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# risk management cycle; risk mitigation or response because if effective mitigation plans are

judge the attributes of every risk. The attributes were two in number and are: the frequency
of occurrence, represented by r!, and the degree of impact, represented by "m!. #hen
\$%&&'( and )aftery, \$'**+( represent this using the equation below:
R = Fr x Im equation 4.1
,here; R - )isk
Fr - requency of occurrence of risk; and
Im - .egree of impact of risk;
/ll the attributes above will be measured numerically and the respondents will make their
judgments by using the five level scale of judgment which uses very low, low, medium,
high and very high for representing both the degree of impact and frequency of occurrence
of risks. The model is applied by converting the opinion judgment scale into numerical
scales. This research will apply values as suggested by 01234 \$%&&&(, which assigns a
value of &.' to very low! and values of &.5, &.6, &.7 and &.* to low!, medium!, high!, and
very high! respectively. .ata will be collected and the weightings of all the risks from each
respondent!s assessment are called the risk score; and will be calculated using the formula
Thuyet, et al. \$%&&7(:
R
i
j
= Fr
i
j
x Im
i
j
equation 4.2
,here; R
i
j
- )isk #core
Fr
i
j
- requency of occurrence for risk i assessed by respondent j
Im
i
j
- .egree of impact for risk i assessed by respondent j
/n average score for each risk is determined by calculating the average scores from all the
respondents. This is called the risk8inde9 score!, which is used for ranking the risks. The
risk8inde9 score is then calculated with the following formula:

N
R
RI
N
1 j
j
i
i

=
=
:::::::::::::: equation 4.3
,here; RI
i
- )isk8inde9 score for risk i
R
i
j
- )isk score assessed by respondent j for risk i
N - ;umber of respondents
The risk ranking will be done by ordering the risks in increasing numerical order of \$', %,
5::.(, with the major risk having the value of '!, the second major risk having the value
of %! and so on.

4.1.3 Graphical Illustrations:
0ictorial and graphical presentations will be used as another technique for conveying the
results and findings of the research in a non8verbal manner. <raphs and charts will be used
as forms of graphical illustration in the research because of their advantage of making
research results easy to interpret.
4.2 Questionnaire survey response:
/ sum of forty \$+&( questionnaires were sent out to four different types of company groups
that speciali=es both in upstream and downstream activities in oil and gas projects in
;igeria as follows: '& questionnaires to public sector companies, '& questionnaires to
private \$multinational( companies and %& to private \$indigenous( companies. %&
questionnaires were distributed to the private indigenous companies because there are more
companies in this category than any other category. 3ut of +& questionnaires that were
distributed, 5& questionnaires were returned. Table +8' shows the details of the distribution
and rate of questionnaire responses as presented below:
%
a!le 4"1: #istri!ution o\$ survey responses
S/No Company type
Nos of questionnaires
Return rate
(%) Distributed Return
1 Public sector 10 5 50
2 Private( Multinational) 10 7 70
3 Private (Indigenous) 20 18 90

Total 40 30 75

The table above shows that a 76> return rate was recorded in the questionnaire survey. The
rate is high as compared to the lower response of ?&> \$;guyen, et al., %&&7( as reali=ed in
a related study. The table above also shows the percentage distribution of respondents in
the survey as follows: 0ublic sector companies 6&>; 0rivate \$1ultinational( companies
7&> and 0rivate \$indigenous( companies *&>.
4.3 %ection 1: General&!ac'(roun) in\$ormation
"n line with the objectives of the research, the first section of the questionnaire will analy=e
the effects of the background and general information of the respondents in the survey. This
establishes a clear insight into the activities of the companies answering the survey
questions with respect to their staff e9perience and number, company history and their
general perception to types of risks and the risk effects on risk management as practiced in
oil and gas projects in ;igeria.
4.3.1 Respon)ent*s +o! position:
"n distributing the questionnaires, a deliberate effort was made to incorporate more
managers in the research due to the fact that managers will have a more comprehensive
knowledge about risks and risk management practices in numerous aspects of oil and gas
projects. rom the survey, it was found that +?.?7> \$'+( of the respondents were managers
which comprised of operations, project and marketing managers; while 65.55> \$'?( were
employees which comprised of project, safety and discipline engineers. The figure below
shows their distribution:
5
a!le 4"2: Results o\$ respon)ents* +o! position
S/No
Respondents job
position Frequency ercenta!e (%)
1 Project anagers 10 35
2 !"eration anagers 1 3
3 #a\$et% anagers 2 7
4 Project &ngineers 7 24
5 #a\$et% &ngineers 2 7
' (isci"line &ngineers 7 24
Fi(ure 4"1: #istri!ution o\$ respon)ents* +o! position
Project anagers
35)
!"eration anagers
3)
#a\$et% anagers
7)
Project &ngineers
24)
#a\$et% &ngineers
7)
(isci"line
&ngineers
24)
The above table and chart \$Table +8% and igure +8'( shows that the percentage
distributions of the respondents! job position in the survey are as follows: 56> \$'&( are
0roject managers; 5> \$'( are 3peration managers, 7> \$%( are #afety managers, %+> \$7( are
0roject engineers, and %+> \$7( are .iscipline engineers. rom obtained results, it can be
+
inferred that the respondents to the questionnaire are individuals who make significant
contributions to the risk management practices in ;igerian oil and gas projects.
