, 1999). Each of these factors is part of project management knowledge areas and has its influence in directing the success of

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projects. However, another factor “customer satisfaction and acceptance” has become an important factor in governing the success of a project as it advances (Pinto & Slevin, 1988). i.e. the addition of qualitative objective to iron triangle is by means of the benefits that will be derived from a completed project (Dimitrios, 2009).

“The existence of an effective benefits delivery and management process that involves the mutual co-operation of project management and line management functions.” (Cooke-Davis, 2002).

Egeland (2011) listed success factors in terms of primary and secondary factors. The primary factors consisted of cost, time, quality and customer satisfaction which has been widely accepted by other research works. However, he believed that factors such as undisturbed work, maintaining statutory regulations, cultures, conducts also play an important role in project. Success is achieved when the output is acceptable by the client no matter what percentage of alignment exists between initial requirements and the deliverables achieved (Egeland, 2011). (Shenhar, Levy, & Dvir, 1997) categorized success factors into four dimensions. Firstly, “Project Efficiency” which governs the ability of implementing project processes. Second “Impact on Customer” which generally caters for the relevance of project outcome against customer’s actual needs. Third “Business success” i.e. how successful the project is commercially immediately after its completion and fourth “Future potential” i.e. the prospects of growth and returns on this project in future (Shenhar, et al., 1997). It is important to understand and visualize the future of a project after completion in order to assess the success criteria during the execution phase (Dimitrios, 2009). Any changes in the project be it cost, schedule, scope or any other component, should be made only when necessary. Failing to do so can result in resistance from all stakeholders (Dimitrios, 2009) Litsikakis (1999) believes that the project manager, project team, project itself, the organization and external environments are important factors for success of a project. However, he firmly states that top management support plays the most important role in succeeding a project (Dimitrios, 2009).

“Success is measured by product and project quality, timeliness, budget compliance and degree of customer satisfaction” (PMI, 2008)

Project management broadly outlines the methodology of practices that are used for managing and directing the projects successfully. Each practice stated and described by project management plays an important role in the success of projects. The procedure of project management has been broken down into specific processes to ensure that the success can be carefully directed though them (PMI, 2008). Scope of project defines the boundaries of a project including the detailing of the desired results for which a project is actually executed. Stakeholders take their

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decisions while eyeing the end results. Therefore, assessment and management of the scope of a project influences its success(PMI, 2008). Stakeholders including the organization benefit from the projects only if it satisfies them. Therefore, execution of projects is done bearing in mind who the end users are and how they will benefit once the projects are completed successfully. It is the responsibility of the project management team to ensure that all parties associated with the project directly or indirectly are satisfied with the outcome. (Lang, 2007) Projects have defined or indefinite period for their execution. New manufacturing facility is also a project but with an indefinite period since it will continue to function for an indefinite time. While there are projects which have a definite period of completion or delivering their results and therefore, their success is hugely governed by their compliance to the schedule. Cost is another important aspect of a project. Every project has an estimated budget which comes along with the feasibility report. Nothing is free and every task has its own cost. Hence, the clients / end users invest their capital in projects for a specific time with the expectation of benefits coming out on time and without further discharge of investment. At times, projects are part of a larger project train and therefore, outcomes of one project serve the input of its successor. Hence, it is very important that the projects are executed on their schedule. Therefore, On-time and on-cost are considered to be factors that important to the success of a project. (P. Valecha, XiaoHang, & Ma, 2010). Pinto & Slevin (1988) categorized success factors in terms of strategic and tactical factors. Strategy aims to assess the objectives and plans to achieve those objectives while tactics deals with allocation and manipulation of available resources, information etc. They conceptualized scope, scheduling and cost to be primarily strategic in nature while rests of the factors were tactical (Pinto & Slevin, 1988). According to Khan (n.d.), critical success factors for any project include Sponsorship, project management embedded in the culture of organization, formal process to define and link business needs to vision, specific objectives and adaption of changes with vision.

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Figure 1 (Shokri-Ghasabeh & Kavousi-Chabok, 2009)

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Above table summarizes the references of project success factors with cost, time, quality and customer satisfaction to be most critical while scope being only relevant (Shokri-Ghasabeh & Kavousi-Chabok, 2009). According to 1995 Standish CHAOS Report, the top 5 factors in successful projects are: 1. User involvement. 2. Executive management support. 3. Clear statement of requirements. 4. Proper planning. 5. Realistic expectations. The report concluded that out of 10, above 5 factors were most important in contributing to project’s success ("The Chaos Report," 1995). Though these factors are considered to be important for success of projects, and their effective implementation will result in a project’s success, this will imply that all other knowledge areas were also managed effectively.

1.2 Organization’s Business Sector

Kuwait Petroleum Corporation (KPC) was established in 1980 with the aim of managing petroleum and hydrocarbon activities both inside and outside Kuwait. In 1974, a participation agreement between British Petroleum (BP), Gulf Kuwait and State of Kuwait was made creating Kuwait Oil Company (KOC) followed by Kuwait National Petroleum Corporation (KNPC) and Petrochemical Industries Company (PIC) with an aim of exploration, refining and production of oil for the local market and export purpose. (Partners, 2004) Various engineering and contracting companies are operating in Kuwait to support Kuwait’s business sector in achieving their goals through projects. Projects are broadly categorized into:

EPC projects

EPC refers to Engineering, Procurement and Construction. In an EPC project, the contractor takes the sole responsibility of carrying out design & engineering, procurement and construction of the project followed by testing and handing over the project to client (Dhawan, n.d).

