Influence of Non-Technical Risks on Project Schedule Overrun: The Perspective of Upstream Gas Projects in Australia

Abstract

The complexities of non-technical risks (NTRs) continue to pose serious threats throughout the lifecycle of hydrocarbon projects. Existing studies emphasise mainly internal organisational and operational issues, with a limited focus on factors in the external environment (where NTRs are frequently found). To shine light on this increasingly important topic, this paper provides insight into the complex relationship between NTRs and schedule overruns, and puts forward a ranked list identifying the NTRs that have had the most significant impact on delays in upstream gas projects in Australia. Data was gathered through an extensive literature review, interviews with industry experts, and a survey to identify relevant NTRs. From these data sources, a predictive model was developed for assessing the impact of NTRs on upstream gas project delays. The survey was circulated among participants directly involved in offshore and onshore (particularly the upstream stage) gas projects, who were requested to indicate via five-point Likert scale the frequency of occurrence and severity of each NTR. We identified 18 NTRs categorised into the political and regulatory risks, economic/financial risks, social risks, and environmental risks that cause severe challenges in upstream gas projects. The findings reveal that, overall, 78% of participants believed that NTRs cause more severe delays in the upstream stage than in the mid- and downstream stages of gas projects in Australia. Roughly 39% of respondents from the offshore group mentioned that environmental issues were more significant, whereas for onshore projects, social risks were considered dominant. Our analysis shows the relative criticality of NTRs. The top five critical NTRs causing major delays were found to be ‘fluctuations in oil prices’, ‘difficulty in obtaining land/access right’, ‘delay in approval from regulatory bodies’, ‘socio-cultural issues’, and ‘environmental restrictions’. Spearman’s rank correlation test was used to show a high degree of agreement between offshore and onshore project participants in their perceptions about the relative criticality of different NTRs. Factor analysis was applied to examine the clustering effects among NTRs, and multivariate regression modelling assisted in deriving a predictive model to forecast the influence of NTRs on project delays. Identifying and prioritising critical NTRs that interplay within the project environment, and thereby delay project execution, will increase stakeholder confidence, build trust and integrity, and improve transparency. In this way, this study will help practitioners and decision-makers to anticipate potential delays, and enable them to plan accordingly to minimise their effects on capital project delivery.