4.3.2 ,or'in( experience:
a!le 4"3: Results o\$ respon)ents* years o\$ -or'in( experience
S/No
"ears of #or\$in!
e%perience Frequency ercenta!e (%)
1 0 to 5 %ears 4 13
2 ' to 10 %ears 10 33
3 *bove 10 %ears 1' 54
Fi(ure 4"2: #istri!ution o\$ respon)ents* years o\$ -or'in( experience
*bove 10 %ears
54)
' to 10 %ears
33)
0 to 5 %ears
13)
The above table and chart \$Table +85 and igure +8%( shows that the percentage
distributions of the respondents! years of working e9perience in the survey are as follows:
'5> \$+( have & to 6 years working e9perience; 55> \$'&( have ? to '& years working
e9perience; and 6+> \$'?( have above '& years working e9perience. rom the obtained
results, it implies that risk management practices in ;igerian oil and gas sector involves
people who have high industry e9perience.
6
4.3.3 .)ucational /uali\$ication:
The questionnaire results obtained with respect to educational qualification show that each
of the respondents possessed at least a form of higher educational qualification \$12/,
1sc, 2sc and 2eng(. This implies that the decision makers who are involved in carrying
out risk management practices in ;igerian oil and gas projects are educated.
4.3.4 Respon)ents a(e (roup:
a!le 4"4: Results o\$ respon)ents* a(e (roup
S/No
Respondents a!e
!roup Frequency ercenta!e (%)
1 25 to 30 +ears 2 7
2 31 to 35 +ears 12 40
3 3' to 40 +ears 3 10
4 41 to 45 +ears 7 23
5 4' to 50 +ears 5 17
' ,50 +ears 1 3
?
Fi(ure 4"3: #istri!ution o\$ respon)ents* a(e (roup
31 to 35 +ears
40)
3' to 40 +ears
10)
41 to 45 +ears
23)
4' to 50 +ears
17)
,50 +ears
3)
25 to 30 +ears
7)
The above table and chart \$Table +8+ and igure +85( shows that the percentage
distributions of the respondents! age groups in the survey are as follows: 7> \$%( are %6 to
5& years; +&> \$'%( are 5' to 56 years; '&> \$5( are 5? to +& years; %5> \$7( are +' to +6
years; '7> \$6( are +? to 6& years; and 5> \$'( are above 6& years. rom the obtained
results, it was noticed that the age group with the highest frequency \$modal age group( were
between 5' to 56 years of age. /lso, all the respondents from +' years and above were
managers. "t can be inferred that a considerable number of managers are actively involved
in risk management practices in ;igerian oil and gas industry.
4.3.0 ypes o\$ pro+ects execute) !y respon)ents:
The ;igerian oil and gas industry was identified from e9tant literature to be divided into
two sectors and as indicated in the questionnaire; respondents were requested to select the
sector where they carry out their project activities. Table +86 shows the survey results.
7
a!le 4"0: Results o\$ pro+ect types execute) !y respon)ents
S/No
Type of projects e%ecuted by
respondents Frequency
ercenta!e
(%)
1 !nl% u"strea 0 0
2 !nl% do-nstrea 3 10
3 .ot/ 27 90
Fi(ure 4"4: #istri!ution o\$ pro+ect types execute) !y respon)ents
!nl%
do-nstrea
10)
!nl% u"strea
0)
.ot/
90)
The above table and chart \$Table +86 and igure +8+( shows that the percentage
distributions of the respondents! with respect to the oil and gas sector; where they carry out
their projects activities are as follows: 5> \$'&( carry out only downstream project
activities; *&> \$%7( carry out both upstream and downstream project activities; and none of
the companies carry out only upstream activities. rom the obtained results, it was noticed
that only respondents! working with companies that engage in retail and marketing of
petroleum products carryout only downstream project activities while others
\$design@construction, inspection, and drilling@e9ploration( companies; carry out their project
activities in both sectors which may be offshore or onshore. "t can be inferred that risk
management practices carried out on most of the projects in both the upstream and
downstream sectors of ;igerian oil and gas industry.
4.3.1 %ervices ren)ere) !y or(ani2ations:
"n the questionnaire survey; respondents were requested to select the type of projects
services that their individual organi=ations where they carry out their project activities;
render in ;igerian oil and gas industry. The table below shows the survey results.