PC projects

PC projects are projects where Engineering is carried out by the client prior to award of contract. The contractor then executes the project based on the design documents provided to him under the contract by procuring the required material followed by construction, testing and handing over the project to client. In these situations, contractor does not hold the responsibility of designs.

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1.3 Organization’s Introduction This research has been carried out on participants selected from Oil & Gas department of KCC Engineering & Contracting Co (KCCEC). The company is in contracting business and has experience in carrying out design, engineering, procurement, construction, testing, commissioning and Maintenance of over 1200 medium to large size projects in various fields including Electro-Mechanical, Instrumentation, Automation & Controls, Telecommunications, Pipelines, & Civil Works with a human resource exceeding 5,200 personnel(KCCEC, 2011a). The company has several departments (KCCEC, 2011b) as follows: 1) Oil & Energy projects department. 2) Electrical, Instrumentation & Control projects department 3) Infrastructure and power stations projects department. 4) Water treatment projects department. 5) Electro-mechanical projects department. 6) Financial & accounting department. The departments are operated by deputy and assignment managing directors under the supervision of managing director and chairman of the company (KCCEC, 2011b). KCCEC had an annual turnover of KD 41 million in 2008 (KCCEC, 2011c). KCCEC aggressively competes in the industry with several competitors namely: 1. M/s. Combined Group Co., Kuwait 2. M/s. Mechanical Engineering & Contracting Co., Kuwait 3. M/s. M/s. Consolidated Contractors Co., Kuwait. 4. M/s. HOT Engineering & Contracting Co., Kuwait. 5. M/s. Mishref Trading & Contracting Co., Kuwait 6. M/s. Al-Meer Technical Services Co., Kuwait. 7. M/s. Kharafi National Co., Kuwait. 8. M/s. Gulf Spic Engineering & Contracting Co., Kuwait. 9. M/s. Al-Ghanim International Contracting Co., Kuwait 10. M/s/ Heavy Engineering Industries Co., Kuwait

1.4 Objectives of the Project Project management is not a directed process flow chart that can be implemented on every project, rather it is a set of guidelines which are to be understood and applied as required.

The objectives of this research project are:

1) To identify the critical factors for the success of EPC (Engineering, Procurement & Construction) or PC (Procurement & Construction) projects in Oil and gas industry of Kuwait

2) To compare the identified factors with previous researches

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1.5 Significance of the Project This research will enable the readers to understand the project management processes, its tools, techniques and factors that are critical for the success of a project. The results established will form a brief guideline for project managers to understand the essence of project management, and understand factors that direct the outcomes of project and implications of non-compatibility with it in Kuwaiti/ Middle Eastern environment of Oil & Gas industry. By this research, project managers, executing the projects, will be able to grasp the wide scope of project management and observe the role of various factors in influencing the project’s execution. Adapting outcomes of this research, project managers will have a broader and different vision of project management and will improve their performance and effectiveness as ‘project manager’ for their projects which will benefit them and their companies. This research is being carried out for projects in Oil & Gas sector of Kuwait which are executed by contracting companies. This research holds importance for me as I am part of this industry and working in capacity of management to execute projects on various levels. Stakeholders such as investors, government bodies (Kuwait Petroleum Corporation), and other contracting companies will be able to extract the key factors that govern the success of a project as they are part of this industry and can use these findings for their own interests. E.g. investors will be able to use these tools for their future investment plans especially through the cost and time factor. Government bodies will be able to estimate the budgets and completion period of projects to ensure that they award the projects on realistic basis and avoiding any unforeseen troubles from contractors who may later realize about their bids being under quoted.

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Chapter 2: Data Processing, Analysis & Interpretation The data for this research were collected, processed, analyzed and interpreted as follows: 2.1) Data Collection Sources The primary data, in this research, were collected from employees of KCC Engineering & Contracting Co (KCCEC). The information includes their understanding, perception and experiences from previously executed projects in order to identify the factors that are critical for the success of project. The secondary sources that were used to get data in this research included the following:

i) KCCEC website. ii) PMBOK (Project Management Body of Knowledge) iii) Books and Journals of project management.

2.2) Data Collection Tool / Instruments A structured questionnaire designed on Likert scale was developed for collecting the participant’s responses. It consisted of the demographic information of participants and their feedback on the nine Project Management Knowledge Areas. The questionnaire was based on nine (9) knowledge areas with each knowledge area having about 4-7 items. The question were ranked from strongly disagree to strongly agree. Each element of the scale was coded as follows:

1) Strongly disagree : 1 2) Disagree : 2 3) Neutral : 3 4) Agree : 4 5) Strongly agree : 5

The reason for using questionnaire comes by the fact that project management varies from project to project and also depends on the professional skills of individuals who supervise projects. 2.3) Subjects / Participants: As this research is aimed at project management and generally covers the projects executed in Oil & Gas industry of Kuwait, the target population was the employees of KCCEC that have been involved in projects at various levels of project management like project director, project managers and project engineers working in Oil & Gas Department of KCCEC who have executed several projects in Oil & Gas Industry of Kuwait. Total population size was 14, and the sample size was 7.