A
a!le 4"1: Results o\$ pro+ect services ren)ere) !y respon)ents
S/No
Type of projects ser&ices
rendered by respondents Frequency
ercenta!e
(%)
1 Ins"ection 4 13
2 (esign0construction 18 '1
3 1etail0ar2eting 4 13
4 (rilling0e3"loration 4 13
Fi(ure 4"0: #istri!ution o\$ pro+ect services ren)ere) !y respon)ents
'1)
13)
13) 13)
Ins"ection
(esign0construction
1etail0ar2eting
(rilling0e3"loration
The above table and chart \$Table +8? and igure +86( shows that the percentage
distributions of the respondents! with respect to the services that their individual
organi=ations render in ;igerian oil and gas industry are as follows: '5> \$+( are involved
in inspection activities; ?'> \$'A( are involved in design and construction activities; '5>
\$+( are involved in retail and marketing activities; and '5> \$+( are involved in drilling and
e9ploration activities. rom the obtained results and from in8depth telephone interviews, it
was gathered that; ;igerian government owned public sector companies like .0), were
involved in inspecting and regulating the way the other companies \$design@construction,
inspection, and drilling@e9ploration( carry out risk management practices in both upstream
and downstream oil and gas projects. This they do by giving them guidelines on the risk
assessment methodology and when to use them on projects. \$.0), %&&?( The retail and
marketing companies were private indigenous companies that carry out their project
activities only in the downstream sector. 1ost of the drilling and e9ploration companies
were private multinationals that have joint ventures with ;;0B \$the owner of and ;igerian
government representative; in all oil and gas projects(. \$;;0B, %&&A( This is because of
the inability of the private indigenous companies! lack of finance and e9pertise to carry out
*
these high technology and huge capital intensive projects. ?'> distribution was comprised
of mostly the private indigenous companies that carry out most design and construction
projects which were sublets from the multinational companies. This large percentage is
because of the new ;igerian Cocal content policy to carry out 7&> of all design and
construction projects in the oil and gas sector by the year %&'&. \$;wachukwu, %&&A( This
boosted the springing up of new design and construction companies. ,ith respect to the
objectives of the research, it can be inferred that risk management practices carried out by
the various companies in ;igerian oil and gas projects are regulated and monitored under
strict guidelines by ;igerian government bodies responsible for ensuring that project risks
are effectively managed and responded to; at the various key stages of oil and gas projects.
4.3.1 3r(ani2ations years o\$ experience:
a!le 4"4: Results o\$ respon)ents* or(ani2ations years o\$ experience
S/No
Respondents or!ani'ations
years of e%perience Frequency
ercenta!e
(%)
1 4ess t/an 5%rs 0 0
2 5 to 10%rs 2 7
3 10 to 20%rs ' 20
3 20%rs and above 22 73
Fi(ure 4"1: #istri!ution o\$ respon)ents* or(ani2ations years o\$ experience
20)
7)
0)
73)
4ess t/an 5%rs
5 to 10%rs
10 to 20%rs
20%rs and above
The above table and chart \$Table +87 and igure +8?( shows that the percentage
distributions of the respondents! individual organi=ations years of e9perience in ;igerian
oil and gas industry are as follows: 7> \$%( have 6 to '& years; %&> \$?( have '& to %& years;
'&
and 75> have above %& years of e9perience. Two companies involved in design and
construction were in the 6 to '& years of e9perience range. The rest had above '& years
e9perience in the ;igerian oil and gas industry. ,ith respect to the organi=ations that
participated in the research survey, it can be seen that most of the companies have been
operating in the oil and gas sector for long. Thus, it can be inferred that most of the
organi=ations that partook in the survey are very e9perienced in oil and gas projects.
4.3.4 .mployee si2e:
a!le 4"5: Results o\$ respon)ents* or(ani2ation*s employee si2e
S/No
Respondents or!ani'ation(s
employee si'e Frequency
ercenta!e
(%)
1 1 to 100 0 0
2 100 to 250 0 0
3 250 to 1000 4 13
4 1000 to 5000 18 '0
5 *bove 5000 8 27
Fi(ure 4"4: #istri!ution o\$ respon)ents* or(ani2ation*s employee si2e
1000 to 5000
'0)
250 to 1000
13)
*bove 5000
27)
The above table and chart \$Table +8A and igure +87( shows that the percentage
distributions of the respondents! individual organi=ations employee si=e are as follows:
'5> \$+( have %6& to '&&& employees; ?&> \$'A( have '&&& to 6&&& employees; and %7>
have above 6&&& employees. 1edium si=ed design and construction companies were the
respondents in the third category \$%6& to '&&&( employees; while large si=ed indigenous
multinationals, public sector government organi=ations and retail and marketing companies
''
had from '&&& to 6&&&D employees. This is because these large si=ed organi=ations have
been in e9istence for many years and carry out oil and gas projects in their subsidiaries
which are spread around the nation. Thus, it can be inferred that since the large si=ed
organi=ations constitute a total of A7> of the survey; they are more organi=ed and have
abundance of employees who carry out risk management on their various oil and gas
projects.
4.4 %ection 2: Ris' mana(ement rationale
"n line with the objectives of the research, this section of the questionnaire will be used to
analy=e the risk management practices carried out by the respondents in the survey. The
questions seek to find out how organi=ations identify the sources of risks; the risk response
techniques they use; and an analysis of the major risks that emanate in ;igerian oil and gas
projects will be carried out so as to determine the five major risks that impede the projects.
This will be further analy=ed so as to determine suitable response strategies for these risks.
4.4.1 3r(ani2ations an) ris' mana(ement system:
"n the questionnaire survey results; all the respondents agreed that their individual
organi=ations maintained a risk system. /ll also agreed that the identified risks are stored in
a risk management database either by recording the risks in a risk register, documenting
and storing them as hardcopy files; or by storing them as folders electronically, inside
computer hard discs, floppy drives or compact discs. This implies that oil and gas
organi=ations pay significant attention to risk management practices so as to effectively
mitigate risks on projects.
4.4.2 Ris' ran'in( \$or 6i(erian oil an) (as construction pro+ects:
"n the questionnaire survey; the respondents which were thirty \$5&( in number; were asked
to rate a list of twenty \$%&( risks which were identified from e9tensive phone interviews to
be the most common sources of risks that emanate in ;igerian oil and gas projects. The
average risk scores from the 5& respondents was used to derive the risk inde9 score by
putting the numerical values as proposed earlier in equation +.5. This is represented with
the formula below:
'%
30
R
RI
30
1 j
j
i
i

=
=
:::::::::::::: equation 4.4
,here; RI
i
- )isk8inde9 score for risk i
R
i
j
- )isk score assessed by respondent j for risk i
30 = ;umber of respondents
The ranking of the identified top twenty \$%&( risks was carried out with respect to the risk
inde9 score so as to determine the top five \$6( major risks so as to further analy=e and
develop suitable mitigating strategies for these risks in line with the research objectives.
This is similar to a study carried out by Thuyet et al., \$%&&7(. The questionnaire results can
be shown in table +8* as follows:
a!le 4"7: Ris' ran'in( \$or 6i(erian oil an) (as construction pro+ects
'5
)ank
)isk
Bode )isk factors )"
' )'%.'6 #ecurity threats from neighboring residents &.6?%'
% )'%.6 "ncompetence of project team members &.5A%5
5 )'%.? 0oor designs &.576
+ )'%.7 Cate internal approvals from clients &.%*7+
6 )'%.* 0oor and inadequate tendering &.%A''
? )'%.'+ "nadequate project organi=ation structure &.%7++
7 )'%.'& Bhanges in design &.%+6A
A )'%.'' "nadequate budgeting and poor project planning &.%57A
* )'%.'5 0oor project feasibility studies &.%%7A
'& )'%.5 "nefficient and poor performance of constructors &.%'%6
'' )'%.'7 )educed quality in procured materials &.%&*A
'% )'%.'A
0oor coordination amongst sub8contractors and
contractors &.'*?6
'5 )'%.' .amage to work by third party &.'7?+
'+ )'%.A
2ureaucratic project and government approval
procedures &.'??6
'6 )'%.'%
.ifferences in practices between local and foreign
contractors &.'?5A
'? )'%.% Environmental protection pressure of other groups &.'6*%
'7 )'%.+ 0oor relationship with government bodies &.'+6%
'A )'%.'? Cate provision or delivery of materials &.'+6%
'* )'%.%& ,orking conditions deferring from contract specification &.'''%
%& )'%.'* Cack of e9perience in design and construction &.'&A?
/ comprehensive list of the ranked risks as deduced from a combination of in8depth
telephone interviews and questionnaire survey is shown in the table above. The twenty \$%&(
risks are sorted accordingly, in ascending order of their overall impact on oil and gas
projects in ;igeria. The top ten risks will then be analy=ed further to determine their
'+
features, characteristics and causes; so that adequate strategies can be proposed to mitigate
the risks.