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The sampling technique employed for collection of primary data was convenience sampling due to lack of time available to complete the project as per the semester calendar. Convenience sampling was used and participants that were readily available at the company office were approached for acquiring data. Sample included:

1) Project Director (Oil & Gas Division) – 1 No. 2) Project Managers (Oil & Gas Division) – 3 Nos. 3) Project Engineers (Oil & Gas Division) – 3 Nos.

2.4 Data Processing & Analysis: The primary data obtained from participants were analyzed with the help of SPSS using factor analysis technique. The responses in the collected data were assigned values as follows: Strongly disagree 1 Disagree 2 Neutral 3 Agree 4 Strongly Agree 5 This factor analysis technique was used to identify the key / critical factors for success of projects. Firstly, factor analysis was carried out on each knowledge area to reduce the number of items and relevant/ significant items of each knowledge area were identified. Also, nine new variables were formulated representing nine knowledge areas. In second phase, factor analysis was applied on the nine new variables representing the nine knowledge areas to identify the critical success factors. The findings from the factor analysis are discussed below:

Project integration management:

Descriptive Statistics

Mean Std. Deviation Analysis N

In my organization, we use to develop Project

Charter 4.14 .690 7

Project Charter should be developed for each

project 4.29 .756 7

In my organization, Project Management Plan

is formulated for each project 3.86 1.069 7

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I think. there are some projects that do not

need Project Management Plan 1.57 .535 7

I manage the projects without project

management plan 1.43 .535 7

Projects are successful without making

necessary updation/changes in the project 1.86 .378 7

When project is closed, we prepare a snag list 4.29 .756 7

Total Variance Explained

Compon

ent

Initial Eigenvalues Extraction Sums of Squared Loadings

Total % of

Variance

Cumulative % Total % of Variance Cumulative %

1 3.399 48.562 48.562 3.399 48.562 48.562

2 1.367 19.527 68.089 1.367 19.527 68.089

3 1.085 15.497 83.586 1.085 15.497 83.586

4 .607 8.670 92.256

5 .410 5.856 98.111

6 .132 1.889 100.000

7 1.350E-

016 1.929E-015 100.000

Extraction Method: Principal Component Analysis.

17

Component Matrixa

Component

1 2 3

Project Charter should be developed for each project .879

When project is closed, we prepare a snag list .840

In my organization, we use to develop Project Charter .836 .358

Projects are successful without making necessary updation/changes in

the project -.724 .464

In my organization, Project Management Plan is formulated for each

project .709 .589

I think. there are some projects that do not need Project Management

Plan .877 -.313

I manage the projects without project management plan -.403 .429 .753


a. 3 components extracted.

This analysis indicates four critical factors/ items from the knowledge area of Project Integration Management – explaining 49% of variation. The factors are:

1) Project charter should be developed for each project. 2) Snag list is prepared while closing the project. 3) Project charter is developed in my organization. 4) Projects are successful without making necessary updation / changes in the

project.

Project scope management


Mean Std.

Deviation

Analysis N

Collecting the requirements of stakeholders is not

important 2.00 .816 7

Scope need not be established prior to of the project 1.14 .378 7

18

Scope acceptance criteria can be developed as the

project progresses 2.14 .900 7

I always prefer to breakdown the scope into specific

doable activities 4.43 .787 7

Project deliverables verification is not necessary as the

project activities are carried out as planned. 1.86 .378 7

I tend to accept minor variations to the project scope if

they are not having any major effect on the project 3.57 .535 7

I do not accept major variations in the project scope 4.43 .535 7


Compo

nent


Total % of

Variance

Cumulative

%

Total % of

Variance

Cumulative %

1 3.144 44.918 44.918 3.144 44.918 44.918

2 2.095 29.929 74.847 2.095 29.929 74.847

3 .761 10.871 85.718

4 .592 8.463 94.181

5 .366 5.222 99.404

6 .042 .596 100.000

7 1.138E-

016 1.625E-015 100.000


19

Component Matrixa

Component

1 2

Scope acceptance criteria can be developed as the project progresses .889 -.443

Project deliverables verification is not necessary as the project activities are

carried out as planned. -.791 .435

I always prefer to breakdown the scope into specific doable activities .766

Collecting the requirements of stakeholders is not important .749 .451

I do not accept major variations in the project scope -.691

I tend to accept minor variations to the project scope if they are not having

any major effect on the project -.876

Scope need not be established prior to of the project .811



This analysis indicates five critical factors/ items from the knowledge area of project scope management – explaining 45% of variation. The factors are:

1) Scope acceptance criteria can be developed during the progress of a project. 2) Project deliverables verification is not necessary as the project activities are

carried out as planned. 3) Breaking down scope into specific doable activities is preferred. 4) Collecting the requirements of stakeholders is not important 5) Major variations in the project scope are not acceptable.

Project time management:


Mean Std.