4.4.3 he analysis o\$ the top ten ris's in 6i(erian oil an) (as construction pro+ects:
"n line with the objectives of the study, the top ten major risks in ;igerian oil and gas
projects will be analy=ed thoroughly. "n order to analy=e these top ten major risks; the mean
of occurrence and the mean of impact degree for each individual risk identified by the
respondents where determined. This can be seen as shown in table +8'& as follows:
a!le 4"18: op ten ris's statistics \$or 6i(erian oil an) (as construction pro+ects
'6
)ank
)isk
code )isk actors
1ean of
3ccurrence
requency
\$r(
1ean of
"mpact
.egree
\$"m(
)isk
"nde9
#core
\$)"(
' )'%.'6
#ecurity threats from neighboring
residents &.7 &.7? &.6?%'
% )'%.6
"ncompetence of project team
members &.6'55 &.?655 &.5A%5
5 )'%.? 0oor designs &.+*55 &.?A &.576
+ )'%.7 Cate internal approvals from clients &.%? &.+A55 &.%*7+
6 )'%.* 0oor and inadequate tendering &.6555 &.6%?7 &.%A''
? )'%.'+
structure &.+%?7 &.6*55 &.%7++
7 )'%.'& Bhanges in design &.+??7 &.+A &.%+6A
A )'%.''
planning &.6? &.+%?7 &.%57A
* )'%.'5 "mproper project feasibility studies &.+%?7 &.+A?7 &.%%7A
'& )'%.5
"nefficient and poor performance of
constructors &.+% &.+755 &.%'%6
'' )'%.'7 )educed quality in procured materials &.+%?7 &.+655 &.%&*A
'% )'%.'A
0oor coordination amongst sub8
contractors and contractors &.?&?7 &.5%?7 &.'*?6
'5 )'%.' .amage to work by third party &.%755 &.7 &.'7?+
'+ )'%.A
2ureaucratic project and government
approval procedures &.5+ &.+??7 &.'??6
'6 )'%.'%
.ifferences in practices between local
and foreign contractors &.5A &.5&?7 &.'?5A
'? )'%.%
Environmental protection pressure of
other groups &.%655 &.6? &.'6*%
'7 )'%.+
0oor relationship with government
bodies &.%755 &..+*55 &.'+6%
'A )'%.'? Cate provision or delivery of materials &.5% &.+&?7 &.'+6%
'* )'%.%&
,orking conditions deferring from
contract specification &.%555 &.5'55 &.'''%
%& )'%.'*
Cack of e9perience in design and
construction &.%655 &.%*55 &.'&A?
rom table +8'& above, it can be deduced that security threats from neighboring residents!
risk take up the first position with a risk8inde9 score \$&.6?%'(, to become the risk with the
highest risk score8inde9. This is an e9ternal risk and has both the highest mean of impact
'?
degree \$&.7?( and the highest mean of occurrence frequency \$&.7(. "t implies that oil and
projects in ;igeria are highly prone to this major risk. "t was gathered from the conducted
interviews that the main causes of this risk were disturbances from the local residents and
militants in the ;iger .elta region in the form of assault and kidnapping of oil and gas
companies employees; vandali=ing of oil and gas pipelines; and sabotage \$fire and
e9plosion of oil and gas facilities(. "t was also gathered that due to lack of compensation
payment which was supposed to be paid to the poor rural dwellers of these oil rich regions
for the compulsory acquisition of their lands for oil and gas e9ploration; always generates
crisis in the area. \$3gedengbe, %&&7(
The second to the fifth risks are as follows: "ncompetence of project team members! with a
risk8inde9 score \$&.5A%5(; poor designs! with a risk8inde9 score \$&.576(; late internal
approvals from clients! with a risk8inde9 score \$&.%*7+(; and poor and inadequate
tendering! with a risk8inde9 score \$&.%A''(. rom the second down to the tenth \$%nd to
'&th( ranking risks are all internal risks.
,ithin this limits were risks which also occupied high positions in the risk ranking and
were associated with the management activities of the client. They are as follows:
"ncompetence of project team members! as the %
nd
; late internal approvals from clients! as
the +
th
; inadequate project organi=ation structure! as the ?
th
poor project planning! as the A
th
and improper project feasibility studies! as the *
th
. The
fact that these management associated risks have high ranking signifies that clients and
employers in ;igerian oil and gas construction projects are failing in their duties of
directing; motivating employees; organi=ing; controlling; and planning oil and gas projects.
rom the interviews conducted, it was revealed that the reason for these lapses accrue to
lack of a defined system in projects! structure and incompetent workers being used on
projects. Thus, it can be inferred that; in order to manage these risks, there should be a
focus on improving clients! management skills, abilities and knowledge as well as
employees capabilities.
"t is worth noting that two risks which had high risk ranking; and found their places as the
5
rd
and 7
th
in the top ten risk ranking were associated with the designs. They are: poor
designs! with a risk8inde9 score \$&.576(; and changes in design! with a risk8inde9 score
'7
\$&.%+6A(. 0oor designs! risk although occupied the overall third position, had the second
highest mean of impact degree \$&.?655(. This is because design works which are done at
the early stages of oil and gas projects have a very huge impact on the total outcome of
projects. / little flaw in a design can cause enormous changes in the construction phase and
in allocating resources; thus, reducing quality and causing cost and time overruns on
projects. \$Thuyet, et al., %&&7(
Bhanges in design! risk is common in oil and gas projects and the earlier it occurs, the
lesser it has impact on the total project outcome. "t usually occurs in the construction phase
of ;igerian oil and gas projects. This risk had &.+A as the mean of impact degree and this
implies that changes in design in ;igerian oil and gas projects have a medium effect or
impact on the overall project outcome. rom the interviews, it was gathered that this risk is
usually caused by changes in design specifications, scope changes and poor quality designs.
To curb these risks, design standards are put in place to enable regulators, clients and
contractors to reach a mutual understanding about the way to carry out designs. \$#nell,
%&&A(
0oor and inadequate tendering! risk had the ranking position as 6th; with a risk8inde9 score
\$&.%A''(, mean of impact degree \$&.6%?7( and mean of occurrence frequency \$&.6555(. This
means that this risk has a severe impact on project outcomes. rom the interviews, it was
revealed that risks associated with tendering in oil and gas projects in ;igeria are attributed
to poor contractor selection by clients. "ncompetent and unreliable contractors end up
winning bids due to inadequacies in the evaluation processes and selection criteria which
lacked due processes!. Thus, contractors are appointed by public and private sector clients!
not on merit but based on whom they know. \$3gunsemi and /je, %&&?( This makes
contactor and client ethics during contractor selection and evaluation processes a comple9
and sensitive issue yet to be addressed in ;igerian oil and gas projects.
The '&th risk inefficient and poor performance of constructors! with a risk8inde9 score
\$&.%'%6(; mean of impact degree \$&.+755(; and mean of occurrence frequency \$&.+%(. This
risk was identified to be a very sensitive risk that needs to be addressed in ;igerian oil and
gas industry. Blients! projects often end up suffering from overruns in cost, delays in time,
poor quality services and decreased productivity due to poor performance on the contractor
'A
side. "n8depth interviews revealed that lack of sufficient equipments and technology;
appropriate e9perience; financial capability; trained employees; available resources; good
quality construction methods; and efficient management skills; were the causes of
contractors poor performance on projects. 2esides, ;igeria oil and gas projects which are
usually large and comple9, requiring huge capital investment, modern technologies and
ever changing up to date construction methods; attracts multinational companies.
Bonsequently, conflicts that impede project successes are often generated due to the
differences in technology know how between the employees of multinational and
indigenous companies.
4.0 Ris' response strate(ies \$or miti(atin( the ma+or ris's
"n the previous section, the top ten major risks in ;igerian oil and gas projects were
identified with their frequency of occurrence and degree of impact. "n line with the
objectives of the study and due to the time constraints and limits of the research; qualitative
method of research was used via telephone interviews with e9perienced personnel of the
;igerian oil and gas industry; to find out the characteristics and causes as well as to
propose efficient strategies to effectively mitigate only the five major risks on the risk
ranking developed from the quantitative analysis because of the severe impacts they have
on oil and gas projects in ;igeria. This section will focus on analy=ing each individual risk
thoroughly.
4.0.1 %ecurity threats \$rom nei(h!orin( resi)ents 9R12.10:
The risks accruing to security threats from neighboring residents on ;igerian oil and gas
projects are enormous. These are e9ternal risks that inhibit the achievement of a project!s
cost, time and quality objectives. "t was gathered from the conducted interviews that the
agitating youths and militants activities on oil and gas fields in the form of assault and
kidnapping of oil and gas companies employees \$Eweje, %&&7(; vandali=ing of oil and gas
pipelines; and sabotage \$fire and e9plosion of oil and gas facilities(. "t was also gathered
that due to lack of compensation payment which was supposed to be paid to the poor rural
dwellers of these oil rich regions for the compulsory acquisition of their lands for oil and
gas e9ploration; always generates crisis in the area. \$3gedengbe, %&&7(
'*
"n this light, the respondents to the interview that were carried out proposed several
strategies which include:
'. The compulsory land use act should be amended so that adequate compensation fees
should be paid to the owners of the acquired lands by oil and gas companies or the
federal government.
%. Borporate social responsibility \$B#)( \$Evuleocha, %&&6( should be enforced by the
federal government so as to increase the development of these oil rich communities
by oil and gas companies.
5. The federal government of ;igeria should seek to enforce stringent laws on waste
disposals so as to stop the oil spillages from activities from oil and gas construction
activities. \$Essoka, et al., %&&?(
+. The C;< production should be introduced fully so as stop the flaring of gases
which cause harm to human, animals and the entire ecological environment in the
;iger .elta region. \$<albraith, %&&A(
4.0.2 Incompetence o\$ pro+ect team mem!ers 9R12.0:
rom the phone interviews, it was gathered that the ;igerian oil and gas projects lack
individuals with skills, knowledge and ability to perform their duties efficiently. Even
though most project team members possessed at least one form of higher education degree,
there is still that lack of insufficient skills needed to manage oil and gas projects.
"n this view, the following strategies were proposed by the interviewees as follows:
'. Effective teamwork should be enhanced via staff training to update them with the
new technologies and industry skills.