Deviation

Analysis N

All of the activities involved in a project must be

sequenced 4.14 1.069 7

An activity can be completed at the given time if

the required resources are readily available 4.57 .535 7

20

Resources can be acquired based on the progress

of activities 2.43 .976 7

I strictly follow the time allocated for every activity. 4.00 1.155 7

Developing schedule is a good practice for

monitoring project’s progress 4.86 .378 7

Unexpected changes can be accommodated by

deploying additional resources leaving the project

schedule unchanged

4.00 1.000 7


Compon

ent


Total % of

Variance

Cumulative

%

Total % of

Variance

Cumulative %

1 2.315 38.582 38.582 2.315 38.582 38.582

2 1.448 24.134 62.715 1.448 24.134 62.715

3 1.339 22.319 85.034 1.339 22.319 85.034

4 .558 9.300 94.334

5 .216 3.605 97.939

6 .124 2.061 100.000


21

Component Matrixa

Component

1 2 3

Resources can be acquired based on the progress of activities .812 -.421

I strictly follow the time allocated for every activity. -.796 .501

An activity can be completed at the given time if the required

resources are readily available .576 .473 .443

All of the activities involved in a project must be sequenced -.372 .888

Unexpected changes can be accommodated by deploying additional

resources leaving the project schedule unchanged -.509 .767

Developing schedule is a good practice for monitoring project’s

progress .541 .584



This analysis indicates two critical factors/ items from the knowledge area of project time management – explaining 39% of variation. The factors are:

1. Resources can be acquired based on the progress of a project. 2. An activity can be completed at the given time if required resources are

readily available.


Project cost management

Mean Std. Deviation Analysis N

Resource planning is an essential part of

project cost management 4.29 .488 7

Costs associated with activities can be known

only after the activity has been completed 1.86 .378 7

I always aim to meet the allocated budget for

the project 4.14 .690 7

Additional costs, resulting from changed

scope or other reasons, should be

accommodated in the allocated budget

2.57 .787 7

22


Compo

nent


Total % of

Variance

Cumulative % Total % of

Variance

Cumulative %

1 1.693 42.318 42.318 1.693 42.318 42.318

2 1.244 31.109 73.426 1.244 31.109 73.426

3 .983 24.583 98.010

4 .080 1.990 100.000


Component Matrixa

Component

1 2

Resource planning is an essential part of project cost management .962

I always aim to meet the allocated budget for the project -.805

Additional costs, resulting from changed scope or other reasons, should be

accommodated in the allocated budget .314 .815

Costs associated with activities can be known only after the activity has been

completed -.741

23



This analysis indicates two critical factors/ items from the knowledge area of project cost management – explaining 42% of variation. The factors are:

1) Resources’ planning is an essential part for managing project costs. 2) Meeting the allocated budget for a project is always aimed.

Project quality management


Mean Std.

Deviation

Analysis N

My organization has a clear quality policy and

quality management system 3.71 .756 7

We use to monitor overall project performance

on a regular basis to ensure that the project will

satisfy the relevant quality standards

4.14 .690 7

Quality control is not required if the output is

visibly acceptable 2.00 .577 7


Compo

nent


Total % of

Variance

Cumulative

%

Total % of

Variance

Cumulative %

1 1.428 47.606 47.606 1.428 47.606 47.606

2 1.000 33.333 80.939

3 .572 19.061 100.000


24

Component Matrixa

Component

1

My organization has a clear quality policy and quality

management system

We use to monitor overall project performance on a

regular basis to ensure that the project will satisfy the

relevant quality standards

.845

Quality control is not required if the output is visibly

acceptable .826



This analysis indicates two critical factors/ items from the knowledge area of project quality management – explaining 48% of variation. The factors are:

1) Project performance should be measured on regular basis to ensure project’s compliance to quality standards.

2) Quality control is not required if the output is visibly acceptable.

Project human resource management


25


Compon

ent


Total % of

Variance


Variance

Cumulative

%

1 2.877 57.546 57.546 2.877 57.546 57.546

2 1.199 23.988 81.535 1.199 23.988 81.535

3 .815 16.309 97.844

4 .087 1.735 99.578

5 .021 .422 100.000


Mean Std.

Deviation

Analysis N

My organization’s defined Human Resource

Plan is readily used as Human Resource

Management Plan for the projects

3.00 .577 7

I have a fixed project team that is used for all

types of projects 2.00 .577 7

Training the project team always helps in

improving the performance of project

execution

4.14 .690 7

Project team’s performance should be

evaluated once the project is complete 3.00 1.155 7

Team members should not be replaced even

if their performance is not satisfactory 2.14 .900 7

26

Component Matrixa

Component

1 2

I have a fixed project team that is used for all types of projects .948

Team members should not be replaced even if their performance is

not satisfactory .946

Project team’s performance should be evaluated once the project is

complete .899 .368

Training the project team always helps in improving the

performance of project execution -.466 .362

My organization’s defined Human Resource Plan is readily used as

Human Resource Management Plan for the projects .922



This analysis indicates three critical factors/ items from the knowledge area of project human resource management – explaining 58% of variation. The factors are:

1) Using fixed team for every type of project. 2) Team members should not be replaced even if their performance is not

satisfactory 3) Project team’s performance should be evaluated once the project is complete.

27


Project communications management

Mean Std.

Deviation

Analysis N

In my organization, project goals and plan are

effectively communicated to the project team 3.57 .787 7

My company relays the information only to

selective personnel 3.14 1.069 7

Project progress reporting to the stakeholders is

not necessary 2.14 1.069 7

Discussions with stakeholders do not benefit the

project’s progress 2.14 1.069 7

I conduct progress review meetings with my team

in routine 4.43 .535 7

I often conduct progress review meetings with the

stakeholders 3.43 1.134 7

Minor changes or variations can be transferred

informally 3.00 1.291 7

Communication lapse can not delay the project 2.00 1.000 7


Compo

nent


Total % of

Variance

Cumulative

%

Total % of

Variance

Cumulative %

1 3.758 46.970 46.970 3.758 46.970 46.970

2 2.003 25.041 72.011 2.003 25.041 72.011

3 1.412 17.649 89.660 1.412 17.649 89.660

4 .511 6.382 96.042

5 .290 3.623 99.665

28

6 .027 .335 100.000

7 1.121E-

016 1.401E-015 100.000

8 -7.243E-

018 -9.054E-017 100.000


Component Matrixa

Component

1 2 3

My company relays the information only to selective personnel .961

Project progress reporting to the stakeholders is not

necessary .831

I conduct progress review meetings with my team in routine .801 .519

Discussions with stakeholders do not benefit the project’s

progress .703 .483

I often conduct progress review meetings with the

stakeholders -.696 .643

In my organization, project goals and plan are effectively

communicated to the project team -.408 .775 .401

Communication lapse can not delay the project .446 .709 -.468

29

Minor changes or variations can be transferred informally .397 .399 -.793



This analysis indicates three critical factors/ items from the knowledge area of project communications management – explaining 47% of variation. The factors are:

1) Relaying information to selective personnel only. 2) Project progress reporting to stakeholders is not necessary 3) Discussions with stakeholders do not benefit project progress.

Project risk management:


Mean Std.

Deviation

Analysis N

Risks are always associated with projects and cannot be

controlled perfectly, therefore there is no need for risk

planning

2.14 1.069 7

I hold team discussions at the start of a project to

identify potential risks 4.14 .690 7

I use to measure the probability and consequences of

risks and estimate their implications for project

objectives

4.00 .577 7

I use my experience to identify potential risks 3.86 .378 7

I always devise an action plan to handle crucial risks 4.00 .577 7

Minor risks can be ignored as they do not have any

major impact on the project 2.43 1.134 7

Impact of risks can be controlled by an effective risk plan 4.00 .816 7


Compo

nent


Total % of

Variance


Variance

Cumulative %

1 3.254 46.486 46.486 3.254 46.486 46.486

30

2 1.732 24.740 71.227 1.732 24.740 71.227

3 1.009 14.417 85.644 1.009 14.417 85.644

4 .707 10.107 95.750

5 .195 2.782 98.533

6 .103 1.467 100.000

7 -2.514E-

017

-3.592E-

016 100.000


Component Matrixa

Component

1 2 3

I use my experience to identify potential risks .946

I always devise an action plan to handle crucial risks .827 -.389

I use to measure the probability and consequences of

risks and estimate their implications for project

objectives

.811

Impact of risks can be controlled by an effective risk plan .692 -.633

I hold team discussions at the start of a project to

identify potential risks .592 -.473 .538

Minor risks can be ignored as they do not have any

major impact on the project .391 .843

31

Risks are always associated with projects and cannot be

controlled perfectly, therefore there is no need for risk

planning

.792



This analysis indicates three critical factors/ items from the knowledge area of project risk management – explaining 47% of variation. The factors are:

1) Using experience for identification of risks. 2) Devising action plan to handle crucial risks. 3) Measuring probabilities and consequences of risks and estimating their

implications on project objectives.

Project procurement management


Mean Std.

Deviation

Analysis N

Procurement planning is very crucial to get a timely

availability of required materials 4.86 .378 7

We procure the products just in time 3.14 1.069 7

We make formal contract with each vendor 4.14 .690 7

We always obtain quotations, and ask for bids and

offers to procure 4.29 .756 7

Once an order or contract is in place, it is suppliers’

responsibility to meet their commitments and no further

monitoring is required by the project manager

1.43 .535 7

We always procure additional material to be on safer

side even if it exceeds the allocated budget 2.29 .951 7


Component Initial Eigenvalues Extraction Sums of Squared Loadings

Total % of

Variance


Variance

Cumulative

%

32

1 2.627 43.778 43.778 2.627 43.778 43.778

2 1.244 20.731 64.509 1.244 20.731 64.509

3 1.018 16.963 81.472 1.018 16.963 81.472

4 .746 12.428 93.900

5 .363 6.056 99.956

6 .003 .044 100.000


Component Matrixa

Component

1 2 3

We make formal contract with each vendor .880 -.460

We always obtain quotations, and ask for bids and offers to

procure .862

Once an order or contract is in place, it is suppliers’

responsibility to meet their commitments and no further

monitoring is required by the project manager

.829

We always procure additional material to be on safer side even

if it exceeds the allocated budget .310 .825

Procurement planning is very crucial to get a timely availability

of required materials .359 .360 .695

33

We procure the products just in time .444 .349 -.644



This analysis indicates three critical factors/ items from the knowledge area of project procurement management – explaining 44% of variation. The factors are:

1. Making formal contract with each vendor. 2. Obtaining quotations, asking for bids and offers to procure is important. 3. It is supplier’s responsibility to meet the commitment and no further

monitoring is required once an order or contract is placed.

In this phase, Nine (9) new variables were formulated from the collected data using

factor analysis representing nine (9) knowledge areas as follows:

1. Project Integration Management 2. Project Scope Management 3. Project Time Management 4. Project Cost Management 5. Project Quality Management 6. Project Human Resource Management 7. Project Communications Management 8. Project Risk Management 9. Project Procurement Management

Second phase

Then factor analysis was run on these 9 variables and their respective importance was

identified on the basis of factor loadings which are as follows:

Component Matrixa

Component

1

Risk .892

Integration .854

Procurement .824

Quality .757

34

Scope .681

Cost .541

HR .308

Time

Communication

Extraction Method: Principal

Component Analysis.