%. <ood staffing by effectively matching project team members to the right projects
where they can function efficiently to achieve optimum productivity.
4.0.3 ;oor )esi(ns 912.1:
The risks of poor designs by contractors in ;igerian oil and gas projects are enormous, and
usually cause the non8achievement of projects! cost, time and quality objectives. ,ho
absorbs the e9tra cost of incomplete or unclear scopes and specifications, ambiguous design
and designers! incompetenceF This question usually causes a lot of conflict between clients
%&
and contractors. "n ;igeria, indigenous companies have little e9perience in design of oil
and gas facilities, thus there e9ists a dominance of foreign multinational companies that
have more e9perience but still run into design difficulties due to the comple9 nature of the
designs in the industry.
"n this light, the respondents to the interview that were carried out proposed several
strategies which include \$Thuyet, %&&7(:
'. "ndigenous companies partnering with the multinationals to improve cost
effectiveness; efficiency; quality of products and services; transparency and transfer
of technology, long term commitment and enhanced opportunity for innovation.
%. Bontractor selection to be based on e9perience and previous performance so that
competent and e9perienced manpower will be carrying out design works efficiently.
5. Gsing concurrent engineering to improve constructability and time savings.
+. .esign standards put in place to enable regulators, clients and contractors to have a
mutual understanding about the way to carry out designs. \$#nell, %&&A(
4.0.4 <ate internal approvals \$rom clients 912.4:
This is an internal project risk that usually originates in clients organi=ation. The interview
respondents revealed that this risk emanates on ;igerian oil and gas projects due to
managers lacking the authority to solve problems and lack of employee commitment.
0roject managers are usually faced with the problem of slow responses from the top
management to pressing project issues e.g. allocating resources. This leads to time and at
times lead to cost overruns on projects. \$Thuyet, %&&A(
"n this light, the respondents to the interview that were carried out proposed the following
strategies:
'. Gsing TH1 \$Total Huality 1anagement( practices for enhancing the involvement
of all project employees to share in the project vision and goals.
%. Empowering project managers with approvals authority so as to make on time and
faster decisions which enhances innovation and successful delivery of projects.
%'
4.0.0 ;oor an) ina)e/uate ten)erin( 912.7:
The risk accruing to poor and inadequate tendering usually, can deviate a project from
meeting up with its objectives. 3il and gas projects usually adopt one of the following
methods; restricted tendering, open tendering, restricted accelerated, competitive
negotiated, competitive negotiated accelerated tendering and dialogues. \$0alaneeswaran and
kumaraswamy, %&&'( The interviews revealed that lack of due processes! \$unethical
attitudes of bidders( and inadequate evaluation criteria! are the main sources that pose
tendering risks in ;igerian oil and gas industry. 0ublic sector clients often accept lowest
price tender so as to show accountability and in defense for criticisms. \$,ong, et al., %&&&(
1oreover, these bidders submit low prices to win and after winning, they negotiate with
clients at later stages to mark8up their tender. /nother identified source is the collusion of
bidders like withdrawal, bribery, and false inflation of covering and tender prices.
"n this light, the respondents to the interview that were carried out proposed the following
strategies:
'. The technique, 1B.1 \$1ultiple criteria decision making( should be used for
evaluating contractors.
%. Blients increasing legal enforcement of collusion by improving the detection of
bidders during prequalification and final stages of evaluation.
5. Blients using selective tendering by inviting only credible and professional
contractors
4.1 %ummary
The quantitative and qualitative approaches were used to assess the major risks that
emanate in ;igerian oil and gas construction projects. The findings from results from the
background information of the questionnaire survey reveals that risk management practices
in ;igeria oil and gas industry involves people with high industry e9perience; educated;
and mostly carry out projects in both upstream and downstream sector. 1ost of the
organi=ations have e9perience in oil and gas activities because they have been in e9istence
long enough in the industry; with adequate staff strength.
The second part the questionnaire revealed that all organi=ations in ;igerian oil and gas
industry maintain a risk management system as well as store identified risks in a risk
%%
management database either as hard copies or electronic copies in computer hard drives,
compact discs and floppy drives.
The top ten major risks that emanate on oil and gas construction projects both in the
upstream and downstream oil and gas sectors are:
6.% #ecurity threats from neighboring residents
?.% "ncompetence of project team members
7.% 0oor designs
A.% Cate internal approvals from clients
''.% Bhanges in design
'%.% "nadequate budgeting and poor project planning
'5.% "mproper project feasibility studies
'+.% "nefficient and poor performance of constructors
Hualitative method was used via in8depth telephone interviews; to further analy=e the top
five major risks due to their high mean of impact degree and high risk inde9 score
thoroughly. The causes and characteristics of the top five major risks; as well as mitigating
strategies were developed to curb the top five major risks that emanate on ;igerian oil and
gas projects.