Above data analysis indicates that Human Resource, Time and Communication were

found to be least important because their factor loadings are 0.3 or less. While ‘Risk’

was found to be the most important factor with a loading of 0.892. Then comes

Integration with factor loading 0.854. Next comes Procurement with factor loading of

0.824 followed by quality with factor loading 0.757. At the end comes scope and cost

with factor loadings 0.681 and 0.541 respectively.

1. Risk 2. Integration 3. Procurement 4. Quality 5. Scope 6. Cost

2.5 Summary of Data Analysis: The data analysis indicated that in addition to scope, cost and quality identified as important success factors in earlier researches, risks associated with project, integration of the project management processes, and procurement management also contribute crucially in the success of a project in oil and gas sector. The participants from selected organization are involved in project management processes in field of oil & gas industry in Kuwait for EPC/PC projects. Their response to the data collection questionnaire indicates their learning and experience of various project management areas. The findings from the data analysis indicated only scope, cost and quality to be concurring with existing researches. Other areas like human resource, time and customer satisfaction were not found to be critical factors for the projects in Oil &

35

Gas industry of Kuwait. However, the findings identified three more factors i.e. risk, integration and procurement as important influencers for projects in terms of success.

36

Chapter 3: Conclusions, Recommendations & Limitations 3.1) Conclusion and Discussion Based on the framework established earlier in this project, the study was conducted on the employees of KCCEC. Their demographics are as follows: All respondents are male, with ages ranging from 30 years to more than to 50 years and having average age of 33 years (excluding one outlier value of above 50). The respondents were graduates with B.E / B.Sc degree and had been working in their current organization for more than 5 years. They had total working experience ranging from 9 years to 25 years with average total experience to be 14 years (excluding one outlier value of 34) while their specific experience in project management ranged between 5 to 12 years with an average of 7 years (excluding one outlier value of 24). This indicates that the respondents have 50% of their total experience in field of project management. The study has concluded that risk, integration, procurement, quality, scope and cost are the critical factors that govern the success of an EPC/PC projects in Oil & Gas sector of Kuwait.

Risk

Every project in Kuwait or any other part of the world is based on sequence of activities and events and hence risks are inevitable. Projects and the organizations executing these projects are not isolated and hence there are external factors like suppliers, vendors, and regulatory authorities, government bodies that influence the execution of a project either directly or indirectly through the organization itself. These external factors, whose roles are anticipated and known, based on the guidelines specified, can also cause unexpected events or occurrences that can affect the projects drastically. Therefore, it is important to evaluate the probabilities of known but undesirable events and also to create plans to handle unexpected events. Oil & Gas industry in Kuwait has enforced regulations which include risk assessment prior to physical execution/ installation of materials at site as well as any maintenance works carried out in existing facilities. Risks are associated with every activity of a project whether minor or major. It is crucial to identify the potential risks at the beginning of every project. This factor has not been reflected in critical factors list in previous researches but the analysis of data from respondents have indicated highest factor loading to this element making it the most critical factor compared to others listed herein. Risks cannot be avoided and therefore it is vital that risk management plan is prepared at the project started and should be re-visited frequently during the progress of a project in order to avoid or minimize the occurrence of any unexpected and undesirable event.

37

Integration

Projects in oil and gas sector involve various technical disciplines like electrical, instrumentation, mechanical, civil, control systems etc. Every project has more than one discipline governing its objectives. Furthermore, within each technical area, the requirement is only met when the detailed broken down activities are completed. Therefore, co-ordination between these activities within a discipline as well as co-ordination between various disciplines is essential to execute the project in line with the requirements. In addition, projects in Kuwait are of EPC/PC in nature and therefore consist of other eight knowledge areas. Integration of these knowledge areas is important to ensure that the project is carried out as a single unit and meets the stakeholders’ expectations. The success of a project management methodology and subsequently a project is tied with the process of integrating every process that is part of project execution. Integration has not been identified as important element in previous researches. Lapse or flaws in the integration can result in isolation of a particular process from the other project activities. A well developed management plan that integrates the functioning of all processes required to execute a project successfully is inevitable. Changes to any aspect of a project management process needs to be reflected in all other project areas.

Procurement

Kuwait has very few organizations manufacturing material and offering services required for the projects in Oil & Gas sector and therefore, most of the procurement is carried from outside Kuwait and is crucial for making the projects successful. Procurement which was not identified critical element in past has been one of the findings of this analysis. Projects usually involves material and services which are to be outsourced and therefore is a critical component of the project where external factors have stronger influence when compared to other elements of a project. Preparing procurement management plan and carrying out procurement as per the plan is critical for success of projects.

Quality

Since Oil & Gas industry is directly associated in providing basic ingredient for many other industrial sectors. The quality of the service is dependent on the quality of facilities established. Kuwait’s Oil & Gas industry follows international quality standards and each project in Kuwait has mandatory requirement of establishing project quality standards and complying with them both in terms of material and service. Quality which has been identified as critical factor in this study has been placed at the “iron triangle” by Atkinson (1999). This finding is backed by PMI (2008) which states quality as one of the measures for success of a project. Egeland (2011) also enlists quality as primary factor critical for success of projects.

38

Scope

Projects in oil and gas sector of Kuwait are carried out with specific scope aiming to achieve specific deliverables. These deliverables or objectives are selected keeping in consideration the future growth and requirements of the nation as well as for maintenance of existing facilities of Kuwait. Therefore, specific goals are assigned for each project in order to meet the overall objectives of the industry’s contribution in the growth of nation. Dimitrios (2009) stressed that changes to scope should be avoided unless they become absolute necessity since undesirable changes will address resistance from stakeholders. This falls in line with the findings of our study to be scope as critical factor. The findings did coincide with works of (Pinto & Slevin, 1988) who specified scope to be critical factor for success in addition to customer satisfaction. PMI (2008) also stresses on scope to be a critical factor governing success of projects which is equally supported by Khan (n.d) who states scope in terms of specific objectives. Clear statement of requirements (scope) has been rated in top five factors in successful projects of CHOS Report (1995).

Cost

Kuwait has its own State Audit Bureau (SAB) which regulates the costs incurred by all government bodies. The bureau audits the costs incurred as well as the revenue generated and hence keep a check on the expenses. Every authority is allocated specific budget to meets its operational requirements as well as expansion plans. Projects in Kuwait are awarded after a formal bidding process and the signing of contract is on fixed project budget for a specific requirement set by the client. Therefore, the element of cost is crucial for both client as well as the contractor executing the EPC / PC project. Changes to cost will face resistance from stakeholders unless they are absolutely inevitable. (Dimitrios, 2009). The response from the participants was concurrent with the previous findings of various researches including the “iron triangle” having cost and quality at two ends (Atkinson, 1999) while time was not observed a governing factor. The findings meet major criteria of cost and scope to be important for success of projects (Pinto & Slevin, 1988) while time is not identified critical in this analysis. (Egeland, 2011) classified factors in terms of primary and secondary factors. Primary success factors included cost, time, quality, and customer satisfaction. The findings fall within the dimensions of primary factors with the exception of time and customer satisfaction. The success factor of cost assessed by PMI (2008) is also supported by this study while time and customer satisfaction were not observed as important elements of success. Previous researches conducted in various industries indicated that scope, cost and quality were important factors (Egeland, 2011), (Atkinson, 1999), (PMI, 2008),(Pinto & Slevin, 1988) & (Dimitrios, 2009). Additionally, time, human resource and customer acceptance and satisfaction were believed to be influencing the success of a project (Pinto & Slevin, 1988), (Atkinson, 1999), (Egeland, 2011), (Dimitrios, 2009), (PMI, 2008), (Lang, 2007) & (Pravesh Valecha, XiaoHong, & Ma, 2010).

39

The findings of this data analysis has highlighted three new factors i.e. integration, risk and procurement in addition to previously recognized success factors of scope, cost and quality. The findings were compared with existing researches and found to be concurring with three existing known factors which can be generalized as important factors in governing success of projects irrespective of the industry. They also represent the critical success factors for projects in Oil & Gas industry of Kuwait which was the objective of this research. To conclude, the critical success factors have been listed below:

1) Risk 2) Integration 3) Procurement 4) Quality 5) Scope 6) Cost

3.2) Recommendations In light of the findings of this research, following recommendations are proposed:

1) Risks are inevitable and therefore a proper and frequent assessment should be carried out throughout the life cycle of a project followed by updating the risk management plan to avoid any unexpected failures of the project. Known and unknown risks are always associated with projects as well as with the organizations executing these projects and it is vital to have a strategy to counter and minimize the impact of such risks when and as they occur. Hence, the management of the organization and the team that has been acquainted with the project’s requirements and is aware of the system as a whole should exercise their experience and discuss the possible risks within the team as well as with the stakeholder to evaluate such risks and to prepare the risk management plan based on these discussions.

2) The process of integration which includes project management plan is the core and most important element governing success of project. An effective project management plan is the first and foremost step in executing a project and should always be prepared placed prior to execution of a project. Project management team and stakeholders should co-ordinate to detail the project management plan in order to devise the strategy and detailed functioning of the process as a whole. This plan should be prepared at the start of the project using the project’s elements and bearing in mind the desired objectives.

3) Procurement should be carried out as per procurement management plan. Since this aspect of a project has greater influence from external factors and involves vendors, a well defined procurement management plan is critical for ensuring success of a project. Every project needs material or services to be outsourced and hence procurement is to be made as per plan and should be carefully monitored and followed up.

4) Quality plans are based on the project objectives and a quality management plan should be developed after defining the scope and applicable standards.

40

Quality standards are established standards that ensure that the project is executed in compliance to project requirements and applicable quality standards.

5) Scope needs to be well defined, clear and translated to the project team enabling them to understand their goals and objectives. A well defined scope enables the project team to translate them effectively in terms of deliverables that are acceptable to stakeholders. Achieving undesired results is not the objective of a project and is not the requirement of any stakeholder. Therefore, the project teams should co-ordinate and discuss the requirements of a project with stakeholders to get in-depth understanding of the scope which can later facilitate in breaking down the scope into doable activities to achieve the project objectives.

6) Costs for each activity should be estimated in order to do a proper budgeting that will ensure achievement of the objectives without straining any stakeholder. Project’s success is assessed by evaluating actual incurred cost against the budgeted costs of a project. Any additional expense without any additional benefit is not the expectation or desire of stakeholders. Therefore, costs of each should be carefully eliminated bearing in mind all the costs such as human resources, equipments, tools, financials, and any other direct or indirect costs that may be associated with a particular activity.