%5
=hapter 0: =onclusion an) recommen)ations
2.1 =onclusion:
"n recent times, the concept of risk management is an essential process that cannot be
neglected in the management of projects in developed countries. ;evertheless, the practice
is still new during the implementation of projects in developing countries; which includes
;igeria. 3nly the ;igerian oil and gas sector seems to be the sector amongst others; that is
keen on utili=ing risk management practices during the implementation of projects because
of the volatile nature of products and characteristics of the project environment where the
operation and processes are carried out, in a constantly changing dynamic environment
which is e9posed to enormous risks. Thus, this research is very significant and timely
considering the fact that the oil and gas sector is the most important contributor to the total
revenue of the ;igerian economy.
The research dissertation which aimed at identifying the risk factors that affect oil and gas
construction projects and to derive risk responses for them was accomplished via reali=ing
the following research objectives:
The different types of risks as well as the different environments where these risks originate
in oil and gas projects where identified from an e9tensive literature review. / closer
assessment via a questionnaire survey was systematically used to determine the frequency
of occurrence and the degree of impact of the major sources of risks that emanate in oil and
gas construction projects in ;igeria.
The results of the research via the risk scores of the major risks revealed that the top ten
major risks in oil and gas construction projects in ;igeria were:

'. #ecurity threats from neighboring residents
%. "ncompetence of project team members
5. 0oor designs
+. Cate internal approvals from clients
%+
7. Bhanges in design
A. "nadequate budgeting and poor project planning
*. "mproper project feasibility studies
'&. "nefficient and poor performance of constructors
0.2 Recommen)ations
or the successful delivery of projects, it is essential that a thorough e9amination of the
major risks affecting a project is e9amined. "n the quest to develop strategies to effectively
mitigate the identified major risks; literature and in8depth interviews were carried out in the
research and were used to proffer appropriate practical strategies which where proposed for
the top five most ranked, major risks in oil and gas construction projects in ;igeria. The
research proposed recommendations to effectively mitigate the top8five major risks as
follows:
'. The compulsory land use act should be amended so that adequate compensation fees
should be paid to the owners of the acquired lands by oil and gas companies or the
federal government.
%. Borporate social responsibility \$B#)( should be enforced by the federal government
so as to increase the development of these oil rich communities by oil and gas
companies.
5. The federal government of ;igeria should seek to enforce stringent laws on waste
disposals so as to stop the oil spillages from activities from oil and gas construction
activities.
+. The C;< production should be introduced fully so as stop the flaring of gases
which cause harm to human, animals and the entire ecological environment in the
;iger .elta region.
6. Effective teamwork should be enhanced via staff training to update them with the
new technologies and industry skills.
?. <ood staffing by effectively matching project team members to the right projects
where they can function efficiently to achieve optimum productivity.
%6
7. "ndigenous companies partnering with the multinationals to improve cost
effectiveness; efficiency; quality of products and services; transparency and transfer
of technology, long term commitment and enhanced opportunity for innovation.
A. Bontractor selection to be based on e9perience and previous performance so that
competent and e9perienced manpower will be carrying out design works efficiently.
*. Gsing concurrent engineering to improve constructability and time savings.
'&. .esign standards put in place to enable regulators, clients and contractors to have a
mutual understanding about the way to carry out designs.
''. Gsing TH1 \$Total Huality 1anagement( practices for enhancing the involvement
of all project employees to share in the project vision and goals.
'%. Empowering project managers with approvals authority so as to make on time and
faster decisions which enhances innovation and successful delivery of projects.
'5. The technique, 1B.1 \$1ultiple criteria decision making( should be frequently
used for evaluating contractors.
'+. Blients increasing legal enforcement of collusion by improving the detection of
bidders during prequalification and final stages of evaluation.
'6. Blients should be using selective tendering by inviting only credible and
professional contractors
0.3 <imitations o\$ research
,ith regards to the gap in distance between the author and the target population; and the
infle9ible time schedule required for completing the research, the choice of telephone
interviews and the use of an electronic questionnaire was the most suitable media for data
collection for the research. Iowever, it was recogni=ed that the representation of the entire
target population may not be repudiated from the respondents views because; not all the
operators in the upstream and downstream sector of the ;igerian oil and gas industry may
have access to internet to facilitate the data collection process. ;evertheless, the sample
still continues to be a valid and dependable information source since most of the corporate,
public and private sector oil and gas organi=ations in ;igeria have internet access.
%?
0.4 Recommen)ations \$or \$uture research
Iaving undertaken the research on risk management in oil and gas construction projects in
;igeria; opportunities are open for future research to be aimed at using the ascertained
major sources of risks and recommended strategies proposed in the research dissertation;
for developing a practical risk management model for future use by clients, investors,
researchers and all stakeholders that have interest in the ;igerian oil and gas industry.
%7
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