3.3) Limitations

1) Time frame allocated by the institutional authorities was very limited because of semester and other academic activities

2) HEC digital library of Pakistan permitted access to institutions only. Open access to sufficient articles was not available on HEC digital library.

3) This study is strictly limited to implementation of project management knowledge areas in EPC/PC projects in Oil & Gas industry of Kuwait.

4) Other organizations were not included in the study due to lack of time and resources.

5) Convenience sampling was done through readily available participants due to time shortage.

6) Limit resources were available while conducting this project.

41

Section II

Students Introduction

• Last Degree Obtained: BSc. Industrial & Manufacturing Engineering

• Organizations Name: KCC Engineering & Contracting Co., Kuwait

• Designation: Mechanical Projects Engineer • Experience (Years): 6.5

42

Appendix / Appendixes

• Questionnaire:

SURVEY TO IDENTIFY KEY FACTORS FOR SUCCESS OF EPC / PC PROJECTS IN OIL & GAS INDUSTRY OF KUWAIT

Following questionnaire was used to collect data from the participants

I am a student of MBA (management) and, as a requirement of the degree, I am carrying out a research to identify the key factors for the success of EPC/PC projects in Oil & Gas Industry of Kuwait in the context of project management. To complete my research, I am to collect data from project managers and engineers on the topic. Therefore, you are kindly requested to spare some of your precious time and fill this questionnaire.

I assure you that this survey data will be kept confidential and will be used only for the purpose of academic research to complete my MBA degree.

1. Name of organization: _________________

2. Designation/ Job title: _________________ (Project Director / Project

Manager / Project Engineer)

3. For how long have you been working in this organization?

Less than 1 year

1 – 2 years

2 – 3 years

3 – 4 years

4 – 5 years

More than 5 years

4. Total working experience: _________ Years

5. Total project management experience: _________ Years

6. Please specify your age group

Below 25 years

25 – 30 years

30 – 40 years

40 – 50 years

50 Years or above

7. Gender: Male Female

43

8. Qualification: BE / B.Sc M.S / M.Sc M.Phil / Ph.D

Questionnaire:

S # Description Strongly Disagree Disagree Neutral Agree Strongly

Agree

Project Integration Management

1 In my organization, we use to develop Project Charter

2 Project Charter should be developed for each project

3

In my organization, Project Management Plan is formulated for each project

4

I think. there are some projects that do not need Project Management Plan

5 I manage the projects without project management plan

6

Projects are successful without making necessary updation/changes in the project

7 When project is closed, we prepare a snag list

Project Scope Management

1

Collecting the requirements of stakeholders is not important

44

2 Scope need not be established prior to of the project

3

Scope acceptance criteria can be developed as the project progresses

4

I always prefer to breakdown the scope into specific doable activities

5

Project deliverables verification is not necessary as the project activities are carried out as planned.

6

I tend to accept minor variations to the project scope if they are not having any major effect on the project

7 I do not accept major variations in the project scope

Project Time Management

1 All of the activities involved in a project must be sequenced

2

An activity can be completed at the given time if the required resources are readily available

3 Resources can be acquired based on the progress of activities

4 I strictly follow the time allocated for

45

every activity.

5

Developing schedule is a good practice for monitoring project’s progress

6

Unexpected changes can be accommodated by deploying additional resources leaving the project schedule unchanged

Project Cost Management

1

Resource planning is an essential part of project cost management

2

Costs associated with activities can be known only after the activity has been completed

3 I always aim to meet the allocated budget for the project

4

Additional costs, resulting from changed scope or other reasons, should be accommodated in the allocated budget

Project Quality Management

1

My organization has a clear quality policy and quality management system

2

We use to monitor overall project performance on a regular basis to ensure that the project will satisfy the

46

relevant quality standards

3 Quality control is not required if the output is visibly acceptable

Project Human Resource Management

1

My organization’s defined Human Resource Plan is readily used as Human Resource Management Plan for the projects

2 I have a fixed project team that is used for all types of projects

3

Training the project team always helps in improving the performance of project execution

4

Project team’s performance should be evaluated once the project is complete

5

Team members should not be replaced even if their performance is not satisfactory

Project Communications Management

1

In my organization, project goals and plan are effectively communicated to the project team

2 My company relays the information only to selective personnel

3 Project progress

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reporting to the stakeholders is not necessary

4

Discussions with stakeholders do not benefit the project’s progress

5 I conduct progress review meetings with my team in routine

6

I often conduct progress review meetings with the stakeholders

7 Minor changes or variations can be transferred informally

8 Communication lapse can not delay the project

Project Risk Management

1

Risks are always associated with projects and cannot be controlled perfectly, therefore there is no need for risk planning

2

I hold team discussions at the start of a project to identify potential risks

3

I use to measure the probability and consequences of risks and estimate their implications for project objectives

4 I use my experience to identify potential

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risks

5 I always devise an action plan to handle crucial risks

6

Minor risks can be ignored as they do not have any major impact on the project

7 Impact of risks can be controlled by an effective risk plan

Project Procurement Management

1

Procurement planning is very crucial to get a timely availability of required materials

2 We procure the products just in time

3 We make formal contract with each vendor

4

We always obtain quotations, and ask for bids and offers to procure

5

Once an order or contract is in place, it is suppliers’ responsibility to meet their commitments and no further monitoring is required by the project manager

6

We always procure additional material to be on safer side even if it exceeds the allocated budget

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